HomeMy WebLinkAboutAmendments to Agenda Items 18 and 19
City Council Memorandum
Date:
__________, 20
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@sbcity.org) or
Chief Deputy City Clerk John Maier (maier_jo@sbcity.org) should you have any
questions.
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This SETTLEMENT AND RELEASE AGREEMENT ("Settlement Agreement") is dated
as of 2017, for identification purposes only, and entered into by and between
the CITY OF SAN BERNARDINO, a California charter city ("City") and ACAA LIMITED
PARTNERSHIP,, a California limited partnership ("ACAA"). The' City and ACAA are referred to
herein collectively as the "Parties" and individually as a "Party".
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A. ACAA holds a secured promissory note dated May 19, 2011 (the "Note" , evidenci
i ing
a loan made to the San Bernardino Economic Development Corporation ("SBEDC") in the principal
sum of One Million, Nine Hundred Thousand Dollars and Zero Cents ($1,900,000-00). The Note is
secured by a Deed of Trust with Assignment of Rents recorded on June 3, 2011 in the
San Bernardino County -Recorder's Office ("Deed of Trust"), on certain real property located at
542 North Mt. Vernon Avenue,, San Bernardino (the "Property").
B.
AAA currently occupies and conducts its business operations on the Property
pursuant to a lease.
C. According to its ten -ns, the Note requires the SBEDC to make full payment of the
principal balance to ACAA on or before the maturity date of the Note. The SBEDC has failed to
make the required payment by the maturity date.
D. Pursuant to its letter of May 22, 2013, ACAA notified the SBEDC: i) of its default
under the Note; ii) that ACAA may proceed with the foreclosure process on the Property; and il'l*) of
its offer that the SBEDC transfer the Property to ACAA in exchange for cancellation of the Note.
E. ACAA alleges that pursuant to the rights granted to ACAA as a creditor under
California law and re '• of recourse available under the Note and Deed of Trust ACAA may
proceed with the foreclosure process on the Property.
F. Pursuant to the direction of the California State Controller's Office, the Property was
acquired by the Successor Agency to the Redevelopment Agency of the City of San Bernardino (the
"Successor Agency"), subject to the Note,, Deed of Trust, and default thereunder.
G. The Property is included as site No. 25 within the State of California Department of
Finance approved Long -Range Property Management Plan {"L P") prepared by the Successor
Agency.
H. Per the LRPMP, the Property Was transferred to the City for future developme
subsequent to securing a California Health and Safety Code § 34180 (f) (1) compensation agreemel
fthe "Compensation Agreement") with the affected taxing entities.
1 1. The Compensation Agreement with respect to the Property was approved by th
affected taxing entities, effective September 27, 2016. 1
J. Consistent with the Compensation Agreement, the City acquired the Property subje
to the Note,, Deed of Trust and default thereunder and intended to transfer the Property to ACAA. I
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.
ACAA has requested that the City discharge the Tax Liability,
Y IT, G The City previously requested the County of San I Bernardino ("County") to removiv-
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
Propertyfrom the tax rolls.
0 0. 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
Parties Release
and Settlement Agreement, the now desire to resolve any claims, disputes and/or
controversies with respect to the Note, Deed of Trust, and Tax Liability.
ILI
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(a) Full Defense. The provisions of this Section may be pleaded as a full and
complete defense to, and may be used as the basis for an injunction against, any action, suit, or other
proceeding that may be instituted, Prosecuted, or attempted in breach of this Agreement.
(b) Waiver of Civil Code Section 1542. The Parties acknowledge and understand
that the matters released herein may involve facts and circumstances currently unknown to each,, but,
nevertheless, the Parties intend that the releases provided herein shall be general releases,, and that
they shall effectively release all actions, claims, charges, liabilities,, obligations, benefits,
compensation, damages, fees or suits of any kind whatsoever in connection with 'I arising out of, or
relating to, the Note, Deed of Trust, and/or Tax Liability, even if they involve unknown facts and
circumstances. The Parties hereby acknowledge that each has been fully advised of the contents of
Section 1542 of the Civil Code of the State of California, which reads as follows:
The Parties hereby expressly waive and relinquish any and all rights and benefits under
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Civil Code Section 1542 and any law or legal principle of similar effect in any jurisdiction with
respect to the releases granted in this Section.
ACAA (Initial[
City (Initial)
4. Nofices. Unless otherwise required by law, any notice to be provided by any Party in
connection with this Settlement Agreement shall be in writing and provided by any of the following
methods.- (i) hand delivery; (ii) overnight delivery by a nationally recognized express courier (such as
Federal Express); or (iii) delivery by United States Postal Service certified mail, postage prepaid,
return receipt requested. All notices shall be deemed given and effective upon the earlier to occur
(a) the hand delivery of such notice to the address set forth in this aragraph; (b) one business day
p
after the timely deposit of such notice with a nationally recognized express courier for next day
delivery addressed to the address set forth in this paragraph; or (c) three calendar days after
depositing such notice in the United States mail as set forth in this paragraph. All notices shall be
addressed and sent to the following addresses:
M
City of San Bernardino
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:
Stradling Yocca Carlson & Rauth
Attn: Thomas P. Clark, Jr.
660 Newport Center Drive, Suite 160
Newport Beach, CA 92660
No Material Reliance. There are no unwritten, oral or verbal understandings,
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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
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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.
8. 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
$10000. 1 1
9. itis 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 h e'reto and their respective heirs, executors, administratorssuccessors and assigns.
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
,9.ction, demand, obligation, liability or interest released by it under this Settlement Agreement.
12. Further Assurances and Authorizations to Settle. The ;Its acting by
themselves or through their respective attorneys, shall promptly prepare and execute any and all
documents necessaary to effectuate the obligations set forth in this Settlement Agreement and
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represent and warrant that any necessary approvals or authorizations required to consummate the
covenants and conditions of this Settlement Agreement and effectuate the resolution of all oft e
claims which are the subject of this Settlement Agreement have been obtained.
13. Non -Assignability. ACAA shall not assign, transfer, or convey its rights or
obligations under this Settlement Agreement, nor assign, transfer or convey its rights, obligations, or
interests in this Settlement Agreement,, the Note, or the Deed of Trust to any otherperson or entity.
14. No This Party Benefited. Except as specifically provided for in Section 3 of this
Settlement Agreement with respect to the SBEDC and the Successor Agency, nothing in this
Settlement Agreement, whether express or implied, shall be intended to confer any rights or remedies
under this Settlement Agreement on any persons other than the Parties.
is. Entir e- Agreement. This Settlement Agreement, including all exhibits hereto
represents the entire understanding among the Parties as to those matters contained herein. Noprior
oral or written understanding shall be of any force or effect with respect to those matters covered
hereunder.
16. Modification; Waiver. This Settlement Agreement shall not be altered, amended, or
modified in any respect except by writing duly executed by the Party to be charged. No waiver shall
be deemed given unless in writing, and one waiver shall not constitute a subsequent waiver.
17. Governing Law; Venue. The provisions of this Settlement Agreement shall be
interpreted and enforced in accordance with the laws of the State of California. Any action arising
from this Settlement Agreement shall be brought in a state court in the County of San Bernardino,
State of California or a federal court in the County of Riverside, State of California.
18.
Authority to Execute. By signature below, each signatory signifies that he or she is
an authorized signatory of the Party on behalf of whom he or she executes this Settlement
Agreement.
19. Joint Preparation. The Parties have cooperated and participated in the drafting and
preparation of this Settlement Agreement. Accordingly, the Parties hereby acknowledge and agree
that this Settlement Agreement shall not be construed or interpreted in favor of or against any of the
Parties by virtue of the identity of its drafters or their respective contributions hereto.'
20. Counterparts. This Settlement Agreement may be executed in any number of
counterparts, each of which will be deemed an original and together constitute the same agreement.
21. Effective Date. This Settlement Agreement shall be effective for all purposes upon
the occurrence of both of the following: (i) the execution hereof by the Parties and (ii) the approval
of the Settlement Agreement by the City Council ("Effective Date").
[Signatures on next page]
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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
•
Mark Scott, City Manager
Geogeann Hanna, City Clerk
STRADLING YOCCA CARLSON &
RAUTH, P.C.
M
Thomas P. Clark, Jr., Special Counsel
T,
ACAA LIMITED PARTNERSHIP,
a California limited partnership
By: A & A HOLDINGS, INC.
Its: General Partner
M0011
Ed Haddad, President
Recording Requested By and
When Recorded Mail to.-
Tarner & Brandt LLP
Attention: Sean S. Varner
3750 University Avenue, 6th Floor
Riverside,, California 92501
For valuable consideration, receipt of which is hereby acknowledged,
The CITY OF SAN BERNARDINO,, a California charter city (the "City") hereby does
REMISE,, RELEASE,, AND FOREVER QUITCLAIM to ACAA LIMITED PARTNERSHIP, a
California limited partnership ("ACAA"), all of City's right, title, and interest in and to,, the
following described real property in the County of San Bernardino, State of California:
Parcel I of Parcel Map Number 17809, in the City of San Bernardino. County of
San Bernardino. State of Californiaas per map recorded in book 228, pages 54
and 55, inclusive of parcel maps, in the office of the county recorder of said
county.
IN WITNESS WHEREOF, City has executed this Quitclaim Deed as of
52017.
CITY OF SAN BERNARDINO,
,?. California charter city
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. I
, before me,
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 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 cor-,,�,-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
0 Individual
0 Corporate Officer
Title(s)
❑ Partner(s) F1 Limited F1 General
F-1 Attorney -In -Fact
n Trustee(s)
El Guardian/Conservator
D Other:
Signer is representing:
Name Of Person(s) Or Entity(ies)
Title Or Type Of Document
Number Of Pages
Date Of Documents
Signer(s) Other Than Named Above
T, �r UMMIll I
710m, NOT
awl
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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
I (the "2005 Series A- I Bonds") and 2005 Series A-2 (the "2005 Series A-2 Bonds" and,
together with the 2005 Series A- I 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"); an.t
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- I 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 SeriesBonds (the "Commerzbank Note"); and (ii) to amend the
2005 Series
1-2 Bonds to provide that such 2005 Series 1-2 Bonds shall be non-recourse to the
City; and (iii) to issue a note payable to Ambac Assurance Corporation, the bond insurer of th
205 Sries AB
-2 onds (the "Ambac Note" and, together with the Commerzbank Note, the I
0e
"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, andconfirmed the City's Plan of Adjustment in its Bankruptcy Case.
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NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITJ
COUNCIL OF THE CITY OF SAN BERNAR!az 9 AS FOLLOWS:
Section 1. The Supplemental Trust Agreement, in substantially the form attached
hereto as Exhibit "A," is hereby approved. The Mayor, any member of the City Council, the
City Attorney, the City Manager or the designee thereof (the "Authorized Officers") are hereby
authorized and directed to execute and deliver the Supplemental Trust Agreement with such
changes, insertions and omissions as may be recommended by the City Attorney or by Stradling
Yocca Carlson & Rauth, a Professional Corporation ("Special Counsel") and approved by the
officer executing the same, said execution being conclusive evidence of such approval.
Section 2. The Exchange A • greement, in substantially the form attached hereto as
Exhibit "B," is hereby approved. The Authorized Officers are hereby authorized and directed to
execute and deliver the Exchange Agreement with such changes, insertions and omissions as
may be recommended by the City Attorney or by Special Counsel and approved by the officer
executing the same, said execution being conclusive evidence of such approval.
Section 3. The Commerzbank Note and the Ambac Note, in substantially the forms
attached hereto as Exhibits "C" and "D", respectively, are hereby approved. The Authorized
Officers are hereby authorized and directed to execute and deliver the Notes with such changes.,
insertions and omissions as may be recommended by the City Attorney or by Special Counsel
and approved by the officer executing the same, said execution being conclusive evidence of
Section 4. The Authorized Officers and any other proper officer of the City, acting
singly, be and each of them hereby is authorized and directed to execute and deliver any 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 the Supplemental Trust Agreement,
the Exchange Agreement and this Resolution. All prior actions of the Authorized Officers and
other officers or staff of the City with respect to this matter are hereby ratified and approved.
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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.
HI
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Section 6. This esoluti®n shall take effect immediately upon its adoption.
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The foregoing Resolution is hereby approved this
Approved as to form:
Gary D. S aenz, City Attorney
By:
ii 4
Georgeann Hanna, City Clerk
day of
R. Carey Davis, Mayor
City
• San Bernardino
W -AWN
111111111111 1111111111111liq llllllllllq� 1111111 11111111111 111111
1j,
If x
u-pplemental Trust Afvreement
rin
WELLS i 1. NATIONAL
as
Dated as of 9 2017
Supplementing and Amending the Trust Agreement dated as of October 1, 2005
City of San Bernardino
Taxable pension Obligation ends
Lmi
ARTICLE I DEFINITIONS; EQUAL SECURITY .............................................................................. 5
SECTION1.01. Definitions ............................................................................................................ 5
SECTION 1.02. First Supplemental Trust Agreement Constitutes Contract... .............................. 8
SECTION 1.03. Section Numbers .......... 0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . . . . 0......... . . . . . . . . . . . . 8
ARTICLE 11 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
SECTION 2.03. Exchange Agreement ...................... ............................................... 0 ....... 0 ............. 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 ................................................ 0 ............................ 10
ARTICLE V COVENANTS OF THE LOCAL AGENCY ................................................................. 12
SECTION 5.01. Performance ........................................................................................................ 12
SECTION 5.02. Power to Enter Into Agreement ......................................................................... 12
SECTION 5.03. Accounting Records and Re ....................................................................... 12
SECTION 5.04. Prosecution and Defense of Suits ....................................................................... 12
SECTION 5.05. Waiver of Laws ........... 0 ...................................................................................... 13
ARTICLEVI THE TRUSTEE ................................. o .......................................................................... 13
0
SECTION6.01. The Trustee ......... 0 ... I .................................. 0 .................... 0 .................................. 13
SECTION 6.02. Trustee's Fees and Eaen,ses,- Indemnification .................................................. 13
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF HOLDERS .................................... 14
SECTION
7®L Events of Default ............................................................................................... 14
ARTICLEVIII MISCELLANEOUS ................................................................................................... 14
gency.
SECTION 8.01. Absolute Oblii4ation of Local A cy . .............. 4 ........... 0 ..... 0 .......... 0 ............
14
SECTION 8.02. Beneficiaries of the First SLipplemental Trust Agreement .................................
14
SECTION8.03. Notices ............................................................................................................... 14
SECTION 8.04. Article and Section Headings and References ................ 0 ................. 0 ................ 15
SECTION 8.05. Partial Invalidity.................................................................................................
15
SECTION 8.06. Execution in Several Countgar�ts ................ 0.0 ....................... 0 ...... ... 0 ..........
16
SECTION8.07. Governing Law .... 0 ........ 0 ................... 0 ............. 0 ........... *..o.* ......... 0........ a..... 00 .......
16
SECTION 8.08. Entire Agreement ...............................................................................................
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EXHIBIT A COPY OF RIINAL AMBAC POLICY .......... o ....................................
A- I
EXHIBIT B FORM OF ENDORSEMENT TO AMBAC POLICY .................................... o ... B-1
EXHIBIT C FORM OF ASSIGNMENT TO AMBAC ..........................................................
C-1
EXHIBIT D FORM OF TRUSTEE'S NOTICE TO AMBAC OF INSUFFICIENT
FUNDS................................................................. o ....... o .................................
D-1
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HIM
'i vi in
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
A
"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.
