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HomeMy WebLinkAboutC-3042 - Orange County Investment Pool, Bankruptcy Settlement Agreement & Joint Agreement0 Price Waterhouse LLP June 19, 1996 Ms. La Vonne M. Harkless, City Clerk City of Newport Beach Post Office Box 1768 Newport Beach, California 92659 -1768 Re: Joint Agreement Signature Page Dear Ms. Harkless: 400S th Hggg �-1 eel Telephone 213 236 3000 Los Angeles 071 -2889 GIB As you requested, please find enclosed a copy of your signature page to the Joint Agreement which has an original signature of Mr. Stan Oftelie, Chairman of the Official Investment Pool Participants' Committee. Also enclosed is a copy of the signature page executed by Mr. Roger Stanton, Chairman of the Orange County Board of Supervisors. As I previously explained to you, Supervisor Stanton's office was not able to locate the original signature pages which I sent to him for his signature. His office indicated to me that he will not sign any signature pages for your files, but that they would send me a copy of the signature page with his signature. If you have any questions, please call me at (213) 236 -4523. Sincerely, Michael M. Ozawa mmo /rh Enclosures 0 0 forbearance hereunder, be offered or received in evidence or used in any proceeding against any Party, or used in any proceeding, or otherwise, for any purpose whatsoever except with respect to (a) effectuation and enforcement of this Agreement and (b) any proceedings in the Bankruptcy Court to approve this Agreement and the execution and delivery hereof. 26. Due Authorization. Each Party to this Agreement hereby represents and warrants that such Party is duly- authorized to enter into this Agreement. THE COUNTY OF ORANGE BY: ITS: THE OFFICIAL INVESTMENT POOL PARTICIPANTBI COMKITTEE BY: a �" ITS:I�INMI� City of Aewoort Leach NAME OF OPTION A PO0 PARTICIPANT BY: �,_')J ITS: Mavor -18- 1210" 0 forbearance hereunder, be offered or received in evidence or used in any proceeding against any Party, or used in any proceeding, or otherwise, for any purpose whatsoever except with respect to (a) effectuation and enforcement of this Agreement and (b) any proceedings in the Bankruptcy Court to approve this Agreement and the execution and delivery hereof. 26. Due Authorization. Each Party to this Agreement hereby represents and warrants that such Party is duly- authorized to enter into this Agreement. THE COUNTY OF ORANGE BY: ITS: OF SUPERVISORS THE OFFICIAL INVESTMENT POOL PARTICIPANTS' COMMITTEE BY: ITS: ORANGE COUNTY COMMUNITY FACILITIES DISTRICTS NAME OF QPTION A POOL PARTICIPANT BY: ITS: BQARD OF SUPERVISORS AND ACTING IN THE CAPACITY AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICTS Elm February 2, 1996 TO: FROM: PREPARED BY: SUBJECT: DISCUSSION: • a CITY OF NEWPORT BEACH OFFICE OF THE CITY MANAGER Council Agenda # 3�o HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL KEVIN J. MURPHY, CITY MANAGER Dennis C. Danner, Administrative Services Director JOINT AGREEMENT In addition to the several pieces of legislation required for the County of Orange to recover from its bankruptcy filing of December 6, 1994, several significant agreements have and must be signed between the County, the Official Investment Pool Participants' Committee, and each Option A Pool Participant, including our City as an Option A Pool Participant. The first agreement approved by the City Council related to the bankruptcy was the Comprehensive Settlement Agreement which permitted the release of approximately $13.6 million in investments held in the Orange County Investment Pool (OCIP). In approving the Settlement Agreement on April 10, 1995, the Council chose Option A which created Settlement Secured Claims and Repayment Claims for the balance of the funds held by the OCIP. This Settlement Agreement was superseded by the Recovery Plan which was negotiated by the County, Pool Participants, the State Legislature, and the Governor's Office in September, 1995. In conceptually supporting the Recovery Plan to permit the County to exit Bankruptcy and prohibit raids on our sales or property taxes, each Option A participant agreed to subordinate its Settlement Secured and Repayment Claims to the Vendor Claims and School Districts' recovery, and agreed that any further recovery of OCIP investment deposits would solely be through County prosecuted litigation against investment brokers and other third party defendants. The Recovery Plan required three important pieces of legislation: SB 863 which reallocated County special district property taxes, AB 1664 which reallocated OCTA transportation sales taxes and County motor vehicle license fees, and SB 1276 which sets up a backup plan for the appointment of a Trustee by the Governor to oversee the County's Plan of Adjustment if the County fails to move forward on a timely Plan of Adjustment. Each of these bills was approved by the Governor. All claims against the County were required to be filed by December 1, 1995. Accordingly the City filed 46 claims for County Administered Accounts (CAA's) totaling approximately $3.6 million (see attached Schedule I). Many of these claims may be disputed by the County and it is unclear at this time how many will ultimately be approved, although the City has adequate backup for all claims except for those funds, i.e., unapportioned property taxes, that are administered solely by the JOINT AGREEMENT • Page 2 r :icipant is now being asked by the County to approve a Joint Agreement to of the Plan of Adjustment. GChrint intended to address the treatment of the remaining Claims (CAA's) of Option A Pool artici nts and to address certain other specific matters related to the interest of PooTpa� rte icipants. The Joint Agreement provides for the establishment of a five- person monitoring committee to ensure that the Plan of Adjustment conforms to the provisions of the Joint Agreement. This committee is comprised of two representatives of the County, two representatives of the Pool Committee (one of which must be a city representative) and Mr. Thomas W. Hayes, who is entitled to make all critical decisions relating to possible litigation. Because the Joint Agreement seeks to pay the County's creditors on a less than 100% reimbursement, the creditors, including the City of Newport Beach, must vote to approve the Joint Agreement before it can be confirmed by the Bankruptcy Court. The holders of at least two - thirds in principal amount of the debt, and more than one -half in number of claims in each impaired class of creditors of the County that vote on the Joint Agreement must vote to accept the Plan of Adjustment. The Joint Agreement provides that: • Neither the County nor any Trustee acting for the County can request the diversion of cities' monies or payments to implement a Plan of Adjustment. • The designated "Representative" and not the County will control the litigation against Merrill Lynch and other defendants. • The division of the litigation proceeds have been re- ordered, as compared to the original Comprehensive Settlement Agreement, to provide for earlier payment to the cities and schools. • The cities will have a representative on the Orange County Recovery Committee. • Within 30 days of a Bankruptcy Court order approving the Joint Agreement, the County will distribute the non - disputed portions of the County Administered Accounts. • The Arterial Highway Funding Program will be terminated in regard to those projects programmed after June 30, 1995. • The schools will have preferred treatment in that their County Administered Account claims will be paid first and they will receive the first monies of any litigation proceeds. • The Joint Agreement distributes the proceeds of litigation according to the formula itemized in Exhibit One. JOINT AGREEMENT • Page 3 0 Each Option A Pool Participant, in its capacity as a holder of claims under the Comprehensive Settlement Agreement and claims relating to County Administered Accounts in adopting the Joint Agreement agrees: • Not to reject a Plan of Adjustment containing provisions incorporating the, material terms of the Joint Agreement and agrees that it intends to support any such Plan. • To waive all of its rights under Section 943 of the Bankruptcy Code in regard to such a Plan of Adjustment which, in essence, means the City waives all rights to object to the Plan of Adjustment once it approves the Joint Agreement. • To waive any right to post - petition interest on the Deficiency Claims. Such deficiency claims are the amount of CAA's not fully reimbursed at the time of the effective date of the Joint Agreement and can only be recovered from County available cash over the next 20 years or sooner, or from litigation proceeds. • That certain School Pool Participant Deficiency Claims can be paid before the Option A Pool Participant receives payment on its Deficiency Claims. • To dismiss the pending appeal regarding the Note Debt settlement once a Plan of Adjustment incorporating the material terms of the Joint Agreement is confirmed. This appeal was filed after the Recovery Plan was developed to insure that no entity received more favorable subsequent settlement terms. The appeal becomes moot once the Joint Agreement is approved. • That the Schools and the Cities will contribute certain funds otherwise due them under the Joint Agreement to the Professional Fee Reserve. Once the Joint Agreement is approved by the required number of OCIP participants and is approved by the Bankruptcy Court, the County will ask that its Plan of Adjustment be approved by the Court. On December 22, 1995, the County filed a 130 page Plan of Adjustment which divided creditors of the County into four broad categories: 1. Those creditors holding administrative claims. 2. Those creditors holding secured claims. 3. Those creditors holding general unsecured claims. 4. Those creditors holding subordinated unsecured claims. The Plan further divides the non - administrative claim holders into 53 "classes" (those claims of the OCIP participants after payment of administrative expenses related to the bankruptcy). The treatment of each class, the administrative claims and the creditors holding a claim under each class are generally described in the Plan. A summary of the classes affecting cities is attached to this report as Exhibit Three. JOINT AGREEMENT • Page 4 The City's remaining investment balance claims fall into categories A -5 and A -20 which are impaired and any payment must come from potential litigation proceeds. Most of the City's County Administered Accounts fall into category B -12 which are impaired and any deficiencies are paid out of "Available Cash" and/or potential litigation proceeds and related funds. Once the Joint Agreement is approved by the Bankruptcy Court the City should receive 75 percent of all undisputed County Administered Accounts falling in category B -12 within 30 days of its effective date. The effective date will be 30 days after confirmation of the Plan by the Court and should be mid - April, 1996. In addition to the Joint Agreement and Plan of Adjustment, each OCIP participant has received a disclosure statement from the County which includes, among other items, the following: • A summary of classification and treatment of claims under the Plan of Adjustment. • A briefing of events preceding the County Bankruptcy. • A briefing of the County Chapter 9 case. • A description of the Plan of Adjustment. • A description of County operations and projected cash flows. • Unaudited County Financial Statements for the period ending June 30, 1995. We have reviewed the Disclosure Statement and copies are available in the Administrative Services offices. Paul Glassman, the cities' bankruptcy advisory attorney has prepared a question and answer document (Attachment n that addresses many of the common questions regarding the Joint Agreement. Finally, Exhibit Two shows examples of the distribution of possible litigation proceeds of varying amounts. RECOMMENDATION: It is recommended that the City Council consider and approve the Joint Agreement between the County of Orange, the Official Investment Pool Participants' Committee and each Option A Pool Participant for resolution of claims against the County of Orange. It is further recommended that, upon confirmation of the Joint Agreement, the City Manager be authorized to execute the Plan of Adjustment if it does not differ in material aspects from the approved Joint Agreement. JNTAGMT.DOC OVO&96 8:38 AM SEW PORT City of Newport Beach SCHEDULE ONE o� ®e Claims Inst County Administerd Accounts v _ mary, December 11, 1995 r� C7tIFOA�`' Amount Claim No. Reference Withheld Notes Property Taxes Secured August 8,1995 133,459.43 1 Property Taxes Secured P/Y Penalty Apportionment April 26,1995 85,055.28 2 Property Taxes Secured PN Collections April 26,1995 328,369.23 3 Property Taxes Homeowners exemption relief 54,396.65 4 Assessment District Collections A.D. 50 April 26,1995 387.47 5 Assessment District Collections A.D. 50 August 8,1995 131.89 5 Assessment District Collections A.D. 58 April 26,1995 313.43 5 Assessment District Collections A.D. 58 August 8,1995 86.21 5 Assessment District Collections A.D. 59 April 26,1995 683.93 5 Assessment District Collections A.D. 59 August 8,1995 497.55 5 Assessment District Collections A.D. 60 August 8,1995 351.03 5 Assessment District Collections A.D. 61 August 8,1995 38.03 5 Assessment District Collections A.D. 62 August 8,1995 533.53 5 Assessment District Collections A.D. 65 April 26,1995 533.31 5 Assessment District Collections A.D. 65 August 8,1995 53.78 5 Assessment District Collections A.D. 86 -2D April 26,1995 345.73 5 Assessment District Collections A.D. 86 -2D August 8,1995 1,769.21 5 Assessment District Collections A.G. 6e April 26,1995 493.64 5 Assessment District Collections A.D. 66 August 8, 1995 22.90 5 Street Lighting August 8,1995 3.04 5 Property Taxes Mis- Allocated Property Taxes 1985-1995 100,000.00 6 Real Property Transfer Tax Property Transfer Tax November, 1994 28,861.00 7 Real Property Transfer Tax Property Transfer Tax December 1-6,1994 14,551.35 7 Court Fines & Forfeitures General, Motor Vehicle and Parking Fines November, 1994 25,862.55 8 Court Fines & Forfeitures General, Motor Vehicle and Parking Fines December 1-6,1994 5,233.77 8 Orange County Dock Lease Newport Arches Marina July- Sept 1994 13,125.00 9 Orange County Dock Lease Newport Arches Marina Oct -Dec 1994 13,125.00 9 Orange County Dock Lease Newport Arches Marina Apr -June 1995 13,125.00 9 Paid Orange County Dock Lease Newport Arches Marina July -Sep 1995 13,687.00 9 Paid OUTSTANDING Billings 90.0004 San Diego Creek Basin 113 August 13,1990 4,080.38 10 OUTSTANDING Billings 94 -0369 Motor Vehicle Theft Task Force - April 94 May 26,1994 6,358.13 11 OUTSTANDING Billings 94 -0389 Motor Vehicle Theft Task Force - May 94 June 16,1994 6,628.61 12 OUTSTANDING Billings 95 -0331 County Agreement D92 -108 Upper Newport Bay December 29,1994 75,000.00 13 OUTSTANDING Billings 95 -0481 Lifeguard Subsidy 94 -95 May 12,1995 37,073.11 14 OUTSTANDING Billings 95 -0488 Agreement D92.108 Irvine Ave, Santiago to Univ. May 22,1995 60,000.00 15 OUTSTANDING Billings 95 -0543 Motor Vehicle Theft Task Force - April 95 June 13,1995 7,271.54 16 OUTSTANDING Billings 95 -0562 Motor Vehicle Theft Task Force - May 95 June 26,1995 7,123.88 17 OUTSTANDING Billings 95 -0546 Sewer Utility Service - 1993 -94 June 13,1995 600.00 18 OUTSTANDING Billings 96 -0036 Motor Vehicle Theft Task Force - June 95 August 4,1995 7,603.07 19 OUTSTANDING Billings 96 -0051 Motor Vehicle Theft Task Force - July 95 August 24,1995 5,866.23 20 OUTSTANDING Billings 96 -0064 Agreement D80 -031 Traffic Signal Maintenance September 13,1995 4,171.60 21 UNBILLED RECEIVABLES Harbor Debris Removal, Jul -Sep 95 3,750.00 22 UNBILLED RECEIVABLES Upper Newport Bay - Agreement D92 -108 817,669.00 23 Eminent Domain / Restitution 264 CNB vs DeAnza Newport Mobile Estates 553608 127,590.42 24 Eminent Domain / Restitution 264 CNB vs O'Connor 349566 35.88 25 Eminent Domain / Restitution 264 CNB vs Boydston 349564 47.84 25 Eminent Domain / Restitution 264 CNB vs Nevin 348986 47.84 25 Eminent Domain / Restitution 264 CNB vs Schumann 348691 2,288.21 25 Eminent Domain / Restitution 264 CNB vs Walker 348690 184.35 25 Miscellaneous Unidentified 318 141977 44,275.98 26 Miscellaneous Unidentified NAFF 145334 1,963.27 27 Miscellaneous Unidentified 148702 112,899.38 28 Unapportioned Property Taxes 669 Fund 669 133059 13,380.24 29 Unapportioned Property Taxes 673 Fund 673 Secured 133650 33,342.40 30 Unapportioned Property Taxes Misc Funds 668 & 675 132949 100,447.65 31 Unapportioned Property Taxes Misc Funds 684,687,686 &687 133378 509,886.10 32 Unapportioned Property Taxes Newport Beach Library 130582 7,339.56 33 Miscellaneous Unidentified 405 97,073.11 34 Miscellaneous Unidentified 318 44,243.64 35 Miscellaneous Unidentified 106 15,000.00 36 LEGAL CONTINGENCY Misc Equitable indemnity arising on or before 12/6/94. 1,000.00 37 Property Taxes Supp Unapportioned Tax & State Redemption 414,434.60 38 Property Taxes Unsecured Unapportioned Tax 5,060.87 39 Property Taxes Secured Unapportioned Tax 161,283.87 40 LEGAL CONTINGENCY 673 Land Fill Discharge of Hazardo s/Da erous Mat 9 age ig 1000.00 41 �EWPOR> City of Newport Beach o� o Claims Inst County Administerd Accounts F, = mary, December 11, 1995 • a Reference Property Taxes Public Utility Unapprtioned Tax Fund Miscellaneous Unidentified 669 Miscellaneous Unidentified Misc Misc COUNCIL PERSON REIMB Msc - Vector Control Committee COUNCIL PERSON REIMB Misc Sanitation Committee SCHEDULE ONE Amount Claim No. Withheld Notes . 