HomeMy WebLinkAboutadditional documentsJohn Paul Maier
From: donotreply@sbcity.org
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Subject: Speaker Slips
Notice Text
First Name Deanna
Last Name Adams, Ph.D.
Telephone 909-884-6105
Email deannahelena.(I earthlink. net
Comments Items 9 and 21 on 05/15/2017 Agenda Thank you. HUD and Item not on the Agenda
City of San Bernardino
Civil Service Department
Date: May 15, 2017
To: Honorable Mayor and City Council Members
From: Rebekah Kramer, Chief Examiner
Subject: Replacement Pages - Charter Implementation Update — Item
#13e (Packet Pages 477 — 479)
Attached you will find replacement pages for Item #13e (packet pages #477 — 479)
scheduled for consideration by the Mayor and City Council on the May 15, 2017.
Corrections were made to Section 6 of the Resolution as presented below.
SECTION 6: Any act previously performed by the Chief Examiner in the Rules other than the acts
related to disciplinary appeals referenced in Rules 513-513.5 and 601 are hereby delegated to a
human resources department with approval from the Appointing Power, as such term is used in
Rule 103
R eso FGes De aFtm +
1 RESOLUTION NO.
RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF S
2 BERNARDINO, CALIFORNIA, RENAMING THE CIVIL SERVICE RULES A
REGULATIONS THE PERSONNEL RULES
RULES
3 AMENDMENTS TO RULES 513-513.5 AND 601 PURSU�A�NT TO CHAPTER 2 501
THE SAN BERNARDINO MUNICIPAL CODE; CONFORMING RULES 513-513.5 AI
4 601 TO THE NEW CHARTER BY CHANGING REFERENCES FROM THE CII
SERVICE BOARD TO THE PERSONNEL COMMISSION; DELEGATING AUTHORI
5 FOR ACTIONS OTHER THAN DISCIPLINARY APPEALS PREVIOUSLY ASSIGNI
IN THE RULES TO THE CIVIL SERVICE BOARD AND CHIEF EXAMINER TO
6 DESIGNEE OF THE APPOINTING POWER UNDER A HUMAN RESOURCI
DEPARTMENT
7 WHEREAS, the voters of the City of San Bernardino, at an election held
s
November 8, 2016, approved a new City Charter; and
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to WHEREAS, the new City Charter went into effect upon filing with the Secreta
11 of State on January 31, 2017; and
12 WHEREAS, prior to the adoption of the new City Charter, responsibility fc
13 hearing appeals of disciplinary action by classified City employees was assigned to th
14 Civil Service Board; and
15 WHEREAS, Section 604 of the new City Charter assigns responsibility fo
16 hearing appeals of disciplinary action by City employees to the Personnel Commission
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WHEREAS,
Section 604 of the new City
Charter states
that the
responsibility of the
Personnel Commission shall be
to hear appeals
of discir
action by City employees; and
WHEREAS, Section 508 of the new City Charter states that the administration
employee matters shall be delegated to a personnel or human resources dennorno
and
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WHEREAS, section 2.50.010 of the San Bernardino Municipal Code states
all amendments to the Civil Service Rules and Regulations shall be adopted
Resolution of the Mayor and City Council.
NOW, THERERFORE, BE IT RESOLVED BY THE MAYOR AND C
COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
SECTION 1: The above Recitals are true and correct and are incorporate
herein by this reference.
SECTION 2: The City of San Bernardino's Civil Service Rules and Regulatior
for the Classified Service shall heretofore be known as the Personnel Rules ("Rules"),
SECTION 3: The amendments to Rules 513-513.5 and 601, attached hereto
Exhibit "A" and incorporated herein, are hereby approved.
SECTION 4: The Personnel Commission shall be responsible for hearing
disciplinary appeals referenced in and pursuant to Rules 513-513.5 and 601.
SECTION 5: Any act previously performed by the Civil Service Board in th
Rules other than the acts related to disciplinary appeals referenced in Rules 513-513.
and 601 are hereby delegated to a human resources department with approval from th
Appointing Power, as such term is used in Rule 103.
SECTION 6: Any act previously performed by the Chief Examiner in the Rule
other than the acts related to disciplinary appeals referenced in Rules 513-513.5 an
601 are hereby delegated to a human resources department with approval from th
Appointing Power, as such term is used in Rule 103.
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RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAI
BERNARDINO, CALIFORNIA, RENAMING THE CIVIL SERVICE RULES AN
REGULATIONS THE PERSONNEL RULES ("RULES"); APPROVIN,
AMENDMENTS TO RULES 513-513.5 AND 601 PURSUANT TO CHAPTER 2.50 O
THE SAN BERNARDINO MUNICIPAL CODE; CONFORMING RULES 513-513.5 ANI
601 TO THE NEW CHARTER BY CHANGING REFERENCES FROM THE CIVI
SERVICE BOARD TO THE PERSONNEL COMMISSION; DELEGATING AUTHORIT
FOR ACTIONS OTHER THAN DISCIPLINARY APPEALS PREVIOUSLY ASSIGNEI
IN THE RULES TO THE CIVIL SERVICE BOARD AND CHIEF EXAMINER TO
DESIGNEE OF THE APPOINTING POWER UNDER A HUMAN RESOURCE
DEPARTMENT
HEREBY CERTIFY that the foregoing Resolution was duly adopted by th
Mayor and City Council of the City of San Bernardino, California, at a meeting thereo
held on the day of , 2017, by the following vote, to wit:
COUNCILMEMBERS: AYES NAYES ABSTAIN ABSENT
MARQUEZ
BARRIOS
VALDIVIA
SHORETT
NICKEL
RICHARD
MULVIHILL
Georgeann Hanna, City Clerk
The foregoing Resolution is hereby approved this
2017.
Approved as to form:
Gary D. Saenz, City Attorney
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of ,
R. Carey Davis, Mayor
City of San Bernardino
City Council Memorandum
Date: May 15, 2016
To: Honorable Mayor and City Council Members
From: Mark Scott, City Manager
By: Gigi Hanna, City Clerk
John Paul Maier, Chief Deputy City Clerk
Subject: Amendment to Agenda Items 18 and 19
Attached are Exhibit B to the Resolution for Agenda Item 18 and Attachments 1 and 5 to
Agenda Item 19.
Please feel free to be in touch with the City Clerk Gigi Hanna (hanna giasbeity.org) or
Chief Deputy City Clerk John Maier (maier moa-sbcity.org) should you have any
questions.
K. The current property tax liability, including penalty and interest through May 1, 2017,
is Eighty Thousand Fifty Seven Dollars ($80,057) plus interest accruing after May 1, 2017 (the "Tax
Liability").
L. Throughout the term of the lease, ACAA has remained current with respect to the
payment to the County of San Bernardino Tax Collector of all possessory interest/unsecured taxes.
M. ACAA has requested that the City discharge the Tax Liability.
N. The City previously requested the County of San Bernardino ("County") to remove
from the tax rolls and cancel the taxes related to all properties included within the LRPMP, inclusive
of the Property. The County has removed all properties included within the LRPMP, inclusive of the
Property, from the tax rolls.
O. The County has advised the City that it will consider the cancellation of the taxes,
interest and penalties related to all properties included within the LRPMP, inclusive of the Tax
Liability, subject to a Mutual Release and Settlement Agreement provided by the County. The
County and City continue to refine the terms of the Mutual Release and Settlement Agreement
P. Based on the expectation of the County and City entering into a final Mutual Release
and Settlement Agreement, the Parties now desire to resolve any claims, disputes and/or
controversies with respect to the Note, Deed of Trust, and Tax Liability.
AGREEMENT
NOW, THEREFORE, in consideration of the terms, conditions, and covenants contained
herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
1. Quitclaim Deed. Concurrently herewith, the City shall execute and deliver to
ACAA for recordation that certain Quitclaim Deed with respect to the Property in the form attached
hereto as Exhibit. A and incorporated herein by this reference.
2. Tax Liability. In the event the County refuses to cancel the Tax Liability, as
described in Recital O, above, the City hereby covenants to discharge the Tax Liability prior to it
reaching One Hundred Thousand Dollars ($100,000) through the accrual of interest.
3. Release by the Parties. Except for the obligations imposed upon the City under this
Settlement Agreement with respect to the Tax Liability, the Parties and all others claiming by and
through them do hereby release and discharge each of them from and for all actions, claims, charges,
liabilities, obligations, benefits, compensation, damages, fees, foreclosure, expenses, or suits of any
kind whatsoever, known or unknown, which either Party now has, or may ever have had, arising out
of, or relating to, the Note, Deed of Trust, Property, and/or Tax Liability. ACAA, on behalf of itself
and all others claiming by and through ACAA, does hereby release and discharge the SBEDC, the
Successor Agency, and each of them from and for all actions, claims, charges, liabilities, obligations,
benefits, compensation, damages, fees, foreclosure, expenses, or suits of any kind whatsoever, known
or unknown, which ACAA or anyone claiming by and through ACAA now has, or may ever have
had, arising out of, or relating to, the Note, Deed of Trust, Property, and/or Tax Liability.
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City of San Bernardino
City: 300 North "D" Street
San Bernardino, CA 92418
Attn: City Manager and City Attorney
Ed Haddad, President
ACAA: 422 Wier Road, Front Office
San Bernardino, CA 92408
With copy via regular U.S. Mail to:
Strad]ing Yocca Carlson & Rauth
Atm: Thomas P. Clark, Jr.
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660
5. No Material Reliance. There are no unwritten, oral or verbal understandings,
agreements, promises or representations of any kind whatsoever as between the Parties that are not
contained in this Agreement. The Parties each represent and acknowledge that, in executing this
Agreement, they have not relied upon any representation, statement, omission, agreement or promise
made by any other Party except as set forth in this Agreement, nor have they relied upon any
representation, statement, agreement, omission or promise made by the other Party's agents,
representatives, or attorneys, except as set forth in this Agreement.
6. Final and Binding Agreement. The Parties have each made such investigation of
the facts pertaining to this Agreement as they have deemed necessary. This Agreement is intended to
be and is the final, binding and fully integrated agreement of the Parties, regardless of any claims of
any of the Parties of misrepresentation, concealment of fact, or mistake of law or fact.
7. No Admission of Liability. The Parties stipulate that this Agreement does not
constitute an admission of liability, does not constitute any factual or legal precedent whatsoever, and
may not be used as evidence in any subsequent proceeding of any kind, except in an action alleging a
breach of this Agreement.
S. Agreement Not Subject to Government Code §52200 et seq. The Property is fully
developed and, therefor, is not being treated as an "economic opportunity", as defined in California
Government Code Section 52200.2, nor is it being conveyed for "economic development purposes"
as described in Government Code Section 52201(a)(1), because the subsidy, if any, is less than
$100,000.
9. Parties Shall Bear Their Own Fees And Costs. Each Party shall bear its own
attorneys' fees and costs relating to this Agreement.
10. Successors and Assigns. This Agreement shall be binding upon and inure to the
Parties hereto and their respective heirs, executors, administrators, successors and assigns.
11. Non -Assignment of Claims. ACAA hereby represents and warrants that there has
been no assignment, sale, or transfer, by operation of law or otherwise, of any claim, right, cause of
action, demand, obligation, liability or interest released by it under this Settlement Agreement.
12. Further Assurances and Authorizations to Settle. The Parties, acting by
themselves or through their respective attorneys, shall promptly prepare and execute any and all
documents necessary to effectuate the obligations set forth in this Settlement Agreement and
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IN WITNESS WHEREOF, this Settlement Agreement has been executed in the name of
the City of San Bernardino, and ACAA, as of the dates set forth below.
CITY OF SAN BERNARDINO,
a California charter city
By:-.
Mark Scott, City Manager
Dated:
ATTEST
Geogeann Hanna, City Clerk
APPROVED AS TO FORM:
STRADLING YOCCA CARLSON &
RAUTH, P.C.
By:_ _
Thomas P. Clark, Jr., Special Counsel
ACAA LIMITED PARTNERSHIP,
a California limited partnership
By: A & A HOLDINGS, INC.
Its: General Partner
Dated:
Ed Haddad, President
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On
personally
P y appeared
, before me,
ss.
.... , Notary Public,
(Print Name of Notary Public)
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature of Notary Public
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent
fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER
❑ Individual
❑ Corporate Officer
DESCRIPTION OF ATTACHED DOCUMENT
Title Or Type Of Document
Title(s)
❑ Partner(s) ❑ Limited ❑ General
❑ Attorney -In -Fact
❑ Trustee(s) — ..
❑ Guardian/Conservator Number Of Pages
❑ Other:
Signer is representing: _
Name Of Person(s) Or Entity(ies) Date Of Documents
Signer(s) Other Than Named Above
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RESOLUTION NO.
RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING THE AMENDMENT OF DOCUMENTS RELATING
TO THE TAXABLE PENSION OBLIGATION BONDS, 2005 SERIES A, APPROVING
THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS IN CONNECTION
THEREWITH AND CERTAIN OTHER MATTERS
WHEREAS, the City of San Bernardino (the "City"), a municipal corporation and
charter city duly organized and existing under and pursuant to the Constitution and laws of the
State of California, has previously issued the Taxable Pension Obligation Bonds, 2005 Series A-
1 (the "2005 Series A-1 Bonds") and 2005 Series A-2 (the "2005 Series A-2 Bonds" and,
together with the 2005 Series A-1 Bonds, the "Bonds"); and
WHEREAS, the Bonds were issued pursuant to a Trust Agreement, dated as of October
1, 2005 (the "Trust Agreement"), by and between the City and Wells Fargo Bank, National
Association, as trustee; and
WHEREAS, the City, the holder of the Bonds, and the insurer of the 2005 Series A-2
Bonds entered into a settlement agreement dated as of March 28, 2016 (the "Settlement
Agreement"); and
WHEREAS, the Mayor and the City Council of the City have determined that it is in the
best interest of the City to amend the Trust Agreement and to enter into certain other documents
in order: (i) to cause the refunding and cancellation of the 2005 Series A-1 Bonds in exchange
for a note to be issued by the City that is payable to Commerzbank Finance & Covered Bond
S.A., the holder of the 2005 Series A-1 Bonds (the "Commerzbank Note"); and (ii) to amend the
2005 Series A-2 Bonds to provide that such 2005 Series A-2 Bonds shall be non-recourse to the
City; and (iii) to issue a note payable to Ambac Assurance Corporation, the bond insurer of the
2005 Series A-2 Bonds (the "Ambac Note" and, together with the Commerzbank Note, the
"Notes"); and
WHEREAS, the Bankruptcy Court for the Central District of California (the
"Bankruptcy Court") in the City's chapter 9 bankruptcy case (the "Bankruptcy Case"), by order
entered on February 7, 2017, among other things: (i) authorized the City to enter into, execute
and deliver additional documents that the City reasonably deems necessary to implement the
Settlement Agreement, and (ii) confirmed the City's Plan of Adjustment in its Bankruptcy Case.
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Section 5. Unless otherwise defined herein, all terms used herein and not otherwise
defined shall have the meanings given such terms in the Trust Agreement, as amended by the
Supplemental Trust Agreement, unless the context otherwise clearly requires.
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Section 6. This Resolution shall take effect immediately upon its adoption.
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EXHIBIT A TO RESOLUTION
Supplemental Trust Agreement
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; EQUAL SECURITY..............................................................................5
SECTION1.01. Definitions............................................................................................................5
SECTION 1.02. First Supplemental Trust A =reement Constitutes Contract ................................. 8
SECTION 1.03. Section Numbers .......................
ARTICLE H REFINANCING OF 2005 SERIES A-1 BONDS; AMENDMENT OF 2005
SERIES A-2 BONDS; GENERAL BOND PROVISIONS ..................................... 8
SECTION 2.01. Refmancin2 of the 2005 Series A-1 Bonds: Issuance of Commerzbank
Note.....................................................................................................................8
SECTION 2.02. Amendment of the 2005 Series A-2 Bonds......................................................... 8
SECTION 2.03. Exchanize Agreement ...........................................................................................9
SECTION 2.04. Costs and Fees for Transfers................................................................................ 9
ARTICLE III CONDITIONS PRECEDENT FOR CANCELLATION AND EXCHANGE;
IMPLEMENTATION.............................................................................................. 9
SECTION 3.01. Conditions for the Cancellation of the 2005 Series A-1 Bonds and
Conversion of the 2005 Series A-2 Bonds to Non -Recourse ............................... 9
SECTION 3.02. Implementation Procedures...............................................................................10
ARTICLE IV PROVISIONS REGARDING AMBAC POLICY.......................................................10
SECTION 4.01. Ambac Polic.......................................................................................................10
SECTION 4.02. Claims Under Ambac Polic..............................................................................10
ARTICLE V COVENANTS OF THE LOCAL AGENCY.................................................................12.
SECTION5.01. Performance.......................................................................................................12
SECTION 5.02. Power to Enter Into Agreement .........................................................................12
SECTION 5.03. Accounting Records and Reports.......................................................................12
SECTION 5.04. Prosecution and Defense of Suits .......................
SECTION 5.05. Waiver of Laws ......................
ARTICLEVI THE TRUSTEE............................................................................................................13
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THIS FIRST SUPPLEMENTAL TRUST AGREEMENT, made and entered into
as of , 2017 (the "First Supplemental Trust Agreement") and effective as of the Effective
Date (as defined herein), supplements the Trust Agreement dated as of October 1, 2005 (the
"Original Trust Agreement", as supplemented by this First Supplemental Trust Agreement, 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.
WITNESSETH:
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, 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 entered into a contract with the System dated
March 1, 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 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 (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 issued its City of San Bernardino
Taxable Pension Obligation Bonds, 2005 Series A-1 Bonds (the "2005 Series A-1 Bonds"), in
the aggregate principal amount of $36,050,000 and 2005 Series A-2 Bonds (the "2005 Series A-2
Bonds"), in the initial aggregate principal amount of $14,351,582.90 (collectively, the "2005
Series A Bonds"), all pursuant to the Original Trust Agreement and in the manner provided
therein; and
WHEREAS, the 2005 Series A-1 Bonds and the 2005 Series A-2 Bonds, together
with any Additional Bonds (as defined in the Original Trust Agreement), were validated pursuant
to the Default Judgment in Validation Proceeding dated 7/11/2005 in San Bernardino County
Superior Court Case No. SCVSS 125783; and
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WHEREAS, all acts and proceedings required by law necessary to make this
First Supplemental 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 First Supplemental Trust Agreement have been in all respects
duly authorized; and
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL TRUST
AGREEMENT WITNESSETH, that in order to implement the matters described above with
respect to the 2005 Series A Bonds, to satisfy certain terms of the Exchange Agreement, and to
make certain changes to the payment procedures related to the Ambac Policy, and consideration
of the premises and of the mutual covenants herein contained and in the Exchange Agreement,
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 defined in the Original Trust Agreement),
as follows:
ARTICLE I
DEFINITIONS; EQUAL SECURITY
SECTION 1.01. Definitions. Unless otherwise defined in this First
Supplemental Trust Agreement, capitalized terms defined in the Original Trust Agreement shall
have the meanings given such terms in the Original Trust Agreement; and unless the context
otherwise requires, the terms defined in this section shall for all purposes hereof and of any First
Supplemental Trust Agreement and of any certificate, opinion, request or other document herein
or therein mentioned have the meanings herein specified:
2005 Series A-1 Bonds
The term "2005 Series A-1 Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
2005 Series A-2 Bonds
The term "2005 Series A-2 Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
Ambac
The term "Ambac" shall have the meaning given such term in the recitals of this
First Supplemental Trust Agreement.
Ambac Police
Insurance Pa, ment Account
The term "Insurance Payment Account" means the account by that name
established by the Trustee pursuant to Section 4.02(c) of this First Supplemental Trust
Agreement.
Insured Holders
The term "Insured Holder" means a Holder (as defined in the Ambac Policy) of
the 2005 Series A-2 Bonds.
Note Paying Agent
The term "Note Paying Agent" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
Notes
The term "Notes" shall have the meaning given such term in the recitals of this
First Supplemental Trust Agreement.
Orisizinal Ambac Policy
The term "Original Ambac Policy" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
Ori«inal Trust Agreement
The term "Original Trust Agreement" shall have the meaning given such term in
the introductory paragraph of this First Supplemental Trust Agreement.
Trust A-zreement
The term "Trust Agreement" shall have the meaning given such term in the
introductory paragraph of this First Supplemental Trust Agreement.
2005 Series A-1 Bonds
The terin "2005 Series A-1 Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
2005 Series A-2 Bonds
The term "2005 Series A-2 Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
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Supplemental Trust Agreement shall not constitute a novation. After the Effective Date, the
2005 Series A-2 Bonds shall continue to be insured by the Original Ambac Policy, endorsed as
provided in this First Supplemental Trust Agreement.
The Ambac Note shall be issued as an Additional Bond under the Trust
Agreement in exchange for rendering the 2005 Series A-2 Bonds non-recourse to the Local
Agency. The conditions and procedure for issuance of the Ambac Note set forth in the Exchange
Agreement shall supersede and replace the requirements of Sections 3.01 and 3.02 of Original
Trust Agreement with respect to conditions precedent to issuance of the Ambac Note. The terms
of the Ambac Note shall be set forth in the Exchange Agreement and in the Ambac Note.
SECTION 2.03. Exchange A:.,reement. The Trustee shall serve as Note
Paying Agent under the Exchange Agreement. The Exchange Agreement shall govern all terms
and provisions of the Notes, including principal, interest (if any) and repayment, as well as all
conditions precedent to issuance.
SECTION 2.04. Costs and Fees for Transfers. Section 2.06(a) of the
Original Trust Agreement shall be amended to delete the following sentence: "The cost of
printing of Bonds and any services rendered or expenses incurred by the Trustee in connection
with any transfer shall be paid by the Local Agency."
CONDITIONS PRECEDENT FOR CANCELLATION AND EXCHANGE;
IMPLEMENTATION
SECTION 3.01. Conditions for the Cancellation of the 2005 Series A-1
Bonds and Conversion of the 2005 Series A-2 Bonds to Non -Recourse. Upon satisfaction of the
following specific conditions, the 2005 Series A-1 Bonds shall be cancelled and the 2005 Series
A-2 Bonds shall be rendered non-recourse to the Local Agency:
(a) the Exchange Agreement and this First Supplemental Trust Agreement
shall have been executed and delivered by all parties thereto;
(b) the Original Ambac Policy shall be endorsed to incorporate the
amendments set forth in Exhibit B attached hereto; and
(c) all conditions for closing under the Exchange Agreement, as set forth in
Section 3.2 thereof, shall have been satisfied, including (i) issuance and delivery to
Commerzbank of the Commerzbank Note in exchange for the 2005 Series A-1 Bonds, and (ii)
issuance and delivery to Ambac of the Ambac Note in exchange for any subrogation,
reimbursement, or other rights to payment from the Local Agency to Ambac in connection with
amounts paid by Ambac under the Ambac Policy with respect to the 2005 Series A-2 Bonds.
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(b) The Trustee shall, after giving notice to Ambac and the Insured Holders of the
2005 Series A-2 Bonds as provided in (a) above, make available to Ambac the registration books
of the Local Agency maintained by the Trustee and all records relating to the funds and accounts
maintained under this First Supplemental Trust Agreement.
(c) The Trustee shall establish an account for the benefit of the Insured Holders and
Ambac referred to herein as the "Insurance Payment Account." The Trustee shall deposit upon
receipt any amount paid under the Ambac Policy in the Insurance Payment Account and
distribute such amount solely for purposes of payment to the Insured Holders for which a claim
was made. For the sake of clarity, amounts paid under the Ambac Policy may not be applied to
satisfy any costs, expenses or liabilities of the Trustee. Amounts held in the Insurance Payment
Account shall not be invested and any amounts remaining in the Insurance Payment Account on
the first Business Day following a Principal Payment Date shall be returned to Ambac by the end
of such Business Day.
(d) The amount of any payment of principal of or interest on the 2005 Series A-2
Bonds from the Insurance Payment Account shall be recorded by the Trustee. Ambac shall have
the right to inspect such records upon one (1) Business Day's prior written notice to the Trustee.
(e) In the event that the Trustee has notice that any payment of principal of or interest
on a 2005 Series A-2 Bond which has become due for payment and which is made to an Insured
Holder by or on behalf of the Local Agency has been deemed a preferential transfer and
theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code
by a trustee in bankruptcy in accordance with the final, non -appealable order of a court having
competent jurisdiction, the Trustee shall, at the time Ambac is notified pursuant to (a) above,
notify all registered owners that in the event that any registered owner's payment is so recovered,
such registered owner will be entitled to payment from Ambac to the extent of such recovery if
sufficient funds are not otherwise available, and the Trustee shall furnish to Ambac its records
evidencing the payment of principal of and interest on the Ambac Insured Bond which have been
made by the Trustee and subsequently recovered from registered owners and the dates on which
such payments were made.
(f) In addition to those rights granted Ambac under this First Supplemental Trust
Agreement, and anything herein to the contrary notwithstanding, the Local Agency, the Trustee
and each Insured Holder acknowledge and agree, that without the need for any further action on
the part of Ambac, Ambac shall, to the extent it makes payment of principal of or interest on
2005 Series A-2 Bonds, become subrogated to all rights of the Holders of such 2005 Series A-2
Bonds, including all rights to payment. To evidence such subrogation, the Trustee shall note
Ambac's rights as subrogee on the registration books of the Local Agency maintained by the
Trustee upon payment of amounts from the Insurance Payment Account to the Insured Holders
of the 2005 Series A-2 Bonds. The Trustee shall simultaneously assign in writing to Ambac, to
11
Section shall survive the discharge of the Bonds and this Agreement and the resignation or
removal of the Trustee.
SECTION 5.05. 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 First Supplemental Trust Agreement or in the 2005 Series A-2
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. Section 6.01 of the Original Trust Agreement
is hereby amended (a) to provide that if at any time the Trustee exercises its right to resign
thereunder, the Trustee shall simultaneously resign as Note Paying Agent under the Exchange
Agreement, (b) to provide that, subject to the provisions of Section 10.6 of the Exchange
Agreement, the consent of each of Commerzbank and Ambac shall be required for the
appointment of any successor Trustee so long as Commerzbank and Ambac remain Holders, and
(c) to delete the requirement that the Trustee and any successor Trustee have a corporate trust
office in Los Angeles or San Francisco, California.
SECTION 6.02. Trustee's Fees and Ex }enses. Indemnification. Section
6.03 of the Original Trust Agreement is hereby amended as follows with respect to obligations of
the Local Agency to pay fees and expenses of, and to indemnify, the Trustee:
(a) The obligation of the Local Agency to pay fees and expenses of the
Trustee, including, for the avoidance of doubt, the fees and expenses provided for under Article
II of this Trust Agreement, shall be limited to the amounts required to be paid by the Local
Agency pursuant to Section 2.4 of the Exchange Agreement.
(b) The provisions of Local Agency under Section 6.03 of the Original Trust
Agreement regarding indemnification of the Trustee are hereby amended to read as follows:
(i) To the extent permitted by law, the Local Agency shall indemnify,
defend and hold harmless the Trustee against any loss, damages, liability or expense
incurred by the Trustee to the extent arising out of or in connection with a breach by the
Local Agency under the Exchange Agreement, the Notes or the Trust Agreement,
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, except to the extent that any loss, damages, liability or expense results from
13
If to the Local Agency:
City of San Bernardino 300 North "D" Street
San Bernardino, CA 92418-0001
Attention: City Attorney's Office
If to the Trustee:
Attention: Corporate Trust Services
Wells Fargo Bank, National Association
555 Montgomery Street, 10th Floor MAC # A0167-102
San Francisco, CA 94111
If to Ambac:
Attention: Portfolio Risk Management
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Email address: notices@ambac.com
If to the Holders:
[Commerzbank: TO BE PROVIDED]
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Email address: notices@ambac.com
SECTION 8.04. Article and Section Headimus 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 8.05. Partial Invalidity. If any one 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
15
[Signature Page to First Supplemental Trust Agreement]
IN WITNESS WHEREOF, the CITY OF SAN BERNARDINO has caused this
First Supplemental 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 First Supplemental 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
I:A
ATTEST:
Georgeann Hanna, City Clerk
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
LM
Approved as to form and
legal content:
GARY D. SAENZ
City Attorney
By:
DMEAST #28194828 03
Theresa Hempeck, Vice President,
Corporate Trust Services,
Authorized Officer
Ambac
Financial Guaranty Insurance Policy
Obligor: SAN. BERNARDINO, CALIFORNIA
$14,351,583 Taxable Pension Obligation Capital
Obligations: Appreciation. Bonds, Series 2005, dated October
28, 2005 and maturing October 1 in the years
2007 through 2024, both inclusive.
Ambac Assurance Corporation
One State Street Plaza, 15th Floor
New York, New York 10004
Telephone: (212) 668-0340
Policy Number:
S24928BE
Premium:
$234,405.00
Ambac Assurance Corporation (Ambac), a Wisconsin stock insurance corporation, in consideration of the payment of the
premium and subject to the terms of this Policy, hereby agrees to pay to The Bank of New York, as trustee, or its successor (the
"Insurance Trustee"), for the benefit of the Holders, that portion of the principal of and interest on the above-described obligations
(the "Obligations") which shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Obligor.
Ambac will make such payments to the Insurance Trustee within one (1) business day following written notification to Ambac of
Nonpayment. Upon a Holder's presentation and surrender to the Insurance Trustee of such unpaid Obligations or related coupons,
uncanceled and in bearer form and free of any adverse claim, the Insurance Trustee will disburse to the Holder the amount of
principal and interest which is then Due for Payment but is unpaid. Upon such disbursement, Ambac shall become the owner of
the surrendered Obligations and/or coupons and shall be fully subrogated to all of the Holder's rights to payment thereon.
In cases where the Obligations are issued in registered form, the Insurance Trustee shall disburse principal to a Holder only upon
presentation and surrender to the Insurance Trustee of the unpaid Obligation, uncanceled and free of any adverse claim, together
with an instrument of assignment, in form satisfactory to Ambac and the Insurance Trustee duly executed by the Holder or such
Holder's duly authorized representative, so as to permit ownership of such Obligation to be registered in the name of Ambac or its
nominee. The Insurance Trustee shall disburse interest to a Holder of a registered Obligation only upon presentation -to the
Insurance Trustee of proof that the claimant is the person entitled to the payment of interest on the Obligation and delivery to the
Insurance Trustee of an instrument of assignment, in form satisfactory to Ambac and the Insurance Trustee, duly executed by the
Holder or such Holder's duly authorized representative, transferring to Ambac all rights under such Obligation to receive the
interest in respect of which the insurance disbursement was made. Ambac shall be subrogated to all of the Holders' rights co
payment on registered Obligations co the extent of any insurance disbursements so made.
In the event that a trustee or paying agent for the Obligations has notice that any payment of principal of or interest -on an
Obligation which has become Due for Payment and which is made to a Holder'by or on behalf of the Obligor has been deemed a
preferential transfer and theretofore recovered from the Holder pursuant to the United States Bankruptcy Code in accordance with
a final, nonappealable order of a court of competent jurisdiction, such Holder will be entitled to payment from Ambac to the extenr
of such recovery if sufficient funds are not otherwise available.
As used herein, the term "Holder" means any person other than (i) the Obligor or (ii) any person whose obligations constitute the
underlying security or source of payment for the Obligations who, at rhe time of Nonpayment, is the owner of an Obligation or of
a coupon relating to an Obligation. As used herein, "Due for Payment", when referring to the principal of Obligations, is when
the scheduled maturity date or mandatory redemption date for the application of a required sinking fund installment has been
reached and does not refer to any earlier dace on which payment is due by reason of call for redemption (other than by application
of required sinking fund installments), acceleration or other advancement of maturity; and, when referring 'to interest on the
Obligations, is when the scheduled date for payment of interest has been reached. As used herein, "Nonpayment" means the failure
of the Obligor to have provided sufficient funds to the trustee or paying agent for payment in full of all principal of and interest
on the Obligations which are Due for Payment.
'This Policy is noncancelable. The ptemium on'this Policy is not -refundable for any reason, including payment of the Obligations
prior to maturity. This Policy does not insure against loss of any prepayment or other acceleration payment which at any time.
may become due in respect of any Obligation, other than at the sole option of Ambac, nor against any risk other than Nonpayment.