0
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 ll
(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 obligat*
ions 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 provideff
therein; and
WHEREAS, the 2005 Series A- I 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, the 2005 Series A Bonds were the only Bonds issued under the
Original Trust Agreement; and
WHEREAS, the 2005 Series A-2 Bonds were insured by Ambac Assurance
Corporation ("Ambac") pursuant to its Financial Guaranty Insurance Policy No. S24928BE, a
copy of which is attached hereto as Ext A (the "Original Ambac Policy"); and
WHEREAS, all of the 2005 Series A-1 Bonds, in the present outstanding
e
areate Principal Amount (as defined in the Original Trust Agreement) of $ _, ar
ggg
beneficially owned by Commerzbank Finance & Covered Bond S.A. (formerly known as Erste
rzbank")- all of
Europaksche Pfandbrief- und Kommunalkreditbank AG in Luxemburg) ("Comme
the 2005 Series A-2 Bonds in the outstanding aggregate Principal Amount of $13,765,000 not
yet due and payable are beneficially owned by Commerzbank; and the 2005 Series A-2 Bonds
paid by Arnbac, in the outstanding aggregate Principal Amount of $7,065,000, have been
assigned to and are beneficially owned by Ambac; and
WHEREAS, in order to provide for such changes beginning on the Effective
Date, the Local Agency has authorized the execution and delivery of this First Supplemental
Trust Agreement, and Commerzbank, as Beneficial Owner of a majority in Aggregate Principal
Amount of the Bonds now Outstanding, has provided the necessary written consents in
accordance with Section 7.01 of the Original Trust Agreement; 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
#
IMMIX
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:
The term "2005 Series A- I Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
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.
9
The term "Ambac Policy" shall mean the Original Ambac Policy, as endorsed,
including such endorsement described in Section 4.01 of this First Supplemental Trust
F&TIR HE ri ink pay ra.
The term "Ambac Note" shall have the meaning given such term. in the recitals of
this First Supplemental Trust Agreement.
The term "Authorized Representative" in the Original Trust Agreement is hereby
amended to mean the Mayor, City Manager, Treasurer and City Clerk of the City of San
Bernardino.
BgpkMtcy Case
The term "Bankruptcy Case" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
The term "Bankruptcy Court" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
rfNMMf,ArrZhqnI-
The term "Commerzbank" shall have the meaning given such term in the recitals
of this First Supplemental Trust Agreement.
The term "Commerzbank Note" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
The term "Effective Date" means the Effective Date as such term is defined in the
Local Agency's Bankruptcy Plan.
The ten -n "Exchange Agreement" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
0
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.
The term "Insured Holder" means a Holder (as defined in the Ambac Policy) of
the 2005 Series A-2 Bonds.
The term "Note Paying Agent" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
The term "Notes" shall have the meaning given such term in the recitals of this
First Supplemental Trust Agreement.
Original Ambac,
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.
The term "2005 Series A-1 Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
The term "2005 Series A-2 Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
SECTION 1.02. First Soplemental Trust Agreement Constitutes Contract '
In consideration of the prior acceptance of the Bonds by the Holders thereof and the concurreni
acceptance of the Notes by Commerzbank and Arnbac, pursuant to Section 7.01 of the Origina.
shall become binding when th(
Trust Agreement, this First Supplemental Trust Agreement
written consents of the Holders of the 2005 Series A Bonds then Outstanding (exclusive o
reemei I I tl
Bonds disqualified as provided in Section 7.02 of the Original Trust Ag ifi ar,(3., filed wi
the Trustee.
SECTION 1.03. Section Numbers. Unless this First Supplemental Trust
Agreement specifically provides for a modification or amendment to a specific Section of the
Original Trust Agreement, the numbering of Articles and Sections in this First Supplemental Trust
Agreement are not intended to modify or amend Articles or Sections of the Original Trust Agreement
having the same numbering, but are intended to refer only to Articles and Sections of this First
Supplemental Trust Agreement.
REFINANCING OF 2005 SERIES A-1 BONDS; AMENDMENT OF 2005 SERIES A-,4.
BONDS; GENERAL BOND PROVISIONS I
SECTION ® Refinancin of the 2005 Series A-1 BoIssuance of
Commerzbank Note. The 2005 Series A-1 Bonds issued pursuant to the Original Trust
anced throuprh the exchange of such 2005 Series A-1 Bonds for the
Agreement shall be refin
Commerzbank Note in accordance with the Exchange Agreement, and shall be cancelled as of
the Effective Date upon satisfaction of the conditions and procedures set forth in Section 3.01 of
this First Supplemental Trust Agreement. ,
Upon satisfaction of the requirements set forth in the Exchange Agreement, the
Commerzbank Note shall be issued as an Additional Bond under the Trust Agreement for the
purpose of refunding the 2005 Series A-1 Bonds then Outstanding. The conditions and
procedure for issuance of the Commerzbank Note set forth in the Exchange Agreement shall
lace the requirements of Sections 3.01 and 3.02 of Original Trust Agreement
supersede and rep
itions precedent to issuance of the Commerzbank Note. The terms of the
with respect to cond
Commerzbank Note shall be set forth in the Exchange Agreement and in the Commerzbank
Note.
SECTION 2.02. Amendment of the 2005 Series A-2 Bonds. Beginning on
the Effective Date, ayment of the Accreted Value of the 2005 Series A-2 Bonds, including all
amounts currently due and unpaid as of the Effective Date, shall be non-recourse to the Local
Agency, such that the Local Agency shall have no further obligations to make any payments on
such 2005 Series A-2 Bonds. The Series A-2 Bonds shall not be extinguished or cancelled, and
the parties intend that the amendment of the 2005 Series A-2 Bonds pursuant to this First
I
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 Trus�j
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
1_0'aying 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 6-,e
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- I 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.
X
SECTION 3. 02. Implementation Procedures. The Local Agency and
Commerzbank shall cooperate in complying with any procedures required by DTC and any
CUSIP requirements in connection with implementing the cancellation of the 2005 Series A-1
Bonds.
ARTICLE 11V
PROVISIONS REGARDING AMBAC POLICY
SECTION 4.02. Claims Under Ambac Policy. As long as the Ambac Policy
shall be in full force and effect, the Local Agency and the Trustee agree to comply with the following
provisions:
(a) At least one (1) Business Day prior to each Principal Payment Date, the Trustee
will determine whether there will be sufficient funds in the Bond Fund to pay the Accreted Value
of the 2005 Series A-2 Bonds maturing on such Principal Payment Date. If the Trustee
determines that there will be insufficient funds in such Fund, the Trustee shall so notify Ambac
and the Insured Holders of such Bonds in writing in the form attached hereto as Exhibit D. Such
notice shall specify the amount of the anticipated deficiency and the 2005 Series A-2 Bonds to
which such deficiency is applicable. If the Trustee has so notified Ambac at least one (1)
Business Day prior to a Principal Payment Date, Ambac will make payment to the Trustee of the
Accreted Value of the maturing 2005 Series A-2 Bonds on or before the Principal Payment Date.
If the Trustee has not so notified Ambac at least one (1) Business Day prior to Principal Payment
Date , Ambac will makepayment to the Trustee of the Accreted Value of the 2005 Series A-2
Bonds maturing on such Principal Payment Date on or before the first (I std Business Day next
following the date on which Ambac shall have received the notice from the Trustee.
[El
11
the fullest extent permitted by law and in a form acceptable to Ambac, all rights of the Insured
Holders of such 2005 Series A-2 Bonds, including all rights to payment.
(g) No failure or delay by the Trustee in performing its obligations hereunder shall
modify or affect m ac's obligation to pay any claim under the Ambac Policy once the Trustee
hasperformed its obligations in accordance with the terms of the Ambac Policy and the
procedures set forth herein.
SECTION 5.01. Performance. Section 5.01 of the Original Trust
Agreement is hereby amended as follows:
The Local Agency will faithfully observe and perform all the agreements and
covenants to be observed or performed by the Local Agency contained in the Trust Agreement
and in the Bonds.
SECTION 5.02. Power to Enter Into Agreement. The Local Agency is duly
authorized pursuant to law to enter into this First Supplemental Trust Agreement. The
provisions of this First Supplemental Trust Agreement are the legal, valid and binding
obligations of the Local Agency in accordance with their terms. The Bonds constitute
obligations imposed by law.
® fN
Accounting Records and R Section 5.05 of the
SECTION 503. co
Original Trust Agreement is hereby amended to provide that the Local Agency shall keep such
records andprovide only such financial reporting as shall be required by the Exchange
Agreement, in lieu of the records and reporting required by Section 5.05 of the Original Trust
Agreement. ,
SECTION 5.04. Prosecution and Defense of Suits. Section 5.06 of the
ni
Original Trust Agreement is hereby amended as follows with respect to obligations of the Local
Agency to defend and indemnify the Trustee:
(a) 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
attorneysfees) 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 breach of duty on the part
of the Trustee. The rights of the Trustee and the obligations of the Local Agency under this
IN
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.
THE TRUSTEE
SECTION 1® 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
11 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
IN
the negligence, willful misconduct, or bad faith on the part of the Trustee. The rights of
the Trustee and the obligations of the Local Agency under this Section shall survive the
discharge of the Bonds and this Agreement and the resignation or removal of the Trustee.
(ii) The Trustee 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 Beneficial Owners against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such action.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES OF HOLDERS
SECTION 7.01. Events of Default. Section 8.01 of the Original Trust
Agreement is hereby amended to provide that in addition to the Events of Default specified
therein, it shall constitute an Event of Default under the Trust Agreement if an Event of Default
(as defined therein) shall occur under the Exchange Agreement.
ARTICLE VIII
SECTION 8.01. Absolute Obli ion of Local Agency. The terms and
provisions of this First Supplemental Trust Agreement supersede the provisions of Section 8.07
of the Oritel.ginal Trust Agreement to the extent such Sectio0
n 8.7 of the Origg
inal Trust Areement
is inconsistent with the terms and provisions of this First Supplemental Trust Agreement. I
SECTION
2® Beneficiaries of the First Supplemental Trust Agreement.-
Ambac Consent to Further Su -P ments. Nothing contained herein, express or implied, is
intended to give to any person other than the Local Agency, the Trustee, Ambac and the Holders
any right, remedy or claim under or by reason hereof. Arnbac shall be a third -party beneficiary
hereof. Any agreement or covenant required herein to be performed by or on behalf of the Local
Agency or any member, officer or employee thereof shall be for the sole and exclusive benefit of
the Trustee, Ambac, and the Holders. Notwithstanding any other provision of the Trust Agreement
to the contrary, the consent of Ambac shall be required for any Supplement to the Trust Agreement,
other than any Supplement that is permitted to be adopted without the consent of Holders of the
Bonds as described in Section 7.01 of the Original Trust Agreement, provided that such consent shall
not be required if a default by Ambac shall have occurred and be continuing under the Ambac Policy
or if the 2005 Series A-2 Bonds are no longer Outstanding
SECTION
3® Notices. All written notices to be given hereunder and
under the Trust Agreement from the Effective Date forward shall be given by mail to the party
entitled thereto at its address set forth below, or at such other address as such party may provide
to the other party in writing from time to time, namely:
IE
If to the Local Agency:
City of San Bernardino 300 North "D" Streel
San Bernardino, CA 92418-0001
Attention: City Attorney's Office
If to the Trustee:
Attention: Corporate Trust Services
Wells Fargo Bank, Natio ' nal Association
555 Montgomery Street, l6thFloor MAC # AO 167-102
San Francisco, CA 94111
Attention: Portfolio Risk Management
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Email address: notices@ambac.com
[Commerzbank: TO BE PROVIDED]
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Email address: noticesgambac.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 Inv . 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
UN
separable from the remaining agreements and covenants or portions thereof and shall in no way
affect the validity hereof or of the Bonds, and the Holders shall retain all the benefit, protection
and security afforded to them under the Act or any other applicable provisions of law. The Local
Agency and the Trustee hereby declare that they would have executed and delivered this First
Supplemental Trust Agreement and each and every other article, section, paragraph, subdivision,
sentence, clause and phrase hereof and would have authorized. the issuance of the Bonds
pursuant hereto irrespective of the fact that any one or more articles, I sections, paragraphs,
subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or
circumstance may be held to be unconstitutional, unenforceable or invalid.
SECTION 8.06. Execution in Several Countg�qrts. This First
reement may be executed in any number of counterparts and each of such
Supplemental Trust Ag
counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as
Local Agency and the Trustee shall preserve undestroyed, shall together
many of them as the
constitute but one and the same instrument.
SECTION 8.07. GoveMLn& Law. This First Supplemental Trust Agreement
shall be governed by and construed in accordance with the laws of the State of California.
SECTION 8.08. Entirg Agreement. This First Supplemental Trust
Agreement supplements and amends the Original Trust Agreement beginning on the Effective
Date, at which time the Original Trust Agreement, as so supplemented and amended by this First
Agreement, the Exchange Agreement, and any other agreement, document
Supplemental Trust
or instrument attached hereto or referred to herein or therein integrate all the terms and
conditions mentioned herein or therein or incidental hereto and supersede all oral negotiations
and prior writings in respect to the subject matter. To the extent of any inconsistency between
the terms of this First Supplemental Trust Agreement and the terms of the Original Trust
s of this First Supplemental Trust Agreement shall control, and to the extent
Agreement, the term
of any inconsistency between the terms of the Trust Agreement and of the Exchange Agreement,
the Exchange Agreement shall control.
in
[Signature Page to First Supplemental Trust Agreement]
IN WITNESS WHEREOF, the CITY OF SAN BERNARDINO has caused thi
First Supplemental Trust Agreement to be signed in its name by the Authorized Representativil
and WELLS FARGO BANK, NATIONAL ASSOCIATION, in token of its acceptance of th
trusts created hereunder, has caused this First Supplemental Trust Agreement to be signed by th.
officer thereunder duly authorized, all as of the day and year first above written. I
0
Georgeann Hanna, City Clerk
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
310
Approved as to form and
legal content:
GARY D. SAENZ
City Attorney
By:
DMEAST #28194828 v13
Theresa Hempeck, Vice President,
Corporate Trust Services,
Authorized Officer
COPY
a
:iQ
IG
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-descr*ibed 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 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 (1) the Obligor or (ii) any person whose obligations constitute the
underlying security or source of payment for the Obligations who, at the V# 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 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
countersignatute of its, duly authorized representative.
u df,".m{ ned hereby certifies ihst this dccur�r nt
,? 2r: -i ctyTact copy v f at al Guaranty In:
Policy. Policy P-410. _ issued by AM
ASSURANCE CORPORATION.
ASSistP '
Date IVY 200
a •
o
S
Ti iti..+- unC.tgr3!4i jed hEare"t- , + xil ':rv�':i ��..: /'' � .r :. .+LrkAsi•+ .: i��..q.% ' •
} i �'i's�e'3ic'it� iii. �;ir4•;.
tnly anC ' AssiuBd by -AMBAC
Policy. --policy No,—
ASSURANCE CORpOPATION_
eislant _t"
Date
Effective date: 5 201ti,
rolicy 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:
Arnbac 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.
IM
C USIP Numbers:
Bond Issuer:
Bond DescriptionlPurpose:
Date of Issuance:
Principal Amount Currently Due for Payment:
Interest Amount Currently Due for Payment:
Record Date:
Date Due for Payment:
Amount Paid by Bond Issuer:
Amount Claimed Under the Policy:
IMPORTANT: All claim forms should be sent to Ambac Assurance Corporation
("Ambac") at the address identified below. Any Person who knowingly and with intent to injure, defraud,
or deceive any insurance company, files a statement of claim containing any false, incomplete, or
misleading information is guilty of a felony in the third degree.
The undersigned Trustee hereby certifies that all of the above information is true, accurate and correct and
it is entitled to the payment of principal and/or interest on the above insured bonds. The Trustee hereby
makes claim for the Amount Claimed Under the Policy stated above in accordance with the Policy for
those insured bonds which are now "Due for Payment" (as defined in the Policy) but for which sufficient
funds for payment have not been provided by the Bond Issuer.
FNINNEURI&V
Claim and Assignment Forms should be sent to:
W
Ambac Assurance Corporation
Attention: Claims Processing
One State Street Plaza
New York, New York 10004
An electronic copy should be sent to:
claimsprocessing@alnbac.com
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 ue 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 Clain 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 terms. The Trustee agrees
that Ambac may exercise any option, vote, right, power or the life (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.