5,593.35 42 (1) 54,774.14 43 (1) 1,000.00 44 (1) 100.00 45 (1) 100.00 46 (1) 3,63 Notes: 1) This Amount is an estimate based on information provided by the county. The City does not have all the information necessary to determine the precise amount of the claim. The County of Orange is, to our knowledge, the only agency with the information necessary to determine the precise amount of the claim. Although the Information provided by the County has changed, the City's Claims have been revised and shall be revised to reflect the most current information available. 2) This claim represents contingent occurrences beyond the City's control or ability to determine a precise amount. The amount of the claim is disclosed as 'an amount which exceeds $ XXXX.' 3) These claims represent amounts which the City is able to determine based on existing agreements. The claim does not include however, all interest, penalties, accruals and other sums to which the City is or maybe entitled to. Page 2 COUNTY3ALS 2:09 PM 02105196 , EXHIBIT ONE OCIP Bankruptcy Distribution of Litigation Proceeds Per Plan of Adjustment Proceeds Newport From To Schools Option A's County OCTA Beach $ - $ 54,707,336 $ 54,707,336 $ - $ - $ - $ - $ 54,707,337 $ 379,895,953 $ - $ 325,188,116 $ - $ - $ 1,519,703 $ 379,895,953 $ 582,696,647 $ - $ - $ 202,800,694 $ - $ - $ 582,696,647 $1,295,530,646 $ - $ 439,034,460 $ 273,799,539 $ - $ 2,062,471 $1,295,530,146 $1,695,530,646 $ - $ $ 300,000,000 $ 100,000,000 $ - $1,695,530,146 $1,773,000,000 $ $ $ - $ 77,469,855 $ - Total Distribution $ 54,707,336 $ 764,222,576 $ 776,600,233 $ 177,469,855 $ 3,582,174 Total Litigation Proceeds $1,773,000,000 Please Note: 1. The City would receive $0 recovery unless there is successful litigation and a recovery of more than $54.7 million. 2. The City would recover $1.5 million of its $3.5 million remaining from OCIP investments provided there is a $380 million recovery. 3. The City would recover its entire Pool investment balance only if the total recovery reaches $1.295 billion. COUNTY2.XLS 2:09 PM 02/05/96 0 • AGREEMENT FOR DISTRIBUTION OF LITIGATION PROCEEDS EXAMPLE ONE Settlement Amount School Districts 100% of first $ 54,707,336 $ 54,707,336 Option A,Participantst �, , �� , , ,, 100°!0 of next$325�`$$�1,6 � �,�`' 325,18886 County Balance Available $ 120,104,048 500,000,000 EXAMPLE TWO Settlement Amount School Districts 100% of first $ 54,707 County 100% of next EXAMPLE THREE Settlement Amount School Districts 100% of first $ 54,707,336 $ 54,707,336 Option A Participants 100% of next $325,188 616 $ 325,188 616 County 100% of next $202,800,694 $ 202,800,694 Option A Participants 61.59% of excess $ 103,042,136 County 38,41% of excess $ 64,261,218 $ 750,000,000 Total School Districts $ 54,707,336 p v e x ra t5 .. y'A F+� ..F y A, ; TotalOptionAPartic�pantsn, #t A r�1.12, 1 28,230;x52 Ee':,..r.G.,.',;; aT.k. ,011 Total County $ 267,061,912 $ 750,000,000 EXAMPLE FOUR Settlement Amount School Districts 100% of first $ 54,707,336 $ 54,707,336 Option A Participants 100ofiezt325188Ga,325,1886Tft County 100% of next $202,800,694 $ 202,800,694 Option A Participants 61.59% of excess $ 257,017,136 County 38.4.1% of excess $ 160,286,218 $ 11000,000,000 Total School Districts $ 54,707,336 $ 363,086,912 $ 1,000,000,000 EXHIBIT TWO COUNTY2ALS 2:09 PM 02/05/96 • . AGREEMENT FOR DISTRIBUTION OF LITIGATION PROCEEDS EXAMPLE FIVE Settlement Amount School Districts Option A Participants County Option A Participants County Total School Districts Total Option, Pa_ticip Total County EXAMPLE SIX Settlement Amount School Districts Option A Participants County Option A Participants County Total School Districts 100% of first $ 54,707,336 $ 54,707,336 100 °10 of next $325,f8ff�6�6 ��_m�. `$____, 325,„168-06G 100% of next $202,800,694 $ 202,800,694 61.59% of excess $ 380,197,136 38.41% of excess $ 237,106,218 $ 1,200,000,000 707 100% of first $ 54,707,336 $ 54,707,336 100 °!° of next $325,188,616' x 100% of next $202,800,694 $ 202,800,694 61.59% of excess $ 439,034,153 38.41% of excess $ 273,799,347 $ 1,295,530,146 13 $ 476,600,041 $ 1,295,530,146 EXHIBIT TWO 0 EXHIBIT THREE Major Classification of Claims Classification Tvne of Claims in Class Treatment Class A -5 CSA Settlement Secured Claim Impaired. Payment from potential Litigation Proceeds and related funds. Secured Claim under CSA modified and/or released. Class A -20 CSA Repayment Claim Impaired. Payment from potential Litigation Proceeds and related funds. Secured Claim under CSA modified and/or released. Class B -10 CAAs defined as "Schedule 1 Unimpaired. Deficiencies per CSA to be paid on or County Administered Account after "Effective Date ". Claims" Class B -12 CAAs defined as "Non- School Impaired. Deficiencies paid out of "Available Cash" Municipality County and or potential Litigation Proceeds and related funds. Administered Account Claims" Class B -13 CAAs not covered under B -10 Impaired. Paid out of "Available Cash ". or B -12 Class B -14 Unsecured portion of Impaired. Payment from potential Litigation Settlement Secured Claims Proceeds and related funds. Class B -23 Indemnity, reimbursement or Unimpaired. Rights unchanged by bankruptcy. contribution claims Class B -26 Senior Unsecured Claims Impaired. Cash payment on Effective Date equal to the Allowed Amount of Claim. Class B -27 Non - classified Unsecured Impaired. Payment is through County Warrants in Claims 50% of Allowed Amount of Claim. Class C -2 All Non - School Unsecured Impaired. Payment from potential Litigation Deficiency Claims Relating to Proceeds and related funds. Repayment Claims FEB -04 -1996 15:20 FROM THOMH TO 13103129507 P.01 • ATTACHMENT ONE The Joint Agreement: Questions and Answers 1. What payments will my City receive under the Joint Agreement and are their other benefits to the Cities under this agreement? If the Joint Agreement becomes "effective ", each City which signs the Joint Agreement should receive approximately 75% of the "undisputed portion" of its County Administered Accounts ( "CAA" or "CAAs ") within 30 days of the agreement becoming "effective ". While the County has not definitively agreed to an "undisputed schedule" for the CAAs, the best information currently available is found in the last schedules of the CAAs provided by the County. The "disputed portion" will not be paid until the County and the affected City reach accommodation or the Bankruptcy Court determines the "allowed" amount. In addition to the above, the Joint Agreement provides for certain other benefits to the Cities, including but not limited to: a) the County's agreement not to seek further diversion of funds to finance its Plan of Adjustment ( "Plan"); b) the Representative's control of the Merrill Lynch and other "Pool Related" litigation.; c) the payment of Litigation Proceeds to the Cities under the Comprehensive Settlement Agreement ( "CSA ") will be reordered so that, depending upon the level of recovery, the Cities may be paid earlier; and d) through a side letter to the Joint Agreement, the County agrees to release certain "Withheld Proceeds." 1 FEB -04 -1996 1520 FROM THOMA TQ 13103121M1M7 *.02 2. What will my City give up under the Joint Agreement? If the Joint Agreement becomes "effective ", each City which signs the Joint Agreement will waive most of its rights to object to the Plan and certain of its rights under the CSA will be modified. However, the Cities rights to sue designated third parties, including their own advisors, is not affected 'by the Joint Agreement. Please note that the Cities right to sue the County's advisors (e.g. Merrill Lynch and KPMG) for CAA losses was given up under the CSA. Under the CSA the Cities also gave up their rights to make a claim against the County for damages. 3. If my City signs the Joint Agreement, will its County Administered Account claims be paid within 30 days of signing? No. No payments will be made under the Joint Agreement until the Joint Agreement becomes "effective" (i.e. all Option A Pool Participants and the County sign the agreement and the Bankruptcy Court approves the agreement). 4. Can the Joint Agreement become "effective" if all Option A Pool Participants don't sign up? Yes, but only the County can waive the requirement that all Option A Pool Participants must sign the Joint Agreement. Please note that the requirement that the Bankruptcy Court approve the Joint Agreement is probably not waivable. 2 FEB -04 -1996 1521 FROM THOMA TO 13103129507 P.03 5. If my City chooses not to sign the Joint Agreement will its CAA claims still be paid? Currently, the County takes the position that only those Cities which execute the Joint Agreement (assuming that it becomes "effective ") will be paid their CAA claims. The County also contends that there is no mechanism under the County's proposed Plan for paying CAAs to the Cities. If the County's position is correct, the CAA claim of a City which chooses not to sign the Joint Agreement will be in "legal limbo' and would probably be addressed through litigation, a new Plan or a separate settlement. 6. How will the undisputed "deficiency" or shortfall portion of the CAA claims be paid under the Joint Agreement? Notwithstanding the language in the Joint Agreement to the contrary, the County takes the position that the deficiencies /shortfalls in the CAAs are not paid under the Joint Agreement but are dealt with under the Plan. The current version of the Plan provides that most of these deficiency claims will be paid out of certain Litigation Proceeds and related funds (as defined in the Plan) and Available Cash (also as defined in the Plan). However, the Plan also provides that certain types of undisputed deficiency CAA claims- -such as eminent domain claims -- will be restored in full on, or as promptly as possible after, the Effective Date or will be paid as provided by state law. 3 FEB- 04 -19% 1521 FROM iHOMA • 70 131eI25W P.04 7. What does the Joint Agreement mean whcn it provides that CSA claims (i.e. the Settlement Secured Claims and Repayment Claims) are "non- recourse" against the County and "recourse" only against third party recoveries? This is a change in the rights of the Cities under the CSA. The "recourse" and "non- recourse" language in the Joint Agreement mcans that the Cities are entitled to be paid their CAA deficiency claims only out of the Litigation Proceeds and Available Cash and will not have any recourse against the County or its general funds. Under the CSA, the claims were previously "recourse" against the County and its general funds. 8. Are Option B Pool Participant Cities eligible to sign the Joint Agreement? The County takes the position that Option B Pool Participants Cities cannot participate in the Joint Agreement and that their rights are unaffected by the Joint Agreement. 9. What does the five person Orange County Recovery Committee ( "Committee ") do and what is the Cities role on this Committee? The Committee reviews and evaluates any Plan of Adjustment or Disclosure Statement filed with the Bankruptcy Court to determine if they are inconsistent with the terms of the Joint Agreement and/or the Comprehensive Settlement Agreement. One of the members of the Committee will be a City representative. 9 FEB-04-19% 15:22 FROM THOMA TO 13103129507 P.05 10. What will Mr. Thomas Hayes role as the Representative entail? Mr. Hayes will have complete control over litigation, including, but not limited to the Merrill Lynch litigation and the KPMG litigation. He can settle, prosecute or dismiss litigation as he deems advisable. 11. Will the Governor appoint a "Trustee" for the County if the Joint Agreement becomes "effective "? Even if the Joint Agreement becomes "effective" the Governor will retain the right to appoint a Trustee if the Plan is not approved by the Bankruptcy Court by May 1, 1996. However, should the Governor choose to exercise this right he must first consult with various individuals delineated in the legislation and make a determination that the prospects of reorganization are unlikely. 12. If my City approves the Joint Agreement, is it at the same time approving the Plan? No. They are separate, with the Joint Agreement being approved first and the Plan later. The Joint Agreement deals only with the CSA claims and a portion of the CAA claims (approximately 75 1/16), while the Plan deals with the deficiency in the CAAs and all other claims. As a practical matter, a City which signs the Joint Agreement is waiving most of its rights to object to the Plan. (SEE ANSWER 2). 5 COPY December 18, 199s JOINT AGREEMENT (the " Agreement") OF THE COUNTY OF ORANGE, THE OFFICIAL INVESTMENT POOL PARTICIPANTS' COMMITTEE AND EACH OPTION A POOL PARTICIPANT FOR RESOLUTION OF CLAIMS AGAINST THE COUNTY OF ORANGE 1. Definitions. Capitalized terms not defined herein shall have the meanings ascribed to such terms in the Comprehensive Settlement Agreement re: Orange County Investment Pools (the "Comprehensive Settlement Agreement ") in the form approved by the United States Bankruptcy Court for the Central District of California ( "Bankruptcy Court ") in an order entered on May 2, 1995. 2. Reallocation of Bradley -Burns Sales Tax. The California legislature (the "Legislature ") has passed and the Governor of the State of California (the "Governor ") has signed legislation providing for the reallocation to and /or reten- tion by the County of Orange (the "County ") of a portion of the Bradley -Burns Sales Tax currently allocated to the orange County Transportation Authority ("OCTA") or to the Orange County Transit District ("OCTD") in the sum of $38 million per year for a term of fifteen (15) years commencing on July 1, 1996. A copy of that legislation is attached to this Agreement as Exhibit "A." 3. Transfer of Motor Vehicle Fuel Taxes. The Legislature has passed and the Governor has signed legislation that allocates to OCTA $23 million of the County's yearly apportionment of Motor Vehicle Fuel Taxes for a period of sixteen (16) years commencing on July 1, 1997. A copy of that legislation is attached to this Agreement as Exhibit "A." The County agrees to pay, subject to all bankruptcy defenses, limitations and objections, all eligible costs, as determined by the County, for Arterial Highway Financing Program projects originally programmed by OCTA or the County prior to and including June 30, 1995, and OCTA shall not be obligated to pay any of such eligible costs. The Arterial Highway Financing Program shall -1- 121095 4. • • terminate upon the completion of the projects originally programmed by OCTA or the County prior to and including June 30, 1995; and neither the County nor OCTA shall fund any projects programmed after June 30, 1995. The Legislature has passed and the Governor has signed legislation providing for the reallocation to the County of property taxes currently allocated and paid to the Orange County fund commonly known as Harbors, Beaches and Parks in an amount equal to $4 million per year (plus any related allocation to such fund of future years' tax increments) for a period of twenty (20) years commencing on July 1, 1996. A copy of that legislation is attached to this Agreement as Exhibit "A." 5. Reallocation of Property Taxes (Flood Control). The Legislature has passed and the Governor has signed legis- lation providing for the reallocation to the County of property taxes currently allocated and paid to the Orange County Flood Control District in an amount equal to $4 million per year (plus any related allocation to that district of future years tax increments) for a period of twenty (20) years commencing on July 1, 1996. A copy of that legislation is attached to this Agreement as Exhibit "A." Reallocation of Property Taxes (Development Authoritv). The Legislature has passed and the Governor has signed legisla- tion providing for the transfer from the Orange County Development Agency ( "OCDA") to the County's general fund of an amount equal to $4 million per year for a period of twenty (20) years commencing on July 1, 1996. A copy of that legislation is attached to this Agreement as Exhibit "A." Segregation of Redirected Revenues. All of the revenues to be directed to or received by the County pursuant to legis- lation enacted in accordance with paragraphs 2 through 6 hereof shall be accounted for and reserved for the perfor- mance of the County's obligations pursuant to a confirmed plan of adjustment, including payment of debt service on post - petition indebtedness or Certificates of Participation approved by the Bankruptcy Court. Funds may be released from the restrictions described in the preceding sentence to -2- 121895 0 0 the extent that funds from the County's general fund are applied to obligations of the County under such plan. 8. Plan of Adjustment. The County shall, as promptly as practicable, and in any event no later than January 1, 1996, prepare and file with the Bankruptcy Court a plan of adjust- ment (the "Plan of Adjustment ") and by no later than January 19, 1996, prepare and file with the Bankruptcy Court a Disclosure Statement with respect to such Plan of Adjustment. The Plan of Adjustment shall contain, in substance, the following terms and conditions: a) The Plan of Adjustment may provide for the payment of the allowed amount of all County vendor allowed claims as of the Petition Date. b) The Plan of Adjustment may provide for the payment of the allowed amount of all allowed claims asserted by County employees. C) The Plan of Adjustment may provide for payment, in full, of all allowed claims under the County's short -term note debt which constitute "Senior Claims" as that term is defined in the Comprehensive Settlement Agreement. d) The Plan of Adjustment may provide for the replenish- ment of those reserve accounts required