In witness whereof, Ambac has caused this Policy to be affixed with a facsimile of its corporate seal and to be signed by its duly
authorized officers in facsimile to become effective as its original seal and signatures and binding upon Ambac by virtue of the
countersignatute of its. duly authorized representative. ,
5
President
December 23, 2005
Effective Date:
-ft `__ems
THE BANK OF NEW YORK acknowledges that it has agreed
to perform the duties of Insurance Trustee under this Policy.
Form No.: 2B-0612 (1/01)
A- 9067
Secretary
Authorizi Representative
"_�A
Authorized Offecer of Insurance Trustee
Ambac
Endorsement
Policy for.
SAN BERNARDINO,
CALIFORNIA
Ambac Assurance Corporation
One State Street Plaza, 15th Floor
New York, New York 10004
Telephone: (212) 668-0340
Attached to and forming part of Polity No.:
S2492SEE
Effective Date of Endorsement:
December 23, 2005
In the event that Ambac Assurance Corporation were to become insolvent, any claims arising
under the Policy would be excluded from coverage by the California Insurance Guaranty
Association, established pursuant to the laws of the State of California.
Nothing herein contained shall be held to vary, alter, waive or extend any of the terms, conditions, provisions, agreements
or limitations of the above mentioned Policy other than as above stated.
In Witness Whereof, Ambac has caused this Endorsement to be affixed with a facsimile of its corporate seal and to
be signed by its duly authorized officers in facsimile to become effective as its original seal and signatures and binding
upon Ambac by virtue of the countersignature of its duly authorized representative.
Ambac Assurance Corporation
isJr
sJa�"•"•�E `o i
! V,
0
JIPresident i�\ +.,tiyj% �d Secretary
Authorized Representative
Form No.: 28-0015 (7/97)
EXHIBIT B
FORM OF ENDORSEMENT TO AMBAC POLICY
Effective date: , 2016
Policy No. S24928BE is hereby amended as follows:
1. The first paragraph of the Policy is hereby replaced and amended in its entirety to read as
follows:
Ambac Assurance Corporation (Ambac), a Wisconsin stock insurance corporation, in
consideration of the payment of the premium and subject to the terms of this Policy, hereby agrees
to pay to Wells Fargo Bank, National Association or its successor (the "Trustee"), as trustee under
that certain Trust Agreement dated October 1, 2005 relating to the issuance of the above-described
obligations (the "Obligations"), for the benefit of the Holders, that portion of the principal of and
interest on the Obligations which shall become Due for Payment but shall be unpaid by reason of
Nonpayment by the Obligor.
2. The second paragraph of the Policy is hereby replaced and amended in its entirety to read
as follows:
Ambac will make such payments to the Trustee on the later of (a) one (1) business day following
written notification to Ambac of Nonpayment or (b) the business day on which the Obligations are
Due for Payment.
3. The thud paragraph of the Policy is hereby replaced and amended in its entirety to read as
follows:
The Trustee shall disburse such payments of principal to a Holder only upon presentation of an
instrument of assignment in form and substance satisfactory to Ambac duly executed by the
Trustee, as the Holder's duly authorized representative, so as to permit ownership of such
Obligation to be registered in the name of Ambac or its nominee and transferring to Ambac all
rights under such Obligations to receive the principal of and interest on the Obligations. The
Trustee shall disburse such payments of interest to a Holder only upon presentation of an
instrument of assignment in form and substance satisfactory to Ambac duly executed by the
Trustee, as the Holder's duly authorized representative, transferring to Ambac all rights under such
Obligations to receive the interest on the Obligations in respect of which the insurance
disbursement was made. Ambac shall be subrogated to all of the Holders' rights to payment on the
Obligations to the extent of any insurance disbursements so made.
4. Nothing herein contained shall be held to vary, alter, waive or extend any of the
terms, conditions, provisions, agreements or limitations of the Policy other than as above
stated.
Ambac Assurance Corporation
Attention: Claims Processing
One State Street Plaza
New York, New York 10004
An electronic copy should be sent to:
claimsprocessing@ambac.com
CONVEYANCE: SUBROGATION
The Trustee hereby transfers, delivers and assigns to Ambac all rights to the payment of the Principal
Amount Currently Due for Payment and the Interest Amount Currently Due for Payment (collectively
referred to as the "Amount Currently Due for Payment"), together with any rights related to such Amount
Currently Due for Payment, with respect to the bonds identified above which bonds are now "Due for
Payment" as defined in the Policy, but only to the extent of payment by or on behalf of Ambac of the
above Amount Claimed Under the Policy. The Trustee agrees that Ambac shall also be subrogated to all
of the rights of the "Holders" as defined in the Policy, including all rights to payment, to the extent of
such payments made by or on behalf of Ambac. The Trustee represents and warrants that it has full
corporate power and authority to execute and deliver this Claim and Assignment Form and this Claim and
Assignment Fonn has been duly authorized, executed and delivered by the Trustee and constitutes a legal,
valid and binding obligation of the Trustee enforceable in accordance with its terns. The Trustee agrees
that Ambac may exercise any option, vote, right, power or the like (including, but not limited to any such
rights arising in context of a bankruptcy, insolvency, liquidation or other reorganization of the Bond
Issuer), it may have to the extent of payment by or on behalf of Ambac of the above Amount Claimed
Under the Policy with respect to the bonds identified above.
The Trustee agrees to make a notation on the insured bonds and in the bond register or other document of
record that Ainbac is subrogated to and assigned all of the rights of the Holder as described hereinabove
and to hold those bonds for which payment of principal at final maturity has been made in an uncanceled
form and manner acceptable to Ambac and the Trustee.
[TRUSTEE]
LIM
C-2
EXHIBIT D
FORM OF TRUSTEE'S NOTICE TO AMBAC OF INSUFFICIENT FUNDS
[DATE]
Ambac Assurance Corporation
Attn.: Surveillance Department and General Counsel
One State Street Plaza
New York, New York 10004
claimsprocessing@ambac.com
Re: Notice Regarding Insufficient Funds for Payment of [DATE] Debt Service for San Bernardino
Taxable Pension Obligation Bond, Cusip: (the "Bonds"):
Reference is made to that certain (i) Trust Agreement, dated as of October 1, 2005, as
supplemented by a First Supplemental Trust Agreement, dated as of _, 2017 (collectively, the
"Trust Agreement"), by and between the City of San Bernardino (the "City") and Wells Fargo Bank,
National Association ("Wells Fargo"), as Trustee, pursuant to which the Bonds were issued. Wells Fargo
hereby certifies that:
1. The undersigned is an authorized officer of the Trustee.
2. Pursuant to the terms of the Bonds and the Trust Agreement, payment is due to the holders of the
Bonds on [DATE] (the "Payment Due Date").
3. Pursuant to Section 4.02 of the Trust Agreement, the Trustee is currently holding [$_1 in the
Bond Fund, which is not sufficient to make the [$] in debt service due on [DATE] for the
Bonds. The total amount of deficiency due on the Bonds is $-
4. Wiring instructions for payment of the deficiency amount to the Trustee are as follows:
Bank: Wells Fargo Bank, N.A.
ABA 121000248
Beneficiary Name: Corporate Trust
Beneficiary Account No. 0001038377
For further credit: 18613300
Attn: T.Hempeck re: San Bernardino
Ref: CITY OF SAN BERNARDINO, CALIFORNIA
In Witness Whereof, the Trustee has executed and delivered this Notice as of [DATE].
[Trustee]
D-1
EXHIBIT B TO RESOLUTION
Exchange Agreement
TABLE OF CONTENTS
Page
ARTICLE1 DEFINITIONS........................................................................................................... 2
1.1
Definitions.......................................................................................................... 2
1.2
Rules of Interpretation.......................................................................................................2
Acknowledgement of Certain
ARTICLE2 THE NOTES..............................................................................................................
2
2.1
Note Terms........................................................................................................................2
2.2
Register..............................................................................................................................3
5.6
2.3
Prepayments......................................................................................................................3
2.4
Fees....................................................................................................................................4
2.5
Other Payment Terms........................................................................................................4
6 AFFIRMATIVE COVEN
2.6
Payment of Obligations.....................................................................................................5
ARTICLE 3 CLOSING DATE OBLIGATIONS OF CITY; CONDITIONS PRECEDENT........ 5
3.1
City Closing Date Obligations..........................................................................................5
Financial Statements ..............
3.2
Conditions Precedent.........................................................................................................6
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF CITY .........................................
7
4.1
Authorization; No Conflict; Enforceability.......................................................................7
4.2
Governmental Authorizations...........................................................................................7
4.3
No Default
.........................................................................................................................7
4.4
Litigation...........................................................................................................................7
4.5
Sovereign Immunity..........................................................................................................8
4.6
Fiscal Year.........................................................................................................................8
4.7
OFAC and Related Matters...............................................................................................8
4.8
Anti -Terrorism Law..........................................................................................................8
ARTTCT.F.
5
rc r.YF-r'6MN l A r IUIN AIV 1) W AKKAf
5.1
Authorization ..........................
5.2
Acknowledgement of Certain
5.3
Unregistered Status of Notes..
5.4
Rule 15c2-12 Exemption........
5.5
Receipt of Information/Non-B
5.6
Inquiry and Analysis ..............
5.7
No Offering/Disclosure Docu;
5.8
Tax Consequences ..................
ARTICLE
6 AFFIRMATIVE COVEN
6.1
Payment ..................................
6.2
Notices; Public Filings ...........
6.3
Financial Statements ..............
6.4
Cooperation ............................
6.5
Books and Records .................
LhN Ur NUTEHULDERS............................................ 8
.......................................................................................9
3ks..................................................................................9
.......................................................................................9
.......................................................................................9
ance...............................................................................9
.....................................................................................10
nts................................................................................10
.....................................................................................10
ITSOF CITY............................................................. 10
.....................................................................................10
.....................................................................................11
.....................................................................................11
.....................................................................................11
.....................................................................................11
1
12.9 No Partnership, Etc.........................................................................................................22
12.10 Limitation on Liability....................................................................................................22
12.11 Waiver of Jury Trial........................................................................................................22
12.12 Counterparts....................................................................................................................22
12.13 No Third Party Beneficiaries...........................................................................................23
12.14 Separate Representation..................................................................................................23
12.15 Ratings.............................................................................................................................23
ui
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (this "Agreement") is dated as of [], 2017,
among CITY OF SAN BERNARDINO, CALIFORNIA, a duly organized, validly existing and
operating local agency (as defined in Section 53570 of the California Code) under the laws of the
State of California ("gly"), COMMERZBANK FINANCE & COVERED BOND S.A.
(formerly known as Erste Europaische Pfandbrief- and Kommunalkreditbank AG in Luxemburg)
("Commerzbank"), as a Noteholder hereunder, AMBAC ASSURANCE CORPORATION
("Ambac"), as a Noteholder hereunder (together with Commerzbank and each of their successors
and assigns, the "Noteholders"), and WELLS FARGO BANK, N.A., as paying agent (in such
capacity, the "Paving Agent").
RECITALS
A. Pursuant to a Trust Agreement dated as of August 1, 2005 (the "Ori�-inal Trust
Aggeement") between City and Wells Fargo Bank, National Association, as indenture trustee (in
such capacity, the "Trustee"), City issued certain Taxable Pension Obligation Bonds (the
"Pension Obli,,ation Bonds") in the initial aggregate principal amount of $50,401,582.90,
consisting of 2005 Series A-1 (Standard Bonds) in the initial aggregate principal amount of
$36,050,000 (the "_S.eries A-1 Bonds") and 2005 Series A-2 (Capital Appreciation Bonds) in the
initial aggregate principal amount of $14,351,582.90 (the "Series A-2 Bonds"), which Series A-2
Bonds were insured by Ambac pursuant to its Financial Guaranty Insurance Policy No.
S24928BE (the "Ambac Policy ").
B. The Series A-1 Bonds and the Series A-2 Bonds, together with any Additional
Bonds (as defined in the Original Trust Agreement), were validated pursuant to the Default
Judgment in Validation Proceeding dated 7/11/2005 in San Bernardino County Superior Court
Case No. SCVSS 125783.
C. Commerzbank and Ambac are the sole owners of all of the Pension Obligation
Bonds, and Ambac is the insurer of the Series A-2 Bonds.
D. City is a debtor under chapter 9 of title 11 of the United States Code, pursuant to a
petition filed on August 1, 2012, commencing In re City of San Bernardino, California, case
number 6:12-bk-28006-MJ (the "BankruptcNi Case") in the United States Bankruptcy Court for
the Central District of California, Riverside Division (the `BankrurtcN Court").
E. Pursuant to a Settlement Agreement dated as of March 28, 2016 (the "Settlement
Agreement'), a copy of which is attached hereto as Exhibit A, and an amended Plan of
Adjustment that incorporates the terms of the Settlement Agreement (the `BankruptcN Plan"),
the Noteholders have agreed to accept a payment stream (the "Payment Stream") in the total
amount set forth in, and payable in the installments described in, the Settlement Agreement in
full satisfaction of the payment and reimbursement obligations of City with respect to the
Pension Obligation Bonds and the Ambac Policy, respectively.
Exhibit C and shall evidence City's unconditional obligation to pay to each Noteholder its pro
rata portion of the Payment Stream. The Commerzbank Note and the Ambac Note shall be dated
the Closing Date, and any new Notes shall be dated as of the date each is executed by City. The
Notes shall mature on the Scheduled Maturity Date. The Notes shall be paid from the City's
general fund and/or any other legally available monies or funds of the City, and are not limited to
any special source of funds. City is not empowered or obligated to levy or pledge taxes to make
payments with respect to the Notes. The Notes may be issued only in Authorized
Denominations.
(b) Interest. The Notes shall not bear interest. In the event that any interest is
imputed to any portion of the amounts payable by City pursuant to the Notes, such imputed
interest may be included in the gross income of the Noteholders for federal income tax purposes
pursuant to Section 103 of the Code, or for California state income tax purposes.
Notwithstanding the foregoing, if City shall fail to pay when due any amounts payable by City
pursuant to the Notes or any other amount whatsoever payable hereunder, City shall pay Default
Interest as provided in Section 9.1.
(c) Scheduled Pa. nnents. City shall pay to Paying Agent, for the accounts of
the Noteholders, the aggregate unpaid amount of the Notes in installments on each Payment Date
in accordance with the Payment Schedule set forth on Exhibit D. Such amounts shall be payable
in Dollars, in immediately available funds.
2.2 ReLlister
(a) Paying Agent shall maintain, at its address referred to in Section 12. 1, a
register for the recordation of the names and addresses of the Noteholders (the "Register"). The
Register shall be available for inspection by City and each Noteholder at any reasonable time and
from time to time upon reasonable prior notice.
(b) Paying Agent shall record in the Register (A) the outstanding balance. of
each of the Notes from time to time and the Proportionate Share of each Noteholder, (B) the date
and amount of any amount due and payable or to become due and payable from City to each
Noteholder under its Note, (C) each repayment or prepayment in respect of the Notes, (D) any
transfer of a Note pursuant to Section 11.3(b), and (E) such other information as Paying Agent
may determine is necessary for administering the Notes and this Agreement. Any such
recordation shall be conclusive and binding on City and each Noteholder, absent manifest error;
provided, however, that (A) neither failure to make any such recordation, nor any error in such
recordation, shall affect City's obligations in respect of this Agreement, the Notes, or otherwise;
and (B) except as set forth above, in the event of any inconsistency between the Register and any
Noteholder's records, the recordation in the Register shall govern.
2.3 Prepayments. City may, at its option, upon at least five (5) Banking Days' prior
notice to Paying Agent, prepay the Notes without premium or penalty, in whole or in part. Upon
any prepayment of the Notes by City to Paying Agent for the account of the Noteholders, the
amounts prepaid shall be applied to the Notes on a pro rata basis according to the Proportionate
Shares of the Noteholders and shall be applied so as to reduce the scheduled payments under the
Notes in the inverse order of maturity. Any optional prepayment hereunder shall be in the
For further credit: 18613300
Attn: T.Hempeck re: San Bernardino
Ref CITY OF SAN BERNARDINO, CALIFORNIA
or as otherwise directed by Paying Agent in writing from time to time, in lawful money of the
United States and in immediately available funds not later than 12:00 p.m., New York time, on
the date on which such payment is due. Any payment made after such time on any day shall be
deemed received on the next Banking Day after such payment is received. Paying Agent shall
disburse to each Noteholder each such payment received by Paying Agent for such Noteholder,
such disbursement to occur by 4:00 p.m., New York time, on the day such payment is received if
received by 12:00 p.m., New York time; otherwise on the next Banking Day.
(b) Date. Whenever any payment due hereunder shall fall due on a day other
than a Banking Day, such payment shall be made on the next preceding Banking Day.
(c) Pro Rata Treatment. Each payment by City hereunder shall be shared
between the Noteholders and applied to the Notes pro rata according to their respective
Noteholder Proportionate Shares.
(d) Sharing, of Payme its. Etc. If any Noteholder (a "Benefited Noteholder")
shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of
setoff, or otherwise) on account of its Note, in excess of its Proportionate Share of payments on
account of the Notes obtained by all Noteholders entitled to such payments, such Noteholder shall
forthwith purchase from each other Noteholder such participation in such Noteholder's Note as
shall be necessary to cause such Benefited Noteholder to share the excess payment ratably with
each other Noteholder; and if after taking into account such participations the Benefited
Noteholder continues to have access to additional funds of City for application on account of its
Note, then the Benefited Noteholder shall use such funds to reduce the balance of its Note and
share such payments with each other Noteholder; Eroded, however, that if all or any portion of
any such excess payment is thereafter recovered from such Benefited Noteholder, any such
purchase from each other Noteholder shall be rescinded and each other Noteholder shall repay to
the Benefited Noteholder such purchase price to the extent of such recovery. City agrees that any
Benefited Noteholder so purchasing a participation from another Noteholder pursuant to this
Section 2.5(d) may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of setoff) with respect to such participation as fully as if such Noteholder
were the direct creditor of City in the amount of such participation.
2.6 Payment of Obligations.
(a) Source of Payment. All obligations of City under the Notes shall be paid
from the City's general fund or any other legally available monies or funds of City, and are not
limited to any special source of funds. Amounts due under the Notes shall have the same
payment priority accorded under California law to all general fund obligations that are not general
obligation debt of the City; provided that City is not empowered or obligated to levy or pledge
taxes to make payments with respect to the Notes.
(d) Federal Law Com )liance. City shall have delivered to Paying Agent and
each requesting Noteholder all such documentation and other information requested by Paying
Agent or such Noteholder that are necessary (including the name, address, tax payer
identification, copies of government issued identification and names of officers of City) for
Paying Agent or such Noteholder, as applicable, to identify such person in accordance with any
applicable Anti -Terrorism Laws, Anti -Money Laundering Laws, and the requirements of the
Patriot Act (including the "know your customer" and similar regulations thereunder).
(e) Series A-1 Bonds. The Series A-1 Bonds shall have been exchanged for
the Commerzbank Note and cancelled, and the Series A-1 Bonds, and any ancillary agreements,
documents or instruments (other than the Trust Agreement) shall have been cancelled, terminated
and of no force and effect.
(f) Series A-2 Bonds. Pursuant to the First Supplemental Trust Agreement,
City shall have been released from all liability for repayment of the Series A-2 Bonds; and Ambac
shall have confirmed that the Ambac Policy is in full force and effect.
(g) Representations and Warranties. The representations and warranties
contained in Article 4 and Article 5 hereof shall be true and correct in all material respects on and
as of the Closing Date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CITY
City makes the following representations and warranties to and in favor of Paying Agent
and the Noteholders as of the Closing Date:
4.1 Authorization: No Conflict: Enforceabilit\ .
(a) City has duly authorized, executed and delivered this Agreement and the
Notes, and neither City's execution and delivery thereof, nor the consummation of the
transactions contemplated thereby, nor City's compliance with the terms thereof (i) conflicts with
or constitutes a default under or results in the violation of the provisions of any Legal
Requirement applicable to or binding on City, or (ii) constitutes a default under or results in the
violation of the provisions of any indenture, mortgage, deed of trust, or other agreement or
instrument to which City is a party or by which it or any of its properties or assets is or may be
bound or affected.
(b) This Agreement and each of the Notes is a legal, valid and binding
obligation of City, enforceable against City in accordance with its terms, except as may be limited
by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting
the enforcement of creditors' rights and subject to general equitable principles.
4.2 Governmental Authorizations.
No approval, consent, exemption, authorization, or other action by, or notice to, or
filing with, any court or Governmental Authority or any other Person (including without
limitation the Bankruptcy Court and any other creditor of City) is necessary or required in
any Person named on any of the OFAC SDN List or any Person included in, owned by, controlled
by, acting for or on behalf of, providing assistance, support, sponsorship, or services of any kind
to, or otherwise associated with any of the Persons referred to or described in the OFAC SDN
List.
4.8 Anti -Terrorism Law. City is not in violation of any Anti -Terrorism Law.
ARTICLE 5
REPRESENTATION AND WARRANTIES OF NOTEHOLDERS
Each Noteholder makes the following representations and warranties to and in favor of
City and Paying Agent as of the Closing Date:
5.1 Authorization. Each Noteholder has authority to accept delivery of its Note and
to execute this Agreement and any other instruments and documents such Noteholder may be
required to execute in connection with the issuance and delivery of its Note.
5.2 Acknowle&,ement of Certain Risks. Each Noteholder acknowledges that the
Notes involve risks that may not be appropriate for certain investors. Each Noteholder
understands that it may need to bear the risks of its Note for an indefinite time, since any sale
before maturity may not be possible for any number of reasons.
5.3 Unrevistered Status of Notes. Each Noteholder understands that the Notes are not
registered under the Securities Act and that such registration is not legally required as of the date
hereof. Each Noteholder further understands that the Notes (a) are not being registered or
otherwise qualified for sale under the "Blue Sky" laws and regulations of any state, (b) will not
be listed in any stock or other securities exchange, (c) will not, at least initially, carry a rating
from any rating service, and (d) will be delivered in a form that may not be readily marketable.
Each Noteholder is either an Accredited Investor or a Qualified Institutional Buyer.
5.4 Rule 15c2-12 Exm tion. Each Noteholder understands that the issuance of the
Notes is exempt from the requirements of Rule 15c2-12 promulgated under the Securities
Exchange Act of 1934, that City is not delivering a "deemed final" official statement with
respect to the Notes.
5.5 Recei ?t of Information/Non-Reliance.
(a) In entering into this transaction each Noteholder acknowledges that it has
had an opportunity to conduct an independent investigation of all the relevant facts and
circumstances, including, without limitation, reviewing the Disclosure Statement. Each
Noteholder has not otherwise relied upon City or its officers, employees, consultants or counsel
(collectively, with City, the "City Representatives") for any other information in connection with
the issuance of the Notes. Each Noteholder acknowledges that it is an accredited investor under
applicable law and is further a sophisticated institutional investor capable of evaluating the
merits, risks and suitability of the Notes, and in making an investment decision, each Noteholder
0
ARTICLE 6
AFFIRMATIVE COVENANTS OF CITY
City covenants and agrees that so long as this Agreement is in effect and amounts are
outstanding under the Notes, it will, unless Paying Agent and the Noteholders waive compliance
in writing:
6.1 Pa anent. Pay all sums due under this Agreement and the Notes according to the
terms hereof and thereof. City hereby covenants with the Noteholders that, to the extent legally
required as a condition to payment, it shall include the amount of the installments set forth in the
Payment Schedule (subject to appropriate adjustment in the event of the optional prepayment of
the Notes prior to maturity), for each fiscal year in which such sums are payable in its budget for
that year, and shall duly and punctually pay or cause to be paid such installments at the dates and
places and in the manner stated herein and therein according to the true intent and meaning
thereof. The foregoing covenant shall be specifically enforceable.
6.2 Notices: Public Filings. Immediately following any filing, dissemination,
distribution, or provision thereof, City shall provide to Paying Agent, for further dissemination to
the Noteholders by first class mail, postage prepaid, at their addresses set forth in Section 12.1 of
this Agreement, a copy of (i) any "Material Event Notice" disseminated, distributed or provided
in satisfaction of or as may be required by the provisions of Rule 15c2-12 promulgated pursuant
to the Securities Exchange Act of 1934, as amended (17 C.F.R. Sec. 240 15c2-12), or any
successor or similar legal requirement, and (ii) the filing made by City with the Municipal
Securities Rulemaking Board's Electronic Municipal Access System (EMMA) regarding the
cancellation of the Series A-1 Bonds in exchange for the Commerzbank Note and amendment of
the Series A-2 Bonds. The City shall cooperate with the Paying Agent in arranging for notice to
be made to the Paying Agent each time any other filings are made by the City with EMMA, and
shall reimburse the Paying Agent for the costs associated with downloading and disseminating
such filings to the Noteholders.
6.3 Financial Statements. City agrees to make available on City's website:
(a) Audited financial statements of City prepared in accordance with GAAP
and certified by an independent certified public accountant selected by City, as such audited
financial statements become available publicly; and
(b) The annual capital and operating budget of the City approved by its City
Council for the upcoming fiscal year, including all amounts payable under the Financing
Documents; and promptly after the adoption thereof, any amendments to such annual budgets.
6.4 Cooperation. City shall perform, upon the reasonable request of Paying Agent,
such reasonable acts as may be necessary or advisable to comply with the terms of this
Agreement and the Notes.
6.5 Books and Records. City shall maintain adequate books, accounts and records
(including project, financial and accounting records) and prepare all financial statements required
hereunder in accordance with GAAP and in compliance with the regulations of any
Governmental Authority having jurisdiction thereof, and permit employees or agents of Paying
11
7.2 Fiscal Year. Change its fiscal year without prior notice to Paying Agent, unless
such change is required by law.
7.3 Accounting Changes. Make any material change in accounting policies or
reporting practices, except as required by GAAP or otherwise required by law.
ARTICLE 8
EVENTS OF DEFAULT
The occurrence of any of the following events (following the giving of notice, as
required, and lapse of any grace periods provided hereunder) shall constitute an event of default
(individually, an "Event of Default") hereunder:
8.1 Failure to Make Payments. City shall fail to pay or cause to be paid any payment
due under the Notes on or before the date that such payment is due under this Agreement and the
Notes, and such failure shall continue unremedied for a period of five (5) Banking Days after the
Paying Agent has delivered written notice thereof to the City (Paying Agent to deliver such
notice on the due date to the extent payment was not received by the Paying Agent by 12:00
p.m.on such due date). Any failure of the Paying Agent to deliver such notice of non-payment as
required by this Section 8.1 shall not constitute a waiver of any default or Event of Default
arising from the City's failure to pay amounts due hereunder and under the Notes.
8.2 Misstatements. Any financial statement, representation, warranty, or certificate
made or prepared by, under the control of, or on behalf of City furnished to Paying Agent or any
Noteholder pursuant to this Agreement, or any amendment or modification thereof or waiver
thereto shall contain an untrue or misleading statement of. a fact as of the date made that would
reasonably be expected to have a Material Adverse Effect, or shall fail to state a fact necessary to
make the statements therein not misleading as of the date made and as a result thereof there
would reasonably be expected to occur a Material Adverse Effect; provided that no Event of
Default shall occur pursuant hereto, unless and until City receives written notice (from any
source) that such untrue or misleading statement, or such omission, has occurred, and City has
not, within forty-five (45) days of the date on which City receives written notice, eliminated or
otherwise cured such untrue or misleading statement, or such omission, so that it would no
longer- reasonably be expected to have a Material Adverse Effect.
8.3 Bankruitc,, : Insolvenc\:. Any of the following events shall have occurred:
(a) City shall file a petition for relief under the Bankruptcy Law (or any
successor statute) or shall otherwise institute any similar proceeding under any other applicable
federal, state or other applicable law, or shall consent thereto; or
(b) City shall apply for, or by consent or acquiescence there shall be an
appointment of, a receiver, liquidator, sequestrator, trustee or other officer with similar powers.
8.4 Other Defaults. City shall fail to perform or observe any other covenant to be
performed or observed by it hereunder and not otherwise specifically provided for elsewhere in
this Article 8, and such failure shall continue unremedied for a period of forty-five (45) days
after the Mayor, City Manager or City Attorney of the City becomes aware thereof or City
13
or dishonor, or other notices or demands of any kind, all such other notices and demands being
waived, (a) to the extent permitted by applicable law, accelerate all amounts then outstanding
under the Notes and demand immediate payment thereof, and (b) exercise any or all rights and
remedies available at law or in equity.
9.4 Bankru )tcv or Insolvency Default. Upon the occurrence and during the
continuation of an Event of Default under Section 8.3, notwithstanding anything herein to the
contrary, all amounts then outstanding under each of the Notes, to the extent permitted by
applicable law, shall automatically become immediately due and payable without further notice
or action.
ARTICLE 10
PAYING AGENT
10.1 ADI) ointment, Powers. and Immunities.
(a) Each Noteholder hereby appoints and authorizes Wells Fargo Bank, N.A.
to act as Paying Agent hereunder and under the Notes with such powers as are expressly
delegated to Paying Agent by the terms of this Agreement, the First Supplemental Trust
Agreement and the Notes, together with such other powers as are reasonably incidental thereto.
Paying Agent shall not have any duties or responsibilities except those expressly set forth in this
Agreement and the First Supplemental Trust Agreement, and shall not be a trustee for, or
fiduciary of, any Noteholder, except that the Paying Agent also shall be the Trustee under the
Trust Agreement. Notwithstanding anything to the contrary contained herein, Paying Agent shall
not be required to take any action which is contrary to this Agreement or any Note or any Legal
Requirement, or that exposes Paying Agent to any liability. Each of Paying Agent, the
Noteholders, and any of their respective affiliates shall not be responsible to any other Noteholder
for any recitals, statements, representations, or warranties made by City contained in this
Agreement, any Note, or any certificate or other document referred to or provided for in, or
received by Paying Agent or any Noteholder under, this Agreement or any Note, for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, the Notes, or
any other document referred to or provided for herein, or for any failure by City to perform its
obligations hereunder or thereunder. Paying Agent may employ agents and attorneys -in -fact and
shall not be responsible for the negligence or misconduct of any such agents or attorneys -in -fact
selected by it with reasonable care.
(b) Paying Agent and its directors, officers, and employees shall not be
responsible for any action taken or omitted to be taken by it or them hereunder or under the Notes
or in connection herewith or therewith, except for its or their own gross negligence or willful
misconduct as determined by a final non -appealable judgment of a court of competent
jurisdiction. Without limiting the generality of the foregoing, Paying Agent (i) may treat the
payee of any Note as the holder thereof until Paying Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form and substance satisfactory to
Paying Agent; (ii) may consult with legal counsel (including counsel for City), independent
public accountants, and other experts selected by it with reasonable care and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants, or experts; (iii) makes no warranty or representation to any Noteholder for
15
Agreement, the Notes or the Trust Agreement, 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, except to the extent that any such loss, damages,
liability or expense results from the negligence, willful misconduct or bad faith on the part of the
Paying Agent. The rights of the Paying Agent and the obligations of the City under this Section
shall survive the discharge of the Notes and this Agreement and the resignation or removal of the
Paying Agent.
(b) Paying Agent shall . be fully justified in refusing to take or continuing to
take any action hereunder unless it shall first be specifically indemnified to its satisfaction by the
directing Noteholders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action.