Cid
(Signature of Authorized Representative)
Print Name:
Title:
L3
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 "Clity") 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
Meneficiary Name: Corporate Trust
Beneficiary Account No. 0001038377
For further credit: 18613300
Attn: T.Hempeck re: San Bernardino
Kef: CITY OF SAN BERNARDINO, CALIFORNIA
In Witness Whereof, the Trustee has executed and delivered this Notice as of [DATE].
[Trustee]
0
Womm
Title:
g
among
CITY
OF SAN BERNARDINOICALIFORNIAq
as City I
COMMERZBANK FINANCE & COVERED BOND S.A. (formerly known as Erste
Europa"ische Pfandbrief-
as Noteholder
5�
AMBAC R
as !` ! te
as Paying Agent
I ], 2017
].I
Definitions ......................................................................................................................... 2
1.2
Rules of ---------------------------------..-2
ARTICLE2 THE NOTES .............................................................................................................. 2
2.1
Note Terms ........................................................................................................................ 2
2.2
______________________________________~__..3
2�
.
Prepayments ......................................................................................................................
3
2,4
Fees .-------------------------------------------.'4
2.5
Other Payment Terms .............................................................. ................................ .........
4
26
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 .........................................................................................................
ARTICLE REPRESENTATIONS AND WARRANTIES OF CITY -------.----..7
4.1
No ................. .....................................................
7
4.2
Governmental Authorizations ------------------------------.7
4.3
I�oDe[bu�----------------------------------------.7
4/4Litigation
--------------------------------------7
4`5
Sovereign Immunity ................. ...................................... ....... .......................................
8
4.6
Fiscal Year .................................................................................... ------------0
4.7
OFACand Related Matters ............................................................... ...............................
8
4.0
Law ................ .... ......................................... .........................................
8
ARTICLE
REPRESENTATION AND WARRANTIES OF NOTEHOLDERS,................. .........................
0
5.1
______________________________________..9
52
Acknowledgement ufCertain Risks .............................. ............. ...... ..............................
9
5.3
Unregistered Status o[Notes ................................................. .......... ........ ....... ...............
9
5'4
Rule 15c2-12 ---------------_—_______________..9
5.5
Receipt of __________________________.g
5.6
Inquiry and Analysis ----------------------------------.lO
5.7
No Documents...-------------------------..IO
5.0
Tax Consequences -----------------------------------..IO
ARTICLE AFFIRMATIVE COVENANTS OF CITY --..]O
&.I
Payment -----------------------------------------ID
6.2Notices;
Public Filings ............ .................................. ........................ ...........................
ll
6^3
Financial Statements ......... ............................... ...................................... -------..Il
6/4
Cooperation..--------------------------------------ll
6i7
Compliance withLaundering Laws and OFAC Laws ............................... II
ARTICLE
7NEGATIVE COVENANTS OF CITY ....................................................................
l2
7.1
' vvdbLaundering ond(]FA(�Laws
---~--_------..I2
7^�
'l�
�im�al��ar-----_--___________________—.~__—.~—_—.__
7.3
Changes --------.~-------------------------
l2
/�RTICLE@E\/E�[TS(�FI�EF/�ULT-----------------------------''
��
8.1
Failure to �I��� -------------------------------''
12
0-2
--------------------------------------
I�
8.3
Bankruptcy; 1o�ol�����.--------------------------------''
l�
0/4
(�tberI�e±aml�/-------------------------------------..
l�
8.5
----------------------------------------
��
ARTICLE 9}�E�IEZ�IES------------^-----------------------_.
}4
9.1
I�etaulImtere�----------------_---__—______________.
I4
9.2
P- DefamI------------------------------------''
14
9.3
(�therK�efam�s-------------------------------------''
I4
9.4
)� or Default ..................................................................................
l4
�JRTICLEIOP�^Y]�J�|A1�EN_�--______________________________..
I�
I0.I
�-------------------------
�nv��re"aodlozozooi'��
�nPo
14
}U.2--
Reliance by Paying ���r�-----------------------------..--I5
-
I0.3
-
Non -Reliance ...................................................................................................................
lh
10.4
-----------------------------_______—____
Defaults16
lO.�
' -------------------------------------
l8
lO.�
Successor Paying Agents ................................................................................................
l�
10.7
--------------------------------------'
l7
I0.0
Amendments ....................................................................................................................
I7
I0.9
(�eueroIProvi�ooas1o9 --------------------------_..
l7
ARTICLE lIPARTICIPATIONS; ASSIGNMENT .................. ................................................
l7
11.1
Successors and Assigns --------------------------------..
I7
11.2
I@
11.3
---------------------------------------.
' a���zao�f�z-----------------------------__..
I0
11'4
-
Lemvm------------------------------------------..
l�
l8.�
I��m�rv��and�-------------------------
Assignability to Federal Ig
ARTICLE12
MISCELLANEOUS ..............................................................................................
I�
l�.K
Addresses .......................................................................................................................
I�
12.2
T]mkn/azu� Azneocboeo1s---------------------------...�u
l�.�
- and `F��y
�o�� /��ocn��� -----------------------__..
.2l
I2/4
-
Entire -----------------------------------''
.�I
12.5
-
���-------------------------------------
.�l
12.6
- '
Subz�i�ioo1mJur�dkc�on--------------------------_____
.�I
12.7
Severability ---------------------------------^22
12.8
Headings ----------------------------------------'~22
M
I2.9 NV Partnership, Etc ......................................................................................................... 22
I2.IOLimitation mm Liability —^-------------------_-----------... 22
l2JIWaiver ofJury Trbu-----------~-----,----------------... 22
12.12 Counterparts ---___._______________________________... 22
I2.I3NoThird Party Beneficiaries ........................................................................................... 23
I2.14 Separate Representation --------------------------------.23
12.15 Ratings -----____________________________________. 23
iii
Exhibit A
Settlement Agreement
Exhibit B
Definitions and Rules of Interpretation
Exhibit C
Form of Note
Exhibit D
Payment Schedule
Exhibit'E
Form of Assignment Agreement
Exhibit F
Form of First Supplemental Trust agreement
u1- 1
Schedule I Noteholders/ Offices
Schedule I Schedule of oteholder Original Payment Stream Amounts and Proportionate
Shares
a
T
A. Pursuant to a Trust Agreement dated as of August 1, 2005 (the '40a
I '
,,ini I rust
Agreement") between City and Wells Fargo Bank, National Association, as indenture trustee (in
such capacity, the "Irustee"), City issued certain Taxable Pension Obligation Bonds (the
"Pension Obliaration Bonds,3') in the initial aggregate principal amount of $50 401582.90
consisting of 2005 Series A- I (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 Poli,�Z).
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
e"
%-,ase 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
A,regiment"), 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.
NOW THEREFORE, in consideration of the mutual promises set forth below, and other
onsideration, the receipt and sufficiency of which are hereby acknowledged,
good and valuable c
the parties agree as follows:
ARTICLE 1
1.1 Definitions. Except as otherwise expressly provided, capitalized terms used in this
Agreement and its exhibits shall have the meanings given such terms in Exhibit B.
1.2 Rules of Except as otherwise expressly provided, the rules of
interpretation set forth in Exhibit B shall apply to this Agreement and the other Financing
Documents.
2.1 Note Terms.
(a) At Closing, City shall execute and deliver the Commerzbank Note to
Commerzbank and the Ambac Note to Ambac. Such Notes, and any new Notes executed and
delivered pursuant to Sectionhere -of. shall be in substantially the form attached hereto as
.1
M
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 datei
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 Pments. 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.
(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 recordations in the Register shall govern.
2.3 repayments. 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
91
2.5 Other erms.
(a) Place and Manner. City shall make all payments due to each Noteholder
hereunder and under the Notes to Paying Agent, for the account of such Noteholder, to:
Bank: Wells Fargo Bank-, N.A.
ABA 121000248
Beneficiary Name: Corporate Trust
Beneficiary Account No. 0001038377
0
For further credit: 18613300
Attn: T.Hempeck i... 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 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
between the Noteholders and
Noteholder Proportionate Shares
i Treatment. Each payment by City hereunder shall be shared
applied to the Notes pro rata according to their respective
(d) Sharing of Iia menta 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 excesspayment 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 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.
C
2.6 Payment of Obligations.
(a) Source of Pgyment. 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. -
M
(b) Further Assurances. City shall fully cooperate with the Noteholders and
Paying Agent and per all additional acts reasonably requested by the Noteholders and Paying
Agent to effect the purposes of the foregoing.
I ARTICLE 3
CLOSING DATE OBLIGATIONS OF CITY; CONDITIONS PRECEDENT
3.1 pity los ate Obligations . On the Closing Date, City . shall deliver to Paying
Agent for the benefit of the Noteholders:
r2l�
(a) Certifications.. An officer's certificate certifying or attaching, as
Resolutions. The resolutions or other authorizations and records o
fn ull force and effect on th
the City, certified by an Authorized as Of icer bei g in f
Closing Date, authorizing the execution, delivery and performance of thi
Agreement and the Notes, together with information regarding any leg
proceedings pursuant to which such authorizations were approved.
(ii) Incumbe . The incumbency of the natural persons authorized t
execute and deliver this Agreement and the Notes.
Additional Certifications. Such additional certifications as may be
reasonably requested by Paying Agent and the Noteholders.
I
(b) Agreement., Notes, First SoglemLe
ental Trust Agement. This Agreement,
the Notes, and the First Supplemental Trust Agreement, fully executed by City.
3.2 Conditions Precedent. The occurrence of the Closing Date shall be conditioned
upon the satisfaction of each of the following conditions precedent, unless waived by the
Noteholders and City:
B our A-p-proval. The Bankruptcy Plan shall have been
(a)
confirmed by the Bankruptcy Court by final order, which order shall (i) be in full force and effect,
language reasonably satisfactory to Commerzbank and Anibac confirming that (x)
and (ii) contain %-1
this Agreement, the Notes, the Settlement Agreement and the First Supplemental Trust
Agreement have been duly authorized, executed and delivered by City and (y) the obligations of
City hereunder and under the Notes, the Settlement Agreement and the First Supplemental Trust
nd binding obligations of City, enforceable in accordance with their
Agreement are valid a
respective terms.
(b) a& -up Plan Effective Date. The Effective Date of City's Bankruptcy
Plan shall have occurred.
(c) Absence of Lifigation. No action, suit, proceeding or investigation shall
have been instituted or threatened, nor shall any order, judgment or decree have been issued or
proposed to be issued by any court or Governmental Authority, challenging or seeking to prevent
the execution and delivery of this Agreement or the Notes.
41
(d) Federal Law Compliance. 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-Tefforism 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:
1. - Enforceabilily.
e I Authorization; No Conflict,
(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
N
connection with the execution, delivery, or performance by City of this Agreement and the
Notes, except as have been obtained.
4.3 No Default. N o- Event of Default or Inchoate Default, as defined herein, has
occurred and is continuing.
rin-1 e no pending or, to City's knowledge, threatened actions or
4.4 Litigation. inere are
proceedings of any kind, including actions or proceedings of or before any court or
Governmental Authority, to which City is a party or is subject, challenging or seeking to prevent
the execution and delivery of this Agreement or the Notes or the transactions contemplated
hereby.
4.5 SovereignIMMII�nit In any action, suit or proceeding brought by Paying Agent
or any Noteholder(s) to enforce this Agreement and/or the obligations underlying the Notes, as
set forth herein, City shall not be entitled to claim, and shall not assert any claim of, sovereign
immunity (nor may there be attributed to City or its property any such immunity (nor shall such
attribution be claimed by City)) from: suit, jurisdiction of any court, relief by way of injunction,
order for specific performance or for recovery of property, attachment of its assets (whether
before or after judgment, in aid of execution, or otherwise) or execution or enforcement of any
judgment to which it or its property might otherwise be entitled.
4.6 Fiscal Year. City's fiscal year is currently July 1 -June 30.
M
(a) To the best of the City's knowledge, without independent investigation,
none of the transactions contemplated hereby will violate (w) the United States Trading with the
Enemy Act, as amended, (x) any of the foreign assets control regulations of the United States
Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) or any enabling legislation.
or executive order relating thereto as amended, the "De ment of Treasury,. Rule"), (y)
Executive Order No. 13,224, 66 Fed Reg 49 ,079 (2001), issued by the President of the United
States (Executive Order Blocking Property and Prohibiting Transactions with Persons o
Wh
Commit, Threaten to Commit or Support Terrorism) (as amended, the "Terrorism Order") or (z)
I In
the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT) Act of 2001, Public Law 107-25 (October 26, 2001 ), as
amended (the "Patriot Act").
(b) City is not a "blocked person" as described in Section I of the Terrorism
Order or a Person described in the Department of Treasury Rule.
(c) City does not knowingly engage in any dealings or transactions, and is not
0
otherwise associated, with a "blocked person" as described in Section I of the Terrorism Order or
a Person described in the Department of Treasury Rule.
(d) City does not (i) appear on the OFA SDN List; (ii) is not 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 Per referred to or described in
the OFAC SDN List; or {1.ii) has not conducted business with or engaged in any transaction with
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
C.ity 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 AcknowledRement 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 Unregistered 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 InstitutionalBuyer.
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 Receipt 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
1
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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 Pqyment. 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
r0aces 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 (1'7 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
ff
holders at any reasonable times during normal business hours and upon no
Agent and the Note
less than forty-eight (48) hours prior notice to examine or audit all of its books, accounts, and
records, and make copies and memoranda thereof.
6.6 Further Assurances. Promptly upon request by Paying Agent or any Noteholder
City shall correct any material defect or error that may be discovered in this Agreement or the
Notes or in the execution, acknowledgment, filing, or recordation thereof, and do, execute,
acknowledge, deliver, record, re-record, file, re -file, register, and re-reg.1ster any and all such
further acts, deeds, certificates, assurances, and other instruments as Paying Agent, or any
Noteholder, may reasonably require from time to time in order to carry out more effectively the
purposes of this Agreement and the Notes.
6.7 Com Nance with Anti -Money Laundering Laws and OFAC Laws.
(a) City shall comply at all times with the requirements of all Anti -Money
Laundering Laws.
(b) City shall provide Paying Agent (on behalf of the Noteholders) with any
information regarding City necessary for the Noteholders to comply with all A-nti-Money
Laundering Laws.
(c) City shall comply at all times with the requirements of all OFAC Laws.
(d) if City obtains actual knowledge or receives any written notice that City is
named on the OFAC SDN List ( such occurrence, an "OFAC Violation"), City shall promptly (i)
give written notice to Paying Agent of such OFAC Violation, and (ii) comply with all applicable
laws with respect to such OFAC Violation (regardless of whether the party included on the OFAC
SDN List is located within the jurisdiction of the United States of America), including the OF
Laws, and City hereby authorizes and consents to Paying Agent taking any and all steps Paying
Agent deems necessary, in its sole discretion, to comply with all applicable laws with respect to
any such OFAC Violation, including the requirements of the OFAC Laws (including the
"freezing" or "blocking" of assets and reporting such action to OFAC).
ARTICLE 7
NEGATIVE COVENANTS OF CITIJ
City covenants and agrees that so long as this Agreement is in effect, it will not, without
theprior written consent of Paying Agent and the Noteholders:
7.1 Compliance with Anti -M Laundering and OFAC Laws.
(a) Become a Person described or designated in the OFAC SDN List of the
Office of Foreign Assets Control or in Section I of the Terrorism Order.
(b) Engage in any dealings or transactions with any Person described or
designated in the OFAC SDN List or in Section I of the Terrorism Order.
[IN
7.2 Fiscal Year. Change its fiscal year without prior notice to Paying Agent, unless
such change is required by law.