to be maintained in accordance with the documentation governing Certificates of Participation issued on behalf of the County to the extent required by such documentation through the payment of past due lease obligations for such Certificates of Participation to cure any default resulting from nonpayment of such lease obligations, in an amount not to exceed $15 million. e) The Plan of Adjustment shall provide for the appointment of a Representative pursuant to Bankruptcy Code section 1123(b)(3)(B), defined below, to enforce, prosecute and collect upon all Pool- Related Claims, as such term is defined in the Comprehensive Settlement Agreement, and such Representative's authority shall include determining whether, and on what terms, to settle any or all of such Claims. -3- 122895 • 0 f) The Plan of Adjustment shall provide for the establish- ment of a fund in the amount of $50 million (the "Litigation Fund ") to enable the Representative to prosecute, enforce and collect upon Pool- Related Claims, including without limitation to pay for the services of lawyers, accountants, expert witnesses, consultants, and to the extent the Professional Fee Reserve established pursuant to the Comprehensive Settlement Agreement is insufficient, counsel for the Official Investment Pool Participants' Committee (the "OCIP Committee ") and /or his designee and to pay other costs and fees related to the prosecution, enforcement and collection of Pool- Related Claims. g) The Plan of Adjustment shall provide that all Settlement Secured Claims allowed pursuant to the Comprehensive Settlement Agreement shall be subor- dinated to Senior Claims for purposes of determining distributional entitlements under the Plan of Adjustment and, upon the Effective Date of such Plan, have recourse only to net proceeds of Pool- Related Claims and the Litigation Fund in accordance with the terms and conditions described in Paragraph 9. The security interest which collateralizes the Settlement Secured Claims pursuant to the Comprehensive Settlement Agreement shall be modified and released only to the extent necessary to permit all Pool- Related Claims to become fully subject to the control of the Representative and to permit the distributions of net proceeds of Pool- Related Claims and of the Litigation Fund in accordance with Paragraph 9, below. h) The Plan of Adjustment shall provide that all Repayment Claims allowed pursuant to the Comprehensive Settlement Agreement shall, upon the Effective Date of such Plan, have recourse only to net proceeds of Pool- Related Claims and the Litigation Fund in accordance with the terms and conditions described in Paragraph 9. The security interest which collateralizes the Repayment Claims pursuant to the Comprehensive Settlement Agreement shall be modified and released only to the extent necessary to permit all Pool- Related Claims to become fully subject to the control of the Representative and to permit the distributions of net -4- 121093 0 0 proceeds of Pool- Related Claims and of the Litigation Fund in accordance with Paragraph 9, below. i) Except as otherwise provided in this Agreement, the Plan of Adjustment shall provide that all claims based upon or arising out of deficiencies in County - Administered Accounts resulting from investment losses in the Orange County Investment Pools ("County - Administered Account Claims ") held by the County will receive the same treatment as County- Administered Account Claims held by the undersigned holders of Settlement Secured Claims and /or Repayment Claims (collectively, the "Option A Pool Participants"). j) The Plan of Adjustment may provide for payment, without interest in accordance with Paragraph 10(e) below, of County - Administered Account Claims held by Option A Pool Participants over a period of up to twenty years beginning on the Effective Date of such Plan, and it is the intent of the County to pay such County - Administered Account Claims held by Option A Pool Participants, as shown on the cash flow projections attached hereto as Exhibit B. 9. The Representative. Matters relating to the Pool- Related Claims and the Representative: a) The Pool- Related Claims of the County and of the Option A Pool Participants shall be enforced, prose- cuted and collected upon by the Representative. The net proceeds, if any, of such enforcement, prosecution and collection efforts shall be distributed at such times and in such amounts as may be determined by the Representative in his sole and absolute discretion. Distributions shall be applied as among the holders of Pool- Related Claims as follows: i) The first $54,707,336.26 shall be distributed, to the holders of Repayment Claims who are School Pool Participants, pro rata, in accordance with the allowed amounts of such claims and shall be applied to reduce the allowed amounts of such claims. -5- 121899 0 0 ii) After the distribution of $54,707,336.26 in accordance with paragraph (i), the next $325,188,616.45 shall be distributed, to the holders of Settlement Secured Claims, pro rata, in accordance with the allowed amounts of such Claims and shall be applied to reduce the allowed amounts of such Claims. iii) After the distribution of $379,895,952.71 in accordance with paragraphs (i) and (ii), the next $202,800,694.23 shall be distributed to the County of Orange. iv) After the distribution of $582,696,646.94 in accordance with paragraphs (i), (ii) and (iii), the next $712,833,499.25 until aggregate distributions equal $1,295,530,146.19 shall be distributed as follows: a) The Secured Claim Percentage, for purposes of this Agreement defined to be 61.59 %, of such amounts shall be distributed to Option A Pool Participants and shall be applied to the allowed amount of the remaining Repayment Claims, pro rata, in accordance with the allowed amounts of such Claims. b) 100% minus the Secured Claim Percentage of such amounts shall be distributed to the County of Orange. V) After the distribution of $1,295,530,146.19 in accordance with paragraphs (i), (ii), (iii) and (iv), the next $400,000,000 until aggregate distributions equal $1,695,530,146.19 shall be distributed as follows: a) 25% of such amounts shall be distributed to OCTA. b) 75% of such amounts shall be distributed to the County of Orange. vi) After the distribution of $1,695,530,146.19 in . accordance with paragraphs (i), (ii), (iii), (iv) 121!95 0 0 and (v), the next $125,000,000, until aggregate distributions equal $1,820,530,146.19 shall be distributed to OCTA. vii) Amounts in excess of $1,820,530,146.19 shall be distributed as follows: a) The Secured Claim Percentage of such amounts shall be distributed to Option A Pool Participants and shall be applied based upon each option A Pool Participants' Investment Balance on December 6, 1994, as shown on Exhibits 1 and 2, as revised, to the Comprehensive Settlement Agreement. b) 100% minus the Secured Claim Percentage of such amounts shall be distributed to the County of Orange. b) Subject to the waiver of certain interest set forth in Paragraph 10(e), the County shall apply the first net litigation proceeds received by the County pursuant to this paragraph to the repayment of allowed County - Administered Account Claims held by Option A Pool Participants arising out of County - Administered Accounts numbered 106, 108, 109, 113, 115, 118, 119, 136, 139, 144, 145, 148, 15G, 158, 180, 207, 264, 265, 280, 296, 299, 300, 318, 327, 367, 380, 386, 405, 459, 460, 466, 506, 648, 664 - 666, 668 - 670, 672 - 680, 684 - 687, 828, 838 and such other County - Administered Accounts as are subsequently identified by agreement of the OCIP Committee and the County, to the extent that such Option A Pool Participant County - Administered Account Claims are not previously paid. The County hereby warrants and represents that there were no interfund borrowings from any County - Administered Account identified above in this Paragraph 9(b) which were not restored prior to determining the correct December 6, 1994 cash balance in such account. C) The Representative shall be Thomas W. Hayes. In the event Mr. Hayes is unable or unwilling to continue to serve as the Representative, an individual or entity selected by the County and approved by the OCIP Committee shall be the Representative. The -7- 121895 • • Representative may contract with Metropolitan West Securities, Inc., or another person or entity, on such terms and conditions as the Representative shall deem appropriate, for the provision of analytical support and asset management services to the Representative. The Representative shall receive reasonable compensa- tion for his services from the Litigation Fund and /or the proceeds of the prosecution, enforcement and collection of Pool- Related Claims. The agreement containing the terms of the Representative's compensation shall be filed under seal with the Bankruptcy Court. d) Both the Representative and Metropolitan West Securities, Inc. shall be indemnified by the Litigation Fund and the litigation proceeds from and against any and all claims which may be asserted against them by reason of any action taken by either of them as Representative or the Representative's agent, respec- tively. The indemnification described in the preceding sentence shall include payment of attorneys' fees and any other costs incurred in defense of any claims asserted against the Representative or the Representative's agent. e) The Representative shall keep counsel for the OCIP Committee informed concerning the progress of the Representative's efforts to prosecute, collect and /or settle Pool- Related Claims. In particular, Exhibit 6 to the Comprehensive Settlement Agreement shall be amended to substitute "counsel for the OCIP Committee" for the words "Designated Counsel" wherever such words appear in such Exhibit. Notwithstanding the foregoing, the Representative shall retain the sole and absolute discretion in all matters concerning the prosecution, collection, settlement and compromise of Pool- Related Claims subject only to such jurisdiction as may be retained by the Bankruptcy Court pursuant to the Plan of Adjustment. f) The definition of Excluded Claim in Section S.q. of the Comprehensive Settlement Agreement is hereby modified: (1) by adding at the end of subsection (5) thereof the words "or does not form the basis for a distribution to such Option A Pool Participant under the December 18, -8- 121895 0 0 1995 Joint Agreement of the County of Orange, the Official Investment Pool Participants' Committee and Each Option A Pool Participant for Resolution of Claims Against the County of Orange or under any order of the Bankruptcy Court in the County Chapter 9 Case" and (2) by adding at the end of subsection 6 thereof the words "but only to the extent that such collected fees do not form the basis for a distribution to such Option A Pool Participant under the December 18, 1995 Joint Agreement of the County of Orange, the Official Investment Pool Participants' Committee and Each Option A Pool Participant for Resolution of Claims Against the County of Orange or under any order of the Bankruptcy Court in the County Chapter 9 Case ". 10. Each A Pool Participant: a) In its capacity as a holder of Settlement Secured Claims, Repayment Claims, and /or County- Administered Account Claims, agrees not to reject any Plan of Adjustment containing provisions incorporating the material terms described in this Agreement; b) In its capacity as a holder of Settlement Secured Claims, Repayment Claims, and /or County- Administered Account Claims, agrees that it intends to accept any Plan of Adjustment containing provisions incorporating the material terms described in this Agreement; C) In its capacity as a holder of Settlement Secured Claims, Repayment Claims, and /or County- Administered Account Claims, agrees not to oppose confirmation by the Bankruptcy Court of any Plan of Adjustment con- taining provisions incorporating the material terms described in this Agreement whether or not such Option A Pool Participant accepts such Plan of Adjustment. Notwithstanding the foregoing, if Bankruptcy Code section 943 is deemed not to be satisfied, such provision is waived by each Option A Pool Participant in its capacity as a holder of Settlement Secured Claims, Repayment Claims, and /or County - Administered Account Claims, to the fullest extent permitted by law; -9- 12109s d) In its capacity as a holder of Settlement Secured Claims, Repayment Claims, and /or County- Administered Account Claims, agrees that the treatment of Settlement Secured Claims, Repayment Claims, and County - Administered Account Claims described in this Agreement complies in all respects with all applicable require- ments of Bankruptcy Code section 943 whether or not any class comprised of holders of Settlement Secured Claims, any class comprised of holders of Repayment Claims, or any class comprised of holders of County - Administered Account Claims accepts the Plan of Adjustment in accordance with Bankruptcy Code section 1126. Notwithstanding the foregoing, if Bankruptcy Code section 943 is deemed not to be satisfied, such provision is waived by each Option A Pool Participant in its capacity as a holder of Settlement Secured Claims, Repayment Claims, and /or County- Administered Account Claims, to the fullest extent permitted by law; e) waives any right to post - petition, post - confirmation or post- effective date interest on any County - Administered Account Claim. Notwithstanding any provision hereof, each Option A Pool Participant does not waive nor intend to waive any claim for any interest that it may have against any third party; f) If not a School Pool Participant, agrees that the County - Administered Account Claims of School Pool Participants based upon losses in County - Administered Accounts numbered 664 - 666, 668 - 670, 672 - 680, and 684 - 687 shall be paid by the County prior to the payment of the County - Administered Account Claims of such Non - School Pool Participants (to the extent there are additional funds then available to the County for the payment of the County - Administered Account Claims, such amounts shall be distributed ratably in respect of all County- Administered Account Claims; provided, however, that the County shall not be required to make distributions in respect of County - Administered Account Claims more frequently than annually). g) Agrees to suspend, pursuant to a stipulation acceptable to the County, all appeals relating to the Bankruptcy Court's June 27, 1995, Order Approving Compromise Of -10- 121895 0 Controversy Respecting Validity Of Note Debt or its June 27, 1995, Order Approving Second Amended Note Modification And Extension Agreement, or any order or findings related thereto; h) Agrees to dismiss with prejudice, upon entry of an order approving a Plan of Adjustment containing provi- sions incorporating the material terms described in this Agreement, all appeals relating to the Bankruptcy Court's June 27, 1995, Order Approving Second Amended Note Modification And Extension Agreement, or any order or findings relate thereto; and i) If it is a School Pool Participant (i.e., one listed on Exhibit 1 to the Comprehensive Settlement Agreement), agrees that its share of the first $2 million in Withheld Proceeds turned over to the County which would be distributed to the Option A School Pool Participants shall instead be deposited into the Professional Fees Reserve to be administered in the same manner as the previous deposits into that reserve on behalf of such Option A School Pool Participants. (Such deposits shall made on behalf of such School Pool Participants on a pro rata basis in accordance with the amount of the original deposit made to that reserve by each such School Pool Participant.) j) If it is a Non - School Pool Participant listed under the heading "OC Municipalities" on Exhibit 2 to the Comprehensive Settlement Agreement (i.e., an "OC City "), agrees that its share of the first $1.2 million in Withheld Proceeds turned over to the County which would be distributed to the Option A OC Cities shall instead be deposited into the Professional Fees Reserve to be administered in the same manner as the previous deposits into that reserve on behalf of such Option A OC Cities. (Such deposits shall made on behalf of such OC Cities on a pro rata basis in accordance with the amount of the original deposit made to that reserve by each such OC City.) 11. Certain Agreements of the Pool Committee. The Pool Committee: -11- iusas 0 0 a) In its capacity as a representative of holders of Settlement Secured Claims, Repayment Claims, and /or County - Administered Account Claims, agrees that it shall support the acceptance by all Option A Pool Participants of any Plan of Adjustment containing provisions incorporating the material terms described in this Agreement; b) Agrees that it shall urge acceptance by all holders of Settlement Secured Claims, Repayment Claims, and /or County - Administered Account Claims, of any Plan of Adjustment containing provisions incorporating the material terms contained in this Agreement; C) In its capacity as a representative of holders of Settlement Secured Claims, Repayment Claims, and /or County - Administered Account Claims who execute this Agreement or who accept the Plan of Adjustment, agrees not to oppose confirmation by the Bankruptcy Court of any Plan of Adjustment which contains provisions incorporating the material terms described in this Agreement whether or not such Plan of Adjustment is accepted by any or all Option A Pool Participants; d) In its capacity as a representative of holders of Settlement Secured Claims, Repayment Claims, and /or County - Administered Account Claims, agrees that any Plan of Adjustment containing provisions incorporating the material terms described in this Agreement complies in all respects with all applicable requirements of Bankruptcy Code section 943 whether or not any class comprised of holders of Settlement Secured Claims, any class comprised of holders of Repayment Claims, or any class comprised of holders of County - Administered Account Claims accepts the Plan of Adjustment in accordance with Bankruptcy Code section 1126; e) Agrees to suspend, pursuant to stipulation acceptable by the County, all appeals relating to the Bankruptcy Court's June 27, 1995, Order Approving Compromise Of Controversy Respecting Validity Of Note Debt or its June 27, 1995, Order Approving Second Amended Note Modification And Extension Agreement, or any order or findings related thereto; and -12- 121895 0 0 f) Agrees to dismiss with prejudice, upon entry of an order approving a Plan of Adjustment containing provisions incorporating the material terms described in this Agreement, all appeals relating to the Bankruptcy Court's June 27, 1995, Order Approving Compromise Of Controversy Respecting Validity Of Note Debt or its June 27, 1995, Order Approving second Amended Note Modification And Extension Agreement, or any order or findings related thereto. 