10.6 Successor Paying Agents. Paying Agent acknowledges that its current intention is
to remain Paying Agent hereunder. Nevertheless, Paying Agent may resign at any time by
giving thirty (30) days' written notice thereof to the Noteholders and City; provided that, the
Paying Agent shall simultaneously resign as Trustee under the Trust Agreement, and such
resignation to be effective only upon the acceptance of the appointment of a successor Paying
Agent and Trustee. Requisite Noteholders may remove Paying Agent by giving thirty (30) days'
written notice thereof to Paying Agent and City, such removal to be effective only upon the
acceptance of the appointment of a successor Paying Agent and the simultaneous resignation of
the Trustee under the Trust Agreement, with such resignation to be effective only upon the
acceptance of the appointment of the successor Paying Agent as successor Trustee under the
Trust Agreement. Upon any such resignation or removal, the Noteholders shall have the right to
appoint a successor Paying Agent with notice to City; provided that (a) the consent of each of
Commerzbank and Ambac shall be required for the appointment of a successor Paying Agent so
long as Commerzbank and Ambac remain Noteholders hereunder, and (b) if a Noteholder wishes
to appoint a substitute Paying Agent for any reason including any actual or potential Paying
Agent fee increase pursuant to Section 2.4 of this Agreement, such consent of the other
Noteholder will not be unreasonably withheld or delayed. If no successor Paying Agent shall
have been so appointed by the Noteholders, and shall have accepted such appointment, within
thirty (30) days after the retiring Paying Agent's giving of notice of resignation or removal, the
retiring Paying Agent may on behalf of the Noteholders, appoint a successor Paying Agent,
which shall be a commercial bank having a combined capital and surplus of at least One
Hundred Million Dollars ($100,000,000). Any successor Paying Agent must also be the
successor Trustee under the Trust Agreement. City agrees to take such steps as may be required
to appoint such successor Trustee under the Trust Agreement if a successor Paying Agent is
appointed under this Agreement. Upon the acceptance of any appointment as Paying Agent
under this Agreement by a successor Paying Agent such successor Paying Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges, and duties of the retiring
Paying Agent, and the retiring Paying Agent shall be discharged from its duties and obligations
as Paying Agent under this Agreement and the Notes. After any retiring Paying Agent's
resignation or removal hereunder as Paying Agent, the provisions of this Article 10 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was Paying Agent.
10.7 Authorization. Paying Agent is authorized by the Noteholders to enter into
agreements supplemental hereto with any Person for the purpose of curing any formal defect,
17
the owner of such participation for all purposes of this Agreement notwithstanding any notice to
the contrary.
11.3 Assig nients and „Transfer.
(a) Permitted Assigninents. Subject to the provisions of Section 11.4 below
and provided that the parties to any assignment shall (prior to any such assignment) execute and
deliver an appropriate agreement evidencing such assignment substantially in the form attached
hereto as Exhibit E (hereinafter, the "Assi�, nment Agreement"), a copy of which shall be provided
by the Paying Agent to the City upon execution thereof, a Noteholder may from time to time, at
its option, sell, assign, transfer or otherwise dispose of (collectively, "assign," and any such sale,
assignment, transfer or other disposition being, for the purposes of this Section 11.3, an
"assi,,nment") any of its rights and obligations under its Note (the Noteholder making such
assignment being the "assigning Noteholder" and the Noteholder receiving such assignment being
a "new Noteholder"); provided that any such assignment shall be only in Authorized
Denominations and to an Eligible Assignee. Such restriction on transfer shall be printed
prominently on the form of the Notes, and any transfer in violation of the provisions of this
Section 11.3 shall be null and void. At the assigning Noteholder's option and upon such
Noteholder's prior payment of the cost of any administrative expense charged by the Paying
Agent (except as otherwise set forth in this Agreement and/or as otherwise agreed by Paying
Agent and the City in their sole discretion), City shall execute and deliver to such new Noteholder
a new Note substantially in the form attached hereto as Exhibit C, in an amount equal to such new
Noteholder's Proportionate Share of the Payment Stream being assigned, and City shall execute
and exchange with the assigning Noteholder a replacement note for its existing Note in an amount
equal to the Proportionate Share of the Payment Stream retained by the assigning Noteholder, if
any. No assignment or transfer of any portion of a Note shall be effective unless and until
recorded in the Register following receipt by the City and Paying Agent of a fully executed
Assignment Agreement, the satisfaction of the requirements in Section 11.3(b) and the
satisfaction of the other foregoing requirements.
(b) Assignment Effective Date. Each assignment shall be recorded in the
Register promptly following receipt of such documentation by Paying Agent. Each assignment
shall be effective (hereinafter, the "Assignment Effective Date") only upon (i) receipt by Paying
Agent and City of an executed Assignment Agreement with respect to each assignment, (ii) the
recordation of each assignment in the Register, and (ii) the delivery to Paying Agent of the
requisite processing fee for such assignment (except as otherwise set forth in this Agreement or
unless otherwise agreed by Paying Agent and City in their sole discretion). All assignments shall
be effective as of the Assignment Effective Date. Following the Assignment Effective Date, such
new Noteholder shall be a Noteholder for all purposes and shall have all of .the rights and duties
of a Noteholder (except as otherwise provided in this Article 11).
11.4 Laws. Notwithstanding the foregoing provisions of this Article 11, no sale,
assignment, transfer, negotiation or other disposition of the interests of any Noteholder hereunder
or under its Note shall be allowed if it would require registration under the Securities Act, any
other federal securities laws or regulations or the securities laws or regulations of any applicable
jurisdiction.
WE
have been validly and effectively given on the day (if a Banking Day and, if not, on the next
following Banking Day) on which it is transmitted if transmitted before 4:00 p.m., recipient's
time, and if transmitted after that time, on the next following Banking Day; Lo..vided,_however,
that if any notice is tendered to an addressee and the delivery thereof is refused by such
addressee, such notice shall be effective upon such tender. Any party shall have the right to
change its address for notice hereunder to any other location within the United States by giving
of thirty (30) days' written notice to the other parties in the manner set forth herein above.
12.2 Delav and Waiver: Amendments. No delay or omission to exercise any right,
power or remedy accruing to Paying Agent or the Noteholders upon the occurrence of any Event
of Default or Inchoate Default or any breach or default of City under this Agreement or the
Notes shall impair any such right, power or remedy of Paying Agent or the Noteholders, nor
shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or
of or in any similar breach or default thereafter occurring, nor shall any waiver of any single
Event of Default, Inchoate Default or other breach or default be deemed a waiver of any other
Event of Default, Inchoate Default or other breach or default theretofore or thereafter occurring.
Any waiver, indulgence, permit, consent or approval of any kind or character on the part of the
Noteholders of any Event of Default, Inchoate Default or other breach or default under this
Agreement or the Notes, or any waiver on the part of Paying Agent or the Noteholders of any
provision or condition of this Agreement, must be in a writing signed by Paying Agent and the
Noteholders or Requisite Noteholders, as applicable, expressly referencing this Agreement and
shall be effective only in the specific instance and to the extent in such writing specifically set
forth. All remedies, either under this Agreement or the Notes or by law or otherwise afforded to
Paying Agent and the Noteholders, shall be cumulative and not alternative. No waiver of an
Event of Default under Section 8.1 or Section 8.3 shall be effective unless signed by each
Noteholder that would be affected thereby. No waiver of any other Event of Default or Inchoate
Default shall be effective unless signed by the Requisite Noteholders. This Agreement may be
amended only by a writing signed by Paying Agent, Noteholders and City.
12.3 Costs. Ex )enses and AttorneN s' Fees. Each of the Noteholders and City will pay
its own costs and expenses in connection with the preparation, negotiation, closing and costs of
administering this Agreement and the documents contemplated hereby, including the reasonable
fees, expenses and disbursements of its counsel in connection with the preparation of such
documents and any amendments hereof or thereof, or the negotiation, closing or administration
of this Agreement. City will reimburse Paying Agent and the Noteholders for all reasonable
costs and expenses, including, but not limited to, reasonable attorneys' fees (but not including
third-party consultant fees), actually expended or incurred by Paying Agent and/or the
Noteholders, as applicable, in enforcing this Agreement and the Notes in connection with an
Event of Default, in actions for declaratory relief related to the enforcement of this Agreement or
the Notes, or in collecting any sum which becomes due Paying Agent or any Noteholder under
this Agreement or the Notes.
12.4 Entire Agreement. This Agreement, the Settlement Agreement, the Notes, and any
other agreement, document or instrument attached hereto or referred to herein integrate all the
terms and conditions mentioned herein or incidental hereto and supersede all oral negotiations
and prior writings in respect to the subject matter hereof. In the event of any conflict between
the terms, conditions and provisions of the Settlement Agreement and this Agreement and/or the
21
TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE OTHER
OPERATIVE DOCUMENTS OR ANY ACT OR OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH; AND EACH PARTY HEREBY WAIVES, RELEASES AND
AGREES NOT TO SUE UPON ANY SUCH CLAIM FOR ANY SUCH SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER OR NOT ACCRUED AND
WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
12.11 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, PAYING
AGENT, EACH NOTEHOLDER, AND CITY HEREBY KNOWINGLY, VOLUNTARILY,
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER,
OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER OPERATIVE
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), OR ACTIONS OF PAYING AGENT, ANY
NOTEHOLDER OR CITY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
PAYING AGENT, CITY AND THE NOTEHOLDERS TO ENTER INTO THIS
AGREEMENT.
12.12 Countertparts. This Agreement may be executed in one or more duplicate
counterparts and delivered by facsimile or by a portable document format (pdf) via electronic
mail, and when executed and delivered by all the parties listed below, shall constitute a single
binding agreement; signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signatures are physically attached to the same
document. A facsimile or portable document format (pdf) signature page shall constitute an
original for all purposes. The parties to this Agreement agree that, except as expressly provided
above, any deliverable required to be provided pursuant to Article 3 may be delivered by
facsimile or electronic mail in a portable document format, or other electronic transmission.
12.13 No Third Parti Beneficiaries. Nothing expressed or referred to in this Agreement
will be construed to give any Person, other than the parties hereto and any other Noteholders, any
legal or equitable right, remedy or claim under or with respect to this Agreement, the Notes, the
other Financing Documents or any provision of this Agreement, the Notes or the other Financing
Documents.
12.14 Separate Representation. Each party hereto acknowledges that it has been advised
and represented by counsel in the negotiation, execution and delivery of this Agreement and
accordingly agrees that if an ambiguity exists with respect to any provision of this Agreement,
such provision shall not be construed against any party because such party or its representatives
drafted such provision.
12.15 Ratings. In the event that any time after the Closing Date, the Noteholders wish
to seek a credit rating for the Notes, City agrees to cooperate with such rating request, to execute
and deliver any formal request to obtain or maintain a raring, as required by any rating agency,
and to provide any other information required or reasonably requested by any rating agency to
obtain or maintain any ratings; provided that the Noteholders pay, or reimburse City for all
amounts paid, for any and all rating agency fees, costs and/or expenses incurred by City in
cooperating with such rating request, including but not limited to any outside attorneys' fees
23
[Signature Page to Exchange Agreement]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their officers thereunto duly authorized as of the day and year first above written.
CITY OF SAN BERNARDINO, CALIFORNIA
By:
Name:
Title:
COMMERZBANK FINANCE & COVERED
BOND S.A.,
as Noteholder
By:
Name:
Title:
AMBAC ASSURANCE CORPORATION
as Noteholder
By: _ .
Name: Gary Greendale
Title: Managing Director
WELLS FARGO BANK, N.A.
as Paying Agent
By:
Name: Theresa Hempeck
Vice President, Corporate Trust Services
Case 6:12-bk-28006-MJ Doc 1882-27 Filed 07/29/16 Entered 07/29/16 19:36:33
Desc Exhibit 26 Page 2 of 10
SETTLEMENT AGREEMENT
This Settlement Agreement (the "Settlement Agreement"), dated as of
Marches 2016, is entered into by and among the City of San Bernardino, California (the
"City"), COMMERZBANK Finance & Covered Bond S.A. (formerly known as Erste
Europaische Pfandbrief-Und Kommunalkreditbank AG in Luxemburg) ("EEPK"), and Ambac
Assurance Corporation ("Ambac").
Back°rte
The City is a debtor under chapter 9 of title 1 I of the United States Code
(the "Bankruptcy Code"), pursuant to a petition filed on August 1, 2012, commencing
In re City of San Bernardino, California, case number 6:12-bk-28006-MJ (the
"BankruMev Case"), in the United States Bankruptcy Court for the Central District of
California, Riverside Division (the "Bankruptcy Court").
Pursuant to a Trust Agreement, dated as of August 1, 2005 (the "Trust
Ap,reement''), between the City and Wells Fargo Bank, National Association, as
indenture trustee (the "Trustee"), the City issued certain Taxable Pension Obligation
Bonds (the "Pension Obligation Bonds") in the initial aggregate principal amount of
$50,401,582.90. EEPK purchased all of the Pension Obligation Bonds, consisting of (a)
2005 Series A-1 (Standard Bonds), in the initial aggregate principal amount of
$36,050,000 (the "Series A-1 Bonds"), and (b) 2005 Series A-2 (Capital Appreciation
Bonds), in the initial aggregate principal amount of $14,351,582.90 (the "Series A-2
Bonds"). Ambac represents that it insures the regularly scheduled principal and interest
payments with respect to the Series A-2 Bonds pursuant to Financial Guaranty Insurance
Policy No. S24928BE (the "Insurance Policy"). Ambac and EEPK are hereinafter
sometimes referred to collectively as the "POB Creditors."
On February 5, 2014, the Trustee, on behalf of EEPK and Ambac, filed a
proof of claim in the Bankruptcy Case with respect to the Pension Obligation Bonds (the
"EEPK Proof of Claim"). On February 5, 2014, Ambac filed a proof of claim in the
Bankruptcy Case with respect to the Pension Obligation Bonds (the "Ambac Proof of
Claim" and, together with the EEPK Proof of Claim, the "Proofs of Claim").
On January 7, 2015, EEPK. and Ambac filed a Complaint in the
Bankruptcy Court (the "Complaint") against the City, seeking relief under 28 U.S.C.
§ 2201, and commencing adversary proceeding number 6:15-ap-01004-MJ (the
"Adversary Proceeding").
On March 13, 2015, the City filed a Motion to Dismiss the Complaint (the
"Motion to Dismiss") under Federal Rule 12(b)(6), made applicable to the Adversary
Proceeding by Bankruptcy Rule 7012(b), for failure to state a claim. EEPK and Ambac
opposed the Motion to Dismiss, and the Bankruptcy Court held a hearing on May 11,
2015. On May 26, 2015, the Bankruptcy Court, entered an order (the "Order") granting
the Motion to Dismiss. EEPK and Ambac appealed from the Order by filing a Notice of
Appeal on June 8, 2014 (the "Appeal") to the Bankruptcy Appellate Panel for the Ninth
1758
Case 6:12-bk-28006-MJ Doc 1882-27 Filed 07/29/16 Entered 07/29/16 19:36:33
Desc Exhibit 26 Page 4 of 10
with respect to the Pension Obligation Bond Claims the sum of $1,375,000 (One
Million Three Hundred Seventy -Five Thousand Dollars), payable each year in
two equal semi-annual installments.
e. During each of the eleventh year after the Effective Date, through and including
the fifteenth year after the Effective Date, the City shall distribute to the POB
Creditors with respect to the Pension Obligation Bond Claims the sum of
$1,500,000 (One Million Five Hundred Thousand Dollars), payable each year in
two equal semi-annual installments.
f. During each of the sixteenth year after the Effective Date, through and including
the twentieth year after the Effective Date, the City shall distribute to the POB
Creditors with respect to the Pension Obligation Bond Claims the sum of
$1,750,000 (One Million Seven Hundred Fifty Thousand Dollars), payable each
year in two equal semi-annual installments.
g. During each of the twenty-first year after the Effective Date, through and
including the twenty-fifth year after the Effective Date, the City shall distribute to
the POB Creditors with respect to the Pension Obligation Bond Claims the sum of
$2,000,000 (Two Million Dollars), payable each year in two equal semi-annual
installments.
h. During each of the twenty-sixth year after the Effective Date, through and
including the thirtieth year after the Effective Date, the City shall distribute to the
POB Creditors with respect to the Pension Obligation Bond Claims the sum of
$2,500,000 (Two Million Five Hundred Thousand Dollars), payable each year in
two equal semi-annual installments.
i. The due dates for the semi-annual installments set forth above shall be scheduled
at such time as the Effective Date is known, so as to in each case occur in a single
fiscal year.
j. The documentation to be executed and delivered under the Conforming Plan to
evidence and effect the City's financial obligations under paragraphs La through
1.i. shaIl conform to the terms hereof and shall otherwise be in form and
substance reasonably satisfactory to the parties hereto; and such documents shall
include any necessary consent or acknowledgement of the Trustee with respect to
the terms hereof and thereof to the extent required by the documents evidencing
the Pension Obligation Bonds.
2. No Admission,• Reinstatement of Positions.
The parties hereto acknowledge that the execution of this Settlement
Agreement and consummation of the transactions contemplated herein do not constitute
an admission of liability or of any facts by any of such parties, but rather are intended to
be in compromise and settlement of disputed and unliquidated claims. Nothing herein
shall constitute or be asserted as constituting any admission of liability by or against any
party hereto, and this Settlement Agreement shall not be offered or received in evidence
3
1760
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Desc Exhibit 26 Page 6 of 10
b. The POB Creditors on behalf of themselves and their
respective present and former directors, officers, employees, agents, representatives,
advisors, and affiliates (collectively the "POB Parties"), shall be deemed to release and
forever discharge the City and its present and former elected and appointed officials,
employees, agents, representatives, and advisors (the "City Parties `) from any and all
claims, causes of action, liabilities and obligations arising under or in connection with the
Pension Obligation Bonds, other than the claims, causes of action, liabilities, and
obligations arising under this Settlement Agreement (and attendant documents referenced
in paragraph IJ. hereof) and the Conforming Plan;
C. The City Parties shall be deemed to release and forever
discharge the POB Parties from any and all claims, causes of action, liabilities, and
obligations arising under or in connection with the Pension Obligation Bonds, other than
the claims, causes of action, liabilities, and obligations arising under this Settlement
Agreement (and attendant documents referenced in paragraph IJ. hereof) and the
Conforming Plan;
d. The release of the City Parties contained herein shall be
deemed to include, or, if required to be effective, such of the POB Parties as have the
right to direct the Trustee shall direct the Trustee at closing of the documents referenced
in paragraph 1 J. hereof (with the consent of all parties hereto) to deliver a release by the
Trustee, in its capacity as trustee under the Trust Agreement, of all claims, causes of
action, liabilities and obligations arising under or in connection with the Pension
Obligation Bonds, other than the claims, causes of action, liabilities, and obligations
arising under this Settlement Agreement (and attendant documents referenced in
paragraph 1J. hereof) and the Conforming Plan.
e. With respect to the releases contained in paragraphs 4.b,
4.c. and 4.d. hereof, the POB Parties and the City Parties each hereby stipulate and agree
that upon the Release Date they shall have expressly waived the provisions, rights, and
benefits of California Civil Code Section 1542, or any other similar state law, federal
law, or principle of common law, which may have the effect of limiting the releases set
forth above. Section 1542 of the California Civil Code provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER
FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR.
5. Revresentations. Each party hereto hereby represents and warrants
that: (a) such party has not heretofore assigned or transferred or purported to transfer or
assign any claim settled or released hereby; (b) such party, subject to Bankruptcy Court
approval, has all corporate, governmental, and other necessary power and authority to
enter into this Settlement Agreement and to perform its obligations hereunder, (c) the
individual signing this Settlement Agreement on behalf of such party has been duly
authorized to so execute and deliver this Settlement Agreement; (d) such party has
1762
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Desc Exhibit 26 Page 8 of 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives as of the day and year fust above
written.
THE CITY OF SAN BERNARDINO
�)L
By: �.
Name: AA ,4- K ,a-- rr
Title: C : -¢vl %la ? e r
COMMERZBANK FINANCE &
COVERED BOND S.A. (FORMERLY
KNOWN AS ERSTE EUROPAISCHE
PFANDBRIEF-UND
KOMMUNALKREDITBANK AG IN
LUXEMBURG)
By:
Name:
Title:
AMBAC ASSURANCE CORPORATION
By:
Name:
Title:
1764
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Desc Exhibit 26 Page 10 of 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives as of the day and year first above
written.
THE CITY OF SAN BERNARDINO
By:
Name:
Title:
COMMERZBANK FINANCE &
COVERED BOND S.A. (FORMERLY
KNOWN AS ERSTE EUROPAISCHE
PFANDBRIEF- UND
KOMMUNALK.REDITBANK AG IN
LUXEMBURG)
By:
Name:
Title:
AMBAC ASSURANCE CORPORATION
By D r
Name:cd-/Ivz�
Title:
7
1766
"Bankruptcy Law" means Title 11, United States Code, and any other state or federal
insolvency, reorganization, moratorium or similar law for the relief of debtors.
"Bankruptcy Plan" shall have the meaning given in the recitals of this Agreement.
"Benefited Noteholder" shall have the meaning given in Section 2.5(d) of this
Agreement.
"City" shall have the meaning given in the preamble of this Agreement.
"City Representatives" shall have the meaning given m Section 5.5 of this Agreement.
"Closing" means the satisfaction (or waiver in accordance with the terms of the
Agreement) of each of the conditions precedent listed in Section 3.2 of the Agreement.
"Closing Date" means the date upon which Closing occurs, which, pursuant hereto, is
intended to be on or immediately following the Effective Date.
"Code" means the Internal Revenue Code of 1986, as amended, and any successor
federal tax statute.
"Commerzbank" shall have the meaning given in the preamble of this Agreement.
"Commerzbank Note" shall have the meaning given in the recitals of this Agreement.
"Default Interest" shall have the meaning given in Section 9..1. of this Agreement.
"Department of Treasury Rule" shall have the meaning given in Section 4.7 of this
Agreement.
"Disclosure Statement" means the Third Amended Disclosure Statement with Respect
to the Third Amended Plan for the Adjustment of the Debts of the City of San Bernardino (July
29, 2016) [Dkt. No. 1881].
"Dollars" and "$" means United States dollars or such coin or currency of the United
States of America as at the time of payment shall be legal tender for the payment of public and
private debts in the United States of America.
"Effective Date" means the Effective Date as such term is defined in the City's
Bankruptcy Plan.
"Eligible Assignee" means a purchaser who qualifies as an Accredited Investor or a
Qualified Institutional Buyer.
"Event of Default" shall have the meaning given in Article 8 of this Agreement.
"EMMA" means the Municipal Securities Rulemaking Board's Electronic Municipal Access
System (EMMA).
Treasury Regulations, 31 C.F.R. Parts 500 et seq. (implementing the economic sanctions
programs administered by OFAC).
"OFAC SDN List" means the list of "Specially Designated Nationals and Blocked
Persons" maintained by OFAC.
"OFAC Violation" has the meaning assigned to such term in Section 6.7 d of this
Agreement.
"Office" means with respect to any Noteholder, the office designated as such beneath the
name of such Noteholder on Schedule I of the Agreement or such other office of such
Noteholder as such Noteholder may specify in writing from time to time to Paying Agent and
City.
"Original Trust Agreement" has the meaning given in the recitals of this Agreement.
"Participant Register" shall have the meaning given in Section11.2 b of this
Agreement.
"Patriot Act" shall have the meaning given in Section 4.7(w of this Agreement
"Paying Agent" shall have the meaning given in the preamble of this Agreement.
"Payment Date" means each of the payment dates set forth on the Payment Schedule.
"Payment Schedule" means the Payment Schedule set forth as Exhibit D to this
Agreement, as the same may be amended or replaced pursuant to the Agreement.
"Payment Stream" shall have the meaning given in the recitals of this Agreement.
"Pension Obligation Bonds" shall have the meaning given in the recitals of this
Agreement.
"Person" means any natural person, corporation, limited liability company, partnership,
firm, association, Governmental Authority or any other entity whether acting in an individual,
fiduciary or other capacity.
"Prime Rate" means, for any day, the prime rate in effect for such day as published in
the Wall Street Jounzal.
"Proportionate Share" means with respect to each Noteholder, the percentages set
forth opposite such Noteholder's name on Schedule II to this Agreement, as such percentages
may be modified from time to time as a result of transfers of any portion of a Note by a
Noteholder and as Paying Agent shall reflect in the Register.
"Qualified Institutional Buyer" has the meaning as provided in rule 144A of the
Securities Act.
"Register" shall have the meaning given in Section 2.2(a) of this Agreement.
RULES OF INTERPRETATION
1. The singular includes the plural and the plural includes the singular.
2. The word "or" is not exclusive.
3. A reference to a Governmental Rule includes any amendment or modification to such
Governmental Rule, and all regulations, rulings and other Governmental Rules
promulgated under such Governmental Rule.
4. A reference to a Person includes its successors and permitted assigns.
Accounting terms have the meanings assigned to them by GAAP, as applied by the
accounting entity to which they refer.
6. The words "include," "includes" and "including" are not limiting.
7. A reference in a document to an Article, Section, Exhibit, Schedule, Annex or Appendix
is to the Article, Section, Exhibit, Schedule, Annex or Appendix of such document unless
otherwise indicated. Exhibits, Schedules, Annexes or Appendices to any document shall
be deemed incorporated by reference in such document.
References to any document, instrument or agreement shall include all exhibits,
schedules and other attachments thereto, shall include all documents, instruments or
agreements issued or executed in replacement thereof, and shall mean such document,
instrument or agreement, or replacement or predecessor thereto, as amended, modified
and supplemented from time to time (to the extent permitted under the Financing
Documents) and in effect at any given time.
9. The words "hereof," "herein" and "hereunder" and words of similar import when used in
any document shall refer to such document as a whole and not to any particular provision
of such document.
10. References to "days" shall mean calendar days, unless the term "Banking Days" shall be
used. References to a time of day shall mean such time in New York, New York, unless
otherwise specified.
11. This Agreement and the Notes are the result of negotiations between, and have been
reviewed by City, Paying Agent, each Noteholder, and their respective counsel.
Accordingly, this Agreement and the Notes shall be deemed to be the product of all
parties thereto, and no ambiguity shall be construed in favor of or against City, Paying
Agent, or any Noteholder.
12. The words "will" and "shall" shall be construed to have the same meaning and effect.
part. Any optional prepayment hereunder shall be in the minimum amount of One Hundred
Thousand Dollars ($100,000) (unless the Notes are being repaid in full).
It is hereby certified that all acts, conditions and things required to be done, have
happened or will be performed precedent to and in the issuance of this Note or in the creation of
the debt of which this is evidence, have been done, or have happened and been performed in
regular and due form and manner as required by law, and that the debt represented by this Note
is not in excess of any constitutional or statutory limitation.
This Note shall not bear interest other than Default Interest, solely as set forth in the
Agreement.
City agrees to pay certain costs and expenses, incurred in connection with the
enforcement of this Note in accordance with the Agreement.
THIS NOTE SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REFERENCE TO CONFLICTS OF LAWS.
CITY OF SAN BERNARDINO, CALIFORNIA
By:
Name:
Title:
C-2
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
June 1, 2034
875,000.00
262,762.50
612,237.50
December 1, 2034
875,000.00
262,762.50
612,237.50
June 1, 2035
875,000.00
262,762.50
612,237.50
December 1, 2035
875,000.00
262,762.50
612,237.50
June 1, 2036
875,000.00
262,762.50
612,237.50
December 1, 2036
875,000.00
262,762.50
612,237.50
June 1, 2037
1,000,000.00
300,300.00
699,700.00
1, 2037
1,000,000.00
300,300.00
699,700.00
June I, 2038
1,000,000.00
300,300.00
699,700.00
EDecember
December 1, 2038
1,000,000.00A300,300.00699,700.00
00
699,700.00
June 1, 2039
1,000,000.0000
699,700.00
December 1, 2039
1,000,000.0000
699,700.00
June 1, 2040
1,000,000.0000
699,700.00
December 1, 2040
1,000,000.0000
699,700.00
June 1, 2041
1,000,000.0000
699,700.00
December 1, 2041
1,000,000.000
699,700.00
June 1, 2042
1,250,000.00
375,375.00
874,625.00
December 1, 2042
1,250,000.00 7
375,375.00
874,625.00
June 1, 2043
1,250,000.00
375,375.00
874,625.00
December 1, 2043
1,250,000.00
375,375.00
874,625.00
June 1, 2044
1,250,000.00
375,375.00
874,625.00
December 1, 2044
1,250,000.00
—3 75,37-5.00
874,625.00
June 1, 2045
11250,000.00
375,375.00
874,625.00
December 1, 2045
1,250,000.00
375,375.00
874,625.00
June 1, 2046
1,250,000.00
375,375.00
874,625.00
December 1, 2046
1,250,000.00
375,375.00
�74625
D-2
SCHEDULE]I
TO AGREEMENT
SCHEDULE OF NOTEHOLDER ORIGINAL PAYMENT STREAM AMOUNTS AND
PROPORTIONATE SHARES
Noteholder Original Share of Payment Proportionate Share
Stream
Commerzbank $35,457,297.50 69.97%
Ambac $15,217,702.50 30.03%
as a Noteholder to the same extent as if Assignee had been an original signatory Noteholder
thereto.
3. Retention bw Assi_nor. Assignor retains its right, benefit, title and interest in and
to the Original Note, only in the principal amount of [$ ] (the "Retained Amount"), and this
Assignment shall have no effect on the Assignor's rights and benefits in connection with the
Retained Amount of the Original Note.
4. Consideration. In consideration for the Assignment, Assignee agrees to pay to
Assignor the amount of $
5. Execution and Delivery of New Notes. Assignor may request that City execute
and deliver the New Note to Assignee in the Assigned Amount. If Assignor makes such request,
(i) Assignor shall pay the cost of any administrative expense charged by the Paying Agent
(except as otherwise set forth in the Exchange Agreement and/or otherwise agreed by Paying
Agent and City in their sole discretion); (ii) the Assignor shall relinquish and deliver to City, for
termination and cancellation, in original form, the Original Note; and (iii) City shall execute and
deliver anew Note (the "New Assi 11ior Note") to Assignor in the Retained Amount, if any. Any
such request shall be made promptly following the execution of this Assignment Agreement, but
in no event more than ten (10) days following the date of execution of this Assignment
Agreement.
6. Effective Date. The Assignment under this Assignment Agreement shall become
effective (the "Effective Date") upon the last of the following to occur: (i) receipt by City and
Paying Agent of an executed Assignment Agreement, (ii) the delivery to Paying Agent of the
requisite processing fee for such Assignment (except as otherwise set forth in the Exchange
Agreement and/or as otherwise agreed by Paying Agent and City in their sole discretion), and
(iii) the recordation of the Assignment in the Register maintained by the Paying Agent pursuant
to the Exchange Agreement.
7. Effect of Effective Date. Upon and following the Effective Date, Assignee will
become a Noteholder under the Exchange Agreement, with the same rights, benefits and
obligations, and shall be bound by the Exchange Agreement, as if the Assignee had been an
original signatory to the Exchange Agreement. If the Assignor requested that the City execute
and deliver a New Note in accordance with Paragraph 5 hereunder, the Original Note shall be
canceled and of no further force or effect as of the Effective Date.
8. Representations and_ Warranties of Assi nor. Assignor makes the following
representations and warranties to and in favor of Assignee as of the Effective Date (which
representations and warranties in each case shall survive the execution of this Assignment
Agreement and the consummation of the transaction contemplated hereunder):
(a) No Violation. The execution, delivery and performance by Assignor of
this Assignment Agreement will not violate any provision of any applicable law,
regulation, writ, order or decree by which Assignor is bound or cause a breach of any of
its organizational documents or authority.
E-2
Article 5 of the Exchange Agreement as of the Effective Date, and (C) to the extent of its
Note, shall have the rights and obligations of a Noteholder thereunder.
(e) Acknowledgement of Certain Risks.. Assignee acknowledges that the
purchase and holding of the New Note involves risks that may not be appropriate for
certain investors, and that there may be a limited market for the New Note. Assignee
understands that it may need to bear the risks of this investment for an indefinite time,
since any sale before maturity may not be possible for any number of reasons.
(f) Unregistered Status, of New Note. Assignee understands that the New
Note is not registered under the 33 Act and that such registration is not legally required as
of the date hereof. Assignee further understands that the New Note (a) is not being
registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of
any state, (b) will not be listed in any stock or other securities exchange, (c) will not,. at
least initially, carry a rating from any rating service, and (d) will be delivered in a form
that may not be readily marketable. Assignee agrees that it will comply with any
applicable state and federal securities laws in effect with respect to any disposition of the
New Note by it, and acknowledges that any current exemption from registration of the
New Note does not affect or diminish such requirements.