0
7.3 Accounting Changes. Make any material change in accounting policies or
reportim4
,.,, 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
(inddually, an "Event of Default") hereunder:
8.1 Failure to Make Pgyments. City shall fall 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 Ba&-upta; 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
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) is
after the Mayor, City Manager or City Attorney of the City becomes aware thereof or City
1W
receives written notice thereof from Paying Agent or a Noteholder; provided that if (a) sue
breach cannot be cured within such forty-five (45) day period, (b) such failure is susceptible o
cure within ninety (90) days, (c) City is proceeding with diligence and in good faith to cure sue
failure, and (d) Paying Agent shall have received an officer's certificate signed by an Authorize'
Officer of City to the effect of clauses (a), (b), and (c) above and stating what action City i
taking to cure, or cause the cure of, such failure, then, so long as no Material Adverse Effec
occurs as a result of such extension, the forty-five (45) day cure period shall be extended to sue
date not to exceed ninety (90) days as shall be necessary for City diligently to cure such failure.
M. InvalidL.
(a) Any provision of this Agreement or the Notes, at any time after execution
0 +
and delivery and for any reason, ceases to be in full force and effect, and such provision is noL
replaced to the satisfaction of the Noteholders with a valid provision, that, (i) does not result in
any Material Adverse Effect on the rights and remedies of the Noteholders under this Agreement
or the Notes and (ii) has an economic effect as close as possible to that of the provision that . has
5) BDays after City has received
ceased to be in fall force and effect, within fifteen (1anking
written notice from Paying Agent or the Requisite Noteholders that such provision has ceased to
be in full force and effect; or
(b) City contests in any manner the validity or enforceability of any provision
of this Agreement or the Notes.
9.1 Default Interest. 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 agrees to pay
interest on such overdue amount, for the period from and including the due data therefor to, but
excluding, the date such amount is paid in full, at a rate per annum equal to the Prime Rate plus
2% per annum ("Default Interest"} ; provided that Default Interest shall only apply to unpaid
installments due under the Notes and shall not apply to any amounts due under the Notes that
have been accelerated pursuant to this Article 9.
9.2 Payment Default. Upon the occurrence and during the continuation of an Event of
Default under Section 8.1, any Noteholder may, by notice to City and Paying Agent (which
notice shall be promptly provided to the other Noteholders by Paying Agent), but without further
resentment or demand for payment, protest or notice of non-payment or
notice of default, p
dishonor, or other notices or demands of any kind, all such other no and demands being
waived, (a) to the extent permitted by applicable law, accelerate all amounts than outstanding
under the Note held by such Noteholder and demand immediate payment thereof, and (b)
exercise any or all rights and remedies available at law or in equity.
9.3 Other Defaults. Upon the occurrence and during the continuation of any other
Event of Default, Requisite Noteholders may, by providing notice to City and Paying Agent
(which notice shall be promptly provided to the other Noteholders by Paying Agent), but without
notice of non -
further notice of default, presentment or demand for payment, protest or payment
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-otcy 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
ApDointment, Powers, and Immun
(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 orprovided 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
any statements� waffanties� or representations made in or in connection with this Agreement o
the Notes; (iv) shall not have any duty to ascertain or to inquire as to the performance o
observance of any of the terms, covenants� or conditions of this Agreement or the Notes on th
part of any party thereto or to inspect the property (including the books and records) of City; an
(v) shalt not be responsible to any Noteholder for the due execution, legality, validit
enforceability, genuineness, sufficiency� or value of this Agreement, the Notes, or any othe:
instrument or document furnished pursuant hereto or thereto.
Indemnification.
(a) The City, to the extent permitted by law, shall indemnify, defend and hold
harmless the Paying Agent against any loss, damages, liability or expense incurred by the Paying
Agent to the extent arising out of or in connection with a breach by the City under this
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 SuccessorPaying Ai=ts. 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 int(to
agreements supplemental hereto with any Person for the purpose of curing any formal defect,
UFA
inconsistency, omission, or ambiguity in this Agreement (without any consent or approval by the
Noteholders).
10. 8 Amendments. No amendment of any provision of this Article 10 shall be effective
unless in writing signed by Paying Agent.
10.9 General Provision as to Payments. Paying Agent shall promptly distribute to each
Noteholder its Proportionate Share of each payment made by City with respect to the Notes. The
payments made for thea of each Noteholder shall be made, it, for the
and distributed to
account of its domestic or foreign Office, as each Noteholder may designate in writing t® Paying
Agent. Noteholders shall have the right to alter designated Offices upon written notice to Paying
Agent and City.
ARTICLE 11
pARTICIPATIONS; ASSIGNMENT
11.1 Successors and ALsAgns. The provisions of this Agreement shall be binding upon
and inure to the be of the parties hereto and their respective successors and assigns; provided
that any assignment of a Note to a new Noteholder must be made in compliance with Section
11.3 hereof. City may not assign or otherwise transfer any of its rights or obligations under this
Agreement or the Notes without the prior written consent of Paying Agent and the Noteholders.
Paying Agent may treat each Noteholder as the owner thereof for all purposes until such
Noteholder makes an assignment in accordance with Section 11.3. Any authorization or consent
of a Noteholder shall be conclusive and binding on any subsequent transferee or assignee of such
Noteholder. Paying Agent shall maintain a copy of each assignment along with the infol7M ation
required by Section 2.2.
11.2 Participations.
(a) Generally. Nothing herein provided shall prevent any Noteholder from
selling a participation interest in its Note; 'orovided that (i) no such sale of a participation shall
alter such Noteholder's obligations hereunder, (ii ) with respect to such Note, such Noteholder
shall retain the sole right and responsibility to exercise the rights of such Noteholder, and enforce
the obligations of it y relating to this Agreement and such Note, including the right to approve
any amendment, modification or waiver of any provision of this Agreement, and (iii) City and
Paying Agent shall deem Noteholder as the holder of its Notes in all respects, and shall continue
to deal solely and directly with Noteholder in connection with Noteholder's Note and Noteholder's
rights and obligations under this Agreement.
(b) Parti6pant Register. Each Noteholder that sells a participation shall
maintain a register on which it enters the name and address of each participant and the amounts
(and stated proportionate interest) of each participant's interest in such Noteholder's Note the
"Participant Register"); pMy�ided that no Noteholder shall have any obligation to disclose all or
any portion of the Participant Register to any Person (including the identity of any participant or
any *Information relating to a participant's interest) except to the extent that such disclosure is
legally required. The entries in the Participant Register shall be conclusive absent manifest error,
and such Noteholder shall treat each Person whose name is recorded in the Participant Register as
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the owner of such participation for all purposes of this Agreement notwithstanding any notice to
the contrary.
11.3 Assignments and Transfer.
(a) Permitted AssiRnments. 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 "Assignment 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
assinment") any of its rights and obligations under its Note (the Noteholder making such
assignment being the "assliming 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( and the
satisfaction of the other foregoing requirements.
(b) Assunment. 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 "Assianment 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.
Im
gam�
ARTICLE 12
!UJNCELLANEOUS
12.1 Addresses. Any communications hereunder between or among the pal -ties hereto
or notices provided herein to be given may be given to the following addresses (and with respect
to the Noteholders, as set forth in Schedule 1):
If to Paying Agent: WELLS FANGO BANK, N.A.
Theresa Hempeck
Vice President, Corporate Trust Services
Wells Fargo Bank, N.A.
600 S. 4th St.
Minneapolis, MN 55479
MAC: N9300-060
Telephone: (612) 667-5660
Theresa.m.hempeck@wellsfargo-com
If to City: CITY OF SAN BERNARDINOA
� CALIFORNI
300 North I'D" Street
San Bernardino, CA 92418-0001
Attention: City Attorney's Office
Telephone: (909) 384-5355
Email: AttomeygSBCity.org
Facsimile: (909) 3 84-523 8
The above is City's legal address. All notices or other communications required or permitted to
be given hereunder shall be in writing and shall be considered as properly given, if delivered in
Emery, DHL., Air Borne
person, if sent by overnight delivery service (including Federal Express,
and other similar overnight delivery services), in the event overnight delivery services are not
readily available, if mailed by first class mail, postage pre -paid, registered or certified with return
receipt requested or if sent by prepaid mail, facsimile, other direct written electronic means, or
by telecopy confirmed by telephone. Notice so given shall be effective upon receipt by the
addressee, except that a communication or notice so transmitted by telecopy shall be deemed to
all
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 4:00P .m., recipient's
time, and if transmitted after that time, on the next following Banking Day; provided, 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 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 Attorneys' 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
a
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12.12 Counterparts. This Agreement may be executed in one or more duplicate
counterparts and delivered by facsimile or by a portable document format (pdfj 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.. 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 Party 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.
12.14Se.urate , 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 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
MR,
and/or fees and costs incurred by consultants, advisors or any other third -party professional
employed or retained by City in the course of, and for the purposes of assisting the City in,
cooperating with such rating request.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
01
[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.
1 LVA �1
COMMERZBANK FINANCE & COVERED
BOND ®9
as Noteholder
By:
Name:
Title:
X
R 01, Ly ki Ell ry) k Lei [41" r, a
By:
Name: Gary Greendale
Title: Managing Director
WELLS FARGO BANK, N.A.
as Paying Agent
11T
FA
NMI
Case 6:12-bk-28006-MJ Doc 1882-27 Filed 07/29/16 Entered 07/29/16 19:36:319,
Desc Exhibit 26 Page 3 of 10 1
A 0 1 1 lef
circuit (the '-&AP). After obtainng two extens ons of the br ing schedule for the
Appeal while the parties explored settlement, EEPK and Ambac filed their opening I Dnef
ons of
in theAppeal on January 51, 2016. Ambac and EEPK have consented to extensi
& Rate brief (the fr.Rgsp2nse Deadline"').
ti me for the City to file its responsive appe
c. During the third year after the Effective Date, the City shall distribute to the POB
Creditors with respect to the Pension Obligation Bond Claims the sum of
$1,300,000 (one Million Three Hundred Thousand Dollars), payablein two e
semi-an"al installments.
d. During each of the fourth year after the Effective Date through and including the
tenth year after the Effective Datethe City shall distribute to the POB Creditors
4
%-.,ase 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 Bo-nd Claims the sum of $1,375,000 (One
Is I
Million Three Hundred Seventy -Five Thousand Dollars),p'ayavie each year in
two equal semi-annual installments.
The parties hereto acknowledge that the execution of this Settlement
Agreement and consummation of the transactions contemplated herein do not constitute
^ % A
an admission ot iiability or of any facts by any of such parties, but rather are. *Intended to
n i ai
be in compromise and settlement of disputed and u fiquidated el "Ms. Nothing h rein
shall constitute or be asserted as constituting any admission of 11"ability'by or against any
party hereto, and this Settlement Agreement shall not be offered or receivedin evidence
Case 6:12-bk-28006-MJ Doc 1882-27 Filed 07/29/16 Entered 07/29/16 19:36:33
Desc Exhibit 26 Page 5 of 10
Mier tribunal for
in any act -ion or proceeding in anv court, admi 'strat've
action or ott
purpose other than to obtm approvai oi or to enforce this Settlement Agreement.
orming
Until approval of a disclosure stateMent consIstent with the Conf
plan, this Settlement Agreement and the negotiation Of the ten -n -s hereof 'I's not a
soli itat* n of votes 'in favor of any chapter 9 Phm,,, and -4mbac" s and EEPK' s agreement
e to
onf,orming Plan is subject to the prior approval of a
herein to vote in favor of the C A- 11
disclosure statement consistent with a Conforming Plan by the Bankruptcy Court.
At such tixne as an order of the BankauptcY Court coii-finwn the
Confonning Plan becomes a final, non -appealable order and the Conforming Plan has
become eff�ctive (the
a. EEPK andArnbae shall dismiss the Appeal with prejud16e:
11
WM-
Case 6:12-bk-28006-MJ Doc 1882-27 Filed 07/29/16 Entered 07/29/16 19:36:3
Desc Exhibit 26 Page 6 of 10 1
Case 6:12-bk-28006-MJ Doc 1882-27 Filed 07/29/16 Entered 07/29/16 19:36:33
Desc Exhibit 26 Page 7 of 10
6. Future Cooktrat The partie§ hereto agree to cooperate fully, to
Ion.
additional actions that may
execute anY and, all supplementary d0cuments', and to take all
be necessary or appropriateto give tuil force and effect to the terms and "ntent of this
Settlement Agreement,
7. Fees and Costs. T he parties hereto shall each bear their own
respective attorney fees and costs arising in connection with the Appeal and this
'3 0 It 49 la the. execution., deliveryand performance hereoE
Settlement Agreement incluall 5 - -
It ed in this Settlement Agreement are
12. Htag�..�- Tbe neadings contain I
n d I n the interpretation of
for convenience only, an shat ot a
e
0
Case 6:12-bk-28006-MJ Doc 1882-27 Filed 07/29/16 Entered 07/29/16 19:36:33
Desc Exhibit 26 Page 8 of 10
IN WITNESS WHEREOF, the parties hereto have caused thi's Agreement
to be e Xecuted bv their duly authorit ,zd e te�enWves as of the day and year fitst above
10
01
By:
Name*
Title: 4vj M e- r
COMM8RZBANK FINTANCE &
COVEUD BOND S.A. (FORMERL
KNOWN AS ERSTEEUROPAISCH
PFANMRIEF-LN,D
KOMMUNALKItEDITBANK AG IN
LUXEMBURG)
BY --,-,--
N an-te
Title.-,
By -
Name:
Title:
Case 6:12-bk-28006-MJ Doc 1882-27 Filed 07/29/16 Entered 07/29/16 19:3633
Desc Exhibit 26 Page 10 of 10
JN \krITNESS WHEREOF., the parties hereto have caused this Agreeme
to be e=uted by their duly authorized representatives as, of the day and year first abov
written. I
By#
Name;
Title.-
COMMERZBANK FINANCE &
COVERED BOND S.A. (FORMERLY
KNOWN AS ERSTE EUROPAISCHE
PFAN DBRIEF- UND
KOMMUNALKREDITBANK AG IN
LUXEMBURG)
By,
Name,,
Time:
Name:
T*tle-
' - H41019-6tA)�,
6
I ities
'Lecredited Investor" has the meaning as provided in Section 2(a)(15) of the Secur* '
"Agreement" shall have the meaning given in the preamble of this Agreement.
4Ambac" shall have the meaning given in the preamble of this Agreement.
"Ambac Note" shall have the meaning given in the recitals of this Agreement.
"Ambac Policy �9 shall have the meaning given in the recitals of this Agreement.
"Anti -Money Laundering Laws" means any laws or regulations relating to money
laundering or terrorist financing, including, the Bank Secrecy Act, 31 U.S.C. sections 5301 et
seq.; the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56 (a/k/a the USA Patriot
Laundering of Monetary Instruments� 18 U.S.C. section 1956 Engaging in Monetary
Transactions in Property Derived from Specified Unlawful Activity, 18 U.S.C. section 1957; the
Financial Recordkeeping and Reporting of Currency and Foreign Transactions Regulations, 31
C.F.R. Part 103; and any similar laws or regulations currently in force or hereafter enacted.
4 99
e -money laundering provisions of the USA
'Anti-Terrorl'sm Laws mans the anti
PATRIOT Act, any of the foreign asset control regulations of the U.S. Treasury Department (31
C.F.R., Subtitle B, Chapteramended) or any enabling legislation or executive order
relating thereto and Executive Order No. 13,2124 Fed Reg 49,079 (2001) issued by the . President
of the United States (Executive Order Blocking Property and Prohibiting Transactions with
Persons Who Commit, Threaten to Commit or Support Terrorism).
"Assignment Agreement" shall have the meaning given in Section 11.3 of this Agreement.
"Assignment Effective Date" shall have the meaning given in Section 11.3 of this
Agreement.
" Authorized Denomination means $100,000 and integral multiples of $5,000 in excess
thereof.
"Authorized Officer" means a duly authorized officer of City.
"Banking Day means any day other than a Saturday, Sunday or other day on which
banks are authorized to be closed in San Bernardino, California or New York, New York.
"Bankruptcy Case" shall have the meaning given in the recitals of this Agreement.
"Bankruptcy Court" shall have the meaning given in the recitals of this Agreement.
VOW,
"Bankruptcy Law" means Title 11, United States Code, and any other state or federal
insolvency, reorganization, moratorium or similar law for the relief of debtors.