12. Other Revenue Diversions. Except as specifically set forth herein, the County agrees not to request of the Legislature, nor otherwise support if requested or approved by any entity other than the County, the diversion of revenue allocated to the undersigned Option A Pool Participant for the purpose of financing the repayment of claims in the County's debt adjustment case or the payment of claims under the County's Plan of Adjustment. 13. Effectiveness of this Agreement. This Agreement shall not become effective unless: a) This Agreement has been executed by authorized representatives of: i) The County of Orange; ii) The Official Investment Pool Participants' Committee of the Orange County Investment Pools Bankruptcy Case; iii) The Orange County Transportation Authority; and iv) Each Option A Pool Participant. The County may waive the requirement contained in section 13(a)(iv) of this Agreement by written notice sent to counsel to the OCIP Committee. b) The Bankruptcy Court approves this Agreement. For the purposes of implementing the provisions of this para- graph 13, all of the parties to this agreement consent to any request that the Bankruptcy Court shorten time or otherwise accelerate a hearing on any motion to approve this Agreement, provided that each party to -13- 121898 0 this agreement is given at least three (3) days notice of the date and time of any hearing on any motion to approve this Agreement. If a County Plan of Adjustment containing provisions incorporating the material terms described in this Agreement is not confirmed by May 31, 1996, or fails to become effective by July 1, 1996, the OCIP Committee may terminate this Agreement by giving 90 days written notice of such termination to the County; provided, however, that while upon the expiration of such 90 day notice period this Agreement shall become of no further force or effect, such termination shall not affect or render subject to any avoidance or recision any action taken by any party hereto pursuant to the terms of this Agreement prior to the expiration of such 90 day notice period. 14. Cooperation and Best Efforts in Seeking Bankruptcy Court Orders. Each party to this Agreement agrees to cooperate with the County in seeking, and not to hinder or interfere with any proceedings to obtain, the order or orders described in Section 13(b) of this Agreement. 15. within 30 days following the entry of a Bankruptcy Court order approving this Agreement, the County shall distribute to each Option A Pool Participant that executes this Agreement, to the extent it is lawfully entitled to such amounts under applicable non- bankruptcy law and to the extent of any portion of a claim therefor is not being dis- puted by the County, cash accounted for as available for distribution (i.e. cash balances net of pro -rata allocations of investment losses and Withheld Proceeds based on December 6, 1994 revised balances plus any interest earned on that available cash balance between December 6, 1994 and the date of such distribution) on account of funds placed with the County on behalf of such Option A Pool Participant and accounted for in County- Administered Accounts numbered 106, 108, 109, 113, 115, 118, 119, 136, 139, 144, 145, 148, 15G, 158, 180, 207, 264, 265, 280, 296, 299, 300, 318, 327, 367, 380, 386, 405, 459, 460, 466, 506, 648, 664 - 666, 668 - 670, 672 - 680, 684 - 687, 828, 838 and such other County - Administered Accounts as are subsequently identified by agreement of the OCIP Committee and the County. (The December 6, 1994 revised balance in a County Administered -14- 121895 i • Account shall include any prepetition interest.) Each Option A Pool Participant agrees not to object to any future distribution proposed by the County to any other entity, to the extent such entity is lawfully entitled to such amounts under applicable non - bankruptcy law, of cash accounted for as available for distribution (i.e. cash balances net of pro -rata allocations of investment losses and Withheld Proceeds based on December 6, 1994, revised balances) on account of funds placed with the County on behalf of such entity and accounted for in County- Administered Accounts numbered 106, 108, 109, 113, 115, 118, 119, 136, 139, 144, 145, 148, 15G, 158, 180, 207, 264, 265, 280, 296, 299, 300, 318, 327, 367, 380, 386, 405, 459, 460, 466, 506, 648, 664 - 666, 668 - 670, 672 - 680, 684 - 687, 828, 838 and such other County - Administered Accounts as are subsequently identified by agreement of the OCIP Committee and the County. The County and each Option A Pool Participant shall use their respective best efforts to resolve differences concerning the allowable amount of claims asserted by such Option A Pool Participant. 16. Certain Agreements of the Orange County Cities Subcommittee. The effectiveness of this Agreement is further conditioned upon the Official Subcommittee of Orange County Cities of the Official Investment Pool Participants' Committee entering into a separate agreement with the County: a) to suspend, pursuant to stipulation acceptable by the County, all appeals relating to the Bankruptcy Court's June 27, 1995, Order Approving Compromise Of Controversy Respecting Validity Of Note Debt or its June 27, 1995, Order Approving Second Amended Note Modification And Extension Agreement, or any order or findings related thereto; and b) to dismiss with prejudice, upon entry of an order approving a Plan of Adjustment containing provisions incorporating the material terms described in this Agreement, all appeals relating to the Bankruptcy Court's June 27, 1995, Order Approving Compromise Of Controversy Respecting Validity Of Note Debt or its June 27, 1995,'Order Approving Second Amended Note Modification And Extension Agreement, or any order or findings related thereto. This condition is intended to benefit the County only and may be waived by the County at any time. -15- 121895 17. Limited Waiver of Certain Interest• Subordination. To the extent the County has the authority and ability to do so, the County waives any right to, post - petition, post - confirmation, or post- effective date interest on any County- Administered Account Claim, but solely to the extent such interest would be paid by or from another County - Administered Account or the County General Fund. Notwith- standing any provision hereof, the County does not waive nor intend to waive any claim for any interest that it may have against any third party. To the extent the County has the authority and ability to do so, the County agrees the County- Administered Account Claims of School Pool Participants based upon County - Administered Accounts numbered 664 - 666, 668 - 670, 672 - 680, and 684 - 687 shall be paid before the County's own County - Administered Account Claims. 18. Orange County Recovery Committee. There shall be established a committee ( "OCR Committee ") consisting of five (5) members: the Representative, two members to be appointed by the County, and two members to be appointed by the OCIP Committee, provided, however, one of the members appointed by the OCIP Committee shall be a city represen- tative. OCR Committee shall review and evaluate any Plan of Adjustment (the "Plan ") and Disclosure Statement filed with the Bankruptcy Court to determine if the Plan is inconsis- tent with any term of this Agreement or the Comprehensive Settlement Agreement to the extent not modified by this Agreement. 19. Effect of Comprehensive Settlement Agreement. Each Option A Pool Participant hereby fully and finally waives and relin- quishes any and all obligations, duties and restrictions imposed upon the County by the Comprehensive Settlement Agreement to the extent inconsistent with this Agreement. The County hereby fully and finally waives and relinquishes any and all obligations, duties and restrictions imposed under the Comprehensive Settlement Agreement upon any Option A Pool Participant which executes the Agreement to the extent inconsistent with this Agreement; provided, however, that nothing contained in this sentence shall be construed to modify, amend or otherwise affect the provisions of sections 7(b), 12, 19, 20, or 34 of the Comprehensive Settlement Agreement. -16- 121895 0 20. No Third -Party Beneficiaries. Nothing contained in this Agreement is intended to confer any rights or remedies under or by reason of this Agreement on, or waive any claims against, or adversely affect any rights of, any person or entity other than the Parties hereto. 21. No Representations or warranties. Except as expressly set forth in this Agreement, none of the Parties hereto makes any representation or warranty, written or oral, express or implied. 22. Applicable Law. This Agreement shall be governed in all respects, including the validity, interpretation and effect, by title 11 of the United States Code and the laws of the State of California, without giving effect to the principles of conflicts of law thereof. 23. Consent to Entry of Orders and Judgments by Bankruptcy Court. Each Party hereto hereby consents to the deter- mination by the Bankruptcy Court, as a "core proceeding" within the meaning of 28 U.S.C. § 157 or any successor provision, and to have the Bankruptcy Court hear and deter- mine and enter appropriate orders and judgments, in any action brought to enforce, interpret, reform or rescind this Agreement or any of the provisions hereof any over any action to determine or declare the rights of any of the Parties under this Agreement. 24. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 25. No Admissions. Neither this Agreement, nor any of the terms hereof, nor any negotiations or proceedings in connection herewith, shall constitute or be construed as or be deemed to be evidence of an admission on the part of any Party of any liability or wrongdoing whatsoever, or the truth or untruth, or merit or lack of merit, of any claim or defense of any Party or directly or indirectly impair or adversely affect any rights or claims not released, modified waived or otherwise affected under this Agreement; nor shall this Agreement, or any of the terms hereof, or any negotiations or proceedings in connection herewith, or any performance or -17- 121895 0 0 forbearance hereunder, be offered or received in evidence or used in any proceeding against any Party, or used in any proceeding, or otherwise, for any purpose whatsoever except with respect to (a) effectuation and enforcement of this Agreement and (b) any proceedings in the Bankruptcy Court to approve this Agreement and the execution and delivery hereof. 26. Due Authorization. Each Party to this Agreement hereby represents and warrants that such Party is duly- authorized to enter into this Agreement. THE COUNTY OF ORANGE BY: ITS: THE OFFICIAL INVESTMENT POOL PARTICIPANTS1 COMMITTEE BY: ITS: NAME OF OPTION A POOL PARTICIPANT BY: ITS: -18- 121095 0 • PROPOSED CONFERENCE REPORT NO. 1 SEPTEMBER 13, 1995 AMENDED IN SENATE SEPTEMBER 6, 1995 AMENDED IN ASSEMBLY APRIL 27, 1995 CALIFORNIA LEGISLATURE - 1995 -96 REGULAR SESSION ASSEMBLY BILL No. 1664 Introduced by Assembly Member Allen February 24, 1995 An act relating to metal affairs to amend Sections 25350.55 and 25350.6 of, to add Sections 25350.7, 25350 8, 253509, 25350.10, and 25350.11 to, and to add and repeal Section 29350.5 of the Government Code, relating to local government finance. LEGISLATIVE COUNSEL'S DIGEST AB 1664, as amended, Allen. ` -Ave--°-Wen-b ' affairs Local government. This kill weeld state the intent of the Legislature to assist the Gewity of Grange ie dealing with its fisea iaselrvene� (1) Existing law requires the board of supervisors, if the board of supervisors so agrees by contract with the State Board ofEqualization, to establish a local transportation fund in the county treasury. Existing law provides a formula to be used with respect to deposits into the local transportation fund. . This bill would, if plan of adjustment is Bled in a specified bankruptcy case, notwithstanding any other provision of ]a rr, EXHIBIT A M1 AB 1664 • —2— • authorize the board of supervisors for the County of Orange, upon the adoption of resolution, to modify its contract with the State Board of Equalization to require, with respect to taxes levied from July 1, 1996, to July 1, 2011, that revenues be deposited in the County of Orange general fund in an amount equal to $'3,166,667 per month, as specified. (2) This bill would authorize the board ofsupervisors ofthe • County of Orange to elect, by resolution, to guarantee payment under a financing agreement, or to guarantee payment under an agreement to finance the lease or lease purchase ofproperty through the issuance ofcertifrcates of participation or lease revenue bonds by providing notice and a transfer schedule, as specified. (3) Existing law requires that all sales and use taxes collected by the State Board of Equalization pursuant to contract with any city, city and county, redevelopment agency, or county be transmitted to the respective local entity periodically as promptly as feasible. This bill would require that taxes collected by the State Board ofEqualization that are derived from taxes imposed by • the County of Orange, as specified, be pledged to all certificates of participation or lease revenue bonds issued during the years 1996 and 1997, not to exceed the amount to be paid in those fiscal years on those certificates or lease • purchase bonds. (4) This bill would sever any provision of this bill that is held invalid, but that invalidity would not affect other provisions or applications that can be given effect without the invalid provision or application. (5) This bill would declare that it would only become operative YSB 727, SB 863, and SB 1276 of the 1995�_96Regular Session are enacted and become operative on or before January 1, 1996 Vote: majority. Appropriation: no. Fiscal committee: tteyes. State - mandated local program: no. The people of the State of California do enact as follows.- 1 1�F Rist-heintentofthel "egis_l_a^`_ureteassist 2 the Ge of 9remge ift de g its irsee� sel etieY: 96 0 101 0 r L -3— AB 1664 • • 1 SECTION 1. It is the intent of the Legislature in 2 enacting this act that the Orange County Transportation 3 Authority continue to carry out the purposes of the 4 Mills- Alquist- Deddeh Act (Chapter 4 (commencing with 5 Section 99200) of Part 11 of Division 10 of the Public i7 6 (Utilities Code) as set forth in Section 99220 of that code. In particular, the Legislature intends that the provisions 8 of this act shall not be utilized to justify reductions in 9 existing bus and paratransit services. It is further the 10 intent of the Legislature that, prior to January 1, 1996, the 11 County of Orange and the Orange County 12 Transportation Authority report to the Legislatureonthe i 13 steps taken to maintain adequate public transportation in 14 the County of Orange. 15 In enacting this act, the Legislature further recognizes 16 that the County of Orange has developed a Consensus 17 County Recovery Plan that willpermit thepayment ofall 18 allowed vendor and labor claims and the repayment of 19 indebtedness owed by the county due in the summer of Q , 20 1996. 21 SEC. 2. The Legislature, k reby finds and declares all 22 of the following.• 23 (a) The County ofOrangegovernmentlackssufflcient © • 24 resources to finance an acceptable plan of adjustment in 25 its pending bankruptcy case. 26 (b) On June 27,1995, the voters of the county defeated 27 a proposed sales tax increase, indicating the public's 28 unwillingness to raise new revenue to finance a plan of 29 adjustment. 30 (c) It is in the interest of the state and all public debt 31 issuers within the state to enable the county to finance an 32 acceptable plan of adjustment in order to improve the © 33 credit standing of California public debt issuers and to 34 preserve and protect the health, safety, and welfare of the 35 residents of the county and the state. To that end, 36 successfully resolving the county bankruptcy and 37 restoring the financial position of Orange County 38 government and thereby permitting the full 39 performance under the county' indebtedness A a matter 40 of statewide interest and concern. AB 1664 • — 4— • 1 (d) In the absence of some alternative source of I • 2 revenue not now available to the county, resources from 3 other governmental units within the county must be 4 transferred to the county to enable it to prepare, and 5 obtain confirmation of, an acceptable plan ofadjustment. 