(g) Securities Exemption. Assignee understands that the offering and sale of
the New Note is exempt from the requirements of Rule 15c2-12 promulgated under the
Securities Exchange Act of 1934, that City is not delivering a "deemed final" official
statement with respect to the New Note, and that City is not making any representation to
Assignee or any other party with respect to the matters governed by Rule 15c2-12.
(h) Receipt of Information/Non-Reliance.
(i) Assignee (A) is a sophisticated entity with respect to the purchase
of the New Note, (B) is able to bear the economic risk associated with the purchase of the
New Note, (C) has adequate information, based on its own independent investigation
concerning the business and financial condition of the City to make an informed decision
regarding the purchase of the New Note, (D) has such knowledge and experience, and has
made investments of a similar nature, so as to be aware of the risks and uncertainties
inherent in the purchase of rights of the type contemplated in this Assignment
Agreement, and (E) has independently and without reliance upon Assignor, and based on
such information as Assignee has deemed appropriate, made its own analysis and
decision to enter into this Assignment Agreement, except that Assignee has relied upon
Assignor's express representations, warranties, covenants, agreements and indemnities in
this Assignment Agreement. Assignee acknowledges that Assignor has not given
Assignee any investment advice, credit information or opinion on whether the purchase
of the New Note is prudent.
(ii) Except as otherwise provided in this Assignment Agreement,
Assignee has not relied on, and will not rely on, Assignor to furnish or make available
any documents or other information regarding the credit, affairs, financial condition or
business of the City, or any other matter concerning the City.
E-4
has deemed appropriate, made its own analysis and decision to enter into the transaction,
except to the extent that Assignee and Assignor have each relied upon the express
representations, warranties, covenants, agreements and indemnities made by the other in
this Assignment Agreement or any related Purchase and Sale Agreement or confirmation
of the transaction. Each of Assignee and Assignor acknowledges that the other has not
given it any investment advice or opinion on whether the transaction is prudent.
Assignee is aware that payment of the New Note involves certain economic variables and
risks that could adversely affect the New Note. Assignee has sufficient knowledge and
experience in financial business matters and is capable of evaluating the merits and risks
of its investments in the New Note. Assignee represents that it is able to bear the
economic risk of an investment in the New Note, including an entire loss of its
investment.
0) No Offering/Disclosure Documents. Except as otherwise specifically
provided herein, Assignee has not relied, and will not rely, on Assignor to furnish or
make available any documents or other information regarding the credit, affairs, financial
condition, or business of the City or any other matter concerning the City. Assignee has
not received from any of the City Representatives any formal or informal offering or
disclosure document relating to the New Note and has concluded that such receipt before
the purchase of the New Note is not required. Assignee acknowledges that no written
information has been provided by any of the City Representatives and that any written
information furnished by any other party may not fully disclose all information pertinent
to the New Note.
(k) No Intent to Distribute. Assignee is acquiring the New Note solely for
investment purposes and does not presently intend to sell, transfer or make a public
distribution of all or any part of the New Note.
(1) Transfer Restrictions. Assignee acknowledges that it has the right to sell
and transfer the New Note, subject to compliance with the transfer restrictions set forth in
the Exchange Agreement, including without limitation, the requirement for transfer only
to an Accredited Investor or Qualified Institutional Buyer and only in Authorized
Denominations.
(m) No Recourse to Assigior. Assignee acknowledges that it shall have no
recourse to Assignor, except for breach by Assignor of its representations, warranties and
agreements under this Assignment Agreement.
10. Notices. Any communications hereunder between or among the Parties hereto or
notices provided herein to be given may be given to the following addresses:
If to Assignor:
II
If to Assignee:
II
E-6
instrument attached hereto or referred to herein, the terms, conditions and provisions of this
Assignment Agreement shall prevail.
Signatures continued on next a e.
EXHIBIT A
[COPY OF ORIGINAL NOTE]
A-1
EXHIBIT F
TO AGREEMENT
FORM OF
FIRST SUPPLEMENTAL TRUST AGREEMENT
F-1
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; EQUAL SECURITY.............................................................................. 5
SECTION1.01. Definitions ............................................................................................................5
SECTION 1.02. First Suivlemental Trust Agreement Constitutes Contract .................................
8
SECTION 1.03. Section Numbers..................................................................................................
8
ARTICLE H REFINANCING OF 2005 SERIES A-1 BONDS; AMENDMENT OF 2005
SERIES A-2 BONDS; GENERAL BOND PROVISIONS .....................................
8
SECTION 2.01. Refinancing of the.2005 Series A-1 Bonds- Issuance of Commerzbank
Note...........................................................
8
SECTION 2.02. Amendment of the 2005 Series A-2 Bonds.........................................................
8
SECTION2.03. Exchan e A reement........................................................................................... 9
SECTION 2.04. Costs and Fees for Transfers................................................................................
9
ARTICLE III CONDITIONS PRECEDENT FOR CANCELLATION AND EXCHANGE;
IMPLEMENTATION.............................................................................................. 9
SECTION 3.01. Conditions for the Cancellation of the 2005 Series A-1 Bonds and
Conversion of the 2005 Series A-2 Bonds to Non -Recourse ...............................
9
SECTION 3.02. Implementation Procedures...............................................................................10
ARTICLE IV PROVISIONS REGARDING AMBAC POLICY.......................................................10
SECTION4.01. Ambac Policy .....................................................................................................10
SECTION 4.02. Claims Under Ambac Policy.............................................................................10
ARTICLE V COVENANTS OF THE LOCAL AGENCY.................................................................12
SECTION5.01. Performance.......................................................................................................12
SECTION 5.02. Power to Enter Into Agreement .........................................................................12
SECTION 5.03. Accounting Records and Reports ...............................
SECTION 5.04. Prosecution and Defense of Suits.......................................................................12
SECTION 5.05. Waiver of Laws..................................................................................................13
ARTICLEVI THE TRUSTEE............................................................................................................13
1
THIS FIRST SUPPLEMENTAL TRUST AGREEMENT, made and entered into
as of , 2017 (the "First Supplemental Trust Agreement") and effective as of the Effective
Date (as defined herein), supplements the Trust Agreement dated as of October 1, 2005 (the
"Original Trust Agreement", as supplemented by this First Supplemental Trust Agreement, 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.
WITNESSETH:
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, 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 entered into a contract with the System dated
March 1, 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 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 (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 issued its City of San Bernardino
Taxable Pension Obligation Bonds, 2005 Series A-1 Bonds (the "2005 Series A-1 Bonds"), in
the aggregate principal amount of $36,050,000 and 2005 Series A-2 Bonds (the "2005 Series A-2
Bonds"), in the initial aggregate principal amount of $14,351,582.90 (collectively, the "2005
Series A Bonds"), all pursuant to the Original Trust Agreement and in the manner provided
therein; and
WHEREAS, the 2005 Series A-1 Bonds and the 2005 Series A-2 Bonds, together
with any Additional Bonds (as defined in the Original Trust Agreement), were validated pursuant
to the Default Judgment in Validation Proceeding dated 7/11/2005 in San Bernardino County
Superior Court Case No. SCVSS 125783; and
11
WHEREAS, all acts and proceedings required by law necessary to make this
First Supplemental 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 First Supplemental Trust Agreement have been in all respects
duly authorized; and
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL TRUST
AGREEMENT WITNESSETH, that in order to implement the matters described above with
respect to the 2005 Series A Bonds, to satisfy certain terms of the Exchange Agreement, and to
make certain changes to the payment procedures related to the Ambac Policy, and consideration
of the premises and of the mutual covenants herein contained and in the Exchange Agreement,
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 defined in the Original Trust Agreement),
as follows:
ARTICLE I
DEFINITIONS; EQUAL SECURITY
SECTION 1.01. Definitions. Unless otherwise defined in this First
Supplemental Trust Agreement, capitalized terms defined in the Original Trust Agreement shall
have the meanings given such terms in the Original Trust Agreement; and unless the context
otherwise requires, the terms defined in this section shall for all purposes hereof and of any First
Supplemental Trust Agreement and of any certificate, opinion, request or other document herein
or therein mentioned have the meanings herein specified:
2005 Series A-1 Bonds
The term "2005 Series A-1 Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
2005 Series A-2 Bonds
The term "2005 Series A-2 Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
Ambac
The term "Ambac" shall have the meaning given such term in the recitals of this
First Supplemental Trust Agreement.
Ambac Policv
E
Insurance Payment Account
The term "Insurance Payment Account" means the account by that name
established by the Trustee pursuant to Section 4.02(c) of this First Supplemental Trust
Agreement.
Insured Holders
The term "Insured Holder" means a Holder (as defined in the Ambac Policy) of
the 2005 Series A-2 Bonds.
Note Pa% ins Arent
The term "Note Paying Agent" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
Notes
The term "Notes" shall have the meaning given such term in the recitals of this
First Supplemental Trust Agreement.
Original Ambac Police
The terin "Original Ambac Policy" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
Original Trust kreement
The term "Original Trust Agreement" shall have the meaning given such term in
the introductory paragraph of this First Supplemental Trust Agreement.
Trust A�-,reement
The term "Trust Agreement" shall have the meaning given such term in the
introductory paragraph of this First Supplemental Trust Agreement.
2005 Series A-1 Bonds
The term "2005 Series A-1 Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
2005 Series A-2 Bonds
The term "2005 Series A-2 Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Tiust Agreement.
7
Supplemental Trust Agreement shall not constitute a novation. After the Effective Date, the
2005 Series A-2 Bonds shall continue to be insured by the Original Ambac Policy, endorsed as
provided in this First Supplemental Trust Agreement.
The Ambac Note shall be issued as an Additional Bond under the Trust
Agreement in exchange for rendering the 2005 Series A-2 Bonds non-recourse to the Local
Agency. The conditions and procedure for issuance of the Ambac Note set forth in the Exchange
Agreement shall supersede and replace the requirements of Sections 3.01 and 3.02 of Original
Trust Agreement with respect to conditions precedent to issuance of the Ambac Note. The terms
of the Ambac Note shall be set forth in the Exchange Agreement and in the Ambac Note.
SECTION 2.03. Exchange Agreement. The Trustee shall serve as Note
Paying Agent under the Exchange Agreement. The Exchange Agreement shall govern all terms
and provisions of the Notes, including principal, interest (if any) and repayment, as well as all
conditions precedent to issuance.
SECTION 2.04. Costs and Fees for.. Transfers. Section 2.06(a) of the
Original Trust Agreement shall be amended to delete the following sentence: "The cost of
printing of Bonds and any services rendered or expenses incurred by the Trustee in connection
with any transfer shall be paid by the Local Agency."
CONDITIONS PRECEDENT FOR CANCELLATION AND EXCHANGE;
IMPLEMENTATION
SECTION 3.01. Conditions for the Cancellation of the 2005 Series A-1
Bonds and Conversion of the 2005 Series A-2 Bonds to Non -Recourse. Upon satisfaction of the
following specific conditions, the 2005 Series A-1 Bonds shall be cancelled and the 2005 Series
A-2 Bonds shall be rendered non-recourse to the Local Agency:
(a) the Exchange Agreement and this First Supplemental Trust Agreement
shall have been executed and delivered by all parties thereto;
(b) the Original Ambac Policy shall be endorsed to incorporate the
amendments set for in Exhibit B attached hereto; and
(c) all conditions for closing under the Exchange Agreement, as set forth in
Section 3.2 thereof, shall have been satisfied, including (i) issuance and delivery to
Commerzbank of the Commerzbank Note in exchange for the 2005 Series A-1 Bonds, and (ii)
issuance and delivery to Ambac of the Ambac Note in exchange for any subrogation,
reimbursement, or other rights to payment from the Local Agency to Ambac in connection with
amounts paid by Ambac under the Ambac Policy with respect to the 2005 Series A-2 Bonds.
M
(b) The Trustee shall, after giving notice to Ambac and the Insured Holders of the
2005 Series A-2 Bonds as provided in (a) above, make available to Ambac the registration books
of the Local Agency maintained by the Trustee and all records relating to the funds and accounts
maintained under this First Supplemental Trust Agreement.
(c) The Trustee shall establish an account for the benefit of the Insured Holders and
Ambac referred to herein as the "Insurance Payment Account." The Trustee shall deposit upon
receipt any amount paid under the Ambac Policy in the Insurance Payment Account and
distribute such amount solely for purposes of payment to the Insured Holders for which a claim
was made. For the sake of clarity, amounts paid under the Ambac Policy may not be applied to
satisfy any costs, expenses or liabilities of the Trustee. Amounts held in the Insurance Payment
Account shall not be invested and any amounts remaining in the Insurance Payment Account on
the first Business Day following a Principal Payment Date shall be returned to Ambac by the end
of such Business Day.
(d) The amount of any payment of principal of or interest on the 2005 Series A-2
Bonds from the Insurance Payment Account shall be recorded by the Trustee. Ambac shall have
the right to inspect such records upon one (1) Business Day's prior written notice to the Trustee.
(e) In the event that the Trustee has notice that any payment of principal of or interest
on a 2005 Series A-2 Bond which has become due for payment and which is made to an Insured
Holder by or on behalf of the Local Agency has been deemed a preferential transfer and
theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code
by a trustee in bankruptcy in accordance with the final, non -appealable order of a court having
competent jurisdiction, the Trustee shall, at the time Ambac is notified pursuant to (a) above,
notify all registered owners that in the event that any registered owner's payment is so recovered,
such registered owner will be entitled to payment from Ambac to the extent of such recovery if
sufficient funds are not otherwise available, and the Trustee shall furnish to Ambac its records
evidencing the payment of principal of and interest on the Ambac Insured Bond which have been
made by the Trustee and subsequently recovered from registered owners and the dates on which
such payments were made.
(f) - In addition to those rights granted Ambac under this First Supplemental Trust
Agreement, and anything herein to the contrary notwithstanding, the Local Agency, the Trustee
and each Insured Holder acknowledge and agree, that without the need for any further action on
the part of Ambac, Ambac shall, to the extent it makes payment of principal of or interest on
2005 Series A-2 Bonds, become subrogated to all rights of the Holders of such 2005 Series A-2
Bonds, including all rights to payment. To evidence such subrogation, the Trustee shall note
Ambac's rights as subrogee on the registration books of the Local Agency maintained by the
Trustee upon payment of amounts from the Insurance Payment Account to the Insured Holders
of the 2005 Series A-2 Bonds. The Trustee shall simultaneously assign in writing to Ambac, to
11
Section shall survive the discharge of the Bonds and this Agreement and the resignation or
removal of the Trustee.
SECTION 5.05. 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 First Supplemental Trust Agreement or in the 2005 Series A-2
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. Section 6.01 of the Original Trust Agreement
is hereby amended (a) to provide that if at any time the Trustee exercises its right to resign
thereunder, the Trustee shall simultaneously resign as Note Paying Agent under the Exchange
Agreement, (b) to provide that, subject to the provisions of Section 10.6 of the Exchange
Agreement, the consent of each of Commerzbank and Ambac shall be required for the
appointment of any successor Trustee so long as Commerzbank and Ambac remain Holders, and
(c) to delete the requirement that the Trustee and any successor Trustee have a corporate trust
office in Los Angeles or San Francisco, California.
SECTION 6.02. Trustee's Fees and Expenses: Indemnification. Section
6.03 of the Original Trust Agreement is hereby amended as follows with respect to obligations of
the Local Agency to pay fees and expenses of, and to indemnify, the Trustee:
(a) The obligation of the Local Agency to pay fees and expenses of the
Trustee, including, for the avoidance of doubt, the fees and expenses provided for under Article
II of this Trust Agreement, shall be limited to the amounts required to be paid by the Local
Agency pursuant to Section 2.4 of the Exchange Agreement.
(b) The provisions of Local Agency under Section 6.03 of the Original Trust
Agreement regarding indemnification of the Trustee are hereby amended to read as follows:
(i) To the extent permitted by law, the Local Agency shall indemnify,
defend and hold harmless the Trustee against any loss, damages, liability or expense
incurred by the Trustee to the extent arising out of or in connection with a breach by the
Local Agency under the Exchange Agreement, the Notes or the Trust Agreement,
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, except to the extent that any loss, damages, liability or expense results from
13
If to the Local Agency:
City of San Bernardino 300 North "D" Street
San Bernardino, CA 92418-0001
Attention: City Attorney's Office
If to the Trustee:
Attention: Corporate Trust Services
Wells Fargo Bank, National Association
555 Montgomery Street, 10a' Floor MAC # A0167-102
San Francisco, CA 94111
If to Ambac:
Attention: Portfolio Risk Management
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Email address: notices@ambac.com
If to the Holders:
[Commerzbank:_ TO BE PROVIDED]
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Email address: notices@ambac.com
SECTION 8.04. 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 8.05. Partial Invalidity.. If any one 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
15
[Signature Page to First Supplemental Trust Agreement]
IN WITNESS WHEREOF, the CITY OF SAN BERNARDINO has caused this
First Supplemental 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 First Supplemental 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
LM
ATTEST:
Georgeann Hanna, City Clerk
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By _ _
Theresa Hempeck, Vice President,
Corporate Trust Services,
Authorized Officer
Approved as to form and
legal content:
GARY D. SAENZ
City Attorney
By:
DMEAST #28194828 v13
!.P
AmbacAmbac Assurance Corporation
One State Street Plaza, 15th Floor
New York, New York 10004
Financial Guaranty Insurance Policy Telephone: (212) 668-0340
Obligor: SAN. BERNARDINO, CALIFORNIA Policy Number:
S24928BE
$14,351,583 Taxable Pension Obligation Capital
Obligations: Appreciation. Bonds, Series 2005, dated October Premium:
28, 2005 and maturing October 1 in the years $234,405.00
2007 through 2024, both inclusive. .
Ambac Assurance Corporation (Ambac), a Wisconsin stock insurance corporation, in consideration of the payment of the
premium and subject to the terms of this Policy, hereby agrees to pay to The Bank of New York, as trustee, or its successor (the
"Insurance Trustee"), for the benefit of the Holders, that portion of the principal of and interest on the above-described obligations
(the "Obligations") which shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Obligor.
Ambac will make such payments to the Insurance Trustee within one (1) business day following written notification to Ambac of
Nonpayment. Upon a Holder's presentation arid surrender to the Insurance Trustee of such unpaid Obligations or related coupons,
uncanceled and in bearer form and free of any adverse claim, the Insurance Trustee will disburse to the Holder the amount of
principal and interest which is then Due for Payment but is unpaid. Upon such disbursement, Ambac shall become the owner of
the surrendered Obligations and/or coupons and shall be fully subrogated to all of the Holder's rights to payment thereon.
In cases where the Obligations are issued in registered form, the Insurance Trustee shall disburse principal to a Holder only upon
presentation and surrender to the Insurance Trustee of the unpaid Obligation, uncanceled and free of any adverse claim, together
with an instrument of assignment, in form satisfactory to Ambac and the Insurance Trustee duly executed by the Holder or such
Holders duly authorized representative, so as to permit ownership of such Obligation to be registered in the name of Ambac or its
nominee. The Insurance Trustee shall disburse interest to a Holder of a registered Obligation only upon presentation -to the
Insurance Trustee of proof that the claimant is the person entitled to the payment of interest on the Obligation and delivery to the
Insurance Trustee of an instrument of assignment, in form satisfactory to Ambac and the Insurance Trustee, duly executed by the
Holder or such Holder's duly authorized representative, transferring to Ambac all rights under such Obligation to receive the
interest in respect of which the insurance disbursement was made. Ambac shall be subrogated to all of the Holders' rights to
payment on registered Obligations to the extent of any insurance disbursements so made.
In the event that a trustee or paying agent for the Obligations has notice that any payment of principal of or interest'on an
Obligation which has become Due for Payment and which is made to a Holder by or on behalf of the Obligor has been deemed a
preferential transfer and theretofore recovered from the Holder pursuant to the United Stares Bankruptcy Code in accordance with
a final, nonappealable order of a court of competent jurisdiction, such Holder will be entitled to payment from Ambac to the extent
of such recovery if sufficient funds are not otherwise available.
As used herein, the term "Holder" means any person other than (i) the Obligor or (ii) any person whose obligations constitute the
underlying security or source of payment for the Obligations who, at t}re time of Nonpayment, is the owner of an Obligation or of
a coupon relating to an Obligation. As used herein, "Due for Payment", when referring to the principal of Obligations, is when
the scheduled maturity date or mandatory redemption date for the application of a required sinking fund installment has been
reached and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by application
of required sinking fund installments), acceleration or other advancement of maturity; and, when referring 'to interest on the
Obligations, is when the scheduled date for payment of interest has been reached. As used herein, "Nonpayment" means the failure
of the Obligor to have provided sufficient funds to the trustee or paying agent for payment in full of all principal of and interest
on the Obligations which are Due for Payment.
'This Policy is noncancelable. The ptemium on.this Policy is nor -refundable for any reason, including payment of the Obligations
prior to maturity. This Policy does not insure against loss of any prepayment or other acceleration payment which at any time
may become due in respect of any Obligation, other than at the sole option of Ambac, nor against any risk other than Nonpayment.
In witness whereof, Ambac has caused this Policy to be affixed viirh a facsimile of its corporate seal and to be signed by its duly
authorized officers in facsimile to become effective as its original seal and signatures and binding upon Ambac by virtue of the
countersignature of its. duly authorized representative. I .
President
December 23, 2005
Effective Date:
THE BANK OF NEW YORK acknowledges that it has agreed
to perform the duties of Insurance Trustee under this Policy.
Form No.: 213-0012 (1101)
A-9067
Secretary
1 JL_
Authorize Representative
Authonzed Officer of Insurance Trustee
I
Ambac.
Endorsement
Policy for.
SAN BERNARDINO,
CALIFORNIA
Ambac Assurance Corporation
One State Street Plaza, 15th floor
New York, New York 10004
Telephone: (212) 668-0340
Attached to and forming part of policy No.:
S24928BE
Effective Date of Endorsement:
December 23, 2005
In the event that Ambac Assurance Corporation were to become insolvent, any claims arising
under the Policy would be excluded from coverage by the California insurance Guaranty
Association, established pursuant to the laws of the State of California.
Nothing herein contained shall be held to vary, alter, waive or extend any of the terms, conditions, provisions, agreements
or limitations of the above mentioned Policy other than as above stated.
In Witness Whereof, Ambac has caused this Endorsement to be Affixed with a facsimile of its corporate seal and to
be signed by its duly authorized officers in facsimile to become effective as its original seal and signatures and binding
upon Ambac by virtue of the countersignature of its duly authorized representative.
Ambac Assurance Corporation
•
President +�� dr Secretary
1�
Authorized Representative
Form No.:2B-0015 (7/97)
EXHIBIT B
FORM OF ENDORSEMENT TO AMBAC POLICY
Effective date: , 2016
Policy No. S24928BE is hereby amended as follows:
1. The first paragraph of the Policy is hereby replaced and amended in its entirety to read as
follows:
Ambac Assurance Corporation (Ambac), a Wisconsin stock insurance corporation, in
consideration of the payment of the premium and subject to the terms of this Policy, hereby agrees
to pay to Wells Fargo Bank, National Association or its successor (the "Trustee"), as trustee under
that certain Trust Agreement dated October 1, 2005 relating to the issuance of the above-described
obligations (the "Obligations"), for the benefit of the Holders, that portion of the principal of and
interest on the Obligations which shall become Due for Payment but shall be unpaid by reason of
Nonpayment by the Obligor.
2. The second paragraph of the Policy is hereby replaced and amended in its entirety to read
as follows:
Ambac will make such payments to the Trustee on the later of (a) one (1) business day following
written notification to Ambac of Nonpayment or (b) the business day on which the Obligations are
Due for Payment.
3. The third paragraph of the Policy is hereby replaced and amended in its entirety to read as
follows:
The Trustee shall disburse such payments of principal to a Holder only upon presentation of an
instrument of assignment in form and substance satisfactory to Ambac duly executed by the
Trustee, as the Holder's duly authorized representative, so as to permit ownership of such
Obligation to be registered in the name of Ambac or its nominee and transferring to Ambac all
rights under such Obligations to receive the principal of and interest on the Obligations. The
Trustee shall disburse such payments of interest to a Holder only upon presentation of an
instrument of assignment in form and substance satisfactory to Ambac duly executed by the
Trustee, as the Holder's duly authorized representative, transferring to Ambac all rights under such
Obligations to receive the interest on the Obligations in respect of which the insurance
disbursement was made. Ambac shall be subrogated to all of the Holders' rights to payment on the
Obligations to the extent of any insurance disbursements so made.
4. Nothing herein contained shall be held to vary, alter, waive or extend any of the
terms, conditions, provisions, agreements or limitations of the Policy other than as above
stated.
Ambac Assurance Corporation
Attention: Claims Processing
One State Street Plaza
New York, New York 10004
An electronic copy should be sent to:
claimsprocessing@ambac.com
CONVEYANCE: SUBROGATION
The Trustee hereby transfers, delivers and assigns to Ambac all rights to the payment of the Principal
Amount Currently Due for Payment and the Interest Amount Currently Due for Payment (collectively
referred to as the "Amount Currently Due for Payment"), together with any rights related to such Amount
Currently Due for Payment, with respect to the bonds identified above which bonds are now "Due for
Payment" as defined in the Policy, but only to the extent of payment by or on behalf of Ambac of the
above Amount Claimed Under the Policy. The Trustee agrees that Ambac shall also be subrogated to all
of the rights of the "Holders" as defined in the Policy, including all rights to payment, to the extent of
such payments made by or on behalf of Ambac. The Trustee represents and warrants that it has full
corporate power and authority to execute and deliver this Claim and Assignment For n and this Claim and
Assignment Form has been duly authorized, executed and delivered by the Trustee and constitutes a legal,
valid and binding obligation of the Trustee enforceable in accordance with its terns. The Trustee agrees
that Ainbac may exercise any option, vote, right, power or the like (including, but not limited to any such
rights arising in context of a bankruptcy, insolvency, liquidation or other reorganization of the Bond
Issuer), it may have to the extent of payment by or on behalf of Ambac of the above Amount Claimed
Under the Policy with respect to the bonds identified above.
The Trustee agrees to make a notation on the insured bonds and in the bond register or other document of
record that Ambac is subrogated to and assigned all of the rights of the Holder as described hereinabove
and to hold those bonds for which payment of principal at final maturity has been made in an uncanceled
form and manner acceptable to Ambac and the Trustee.
[TRUSTEE]
0
C-2
EXHIBIT D
FORM OF TRUSTEE'S NOTICE TO AMBAC OF INSUFFICIENT FUNDS
[DATE]
Ambac Assurance Corporation
Attn.: Surveillance Department and General Counsel
One State Street Plaza
New York, New York 10004
claimsprocessing@ambac.com
Re: Notice Regarding Insufficient Funds for Payment of [DATE] Debt Service for San Bernardino
Taxable Pension Obligation Bond, Cusip: (the "Bonds"):
Reference is made to that certain (i) Trust Agreement, dated as of October 1, 2005, as
supplemented by a First Supplemental Trust Agreement, dated as of ., 2017 (collectively, the
"Trust Agreement"), by and between the City of San Bernardino (the "City") and Wells Fargo Bank,
National Association ("Wells Fargo"), as Trustee, pursuant to which the Bonds were issued. Wells Fargo
hereby certifies that:
1. The undersigned is an authorized officer of the Trustee.
2. Pursuant to the terms of the Bonds and the Trust Agreement, payment is due to the holders of the
Bonds on [DATE] (the "Payment Due Date").
3. Pursuant to Section 4.02 of the Trust Agreement, the Trustee is currently holding [$ in the
Bond Fund, which is not sufficient to make the [$ ] in debt service due on [DATE] for the
Bonds. The total amount of deficiency due on the Bonds is $-
4. Wiring instructions for payment of the deficiency amount to the Trustee are as follows:
Bank: Wells Fargo Bank, N.A.
ABA 121000248
Beneficiary Name: Corporate Trust
Beneficiary Account No. 0001038377
For further credit: 18613300
Attn: T.Hempeck re: San Bernardino
Ref- CITY OF SAN BERNARDINO, CALIFORNIA
In Witness Whereof, the Trustee has executed and delivered this Notice as of [DATE].
[Trustee]
LM
D-1
EXHIBIT C TO RESOLUTION
Commerzbank Note
It is hereby certified that all acts, conditions and things required to be done, have
happened or will be performed precedent to and in the issuance of this. Note or in the creation of
the debt of which this is evidence, have been done, or have happened and been performed in
regular and due form and manner as required by law, and that the debt represented by this Note
is not in excess of any constitutional or statutory limitation.
This Note shall not bear interest other than Default Interest, solely as set forth in the
Agreement.
City agrees to pay certain costs and expenses, incurred in connection with the
enforcement of this Note in accordance with the Agreement.
THIS NOTE SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REFERENCE TO CONFLICTS OF LAWS.
CITY OF SAN BERNARDINO, CALIFORNIA
By: _
Name:
Title:
PROMISSORY NOTE
THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY BE
TRANSFERRED IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE
EXCHANGE AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE
AND THE OBLIGATIONS REPRESENTED HEREBY MUST BE RECORDED IN THE
REGISTER MAINTAINED BY PAYING AGENT PURSUANT TO THE TERMS OF
SUCH EXCHANGE AGREEMENT. NO TRANSFERS ARE PERMITTED EXCEPT IN
ACCORDANCE WITH THE EXCHANGE AGREEMENT.
THE TRANSFER OF THIS NOTE OR ANY PORTION HEREOF MAY BE MADE
ONLY IN AUTHORIZED DENOMINATIONS TO A PURCHASER WHO QUALIFIES
AS AN ACCREDITED INVESTOR OR A QUALIFIED INSTITUTIONAL BUYER, AS
SUCH TERMS ARE DEFINED IN THE EXCHANGE AGREEMENT.
No. [] San Bernardino, California
[ ... 1,20[ 1
For value received, the undersigned, CITY OF SAN BERNARDINO, CALIFORNIA, a
duly organized, validly existing and operating local agency (as defined in Section 53570 of the
California Code) under the laws of the State of California ("C"), unconditionally promises to
pay to Ambac Assurance Corporation or its permitted assigns (the "Noteholder"), the principal
amount of fifteen million, two hundred seventeen thousand, seven hundred two DOLLARS and
fifty cents ($15,217,702.50), pursuant to that certain Exchange Agreement, dated as of
2017 (as may be amended, amended and restated, modified or supplemented
from time to time, the "Agreement'), by and among City, the Noteholders from time to time
party thereto, and Wells Fargo Bank, N.A., as Paying Agent, together with any and all other
amounts owed by City to the Noteholder thereunder.
In accordance with the terms and provisions of the Agreement, payments of principal of,
and interest on, this Note are to be made to the Paying Agent for the account of, and subsequent
distribution to, the Noteholder, in lawful money of the United States of America.
This is one of the Notes referred to in the Agreement and is entitled to the benefits
thereof and is subject to all terms, provisions and conditions thereof. Capitalized terms used and
not defined herein shall have the meanings set forth in the Agreement.
This Note is made in connection with and is payable as provided in the Agreement.
Reference is hereby made to the Agreement for the provisions, among others, with respect to the
rights, duties and obligations of City and the rights of the holder of this Note.
The amount hereof is payable in accordance with the Agreement. As set forth in the
Agreement, City may, at its option, prepay the Notes without premium or penalty, in whole or in
part. Any optional prepayment hereunder shall be in the minimum amount of One Hundred
Thousand Dollars ($100,000) (unless the Notes are being repaid in full).
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28
RESOLUTION NO.
RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO ACTING AS THE SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY AUTHORIZING THE AMENDMENT OF DOCUMENTS RELATING TO
THE REFUNDING CERTIFICATES OF PARTICIPATION (1999 POLICE STATION,
SOUTH VALLE AND 201 NORTH E STREET PROJECTS), APPROVING THE
EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS IN CONNECTION
THEREWITH AND CERTAIN OTHER MATTERS
WHEREAS, the City of San Bernardino (the "City"), a municipal corporation and
charter city duly organized and existing under and pursuant to the Constitution and laws of the
State of California, has previously authorized the execution and delivery of Refunding
Certificates of Participation (1999 Police Station, South Valle and 201 North E Street Projects)
(the "Certificates") to refinance the acquisition of certain facilities; and
WHEREAS, the Certificates were executed and delivered pursuant to a Trust
Agreement, dated as of September 1, 1999 (the "Trust Agreement"), by and among the City, the
San Bernardino Joint Powers Financing Authority (the "Authority"), a joint exercise of powers
authority duly organized and existing under and pursuant to the Constitution and laws of the
State of California, and U.S. Bank National Association, as trustee; and
WHEREAS, the Certificates were secured by payments made by the City under a Police
Station Lease Agreement, dated as of September 1, 1999 (the "Police Station Lease
Agreement"), by and between the Authority, as lessor of certain assets described in the Police
Station Lease Agreement, and the City, as lessee; and
WHEREAS, the Authority has determined that it is in the best interest of the Authority
to amend the Trust Agreement and the Police Station Lease Agreement in order to enable the
City and the Authority to apply certain moneys held thereunder to prepay the Certificates; and
WHEREAS, Authority has determined that it is in the best interest of the Authority,
upon the prepayment of the Certificates, to enter into a termination agreement for the Police
Station Lease Agreement with the City (the "Police Station Lease Termination") and to enter
j into a termination agreement for a Police Station Site and Facility Lease dated as of September
1, 1999, with the City as successor lessor to the Successor Agency to the Redevelopment
Agency of the City of San Bernardino (the "Site and Facility Lease Termination").
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and all documents and instruments and to do and cause to be done any and all acts and things
necessary or proper for carrying out the transactions contemplated by Amendment No. 1 to Trust
Agreement, Amendment No. 1 to Police Station Lease Agreement, the Police Station Lease
Termination, the Site and Facility Lease Termination and this Resolution. All prior actions of
the Authorized Officers and other officers or staff of the Authority with respect to this matter are
hereby ratified and approved.
Section 6. Unless otherwise defined herein, all terms used herein and not otherwise
defined shall have the meanings given such terms in the Trust Agreement unless the context
otherwise clearly requires.
Section 7. This Resolution shall take effect immediately upon its adoption.
3
EXHIBIT A TO RESOLUTION
Amendment No. 1 to Trust Agreement
SECTION 3. Section 1.01 shall be amended to add the following definitions in the
appropriate alphabetical order:
"Police Station Lease Amendment" means that certain Amendment No. 1 to
Police Station Lease Agreement dated as of f, by and between the
Authority and the City."
"Police Station Lease Agreement" means that certain Police Station Lease
Agreement, dated as of September 1, 1999, by and between the Authority, as
lessor, and the City, as lessee, as amended by the Police Station Lease
Amendment."
SECTION 4. Section 3.06(a) is hereby deleted in its entirety and replaced with the
following:
"(a) The moneys in the Capital Reserve Fund shall be disbursed by the
Trustee as follows: (i) at the written direction of the City with the prior written
consent of the Bond Insurer, as directed by the City Manager of the City to be
applied to pay certain capital expenses within the City; or (ii) at the written
direction of the City with the prior written consent of the Bond Insurer, to
prepay Lease Payments and to apply such funds: (A) to the defeasance of a
portion of the Certificates in accordance with Section 14.01 hereof in a
principal amount equal to the aggregate unpaid principal component of such
Lease Payments; and (B) to the optional partial redemption of Certificates in a
principal amount equal to the aggregate unpaid principal component of such
Lease Payments on the earliest practicable date after such redemption for which
notice of redemption can be given in accordance with Section 4.03 hereof. The
Trustee may disburse moneys from the Capital Reserve Fund: (1) with respect
to payment of capital expenses, only upon receipt of: (1) a sequentially
numbered requisition or an instruction, signed by the Executive Director of the
Authority or the City Manager of the City, as applicable (or such officer's
designee, such designation to be evidenced in writing delivered to the Trustee),
setting forth the capital improvements to be performed or reimbursed and the
amounts to be disbursed for payment or reimbursement of such capital
improvements; and (II) the written consent of the Bond Insurer; or (2) with
respect to prepayment of the Police Station Lease Agreement, only upon receipt
of. (I) an instruction signed by the Executive Director of the Authority or the
City Manager of the City, as applicable (or such officer's designee, such
designation to be evidenced in writing delivered to the Trustee): (x) setting
forth the amounts to be disbursed from the Capital Reserve Fund for
prepayment of Lease Payments; (y) certifying that, together with amounts
disbursed from the Reserve Fund pursuant to Section 6.06, the total amount of
funds to be released is sufficient to prepay the Lease Payments in full; and (z)
directing the Trustee to redeem in accordance with Section 4.01(a) Certificates
in an aggregate principal amount equal to the principal component of such
Lease Payments at the earliest practicable date for which notice of redemption
can be given in accordance with Section 4.03 hereof; (11) the written consent of
the Bond Insurer; and (III) the certification required by Section 4.02. Any
requisition or instruction hereunder shall be signed by the Authority
2
Disclosure Agreement) in accordance with the terms of the Continuing Disclosure
Agreement and Rule 15c2-12 as adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended.
(c) The City is not a party to any agreement that modifies or purports to modify any of
the 1999 Refunding Certificates of Participation Agreements (Police Station/201
North E Street/South Valle).
(d) Each of the 1999 Refunding Certificates of Participation Agreements (Police
Station/201 North E Street/South Valle) is in full force and effect.
(e) The City has duly authorized its execution, delivery and performance of this
Amendment and the Police Station Lease Amendment, and each of this Amendment
and the Police Station Lease Amendment constitutes a legal, valid and binding
obligation of the City enforceable in accordance with its terms.
SECTION 8. THIS AMENDMENT SHALL BE CONSTRUED AND GOVERNED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
SECTION 9. This Amendment shall become effective upon the satisfaction of each of the
following conditions precedent:
(a) The City has executed and delivered the Police Station Lease Amendment, in the
form annexed as Exhibit A hereto.
(b) The City has cured, or provided adequate assurance acceptable to the Trustee and the
Bond Insurer that it will promptly cure, the Defaults.
(c) The City shall have caused to be delivered to the Trustee, the City and the Bond
Insurer a written opinion from nationally -recognized bond counsel, in substantially
the form attached hereto as Exhibit B.
(d) The United States Bankruptcy Court for the Central District of California, Riverside
Division, or such other court that lawfully exercises jurisdiction (the "Bankruptcy
Court") over the case commenced by the City under chapter 9 of the Bankruptcy
Code and styled In re City of San Bernardino, California, Case No. 6:12 -28006 -MJ,
has issued a final and non -appealable order, in form and substance satisfactory to the
Trustee and the Bond Insurer, approving the Plan of Adjustment of Debts of City of
San Bernardino, California (May 29, 2015) (as such Plan of Adjustment may be
amended from time to time with the consent of the Bond Insurer, the "Plan of
Adjustment").
(e) The City provides a written certification from a City Representative that, as of the
date on which the Amendment becomes effective, each of the representations set
forth in SECTION 7 is true and correct.
(f) The "Effective Date" under the Plan of Adjustment has occurred.
[Signature Page to 199 Trust Agreement Amendment]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to Trust
Agreement to be duly executed as of the day and year first written above.
U.S. BANK NATIONAL ASSOCIATION
Authorized Officer
SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
Chairperson
CITY OF SAN .BERNARDINO
LIM
S-1
BOND
OBLIGATION
DOCUMENT
EVIDENCING
REAL PROPERTY
SECURITY
LEASED PROPERTY APN NO.
DESCRIPTION
The Police Station 0140-281-52
TAX AMOUNT
DUE
(as of 3/31/16)
Refunding
City obligated to None
$710,939.33
Certificates of
make payments
Site located at 710 N.
Participation
under lease
"D" Street.
(Police
between the City
Station, South
and the JPFA for
Legal description of a
Valle and 201
property
single parcel set forth
North E
identified as the
in Exhibit A to lease
Street) ("1999
Police Station Site.
between City and
Refunding
JPFA identified as
Certificates")
Parcel 1 of Parcel
Map No. 14725.
This corresponds to
APN 0140-281-52
perthe County
Assessor records.
The Assessor's
records reflect that
this parcel was
transferred from the
Redevelopment
Agency ("RDA") to
the Economic
Development Corp.
("EDC") in March
2011 and then
subsequently
transferred to the
Successor Agency in
November 2014. The
taxes due for this
APN are $710,939.33.
described as the
South Valle
improvements
(legally described
in Exhibit Aas
consisting of four
separate parcels
which was
recorded as Doc.
No.
19990408318).
San
City obligated to
Bernardino
make payments
Joint Powers
for "Project" as
Financing
defined in
Authority
Indenture.
Lease Revenue
Indenture defines
Bonds (City
Project as "City
Hall Project)
Hall and the
Series 1996)
Parking Structure
described
collectively in
Exhibit "A" to the
Lease
Agreement" The
term "Lease
Agreement"
means the "Lease
Purchase
Agreement dated
December 1,
1996" between
the Authority and
the City. This
None
Street, Waterman
Avenue and Caroline
Street based on the
legal descriptions in
the South Valle lease.
Parcels described in
Exhibits A to Lease
Agreement contain
legal descriptions
of Parcels A, B, B-1,
C, D and Parking
Structure.
Parcels A, B and 13-
1 reference
portions of
"Parcels 24 and 25
of Parcel Map 688
in City of San
Bernardino...."
These parcels
were
subsequently split
and the legal
description of the
property now
appearsto
correspond with
the following
parcels shown on
Assessor Parcel
Map No. 0134
pages 25 and 31:
(a) 0134-251-58
(identified as
Plaza East); (b)
Parcel A and B-1
That portion of
this legal
description now
identified as
Plaza East, APN
0134-251-58,
has outstanding
taxes due of
$46,654.93.
No known taxes
due for the
remainder of the
legally described
property which
appears to be the
land under City
Hall (APN 0134-
251-51).
transferred to the
Successor Agency
in November
2014. The taxes
due for this APN
are $317,435.69.
EXHIBIT A
Amendment No. 1 to Police Station Lease Agreement
"Such option shall be exercised, in the event of prepayment in full, by
depositing with said notice cash and/or instructing the Trustee to apply
moneys held in the Capital Reserve Fund, in an aggregate amount which,
together with amounts then on deposit in the Reserve Fund, the
Insurance and Condemnation Fund and the Lease Payment Fund, will be
sufficient to pay the aggregate unpaid component of the Lease Payments
attributable to the Certificates then due but unpaid, or in the event of
prepayment in part, by depositing with said notice cash, and/or
instructing the Trustee to apply moneys held in the Capital Reserve
Fund, in each case in an amount divisible by $5,000 equal to the amount
desired to be prepaid together with any Lease Payments attributable to
the Certificates then due but unpaid."
SEC'T'ION 4. THIS AMENDMENT SHALL BE CONSTRUED AND GOVERNED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW.
SECTION 5. This Amendment shall become effective upon the later to occur of its
execution and delivery and the satisfaction or waiver of the conditions precedent to the effectiveness
of that certain Amendment No. 1 to the Trust Agreement, dated as of I ], 2017.
SECTION 6. This Amendment may be executed in several counterparts, each of which
shall be deemed as an original, all of which shall constitute but one of the same instrument.
SECTION 7. Except as otherwise amended pursuant to this Amendment, the Original
Police Station Lease Agreement shall remain unchanged, is hereby ratified and confirmed, and shall
continue to be in full force and effect and binding upon the parties hereto.
[This space intentionally left blank; signature page immediately follows.]
2
EXHIBIT B
Opinion of Bond Counsel
_, 2017
City of San Bernardino
San Bernardino Joint Powers Financing Authority
U.S. Bank National Association
National Public Finance Guarantee Corporation
Page Two
resolutions of the City and the Authority approving the Amendments; and (v) such other information
and documents as we have deemed necessary to render the opinions set forth herein.
Based upon and in reliance on the foregoing, we are of the opinion that:
(a) The Amendments have been duly authorized, executed and delivered by the City and
the Authority in accordance with the amendment provisions of the Original Agreements and
constitute amendments that the City and the Authority deem desirable and which do not materially
adversely affect the interests of the Owners of the Certificates.
(b) Assuming due authorization, execution and delivery of the Trust Agreement
Amendment by the Trustee, the Amendments constitute the legal, valid and binding obligations of
the City and the Authority enforceable against the City and the Authority in accordance with their
respective terms, except as the same may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights, by equitable principles, by the exercise of judicial discretion in
appropriate cases and by the limitations on remedies against public agencies in the State of
California. In addition, neither the execution and delivery of the Amendments nor any of the
transactions contemplated thereby will adversely affect the enforceability of the Original Agreements
against the City and the Authority, as applicable.
(c) Neither the execution and delivery of the Amendments nor any of the transactions
contemplated thereby will adversely affect the exclusion from gross income for federal income tax
purposes of interest with respect to the Certificates. In order for interest with respect to the
Certificates to be excluded from gross income for federal income tax purposes subsequent to their
date of issuance, it is necessary that certain provisions of the Internal Revenue Code of 1986, as
amended, be complied with on a continuous basis. We have made no independent investigation as to
whether there has been such compliance in the present case. Accordingly, we express no opinion as
to whether interest with respect to the Certificates is presently excluded from gross income for
federal income tax purposes or is exempt from State of California personal income taxation as of the
date of this opinion. This opinion letter does not constitute a reaffirmation of any opinions
previously delivered by this firm or any other with respect to the Certificates, the Original
Agreements or any amendments thereto.
The opinions expressed herein are based upon our analysis and interpretation of existing
laws, regulations, rulings and judicial decisions, and the foregoing opinions cover certain matters not
directly addressed by such authorities. We call attention to the fact that such opinions may be
affected by actions taken or events occurring after the date hereof. We have not undertaken to
determine, or to inform any person, whether such actions or events are taken or occur. We expressly
disclaim any obligation to update this opinion letter. No attorney-client relationship exists between
us and you with respect to the Certificates or the Amendments.
EXHIBIT B TO RESOLUTION
Amendment No. 1 to Police Station Lease Agreement
"Such option shall be exercised, in the event of prepayment in full, by
depositing with said notice cash and/or instructing the Trustee to apply
moneys held in the Capital Reserve Fund, in an aggregate amount which,
together with amounts then on deposit in the Reserve Fund, the
Insurance and Condemnation Fund and the Lease Payment Fund, will be
sufficient to pay the aggregate unpaid component of the Lease Payments
attributable to the Certificates then due but unpaid, or in the event of
prepayment in part, by depositing with said notice cash, and/or
instructing the Trustee to apply moneys held in the Capital Reserve
Fund, in each case in an amount divisible by $5,000 equal to the amount
desired to be prepaid together with any Lease Payments attributable to
the Certificates then due but unpaid."
SECTION 4. THIS AMENDMENT SHALL BE CONSTRUED AND GOVERNED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW.
SECTION 5. This Amendment shall become effective upon the later to occur of its
execution and delivery and the satisfaction or waiver of the conditions precedent to the effectiveness
of that certain Amendment No. 1 to the Trust Agreement, dated as of [ _.._._], 2017.
SECTION 6. This Amendment may be executed in several counterparts, each of which
shall be deemed as an original, all of which shall constitute but one of the same instrument.
SECTION 7. Except as otherwise amended pursuant to this Amendment, the Original
Police Station Lease Agreement shall remain unchanged, is hereby ratified and confirmed, and shall
continue to be in full force and effect and binding upon the parties hereto.
[This space intentionally left blank; signature page immediately follows.]
2
EXHIBIT C TO RESOLUTION
Police Station Lease Termination
TERMINATION OF POLICE STATION LEASE AGREEMENT
THIS TERMINATION OF LEASE (this "Agreement") is dated as of [ 1, 2017 and
effective as of the date of recordation hereof, by and between the SAN BERNARDINO JOINT
POWERS FINANCING AUTHORITY, a public body corporate and politic and existing under the
laws of the State of California (the "Authority"), as lessor, and the CITY OF SAN BERNARDINO,
a municipal corporation and charter city duly organized and existing under the laws of the State
of California (the "City"), as lessee.
RECITALS
A. The Authority, the City and U.S. Bank National Association (the "Trustee"), entered
into a Trust Agreement, dated as of September 1, 1999 (as amended, the "Trust Agreement"),
pursuant to which the City caused the execution and delivery of $15,480,000 original aggregate
principal amount of Refunding Certificates of Participation (1999 Police Station, South Valle and
201 North E Street Projects) (the "Certificates").
B. The Authority, as lessor, and the City, as lessee, entered into that certain Police
Station Lease Agreement (the "Lease Agreement"), dated as of September 1, 1999, which was
recorded as Document No. 408313 on September 29, 1999 in the Official Records of the County of
San Bernardino, State of California (the "Official Records"), pursuant to which the Authority leased
certain property described therein (the "Property") to the City. A legal description of the Property is
attached hereto as Exhibit A.
C. The City has notified the Authority of its intention to partially defease the Certificates
as of the date hereof and to exercise its option of partial redemption of Certificates in a principal
amount equal to the aggregate unpaid principal component of the Lease Payments (as such term is
defined in the Lease Agreement) on the earliest practicable date for which notice of redemption can
be given in accordance with Section 4.03 of the Trust Agreement.
D. The City hereby certifies that it has caused to be delivered moneys (the "Defeasance
Amount"), pursuant to that certain Escrow Agreement, dated as of even date hereof, by and between
the City and U.S. Bank National Association, as escrow agent (the "Escrow Agent"), sufficient to
prepay the Lease Payments in full, in order to partially defease the Certificates as of the date hereof
and provide funds to exercise its option of partial redemption of the Certificates on September 1,
2017.
E. In connection with the partial defeasance of the Certificates, the City and the
Authority now desire to terminate and discharge the Lease Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Recordation. This Agreement shall not be recorded until the City deposits the
Defeasance Amount with the Escrow Agent.
[Signature Page to Police Station Lease Termination]
IN WITNESS WHEREOF, this Agreement has been executed by each party's respective
duly authorized officers, as of the date first above written.
ATTEST:
Georgeann Hanna
City Clerk
ATTEST:
Georgeann Hanna
Secretary
APPROVED AS TO FORM:
Gary Saenz
City Attorney
CITY OF SAN BERNARDINO
Mark Scott
City Manager
SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
in
S-1
R. Carey Davis
Chairperson
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or
validity of that document.
STATE OF CALIFORNIA )
ss.
COUNTY OF SAN BERNARDINO )
On , 2017 before me, Notary Public,
personally appeared [ 1, who proved to me on the basis of satisfactory evidence to be
the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal
EXHIBIT D TO RESOLUTION
Site and Facility Lease Termination
TERMINATION OF POLICE STATION SITE AND FACILITY LEASE
THIS TERMINATION OF LEASE (this "Agreement") is dated as of I j, 2017 and
effective as of the date of recordation hereof, by and between the CITY OF SAN BERNARDINO, a
municipal corporation and charter city duly organized and existing under the laws of the State of
California (the "City"), as successor lessor to the Redevelopment Agency of the City of San
Bernardino (the "Agency"), and the SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY duly organized and existing under and by virtue of the laws of the State of California
(the "Authority"), as lessee.
RECITALS
A. The Authority, the City and U.S. Bank National Association (the "Trustee"), entered
into a Trust Agreement, dated as of September 1, 1999 (as amended, the "Trust Agreement"),
pursuant to which the City caused the execution and delivery of $15,480,000 original aggregate
principal amount of Refunding Certificates of Participation (1999 Police Station. South Valle and
201 North E Street Projects) (the "Certificates").
B. The Agency, as lessor, and the Authority, as lessee, entered into that certain Police
Station Site and Facility Lease (the "Site and Facility Lease"), dated as of September 1, 1999, which
was recorded as Document No. 408312 on September 29, 1999 in the Official Records of the County
of San Bernardino, State of California (the "Official Records"), pursuant to which the Agency
leased certain property described therein (the "Property") to the Authority. A legal description of the
Property is attached hereto as Exhibit A.
C. The Authority, as lessor, and the City, as lessee, entered into that certain Police
Station Lease Agreement (the "Lease Agreement"), dated as of September 1, 1999, which was
recorded as Document No. 408313 on September 29, 1999 in the Official Records, pursuant to which
the Authority leased the Property to the City.
D. On June 28, 2016, pursuant to the City's Long Range Property Management Plan, the
Property was transferred from the Agency to the City. By operation of law, the City has become the
lessor under the Site and Facility Lease and assumed all the rights and obligations of the Agency
pursuant to the Site and Facility Lease.
E. The term of the Site and Facility Lease shall end when all Lease Payments (as such
term is defined in the Lease Agreement) have been fully paid or provided for in accordance with the
terms of the Lease Agreement.
F. The City has notified the Authority of its intention to partially defease the Certificates
as of the date hereof and to exercise its option of partial redemption of Certificates in a principal
amount equal to the aggregate unpaid principal component of the Lease Payments on the earliest
practicable date for which notice of redemption can be given in accordance with Section 4.03 of the
Trust Agreement.
G. The City hereby certifies that it has caused to be delivered moneys (the "Defeasance
Amount"), pursuant to that certain Escrow Agreement, dated as of even date hereof, by and between
the City and U.S. Bank National Association, as escrow agent (the "Escrow Agent"), sufficient to
[Signature Page to Police Station Site Lease Termination]
IN WITNESS WHEREOF, this Agreement has been executed by each party's respective
duly authorized officers, as of the date first above written.
ATTEST:
Georgeann Hanna
City Clerk
ATTEST:
Georgeann Hanna
Secretary
APPROVED AS TO FORM:
Gary Saenz
City Attorney
CITY OF SAN BERNARDINO
In
Mark Scott
City Manager
SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
By:
R. Carey Davis
Chairperson
S-1
A notary public or other officer completing this certificate verifies only the identity of the maiviauai
who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or
validity of that document.
STATE OF CALIFORNIA )
ss.
COUNTY OF SAN BERNARDINO )
On , 2017 before me, , Notary Public,
personally appeared f 1, who proved to me on the basis of satisfactory evidence to be
the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal
City of San Bernardino
Civil Service Department
Date: May 15, 2017
To: Honorable Mayor and City Council Members
From: Rebekah Kramer, Chief Examiner
Subject: Replacement Pages - Charter Implementation Update - Item
Me (Packet Pages 477 - 479)
Attached you will find replacement pages for Item #13e (packet pages #477 - 479)
scheduled for consideration by the Mayor and City Council on the May 15, 2017.
Corrections were made to Section 6 of the Resolution as presented below.
SECTION 6: Any act previously performed by the Chief Examiner in the Rules other than the acts
related to disciplinary appeals referenced in Rules 513-513.5 and 601 are hereby delegated to a
human resources department with approval from the Appointing Power, as such term is used in
Rule 103
Rese Fees nonak +
RESOLUTION NO.
RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY O
211 BERNARDINO, CALIFORNIA, RENAMING THE CIVIL SERVICE RULES A
REGULATIONS THE PERSONNEL RULES
3 AMENDMENTS TO RULES 513-513.5 AND 601 PURSU�A`NT O CHAP ER 2 501
THE SAN BERNARDINO MUNICIPAL CODE; CONFORMING RULES 513-513.5 A
4 601 TO THE NEW CHARTER BY CHANGING REFERENCES FROM THE CI1
SERVICE BOARD TO THE PERSONNEL COMMISSION; DELEGATING AUTHORI
5 FOR ACTIONS OTHER THAN DISCIPLINARY APPEALS PREVIOUSLY ASSIGN
IN THE RULES TO THE CIVIL SERVICE BOARD AND CHIEF EXAMINER TO
6 DESIGNEE OF THE APPOINTING POWER UNDER A HUMAN RESOURCI
DEPARTMENT
7 WHEREAS, the voters of the City of San Bernardino, at an election held
s
November 8, 2016, approved a new City Charter; and
9
WHEREAS, the new City Charter went into effect upon filing with the Secreta
10
11 of State on January 31, 2017; and
12 WHEREAS, prior to the adoption of the new City Charter, responsibility fc
13 hearing appeals of disciplinary action by classified City employees was assigned to th
14 Civil Service Board; and
15 WHEREAS, Section 604 of the new City Charter assigns responsibility fo
16 1 hearing appeals of disciplinary action by City employees to the Personnel Commission
17 land
1s WHEREAS, Section 604 of the new City Charter states that the
19 responsibility of the Personnel Commission shall be to hear appeals of disci lin
20 p
action by City employees; and
21
22 WHEREAS, Section 508 of the new City Charter states that the administration
23 employee matters shall be delegated to a personnel or human resources departure
and
24
25
1
I WHEREAS, section 2.50.010 of the San Bernardino Municipal Code states that
2 all amendments to the Civil Service Rules and Regulations shall be adopted b
3 Resolution of the Mayor and City Council.
4 NOW, THERERFORE, BE IT RESOLVED BY THE MAYOR AND CITY
5 COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
6
SECTION 1: The above Recitals are true and correct and are incorporate
s
herein by this reference.
9 SECTION 2: The City of San Bernardino's Civil Service Rules and Regulation
10 for the Classified Service shall heretofore be known as the Personnel Rules ("Rules"),
11 SECTION 3: The amendments to Rules 513-513.5 and 601, attached hereto a
12 Exhibit "A" and incorporated herein, are hereby approved.
13 SECTION 4: The Personnel Commission shall be responsible for hearing o
14 disciplinary appeals referenced in and pursuant to Rules 513-513.5 and 601.
15 SECTION 5: Any act previously performed by the Civil Service Board in the
16
Rules other than the acts related to disciplinary appeals referenced in Rules 513-513.
17
18 and 601 are hereby delegated to a human resources department with approval from the
Appointing Power, as such term is used in Rule 103.
19
zo
SECTION 6: Any act previously performed by the Chief Examiner in theRule
21 other than the acts related to disciplinary appeals referenced in Rules 513-513.5 and
22 601 are hereby delegated to a human resources department with approval from the
23 Appointing Power, as such term is used in Rule 103.
24
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3
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5
6
7
s
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RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAI
BERNARDINO, CALIFORNIA, RENAMING THE CIVIL SERVICE RULES ANI
REGULATIONS THE PERSONNEL RULES ("RULES"); APPROVIM
AMENDMENTS TO RULES 513-513.5 AND 601 PURSUANT TO CHAPTER 2.50 O
THE SAN BERNARDINO MUNICIPAL CODE; CONFORMING RULES 513-513.5 ANI
601 TO THE NEW CHARTER BY CHANGING REFERENCES FROM THE CIVI
SERVICE BOARD TO THE PERSONNEL COMMISSION; DELEGATING AUTHORIT
FOR ACTIONS OTHER THAN DISCIPLINARY APPEALS PREVIOUSLY ASSIGNEI
IN THE RULES TO THE CIVIL SERVICE BOARD AND CHIEF EXAMINER TO
DESIGNEE OF THE APPOINTING POWER UNDER A HUMAN RESOURCE
DEPARTMENT
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by th
Mayor and City Council of the City of San Bernardino, California, at a meeting thereo
held on the day of , 2017, by the following vote, to wit:
COUNCILMEMBERS: AYES NAYES ABSTAIN ABSENT
MARQUEZ
BARRIOS
VALDIVIA
SHORETT
NICKEL
RICHARD
MULVIHILL
Georgeann Hanna, City Clerk
The foregoing Resolution is hereby approved this
2017.
Approved as to form:
Gary D. Saenz, City Attorney
Un
3
of
R. Carey Davis, Mayor
City of San Bernardino
City of San Bernardino
Civil Service Department
Date: May 15, 2017
To: Honorable Mayor and City Council Members
From: Rebekah Kramer, Chief Examiner
Subject: Replacement Pages - Charter Implementation Update - Item
#13e (Packet Pages 477 - 479)
Attached you will find replacement pages for Item #13e (packet pages #477 - 479)
scheduled for consideration by the Mayor and City Council on the May 15, 2017.
Corrections were made to Section 6 of the Resolution as presented below.
SECTION 6: Any act previously performed by the Chief Examiner in the Rules other than the acts
related to disciplinary appeals referenced in Rules 513-513.5 and 601 are hereby delegated to a
human resources department with approval from the Appointing Power, as such term is used in
Rule 103
N z'ric-rTc•
I RESOLUTION NO. ___
RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF S
2 BERNARDINO, CALIFORNIA, RENAMING THE CIVIL SERVICE RULES A
REGULATIONS THE PERSONNEL RULES
3 AMENDMENTS TO RULES 513-513.5 AND 601 PURSUANT TO CHAP ER 2 501
THE SAN BERNARDINO MUNICIPAL CODE; CONFORMING RULES 513-513.5 Ai
4 601 TO THE NEW CHARTER BY CHANGING REFERENCES FROM THE CII
SERVICE BOARD TO THE PERSONNEL COMMISSION;
DELEGATING AUTHORI
5 FOR ACTIONS OTHER THAN DISCIPLINARY APPEALS PREVIOUSLY ASSIGNI
IN THE RULES TO THE CIVIL SERVICE BOARD AND CHIEF EXAMINER TO
6 DESIGNEE OF THE APPOINTING POWER UNDER A HUMAN RESOURCI
DEPARTMENT
7 WHEREAS, the voters of the City of San Bernardino, at an election held
s
November 8, 2016, approved a new City Charter; and
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10 WHEREAS, the new City Charter went into effect upon filing with the Secreta
11 of State on January 31, 2017; and
12 WHEREAS, prior to the adoption of the new City Charter, responsibility fi
13 hearing appeals of disciplinary action by classified City employees was assigned to th
14 Civil Service Board; and
15 WHEREAS, Section 604 of the new City Charter assigns responsibility fo
16 hearing appeals of disciplinary action by City employees to the Personnel Commission
17 and
18 WHEREAS, Section 604 of the new City Charter states that the soled
19 responsibility of the Personnel Commission shall be to hear appeals of disciplina
20 action by City employees; and
21
WHEREAS, Section 508 of the new City Charter states that the administration oij
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23 employee matters shall be delegated to a personnel or human resources deoartmiznf-
ff
and
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WHEREAS, section 2.50.010 of the San Bernardino Municipal Code states
all amendments to the Civil Service Rules and Regulations shall be adopted
Resolution of the Mayor and City Council.
NOW, THERERFORE, BE IT RESOLVED BY THE MAYOR AND C
COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
SECTION 1: The above Recitals are true and correct and are incorporate
herein by this reference.
SECTION 2: The City of San Bernardino's Civil Service Rules and Regulatio
for the Classified Service shall heretofore be known as the Personnel Rules ("Rules"),
SECTION 3: The amendments to Rules 513-513.5 and 601, attached hereto ;
Exhibit "A" and incorporated herein, are hereby approved.
SECTION 4: The Personnel Commission shall be responsible for hearing
disciplinary appeals referenced in and pursuant to Rules 513-513.5 and 601.
SECTION 5: Any act previously performed by the Civil Service Board in tl
Rules other than the acts related to disciplinary appeals referenced in Rules 513-513
and 601 are hereby delegated to a human resources department with approval from tl
Appointing Power, as such term is used in Rule 103.
SECTION 6: Any act previously performed by the Chief Examiner in the Rul(
other than the acts related to disciplinary appeals referenced in Rules 513-513.5 ar
601 are hereby delegated to a human resources department with approval from t[
Appointing Power, as such term is used in Rule 103.
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RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAI
BERNARDINO, CALIFORNIA, RENAMING THE CIVIL SERVICE RULES ANI
REGULATIONS THE PERSONNEL RULES ("RULES"); APPROVINI
AMENDMENTS TO RULES 513-513.5 AND 601 PURSUANT TO CHAPTER 2.50 0
THE SAN BERNARDINO MUNICIPAL CODE; CONFORMING RULES 513-513.5 ANI
601 TO THE NEW CHARTER BY CHANGING REFERENCES. FROM THE CIVI
SERVICE BOARD TO THE PERSONNEL COMMISSION; DELEGATING AUTHORIT
FOR ACTIONS OTHER THAN DISCIPLINARY APPEALS PREVIOUSLY ASSIGNEI
IN THE RULES TO THE CIVIL SERVICE BOARD AND CHIEF EXAMINER TO ,
DESIGNEE OF THE APPOINTING POWER UNDER A HUMAN RESOURCE;
DEPARTMENT
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by th
Mayor and City Council of the City of San Bernardino, California, at a meeting thereo
held on the day of , 2017, by the following vote, to wit:
COUNCILMEMBERS: AYES NAYES ABSTAIN ABSENT
MARQUEZ
BARRIOS .
VALDIVIA
SHORETT
NICKEL
RICHARD
MULVIHILL
Georgeann Hanna, City Clerk
The foregoing Resolution is hereby approved this
2017.