"Bankruptcy Plan" shall have the meaning given in the recitals of this Agreement.
"Benefited Noteholder" shall have the meaning given m Section 2 of this
Agreement.
"City" shall have the meaning given in the preamble of this Agreement.
it Representat ives" shall have the meaning given in Section 5.5 of this Agreement.
"Closing" is the satisfaction (or waiver in accordance with the terms of the
Agreement) of each of the conditions precedent listed in Section 3.2 of the Agreement.
"Closing Date" means the date upon which Closing occurs, which, pursuant hereto, is
intended to be on or immediately following the Effective Date.
"Code" means the Internal Revenue Code of 1986, as amended, and any successor
federal tax statute.
"Commerzbank" shall have the meaning given in the preamble of this Agreement.
"Commerzbank Note" shall have the meaning given in the recitals of this Agreement.
"Default Interest" shall have the meaning given in Section 9.1 of this Agreement.
"Department of Treasury Rule" shall have the meaning given in Section 4.7 of this
Agreement.
"Disclosure Statement" means the Third Amended Disclosure Statement with Respect
to the Third Amended Plan for the Adjustment of the Debts of the City of San Bernardino (July
29, 201 6) [Dkt. No. 18 81 ].
"Dollars" and "$" 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 (EM A).
101's
"Federal Reserve Board" means the Board of Governors of the Federal Reserve System.
0 Agreementthe Notes and the other ancillary
"Fi*nancing Documents" means this,
documents related thereto.
"Fi*rst Supplemental Trust Agreemenf' shall have the meaning given in the recitals of
this Agreement.
"GAAP" means generally accepted accounting principles in the United States of
America consistently applied, as applicable to goverm-nent entities.
"Governmental Authority" means any national, state or local government (whether
--V
domestic or foreign), any political subdivision thereot or any other governmental, quasi -
governmental, judicial, public or statut® instrumentality, authority, body, agency, bureau or
entity, or any arbitrator with authority to bind a party at law.
"Governmental Rule" means any statute, law, rule, regulation, ordinance, rule of
mmon law, order or b•
inding interpretation, code, treaty, judgment, decree, directive,
co similar form of decision of any Governmental Authority in each case
guidelines, policy or
applicable to or binding upon City or to which City is subject.
"Inchoate Default" means any occurrence� circumstance or event, or any combination
ime, the giving of notice or both, would constitute an Event of
thereof, which, with the lapse of t
Default.
"Legire e tsmeans, as to any Person, any law, treaty, rule or regulation, and
any determination of any Goverm-nental Authority in each case applicable to or binding upon
such Person or any of its -properties or to which such Person or any of its property is subject.
"Material Adverse Effect �� means (a) a material adverse change in the status of the
business, assets, liabilities� results of operations or condition (financial or otherwise) of City, or
(b) a material adverse change in (i) the ability of City to perform any material obligations under
this Agreement or the Notes, or (ii) the ability of the Noteholders to enforce this Agreement or
the Notes.
" Noteholders' means Commerzbank, Ambac, and any new Noteholder by assignment,
pursant to Section 11.3 of this Agreement.
"Notes�� means the Commerzbank Note, the Ambac Note and any new Note executed and
delivered by the City pursuant to Section 11.3 of this Agreement.
"OFAC" means the Un•ited States Department of Treasury Office of Foreign Assets
Control.
"OFAC Laws means any laws, regulations, and executive orders relating to the
ctions programs administered by OFAC, including, the International Emergency
economic San 1701 et seq.; the Trading with the Enemy Act, 50
Economic Powers Act, 50 U.S.C. sections n Assets Control, Department of the
App. U.S.C. sections I et seq.; and the office of Fore ..ig
Treasury Regulations, 31 C.F.R. Parts 500 et seq. (implementing the economic sanctions
programs administered by CFA).
"OFAC SDN List" means the list of "Specially Designated Nationals and Blocked
Persons" maintained by OFA.
"OFAC Violation" has the meaning assigned to such term in Section 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 toPaying Agent and
city.
0
"Original Trust Agreement" has the meaning given in the recitals of this Agreement.
"Participant Register" shall have the meaning given in Section -11.2of this
Agreement.
"Patriot Act" shall have the meaning given in Section 4. of this Agreement
i
"Paying Agent" shall have the meaning given n 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, thepercentages set
forth opposite such Noteholder's name on Schedule 11 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 asprovided in rule 144A of the
Securities Act.
"Register" shall have the meaning given in Section 2.2(a) of this Agreement.
"Requisite Noteholders" means Noteholders holding a majority of the then -outstanding
principal amount of the Notes.
"Scheduled Maturity Date" means December 1, 2046.
"Securities Act" means the Securities Act of 1933, as amended.
4(.S I I
eries A -I Bonds" shall have the meaning given in the recitals of this Agreement
"Series A-2 Bonds" shall have the meaning given in the recitals of this Agreement.
"Settlement Agreement" shall have the meaning given in the recitals of this Agreement.
"Terrorism Order" shall have the meaning given in Section 4.7 -
"Transfer Fee Cap" shall have the meaning given in Section 2.4.
"Treasury�9 means the United States Department of the Treasury.
" Trust Agreement" shall have them eaning given in the recitals of this Agreement.
" Trustee shall have the meaning given in the recitals of this Agreement.
1=06
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 of
agreements issued or executed in replacement thereof, and shall mean such document,
instrument or agreement, or replacement or predecessor thereto, as amended, modifie:i-
and supplemented from time to time (to the extent permitted under the FinanCiql
Documents) and in effect at any given time. 4
I/. 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 bii
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.
No. San Bernardino, California
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, hav
happened or will be performed precedent to and in the issuance of this Note or in the creation o
the debt of which this is evidence, have been done, or have happened and been performed i
regular and due form and manner asrequired by law, and that the debt represented by this Not
is not in excess of any constitutional or statutory limitation. I
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.
q 11 jjq;�i 1111 q
Months After 0
Prior Payment
12
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
6
6
6
June LI, 2018
June 1, 2019
December 1, 2019
June 1, 2020
December 1, 2020
June 1, 2021
December 1, 2021
June 1, 2022
December 1, 2022
June l,2023
December 1, 2023
June l,2024
December 1, 2024
June l,2025
December 1, 2025
June l,2026
December 1, 2026
June 1,, 2027
December 1, 2027_
June 1, 2028
December 1, 2028
June 112029
December 1, 2029
June 1, 2030
December 1, 2030
June 1, 2031
December 1, 2031
June l,2032
December 1, 2032
June 1, 2033
December 1, 2033
11 000,000-00
650,000-00
650,000-00
687,500-00
687,500-00
687,500-00
687,500-00
687,500-00
687,500-00
..................
697,500-00
.................
687,500-00
-------------- --
687,500.00
687,500-00
687,500-00
..........
687,500-00
687,500-00
687,500-00
750,000-00
750,000-00
--75-0,000.00
750,000-00
750,000-00
750,000-00
750,000-00
750,000-00
750,000-00
750,000-00
875,000-00
875,000-00
875,000-00
875,000-00
Ambac
15,217,702.50
Amount Due
Ambac
0.00
300,30 =
==5.00
195,19
--------------- -
195,195-00
------------------- 7--
206,456.25
206,456.25
206,456.25
=206,456:.25
206,456.25
206,456.25
206,456.251
0
206,45
6.25
206,456.25
206,456.25
206,456.25
06 ' 456,25
206,456.251
206,456.25
A
206,456.25
225,225.00
225,225.00
225,225.00
225,225-00
225 ,225.00
225,225.00
225,225.00
225,225.00
225,225.00
225,225-00
262,762.50
62,762.50
262,762.50
262,762.50
Commerzbank
35,457,297.50
Amount Due
Commerzbank
699,700.00
--------------------- -- W-
454,805.00
45405.00
------------------
481,043.75
481,043.75
481,043.75
4811043.75
481,043.75
481,043.75
-------------
481,043.75
481,043.75
481,043.75
481,043.75
481,043.75
481,043.75
481,043.75
481,043.75
5249775.00
524,775.00
524,775.00
524,775.00
524,775.00
5245775.00
524,775.00
524,775.00
524,775.00
524,775.00
612,237.50
612,237.50
612,237.50
612,237.50
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
2621762.50
612,237.50
December 1, 2034
875,000.00
262,762.50
612,237.50
June L 2035
8755000.00
262,762.50
6121237.50
December 1, 2035
8755000.00
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
1,0005000.00
300, - 300.00
699,700.00
December 1, 2038
1,000,000.00
300,300.00
699,700.00
June 1, 2039
19000,000.00
300,300.00
699,700.00
December L 2039
1,000,000.00
3001300.00
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
6995700.00
June 1, 2041
1005000.00
300,300.00--
699,700.00
December 1, 2041
1,000,000.00
3009300.00
699-,700.00
June 1, 2042
11250,000.00
375,375.00
874,625.00
December 1, 2042
15250,000.00
375,375.00
874,625.00
June 1, 2043
1,250,000.0-0
375,375.00
8745625.00
December 1, 2043
15250,000.00
375,375.00
874-5625.00
June 1, 2044
1,250,000.00
375,375.00
874,625.00
December 1, 2044
1,250,000.00
375,375.00
874,625.00
June 1, 2045
1,250,000.00
375,375.00
874,625.00-
December 1, 2045
1,250,000.00
3759375.00
874,625=00
June 1, 2046
11250,000-00
375,375.00
874,625.00
December 1, 2046
1
1,250,000.00
- I
375,375.00I
-
874,625.00
-
M
\� !
\
^ :` : \
\\ }
Commerzbank
!`- \ Covered � ƒ!}ƒ 4})}}}}f\/ƒ %l}}< 11)7!}/f. _ S.A.-
[Office] .
A }}} 7 \Assurance Corporation
One S
}fS }7>f «:.e *} Plaza
New \¢\«, New \%\«
10004
-:-
� \ }}
i i\�
«1:
-
..
�
PROPORTIONATE «
. . .
Noteholder . Original Share of Payment Proportionate Share
Stream
Commerzbank $354575297.50 6 9, 9 7� O
Ambac $155217!702.50 30.03%
Mow,
NMI
This Assignment Agreement Agreement") is made by and between
with Assi[ � { A Sl nee �and {"Assignor", Assignee, the
"Parties" and each a "EqqZ') with respect to the following facts:
A. Assignor is the holder of a note (the " ") issued by the City of San
Bernardino, California {"�"), pursuant to that certain Exchange Agreement, 'dated as of
, 201 {the. "Exch nt"), by and among City, the Noteholders from time to
time party thereto, and Wells Fargo Bank, N.A., as paying agent (the IIP���A�en�t"). A copy
of the Original Note is attached hereto at Exhibit A, and a copy of the Exchange Agreement is
attached hereto as Exhibit B. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms as found in the Exchange Agreement.
B. Pursuant to the Exchange Agreement, Assignor may, from time to time, at its
option, sell, assign, transfer or otherwise dispose (collectively, "assign," and any such sale,
assignment, transfer or other disposition being, as set forth in the Exchange Agreement, an
4r. 9 rights and obligations under its Original Note-, provided
assignment") all or any portion of its r -, . #
that (i) such assignment shall be only to an Eligible Assignee, (ii) each such assignment is in
Authorized Denominations, and (iii) each new Noteholder shall have executed this Assignment
Agreement.
C. The Parties have agreed that Assignor will assign to Assignee in
principal amount of its right, benefitl title, and interest in and to the Original Note, and Assignee
proposes to (i) accept such assignment, (ii) be bound by the Exchange Agreement and its terms
in connection with such assigm-nent and (iii) provide payment to Assignor as set forth herein.
NOW, THEREFORE, in consideration of the promises and mutual agreements set forth
below, the Parties agree as follows:
I . As m -neat b Assignor hereby assigns to Assignee (the
_ y Assignor. hereby acknowledged, in principal
44Assi nmenf �), for good and valuable consideration h
g_�
amount (the "Ass ed Amount") of Assignor's right, benefit, title and interest in and to the
Original Note and to the obligations in connection therewith (hereinafter such Assigned Amount
of the Original Note shall be referred to as the `New Note").
2. Acceptance b- v Assignee. Assignee hereby accepts and assumes the New Note,
and the obligations in connection therewith, to the same extent and with the same effect as if the
Original Note had originally been issued in the name of Assignee in the Assigned Amount. By
Note, Assignee agrees that it will be bound by the Exchange Agreement
acceptance of the New
'01
as a Noteholder to the same extent as if Assignee had been an original signatory Noteholder
thereto.
3. Detention by As.,signor. Assignor retains its right, benefit, title and interest in and
to the Original Note, only in the principal amount of I (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 Pa in
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 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 As 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.
MM'
(b) No Third
part y_Ap]2rovaI. No governmental approval or third party
consent is required in connection with the execution, delivery or performance by
Assignor of the Assignment Agreement, except such approvals or consents as have been
previously obtained.
(c) Authorization. Assignor has authority to execute this Assignment
required to
Agreement and any other instruments and documents Assignor may be
execute in connection with the assignment set forth herein.
Fe and Clear. Assignor is the sole legal and beneficial owner of and has
{d)
good title to the Original Note free and clear of any and all claims, liens and
encumbrances of any nature.
Receipt of Information/Non-Reliance. Assignor acknowledges that (A) it
{e)may have obtained, and later may come into possession of, information regarding the
New Note and/or the Issuer (i) that is not known to Assignee, (ii) to which a reasonable
investor would attach significance in making investment decision, and (iii) that may be
material to a decision to enter into the purchase and sale transaction ("Excluded
Information"), and (B) the Excluded Information shall not and does not affect the truth or
accuracy oft representations or warranties of Assignor pursuant to this Assignment
Agreement.
•of As� nee. Assignee makes the following
9. R and Warranties
representations and warranties to and in favor of Assignor and City as of the Effective ate
D
(which representations and warranties in each case shall survive the execution of this
Assignment Agreement and the consummation of the transaction contemplated hereunder):
r"i delivery and performance by Assignee of
(a) No Violation. i ne execution
this Assignment Agreement will not violate any provision of any applicable law,
regulation, writq order or decree by which Assignee is bound or cause a breach of any of
its organizational documents or authority.
(b) No Third part y_Approval. No governmental approval or third party
consent is required in connection with the execution, delivery or performance by
Assignee of the Assignment Agreement, except such approvals or consents as have been
previously obtained.
(c) Authorization. Assignee is an Eligible Assignee under the Exchange
Agreement (i.e., either a "qualified institutional buyer" as defined in Rule 144A (a
"Qualified Institutional Buyer") promulgated under the Securities Act of 1933, as
amended the "33 Act"), or an "accredited investor" as defined in Rule 501 of Regulation
D of the 33 Act (an "Accredited Investor")) and has authority to purchase the New Note
and to execute this Assignment Agreement and any other instruments and documents
Assignee may be required to execute in connection with the -purchase of the New Note.
(d) Ob er Exchange Agreement. From and after the Effective
Date, Assignee (A) shall be bound by the provisions of the Exchange Agreement as a
ns set forth in
No
teholder thereunder, (B) shall be deemed to have made the representatio
FM
Cox
(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 notgiven
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.
nI -Pon any
(vii) In enterinto this transactio , Assig
ingnee has not relied u
representations or opinions made by Assignor or any of the City Representatives relating
to the legal consequences or other aspects of the transactions.
(i) Inquiry and Analysis. Assignee has made its own inquiry and analysis
with respect to the New Note and other factors affecting the payment of the New Note;
Assignee has, or has access to, such information as it deems appropriate under the
circumstances concerning, among other things, the City's business and financial condition
to make an informed decision regarding the transfer of the New Note; and Assignee has
independently and without reliance on the Assignor, and based on such information as it
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 Offerina/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
condon, 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.
W 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.
(in) No Recourse to Assignor. 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:
I I
If to Assignee:
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instrument attached hereto or referred to herein, the terms, conditions and provisions of this
Assignment Agreement shall prevail.