6 (e) The transfer of resources to the county should be 7 designed to minimize the impact on affected entities. 1 8 (1) The emergence from bankruptcy of the county 9 through the confirmation of an adequate plan of 10 adjustment will assist in the effectuation of the primary 11 purposes of the Community development Law (Part 12 1 (commencing with Section 33000) of Division 24 of the 13 Health and Safety Code), including job creation, 14 attracting new private commercial investments, the 15 physical and social improvement of residential 16 neighborhoods, and the provision and maintenance of 17 low- and moderate - income housing. The attraction of 18 new businesses to redevelopment project areas depends 19 on the e�dstence of an effective county government that 20 is not burdened by litigation and other requirements of I t • 21 a bankruptcy proceeding. The payments to the county 22 pursuant to Section 33670.9 of the Heath and Safety Code 23 benefit rede velopment project areas and are deemed a 24 debt of the Orange County Development Agency to 25 repay the county for such general and specific benefits to 26 the redevelopment project areas previously provided by 27 the county. 28 SEC. 3. Section 25350.55 of the Government Code is 29 amended to read. 30 25350.55. (a) Prior to entering into an agreement to 31 finance the lease or lease - purchase of property through 32 the execution and delivery or issuance, as the case may be, 33 of certificates of participation or lease revenue bonds, the I 1 34 board may elect, by resolution, to guarantee payment 35 under that financing agreement in accordance with the 36 following: 37 (1) A county that elects to participate under this 38 section shall provide notice to the Controller of that 39 election, which shall include a schedule for the payments 40 to be made by the county under that financing 96 % 96 • • —5— AB 1664 + Of . 1 agreement, and identify a trustee appointed by the 'Om 2 county for the purposes of this section. be 3 (2) In the event that, for any reason, the funds ind 4 otherwise available to the county will not be sufficient to ant. 5 make any payment under the financing agreement at the 'be 6 time that payment is required, the county shall so notify 1 4D 7 the trustee. The trustee shall immediately communicate r] ty 8 that information to the affected holders of certificates of Of 9 participation or bondholders, and to the Controller. ary 10 (3) When the Controller receives notice from the art 11 trustee as described in paragraph (2), or the county fails he 12 to make any payment under the financing agreement at 9t7, 13 the time that payment is required, the Controller shall `he 14 make an apportionment to the trustee in the amount of Fial 15 that required payment for the purpose of making that Of 16 payment. The Controller shall make that payment only Of 17 from moneys credited to the Motor Vehicle License Fee ids 18 Account in the Transportation Tax Fund to which that Zat 19 county is entitled at that time under Chapter 5 of 1 ) 20 (commencing with Section 11001) of Part 5 of Division 2 7 t 21 of the Revenue and Taxation Code, and shall thereupon de 22 reduce, by the amount of the payment, the subsequent I a 23 allocation or allocations to which the county would to ) • 24 otherwise be entitled under that chapter. to 25 (4) As an alternate to the procedure set forth in by 26 paragraphs (2) and (3), the board of supervisors may 27 . provide a transfer schedule in a notice to the Controller is 28 of its election to participate under this section. The 29 transfer schedule shall set forth amounts to be transferred to 30 to the trustee and the date or dates for the transfers and ;h 31 the Controller shall, subject to the limitation in the second le, 32 sentence of paragraph (3), make apportionments to the ie ® 33 trustee in those amounts on the specified date or dates for at 34 the purpose of making those transfers. ie 35 (5) In the event that for any reason, the county is no 36 longer obligated for any period to make all or a portion Lis 37 of the payments with respect to the lease or at 38 lease- purchase financed through the execution and is 39 delivery, or issuance, as the case may be, of certificates of ig ' _ 40 participation or lease revenue bonds, the trustee shall % 96 AB 1664 IS —6— 0 ( • 1 notify the affected holders of certificates of participation 2 or bondholders. The trustee shall also notify the 3 Controller. Upon receipt of the notification, the 4 Controller shall cease making the transfers. Ifaftergiving 5 notice, the obligation of the county to make payments 6 7 with respect to a lease orlease purchase financed through the execution and delivery orissuance, as the case may be, 8 of certificates of participation or lease revenue bonds is 9 restored, the trustee shall so notify the affected holders of 10 certificates of participation or bondholders and the 11 Controller. Upon receipt of the notification, the 12 Controller shall resume making the transfers. 13 (b) This section shall not be construed to obligate the 14 State of California to make any payment to a county from 15 the Motor Vehicle License Fee Account in the 16 Transportation Tax Fund in any amount or pursuant to 17 any particular allocation formula, or to make any other 18 payment to a county, including, but not limited to, any 19 payment in satisfaction of any debt or liability incurred or 20 guaranteed by a county in accordance with this section. 1 ) 21 SEC. 4. Section 25350.6 of the Government Code is 22 amended to read.• 23 25350.6. (a) Moneys credited to the Motor Vehicle 24 License Fee Account in the Transportation Fund to 25 which Orange County may at any time be entitled shall 26 be pledged, without any necessity for specific 27 authorization of the pledge by the board of supervisors, 28 to all certificates of participation or lease revenue bonds 29 executed and delivered or issued, as the case may be, 30 during 4%6 er 1996 or 1997, including obligations 31 executed and delivered or issued before 294 2010 to 32 refund those certificates of participation or lease revenue 33 bonds, to finance or refinance the lease or lease - purchase } • 34 of property of the county and having a stated maturity of 35 20 years or more-, edlier them e- "`riieates of partieipatien 36 er lease reventie beads seemed by a pledge of eaterprise 37 re�eaaes. �g Wet ae limed te-, airpert rer- enttes 38 er sekd waste system yes. However, the amount so 39 pledged with respect to any fiscal year of the county shall 0 ,;r, ys • _ 7 AB 1664 ion 1 not exceed the amounts to be paid in that fiscal year on the 2 those certificates or lease revenue bonds. 3 (b) The state hereby covenants with the holders of n 4 any certificates of participation or lease revenue bonds, n s 5 including refunding obligations, entitled to the pledge igh 6 granted by this section that, as long as any of the be, 7 certificates of participation or lease revenue bonds 'S is 8 entitled to the pledge granted by this section shall remain s of 9 outstanding, the state shall not alter or amend the deposit the 10 of moneys into, or the allocation of moneys credited to, the 11 the Motor Vehicle License Fee Account in the 12 Transportation Tax Fund under Chapter 5 (commencing .he 13 with Section 11001) of Part 5 of Division 2 of the Revenue �m 14 and Taxation Code in any manner that would adversely :he 15 affect the security of, or the ability of the county to pay to 16 the principal of and interest on, the certificates of ier 17 participation or lease revenue bonds entitled to the .ny 18 pledge granted by this section. However, nothing or 19 precludes any alteration or amendment if and when )n , • 20 adequate provision has been made by law for the is 21 protection from impairment of the contract represented 22 by the certificates of participation or lease revenue bonds, cle 23 and the right to so alter or amend is hereby reserved. The 24 • eet County of Orange may include this covenant of 25 the state in the agreements or other documents .all fic 26 underlying the certificates of participation or lease 27 revenue bonds. .rs, ids 28 SEC. 5. Section 25350.7 is added to the Government ie, 29 Code, to read.. ins 30 25350.7 (a) Prior to entering into an agreement to to 31 finance the lease or lease purchase of property through 32 the execution and delivery orissuance, as the case may be, ue `o 33 • ofcertzficates ofparticipation or lease revenue bonds, the f 34 board ofsup ervisors of the County of Orange may elect, 35 byresolutiorNtoguarantee payment under thatfioancing stt 36 agreement in accordance with the following. .9e ,es 37 (1) If the county elects to participate under this so 38 section, it shall provide notice to the Controller of that all 39 election, and the notice shall include a schedule for the 40 payments to be made by the county under that financing ,;r, ys AB 1664 9 —8— • 1 agreement andidentifva trustee appointedbvthecounty I ( 2 for the purpose of this section. 3 (2) In the event that, for anv reason, the funds 4 available to the county will not be sufficient to make any 5 payment under the financing agreement at the time that 6 paymentis required, the county shallso notify the trustee 7 and deliver to the Controller a duly certified copy of the 1 8 resolution ofits board ofsupervisors adopted pursuant to 9 Section 29530.5. The trustee shall immediately 10 communicate that information to the affected holders of I 11 certificates of participation or bondholders and to the 1 12 Controller. 1. 13 (3) When the Controller receives notice from the 1. 14 trustee, and a copy of the resolution from the county, as 1 15 described in paragraph (2), or, after having adopted the L 16 resolution specified in paragraph (2), the county fails to li 17 make anypayment under the financing agreement at the 1' 18 time thatpayment is required, the Controller shall make It 19 an apportionment to the trustee in the amount of that 1( 20 required payment for the purpose of making that ) © 2( 21 payment. The Controller shall make that payment only 21 22 from moneys to be transmitted to the county by the State 2c 23 Board ofEqualization under Section 7204 of the Revenue 2� 24 and Taxation Code, that are derived from that portion of • 24 25 the sales and use taxes imposed by the county in excess of 2' 26 1 percent, pursuant to Part 1.5 (commencing with 2( 27 Section 7200) of Division 2 of the Revenue and Taxation 2: 28 Code, and that are permitted to be deposited in the 2E 29 general fund of the county pursuant to Section 29530.5. 2c- 30 (b) As an alternative to the procedure set forth in 3C 31 paragraphs (2) and (3) of subdivision (a), the board of 31 32 supervisors may, on or after the date of adoption by the 32 33 board of the resolution specked in Section 29530.5, 33 • 34 provide a transfer schedule in a notice to the Controller 34 35 and the State Board of Equalization of its election to 35 36 participate under this section. The transfer schedule shall 36 37 set forth the amounts to be transferred to the trustee and 37 38 the date or dates for the transfers, and the Controller 38 39 shall, subject to the limitation in the second and third 39 40 sentences of paragraph (3) of subdivision (a), make ) 40 M � —9— AB 1664 )unty X11 . 1 apportionments to the trustee in those amounts on the 2 specified date or dates for the purpose of making those unds 3 transfers. any 4 (c) In the event that, for an reason, the countv is no that 5 longer obligated, for any period, to make all or a portion istee 6 of the payments with respect to the lease or ft he , . 7 lease purchase financed through the execution and Ut to 8 delivery or issuance, as the se may be, of certifica tes of itely 9 participation or lease revenue bonds, the trustee shall so rs of 10 notify the affected holders of certificates ofparticipation the I 11 or bondholders, the Controller, and the State Board of 12 Equalization. Upon receipt of the notification, the the 13 Controller shall cease making the transfers. If, after the V, as I 14 giving of the notice, the obligation of the county to make the 15 payments with respect to the lease or lease purchase fs to 16 financed through the execution and delivery or issuance the 17 of certificates of participation or lease revenue bonds is ake ` 18 restored, the trustee shall so notify the affected holders of `hat ! 19 certificates of participation or bondholders, the that 20 Controller, and the State Board of Equalization. Upon on1v ; 21 receipt of the notification, the Controller shall resume `ate 22 making the transfers. 2ue 23 (d) Any election made by the county pursuant to this 2 of 24 section shall be in addition to any other election made by S of 25 the county pursuant to any other applicable provision of nth 26 law to guarantee the obligation of the county to make ion 27 payments with respect to the lease or lease purchase of the 28 property financed through the certificates of ,6 29 participation or lease revenue bonds. in 30 SEC. 6. Section 25350.8 is added to the Government Of 31 Code, to read.• he 32 25350.8. (a) Taxes collected by the State Board of 7.5, '�� • 33 Equalization pursuant to Section 7204 ofthe Revenue and lei 34 Taxation Code, that are derived from that portion of the to 35 taxes imposed by the County of Orange in excess of I all 36 percent pursuant to Part 1.5 (commencing with Section ❑d 37 7200) of Division 2 of the Revenue and Taxation Code, ler 38 and that are permitted to be deposited to the general rd 39 fund of the county pursuant to paragraph (1) of ke 40 subdivision (a) of Section 29530.5 shall be pledged AB 1664 0 —10— 0 • 1 without the necessity for specific authorization of the 2 pledge by the board of supervisors, to all certificates of 3 participation or lease revenue bonds executed and 4 delivered or issued, as the case may be, during the years 5 1996 and 1997, including obligations executed and 6 7 delivered or issued before 2010, to refund those lease bonds, • certificates of participation or revenue to 8 finance or refinance the lease or lease purchase of 9 property of the county and havinga stated maturity of20 10 ,years or more. However, the amount so pledged with 11 respect to any fiscal year of the counts• shall not exceed 12 the amounts to be paid in that fiscal Year on those 13 certificates or lease revenue bonds. 14 (b) The pledge of taxes pursuant to this section shall 15 constitute a contract between the County of Orange and 16 the owners of any of the certificates of participation or 17 lease revenue bonds and shall be protected from 18 impairment by the United States and California 19 Constitutions. The state hereby covenants with the 20 owners of any certificates of participation or lease , 21 revenue bonds entitled to the pledge granted by this 22 section that, as long as any of the certificates of 23 participation or lease revenue bonds entitled to the 24 pledge granted by this section shall remain outstanding, • 25 (1) the provisions of Section 7202 which authorize the 26 imposition of the taxes shall not be repealed and (2) the 27 provisions ofparagraph (1) of subdivision (a) of Section 28 29530.5 shall not be repealed prior to July 1, 2011, nor shall 29 either section be altered or amended prior to that date in 30 any manner that would adversely affect the security of, 31 or the ability of the county to pay, the principal of and 32 interest on the certiricates of participation or lease 33 revenue bonds entitled to the pledge granted by this 34 section. However, nothing precludes any alteration or 35 amendment if and when adequate provision has been 36 made by law for the protection from impairment of the 37 contract represented by the certdi'cates ofparticipation 38 or lease revenue bonds, and the right to so alter or amend 39 is hereby reserved. The county mayinclude this covenant 40 of the state in the agreements or other documents I M fl M 9M i • — 11 — AB 1664 1 underlying the certificates of participation or lease the 2 revenue bonds. s of 3 SEC. 7. Section 25330.9 is added to the Government tnd 4 Code, to read.. gars ind ' 5 25350.9. (a) Prior to entering into an agreement to 6 finance the lease or lease purchase of property through ose 7 the execution and deli very orissuance, as the case ma v be. to 8 of certificates ofparticipab 'onorlease revenue bonds, the Of 9 Board of Supervisors- of the County of Orange may elect. f20 10 byresolution, to guarantee payment under thatfinancing pith 11 agreement in accordance with the following: 3ed 12 (1) If the county elects to participate under this ose 13 section, it shall provide notice to the Controller of that 14 election, and the notice shall include a schedule for the fall 15 payments to be made by the county under that Financing aid 16 agreement and identifva trustee appointed by the county • or 17 for the purpose of this section. om 18 (2) In the event that, for any reason, the funds nia 19 a vailable to the county will not be sufficient to make an 1 the ase 0 20 payment under the financing agreement at the time that 21 paymentisrequired, the county shallso notify the trustee. L is Of 22 The trustee shall immediately communicate that 23 information to the affected holders of certificates of the 24 participation or bondholders and to the Controller. the th e ® 25 (3) When the Controller receives notice from the 26 trustee as specified in paragraph (2) or the county fails to the 27 make anypayment under the financingagreementatthe [on time e that payment is required, the Controller shall make l gal 29 an apportionment to the trustee in the amount of that in Of, 30 required payment for the purpose of making that nd 31 payment. The Controller shall make that payment onli- 32 from moneys to be transmitted to the county by the State 2se his his O 33. 