Approved as to form:
Gary D. Saenz, City Attorney
0
3
of ,
R. Carey Davis, Mayor
City of San Bernardino
RNnRD
City Council Memorandum
o �r�
FD
Date May 15, 2016
To: Honorable Mayor and City Council Members
From: Mark Scott, City Manager
By: Gigi Hanna, City Clerk
John Paul Maier, Chief Deputy City Clerk
Subject: Amendment to Agenda Items 18 and 19
Attached are Exhibit B to the Resolution for Agenda Item 18 and Attachments 1 and 5 to
Agenda Item 19.
Please feel free to be in touch with the City Clerk Gigi Hanna (hanna gi(Qsbcity.org) or
Chief Deputy City Clerk John Maier (maier moa-sbcity.org) should you have any
questions.
K. The current property tax liability, including penalty and interest through May 1, 2017,
is Eighty Thousand Fifty Seven Dollars ($80,057) plus interest accruing after May 1, 2017 (the "Tax
Liability").
L. Throughout the term of the lease, ACAA has remained current with respect to the
payment to the County of San Bernardino Tax Collector of all possessory interest/unsecured taxes.
M. ACAA has requested that the City discharge the Tax Liability.
N. The City previously requested the County of San Bernardino ("County") to remove
from the tax rolls and cancel the taxes related to all properties included within the LRPMP, inclusive
of the Property. The County has removed all properties included within the LRPMP, inclusive of the
Property, from the tax rolls.
O. The County has advised the City that it will consider the cancellation of the taxes,
interest and penalties related to all properties included within the LRPMP, inclusive of the Tax
Liability, subject to a Mutual Release and Settlement Agreement provided by the County. The
County and City continue to refine the terms of the Mutual Release and Settlement Agreement
P. Based on the expectation of the County and City entering into a final Mutual Release
and Settlement Agreement, the Parties now desire to resolve any claims, disputes and/or
controversies with respect to the Note, Deed of Trust, and Tax Liability.
AGREEMENT
NOW, THEREFORE, in consideration of the terms, conditions, and covenants contained
herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
1. Quitclaim Deed. Concurrently herewith, the City shall execute and deliver to
ACAA for recordation that certain Quitclaim Deed with respect to the Property in the form attached
hereto as Exhibit A and incorporated herein by this reference.
2. Tax Liability. In the event the County refuses to cancel the Tax Liability, as
described in Recital O, above, the City hereby covenants to discharge the Tax Liability prior to it
reaching One Hundred Thousand Dollars ($100,000) through the accrual of interest.
3. Release by the Parties. Except for the obligations imposed upon the City under this
Settlement Agreement with respect to the Tax Liability, the Parties and all others claiming by and
through them do hereby release and discharge each of them from and for all actions, claims, charges,
liabilities, obligations, benefits, compensation, damages, fees, foreclosure, expenses, or suits of any
kind whatsoever, known or unknown, which either Party now has, or may ever have had, arising out
of, or relating to, the Note, Deed of Trust, Property, and/or Tax Liability. ACAA, on behalf of itself
and all others claiming by and through ACAA, does hereby release and discharge the SBEDC, the
Successor Agency, and each of them from and for all actions, claims, charges, liabilities, obligations,
benefits, compensation, damages, fees, foreclosure, expenses, or suits of any kind whatsoever, known
or unknown, which ACAA or anyone claiming by and through ACAA now has, or may ever have
had, arising out of, or relating to, the Note, Deed of Trust, Property, and/or Tax Liability.
2
City of San Bernardino
Com' 300 North "D" Street With copy via regular U.S. Mail to:
Stradling Yocca Carlson & Rauth
San Bernardino, CA 92418 Attn: Thomas P.
Attn: City Manager and City Attorney 60 Newport Center Dr ve, Suite 16
Newport Beach, CA 92660 00
Ed Haddad, President
ACAA: 422 Wier Road, Front Office
San Bernardino, CA 92408
5' No Material Reliance. There are no unwritten, oral or verbal understands
agreements, promises or representations of any kind whatsoever as between the Parties that are
contained in this Agreement. The Parties each represent and acknowledge that, in exec understandings,
not
Agreement, they have not relied upon any representation, statement, omission, agreement or
this
made by any other Party except as set forth in this Agreement, nor have they relied u
representation, statement, agreement, omission or promise made b r Promise
representatives, or attorneys, except as set forth in this Agreement. Pon any
y the other Party's agents,
6' Final and Binding Agreement. The Parties have each made such investigation
the facts pertaining to this Agreement as they have deemed necessary. This Agreement is i
be and is the final, binding and fully integrated agreement of the Parties, regardless g n of
any of the Parties of misrepresentation, concealment of fact, or mistake of law o mended to
g of any claims of
r fact.
ie No Admission of Liability. The Parties this
constitute an admission of liability, does not constitute any fact allate or legaltprecedent
what
h is does not
may not be used as evidence in any subsequent proceeding of any kind, except in naction alleging alle rig a
and
breach of this Agreement.
S. Agreement Not Subject to Government Code §52200 et seq. The Prope
developed and, therefor, is not being treated as an "economic opportuni P rtY is fully
Government Code Section 52200.2, nor is it being conveyed for "economic development Opportunity", as defined in California
as described in Government Code Section 52201(a)(1),because the subsidy, if an is Purposes"
$100,000. y, ss than
9. Parties Shall Pear Their Own Fees And Costs. Each Pa
attorneys' fees and costs relating to this Agreement. rt3' shall bear its own
10. Successors and Assigns. This Agreement shall be binding upon and inure to
Parties hereto and their respective heirs, executors, administrators, successors and assigns. the
11. Non -Assignment of Claims. ACAA hereby represents and warms
been no assignment, sale, or transfer, by operation of law or otherwise, of any claim, rithat
there has cause of
action, demand, obligation, liability or interest released by it under this Settlement Agreement
12e Further Assurances and Authorizations to Settle. The Parties, actin
themselves or through their respective attorneys, shall promptly prepare and execute any and all
documents necessary to effectuate the obligations set forth in this Settlementg by
Agreement and
0
IN WITNESS WHEREOF, this Settlement Agreement has been executed in the name of
the City of San Bernardino, and ACAA, as of the dates set forth below.
CITY OF SAN BERNARDINO,
a California charter city
By:.... - --
Mark Scott, City Manager
Dated:
ATTEST
Geogeann Hanna, City Clerk
APPROVED AS TO FORM:
STRAI)L,ING YOCCA CARL,S®N &
RAUTH, P.C.
By:
Thomas P. Clark, Jr., Special Counsel
10
ACAA LIMITED PARTNERSHIP,
a California limited partnership
By: A & A HOLDINGS, INC.
Its: General Partner
By:
Ed Haddad, President
Dated:
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
STATE OF CALIFORNIA )
COUNTY OF
._ , before me,
personally appeared
ss.
(Print Name of Notary Public)
, Notary Public,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and aclmowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and con-ect.
WITNESS my hand and official seal.
Signature of Notary Public
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent
fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
❑ Individual
❑ Corporate Officer
Title Or Type Of Document
Title(s)
❑ Partner(s) ❑ Limited ❑ General
❑ Attorney -In -Fact
❑ Trustee(s) -
ElGuardian/Conservator Number Of Pages
❑ Other:
Signer is representing: _
Name Of Person(s) Or Entity(ies) Date Of Documents
Signer(s) Other Than Named Above
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RESOLUTION NO.
RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING THE AMENDMENT OF DOCUMENTS RELATING
TO THE TAXABLE PENSION OBLIGATION BONDS, 2005 SERIES A, APPROVING
THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS IN CONNECTION
THEREWITH AND CERTAIN OTHER MATTERS
WHEREAS, the City of San Bernardino (the "City"), a municipal corporation and
charter city duly organized and existing under and pursuant to the Constitution and laws of the
State of California, has previously issued the Taxable Pension Obligation Bonds, 2005 Series A-
1 (the "2005 Series A-1 Bonds") and 2005 Series A-2 (the "2005 Series A-2 Bonds" and,
together with the 2005 Series A-1 Bonds, the "Bonds"); and
WHEREAS, the Bonds were issued pursuant to a Trust Agreement, dated as of October
1, 2005 (the "Trust Agreement"), by and between the City and Wells Fargo Bank, National
Association, as trustee; and
WHEREAS, the City, the holder of the Bonds, and the insurer of the 2005 Series A-2
Bonds entered into a settlement agreement dated as of March 28, 2016 (the "Settlement
Agreement"); and
WHEREAS, the Mayor and the City Council of the City have determined that it is in the
best interest of the City to amend the Trust Agreement and to enter into certain other documents
in order: (i) to cause the refunding and cancellation of the 2005 Series A-1 Bonds in exchange
for a note to be issued by the City that is payable to Commerzbank Finance & Covered Bond
S.A., the holder of the 2005 Series A-1 Bonds (the "Commerzbank Note"); and (ii) to amend the
2005 Series A-2 Bonds to provide that such 2005 Series A-2 Bonds shall be non-recourse to the
City; and (iii) to issue a note payable to Ambac Assurance Corporation, the bond insurer of the
2005 Series A-2 Bonds (the "Ambac Note" and, together with the Commerzbank Note, the
"Notes"); and
WHEREAS, the Bankruptcy Court for the Central District of California (the
"Bankruptcy Court") in the City's chapter 9 bankruptcy case (the "Bankruptcy Case"), by order
entered on February 7, 2017, among other things: (i) authorized the City to enter into, execute
and deliver additional documents that the City reasonably deems necessary to implement the
Settlement Agreement, and (ii) confirmed the City's Plan of Adjustment in its Bankruptcy Case.
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Section 5. Unless otherwise defined herein, all terms used herein and not otherwise
defined shall have the meanings given such terms in the Trust Agreement, as amended by the
Supplemental Trust Agreement, unless the context otherwise clearly requires.
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Section 6. This Resolution shall take effect immediately upon its adoption.
3
EXHIBIT A TO RESOLUTION
Supplemental Trust Agreement
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; EQUAL SECURITY ..............
SECTION 1.01. Definitions ...............
SECTION 1.02. First Su lemental Trust A reement Constitutes Contract ................................. 8
SECTION 1.03. Section Numbers .............................
ARTICLE II REFINANCING OF 2005 SERIES A-1 BONDS; AMENDMENT. OF 2005
SERIES A-2 BONDS; GENERAL BOND PROVISIONS.....................................8
SECTION 2.01. Refinancinu of the 2005 Series A-1 Bonds Issuance of Commerzbank
Note............
SECTION 2.02. Amendment of the 2005 Series A-2 Bonds .............................
SECTION 2.03. Exch an e Agreement ......................
SECTION 2.04. Costs and Fees for Transfers .........................
ARTICLE III CONDITIONS PRECEDENT FOR CANCELLATION AND EXCHANGE;
IMPLEMENTATION.............................................................................................. 9
SECTION 3.01. Conditions for the Cancellation of the 2005 Series A-1 Bonds and
Conversion of the 2005 Series A-2 Bonds to Non -Recourse ....................
.......... 9
SECTION 3.02. Im �lementation Procedures ............................................
10
ARTICLE IV PROVISIONS REGARDING AMBAC POLICY .............................................
SECTION 4.01. Ambac Polic............................................................
SECTION 4.02. Claims Under Ambac Police ...........................................
ARTICLE V COVENANTS OF THE LOCAL AGENCY ...........................................
SECTION 5.01. Performance............................................................
SECTION 5.02. Power to Enter Into A-reement....................................................
SECTION 5.03. Accountin4 Records and Reports
...................12
SECTION 5.04. Prosecution and Defense of Suits ....................
SECTION 5.05. Waiver of Laws .........................
........................................................................13
ARTICLE VI THE TRUSTEE ..............
1
THIS FIRST SUPPLEMENTAL TRUST AGREEMENT, made and entered into
as of , 2017 (the "First Supplemental Trust Agreement") and effective as of the Effective
Date (as defined herein), supplements the Trust Agreement dated as of October 1, 2005 (the
"Original Trust Agreement", as supplemented by this First Supplemental Trust Agreement, 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.
WITNESSETH:
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, 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 entered into a contract with the System dated
March 1, 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 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 (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 issued its City of San Bernardino
Taxable Pension Obligation Bonds, 2005 Series A-1 Bonds (the "2005 Series A-1 Bonds"), in
the aggregate principal amount of $36,050,000 and 2005 Series A-2 Bonds (the "2005 Series A-2
Bonds"), in the initial aggregate principal amount of $14,351,582.90 (collectively, the "2005
Series A Bonds"), all pursuant to the Original Trust Agreement and in the manner provided
therein; and
WHEREAS, the 2005 Series A-1 Bonds and the 2005 Series A-2 Bonds, together
with any Additional Bonds (as defined in the Original Trust Agreement), were validated pursuant
to the Default Judgment in Validation Proceeding dated 7/11/2005 in San Bernardino County
Superior Court Case No. SCVSS 125783; and
3
WHEREAS, all acts and proceedings required• by law necessary to make this
First Supplemental 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 First Supplemental Trust Agreement have been in all respects
duly authorized; and
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL TRUST
AGREEMENT WITNESSETH, that in order to implement the matters described above with
respect to the 2005 Series A Bonds, to satisfy certain terms of the Exchange Agreement, and to
make certain changes to the payment procedures related to the Ambac Policy, and consideration
of the premises and of the mutual covenants herein contained and in the Exchange Agreement,
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 defined in the Original Trust Agreement),
as follows:
ARTICLE I
DEFINITIONS; EQUAL SECURITY
SECTION 1.01. Definitions. Unless otherwise defined in this First
Supplemental Trust Agreement, capitalized terms defined in the Original Trust Agreement shall
have the meanings given such terms in the Original Trust Agreement; and unless the context
otherwise requires, the terms defined in this section shall for all purposes hereof and of any Fust
Supplemental Trust Agreement and of any certificate, opinion, request or other document herein
or therein mentioned have the meanings herein specified:
2005 Series A-1 Bonds
The term "2005 Series A-1 Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
2005 Series A-2 Bonds
The term "2005 Series A-2 Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
Ambac
The term "Ambac" shall have the meaning given such term in the recitals of this
First Supplemental Trust Agreement.
Ambac Polic%.-
Insurance Payment Account
The term "Insurance Payment Account" means the account by that name
established by the Trustee pursuant to Section 4.02(c) of this First Supplemental Trust
Agreement.
Insured Holders
The term "Insured Holder" means a Holder (as defined in the Ambac Policy) of
the 2005 Series A-2 Bonds.
Note PUing Agent
The term "Note Paying Agent" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
Notes
The term "Notes" shall have the meaning given such term in the recitals of this
First Supplemental Trust Agreement.
OriL,inal Ambac Policy
The term "Original Ambac Policy" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
Original Trust Agreement
The term "Original Trust Agreement" shall have the meaning given such term in
the introductory paragraph of this First Supplemental Trust Agreement.
Trust Agreement
The term "Trust Agreement" shall have the meaning given such term in the
introductory paragraph of this First Supplemental Trust Agreement.
2005 Series A-1 Bonds
The term "2005 Series A-1 Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
2005 Series A-2 Bonds
The term "2005 Series A-2 Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
7
Supplemental Trust Agreement shall not constitute a novation. After the Effective Date, the
2005 Series A-2 Bonds shall continue to be insured by the Original Ambac Policy, endorsed as
provided in this First Supplemental Trust Agreement.
The Ambac Note shall be issued as an Additional Bond under the Trust
Agreement in exchange for rendering the 2005 Series A-2 Bonds non-recourse to the Local
Agency. The conditions and procedure for issuance of the Ambac Note set forth in the Exchange
Agreement shall supersede and replace the requirements of Sections 3.01 and 3.02 of Original
Trust Agreement with respect to conditions precedent to issuance of the Ambac Note. The terms
of the Ambac Note shall be set forth in the Exchange Agreement and in the Ambac Note.
SECTION 2.03. Excham,e A reement. The Trustee shall serve as Note
Paying Agent under the Exchange Agreement. The Exchange Agreement shall govern all terms
and provisions of the Notes, including principal, interest (if any) and repayment, as well as all
conditions precedent to issuance.
SECTION 2.04. Costs and Fees for Transfers. Section 2.06(a) of the
Original Trust Agreement shall be amended to delete the following sentence: "The cost of
printing of Bonds and any services rendered or expenses incurred by the Trustee in connection
with any transfer shall be paid by the Local Agency."
CONDITIONS PRECEDENT FOR CANCELLATION AND EXCHANGE;
IMPLEMENTATION
SECTION 3.01. Conditions for the Cancellation of the 2005 Series A-1
Bonds and Conversion of the 2005 Series A-2 Bonds to Non -Recourse. Upon satisfaction of the
following specific conditions, the 2005 Series A-1 Bonds shall be cancelled and the 2005 Series
A-2 Bonds shall be rendered non-recourse to the Local Agency:
(a) the Exchange Agreement and this First Supplemental Trust Agreement
shall have been executed and delivered by all parties thereto;
(b) the Original Ambac Policy shall be endorsed to incorporate the
amendments set for in Exhibit B attached hereto; and
(c) all conditions for closing under the Exchange Agreement, as set forth in
Section 3.2 thereof, shall have been satisfied, including (i) issuance and delivery to
Commerzbank of the Commerzbank Note in exchange for the 2005 Series A-1 Bonds, and (ii)
issuance and delivery to Ambac of the Ambac Note in exchange for any subrogation,
reimbursement, or other rights to payment from the Local Agency to Ambac in connection with
amounts paid by Ambac under the Ambac Policy with respect to the 2005 Series A-2 Bonds.
0
(b) The Trustee shall, after giving notice to Ambac and the Insured Holders of the
2005 Series A-2 Bonds as provided in (a) above, make available to Ambac the registration books
of the Local Agency maintained by the Trustee and all records relating to the funds and accounts
maintained under this First Supplemental Trust Agreement.
(c) The Trustee shall establish an account for the benefit of the Insured Holders and
Ambac referred to herein as the "Insurance Payment Account." The Trustee shall deposit upon
receipt any amount paid under the Ambac Policy in the Insurance Payment Account and
distribute such amount solely for purposes of payment to the Insured Holders for which a claim
was made. For the sake of clarity, amounts paid under the Ambac Policy may not be applied to
satisfy any costs, expenses or liabilities of the Trustee. Amounts held in the Insurance Payment
Account shall not be invested and any amounts remaining in the Insurance Payment Account on
the first Business Day following a Principal Payment Date shall be returned to Ambac by the end
of such Business Day.
(d) The amount of any payment of principal of or interest on the 2005 Series A-2
Bonds from the Insurance Payment Account shall be recorded by the Trustee. Ambac shall have
the right to inspect such records upon one (1) Business Day's prior written notice to the Trustee.
(e) In the event that the Trustee has notice that any payment of principal of or interest
on a 2005 Series A-2 Bond which has become due for payment and which is made to an Insured
Holder by or on behalf of the Local Agency has been deemed a preferential transfer and
theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code
by a trustee in bankruptcy in accordance with the final, non -appealable order of a court having
competent jurisdiction, the Trustee shall, at the time Ambac is notified pursuant to (a) above,
notify all registered owners that in the event that any registered owner's payment is so recovered,
such registered owner will be entitled to payment from Ambac to the extent of such recovery if
sufficient funds are not otherwise available, and the Trustee shall furnish to Ambac its records
evidencing the payment of principal of and interest on the Ambac Insured Bond which have been
made by the Trustee and subsequently recovered from registered owners and the dates on which
such payments were made.
(f) In addition to those rights granted Ambac under this First Supplemental Trust
Agreement, and anything herein to the contrary notwithstanding, the Local Agency, the Trustee
and each Insured Holder acknowledge and agree, that without the need for any further action on
the part of Ambac, Ambac shall, to the extent it makes payment of principal of or interest on
2005 Series A-2 Bonds, become subrogated to all rights of the Holders of such 2005 Series A-2
Bonds, including all rights to payment. To evidence such subrogation, the Trustee shall note
Ambac's rights as subrogee on the registration books of the Local Agency maintained by the
Trustee upon payment of amounts from the Insurance Payment Account to the Insured Holders
of the 2005 Series A-2 Bonds. The Trustee shall simultaneously assign in writing to Ambac, to
11
Section shall survive the discharge of the Bonds and this Agreement and the resignation or
removal of the Trustee.
SECTION 5.05. 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 First Supplemental Trust Agreement or in the 2005 Series A-2
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. Section 6.01 of the Original Trust Agreement
is hereby amended (a) to provide that if at any time the Trustee exercises its right to resign
thereunder, the Trustee shall simultaneously resign as Note Paying Agent under the Exchange
Agreement, (b) to provide that, subject to the provisions of Section 10.6 of the Exchange
Agreement, the consent of each of Commerzbank and Ambac shall be required for the
appointment of any successor Trustee so long as Commerzbank and Ambac remain Holders, and
(c) to delete the requirement that the Trustee and any successor Trustee have a corporate trust
office in Los Angeles or San Francisco, California.
SECTION 6.02. Trustee's Fees and Expenses: Indemnification. Section
6.03 of the Original Trust Agreement is hereby amended as follows with respect to obligations of
the Local Agency to pay fees and expenses of, and to indemnify, the Trustee:
(a) The obligation of the Local Agency to pay fees and expenses of the
Trustee, including, for the avoidance of doubt, the fees and expenses provided for under Article
II of this Trust Agreement, shall be limited to the amounts required to be paid by the Local
Agency pursuant to Section 2.4 of the Exchange Agreement.
(b) The provisions of Local Agency under Section 6.03 of the Original Trust
Agreement regarding indemnification of the Trustee are hereby amended to read as follows:
(i) To the extent permitted by law, the Local Agency shall indemnify,
defend and hold harmless the Trustee against any loss, damages, liability or expense
incurred by the Trustee to the extent arising out of or in connection with a breach by the
Local Agency under the Exchange Agreement, the Notes or the Trust Agreement,
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, except to the extent that any loss, damages, liability or expense results from
13
If to the Local Agency:
City of San Bernardino 300 North "D" Street
San Bernardino, CA 92418-0001
Attention: City Attorney's Office
If to the Trustee:
Attention: Corporate Trust Services
Wells Fargo Bank, National Association
555 Montgomery Street, 10'' Floor MAC # A0167-102
San Francisco, CA 94111
If to Ambac:
Attention: Portfolio Risk Management
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Email address: notices@ambac.com
If to the Holders:
[Commerzbank: TO BE PROVIDED]
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Email address: notices@ambac.com
SECTION 8.04. 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 8.05. Partial Invalidity. If any one 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
15
[Signature Page to First Supplemental Trust Agreement]
IN WITNESS WHEREOF, the CITY OF SAN BERNARDINO has caused this
First Supplemental 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 Fust Supplemental 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
ATTEST.
IM
Georgeann Hanna, City Clerk
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By
Approved as to form and
legal content:
GARY D. SAENZ
City Attorney
By:
DMEAST #28194828 A3
Theresa Hempeck, Vice President,
Corporate Trust Services,
Authorized Officer
AmbaAmbac Assurance Corporation
One State Street Plaza, 15th Floor
Financial Guarant Insurance Polic New YorkNew York 10004
Y }� Telephone:: (212) 668-0340
Obligor: SAN. BERNARDINO, CALIFORNIA Policy Number:
S24928BE
$14,351,583 Taxable Pension Obligation Capital
Obligations: Appreciation. Bonds, Series 2005, dated October Premium:
28, 2005 and maturing October 1 in the years $234,405.00
2007 through 2024, both inclusive. .
Ambac Assurance Corporation (Ambac), a Wisconsin stock insurance corporation, in consideration of the payment of the
premium and subject to the terms of this Policy, hereby agrees to pay to The Bank of New York, as trustee, or its successor (the
"Insurance Trustee"), for the benefic of the Holders, that portion of the principal of and interest on the.above-described obligations
(the "Obligations") which shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Obligor.
Ambac will make such payments to the Insurance Trustee within one (1) business day following written notification to Ambac of
Nonpayment. Upon a Holder's presentation and surrender to the Insurance Trustee of such unpaid Obligations or related coupons,
uncanceled and in bearer form and free of any adverse claim, the Insurance Trustee will disburse to the Holder the amount of
principal and interest which is then Due for Payment but is unpaid. Upon such disbursement, Ambac shall become the owner of
the surrendered Obligations and/or coupons and shall be fully subrogated to all of the Holder's rights to payment thereon.
In cases where the Obligations are issued in registered form, the Insurance Trustee shall disburse principal to a Holder only upon
presentation and surrender to the Insurance Trustee of the unpaid Obligation, uncanceled and free of any adverse claim, together
with an instrument of assignment, in form satisfactory to Ambac and the Insurance Trustee duly executed by the Holder or such
Holder's duly authorized representative, so as to permit ownership of such Obligation to be registered in the name of Ambac or its
nominee. The Insurance Trustee shall disburse interest to a Holder of a registered Obligation only upon presentation -to the
Insurance Trustee of proof that the claimant is the person entitled to the payment of interest on the Obligation and delivery to the
Insurance Trustee of an instrument of assignment, in form satisfactory to Ambac and the Insurance Trustee, duly executed by the
Holder or such Holder's duly authorized representative, transferring co Ambac all _rights under such Obligation to receive the
interest in respect of which the insurance disbursement was made. Ambac shall be subrogated to all of the Holders' rights to
payment on registered Obligations to the extent of any insurance disbursements so made.
In the event that a trustee or paying agent for the Obligations has notice that any payment of principal of or interest -on an
Obligation which has become Due for Payment and which is made to a Holder'by or on behalf of the Obligor has been deemed a
preferential transfer and theretofore recovered from the Holder pursuant to the United States Bankruptcy Code in accordance with
a final, nonappealable order of a court of competent jurisdiction, such Holder will be entitled to payment from Ambac to the extent
of such recovery if sufficient funds are not otherwise available.
As used herein, the term "Holder" means any person other than (i) the Obligor or (ii) any person whose obligations constitute the
underlying security or source of payment for the Obligations who, at Elie time of Nonpayment, is the owner of an Obligation or of
a coupon relating to an Obligation. As used herein, "Due for Payment', when referring to the principal of Obligations, is when
the scheduled maturity date or mandatory redemption date for the application of a required sinking fund installment has been
reached and does nor refer to any earlier date on which payment is due by reason of call for redemption (other than by application
of required sinking fund installments), acceleration or other advancement of maturity; and, when referring to interest on the
Obligations, is when the scheduled date for payment of interest has been reached. As used herein, "Nonpayment" means the failure
of the Obligor to have provided sufficient funds to the trustee or paying agent for payment in full of all principal of and interest
on the Obligations which are Due for Payment.
.This Policy is noncancelable. The premium on.this Policy is not refundable for any reason, including payment of the Obligations
prior to maturity. This Policy does not insure against loss of any prepayment or other acceleration payment which at any time
may become due in respect of any Obligation, other than at the sole option of Ambac, nor against any risk other than Nonpayment.
In witness whereof, Ambac has caused this Policy to be affixed with a facsimile of its corporate seal and to be signed by its duly
authorized officers in facsimile to become effective as its original seal and signatures and binding upon Ambac by virtue of the
countersignature of its.duly authorized representative. ,
President
December 23, 2005
Effective Date:
THE BANK OF NEW YORK acknowledges that it has agreed
to perform the duties of Insurance Trustee under this Policy.
Form No.: 213-0612 (1/01)
A-9067
{lJ
Secretary
Auth rizi Representative
Authorized Officer of Insurance Trustee
i
Ambac
Endorsement
Policy for
SAN BERNARDINO,
CALIFORNIA
Ambac Assurance Corporation
One State Street Plaza, 15th Floor
New York, New York 10004
Telephone: (212) 668-0340
Attached to and forming part of Polity No.:
S24928BE
Effective Date of Endorsement:
December 23, 2005
In the event that Ambac Assurance Corporation were to become insolvent, any claims arising
under the Policy would be excluded from coverage by the California Insurance Guaranty
Association, established pursuant to the laws of the State of California.
Nothing herein contained shall be held to vary, alter, waive or extend ariy of the terms, conditions, provisions, agreements
or limitations of the above mentioned Policy other than as above stated.
In Witness Wizereof, Ambac has caused this Endorsement to be affixed with a facsimile of its corporate seal and to
be signed by its duly authorized officers in facsimile to become effective as its original seal and signatures and binding
upon Ambac by virtue of the countersignature of its duly authorized representative.
Ambac Assurance Corporation
OF /?o�
CV -4
i
President fit; ^ �.'.'%",.".��� �,� Secretary
Authorized Representative
Form No-: 28-0015 (7/97)
EXHIBIT B
FORM OF ENDORSEMENT TO AMBAC POLICY
Effective date: , 2016
Policy No. S24928BE is hereby amended as follows:
1. The first paragraph of the Policy is hereby replaced and amended in its entirety to read as
follows:
Ambac Assurance Corporation (Ambac), a Wisconsin stock insurance corporation, in
consideration of the payment of the premium and subject to the terms of this Policy, hereby agrees
to pay to Wells Fargo Bank, National Association or its successor (the "Trustee"), as trustee under
that certain Trust Agreement dated October 1, 2005 relating to the issuance of the above-described
obligations (the "Obligations"), for the benefit of the Holders, that portion of the principal of and
interest on the Obligations which shall become Due for Payment but shall be unpaid by reason of
Nonpayment by the Obligor.
2. The second paragraph of the Policy is hereby replaced and amended in its entirety to read
as follows:
Ambac will make such payments to the Trustee on the later of (a) one (1) business day following
written notification to Ambac of Nonpayment or (b) the business day on which the Obligations are
Due for Payment.
3. The third paragraph of the Policy is hereby replaced and amended in its entirety to read as
follows:
The Trustee shall disburse such payments of principal to a Holder only upon presentation of an
instrument of assignment in form and substance satisfactory to Ambac duly executed by the
Trustee, as the Holder's duly authorized representative, so as to permit ownership of such
Obligation to be registered in the name of Ambac or its nominee and transferring to Ambac all
rights under such Obligations to receive the principal of and interest on the Obligations. The
Trustee shall disburse such payments of interest to a Holder only upon presentation of an
instrument of assignment in form and substance satisfactory to Ambac duly executed by the
Trustee, as the Holder's duly authorized representative, transferring to Ambac all rights under such
Obligations to receive the interest on the Obligations in respect of which the insurance
disbursement was made. Ambac shall be subrogated to all of the Holders' rights to payment on the
Obligations to the extent of any insurance disbursements so made.
4.
terms,
stated.
Nothing herein contained shall be held to vary, alter, waive or extend any of the
conditions, provisions, agreements or limitations of the Policy other than as above
Ambac Assurance Corporation
Attention: Claims Processing
One State Street Plaza
New York, New York 10004
An electronic copy should be sent to:
claimsprocessing@ambac.com
CONVEYANCE: SUBROGATION
The Trustee hereby transfers, delivers and assigns to Ambac all rights to the payment of the Principal
Amount Currently Due for Payment and the Interest Amount Currently Due for Payment (collectively
referred to as the "Amount Currently Due for Payment"), together with any rights related to such Amount
Currently Due for Payment, with respect to the bonds identified above which bonds are now "Due for
Payment" as defined in the Policy, but only to the extent of payment by or on behalf of Ambac of the
above Amount Claimed Under the Policy. The Trustee agrees that Ambac shall also be subrogated to all
of the rights of the "Holders" as defined in the Policy, including all rights to payment, to the extent of
such payments made by or on behalf of Ambac. The Trustee represents and warrants that it has full
corporate power and authority to execute and deliver this Claim and Assigmnent Form and this Claim and
Assignment Form has been duly authorized, executed and delivered by the Trustee and constitutes a legal,
valid and binding obligation of the Trustee enforceable in accordance with its terns. The Trustee agrees
that Ambac may exercise any option, vote, right, power or the like (including, but not limited to any such
rights arising in context of a bankruptcy, insolvency, liquidation or other reorganization of the Bond
Issuer), it may have to the extent of payment by or on behalf of Ambac of the above Amount Claimed
Under the Policy with respect to the bonds identified above.
The Trustee agrees to make a notation on the insured bonds and in the bond register or other docu vent of
record that Ambac is subrogated to and assigned all of the rights of the Holder as described hereinabove
and to hold those bonds for which payment of principal at final maturity has been made in an uncanceled
form and manner acceptable to Arnbac and the Trustee.