IN WITNESS VMER-EOF, the Parties to this Assignment Agreement have caused this
Assignt-nent Agreement to be executed by their duly authorized representatives as of the date first
written below-
-ted:
elow-
ated: By: [Assignor]
By:
Title:
Dated: By: [Assignee]
By:
Title:
M
Wells Fargo Bank, N.A., as Paying Agent
under the Exchange Agreement
By:
Title:
w
[COPY OF EXAGREEMENT]
FORM � # \ �
)\
FIRST}RSSUPPLEMENTAL
PP \\\ }A( t « AGREEMENT /\} »
w
FIRST SUPPLEMENTAL TRUST AGREEMENT
CITY OF SAN 1r i
and
WELLS FARGO BANK9 NATIONAL 9
as 'Trustee
Supplementing
Dated as 0f 9 2017
City of o
Pension Obligation Bonds
s s ,!
ARTICLE I DEFINITIONS q EQUAL SECURITY .......
....................................................................... 5
SECTION 1.01. Definitions ................................................................. 5
SECTION 1.02. First, Supplemental Trust, Agreement Constitutes Contract ........ 0........ 9........ 8
SECTION 1.03. Section umbers........ 0 ..................x....0
ARTICLE 11 REFINANCING OF 2005 SERIES A-1 BONDS; AMENDMENT OF 2005
SERIES A-2 BONDS; GENERAL BOND PROVISIONS ..................................... 8
SECTION 2.01. Refinancina of the 2005 Series A-1 Bonds; Issuance of Commerzbank
I Note 8
SECTION 2.02. Amendment of the 2005 Series A-2 Bonds.* ....................................................... 8
SECTION 2.03. Exchange Agreement ........................................................................................... 9
SECTION 2.04. 'Costs and Fees for Transfers ........................ 0 .... 0 ............................................. 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
® Ambac Policy ........................ *0 ................ 0 ....... 0 ................ 0 .............. 0.0— ........... 0.10
SECTION 4.02. Claims Under Ambac Policy .......... o ............... o ... o ... o ....... oo ................................. 10
ARTICLE V COVENANTS OF THE LOCAL AGENCY ....... o ..... — ...................... o ......... o ........12
SECTION5.01. Perfonnance ....................................................................................................... 12
SECTION 5.02. Power to Enter Into Agreement ......................................................................... 12
SECTION 5.03. Accounting Records and Re ..................................... * ............. #* .................. 12
SECTION 5.04. Prosecution and Defense Of Suits ....................................................................... 12
SECTION 5.05. Waiver of Laws ................................. # ..................... # ..................... o .................... 13
ARTICLEVI THE TRUSTEE ............................................................................................................ 13
U
9 .................
13
SECTION 6.01. The Trustee ............................ 0 0 ...... 0 ................................... 4 .............
istee's Fees and Ex"enses; Indemnification ........................... 9 ......................
SECTION 6.02. TrtPr
13
DEFAULT AND REMEDIES OF HOLDERS ....................................
14
ARTICLE VII EVENTS OF
14
SECTION 7.01. Events of Default ...............................................................................................
0 ....... 14
ARTICLE Vill MISCELLANEOUS ...........+...., a .................. ................................................
SECTION 80 01. Absolute Obligation of Local A ency .............................. 4 ................................
14
SECTION 8.02. Bene First Trust AgIgement .................................
14
14
SECTION8.03. Notices ...............................................................................................................
SECTION 8.04. icle eading es .................................................
0.15
15
SECTION 8.05. Partial Invalidjjy .................................................................................................
SECTION 8.06. Execution in Several Counten2arts ...................................................................
.ilk
16
SECTION 8.07. GoveMiU,, Law ........................ I ..........................................................................
16
SECTION 8.08. Entire A reement ..............................
EXHIBIT A COPY OF ORIGINAL AMBAC POLICY ........................................................
A-1
FORM OF ENDORSEMENT TO AMBAC POLICY ........................................
B-1
EXHIBIT B
EXHIBIT C FORM OF ASSIGNMENT TO AMBAC ..........................................................
C-1
TRUSTEE'S NOTICE TO AMBAC OF INSUFFICIENT
EXHIBIT D FORM OF
EXHIBIT
......... D-1
FO. UNDS ...............................................................................................
N
THIS FIRST SUPPLEMENTAL TRUST AGREEMENT, made and entered int*
as of 2017 (the "First Supplemental Trust Agreement")
and effective
``
Date (as defined herein), supplements the Trust
Agreement ' 0
"Original Trust Agreement", as supplemented by this First Supplemental Trust Agreement, the
Agreement")
national banking association duly organized ! i existingunderand by virtue of the ! o the
United States of America, as Trustee (the "Trustee"),
and the CITY O; SAN BERNARDINO
State(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.
X*:'-',i,HEREAS, the Local Agency is obligated by the Public Employees' Retirement
Law, commencing with Section 20000 of the Government Code of the California, as
amended,
"Syst
_relating to pension benefitsaccruingto members; and
the Local Agency entered into a contract with the System dated
March l , 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 I I
(commencing with Section 53570) of Chapter 3 of Division 2 of Title 5 of the Government Code
*f the State of California (the "Act") to issue bonds for the purpose of refunding any evidence of
�ndebtedness of the Local Agency; and
WHEREAS, purpose ; -Local
�Agency's obligations
System evidenced b
i_iie PERS Contract, i Local *. _i
of ! Bemardin1.
Taxable Pension Obligation Bonds, 2005 Series A-1 Bonds (the "2005 Series A-1 Bonds"), 1
the aggregate principal amount of $36,050,000 and 2005 Series A-2 Bonds (the "2005 Series A -
Bonds"), in the initial aggregate principal amount of $14351,582.90 (collectively, the "200
Series A Bonds"), all pursuant to the
Original
and
WHEREAS,
Bonds and Bonds,
�.� _ together
with any Additional Bonds (as defined in the Original Trust Agreement), were validated pursuant
to the Default Judgment
Superior Court Case No. SCVSS 125783; and
91
WHEREAS, the 2005 Series A Bonds were the only Bonds issued under the
Original Trust Agreement; and
WHEREAS, the 2005 Series A-2 Bonds were insured by Ambac Assurance
Corporati 0 on ("Ambac") pursuant to its Financial Guaranty Insurance Policy No. 52492 E, a
copy ®f which is attached hereto as Exhibit A (the "Original Ambac Policy"); and
WHEREAS, all of the 2005 Series A-1 Bonds, in the present outstanding
$ are
aggregate Principal Amount (as defined in the Original Trust Agreement) of
beneficially owned by Commerzbank Finance & Covered and S.A. (formerly known as Erste
Europaksche Pfandbrief- und Kommunalkreditbank AG in Luxemburg) ("Commerzbank"); all of
the 2005 Series A-2 Bonds in the outstanding aggregate Principal Amount of $13,765,000 not
yet due and payable are beneficially owned by Commerzbank; and the 2005 Series A-2 Bonds
paid by Ambac, in the outstanding aggregate Principal Amount of $7,065,000, have been
assigned to and are beneficially owned by Ambac, and
WHEREAS, pursuant to the Third Amended Plan for the Adjustment of Debts of
the City of San Bernardino, California, dated July 29, 2016 (as amended, the "Bankruptcy Plan")
in the Local Agency's chapter 9 bankruptcy case 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") and an Exchange
Agreement of even date herewith (the "Exchange Agreement") among the Local Agency,
Commerzbank, Amb ac, and Wells Fargo Bank, National Association, as paying agent (the "Note
Paying agent '), the Local Agency, Commerzbank and Ambac have agreed, among other things,
(1) to the refunding and cancellation of the 2005 Series A-1 Bonds in exchange for an Additional
Bond in the form of a Note to be issued by the Local Agency to Commerzbank pursuant to the
Bankruptcy Plan and the Exchange Agreement (the "Commerzbank Note") to refund, refinance
and replace the 2005 Series A-1 Bonds, (2) to the amendment of the 2005 Series A-2 Bonds to
provide that such Bonds shall be non-recourse to the Local Agency, (3) the issuance of an
Additional Bond in the form of a Note to be issued by the Local Agency payable to Ambac (the
"Ambac Note" and, with the Commerzbank Note, collectively, the "Notes") pursuant to the
Bankruptcy Plan and the Exchange Agreement, and (4) to supplement and amend the Original
t the foregoing matters with respect to the 2005 Series A Bonds, to
Trust Agreement to implemen
e Exchange Agreement� and to make certain changes to the payment
satisfy certain terms of th
procedures related to the Ambac Policy; and
WHEREAS, in order to provide for such changes beginning on the Effective
Date, the Local Agency has authorized the execution and delivery of this First Supplemental
Trust Agreement, and Commerzbank, as Beneficial Owner of a majority in Aggregate Principal
Amount of the Bonds now Outstanding, has provided the necessary written consents in
accordance with Section 7.01 of the Original Trust Agreement; and
M
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
1 -1
1-1,OW9 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 Bond's (as defined in the Original Trust Agreement),
as follows:
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:
The term "2005 Series A- I Bonds" shall have the meaninggiven such term in the
recitals of this First Supplemental Trust Agreement.
The term "2005 Series A-2 Bonds" shall have the meaning given such tern -1 in the
recitals of this First Supplemental Trust Agreement.
The term "Ambac" shall have the meaning given such term in the recitals of this
First Supplemental Trust Agreement.
R
I
The term "Ambac Policy" shall mean the Original Ambac Policy, as endorsed,
including such endorsement described in Section 4.01 of this First Supplemental Trust
Ambac Note
The to "Ambac Note" shall have the meaning given such term in the recitals of
this First Supplemental Trust Agreement.
The term "Authorized Representative" in the Original Trust Agreement is hereby
amended to mean the Mayor, City Manager, Treasurer and City Clerk of the City of San
Bernardino.
The term "Bankruptcy Case" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
Bjpt�c COUA
The term "Bankruptcy -Court " shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
The term "Comi-nerzbank" shall have the meaning given such term in the recitals
of this First Supplemental Trust Agreement.
The term "Commerzbank Note" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
Effective Date
The term "Effective Date" means the Effective Date as such term is defined in the
Local Agency's Bankruptcy Plan.
Exchange Areenlent
The term "Exchange Agm reement" shall have the meaning given such terin the
recitals of this First Supplemental Trust Agreement.
T
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.
The term "Insured Holder" means a Holder (as defined in the Ambac Policy) of
the 2005 Series A-2 Bonds.
MMM11, F, UJIS A, 0
The term "Note Paying Agent" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
The term "Notes" shall have the meaning given such teen in the recitals of this
First Supplemental Trust Agreement.
Original Ambac Polio
The term "Original Ambac Policy" shall have themeaning given such term in the
recitals of this First Supplemental Trust Agreement.
Original Trust Aareement
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.
The term "2005 Series A-1 Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
The term "2005 Series A-2 Bonds" shall have the meaning given such term in the
recitals of this First Supplemental Trust Agreement.
SECTION 1. 02. First S - - rust_ greement Constitutes Contract.
In consideration of the prior acceptance of the Bonds by the Holders thereof and the concurrent
acceptance of the Notes by Commerzbank and bac, pursuant to Section 7.01 of the Original
Trust Agreement, this First Supplemental Trust Agreement shall become binding when the
written consents of the Holders of the 2005 Series A Bonds then Outstanding (exclusive of
Bonds disqualified as provided in Section 7.02 of the Original Trust Agreement), are filed with
the Trustee.
SECTION 1.03. Section Numbers. Unless this First Supplemental Trust
Agreement specifically provides .fora modification or amendment to a specific Section of the
Original Trust Agreement, the numbering of Articles and Sections in this First Supplemental Trust
Agreement are not intended to modify or amend Articles or Sections of the Original Trust Agreement
having the - same numbering, but are intended to refer only to Articles and Sections of this First
Supplemental Trust Agreement.
REFINANCING OF 2005 SERIES A-1 BONDS; AMENDMENT OF 2005 SERIES A-2
BONDS; GENERAL BOND PROVISIONS
SECTION 2.01. Refinanc - 005 Series A- I Bo ds° Issuance , of
Commerzbank Note, The 2005 Series A-1 Bonds issued pursuant to the Original Trust
Agreement shall be refinanced through the exchange of such 2005 Series A-1 Bonds for the
Commerzbank Note in accordance with the Exchange Agreement, and shall be cancelled as of
the Effective Date upon satisfaction of the conditions and procedures set forth in Section 3.01 ®f
this First Supplemental Trust Agreement.
Upon satisfaction of the requirements set forth in the Exchange Agreement, the
Commerzbank Note shall be issued as an Additional Bond under the Trust Agreement for the
f% .1ingpr the 2005 Series A-1 Bonds then Outstanding. The conditions and
purpose of refunding
procedure for issuance of the Commerzbank 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 Commerzbank Note. The terms of the
Commerzbank Note shall be set forth in the Exchange Agreement and iommerzbank
n the C
Note.
SECTION 2.02. Amendment of the 2005 Series A-2 Bonds. Beginning on
the Effective Date, payment of the Accreted Value of the 2005 Series A-2 Bonds, including all
as of the Effective Date, shall be non-recourse to the Local
amounts currently due and unpaid
Agency, such that the Local Agency shall have no further obligations to make any payments on
such 2005 Series A-2 Bonds. The Series A-2 Bonds shall not be extinguished or cancelled, and
the parties intend that the amendment of the 2005 Series A-2 Bonds pursuant to this First
I
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 I 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 Arnbac Note.
SECTION 2.03. Exchanae 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.
Costs and Fees for Transfers.
Section 2.06(a) of the
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.
9
SECTION 3.02.Ing lementation Procedures. The Local Agency and
Commerzbank shall cooperate in complying with any procedures required by DTC and any
CUSIP requirements in connection with implementing the cancellation of the 2005 Series A-1
Bonds.
ARTICLE IV
PROVISIONS REGARDING AMBAC POLICY
E
i
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ii
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Ah
' • i !`` `i ! s' is • .' � ` , E�`! ` � i �
a i
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• • � � - • � - • i i - � - - i ;i, a i. ! �` a • i , - i; , 'i � i `
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" i i " S ! " � � � I � I. •i.. a � 1 � ! ` � � .1; ii. �,.. a a
i!' i ` `` , i i `i • • i -i � -:. - -i is - ! i i! • �
! is `t 'i' !� i` . i ice• , i !.r .i ! i ♦ a.,i i ! `, s f �
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11
the fullest extent permitted by law and in a form acceptable to bac, all rights of the Insured
Holders of such 2005 Series A-2 Bonds, including all rights to payment.
(g) No failure or delay by the Trustee in performing its obligations hereunder shall
modify or affect Ambac's obligation to pay any claim under the Ambac Policy once the Trustee
has performed its obligations in accordance with the terms of the Amba c Policy and the
procedures set forth herein.
COVENANTS OF THE LOCAL AGENCY
SECTION 5.01. Performance. Section 5.01 of the Original Trust
Agreement is hereby amended as follows:
The Local Agency will faithfully observe and perform all the agreements and
covenants to be observed or performed by the Local Agency contained in the Trust Agreement
and in the Bonds.
SECTION 5.02. Power to Enter Into
A reement. The Local Agency is duly
authorized pursuant to law to enter into this First Supplemental Trust Agreement. The
provisions of this First Supplemental Trust Agreement are the legal, valid and binding
obligations of the Local Agency in accordance with their terms. The Bonds constitute
obligations imposed by law.
SECTION 5.03. .A
ccountin ecOrds and &gorts- Section 5.05 of the
Original Trust Agreement is hereby amended to provide that the Local Agency shall keep such
0 as shall be required by the Exchange
records and provide only such financial reporting -
Agreement, in lieu of the records and reporting required by Section 5.05 of the Original Trust
Agreement.
SECTION 5.04. Prosecution and Defense of Suits. Section 5.06 of the
Original Trust Agreement is hereby amended as follows with respect to obligations of the Local
Agency to defend and indemnify the Trustee:
(a) To the extent permitted by law, the Local Agency shall indemnify, defend
:gains any loss, damages, liability or expense incurred by the
and hold harmless the Trustee
r in connection with a breach by the Local Agency under the
Trustee to the extent arising out of o
Exchange Agreement, the Notes oft Trust Agreement, including costs and expenses (including
attorneysfees) 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,
e negligence, willful misconduct or breach of duty on the pa
liability or expense results from thrt
of the Trustee. The rights of the Trustee and the obligations of the Local Agency under this
UN
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 timc
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.