34 Board ofEqualization under Section 7204 of the Revenue and Taxation Code, that are derived from that portion of or 35 the sales and use taxes imposed by the countypursuant to ten he 36 Part 1.5 (commencing with Section 7200) of Division 2 of 37 the Revenue and Taxation Code, other than that portion n d 38 of the taxes described in Section 29530.5, and shall 39 thereupon reduce, by the amount of the payment, the ant nts M 9M AB 1664 • — 12— • 1 subsequent amounts to which the county would be 2 entitled under that section. 3 (b) As an alternative to the procedure set forth in 4 paragraphs (2) and (3) of subdivision (a), the board of 5 supervisors of the countymayprovidea transfer schedule 6 in a notice to the Controller and the State Board of 7 Equalization of its election to participate under this a 8 section. The transfer schedule shall set forth amounts to 9 be transferred to the trustee and the date or dates for the 10 transfers and the Con trollershall, subject to the limitation 11 in the second sentence of paragraph (3) of subdivision 12 (a), make apportionments to the trusteein thoseamounts 13 on the specified date or dates for the purpose of making 14 those transfers. 15 (c) If the county is no longer obligated for any period 16 to make all or a portion of the payments with respect to 17 the lease or lease purchase financed through the 18 execution and delivery or issuance, as the case may be, of 19 certificates of participation or lease revenue bonds, the 20 trustee shall so notifv the affected holders of certificates 21 of participation or bondholders, the Controller, and the 22 State Board of Equalization. ,Upon receipt of the 23 notification, the Controller shall cease making the 24 transfers. If, after the giving of the notice, the obligation 25 of the county to make payments with respect to the lease 26 or lease purchase financed through the execution and 27 delivery orissuanceofcertificatesofparticipationorlease 28 revenue bonds is restored, the trustee shall so notify the 29 affected holders of certificates of participation or 30 bondholders, the Controller, and the State Board of 31 Equalization. Upon receipt of the notification, the 32 Controller shall resume making the transfers 33 (d) Any election made by the county pursuant to this } • 34 section shall be in addition to any other election made by 35 the county pursuant to any other applicable provision of 36 law to guarantee the obligation of the county to make 37 payments with respect to the lease or lease purchase of 38 propertyfmanced through certifiaicates ofparticipation or 39 lease revenue bonds. ' ri f! 1 0 —13— 0 AB 1664 1 SEC. 8. Section 25350.10 is added to the Government 2 Code, to read.• 3 25350.10. (a) Taxes collected by the State Board of 4 Equalization pursuant to Section 7204 of the Revenue and 5 Taxation Code, that are derived from the taxes imposed 6 by the County of Orange pursuant to Part 1.5 7 (commencing with Section 7200) of Division 2 of the 8 Revenue and Taxation Code, other than that portion of 9 those taxes specified in Section 29530.5, shall be pledged, 10 without the necessity for specific authorization of the 11 pledge by the board of supervisors, to all certificates of 12 participation or lease revenue bonds executed and 13 delivered or issued, as the case may be, during the years 14 1996 and 1997, including obligations executed and 15 delivered or issued before 2010, to refund those 16 certificates of participation or lease revenue bonds, to 17 finance or refinance the lease or lease purchase of 18 property of the county and having stated maturity of20 19 years or more. However, the amount so pledged with 20 respect to any fiscal year of the county shall not exceed 21 the amounts to be paid in the fiscal year on those 22 certificates or lease revenue bonds 23 (b) The pledge of taxes pursuant to this section shall 24 constitute a contract between the county and the owners 25 ofany of the certificates ofparticipation or lease revenue 26 bonds and shall be protected from impairment by the 27 United States and California Constitutions. The state 28 hereby covenants with the owners of any certificates of 29 participation or lease revenue bonds entitled to the 30 pledge granted by this section that, as long as any of the 31 certificates of participation or lease revenue bonds 32 entitled to thepledgegranted by this section shallremain 33 outstanding, the provisions of Section 7202 of the 34 Revenue and Taxation Code that authorize the 35 imposition of the taxes shall not be repealed. However, 36 nothing precludes any alteration or amendment if and 37 when adequate provision has been made by law for the 38 protection from impairment of the contract represented 39 by the certificates ofparticipation orlease revenue bonds, 40 and the right to so alter or amend is hereby reserved. The 96 AB 1664 14— 1 county of may include this covenant of the state in the ^� 2 agreements or other documents underlving the 3 certificates ofparticipation or lease rei-enue bonds. 4 SEC. 9. Section 25350.11 is added to the Government 5 Code, to read. 6 25350.11. Vottitithstandinganc -otherprovisionsofthis 7 chapter, the sum of the amounts pledged with respect to 8 any fiscal year pursuant to Sections 25350.6, 25350.8, and 9 25350.10 shall not exceed the amounts to be paid in that 10 fiscal year on the certificates of participation or lease 11 revenue bonds entitled to the pledge described in those 12 sections. 13 SEC. 10. Section 29530.5 is added to the Government 14 Code, to read.• 15 29530.5. (a) Notwithstanding any other provision of 16 this article, the Board of Supervisors of the Countv of 17 Orange may, upon the adoption ofa resolution approved 18 by a majority of all ofits members, unilaterallvmodifvits 19 contract, as specified in Section 29530 with the State 20 Board of Equalization, to require that, effective on or 21 afterJuly1,1996, except to the extent that subdivision (b) 22 applies during any period, county sales and use tax 23 revenues specified in Section 29530 be deposited into the 24 county general fund payable, on a monthly basis, in an 25 amount equal to three million one hundred sixty -six , 26 thousand six hundred sixty -seven dollars (53,166,667). 27 (b) (1) If the county has elected to guarantee 28 payment ofits obligations under an agreement to finance 29 the lease or lease purchase of property through the 30 execution and delivery or issuance, as the case may be, of 31 certificates of participation or lease revenue bonds 32 pursuant to subdivision (a) of Section 25350 7, the 33 amounts required to be deposited in the general fund of 34 the county, in any month, pursuant to subdivision (a) 35 shall be reduced by the amounts, ifan v, transferred by the 36 Controller to the trustee for the certificates of 37 participation or lease revenue bonds, pursuant to 38 subdivision (a) of Section 25350.7 39 (2) If the county has elected to guarantee its 40 obligations under an agreement to finance the lease or 0 0 —15— AB 1664 1 lease purchase of property through the execution and 2 deliverance or issuance, as the case maybe, of certificates 3 of participation or lease revenue bonds pursuant to 4 subdivision (b) of Section 25350.7, the amounts required 5 to be deposited in the general fund of the county, in any 6 month, pursuant to subdivision (a) shall be reduced by 7 the amounts transferred by the Controller to the trustee 8 for the certificates of participation or lease revenue 9 bonds, pursuant to subdivision (b) of Section 23330.7. 10 (c) This section shall not take effect unless and until 11 (1) a plan of adjustment is confirmed in Case :Yo. 12 SA -94 -22272 JR in the United States Bankruptcy Court for 13 the Central District of California, or (2) a trustee is 14 appointed pursuant to Chapter 10 (commencing with 15 Section 30400). 16 (d) In enacting this section, the Legislature intends 17 that the provisions of this act shall not be utilized to justify f 18 reductions in existing bus and para transit services. 19 (e) The modification authorized by this section is not 20 applicable to the City of Laguna Beach. 21 (f) This section shall become inoperative on July 1, ' 22 2011, and, as ofjanuary 1, 2012, is repealed, unless a later 23 enacted statute, that becomes operative on or before ©24 January 1, 2012, deletes or extends the dates on which it 25 becomes inoperative and is repealed. 26 SEC. 11. (a) In implementing Section 9616 of the 27 Revenue and Taxation Code, the County of Orange shall 28 not adversely affect Santa Ana River flood control 29 projects 30 (b) If any of the revenues from the property tax 31 reallocation specified in Section 33670.9 of the Health and 32 Safety Code or Section 96.16of the Revenue and Taxation ©33 Codearenotforth coming, th e Co un ty of Orange shall use 34 county general fund moneys to cover any resulting 35 shortfall, as necessary. 36 SEC. 12. County revenues in the amount of the 37 revenues allocated, transferred to, or deposited with, the 38 County of Orange pursuant to the provisions of this act, 39 40 shall not be used or expended for any purpose other than in full, for the the satisfaction adequate provision C* AB 1664 • — 16— . 1 satisfaction in full, or other consensual treatment of the 2 outstanding and allowed claims of county vendors, 3 emplovees, holders of short -term debt of the county,. 4 holders of certificates of participation of the county on 5 account ofpast due lease obligations, holders of expenses 6 of administration in the county's bankruptcy case, costs to the of these claims, O 7 and expenses ancillart, satisfaction 8 and otherwise to perform the county's obligations 9 pursuant to a confirmed plan of adjustment. 10 SEC.13. Any litigation fund established aspart of the 11 Joint Agreement of the County of Orange, the Official 12 Investment Pool Participants' Committee and Each 13 Option A Pool Participant for Resolution of All Claims 14 Against the County of Orange in Case No. SA -94 -22273 JR .15 or Case No. S.4- 94- 22272JR in the United States 16 Bankruptcy Court for the Central District of California, 17 shall be subject to the following: 18 (a) The funds shall be deposited in a special account. 19 (b) Interest earned shall be treated and distributed 20 annually as net litigation proceeds pursuant to the Joint 4 21 Agreement of the County of Orange, the Official 22 Investment Pool Participants' Committee and Each 23 Option A Pool Participant for Resolution of All Claims 24 Against the County of Orange, September 6, 1995. • 25 (c) An annual audit of the account shall be prepared 26 by the holder of the funds and shall be transmitted to each 27 house of the Legislature and the Governor. 28 SEC. 14. The Legislature hereby finds and declares 29 that a general statute, within the meaning of Section 16 30 of Article IV of the California Constitution, cannot be 31 made applicable due to the uniquely severe fiscal crisis 32 being experienced by the County of Orange, and that, 33 therefore, this special statute is necessary. 1 34 SEC. 15 The provisions of this act are severable. If 35 any provision of this act or its application is held invalid, 36 that invalidity shall not affect other provisions or 37 applications that can be given effect without the invalid 38 provision or application, 39 SEC. 16. This act shall become operative only if 7270f the1995-96 Session, 40 . Senate Bill Regular Senate Bill ' C� 10 � 0 ❑i —17— AB 1664 1 863 of the 1995-96 Regular Session, and Senate Bill 1276 2 of the 1995-96 Regular Session are all enacted and 3 become operative on or before January 1, 1996 Mi PROPOSED CONFERENCE REPORT NO. 1 SEPTEMBER 13, 1995 AMENDED IN ASSEMBLY JULY 12, 1995 AMENDED IN SENATE MAY 8, 1995 SENATE BILL No. 863 Introduced by Senaters 6rayen and Killeet Senator Craven February 23, 1995 An act to amend See6ens 2430 and 26988 e€; aftd to add Seetietts £7890.6; 27989:7, $7-889.8, aed $7-98913 te; the Government. Gede, relating to eetinty a4fees. add Section 29141.1 to the Government Code, to add Section 33670.9 to the Health and Safety Code, to add Section 96.16 to the Revenue and Taxation Code, and to amend the Budget Act of 1993 (Chapter 303 of the Statutes of 1995) by amending Item 6110 - 230 -001 of Section 2.00 thereof, relating to local government, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST SB 863, as amended, Craven. Gounty effiees Local government. (1) Existing law establishes various procedures and requirements with respect to the annual allocation of ad valorem property tax revenues derived from the ad valorem taxation of locally assessed property. This bill would modify the ' computations and allocations made in the County of Orange to reduce the property tax allocation to a flood control districtand a harbors, beaches and parks fund by $'4,000,000 each and require allocation of M S B 863 — ? — • monevs equivalent to that reduction to the County of Orange • , for each of the 1997 -98 to 2016 -16 fiscal years. 1 ' This bill would require the Orange Countv Redevelopment 1 Agency to transfer $'4,000,000 to the general fund of the c County of Orange in equal installments twice a Year for a period of 20 years. e (2) This bill would require the County of Orange to display • • s a specific notice on its property tax bills regarding the county a recovery, thus imposing a state - mandated local program. e (3) Item 6110 - 230 -001 of Section 2.00 of the Budget Act of E 1995 contained an appropriation of moneys to the State e Department ofEducation for transfer to Section A of the State School Fund for allocation by the Superintendent of Public Ej Instruction to school districts, county offices of education, and e other agencies for the purposes of specified educational h programs. This bill would amend the Budget Act of 1993 by amending Item 6110 - 230 -001 of Section 2.00 of the Budget Act of 1995 to e provide that of the funds allocated from thatitem forpurposes ofhome- to- school transportation, $4,000,000 shall be allocated . . to the Alameda County Office of Education for the purpose 4 of purchasing transportation services for elementary and secondary pupils on a one -time emergency basis. (4) This bill would sever any provision of this bill that is 4 held invalid, but that invalidity would not affect other e; provisions or applications that can begiven effect without the invalid provision or application. (5) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish e} procedures for making that reimbursement, including the ee creation of a State Mandates Claims Fund to pay the costs of t_n mandates that do not exceed $1,000,000 statewide and other ® N ee procedures for claims whose statewide costs exceed $1,000,000 E This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions. • . 1 2 -3— SB 863 00 (6) This bill would declare that its provisions would only become operative if SB 727, SB 1276, and AB 1664 of the 199�96 Regular Session are enacted and become operative on or before January 1, 1996. Existing law °• them the eew+tt beard of stiperwisers to eenseli e v=rAT effigies ir3 vefietts eembinatierts artd ifr ® ® speeified e:_eti: stare == A tet}g ether tags, existing law • therizes the beard of %tperoisers to eensehElate 2 er mere effiees wheft the eeettpant deer fret pessess wry of the required few the separate effigies if ee Elualifieatieft applies to all of the effigies ee tselidated artd the board fit3ds that sugieien+ del possessing the qualifiemiefts required awe empleyed in the eenselidated effiee as speeified. This autkeriastie, ie limited to eetinties hang a peptilatieft of 4,000,090 er mtere persens.. T449 bill wettid delete that pepulatiee limitatien.. Existing law attthewizes the eetint), beard of misers to establish the effiee of diweeter of f ranee subjeet to vetew appre% T gttestiets of whether the effiee, if established; 4*a4 be eleetiN,e er appeieted b;, the beard may afse be submit to . yeters at the same eleeNewr. This bill wettid preN,ide that ae5` person mety be appeieted by the beard of er be a eandidate few eleetien,, to © Q the effiee of the direeter of fittenee, eettgelidated f %&M ether efiiees purstmet to exis6 g lam if he er she meets the EIttalifieatiens fer the effiee of the direeter of Emisting law does met speeify qtta4ifieatiems of eetinty trcasttrer. This bill ivetrid autherize a eeunty beard of superNeisers to eneet art wee adepting eertain qualifieetions aed eentine4eg edueation reeptiremeftts fer the effiee of eettaty /� treasurer; eounty tam elleeter, er � cn #Pease Ae* Vote: majority. Appropriation: "yes. Fiscal committee: tae yes. State - mandated local program: "yes. The people of the State of California do enact as follows. •- - - - i�M1 0 , 0 SB 863 —4— 1 SECTION 1. It is the intent of the Legislature in 00 1 2 enacting this act that the Orange County Transportation 2 3 Authority continue to carry out the purposes of the 3 4 4 .dills- Alquist- Deddeh Act (Chapter 4 (commencing with 5 Section 99200) of Part 11 of Division 10 of the Public J 6 Utilities Code) as set forth in Section 99220 of that code. 6 7 In particular, the Legislature intends that the provisions 7 8 of this act shall not be utilized to justify, reductions in 8 9 existing bus and paratransit services. It is further the 9 10 10 intent of the Legislature that, prior tojanuarv1,1996,the 11 County of Orange and the Orange County 11 12 Transportation Authorityreport to the Legislature on the 12 13 steps taken to maintain adequate public transportation in 13 14 the County of Orange. 