[TRUSTEE]
C-2
EXHIBIT D
FORM OF TRUSTEE'S NOTICE TO AMBAC OF INSUFFICIENT FUNDS
[DATE]
Ambac Assurance Corporation
Attn.: Surveillance Department and General Counsel
One State Street Plaza
New York, New York 10004
claimsprocessing@ambac.com
Re: Notice Regarding Insufficient Funds for Payment of [DATE] Debt Service for San Bernardino
Taxable Pension Obligation Bond, Cusip: (the `Bonds"):
Reference is made to that certain (i) Trust Agreement, dated as of October 1, 2005, as
supplemented by a First Supplemental Trust Agreement, dated as of , 2017 (collectively, the
"Trust Agreement'), by and between the City of San Bernardino (the "City") and Wells Fargo Bank,
National Association ("Wells Fargo"), as Trustee, pursuant to which the Bonds were issued. Wells Fargo
hereby certifies that:
1. The undersigned is an authorized officer of the Trustee.
2. Pursuant to the terms of the Bonds and the Trust Agreement, payment is due to the holders of the
Bonds on [DATE] (the "Payment Due Date").
3. Pursuant to Section 4.02 of the Trust Agreement, the Trustee is currently holding [$__] in the
Bond Fund, which is not sufficient to make the [$____] in debt service due on [DATE] for the
Bonds. The total amount of deficiency due on the Bonds is $
4. Wiring instructions for payment of the deficiency amount to the Trustee are as follows:
Bank: Wells Fargo Bank, N.A.
ABA 121000248
Beneficiary Name: Corporate Trust
Beneficiary Account No. 0001038377
For further credit: 18613300
Attn: T.Hempeck re: San Bernardino
Ref: CITY OF SAN BERNARDINO, CALIFORNIA
In Witness Whereof, the Trustee has executed and delivered this Notice as of [DATE].
[Trustee]
D-1
EXHIBIT B TO RESOLUTION
Exchange Agreement
TABLE OF CONTENTS
Page
ARTICLE1 DEFINITIONS........................................................................................................... 2
1.1
Definitions.........................................................................................................................2
1.2
Rules of Interpretation.......................................................................................................2
ARTICLE2 THE NOTES........................................................................................................
2
2.1
Note Terms........................................................................................................................2
2.2
Register..............................................................................................................................3
2.3
Prepayments......................................................................................................................3
2.4
Fees....................................................................................................................................4
2.5
Other Payment Terms........................................................................................................4
2.6
Payment of Obligations.....................................................................................................5
ARTICLE 3 CLOSING DATE OBLIGATIONS OF CITY; CONDITIONS PRECEDENT........
5
3.1
City Closing Date Obligations..........................................................................................5
3.2
Conditions Precedent.........................................................................................................6
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF CITY ......................................... 7
4.1
Authorization; No Conflict; Enforceability.......................................................................7
4.2
Governmental Authorizations...........................................................................................7
4.3
No Default .......................................
7
4.4
Litigation...........................................................................................................................7
4.5
Sovereign Immunity..........................................................................................................8
4.6
Fiscal Year.........................................................................................................................8
4.7
OFAC and Related Matters...............................................................................................8
4.8
Anti -Terrorism Law..........................................................................................................8
ARTICLE 5
REPRESENTATION AND WARRANTIES OF NOTEHOLDERS ............................................
8
5.1
Authorization.....................................................................................................................9
5.2
Acknowledgement of Certain Risks..................................................................................9
5.3
Unregistered Status of Notes.............................................................................................9
5.4
Rule 15c2-12 Exemption...................................................................................................9
5.5
Receipt of Information/Non-Reliance...............................................................................9
5.6
Inquiry and Analysis.......................................................................................................10
5.7
No Offering/Disclosure Documents................................................................................10
5.8
Tax Consequences...........................................................................................................10
ARTICLE 6 AFFIRMATIVE COVENANTS OF CITY.............................................................
10
6.1
Payment...........................................................................................................................10
6.2
Notices; Public Filings....................................................................................................11
6.3
Financial Statements.......................................................................................................11
6.4
Cooperation.....................................................................................................................11
6.5
Books and Records..........................................................................................................11
I
12.9 No Partnership, Etc.........................................................................................................22
12.10 Limitation on Liability....................................................................................................22
12.11 Waiver of Jury Trial........................................................................................................22
12.12 Counterparts....................................................................................................................22
12.13 No Third Party Beneficiaries ...........................................................................................23
12.14 Separate Representation..................................................................................................23
12.15 Ratings.............................................................................................................................23
iii
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (this "Ageement") is dated as of [_], 2017,
among CITY OF SAN BERNARDINO, CALIFORNIA, a duly organized, validly existing and
operating local agency (as defined in Section 53570 of the California Code) under the laws of the
State of California ("City"), CON EAERZBANK FINANCE & COVERED BOND S.A.
(formerly known as Erste Europaische Pfandbrief- and Kommunalkreditbank AG in Luxemburg)
("Commerzbank"), as a Noteholder hereunder, AMBAC ASSURANCE CORPORATION
("Ambac"), as a Noteholder hereunder (together with Commerzbank and each of their successors
and assigns, the "Noteholders"), and WELLS FARGO BANK, N.A., as paying agent (in such
capacity, the "Paying Agent").
RECITALS
A. Pursuant to a Trust Agreement dated as of August 1, 2005 (the "Original Trust
.greement") between City and Wells Fargo Bank, National Association, as indenture trustee (in
such capacity, the "Trustee"), City issued certain Taxable Pension Obligation Bonds (the
"Pension -0 liation Bonds") in the initial aggregate principal amount of $50,401,582.90,
consisting of 2005 Series A-1 (Standard Bonds) in the initial aggregate principal amount of
$36,050,000 (the "Series A-1 Bonds") and 2005 Series A-2 (Capital Appreciation Bonds) in the
initial aggregate principal amount of $14,351,582.90 (the "Series A-2 Bonds"), which Series A-2
Bonds were insured by Ambac pursuant to its Financial Guaranty Insurance Policy No.
S24928BE (the "Ambac Police").
B. The Series A-1 Bonds and the Series A-2 Bonds, together with any Additional
Bonds (as defined in the Original Trust Agreement), were validated pursuant to the Default
Judgment in Validation Proceeding dated 7/11/2005 in San Bernardino County Superior Court
Case No. SCVSS 125783.
C. Commerzbank and Ambac are the sole owners of all of the Pension Obligation
Bonds, and Ambac is the insurer of the Series A-2 Bonds.
D. City is a debtor under chapter 9 of title 11 of the United States Code, pursuant to a
petition filed on August 1, 2012, commencing In re City of San Bernardino, California, case
number 6:12-bk-28006-MJ (the "Bankruptcy Case") in the United States Bankruptcy Court for
the Central District of California, Riverside Division (the "Bankruptcy Court").
E. Pursuant to a Settlement Agreement dated as of March 28, 2016 (the "Settlement
AL7reement" ), a copy of which is attached hereto as Exhibit A, and an amended Plan of
Adjustment that incorporates the terms of the Settlement Agreement (the "Bankruptcy Plan"),
the Noteholders have agreed to accept a payment stream (the "Payment Stream") in the total
amount set forth in, and payable in the installments described in, the Settlement Agreement in
full satisfaction of the payment and reimbursement obligations of City with respect to the
Pension Obligation Bonds and the Ambac Policy, respectively.
Exhibit C and shall evidence City's unconditional obligation to pay to each Noteholder its pro
rata portion of the Payment Stream. The Commerzbank Note and the Ambac Note shall be dated
the Closing Date, and any new Notes shall be dated as of the date each is executed by City. The
Notes shall mature on the Scheduled Maturity Date. The Notes shall be paid from the City's
general fund and/or any other legally available monies or funds of the City, and are not limited to
any special source of funds. City is not empowered or obligated to levy or pledge taxes to make
payments with respect to the Notes. The Notes may be issued only in Authorized
Denominations.
(b) Interest. The Notes shall not bear interest. In the event that any interest is
imputed to any portion of the amounts payable by City pursuant to the Notes, such imputed
interest may be included in the gross income of the Noteholders for federal income tax purposes
pursuant to Section 103 of the Code, or for California state income tax purposes.
Notwithstanding the foregoing, if City shall fail to pay when due any amounts payable by City
pursuant to the Notes or any other amount whatsoever payable hereunder, City shall pay Default
Interest as provided in Section 9.1.
(c) Scheduled Pay inents. City shall pay to Paying Agent, for the accounts of
the Noteholders, the aggregate unpaid amount of the Notes in installments on each Payment Date
in accordance with the Payment Schedule set forth on Exhibit D. Such amounts shall be payable
in Dollars, in immediately available funds.
2.2 Resister
(a) Paying Agent shall maintain, at its address referred to in Section 12.1, a
register for the recordation of the names and addresses of the Noteholders (the "Re inter"). The
Register shall be available for inspection by City and each Noteholder at any reasonable time and
from time to time upon reasonable prior notice.
(b) Paying Agent shall record in the Register (A) the outstanding balance of
each of the Notes from time to time and the Proportionate Share of each Noteholder, (B) the date
and amount of any amount due and payable or to become due and payable from City to each
Noteholder under its Note, (C) each repayment or prepayment in respect of the Notes, (D) any
transfer of a Note pursuant to Section 11.3(b), and (E) such other information as Paying Agent
may determine is necessary for administering the Notes and this Agreement. Any such
recordation shall be conclusive and binding on City and each Noteholder, absent manifest error;
provided, however, that (A) neither failure to make any such recordation, nor any error in such
recordation, shall affect City's obligations in respect of this Agreement, the Notes, or otherwise;
and (B) except as set forth above, in the event of any inconsistency between the Register and any
Noteholder's records, the recordations in the Register shall govern.
2.3 Preps ents. City may, at its option, upon at least five (5) Banking Days' prior
notice to Paying Agent, prepay the Notes without premium or penalty, in whole or in part. Upon
any prepayment of the Notes by City to Paying Agent for the account of the Noteholders, the
amounts prepaid shall be applied to the Notes on a pro rata basis according to the Proportionate
Shares of the Noteholders and shall be applied so as to reduce the scheduled payments under the
Notes in the inverse order of maturity. Any optional prepayment hereunder shall be in the
3
For further credit: 18613300
Attn: T.Hempeck re: San Bernardino
Rei CITY OF SAN BERNARDINO, CALIFORNIA
or as otherwise directed by Paying Agent in writing from time to time, in lawful money of the
United States and in immediately available funds not later than 12:00 p.m., New York time, on
the date on which such payment is due. Any payment made after such time on any day shall be
deemed received on the next Banking Day after such payment is received. Paying Agent shall
disburse to each Noteholder each such payment received by Paying Agent for such Noteholder,
such disbursement to occur by 4:00 p.m., New York time, on the day such payment is received if
received by 12:00 p.m., New York time; otherwise on the next Banking Day.
(b) Date. Whenever any payment due hereunder shall fall due on a day other
than a Banking Day, such payment shall be made on the next preceding Banking Day.
(c) Pro Rata Treatment. Each payment by City hereunder shall be shared
between the Noteholders and applied to the Notes pro rata according to their respective
Noteholder Proportionate Shares.
(d) Sharim of Pavinents. Etc. If any Noteholder (a "Benefited Noteholder")
shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of
setoff, or otherwise) on account of its Note, in excess of its Proportionate Share of payments on
account of the Notes obtained by all Noteholders entitled to such payments, such Noteholder shall
forthwith purchase from each other Noteholder such participation in such Noteholder's Note as
shall be necessary to cause such Benefited Noteholder to share the excess payment ratably with
each other Noteholder; and if after taking into account such participations the Benefited
Noteholder continues to have access to additional funds of City for application on account of its
Note, then the Benefited Noteholder shall use such funds to reduce the balance of its Note and
share such payments with each other Noteholder; provided, however, that if all or any portion of
any such excess payment is thereafter recovered from such Benefited Noteholder, any such
purchase from each other Noteholder shall be rescinded and each other Noteholder shall repay to
the Benefited Noteholder such purchase price to the extent of such recovery. City agrees that any
Benefited Noteholder so purchasing a participation from another Noteholder pursuant to this
Section 2.5(d) may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of setoff) with respect to such participation as fully as if such Noteholder
were the direct creditor of City in the amount of such participation.
2.6 PaNment of Oblivations.
(a) Source of Payment. All obligations of City under the Notes shall be paid
from the City's general fund or any other legally available monies or funds of City, and are not
limited to any special source of funds. Amounts due under the Notes shall have the same
payment priority accorded under California law to all general fund obligations that are not general
obligation debt of the City; provided that City is not empowered or obligated to levy or pledge
taxes to make payments with respect to the Notes.
(d) Federal Law Com 7liance. City shall have delivered to Paying Agent and
each requesting Noteholder all such documentation and other information requested by Paying
Agent or such Noteholder that are necessary (including the name, address, tax payer
identification, copies of government issued identification and names of officers of City) for
Paying Agent or such Noteholder, as applicable, to identify such person in accordance with any
applicable Anti -Terrorism Laws, Anti -Money Laundering Laws, and the requirements of the
Patriot Act (including the "know your customer" and similar regulations thereunder).
(e) Series A-1 Bonds. The Series A-1 Bonds shall have been exchanged for
the Commerzbank Note and cancelled, and the Series A-1 Bonds, and any ancillary agreements,
documents or instruments (other than the Trust Agreement) shall have been cancelled, terminated
and of no force and effect.
(f) Series A-2 Bonds. Pursuant to the First Supplemental Trust Agreement,
City shall have been released from all liability for repayment of the Series A-2 Bonds; and Ambac
shall have confirmed that the Ambac Policy is in full force and effect.
(g) Representations and Warranties. The representations and warranties
contained in Article 4 and Article 5 hereof shall be true and correct in all material respects on and
as of the Closing Date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CITY
City makes the following representations and warranties to and in favor of Paying Agent
and the Noteholders as of the Closing Date:
4.1 Authorization: No Conflict: Enforceability .
(a) City has duly authorized, executed and delivered this Agreement and the
Notes, and neither City's execution and delivery thereof, nor the consummation of the
transactions contemplated thereby, nor City's compliance with the terms thereof (i) conflicts with
or constitutes a default under or results in the violation of the provisions of any Legal
Requirement applicable to or binding on City, or (ii) constitutes a default under or results in the
violation of the provisions of any indenture, mortgage, deed of trust, or other agreement or
instrument to which City is a party or by which it or any of its properties or assets is or may be
bound or affected.
(b) This Agreement and each of the Notes is a legal, valid and binding
obligation of City, enforceable against City in accordance with its terms, except as may be limited
by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting
the enforcement of creditors' rights and subject to general equitable principles.
4.2 Governmental Authorizations.
No approval, consent, exemption, authorization, or other action by, or notice to, or
filing with, any court or Governmental Authority or any other Person (including without
limitation the Bankruptcy Court and any other creditor of City) is necessary or required in
7
any Person named on any of the OFAC SDN List or any Person included in, owned by, controlled
by, acting for or on behalf of, providing assistance, support, sponsorship, or services of any kind
to, or otherwise associated with any of the Persons referred to or described in the OFAC SDN
List.
4.8 Anti -Terrorism Law. City is not in violation of any Anti -Terrorism Law.
ARTICLE 5
REPRESENTATION AND WARRANTIES OF NOTEHOLDERS
Each Noteholder makes the following representations and warranties to and in favor of
City and Paying Agent as of the Closing Date:
5.1 Authorization. Each Noteholder has authority to accept delivery of its Note and
to execute this Agreement and any other instruments and documents such Noteholder may be
required to execute in connection with the issuance and delivery of its Note.
5.2 Acknowled,,ement of Certain Risks. Each Noteholder acknowledges that the
Notes involve risks that may not be appropriate for certain investors. Each Noteholder
understands that it may need to bear the risks of its Note for an indefinite time, since any sale
before maturity may not be possible for any number of reasons.
5.3 Unre,istered Status of Notes. Each Noteholder understands that the Notes are not
registered under the Securities Act and that such registration is not legally required as of the date
hereof. Each Noteholder fiuther understands that the Notes (a) are not being registered or
otherwise qualified for sale under the `Blue Sky" laws and regulations of any state, (b) will not
be listed in any stock or other securities exchange, (c) will not, at least initially, carry a rating
from any rating service, and (d) will be delivered in a form that may not be readily marketable.
Each Noteholder is either an Accredited Investor or a Qualified Institutional Buyer.
5.4 Rule 15c2-12 Exemption. Each Noteholder understands that the issuance of the
Notes is exempt from the requirements of Rule 15c2-12 promulgated under the Securities
Exchange Act of 1934, that City is not delivering a "deemed final" official statement with
respect to the Notes.
5.5 Recei �t of Infonnation/Non-Reliance.
(a) In entering into this transaction each Noteholder acknowledges that it has
had an opportunity to conduct an independent investigation of all the relevant facts and
circumstances, including, without limitation, reviewing the Disclosure Statement. Each
Noteholder has not otherwise relied upon City or its officers, employees, consultants or counsel
(collectively, with City, the "City Representatives") for any other information in connection with
the issuance of the Notes. Each Noteholder acknowledges that it is an accredited investor under
applicable law and is further a sophisticated institutional investor capable of evaluating the
merits, risks and suitability of the Notes, and in making an investment decision, each Noteholder
ARTICLE 6
AFFIRMATIVE COVENANTS OF CITY
City covenants and agrees that so long as this Agreement is in effect and amounts are
outstanding under the Notes, it will, unless Paying Agent and the Noteholders waive compliance
in writing:
6.1 Paent. Pay all sums due under this Agreement and the Notes according to the
terms hereof and thereof. City hereby covenants with the Noteholders that, to the extent legally
required as a condition to payment, it shall include the amount of the installments set forth in the
Payment Schedule (subject to appropriate adjustment in the event of the optional prepayment of
the Notes prior to maturity), for each fiscal year in which such sums are payable in its budget for
that year, and shall duly and punctually pay or cause to be paid such installments at the dates and
places and in the manner stated herein and therein according to the true intent and meaning
thereof. The foregoing covenant shall be specifically enforceable.
6.2 Notices: Public FilinLs. Immediately following any filing, dissemination,
distribution, or provision thereof, City shall provide to Paying Agent, for further dissemination to
the Noteholders by first class mail, postage prepaid, at their addresses set forth in Section 12.1 of
this Agreement, a copy of (i) any "Material Event Notice" disseminated, distributed or provided
in satisfaction of or as may be required by the provisions of Rule 15c2-12 promulgated pursuant
to the Securities Exchange Act of 1934, as amended (17 C.F.R. Sec. 240 15c2-12), or any
successor or similar legal requirement, and (ii) the filing made by City with the Municipal
Securities Rulemaking Board's Electronic Municipal Access System (EMMA) regarding the
cancellation of the Series A-1 Bonds in exchange for the Commerzbank Note and amendment of
the Series A-2 Bonds. The City shall cooperate with the Paying Agent in arranging for notice to
be made to the Paying Agent each time any other filings are made by the City with EMMA, and
shall reimburse the Paying Agent for the costs associated with downloading and disseminating
such filings to the Noteholders.
6.3 Financial Statements. City agrees to make available on City's website:
(a) Audited financial statements of City prepared in accordance with GAAP
and certified by an independent certified public accountant selected by City, as such audited
financial statements become available publicly; and
(b) The annual capital and operating budget of the City approved by its City
Council for the upcoming fiscal year, including all amounts payable under the Financing
Documents; and promptly after the adoption thereof, any amendments to such annual budgets.
6.4 CooJ)eration. City shall perform, upon the reasonable request of Paying Agent,
such reasonable acts as may be necessary or advisable to comply with the terms of this
Agreement and the Notes.
6.5 Books and Records. City shall maintain adequate books, accounts and records
(including project, financial and accounting records) and prepare all financial statements required
hereunder in accordance with GAAP and in compliance with the regulations of any
Governmental Authority having jurisdiction thereof, and permit employees or agents of Paying
11
7.2 Fiscal Year. Change its fiscal year without prior notice to Paying Agent, unless
such change is required by law.
7.3 Accounting-, Charrfjes. Make any material change in accounting policies or
reporting practices, except as required by GAAP or otherwise required by law.
ARTICLE 8
EVENTS OF DEFAULT
The occurrence of any of the following events (following the giving of notice, as
required, and lapse of any grace periods provided hereunder) shall constitute an event of default
(individually, an "Event of Default") hereunder:
8.1 Failure to Make Payments. City shall fail to pay or cause to be paid any payment
due under the Notes on or before the date that such payment is due under this Agreement and the
Notes, and such failure shall continue unremedied for a period of five (5) Banking Days after the
Paying Agent has delivered written notice thereof to the City (Paying Agent to deliver such
notice on the due date to the extent payment was not received by the Paying Agent by 12:00
p.m.on such due date). Any failure of the Paying Agent to deliver such notice of non-payment as
required by this Section 8.1 shall not constitute a waiver of any default or Event of Default
arising from the City's failure to pay amounts due hereunder and under the Notes.
8.2 Misstatements. Any financial statement, representation, warranty, or certificate
made or prepared by, under the control of, or on behalf of City furnished to Paying Agent or any
Noteholder pursuant to this Agreement, or any amendment or modification thereof or waiver
thereto shall contain an untrue or misleading statement of a fact as of the date made that would
reasonably be expected to have a Material Adverse Effect, or shall fail to state a fact necessary to
make the statements therein not misleading as of the date made and as a result thereof there
would reasonably be expected to occur a Material Adverse Effect; provided that no Event of
Default shall occur pursuant hereto, unless and until City receives written notice (from any
source) that such untrue or misleading statement, or such omission, has occurred, and City has
not, within forty-five (45) days of the date on which City receives written notice, eliminated or
otherwise cured such untrue or misleading statement, or such omission, so that it would no
longer reasonably be expected to have a Material Adverse Effect.
8.3 Bankruptcy.- Insolvency . Any of the following events shall have occurred:
(a) City shall file a petition for relief under the Bankruptcy Law (or any
successor statute) or shall otherwise institute any similar proceeding under any other applicable
federal, state or other applicable law, or shall consent thereto; or
(b) City shall apply for, or by consent or acquiescence there shall be an
appointment of, a receiver, liquidator, sequestrator, trustee or other officer with similar powers.
8.4 Other Defaults. City shall fail to perform or observe any other covenant to be
performed or observed by it hereunder and not otherwise specifically provided for elsewhere in
this Article 8, and such failure shall continue unremedied for a period of forty-five (45) days
after the Mayor, City Manager or City Attorney of the City becomes aware thereof or City
13
or dishonor, or other notices or demands of any kind, all such other notices and demands being
waived, (a) to the extent permitted by applicable law, accelerate all amounts then outstanding
under the Notes and demand immediate payment thereof, and (b) exercise any or all rights and
remedies available at law or in equity.
9.4 Bankrur)—tcy or Insolvency Default. Upon the occurrence and during the
continuation of an Event of Default under Section 8.3, notwithstanding anything herein to the
contrary, all amounts then outstanding under each of the Notes, to the extent permitted by
applicable law, shall automatically become immediately due and payable without further notice
or action.
ARTICLE 10
PAYING AGENT
10.1 A.� ?ointment. Powers and Immunities.
(a) Each Noteholder hereby appoints and authorizes Wells Fargo Bank, N.A.
to act as Paying Agent hereunder and under the Notes with such powers as are expressly
delegated to Paying Agent by the terms of this Agreement, the First Supplemental Trust
Agreement and the Notes, together with such other powers as are reasonably incidental thereto.
Paying Agent shall not have any duties or responsibilities except those expressly set forth in this
Agreement and the First Supplemental Trust Agreement, and shall not be a trustee for, or
Trust Agreement. Notwithstanding anything to the contrary contained herein, Pa
fiduciary of, any Noteholder, except that the Paying Agent also shall be the Trustee under the
ying Agent shall
not be required to take any action which is contrary to this Agreement or any Note or any Legal
Requirement, or that exposes Paying Agent to any liability. Each of Paying Agent, the
Noteholders, and any of their respective affiliates shall not be responsible to any other Noteholder
for any recitals, statements, representations, or warranties made by City contained in this
Agreement, any Note, or any certificate or other document referred to or provided for in, or
received by Paying Agent or any Noteholder under, this Agreement or any Note, for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, the Notes, or
any other document referred to or provided for herein, or for any failure by City to perform its
obligations hereunder or thereunder. Paying Agent may employ agents and attorneys -in -fact and
shall not be responsible for the negligence or misconduct of any such agents or attorneys -in -fact
selected by it with reasonable care.
(b) Paying Agent and its directors, officers, and employees shall not be
responsible for any action taken or omitted to be taken by it or them hereunder or under the Notes
or in connection herewith or therewith, except for its or their own gross negligence or willful
misconduct as determined by a final non -appealable judgment of a court of competent
jurisdiction. Without limiting the generality of the foregoing, Paying Agent (i) may treat the
payee of any Note as the holder thereof until Paying Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form and substance satisfactory to
Paying Agent; (ii) may consult with legal counsel (including counsel for City), independent
public accountants, and other experts selected by it with reasonable care and shall not in liable for
any action taken or omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants, or experts; (iii) makes no warranty or representation to any Noteholder for
15
Agreement, the Notes or the Trust Agreement, 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, except to the extent that any such loss, damages,
liability or expense results from the negligence, willful misconduct or bad faith on the part of the
Paying Agent. The rights of the Paying Agent and the obligations of the City under this Section
shall survive the discharge of the Notes and this Agreement and the resignation or removal of the
Paying Agent.
(b) Paying Agent shall. be fully justified in refusing to take or continuing to
take any action hereunder unless it shall first be specifically indemnified to its satisfaction by the
directing Noteholders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action.
10.6 Successor Paving _ ents. Paying Agent acknowledges that its current intention is
to remain Paying Agent hereunder. Nevertheless, Paying Agent may resign at any time by
giving thirty (30) days' written notice thereof to the Noteholders and City; provided that, the
Paying Agent shall simultaneously resign as Trustee under the Trust Agreement, and such
resignation to be effective only upon the acceptance of the appointment of a successor Paying
Agent and Trustee. Requisite Noteholders may remove Paying Agent by givin thi
written notice thereof to Paying Agent and Ci g' (30) days'
City, such removal to be effective only upon the
acceptance of the appointment of a successor Paying Agent and the simultaneous resignation of
the Trustee under the Trust Agreement, with such resignation to be effective only upon the
acceptance of the appointment of the successor Paying Agent as successor Trustee under the
Trust Agreement. Upon any such resignation or removal, the Noteholders shall have the right to
appoint a successor Paying Agent with notice to City; provided that (a) the consent of each of
Commerzbank and Ambac shall be required for the appointment of a successor Paying Agent so
long as Commerzbank and Ambac remain Noteholders hereunder, and (b) if a Noteholder wishes
to appoint a substitute Paying Agent for any reason including any actual or potential Paying
Agent fee increase pursuant to Section 2.4 of this Agreement, such consent of the other
Noteholder will not be unreasonably withheld or delayed. If no successor Paying Agent shall
have been so appointed by the Noteholders, and shall have accepted such appointment, within
thirty (30) days after the retiring Paying Agent's giving of notice of resignation or removal, the
retiring Paying Agent may on behalf of the Noteholders, appoint a successor Paying Agent,
which shall be a commercial bank having a combined capital and surplus of at least One
Hundred Million Dollars ($100,000,000). Any successor Paying Agent must also be the
successor Trustee under the Trust Agreement. City agrees to take such steps as may be required
to appoint such successor Trustee under the Trust Agreement if a successor Paying Agent is
appointed under this Agreement. Upon the acceptance of any appointment as Paying Agent
under this Agreement by a successor Paying Agent such successor Paying Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges, and duties of the retiring
Paying Agent, and the retiring Paying Agent shall be discharged from its duties and obligations
as Paying Agent under this Agreement and the Notes. After any retiring Paying Agent's
resignation or removal hereunder as Paying Agent, the provisions of this Article 10 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was Paying Agent.
10.7 Authorization. Paying Agent is authorized by the Noteholders to enter into
agreements supplemental hereto with any Person for the purpose of curing any formal defect,
17
the owner of such participation for all purposes of this Agreement notwithstanding any notice to
the contrary.
11.3 Assiznments and Transfer.
(a) PermittedAssi�r�uzIents. Subject to the provisions of Section 11.4 below
and provided that the parties to any assignment shall (prior to any such assignment) execute and
deliver an appropriate agreement evidencing such assignment substantially
he form attached
hereto as Exhibit E (hereinafter, the "Assignment Agreement"), a copy of which tshall be provided
by the Paying Agent to the City upon execution thereof, a Noteholder may from time to time, at
its option, sell, assign, transfer or otherwise dispose of (collectively, "assign," and any such sale,
assignment, transfer or other disposition being, for the purposes of this Sectio, an
"assignment") any of its rights and obligations under its Note (the Noteholder making such
assignment being the "assigning Noteholder" and the Noteholder receivingsuch assignment
a "new Noteholder"); irovided that an such assignment gement being
Y gement shall be only in Authorized
Denominations and to an Eligible Assignee. Such restriction on transfer shall be printed
prominently on the form of the Notes, and any transfer in violation of the provisions of this
Section 11.3 shall be null and void. At the assigning Noteholder's option and upon such
Noteholder's prior payment of the cost of any administrative expense charged by the Paying
Agent (except as otherwise set forth in this Agreement and/or as otherwise agreed by Paying
Agent and the City in their sole discretion), City shall execute and deliver to such new Noteholder
a new Note substantially in the form attached hereto as Exhibit C, in an amount equal to such new
Noteholder's Proportionate Share of the Payment Stream being assigned, and City shall execute
and exchange with the assigning Noteholder a replacement note for its existing Note in an amount
equal to the Proportionate Share of the Payment Stream retained by the assigning Noteholder, if
any. No assignment or transfer of any portion of a Note shall be effective unless and until
recorded in the Register following receipt by the City and Paying Agent of a fully executed
Assignment Agreement, the satisfaction of the requirements in Section 11.310 and the
satisfaction of the other foregoing requirements.
(b) Assignment Effective Date. Each assignment shall be recorded in the
Register promptly following receipt of such documentation by Paying Agent. Each assignment
shall be effective (hereinafter, the "Assignment Effective Date") only upon (i) receipt by Paying
Agent and City of an executed Assignment Agreement with respect to each assignment, a the
recordation of each assignment in the Register, and (ii) the delivery to Paying Agent of the
requisite processing fee for such assignment (except as otherwise set forth in this Agreement or
unless otherwise agreed by Paying Agent and City in their sole discretion). All assignments shall
be effective as of the Assignment Effective Date. Following the Assignment Effective Date, such
new Noteholder shall be a Noteholder for all purposes and shall have all of the rights and duties
of a Noteholder (except as otherwise provided in this Article 11).
11.4 Laws. Notwithstanding the foregoing provisions of this Article 11, no sale,
assignment, transfer, negotiation or other disposition of the interests of any Noteholder hereunder
or under its Note shall be allowed if it would require registration under the Securiries Act, any
other federal securities laws or regulations or the securities laws or regulations of any applicable
jurisdiction.
19
have been validly and effectively given on the day (if a Banking Day and, if not, on the next
following Banking Day) on which it is transmitted if transmitted before 4:00 p.m., recipient's
time, and if transmitted after that time, on the next following Banking Day; nroL vided,however,
that if any notice is tendered to an addressee and the delivery thereof is refused by such
addressee, such notice shall be effective upon such tender. Any parry shall have the right to
change its address for notice hereunder to any other location within the United States by giving
of thirty (30) days' written notice to the other parties in the manner set forth herein above.
12.2 Delay and Waiver: Amendments. No delay or omission to exercise any right,
power or remedy accruing to Paying Agent or the Noteholders upon the occurrence of any Event
of Default or Inchoate Default or any breach or default of City under this Agreement or the
Notes shall impair any such right, power or remedy of Paying Agent or the Noteholders, nor
shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or
of or in any similar breach or default thereafter occurring, nor shall any waiver of any single
Event of Default, Inchoate Default or other breach or default be deemed a waiver of any other
Event of Default, Inchoate Default or other breach or default theretofore or thereafter occurring.