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
*ffice 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
11 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
UK
the negligence, willful misconduct, or bad faith on the part of the Trustee. The rights of
the Trustee and the obligations of the Local Agency under this Section shall survive the
discharge of the Bonds and this Agreement and the resignation or removal -of the Trustee.
(ii) The Trustee shall be fully justified in refusing to take or continuing
to take any action hereunder unless it shall first be specifically indenInified to its
0 1
satisfaction by the directing Beneficiai Owners against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such action.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES OF HOLDERS
SECTION 7.01. Events of Default. Section 8.01 of the Original Trust
Agreement is hereby amended to provide that in addition to the Events of Default specified
therei•
n, it shall constitute an Event of Default under the Trust Agreement if an Event of Default
(as defined therein) shall occur under the Exchange Agreement.
ARTICLE VIII
,ELLANEOUS
SECTION 8.01. Absolute f Locd__A�enc The terms and
provisions of this First Supplemental Trust Agreement supersede the provisions of Section 8.07
of the Original Trust Agreement to the extent such Section 8.07 of the Original Trust Agreement
is inconsistent with the terms and provisions of this First Supplemental Trust Agreement.
SECTION 8.02. Beneficiaries of the First u lemental Trust Agreement-
ts. Nothing contained herein, express or implied, is
Ambac Consent to Furth
intended to give to any person of than the Local Agency, the Trustee, Ambac, and the Holders
any right, remedy or claim under or by reason hereof. Ambac shall be a third -party beneficiary
hereof. Any agreement or covenant required herein to be -performed by or on behalf of the Local
mployee thereof shall be for the sole and exclusive benefit of
Agency or any member, officer or e
the Trustee, Arnbac and the Holders. Notwithstanding any other provision of the Trust Agreement
to the contrary, the consent of Ambac shall be required for any Supplement to the Trust Agreement,
other than any Supplement that is permitted to be adopted without the consent of Holders of the
Bonds as described in Section 7.01 of the Original Trust Agreement, provided that such consent shall
not be required if a default by Ambac shall have occurred and be continuing under the Ambac Policy
or if the 2005 Series A-2 Bonds are no longer Outstanding
SECTION 8.03. Notices. All written notices to be given hereunder and
under the Trust Agreement from the Effective Date forward shall be given by mail to the party
rth below, or at such other address as such party may provide
entitled thereto at its address set fo
to the otherp arty in writing from time to time, namely:
[Ell
If to the Local Agency:
City of San Bernardino 300 North "D" Street
San Bernardino, CA 92418-0001
Attention: City Attorney's Office
Attention: Corporate Trust Services
Wells Fargo Bank, National Association
5 5 5 Montgomery Street, 10"' Floor MAC # AO 167-102
San Francisco, CA 94111
ffffm' =-, �
Attention: Portfolio Risk Management
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Email address: notices@ambac.com
'1Commerzbank: 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 Inv . 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
SECTION 8.06. Execution . in SeveralCoLiarts. This First
Supplemental Trust Agreement may be executed in any number of counterparts and each of such
n As, or as
counterparts shall for all purposes be deemed to be an original; and all such counterpal
many of them as the Local Agency and the Trustee shall . preserve undestroyed, shall together
constitute but one and the same instrument.
SECTION 8.07. GoveMLny, Law. This First Supplemental Trust Agreement
shall be governed by and construed in accordance with the laws of the State of California.
SECTION 8.08.
Entire reement. This First Supplemental Trust
Agreement supplements and amends the Original Trust Agreement beginning on the Effective
First
Date, at which time the Original Trust Agreement, as so supplemented and amended by this
the Exchange Agreement, and any other agreement, document
Supplemental Trust Agreement,
or instrument attached hereto or referred to herein or therein integrate all the terms and
mentioned herein or therein or incidental hereto and supersede all oral negotiations
and prior writ* gs in respect to the subject matter. To the extent of any inconsistency between
in igi
the terms of this First Snal Trust
upplemental Trust Agreement and the terms of the 0r
Agreement, the terms of this First Supplemental Trust Agreement shall control, and to the extent
of any inconsistency between the terms of the Trust Agreement and of the Exchange Agreement,
the Exchange Agreement shall control.
In
[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.
A
CITY OF SAN BERNARDIN..
0
DIM
Georgeann Hanna, City Clerk
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
LIM
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 IF -
COPY OF ORIGINAL
ra
MP7_1
Mr1:M
NEW,
K_J
rinancial Guaranty Insurance Policy
Ambac Assurance Corporation
One State Street Plaza, 15th Floor
New York, New York 10004
Telephone: (212) 668-0340
Obligor: SAN.BERNARDINO,CALIFORNIA Policy Number:
S24928BE
$14.,351,583 Taxable Pension Obligation capital
Obligations: Premium: .
Appreciation. Bonds Series 2005,, dated October -
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-descr*ibed 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
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 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 (1) the Obligor or (11) any person whose obligations constitute the
underlying security or source of payment for the Obligations who, at to 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 i 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.
t un rwSigned hereby Certifies thst this dccurrtent r
copy h ' t ai Guaranty In: -111.
,� issued by AMS`
Pzcy. Policy
ASSURANCE CORPORATION.
Assists? -
Date 200.f
IN'40thina herein contained shall be held to vat, alter, waive or extend ariy of the terms, conditions, provisions, agreements
or limitations of the above mentioned Policy other than as above stated.
In Whaess 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
>P ii4, !ii:4t:+'S �7ig led hC, ��r w"'• it��':rM t �•... ~(ina
'.+ .7 .+��si•�. «i�;,`•S
tnjand ct Co tf OIP7� 1
ASSURANCE COF Ppolicy.--policy No.— OPATlCN.
Av ,Slab# ..tai
D ate �'
0r
itd'
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 Arnbac. 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.
CUSIP Numbers:
Bond DescriptionIPurpose:
Date of Issuance:
Principal Amount Currently Duefor Payment. -
Interest Amount Currently Duefor Payment:
Date Due for Payment:
Amount Paid by Bond Issuer:
Amount Claimed Under the Policy:
IMPORTANT: All claim forms should be sent to Ambac Assurance Corporation
at the address identified below. Any Person who knowingly and with intent to injure, defraud,
("Ambac .
or deceive any insurance coinpany� files a statement of claim containing any false, incomplete, or
misleading information is guilty of a felony in the third degree.
The undersigned Trustee hereby certifies that all of the above information is true, accurate and correct and
it is entitled to the payment of principal and/or interest on the above insured bonds. The Trustee hereby
makes claim for the Amount Claimed Under the Policy stated above in accordance with the Policy for
those insured bonds which are now "Due for Payment" (as defined in the Policy) but for which sufficient
funds for payment have not been provided by the Bond Issuer.
Claim and Assignment Forms should be sent to:
Ambac Assurance Corporation
Attention: Maims Processing
One Mate Street Plaza
An electronic copy should be sent to:
claimsprocessing@ambac.com
i
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 Maimed Linder 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 Form has been duly authorized, executed and delivered by the Trustee and constitutes a legal,
g g
valid and binding obligation of the Trustee enforceable in accordance with its ten -ns. 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 Maimed
Linder 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
forth and manner acceptable to Ambac and the Trustee.
E
0
(Signature of Authorized Representative)
Print Name:
Title:
Date:
w
4
1�
Ambac Assurance Corporation
Attn.: Surveillance Department and General Counsel
One State Street Plaza
New York, New York 10004
claimsprocessing@alnbac.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 9 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
Iteneficiary Account No. 000 103 8 3 77
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]
0
IN a in e:
Title:
PROMISSORY NOTE
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 BUYER9 AS
SUCH TERMS ARE DEFINED IN THE EXCHANGE AGREEMENT.
No. San Bernardino, California
1� 20[_]
1 1- 1 till 111
So
This is one of the Notes referred to in the Agreement and is entitled to the benefits
thereof and is subject to all terms, provons and condons 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
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 perfol ed in
regular and due form and manner as required by lave, and that the debt represented by this Note
is not In excess of any constitutional or statutory limitation.
This Nate 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 ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REFERENCE TO CONFLICTS OF LAWS
ij� 11111 111
By:.
Name:
Title.
I
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.
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
City agrees to pay certain costs and expenses, incurred in connection with the
r,mforcement 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
lal
------------ -
W-0-- USION-1
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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 thl
M
City and the Authority to apply certain moneys held thereunder to prepay the Certificates- and
of I
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
into a termination agreement for a Police Station Site and Facility Lease dated as of September
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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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:
AUTHORITYAS FOLLOWS
,
Section 1. Amendment No. I to Trust Agreement, in substantially the form attached hereto
as Exhibit "A" 5 is hereby approved. The Chairperson, the Vice Chairperson, the Executive
Director, the Secretary, counsel to the Authority or the designee thereof (the "Authorized
Officers") are hereby authorized and directed to execute and deliver Amendment No. I to Trust
agreement with such changes, insertions and omissions as may be recommended by counsel to
the Authority or by Stradling Yocca Carlson & Rauth, a Professional Corporation ("Special
Counsel") and approved by the officer executing the same, said execution being conclusive
evidence of such approval.
Section 2. Amendment No. I to Police Station Lease Agreement, in substantially the
form attached hereto as Exhibit "Bis hereby approved. The Authorized Officers are hereby
authorized and directed to execute and deliver Amendment No. I to Police Station Lease
Agreement with such changes, insertions and omissions as may be recommended by counsel to
the Authority or by Special Counsel and approved by the officer executing the same, said
execution being conclusive evidence of such approval.
Section 3. The Police Station Lease Termination,, in substantially the form attached
hereto as Exhibit "C", is hereby approved. The Authorized Officers are hereby authorized and
directed to execute and deliver Police Station Lease Termination with such changes, insertions
and omissions as may be recommended by the Counsel to the Authority or by Special Counsel
and approved by the officer executing the same, said execution being conclusive evidence of
such approval.
Section 4. The Site and Facility Lease Termination, in substantially the form
attached hereto as Exhibit "DII, is hereby approved. The Authorized Officers are hereby
authorized and directed to execute and deliver Site and Facility Lease Termination with such
changes, insertions and omissions as may be recommended by the Counsel to the Authority or by
Special Counsel and approved by the officer executing the same, said execution being conclusive
evidence of such approval.
Section 5. The Authorized Officers and any other proper officer of the Authority,
acting singly, be and each of them hereby is authorized and directed to execute and deliver any
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22
23
24
25
26
27
28
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. I to Trust
Agreement, Amendment No. I 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.
I
1
2,
3
4
5
6
7
8
9
u
ll
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Council Members: AYES NAYS ABSTAIN ABSENT
MARQUEZ
BARRIOS
VALDIVIA
SHORETT
NICKEL
RICHARD
MULVIHILL
Georgeann Hanna, City Clerk
The foregoing Resolution is hereby approved this day of 92017.
Approved as to form:
Gary D. Saenz, City Attorney
By:
R. Carey Davis, Mayor
City of San Bernardino
III lj�
X91_
_ m
a Trust
a-. e��,: _ _� � �-.#;-� A
AMENDMENT NO. 1 TO TRUST AGREEMENT
(1999 Refunding Certificates of Participation)
This AMENDMENT NO. I TO TRUST AGREEMENT (this "Amendment") is made and
entered into and dated as of [ ], 2017 by and between U.S. BANK NATIONAL
ASSOCIATION, as trustee (the "Trustee"), the SAN BERNARDINO JOINT POWERS
FINANCING AUTHORITY, a joint powers authority duly organized and existing under the laws of
the State of California (the "Authority"), 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
66 � 19).
RFCTTAT.,q
A. The Trustee, the Authority and the City previously entered into a Trust Agreement,
dated as of September 1, 1999 (the "Original 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. Repayment of the Certificates is secured in part by lease payments made by the City
to the Authority pursuant to a Police Station Lease Agreement, dated as of September 1, 1999 (as
amended, 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.
C. The City desires: (i) to prepay all Lease Payments under the Police Station Lease
Agreement (the "Police Station Lease Payments") and thereby to cause the defeasance of a portion
of the Certificates in accordance with the provisions of Section 10.1 of the Police Station Lease
Agreement and Section 14.01 of the Trust Agreement in a principal amount equal to the aggregate
unpaid principal component of such Lease Payments; and (ii) to cause 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, the Authority and the City desire to amend the Original Agreement in order to
permit moneys held in the Capital Reserve Fund established under the Original Agreement, as well
as moneys held in the Reserve Fund established under the Original Agreement, to be applied: (i) to
prepay the Police Station Lease Payments; and (ii) to the partial defeasance and optional partial
redemption of Certificates.
SECTION 1. This Amendment hereby incorporates by reference all terms and conditions
set forth in the Original Agreement unless specifically modified by this Amendment. All of the
terms and conditions set forth in the Original Agreement that are not specifically modified by this
Amendment shall remain in full force and effect.
SECTION 2. The capitalized terms set forth in this Amendment not otherwise defined
herein shall have the meanings set forth in the Original 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. I to
Police Station Lease Agreement dated as of 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 (11) the written consent of the Bond Insurer; or (2) with
respect to prepayment of the Police Station Lease Agreement, only upon receipt
of: (1) 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 (111) the certification required by Section 4.02. Any
requisition or instruction hereunder shall be signed by the Authority
2
Representative or the City Representative, as applicable, and the City shall
provide the Bond Insurer with a copy of any such requisition or instruction
concurrently with delivering such requisition or instruction to the Trustee. The
Trustee will hold any funds disbursed pursuant to Section 3 ).06(a)(ii), together
with any earnings thereon, in trust for the sole and exclusive benefit of the
Owners pending the required redemption under Section 4.01(a).'"
SECTION 5. Section 4.02 is hereby amended to add the following at the end of the section:
"Notwithstanding the foregoing, in the case of an optional redemption of
Certificates occurring as a result of the prepayment of any Lease Payments, the
order of redemption of the Certificates will be determined in a manner to ensure
that the amount and timing of the remaining Lease Payments will be sufficient
to pay principal and interest on the remaining Certificates when due, as certified
by an independent financial consultant reasonably acceptable to the Trustee and
the Bond Insurer."
;�ECTION 6. The following is hereby added as Section
"Section 6.06. Application in Event of Partial Prepayment of Lease
Payments. In connection with a prepayment of Lease Payments pursuant to
Article X of any Lease Agreement and a redemption of Certificates pursuant to
Section 4.01(a), amounts in the Reserve Fund may be applied to such
prepayment so long as the amount on deposit in the Reserve Fund following
such prepayment equals or exceeds the Reserve Requirement after taking into
account the redemption of the Certificates under Section 4.01(a). The City
shall provide to the Trustee, with a copy to the Bond Insurer, a certificate of a
City Representative (a) setting forth the amounts to be disbursed from the
Reserve Fund for the prepayment of the applicable Lease Agreement, and
(b) directing the Trustee to redeem in accordance with Section 4.01(a) an
amount of Certificates equal to the amount of funds being released at the
earliest practicable date. Such certificate shall be accompanied by the
certification required by Section 4.02. The Trustee will hold any funds
disbursed pursuant to this Section 6.06 in trust for the sole and exclusive benefit
of the Owners pending the required redemption under Section 4.01(a)."
SECTION 7. As an inducement to the Trustee and the Bond Insurer consentinv, to this
Amendment, the City hereby makes the following representations:
(a) Other than as set forth on Schedule "I" hereto (collectively, the "Defaults"), no
defaults that are required to be cured pursuant to Section 365(b)(1)(A) of Title I I of
the United States Code (the "Bankruptcy Code") exist under that certain Continuing
Disclosure Agreement between the City and the Trustee, dated as of September 299
1999 (the "Continuing Disclosure Agreement"), the Original Agreement or the Lease
Agreements (collectively, the "1999 Refunding Certificates of Participation
Agreements (Police Station/201 North E Street/South Valle)").