14 15 In enacting this act, the Legislature further recognizes 1� 16 that the County of Orange has developed a Consensus 16 17 County Recovery Plan that will permit the payment ofall 17 18 allowed vendor and labor claims and the repayment of m 18 19 indebtedness owed by the county due in the summer of 19 20 1996. • • 20 21 21 SEC. 2. The Legislature hereby finds and declares all 22 of the following. • 22 23 (a) The County of Orange go vernmentlacks sufficient 23 24 resources to Finance an acceptable plan of adjustment in bankruptcy 24 25 25 its pending case. 26 26 (b) On june27,1995, the voters of the county defeated 27 27 a proposed sales tax increase, indicating the public's 28 28 unwillingness to raise new revenue to Finance a plan of 29 29 adjustment. 30 30 (c) It is in the interest of the state and all public debt 31 issuers within the state to enable the county to finance an 31 32 acceptable plan of adjustment in order to improve the 32 33 33 credit standing of California public debt issuers and to • 34 34 preserve andprotect the health, safety, and welfare of the 35 residents of the county and the state. To that end, 35 36 36 successfully resolving the county bankruptcy and 37 37 restoring the Financial position of Orange County 38 38 government and thereby permitting the full 39 39 40 performance under the county's indebtedness is a matter interest 40 of statewide and concern. 0 LMI an he to he id. lid �rll 1 car • 0 0 • 0 -5- sB 863 1 (d) In the absence of some alternative source of 2 revenue not now available to the county, resources from 3 other governmental units within the county must be 4 transferred to the county to enable it to prepare, and 5 obtain confirmation of an acceptable plan ofadjustment. 6 (e) The transfer of resources to the county should be 7 designed to minimize the impact on affected entities. 8 (i7 The emergence from bankruptcy of the county 9 through the confirmation of an adequate plan of 10 adjustment will assist in the effectuation of the primary 11 purposes of the Community Redevelopment Law (Part 12 1 (commencing with Section 33000) of Division 24 of the 13 Health and Safety Code), including job creation, 14 attracting new private commercial investments, the 15 physical and social improvement of residential 16 neighborhoods, and the provision and maintenance of 17 low- and moderate - income housing. The attraction of 18 new businesses to redevelopment project areas depends 19 on the existence of an effective county government that 20 is not burdened by litigation and other requirements of 21 a bankruptcy proceeding. The payments to the county 22 pursuant to Section 33670.9 of the Heath and Safety Code 23 benefit redevelopment project areas and are deemed a 24 debt of the Orange County Development Agency to 25 repay the county for such general and specific benefits to 26 the redevelopment project areas previously provided by 27 the county. 28 SEC. 3. Section 29141.1 is added to the Government 29 Code, to read 30 29141.1. The property tax bill in the County of Orange 31 .shall include a statement with language to the effect that 32 a portion of the taxpayer's property taxes may be used to 33 implement the county recovery plan to emerge from 34 bankruptcy. This section shall not be required after these 35 revenues are no longer needed for this purpose. 36 SEC. 4. Section 33670.9 is added to the Health and 37 Safety Code, to read 38 33670.9. (a) For a period of 20 years commencing on 39 July 1, 1996, the Orange County Development Agency 40 shall transfer to the general fund of the County ofOrange oy =n t in • I • `ed 'c .i of �bt an he to he id. lid �rll 1 car • 0 0 • 0 -5- sB 863 1 (d) In the absence of some alternative source of 2 revenue not now available to the county, resources from 3 other governmental units within the county must be 4 transferred to the county to enable it to prepare, and 5 obtain confirmation of an acceptable plan ofadjustment. 6 (e) The transfer of resources to the county should be 7 designed to minimize the impact on affected entities. 8 (i7 The emergence from bankruptcy of the county 9 through the confirmation of an adequate plan of 10 adjustment will assist in the effectuation of the primary 11 purposes of the Community Redevelopment Law (Part 12 1 (commencing with Section 33000) of Division 24 of the 13 Health and Safety Code), including job creation, 14 attracting new private commercial investments, the 15 physical and social improvement of residential 16 neighborhoods, and the provision and maintenance of 17 low- and moderate - income housing. The attraction of 18 new businesses to redevelopment project areas depends 19 on the existence of an effective county government that 20 is not burdened by litigation and other requirements of 21 a bankruptcy proceeding. The payments to the county 22 pursuant to Section 33670.9 of the Heath and Safety Code 23 benefit redevelopment project areas and are deemed a 24 debt of the Orange County Development Agency to 25 repay the county for such general and specific benefits to 26 the redevelopment project areas previously provided by 27 the county. 28 SEC. 3. Section 29141.1 is added to the Government 29 Code, to read 30 29141.1. The property tax bill in the County of Orange 31 .shall include a statement with language to the effect that 32 a portion of the taxpayer's property taxes may be used to 33 implement the county recovery plan to emerge from 34 bankruptcy. This section shall not be required after these 35 revenues are no longer needed for this purpose. 36 SEC. 4. Section 33670.9 is added to the Health and 37 Safety Code, to read 38 33670.9. (a) For a period of 20 years commencing on 39 July 1, 1996, the Orange County Development Agency 40 shall transfer to the general fund of the County ofOrange oy SB 863 — 6— • 1 an amount equal tofourmillion dollars (54,000,000) a,vear 2 in two equal installments on June 15 and February 15 of . 3 each year. The Orange County Development Agency 4 shall not incur any obligation with respect to loans, 5 advances of money, or indebtedness, whether funded, 6 refunded, assumed, or otherwise, that would impair its 7 ability to make the foregoing transfers or that would 8 cause the foregoing transfers to violate Section 16 of 9 Article XVI of the California Constitution or subdivision 10 (b) of Section 33670. Funds allocated to low- and 11 moderate - income housing pursuant to Section 33334.2 12 shall not be used for purposes of this section. 13 (b) This section shall not take effect unless and until 14 (1) a plan of adjustment is confirmed in Case No. 15 SA- 94- 22272JRin the United Sta tes Bankruptcy Court for 16 the Central District of California or (2) a trustee is 17 appointed pursuant to Chapter 10 (commencing with 18 Section 30400) ofDivision 3 of Title 3 of the Government 19 Code. 20 21 SEC. 5. Section 9616 is added to the Revenue and Taxation Code, to read., • • 22 96.16. (a) Notwithstanding any other provisions of 23 this chapter, in the County of Orange, for the 1996 -97 24 fiscal year, the amount of property tax revenue deemed 25 allocated in the prior fiscal year to a flood control district • • 26 or a harbors, beaches and parks fund shall be reduced by 27 four million dollars ($4,000,000) each, and the amount of 28 property tax revenue deemed allocated in the priorfiscal 29 year to the county shall be increased by an amount equal 30 to the combined amount of those reductions. For each of 31 the 1997 -98 to 2015 -16 Fiscal years, inclusive, the auditor 32 shall allocateproperty tax revenues in those amounts that 33 fully reflect the modifications required by the preceding 34 sentence. 35 (b) For the 2016 -17 fiscal year and each fiscal year 36 thereafter, the auditor shall allocate property tax 37 revenues in those amounts that would be determined if 38 subdivision (a) had not applied to any prior Fiscal year. 39 (c) This section shall not take effect unless and until 40 (1) a plan of adjustment is confirmed in Case No. ! • 0 2 2 2 2 2' 3( 31 3( 3' 0 —7— ss 863 1 SA -94-22272 JRin the United States Bankruptcy Court for O F%c I �rIFTO� / /iCFr:nF nip %�o �iin ruin nr /�i� o Frr �oFan :c 0 0 0 96 3 appointed pursuant to Chapter 10 (commencing with 4 Section 30400) of Division 3 of Title 3 of the Government 5 Code. 6 SEC. 6. (a) In implementing Section 96.16 of the ® ® 7 Revenue and Taxation Code, the County of Orange shall 8 not adversely affect Santa Ana River flood control 9 projects. 10 (b) If any of the revenues from the propertv tax 11 reallocation specified in Section 33670.9 of the Health and 12 Safety Code or Section 96.16 of the Revenue and Taxation 13 Code are not forthcoming, the County of Orange shall use 14 county general fund moneys to cover any resulting 15 shortfall, as necessary. 16 SEC. 7 County revenues in the amount of the 17 revenues allocated, transferred to, or deposited with, the 18 County of Orange pursuant to the provisions of this act, 19 shall not be used or expended for any purpose other than 20 the satisfaction in full, adequate provision for the • • 21 satisfaction in full, or other consensual treatment of the 22 outstanding and allowed claims of county vendors, 23 employees, holders of short -term debt of the county, 24 holders of certificates of participation of the county on • • 25 account ofpast due lease obligations, holders of expenses 26 ofadministration in the county :v bankruptcy case, or costs 27 and expenses ancillary to the satisfaction of these claims, 28 and otherwise to perform the county's obligations 29 pursuant to a confirmed plan of adjustment. 30 SEC. 8. Item 6110 - 230 -001 of Section 2.00 of the 31 Budget Act of 1995 (Chapter 303 of the Statutes of 1995) 32 is amended to read. 33 0 0 0 96 SB 863 9 -8- 1 6110- 230-001 —For local assistance, Depart - 2 ment of Education, (Proposition 98) for 3 transfer to Section A of the State School 4 Fund, for allocation by the Superinten- 5 dent of Public Instruction to school dis- 6 tricts, county offices of education, and 7 other agencies for the purposes of the • • 8 Proposition 98 educational programs 9 funded in this item, in lieu of amounts 10 otherwise provided by statute ..... 2,017,804,000 11 Schedule: 12 (a) Programs ......... 2,017,804,000 13 (b) Reimbursements .. 0 14 Provisions: 15 1. The Superintendent of Public Instruction shall 16 take action, in a manner consistent with state 17 policy as expressed in statute and with the 18 purposes of this act, to ensure the orderly 19 administration of state - funded education 20 21 programs conducted by local agencies. The 1995 -96 fiscal year allocations of state aid for • • 22 these programs shall be in the same amounts 23 as the 1994 -95 fiscal year allocations, adjusted 24 as appropriated to reflect changes in other 25 state, federal, and local revenues, and the re- • • 26 direction of supplemental grant funds to 27 categorical programs pursuant to Section 15 of 28 Chapter 703 of the Statutes of 1992. The 29 Superintendent of Public Instruction shall 30 apportion funds from the program allocations 31 to each school district, county office of 32 education, or other agency in a manner 33 consistent with the policies, formulas, 34 regulations, and statutes governing those S 35 apportionments, including the appropriate 36 program provisions set forth in Senate Bill 89 37 of the 1995 -96 Regular Session as amended in 38 the Senate May 30, 1995. If the funds are less 39 than the amount neces- sary for these 40 programs, the superintendent shall apportion • 0 W11 M, 96 1 the deficiency on a proportional basis across 2 all programs. If the funding provided by this 3 item is greater than the amount necessary for 4 these programs, the Superintendent of Public 5 Instruction shall direct that the excess funds 6 be transferred by the Controller to the State • ® 7 Instructional Materials Fund for the 1995 -96 8 fiscal year for the purchase of instructional 9 materials for kindergarten and grades 1 to 8, i 10 inclusive, or grades 9 to 12, inclusive. 11 2. Notwithstanding any other provision of law, 12 not more than 15 percent of the amount i 13 apportioned to any school district, county 14 office of education, or other agency under this 15 item for any program may be expended by 16 that recipient for the purposes of any other 17 program for which the recipient is eligible for 18 funding under this item, except that the total 19 amount of funding allocated to the recipient • • 20 21 under this item that is expended by the recipient for the purposes of any program 22 pursuant to this item shall not exceed 120 23 percent of the amount of state funding 24 allocated pursuant to Provision 1 to that • • 25 recipient for that program for the 1995 -96 26 fiscal year. 27 3. The educational programs that are not eligible 28 for funding under this item are those 29 programs funded by the following items of the 30 Budget Act of 1991 (Ch. 118, Stats. 1991) : 31 Items 32 6110- 001 -001, 6110 -001 -178, 6110 -001 -231, 33 6110- 001 -231, 6110 -001 -344, 6110 - 001 -687. 01 0 34 6110- 001 -890, 6110 - 005 - 001,6110 -006 -001, 6110 35 - 006 -814, 6110 -008 -001, 6110- 015 -001, 6110- 36 021 -001, 6110 -101 -001, 6110 -101 -814. 6110 -101 37 -890, 6110 -106 -001, 6110- 113 -001, 6110-117 - 38 001, 6110 - 128 -890, 6110 - 129 -001, 6110 -136- 39 890, 6110 -141 -890, 6110-152-001,6110 . • 40 -156 -001, 6110 -158 -001, 6110 - 156 -890, 6110 -16 W11 M, 96 JB 603 - 10 - • • 0 -001, � A 6110- 161 -001, 6110 -161 -890, 6110 - 163 -001, 6110- 166 -890, 6110- 171 -178, 6110 -176 -890, 6110- 181 -140, 6110 -183 -890, 6110- 196 -001, 6110- 196 -890, 6110- 201 -890, 6110- 202 -001, 6110 -225 -001, 6110- 226 -001, and 6350 -101- 001. 4. Notwithstanding any other provision of law, in • • the case of the Oakland Unified School District, the Controller shall identify the 1993 -94 fiscal year as "the first full year of operations" for purposes of Section 42247 of the Education Code, provided that the amount of audited costs approved by the Controller for the first full year of operation shall not exceed $9,700,000. 5. The reduction of the maximum allowable building area for each applicant school district pursuant to Section 17746.8 of the Education Code shall be a permanent reduction to the district's eligibility for funding under Chapter • • 22 (commencing with Section 17700) of Part 10 of the Education Code. To the extent feasible, the reduction shall be applied to district projects that represent the same grade • • levels of the pupils for which the district is claiming funding pursuant to Section 42263 of the Education Code. 6. Local education agencies may use the authority granted pursuant to Provision 2 of this item to provide the funds necessary to initiate, to continue support following the three -year state grant period, or to expand, an existing Healthy Start program pursuant to Chapter 5 (commencing with Section 8800) of Part 6 of the Education Code. 7. Notwithstanding Provision 3 of this item, local education agencies may use the authority granted pursuant to Provision 2 of this item to provide the funds necessary to initiate a • O 0 0 0 6 QA • -11— ! • 1 conflict resolution program pursuant to 2 Chapter 2.5 (commencing with Section 3 32260) of Part 19 of the Education Code. 4 8. The amount appropriated by this item includes 5 funds for the Environmental Education 6 Program established by Chapter 4 • 7 (commencing with Section 8700) of Part 6 of 8 the Education Code and the School Based 9 Management Program established by Article 10 12 (commencing with Section 44666) of 11 Chapter 3 of Part 25 of the Education Code. 12 9. As a condition of receiving funding under this 13 item, by January 1, 1996, each school district i 14 that receives reimbursement for the costs of a 15 desegregation program shall submit to the 16 State Department of Education a baseline 17 profile of all schools supported with that 18 funding. This baseline profile shall include for 19 the preceding three years, or from the 20 inception of its program, whichever period of • • 21 time is shorter, all of the following 22 information: (a) available indicators of pupil 23 success at those schools, such as test scores, 24 graduation rates, or dropout rates: (b) an • • 25 indication of whether the desegregation 26 programs in question were entered into 27 voluntarily or for a court - related reason such 28 as a consent decree; and (c) available data on 29 the ethnic distribution of pupils. A school 30 district may submit evaluation reports that i 31 already exist or are otherwise required by a 32 court to comply with this requirement, i 33 provided that the reports contain the 34 information specified above. 35 10. For purposes of Section 42263 of the 36 Education Code, the statewide average cost 37 avoided per pupil for the 1995 -96 fiscal year, 38 shall be the amount determined for that 39 purpose for the 1994 -95 fiscal year, plus an 0 0 6 QA SB 863 . —12— I amount equal to 2.73 percent times the !; 2 amount determined for the 1994 -95 fiscal year. 3 11. The Legislature finds and declares that the 4 amount of $2,048,635 received by the San 5 Francisco Unified School District for the 6 1991.92 fiscal year as an overpayment 7 constitutes full and complete payment to the • . 8 district of all claims for desegregation costs for 9 the 1984 -85, 1985 -86, 1986 -87, 1987 -88, 1988 -89, 10 and 1989 -90 fiscal years. 11 12. Of the funds allocated from this item for 12 purposes of home -to- school transportation, 13 54,000,4100 shall be allocated to the Alameda 14 County Office ofEducation for the purpose of 15 purchasing transportation services for 16 elementary and secondary pupils on a 17 onetime emergency basis, including the 18 purchase of such services from a transit 19 district as defined in Section 24503 of the 20 21 Public Utilities Code. SEC. 9. The Legislature hereby finds and declares • • 22 that a general statute, within the meaning of Section 16 23 of Article IV of the California Constitution, cannot be 24 made applicable due to the uniquely severe fiscal crisis 25 being experienced by affected local agencies. and that, • • 26 therefore, this special statute is necessary. 