Any waiver, indulgence, permit, consent or approval of any kind or character on the part of the
Noteholders of any Event of Default, Inchoate Default or other breach or default under this
Agreement or the Notes, or any waiver on the part of Paying Agent or the Noteholders of any
provision or condition of this Agreement, must be in a writing signed by Paying Agent and the
Noteholders or Requisite Noteholders, as applicable, expressly referencing this Agreement and
shall be effective only in the specific instance and to the extent in such writing specifically set
forth. All remedies, either under this Agreement or the Notes or by law or otherwise afforded to
Paying Agent and the Noteholders, shall be cumulative and not alternative. No waiver of an
Event of Default under Section 8.1 or Section 8.3 shall be effective unless signed by each
Noteholder that would be affected thereby. No waiver of any other Event of Default or Inchoate
Default shall be effective unless signed by the Requisite Noteholders. This Agreement may be
amended only by a writing signed by Paying Agent, Noteholders and City.
12.3 Costs. Expenses and Attorney s' Fees. Each of the Noteholders and City will pay
its own costs and expenses in connection with the preparation, negotiation, closing and costs of
administering this Agreement and the documents contemplated hereby, including the reasonable
fees, expenses and disbursements of its counsel in connection with the preparation of such
documents and any amendments hereof or thereof, or the negotiation, closing or administration
of this Agreement. City will reimburse Paying Agent and the Noteholders for all reasonable
costs and expenses, including, but not limited to, reasonable attorneys' fees (but not including
third -party consultant fees), actually expended or incurred by Paying Agent and/or the
Noteholders, as applicable, in enforcing this Agreement and the Notes in connection with an
Event of Default, in actions for declaratory relief related to the enforcement of this Agreement or
the Notes, or in collecting any sum which becomes due Paying Agent or any Noteholder under
this Agreement or the Notes.
12.4 Entire Agreement. This Agreement, the Settlement Agreement, the Notes, and any
other agreement, document or instrument attached hereto or referred to herein integrate all the
terms and conditions mentioned herein or incidental hereto and supersede all oral negotiations
and prior writings in respect to the subject matter hereof. In the event of any conflict between
the terms, conditions and provisions of the Settlement Agreement and this Agreement and/or the
21
TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE OTHER
OPERATIVE DOCUMENTS OR ANY ACT OR OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH; AND EACH PARTY HEREBY WAIVES, RELEASES AND
AGREES NOT TO SUE UPON ANY SUCH CLAIM FOR ANY SUCH SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER OR NOT ACCRUED AND
WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
12.11 Waiver of Jure Trial. TO THE EXTENT PERMITTED BY LAW, PAYING
AGENT, EACH NOTEHOLDER, AND CITY HEREBY KNOWINGLY, VOLUNTARILY,
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER,
OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER OPERATIVE
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), OR ACTIONS OF PAYING AGENT, ANY
NOTEHOLDER OR CITY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
PAYING AGENT, CITY AND THE NOTEHOLDERS TO ENTER INTO THIS
AGREEMENT.
12.12 Counterp s. This Agreement may be executed in one or more duplicate
counterparts and delivered by facsimile or by a portable document format (pdf) via electronic
mail, and when executed and delivered by all the parties listed below, shall constitute a single
binding agreement; signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signatures are physically attached to the same
document. A facsimile or portable document format (pdf) signature page shall constitute an
original for all purposes. The parties to this Agreement agree that, except as expressly provided
above, any deliverable required to be provided pursuant to Article 3 may be delivered by
facsimile or electronic mail in a portable document format, or other electronic transmission.
12.13 No Third Parte Beneficiaries. Nothing expressed or referred to in this Agreement
will be constiued to give any Person, other than the parties hereto and any other Noteholders, any
legal or equitable right, remedy or claim under or with respect to this Agreement, the Notes, the
other Financing Documents or any provision of this Agreement, the Notes or the other Financing
Documents.
12.14 Se :)agate Re rresentation. Each party hereto acknowledges that it has been advised
and represented by counsel in the negotiation, execution and delivery of this Agreement and
accordingly agrees that if an ambiguity exists with respect to any provision of this Agreement,
such provision shall not be construed against any party because such party or its representatives
drafted such provision.
12.15 Ratings. In the event that any time after the Closing Date, the Noteholders wish
to seek a credit rating for the Notes, City agrees to cooperate with such rating request, to execute
and deliver any formal request to obtain or maintain a rating, as required by any rating agency,
and to provide any other information required or reasonably requested by any rating agency to
obtain or maintain any ratings; provided that the Noteholders pay, or reimburse City for all
amounts paid, for any and all rating agency fees, costs and/or expenses incurred by City in
cooperating with such rating request, including but not limited to any outside attorneys' fees
23
[Signature Page to Exchange Agreement]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their officers thereunto duly authorized as of the day and year first above written.
CITY OF SAN BERNARDINO, CALIFORNIA
By:
Name:
Title:
COMMERZBANK FINANCE & COVERED
BOND S.A.,
as Noteholder
By:
Name:
Title:
AMBAC ASSURANCE CORPORATION
as Noteholder
By:
Name: Gary Greendale
Title: Managing Director
WELLS FARGO BANK, N.A.
as Paying Agent
By:
Name: Theresa Hempeck
Vice President, Corporate Trust Services
Case 6:12-bk-28006-MJ Doc 1882-27 Filed 07/29/16 Entered 07/29/16 19:36:33
Desc Exhibit 26 Page 2 of 10
SETTLEMENT AGREEMENT
This Settlement Agreement (the "Settlement Agreement"), dated as of
March
7 2016, is entered into by and among the City of San Bernardino, California (the
"City"), COMMERZBANK Finance & Covered Bond S.A. (formerly known as Erste
Europaische Pfandbrief-Und Kommunalkreditbank AG in Luxemburg) ("EEPK"), and Ambac
Assurance Corporation ("Ambac").
Background
The City is a debtor under chapter 9 of title 11 of the United States Code
(the "BankruiAcy Coale"), pursuant to a petition filed on August 1, 2012, commencing
M re City of San Bernardino, California, case number 6:12-bk-28006-MJ (the
"Bankruptev Case"), in the United States Bankruptcy Court for the Central District of
California, Riverside Division (the "Bankruptcy Court").
Pursuant to a Trust Agreement, dated as of August 1, 2005 (the "Trust
Anr� eement''), between the City and Wells Fargo Bank, National Association, as
indenture trustee (the "Trustee'), the City issued certain Taxable Pension Obligation
Bonds (the. "Pension Obligation Bonds") in the initial aggregate principal amount of
$50,401,582.90. EEPK purchased all of the Pension Obligation Bonds, consisting of (a)
2005 Series A-1 (Standard Bonds), in the initial aggregate principal amount of
$36,050,000 (the "Series A-1 Bonds"), and (b) 2005 Series A-2 (Capital Appreciation
Bonds), in the initial aggregate principal amount of $14,351,582.90 (the "Series A-2
Bonds"). Ambac represents that it insures the regularly scheduled principal and interest
payments with respect to the Series A-2 Bonds pursuant to Financial Guaranty Insurance
Policy No. S24928BE (the "Insurance Policy"). Ambac and EEPK are hereinafter
sometimes referred to collectively as the "POB Creditors."
On February 5, 2014, the Trustee, on behalf of EEPK and Ambac, filed a
proof of claim in the Bankruptcy Case with respect to the Pension Obligation Bonds (the
"EEPK Proof of Claim"). On February 5, 2014, Ambac filed a proof of claim in the
Bankruptcy Case with respect to the Pension Obligation Bonds (the "Ambac Proof of
Claim" and, together with the EEPK Proof of Claim, the "Proofs of CIaim").
On January 7, 2015, EEPK and Anlbac filed a Complaint in the
Bankruptcy Court (the "Complaint") against the City, seeking relief under 28 U.S.C.
§ 2201, and commencing adversary proceeding number 6:15-ap-01004-MJ (the
"Adversary Proceeding").
On March 13, 2015, the City filed a Motion to Dismiss the Complaint (the
"Motion to Dismiss'') under Federal Rule 12(b)(6), made applicable to the Adversary
Proceeding by Bankruptcy Rule 7012(b), for failure to state a claim. EEPK and Ambac
opposed the Motion to Dismiss, and the Bankruptcy Court held a hearing on May 11,
2015. On May 26, 2015, the Bankruptcy Court, entered an order (the "Order") granting
the Motion to Dismiss. EEPK and Ambac appealed from the Order by filing a Notice of
Appeal on June 8, 2014 (the "Appeal") to the Bankruptcy Appellate Panel for the Ninth
1758
Case 6:12-bk-28006-MJ Doc 1882-27 Filed 07/29/16 Entered 07/29/16 19:36:33
Desc Exhibit 26 Page 4 of 10
with respect to the Pension Obligation Bond Claims the sum of $1,375,000 (One
Million Three Hundred Seventy -Five Thousand Dollars), payable each year in
two equal semi-annual installments.
e. During each of the eleventh year after the Effective Date, through and including
the fifteenth year after the Effective Date, the City shall distribute to the POB
Creditors with respect to the Pension Obligation Bond Claims the sum of
$1,500,000 (One Million Five Hundred Thousand Dollars), payable each year in
two equal semi-annual installments.
f. During each of the sixteenth year after the Effective Date, through and including
the twentieth year after the Effective Date, the City shall distribute to the POB
Creditors with respect to the Pension Obligation Bond Claims the sum of
$1,750,000 (One Million Seven Hundred Fifty Thousand Dollars), payable each
year in two equal semi-annual installments.
g. During each of the twenty-first year after the Effective Date, through and
including the twenty-fifth year after the Effective Date, the City shall distribute to
the POB Creditors with respect to the Pension Obligation Bond Claims the sum of
$2,000,000 (Two Million Dollars), payable each year in two equal semi-annual
installments.
h. During each of the twenty-sixth year after the Effective Date, through and
including the thirtieth year after the Effective Date, the City shall distribute to the
FOS Creditors with respect to the Pension Obligation Bond Claims the sum of
$2,500,000 (Two Million Five Hundred Thousand Dollars), payable each year in
two equal semi-annual installments.
i. The due dates for the semi-annual installments set forth above shall be scheduled
at such time as the Effective Date is known, so as to in each case occur in a single
fiscal year.
The documentation to be executed and delivered under the Conforming Plan to
evidence and effect the City's financial obligations under paragraphs La through
I J. shall conform to the terms hereof and shall otherwise be in form and
substance reasonably satisfactory to the parties hereto; and such documents shall
include any necessary consent or acknowledgement of the Trustee with respect to
the terms hereof and thereof to the extent required by the documents evidencing
the Pension Obligation Bonds.
2. No Admission; Reinstatement of Positions.
The parties hereto acknowledge that the execution of this Settlement
Agreement and consummation of the transactions contemplated herein do not constitute
an admission of liability or of any facts by any of such parties, but rather are intended to
be in compromise and settlement of disputed and unliquidated claims. Nothing herein
shall constitute or be asserted as constituting any admission of liability by or against any
party hereto, and this Settlement Agreement shall not be offered or received in evidence
1760
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Desc Exhibit 26 Page 6 of 10
b. The POB Creditors on behalf of themselves and their
respective present and former directors, officers, employees, agents, representatives,
advisors, and affiliates (collectively the "POB Parties"), shall be deemed to release and
forever discharge the City and its present and former elected and appointed officials,
employees, agents, representatives, and advisors (the " Cir► Parties") from any and all
claims, causes of action, liabilities and obligations arising under or in connection with the
Pension Obligation Bonds, other than the claims, causes of action, liabilities, and
obligations arising under this Settlement Agreement (and attendant documents referenced
in paragraph I.J. hereof) and the Conforming flan;
C. The City Parties shall be deemed to release and forever
discharge the POB Parties from any and all claims, causes of action, liabilities, and
obligations arising under or in connection with the Pension Obligation Bonds, other than
the claims, causes of action, liabilities, and obligations arising under this Settlement
Agreement (and attendant documents referenced in paragraph 1 J. hereof) and the
Conforming Plan;
d. The release of the City Parties contained herein shall be
deemed to include, or, if required to be effective, such of the POB Parties as have the
right to direct the Trustee shall direct the Trustee at closing of the documents referenced
in paragraph 1 J. hereof (with the consent of all parties hereto) to deliver a release by the
Trustee, in its capacity as trustee under the Trust Agreement, of all claims, causes of
action, liabilities and obligations arising under or in connection with the Pension
Obligation Bonds, other than the claims, causes of action, liabilities, and obligations
arising under this Settlement Agreement (and attendant documents referenced in
paragraph 1J. hereof) and the Conforming Plan.
e. With respect to the releases contained in paragraphs 4.b,
4.c. and 4.d. hereof, the POB Parties and the City Parties each hereby stipulate and agree
that upon the Release Date they shall have expressly waived the provisions, rights, and
benefits of California Civil Code Section 1542, or any other similar state law, federal
law, or principle of common law, which may have the effect of limiting the releases set
forth above. Section 1542 of the California Civil Code provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER
FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR.
5. Representations. Each party hereto hereby represents and warrants
that: (a) such party has not heretofore assigned or transferred or purported to transfer or
assign any claim settled or released hereby; (b) such party, subject to Bankruptcy Court
approval, has all corporate, governmental, and other necessary po«ter and authority to
enter into this Settlement Agreement and to perform its obligations hereunder, (c) the
individual signing this Settlement Agreement on behalf of such party has been duly
authorized to so execute and deliver this Settlement Agreement; (d) such party has
1762
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Desc Exhibit 26 Page 8 of 10
IN WI'T'NESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives as of the day and year first above
written.
THE CITY OF SAN BERNARDINO
By:��
Name: A+
Title: 0- 4vj /Vf�.a q e r'
COMMERZBANK FINANCE &
COVERED BOND S.A. (FORMERLY
KNOWN AS ERSTE EUROPAISCHE
PFANDBRIEF-UND
KOMMUNALKREDITBANK AG IN
LUXEMBURG)
By.-_,
Name:
Title:
AMBAC ASSURANCE CORPORATION
By:
Name:
Title:
1764
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Desc Exhibit 26 Page 10 of 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives as of the clay and year first above
written.
TI -JE CITY OF SAN BERNARDINO
By: _
Name:
Title:
COMMERZBANK FINANCE &
COVERED BOND S.A. (FORMERLY
KNOWN AS ERSTE EUROPAISCHE
PFANDBRIEF- UND
KOMMUNALKREDITBANK AG IN
LUXEMBURG)
By:_ _
Name:
Title:
AMBAC ASSURANCE CORPORATION
By:
Name: Cdlq;
Title:
7
1766
"Bankruptcy Law" means Title 11, United States Code, and any other state or federal
insolvency, reorganization, moratorium or similar law for the relief of debtors.
"Bankruptcy Plan" shall have the meaning given in the recitals of this Agreement.
"Benefited Noteholder" shall have the meaning given in Section 2.5t d_j of this
Agreement.
"City" shall have the meaning given in the preamble of this Agreement.
"City Representatives" shall have the meaning given in Section 5.5 of this Agreement.
"Closing" means the satisfaction (or waiver in accordance with the terms of the
Agreement) of each of the conditions precedent listed in Section 3.2 of the Agreement.
"Closing Date" means the date upon which Closing occurs, which, pursuant hereto, is
intended to be on or immediately following the Effective Date.
"Code" means the Internal Revenue Code of 1986, as amended, and any successor
federal tax statute.
"Commerzbank" shall have the meaning given in the preamble of this Agreement.
"Commerzbank Note" shall have the meaning given in the recitals of this Agreement.
"Default Interest" shall have the meaning given in Section 9.1 of this Agreement.
"Department of Treasury Rule" shall have the meaning given in Section 4.7 of this
Agreement.
"Disclosure Statement" means the Third Amended Disclosure Statement with Respect
to the Third Amended Plan for the Adjustment of the Debts of the City of San Bernardino (July
29, 2016) [Dkt. No. 1881].
"Dollars" and "$" means United States dollars or such coin or currency of the United
States of America as at the time of payment shall be legal tender for the payment of public and
private debts in the United States of America.
"Effective Date" means the Effective Date as such term is defined in the City's
Bankruptcy Plan.
"Eligible Assignee" means a purchaser who qualifies as an Accredited Investor or a
Qualified Institutional Buyer.
"Event of Default" shall have the meaning given in Article 8 of this Agreement.
"EMMA" means the Municipal Securities Rulemaking Board's Electronic Municipal Access
System (EMMA).
MR
Treasury Regulations, 31 C.F.R. Parts 500 et seq. (implementing the economic sanctions
programs administered by OFAC).
"OFAC SDN List" means the list of "Specially Designated Nationals and Blocked
Persons" maintained by OFAC.
"OFAC Violation" has the meaning assigned to such term in Section 6.7Ld) of this
Agreement.
"Office" means with respect to any Noteholder, the office designated as such beneath the
name of such Noteholder on Schedule I of the Agreement or such other office of such
Noteholder as such Noteholder may specify in writing from time to time to Paying Agent and
City.
"Original 'frust Agreement" has the meaning given in the recitals of this Agreement.
"Participant Register" shall have the meaning given in Section ..11.2 of this
Agreement.
"Patriot Act" shall have the meaning given in Section 4.7(a) of this Agreement
"Paying Agent" shall have the meaning given in the preamble of this Agreement.
"Payment Date" means each of the payment dates set forth on the Payment Schedule.
"Payment Schedule" means the Payment Schedule set forth as Exhibit D to this
Agreement, as the same may be amended or replaced pursuant to the Agreement.
"Payment Stream" shall have the meaning given in the recitals of this Agreement.
"Pension Obligation Bonds" shall have the meaning given in the recitals of this
Agreement.
"Person" means any natural person, corporation, limited liability company, partnership,
firm, association, Governmental Authority or any other entity whether acting in an individual,
fiduciary or other capacity.
"Prime Rate" means, for any day, the prime rate in effect for such day as published in
the Wall Street Journal.
"Proportionate Share" means with respect to each Noteholder, the percentages set
forth opposite such Noteholder's name on Schedule II to this Agreement, as such percentages
may be modified from time to time as a result of transfers of any portion of a Note by a
Noteholder and as Paying Agent shall reflect in the Register.
"Qualified Institutional Buyer" has the meaning as provided in rule 144A of the
Securities Act.
"Register" shall have the meaning given in Section 2.21 a of this Agreement.
RULES OF INTERPRETATION
1. The singular includes the plural and the plural includes the singular.
2. The word "or" is not exclusive.
3. A reference to a Governmental Rule includes any amendment or modification to such
Governmental Rule, and all regulations, rulings and other Governmental Rules
promulgated under such Governmental Rule.
4. A reference to a Person includes its successors and permitted assigns.
5. Accounting terms have the meanings assigned to them by GAAP, as applied by the
accounting entity to which they refer.
6. The words "include," "includes" and "including" are not limiting.
7. A reference in a document to an Article, Section, Exhibit, Schedule, Annex or Appendix
is to the Article, Section, Exhibit, Schedule, Annex or Appendix of such document unless
otherwise indicated. Exhibits, Schedules, Annexes or Appendices to any document shall
be deemed incorporated by reference in such document.
8. References to any document, instrument or agreement shall include all exhibits,
schedules and other attachments thereto, shall include all documents, instruments or
agreements issued or executed in replacement thereof, and shall mean such document,
instrument or agreement, or replacement or predecessor thereto, as amended, modified
and supplemented from time to time (to the extent permitted under the Financing
Documents) and in effect at any given time.
9. The words "hereof," "herein" and "hereunder" and words of similar import when used in
any document shall refer to such document as a whole and not to any particular provision
of such document.
10. References to "days" shall mean calendar days, unless the term "Banking Days" shall be
used. References to a time of day shall mean such time in New York, New York, unless
otherwise specified.
11. This Agreement and the Notes are the result of negotiations between, and have been
reviewed by City, Paying Agent, each Noteholder, and their respective counsel.
Accordingly, this Agreement and the Notes shall be deemed to be the product of all
parties thereto, and no ambiguity shall be construed in favor of or against City, Paying
Agent, or any Noteholder.
12. The words "will" and "shall" shall be construed to have the same meaning and effect.
LOU
part. Any optional prepayment hereunder shall be in the minimum amount of One Hundred
Thousand Dollars ($100,000) (unless the Notes are being repaid in full).
It is hereby certified that all acts, conditions and things required to be done, have
happened or will be performed precedent to and in the issuance of this Note or in the creation of
the debt of which this is evidence, have been done, or have happened and been performed in
regular and due form and manner as required by law, and that the debt represented by this Note
is not in excess of any constitutional or statutory limitation.
This Note shall not bear interest other than Default Interest, solely as set forth in the
Agreement.
City agrees to pay certain costs and expenses, incurred in connection with the
enforcement of this Note in accordance with the Agreement.
THIS NOTE SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REFERENCE TO CONFLICTS OF LAWS.
CITY OF SAN BERNARDINO, CALIFORNIA
By:
Name:
Title:
C-2
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
June 1, 2034
875,000.00
262,762.50
612,237.50
December 1, 2034
875,000.00
262,762.50
612,237.50
June 1, 2035
875,000.00
262,762.50
612,237.50
December 1, 2035
875,000.00
262,762.50
612,237.50
June 1, 2036
875,000.00
262,762.50
612,237.50
December 1, 2036
875,000.00
262,762.50
612,237.50
June 1, 2037
1,000,000.00
300,300.00
699,700.00
December 1, 2037
1,000,000.00
300,300.00
699,700.00
June 1, 2038
1,000,000.00
300,300.00
699,700.00
December 1, 2038
1,000,000.00
300,300.00
699,700.00
June 1, 2039
—1,2039
1,000,000.00
300,300.00
699,700.00
December
11000,000-00
300,300.00
699,700.00
June 1, 2040
1,000,000.00
300,300.00
699,700.00
December 1, 2040
1,000,000.00
300,300.00
699,700.00
June 1, 2041
11000,000.00
300,300.00
699,700.00
December 1, 2041
1,000,000.00
300,300.00
699,700.00
June 1, 2042
1,250,000.00
375,375.00
874,625.00
December 1, 2042
1,250,000.00
375,375.00
874,625.00
June 1, 2043Alk
00.00
375,375.00
874,625.00
December 1, 204300.00
375,375.00
—874,625.00
June 1, 204400.00
375,375.00
874,625.00
December 1, 204400.00
375,375.00
874,625.00
June 1, 204500.00
375,375.00
874,625.00December
1, 204500.00
375,375.00
874,625.00June1,204600.00
375,375.00
874,625.00December
1, 204600.00
375,375.00
874,625.00
D-2
SCHEDULEII
TO AGREEMENT
SCHEDULE OF NOTEHOLDER ORIGINAL PAYMENT STREAM AMOUNTS AND
PROPORTIONATE SHARES
Noteholder Original Share of Payment Proportionate Share
Stream
Commerzbank $35,457,291.50 69.97%
Ambac $15,217,702.50 30.03%
as a Noteholder to the same extent as if Assignee had been an original signatory Noteholder
thereto.
3. Retention bv AssiLnor. Assignor retains its right, benefit, title and interest in and
to the Original Note, only in the principal amount of [$ ] (the "Retained Amount"), and this
Assignment shall have no effect on the Assignor's rights and benefits in connection with the
Retained Amount of the Original Note.
4. Consideration. In consideration for the Assignment, Assignee agrees to pay to
Assignor the amount of $
5. Execution and Deliven__ of New Notes. Assignor may request that City execute
and deliver the New Note to Assignee in the Assigned Amount. If Assignor makes such request,
(i) Assignor shall pay the cost of any administrative expense charged by the Paying Agent
(except as otherwise set forth in the Exchange Agreement and/or otherwise agreed by Paying
Agent and City in their sole discretion); (ii) the Assignor shall relinquish and deliver to City, for
termination and cancellation, in original form, the Original Note; and (iii) City shall execute and
deliver a new Note (the "New Assignor Note") to Assignor in the Retained Amount, if any. Any
such request shall be made promptly following the execution of this Assignment Agreement, but
in no event more than ten (10) days following the date of execution of this Assignment
Agreement.
6. Effective Date. The Assignment under this Assignment Agreement shall become
effective (the "Effective Date") upon the last of the following to occur: (i) receipt by City and
Paying Agent of an executed Assignment Agreement, (ii) the delivery to Paying Agent of the
requisite processing fee for such Assignment (except as otherwise set forth in the Exchange
Agreement and/or as otherwise agreed by Paying Agent and City in their sole discretion), and
(iii) the recordation of the Assignment in the Register maintained by the Paying Agent pursuant
to the Exchange Agreement.
7. Effect of Effective Date. Upon and following the Effective Date, Assignee will
become a Noteholder under the Exchange Agreement, with the same rights, benefits and
obligations, and shall be bound by the Exchange Agreement, as if the Assignee had been an
original signatory to the Exchange Agreement. If the Assignor requested that the City execute
and deliver a New Note in accordance with Para agr ph 5 hereunder, the Original Note shall be
canceled and of no further force or effect as of the Effective Date.
8. Re vresentations_...and Warranties of Assignor. Assignor makes the following
representations and warranties to and in favor of Assignee as of the Effective Date (which
representations and warranties in each case shall survive the execution of this Assignment
Agreement and the consummation of the transaction contemplated hereunder):
(a) No Violation. The execution, delivery and performance by Assignor of
this Assignment Agreement will not violate any provision of any applicable law,
regulation, writ, order or decree by which Assignor is bound or cause a breach of any of
its organizational documents or authority.
E-2
Article 5 of the Exchange Agreement as of the Effective Date, and (C) to the extent of its
Note, shall have the rights and obligations of a Noteholder thereunder.
(e) Acknowledgement of Certain Risks. Assignee acknowledges that the
purchase and holding of the New Note involves risks that may not be appropriate for
certain investors, and that there may be a limited market for the New Note. Assignee
understands that it may need to bear the risks of this investment for an indefinite time,
since any sale before maturity may not be possible for any number of reasons.
(f) Unregistered Status of New Note. Assignee understands that the New
Note is not registered under the 33 Act and that such registration is not legally required as
of the date hereof. Assignee further understands that the New Note (a) is not being
registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of
any state, (b) will not be listed in any stock or other securities exchange, (c) will not, at
least initially, carry a rating from any rating service, and (d) will be delivered in a form
that may not be readily marketable. Assignee agrees that it will comply with any
applicable state and federal securities laws in effect with respect to any disposition of the
New Note by it, and acknowledges that any current exemption from registration of the
New Note does not affect or diminish such requirements.
(g) Securities Exemjition. Assignee understands that the offering and sale of
the New Note is exempt from the requirements of Rule 15c2-12 promulgated under the
Securities Exchange Act of 1934, that City is not delivering a "deemed final" official
statement with respect to the New Note, and that City is not making any representation to
Assignee or any other party with respect to the matters governed by Rule 15c2-12.
(h) ReceiLt of Information/Non-Reliance.
(i) Assignee (A) is a sophisticated entity with respect to the purchase
of the New Note, (B) is able to bear the economic risk associated with the purchase of the
New Note, (C) has adequate information, based on its own independent investigation
concerning the business and financial condition of the City to make an informed decision
regarding the purchase of the New Note, (D) has such knowledge and experience, and has
made investments of a similar nature, so as to be aware of the risks and uncertainties
inherent in the purchase of rights of the type contemplated in this Assignment
Agreement, and (E) has independently and without reliance upon Assignor, and based on
such information as Assignee has deemed appropriate, made its own analysis and
decision to enter into this Assignment Agreement, except that Assignee has relied upon
Assignor's express representations, warranties, covenants, agreements and indemnities in
this Assignment Agreement. Assignee acknowledges that Assignor has not given
Assignee any investment advice, credit information or opinion on whether the purchase
of the New Note is prudent.
(ii) Except as otherwise provided in this Assignment Agreement,
Assignee has not relied on, and will not rely on, Assignor to fiu*nish or make available
any documents or other information regarding the credit, affairs, financial condition or
business of the City, or any other matter concerning the City.
E-4
has deemed appropriate, made its own analysis and decision to enter into the transaction,
except to the extent that Assignee and Assignor have each relied upon the express
representations, warranties, covenants, agreements and indemnities made by the other in
this Assignment Agreement or any related Purchase and Sale Agreement or confirmation
of the transaction. Each of Assignee and Assignor acknowledges that the other has not
given it any investment advice or opinion on whether the transaction is prudent.
Assignee is aware that payment of the New Note involves certain economic variables and
risks that could adversely affect the New Note. Assignee has sufficient knowledge and
experience in financial business matters and is capable of evaluating the merits and risks
of its investments in the New Note. Assignee represents that it is able to bear the
economic risk of an investment in the New Note, including an entire loss of its
investment.
0) No Offering,/Disclosure Documents. Except as otherwise specifically
provided herein, Assignee has not relied, and will not rely, on Assignor to furnish or
make available any documents or other information regarding the credit, affairs, financial
condition, or business of the City or any other matter concerning the City. Assignee has
not received from any of the City Representatives any formal or informal offering or
disclosure document relating to the New Note and has concluded that such receipt before
the purchase of the New Note is not required. Assignee acknowledges that no written
information has been provided by any of the City Representatives and that any written
information furnished by any other parry may not fully disclose all information pertinent
to the New Note.
(k) No Intent to Distribute. Assignee is acquiring the New Note solely for
investment purposes and does not presently intend to sell, transfer or make a public
distribution of all or any part of the New Note.
(1) Transfer Restrictions. Assignee acknowledges that it has the right to sell
and transfer the New Note, subject to compliance with the transfer restrictions set forth in
the Exchange Agreement, including without limitation, the requirement for transfer only
to an Accredited Investor or Qualified Institutional Buyer and only in Authorized
Denominations.
(m) No Recourse to Assi2rior. Assignee acknowledges that it shall have no
recourse to Assignor, except for breach by Assignor of its representations, warranties and
agreements under this Assignment Agreement.
10. Notices. Any communications hereunder between or among the Parties hereto or
notices provided herein to be given may be given to the following addresses:
If to Assignor:
II
If to Assignee:
I
E-6
instrument attached hereto or referred to herein, the terms, conditions and provisions of this
Assignment Agreement shall prevail.
Si natures continued on next yggej
IM'
EXHIBIT A
[COPY OF ORIGINAL NOTE]
A-1
EXHIBIT F
TO AGREEMENT
FORM OF
FIRST SUPPLEMENTAL TRUST AGREEMENT
F-1
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; EQUAL SECURITY.............................................................................. 5
SECTION1.01. Definitions............................................................................................................5
SECTION 1.02. First Supplemental Trust Areement Constitutes Contract ................................. 8
SECTION 1.03. Section Numbers..................................................................................................8
ARTICLE II REFINANCING OF 2005 SERIES A-1 BONDS; AMENDMENT OF 2005
SERIES A-2 BONDS; GENERAL BOND PROVISIONS .....................................
8
SECTION 2.01. Refinancing of the 2005 Series A-1 Bonds: Issuance of Commerzbank
Note...........................................................
8
SECTION 2.02. Amendment of the 2005 Series A-2 Bonds.........................................................
8
SECTION2.03. Exchange Agreement
9
...........................................................................................
SECTION 2.04. Costs and Fees for Transfers................................................................................
9
ARTICLE III CONDITIONS PRECEDENT FOR CANCELLATION AND EXCHANGE;
IMPLEMENTATION..............................................................................................
9
SECTION 3.01. Conditions for the Cancellation of the 2005 Series A-1 Bonds and
Conversion of the 2005 Series A-2 Bonds to Non -Recourse ...............................
9
SECTION 3.02. Imlzlementation Procedures...............................................................................10
ARTICLE IV PROVISIONS REGARDING AMBAC POLICY.......................................................10
SECTION4.01. Ambac Policy.....................................................................................................10
SECTION 4.02. Claims Under Ambac Polic�.............................................................................10
ARTICLE V COVENANTS OF THE LOCAL AGENCY...:.............................................................12
SECTION5.01. Performance.......................................................................................................12
SECTION 5.02. Power to Enter Into Agreement.........................................................................12
SECTION 5.03. A counting Records and Reports .......................................................................12
SECTION 5.04. Prosecution and Defense of Suits.......................................................................12
SECTION 5.05. Waiver of Laws ................................
ARTICLEVI THE TRUSTEE............................................................................................................13
1