(b) Other than as set forth on Schedule "2" hereto, as of the date hereof, the City has
given, or caused to be given notice of all Listed Events (as defined in the Continuing
3
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
® 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.
I1
The Trustee, acting at the direction of the Bond Insurer, and the City may waive any of the
conditions precedent set forth in subsections (b) or (e) of this SECTION 9.
SECTION 10. 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 11. 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
2® Except as otherwise amended pursuant to this Amendment, the Trust
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.]
I
[Signature Page to '99 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.
Mi
SAN . DINO JOINT POWERS FINANCING
i i`
•.
am
Chairperson
0
Schedule " 1 "
t
Tax bens exist on the leased property as set forth on the following pages.
BOND
OBLIGATION
DOCUMENT
EVIDENCING
REAL PROPERTY
SECURITY
LEASED PROPERTY
DESCRIPTION
APN NO.
TAX AMOUNT
DUE
(as of 3/31/16)
Refunding
City obligated to
None
The Police Station
0140-281-52
$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
per the 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.
1999
City obligated to
Deed of Trust
Legal description of
0134-321-24
$296,271.04
Refunding
make payments
encumbering
two parcels set forth
Certificates
under lease
201 N. "E"
in Exhibit A.
between the City
Street site
and the JPFA for
recorded as
Parcel 1A is legally
property
Doc. No.
described as Parcel
described as the
19990408316
27 of Parcel Map
201 N. "E" Street
688. This
Site (legally
corresponds to APN
described in
0134-321-24 per the
Exhibit A as Parcel
County Assessor
IA and 1B to the
records. The
lease which was
Assessor's records
recorded as Doc.
reflect that this
No.
parcel was
19990408375).
transferred from the
RDA to the EDC in
March 2011 and then
subsequently
transferred to the
Successor Agency in
November 2014. The
taxes due for this
APN are $296,271.04.
Parcel 1B is an
easement for ingress
and egress.
1999
City obligated to
None
The legal description
None known
None known
Refunding
make payments
appears to consist of
Certificates
due under the
certain rights-of-way
lease between the
in the area of Hunts
City and the JPFA
Lane, Redlands
for property
Boulevard, "E"
described as the
South Valle
improvements
(legally described
in Exhibit A as
consisting of four
separate parcels
which was
recorded as Doc.
No.
19990408318).
Street, Waterman
Avenue and Caroline
Street based on the
legal descriptions in
the South Valle lease.
San
City obligated to
None
Parcels described in
Parcels A, B and B-
Parcel A and B-1
Bernardino
make payments
Exhibits A to Lease
1 reference
Joint Powers
for "Project" as
Agreement contain
portions of
That portion of
Financing
defined in
legal descriptions
"Parcels 24 and 25
this legal
Authority
Indenture.
of Parcels A, 131 B-11
of Parcel Map 688
description now
Lease Revenue
Indenture defines
Cp D and Parking
in City of San
identified as
Bonds (City
Project as "'City
Structure.
Bernardino...."
Plaza East, APN
Hall Project)
Hall and the
These parcels
Series 1996)
Parking Structure
were
0134-251-58,
described
subsequently split
has outstanding
collectively in
and the legal
taxes due of
Exhibit "A" to the
description of the
$46,654.93.
Lease
property now
Agreement." The
appears to
No known taxes
term "Lease
correspond with
due for the
Agreement"
the following
remainder of the
means the "Lease
parcels shown on
legally described
Purchase
Assessor Parcel
property which
Agreement dated
Map No. 0134
appears to be the
December 1,
pages 25 and 31:
land under City
1996" between
(a) 0134-251-58
Hall (APN 0134 -
the Authority and
(identified as
251-51).
the City. This
Plaza East); (b)
Lease Agreement
0134-251-51
Parcel B
was recorded as
(which appears to
Doc. No.
be the ground
None for City
19970104310.
under the City Hall
Hall building
building); and (c)
(APN 0134-251-
0134-251-61 (the
61).
City Hall building
itself).
Parcels C and D
Parcels C and D
are easements for
None known for
the benefits of
these
Parcels A, B and 13-
easements.
Parkin1.
The Parking
Structure
Structure is legally
Legal
described as
description
Parcel 28 of Parcel
Map No. 688. Per
corresponds to
the County
APN 0134-311-
Assessor's
50 for which
records, this
taxes are due of
parcel
$317,435.69.
corresponds to
APN. 0134-311-
50. The Assessor's
records reflect
that this parcel
was transferred
from the RDA to
the EDC in March
2011 and then
subsequently
transferred to the
Successor Agency
in November
2014. The taxes
due for this APN
are $317,435.69.
•
DOCSSM/3032612v 11200430-0003
Amendment No. I to Police Station Lease Agreement
This AMENDMENT NO. I TO POLICE STATION LEASE AGREEMENT (this
"Amendment") is made and entered into and dated as of [ ], 2017 by and between the
SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY, a joint powers authority duly
organized and existing under the laws of the State of California (the "Authority"), 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").
RFCTTAT.q
A. U.S. Bank National Association, the Authority and the City previously 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. Repayment of the Certificates is secured in part by lease payments made by the City
to the Authority pursuant to a Police Station Lease Agreement, dated as of September 1, 1999 (the
"Original Police Station Lease Agreement"), by and between the Authority, as lessor of certain
assets described in the. Original Police Station Lease Agreement, and the City, as lessee.
C. The City desires: (i) to prepay all Lease Payments under the Original Police Station
Lease Agreement (the "Police Station Lease Payments") and thereby to cause the defeasance of a
portion of the Certificates in accordance with the provisions of Section 10.1 of the Original Police
Station Lease Agreement and Section 14.01 of the Trust Agreement in a principal amount equal to
the aggregate unpaid principal component of such Lease Payments; and (ii) to cause the optional
partial redemption of Certificates in a principal amount equal to the aggregate unpaid principal
component of such Lease Payments.
D. The Authority and the City desire to amend the Original Police Station Lease
Agreement pursuant to Section 8.3 (d) thereof and the second paragraph of Section 10.01 of the Trust
Agreement in order to permit moneys held in the Capital Reserve Fund established under the Trust
Agreement to be applied to prepay the Police Station Lease Payments.
FAM I IN U 2 MA 12 0, 0 1
SECTION 1. This Amendment hereby incorporates by reference all terms and conditions
set forth in the Oi-4,yinal Police Station Lease Agreement unless specifically modified by this
Amendment. All of the terms and conditions set forth in the Original Police Station Lease
Agreement that are not specifically modified by this Amendment are hereby ratified and shall remain
in full force and effect.
SECTION 2® The capitalized terms set forth in this Amendment not otherwise defined
herein shall have the meanings set forth in the Original Police Station Lease Agreement.
SECTION 3. The third sentence of the second paragraph of Section 10.2 is hereby deleted
in its entirety and replaced with the following:
"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 REGARI,
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. I 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.]
N,
[Signature Page to '99 ease Amendment Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to Police
Station Lease Agreement to be duly executed as of the day and year first written above.
SAN BERNARDINO JOINT POWERS
AUTHORITY
Chairperson
City Manager
�f • i i• ! !
STRADLING YOCCA CARLSON & RAUTH, P.C.
CALIFORNIA
660 NEWPORT CENTER DRIVE, SUITE 1600
NEWPORT BEACH
NEWPORT BEACH, CA 92660-6422
SACRAMENTO
SYCR.COM
SAN DIEGO
SAN FRANCISCO
SANTA BARBARA
SANTA MONICA
COLORADO
DENVER
NEVADA
RENO
WASHINGTON
SEATTLE
2017
City of San Bernardino
San Bernardino, California
San Bernardino Joint Powers Financing Authority
San Bernardino, California
U.S. Bank National Association
Los Angeles, California
National Public Finance Guarantee Corporation
Purchase, New York
Ladies and Gentlemen:
We have acted as Bond Counsel to the City of San Bernardino (the "City") and the San
Bernardino Joint Powers Financing Authority (the "Authority") in connection with the execution of:
(1) Amendment No. I to Police Station Lease Agreement, dated as of 1 2017 (the "Lease
Amendment"), by and between the City and the Authority; and (2) Amendment No. I to Trust
Agreement, dated as of , 2017 (the "Trust Agreement Amendment" and, together with the
Lease Amendment, the "Amendments"), by and among the City, the Authority and U.S. Bank
National Association, as trustee (the "Trustee"), each relating to the $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"). The execution of the Amendments was authorized
pursuant to Resolution No. of the City and Resolution No. of the Authority, each adopted on
20—. All capitalized terms not defined herein shall have the meanings ascribed to such
terms in the Trust Agreement Amendment.
In rendering our opinion, we have examined the applicable law and originals or certified
copies of: (i) the Amendments; (ii) the Police Station Lease Agreement, dated as of September 1,
1999 (the "Original Lease"), by and between the City and the Authority; (iii) the Trust Agreement,
dated as of September 1, 1999 (the "Original Trust Agreement" and, together with the Original
Lease, the "Original Agreements"), by and among the City, the Authority and the Trustee; (iv) the
—� 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.
,2017
City of San Bernardino
San Bernardino Joint Powers Financing Authority
U.S. Bank National Association
National Public Finance Guarantee Corporation
Page Three
Our opinion is limited to matters governed by the laws of the State of California and federal
law. We assume no responsibility with respect to the applicability or the effect of the laws of any
other jurisdiction.
We have not been engaged, nor have we undertaken, to advise any party or to opine as to any
matters not specifically covered herein, including, but not limited to, matters relating to compliance
with any securities laws.
This opinion letter may be relied upon only by you and may not be circulated, quoted from or
relied upon by any other party without our prior written consent.
Respectfully submitted,
70,71-77,137 a IM'J�
40
Amendment
N r is Station
Lease
Agreement
This AMENDMENT NO. I TO POLICE STATION LEASE AGREEMENT (this
"Amendment") is made and entered into and dated as of [ , 2017 by and between the
SAN BERNARDINO JOINT POWERS FINANCING AUTHORITY, a joint powers authority duly
organized and existing under the laws of the State of California (the "Authority"), 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").
RWONWAIURS
A. U.S. Bank National Association, the Authority and the City previously 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. Repayment of the Certificates is secured in part by lease payments made by the City
to the Authority pursuant to a Police Station Lease Agreement, dated as of September 1, 1999 (the
"Original Police Station Lease Agreement"), by and between the Authority, as lessor of certain
assets described in the Original Police Station Lease Agreement, and the City, as lessee.
C. The City desires: (i) to prepay all Lease Payments under the Original Police Station
Lease Agreement (the "Police Station Lease Payments") and thereby to cause the defeasance of a
portion of the Certificates in accordance with the provisions of Section 10.1 of the Original Police
Station Lease Agreement and Section 14.01 of the Trust Agreement in a principal amount equal to
the aggregate unpaid principal component of such Lease Payments; and (ii) to cause the optional
partial redemption of Certificates in a principal amount equal to the aggregate unpaid principal
component of such Lease Payments.
D. The Authority and the City desire to amend the Original Police Station Lease
Agreement pursuant to Section 8.3 ) (d) thereof and the second paragraph of Section 10.01 of the Trust
Agreement in order to permit moneys held in the Capital Reserve Fund established under the Trust
Agreement to be applied to prepay the Police Station Lease Payments.
SECTION 1. This Amendment hereby incorporates by reference all terms and conditions
set forth in the Original Police Station Lease Agreement unless specifically modified by this
Amendment. All of the terms and conditions set forth in the Original Police Station Lease
Agreement that are not specifically modified by this Amendment are hereby ratified and shall remain
in full force and effect.
SECTION 2. The capitalized terms set forth in this Amendment not otherwise defined
herein shall have the meanings set forth in the Original Police Station Lease Agreement.
SECTION 3. The third sentence of the second paragraph of Section 10.2 is hereby deleted
in its entirety and replaced with the following:
"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. I to the Trust Agreement, dated as of - ]5 2017.
SECTION
® 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.]
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3 - - Vii, • { 4{: -,�, ` • .i _ tI Ai t .t, t F¢
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. I to Police
Station Lease Agreement to be duly executed as of the day and year first written above.
SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
By:
Chairperson
0
City Manager
a�4
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[Space above for Recorder's use.]
This document is recorded for the benefit Of
the City of San Bernardino and recording is
fee -exempt under $ 27383 of the Government
Code.
me
Dated 7«+\( 1.2$17
THIS TERMINATION OF LEASE (this "Agreement") is dated as of [ ], 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 BERNARD O,
a municipal corporation and charter city duly organized and existing under the laws of the State
of California (the "City"), as lessee.
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.
2. Record Title. The Authority appoints the City as its agent to prepare, execute and file
or record, in appropriate places, such documents as may be necessary to place record title to the
Property in the City, free and clear of any liens, claims or encumbrances.
3. Termination of Lease Agreement. Effective as of the date hereof, the Authority and
the City acknowledge and agree that the Lease Agreement shall be terminated and, except for the
obligation of the City to pay Lease Payments from the moneys and securities deposited with the
Escrow Agent, shall be of no further force or effect, and from and after the date hereof, the Authority
shall have no further interest in the Property.
4. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which, when taken together, shall constitute one
agreement. The signature and acknowledgment pages from each counterpart may be removed and
attached to a single document in order to create one original instrument.
[REMAINDER OF PAGE INTENTIONALL Y LEFT BLANK.]
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[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.
Georgeann Hanna
City Clerk
Georgeann Hanna
Secretary
Gary Saenz
City Attorney
0
Mark Scott
City Manager
SAN BERNARDINO JOINT POWERS FINANCING
AUTHORITY
0
95
[Ok- 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 9 2017 before me, ,Notary Public,
personally appeared R. Carey Davis, 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
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 1 2017 before me, ,Notary Public,
personally appeared [ ], 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
140-281-52
A. .:
PARCEL I OF PARCEL MAP NO. 147251 IN THE CITY OF SAN BERNARDINO, COUNTY OF
SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 1781
PAGES 32 THROUGH34, INCLUSIVE, IN THE OFFICE OF THE COUNTY RECORDER
ii'
Site and Facill't-v Lease Termination
.7
[Space above for Recorder's use.]
This document is recorded for the benefit of
the City of San Bernardino and recording is
fee -exempt under § 27383 of the Government
Code.
by and between
CITY OF SAN BERNARDINO, AS SUCCESSOR LESSOR TO THE REDEVELOPMENT
AGENCY OF THE CITY OF SAN is i ♦ i D O.
Dated as of [ 192017
192
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 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.
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
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.
H. In connection with the defeasance of the Certificates, the City and the Authority now
desire to terminate and discharge the Site and Facility Lease.
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.
2. Record Title. The Authority appoints the City as its agent to prepare, execute and file
or record, in appropriate places, such documents as may be necessary, if any, to place record title to
the Property in the City, free and clear of any liens, claims or encumbrances.
3. Termination of Site and Facility Lease. Effective as of the date hereof, the Authority
and the City acknowledge and agree that the Site and Facility Lease shall be terminated and, except
for the obligation of the City to pay Lease Payments from the moneys and securities deposited with
the Escrow Agent, shall be of no further force or effect, and from and after the date hereof, the
Authority shall have no further interest in the Property.
4. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which, when taken together, shall constitute one
agreement. The signature and acknowledgment pages from each counterpart may be removed and
attached to a single document in order to create one original instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
0
[Signature Page to Police Station Site Lease Termination',!
"i
IN WITNESS WHEREOF, this Agreement has been executed by each party's respective
duly authorized officers, as of the date first above written.
Georgeann Hanna
City Clerk
Georgeann Hanna
Secretary
Gary Saenz
City Attorney
M
Mark Scott
City Manager
SAN BERNARDINO JOINT POWERS FINANCINI
AUTHORITY
0
M-
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 1 2017 before me, ,Notary Public,
personally appeared R. Carey Davis, 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
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 5 2017 before me, ,Notary Public,
personally appeared [ ], 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
Ass s 1