27 SEC. 10. The provisions of this act are severable. If 28 any provision of this act or its application is held in valid, 29 that invalidity shall not affect other provisions or i 30 applications that can be given effect without the invalid 31 provision or application. 32 SECC, 11. Notwithstanding Section 17610 of the 33 Government Code, ifthe Commission on State Mandates 34 determines that this act contains costs mandated by the • 35 state, reimbursement to local agencies and school 36 districts for those costs shall be made pursuant to Part 7 37 (commencing with Section 17500) of Division 4 of Title 38 2 of the Government Code. If the statewide cost of the 39 claim for reimbursement does not exceed one million M •�o ,s • . S s f 0 6 0 0 - 13— 1 dollars ($1,000,000), reimbursement shall be made from 2 the State :Mandates Claims Fund. 3 Notwithstanding Section 175 80 of the Government 4 Code. unless otherwise specified, the provisions of this act 5 shall become operative on the same date that the act 6 takes effect pursuant to the California Constitution. 7 SEC. 12. This act shall become operative only if 8 Senate Bill 727 of the 1993 -96 Regular Session, Senate Bill 9 1276 of the 1993 -96 Regular Session, and Assembly Bill 10 1664 of the 1993 -96 Regular Session are all enacted and 11 become operative on or before January 1, 1996. 12 is amended to reade 13 21386. If the hear -d of s er isers eettselidates two er 14 more ef%ees iger-5tiant to statute er eharter; the eeettpaftt 15 of the e&neeiideted effiee need fret pessess and of the 16 qualifieations r-eeptireEl of the eeettpemt of any of the 17 separate effiees that are eensokdated if teeth of the 18 f;aflewittg eenditieos are feet- 19 {a} ?re Ejttalifiea4e e applies to a4 of the e€fiees 20 eeftselidated. 21 +b+ The beard finds thatfneierR persennei 22 pessessing the required are empleyed ie 23 the eenselidated effiee to assm -e that deeisiens made bN- 25 the ad�c� effiee are based eefftpeterrt 26 This seetien deer net per -mit the eeetfpant of the 27 eenselidated effiee to praetiee and prefession or trade fer 28 the praeSee of •eh a heense, permit, or regi5trat4en ie 29 ioettired withent that keease, permit, er 30 Ste. $: Seetien $6989 of the Geyernment Gede is 31 amended to read- 32 £6980. Pte beard of sttperN,isers of any eetotti° ffmy 33 establish the effiee of direeter of 34 {a} The heard of supervisors shad sit to the 35 eleeters of the eefrnty the question of whether the effiee 36 of direetor of iinaeee shag he established. 14 a majerit3, of 37 the voters veting en the questien et that eleet en fever the 38 establi5hffi of the effiee, the heard of sapervisors shad 39 by or-Elifta r ereate the effiee. 56 SB 863 —14— OWN 1 -(4 The board e€ superwisers 4 that eleet� FRay else '^i 0 - veters the Ejuestiett ef whethet: - - - the rveters veting -- - er-eating the affiee, • pet-son fftay 19pe appointed by the board of 9 or be a eandidate for eleetion, 11 pursuant to this ehapter, if he or she meets the 12 qualifieatieng far the effiee of the direeter of fittanee. 13 &F7G- t3- Seetieft 2;900.6 is added te the Gover-nment. 15 0000.6. The preNcisiens of Seetions 00004, 0000.8, 16 aed .... shall beeente aftly ift these eettnties 17 in whieh, prior to the first date of t4te period fer ftliftg . deelara6ens ef eandid or 21 regelar meeting with A members present, eftaet att 23 et-dinanee ffmy be repealed by thebeard of supervigerg 94 24 afty time. 25 SEG. 4- Seetiett B;OW.; is added to the GeN,ermffient. 26 Gede-, to read- ... _ person shall hereafter be eligible for ' - urtless any of the fellewitt applies, Y 36 atiditerieentraller, or the ehie deptAy or a" assistant ift 37 these offieeg. 39 masters, or deeteral degree from aft aeeredited -e-elle-Pe 0 ... . .. SNIP IWI NMI 1 - �" zkiiai SB 863 25 deemed s yielat4en e€ this v 2-7000.9 is added to the Govermffient. • .... Netwithstaftdiftg - - beginning ... - eentitteing _ ._ - stieeessfully eempleted - 15 eensisting e&, e,+ et tniftitntifa, 24 hours e4a aft eqttiN,eAent • both efferted by ia reeegnized - -- • iftstitote, eT- aeeredited eellege er tiftivergity, dwA - willft4 er ae,9-&,-wertt - 25 deemed s yielat4en e€ this v E PROPOSED CONFERENCE REPORT NO. 1 SEPTEMBER 13, 1995 AMENDED IN ASSEMBLY AUGUST 24, 1995 AMENDED IN ASSEMBLY JULY 14, 1995 AMENDED IN SENATE MAY 26, 1995 AMENDED IN SENATE MAY 18, 1995 SENATE BILL No. 1276 Introduced by Senator Killea February 24, 1995 An act to amend Seetiefts 44740-,16:743, aftd i7-3gg ef-, aftd t-& add Seetiens 16:731.6 afd 16781.6 te; the Gelvernmetti Gede, relating to state bends and eetes, aid deelar-ieg the tir-geefy tberee€ to take ef€eet add Chapter 10 (commencing with Section 30400) to Division 3 of Title 3 of the Government Code, and to add and repeal Section 2128 of the Streets and Highways Code, relating to local government finance, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST SB 1276, as amended, Killea. Genera} ebligatien bends. eerm =:ereia: wee Local government. (1) Existing law requires the board of supervisors to generally administer the affairs of county government. This bill would authorize the Governor to appoint an individual to serve as trustee for the County of Orange if the county board supervisors of the county has not filed a plan of 94 SB 1276 0 —2— adjustment with the bankruptcy court b january 1, 1996 The bill would require that a trustee be appointed notwithstanding the timely filing of plan if, as ofMa t-1, 1996, the Governor makes a determination, after consulting kith specified individuals, that there is no substantial agreement on the terms of the plan of adjustment and the timelc, confirmation of the plan is unlikely. The trustee would be a state public official and would serve at the pleasure of the Governor. This bill would prescribe duties of the trustee, including transferring statutory powers of the county board of supervisors to the trustee, emploving necessary staff, and issuing specified forms of debt. (2) Existing law apportions funds to each county from the Highway Users Tax Account in the Transportation Fiend for county road projects. This bill would, if a plan of adjustment is confirmed in a specified bankruptcy case ora trustee is appoin tedas specified in (1) above, apportion x'1,916,667 during each calendar month commencing with July 1997 and ending June 2013 to the Orange County Transportation Authority instead of the county, thus constituting an appropriation, with the remaining apportionments to be paid to the County of Orange. (3) This bill would sever any provision of this bill that is held invalid, but that invalidity would not affect other provisions or applications that can be given effect without the invalid provision or application. (4) This bill would declare that its provisions would oniti- become operativeifSB 727, SB 863, and AB 1664 of the 1995 -96 Regular Session are enacted and become operative on or before January 1, 1996. {}} Exfisting law }revides for rv,aeieos preeedwes aed metes with respeet to State G aek bond aet has a f namee eemmittee, of ether- beds er-eated bi, the aet and is atitherized to eause bends to be issued bv the of a r-eseletien e+ Th6 W4 would a feP ^'ter feeeElw-es to existifg genem! abligatieit bend 6w ppeeedures aid per-mit a eefftmittee to issee a$ of pa T4 of the bends pied to be issued by the befcd aet as jai paF Metes; stti�eet to 94 U 0 0 0 0 • l• 0 0 s to nrit e be . R' et to Q, —3— 0 Vote: .. es yes. State-mandated local program: • SB 1276 s►f►ee of notes aeeer-danee w4h se 9peeified' is to take e€feet Fiscal committee: The people of the State of California do enact as follo►r s: 1 C°`�"r � Seetion }67}.6 1s added to the 2 SECTION 1. It is the intent of the Legislature in 3 enacting this pact that the Orange County Transportation 4 Authority continue to carry out the purposes of the 5 Mills - Alquist- Deddeh .-act (Chapter 4 (commencing with 6 Section 99200) of Part 11 of Division 10 of the Public 7 Utilities Code) as set forth in Section 99220 of that code. 8 In particular, the Legislature intends that the provisions 9 of this act shall not be utilized to justify reductions in 10 existing bus and paratransit services. It is further the 11 intentof the Legislature that, prior tojanuary1,1996,the 12 County of Orange and the Orange County 13 Transportation Authority a•(�port to the Legislature on the 14 steps taken to maintain ad oquate public transportation in 15 the County of Orange. SB 1276 • —4— 0 1 In enacting this act, the Legislature further recognizes • • 2 that the County, of Orange has developed a Consensus 3 3 County Recovery Plan that will permit theprt►ment ofall 4 4 allowed vendor and labor claims and the repa►ment of 5 indebtedness owed by the county due in the scrmrner of 6 6 1996. 7 7 SEC. 2. The Legislature hereby• finds and declares all 0 0 8 8 of the following: 9 9 (a) The County of Orange government lacks suffi 'cient 10 10 resources to finance an acceptable plan of adjustment in 11 11 its pending bankrupts tiv case. 12 12 (b) OnJune27,199i, the voters of the county defeated 13 13 a proposed sales tax increase, indicating the public's 14 14 unwillingness to raise new revenue to finance a plan of 15 15 adjustment. 16 16 (c) It is in the interest of the state and all public debt 17 17 issuers within the state to enable the count► - to finance an 18 18 acceptable plan of adjustment in order to improve the 19 19 credit standing of California public debt issuers and to 20 20 preserve and protect the health, safett ; and it -elfare of the • • 21 21 residents of the county and the state. To that end, 22 22 successfully resolving the county bankruptcy and 23 23 restoring the financial position of Orange Couniv 24 24 government and therebv permitting the full • • 73 25 performance under the county' indebtedness is a matter 26 26 of statewide interest and concern. 27 27 (d) In the absence of some alternative source of 28 28 revenue not now available to the county; resources from 29 29 other governmental units within the count- must be 30 30 transferred to the county to enable it to prepare, and 31 31 obtain confirmation of, an acceptable plan of adjustment. 32 32 (e) The transfer of resources to the count►- should be 33 33 designed to inhibnize the impact on affected entities. 34 34 (f) The emergence from bankruptcy of the county • © 35 35 through the confirmation of an adequate plan of 36 36 adjustment will assist in the effectuation of the primary 37 37 purposes of the Community Redevelopment Law (Part 38 38 1 (commencing with Section 33000) of Division 24 of the 39 39 ffealth and Safety Code), including job creation, • 40 ,rttracting new private commercial investments, the 94 ,r C 0 a� 0 0 —5— 0 SB 1276 1 phvsical and social improvement of residential 2 neighborhoods. and the provision and maintenance of 3 low- and moderate - income housing. The attraction of 4 neuy businesses to redevelopment project areas depends S on the existence of an effective county government that 6 is not burdened by litigation and other requirements of 7 a bankruptcv proceeding The payments to the countv 8 pursuant to Section 33670.9 of the Heath and Safety Code 9 benefit redevelopment project areas and are deemed a 10 debt of the Orange Counts- Development Agency to 11 repel v the county for such general and specific benefits to 12 the redevelopment project areas previously pros ided by 13 the counts. 14 SEC. 3. Chapter 10 (commencing with Section 30400) 13 is added to Division 3 of Title 3 of the Government Code. 16 to read: 17 18 CHAPTER 10. OR.4.vcE COL_N-TY FI_V,4ACIAL COATROL 19 20 30400. (a) It is in the interest of the state and all 21 public debt issuers within the state to enable the County 22 of Orange to finance an acceptable plan of adjustment in 23 order to improve the credit standing of California public 24 debt issuers and to preserve and protect the health, 25 safety, and welfare of the residents of the countv and the 26 state. To that end, successfully resolving the county 27 bankruptcv and restoring the financial position of county 28 governmentisa matter ofstateivideinterestand concern. 29 (b) As a further guarantee that the county will be able 30 to prepare and obtain confirmation ofan acceptable plan 31 of adjustment, it is appropriate to create a back-up. 32 mechanism for appointment of state trustee. 33 (c) It is in the fuurther interest of the state to facilitate 34 and expedite the confirmation of an acceptable plan of 33 adjustment b1- i•estingin a state trustee the authority and 36 discretion to present and enforce certain claims held by 37 cities, public districts. or local agencies against the county. 38 30400.3. For purposes of this chapter, the following 39 words have the folioicing meanings. 94 SB 1276 • —6— 1 (a) "Confirmation of the plan "means confirmation of • . 1 2 the plan ofadjustment pursuant to Section 943 of Title 11 2 3 of the United States Code. 3 4 (b) "County" means the Countv of Orange. 4 5 (c) `Investment pools case" means Case Ao. 5 6 S.9- 94- 22273JRin the United States Bankruptcr- Court for 6 7 the Central District of California. C) 7 8 (d) "Pending case "means Case A o. S.4 -94- 22272 JR in 8 9 the United States Bankruptcy Court for the Central 9 10 District of California. 10 11 (e) "Plan of adjustment" means a plan of adjustment I 11 12 as that term is used in Sections 941 and 942 of Title 11 of 12 13 the United States Code, that contains provisions 13 14 ,substantially similar to the terms of the counts, consensus 14 15 recovery plan, as specified in the Joint . 4greement of the I 1 16 County of Orange, the Official Investment Pool 17 Participants' Committee and Each Option .4 Pool 17 18 Participant 'for Resolution of All Claims Against the 18 t� 19 County of Orange, September 6, 199. 19 p 20 (f) "Specified county officers "means the treasurer -tax . , 20 s` 21 si 21 collector, auditor, chief executive officer, and assessor. 22 (g) "Trustee" means the person appointed bti° the 22 23 23 Governor pursuant to Section 30401. 1. 24 30401. (a) If the county has not filed a plan of 24 e • , 25 t. 23 adjustment with the bankruptcy court b.v january 1.. 1996, 26 the Governor may appoint an individual to serve as 26 a 27 c 27 trustee of the county. The appointmentmav occur at any 28 time afterjanuary 1, 1996, until confirmation of the plan. 28 29 Notwithstanding the timely filing of plan ofadjustment, 29 c 30 the Governor shall appoint a trustee if the Governor 30 s 31 31 determines that, as ofMav 1, 1996, or any date thereafter, CC 32 the parties specified below have failed to reach II 32 c 33 substantial agreement on the terms of the plan of 4 33 1 ® 34 1 34 adjustment and the timely confirmation of the plan 35 appears unlikely. Before reaching the foregoing j 35 36 36 determination, the Governor or his or her designee shall 37 37 first consult with (1) the specified county officers and the 38 ' 38 board of supervisors, (2) the Official Committee of 39 39 Unsecured Creditors of the County of Orange appointed 40 in the pending case, and (3) the Official Committee of • 40 M 94 � — 7 — ! SB 1276 tion of 1 • 1 Investment Pools Participants appointed in the Fitle 11 2 investment pools case. The trustee is a public official of 3 the state and shall serve at the pleasure of, and is 4 responsible to, the Governor. o No. 5 (b) The trustee shall have recognized expertise in rurtfor 6 management and public finance. , 7 © (c) The trustee shall report to the Goc -error on actions 2JR in 8 taken by the county to institute a financial plan, to entral 9 implementa balanced budget, and to resolve the pending 10 case, including actions to reduce county expenditures or stment 11 increase countv revenues and theamountoftheresulting e 11 of 12 expenditure reduction and revenue increase. I isions 13 (d) The trustee shall pros ide an annual report to the senses 14 Legislature concerning the financial affairs of the countv% of the 15 (e) The trustee may institute a financial plan for the Pool 16 county if the county fails to present a balanced budget. Pool 17 (1) In implementing a financial plan for the counts; st the 18 the trustee may exercise all necessary and appropriate 19 powers of the county board of supervisors.. subject to the -er -tax 20 same legal limitations that apply to the board of ssor. 21 supervisors. w the 22 (g) The trustee shall exercise the powers granted 23 pursuant to this chapter for an emergency period that fan of 24 ends upon the adoption, after the appointment of the ,1996, 25 trustee, of two consecutive balanced final budgets and -ve as 26 achievement of two positive audited fund balances. as at anv 27 determined by the Governor or his or her designee. plan. 28 30402. (a) If a trustee is appointed pursuant to this went, 29 chapter, all powers granted to the county board of ' ernor 30 supervisors, including, but not limited to, those powers after, 31 granted by Section 2930.3, shall be withdrawn and reach 32 delegated to the trustee. However, the trustee mat - an of o 33 • 34 provide for the continued exercise of all or specified by board Further, the plan powers the of supervisors. trustee going 35 shall oversee the pending case and may• exercise the shall 36 county's right to file a plan of adjustment id the 37 (b) Hat any time, in the discretion of the trustee, after ee of 38 consultation with (1) the specified county officers and the Hinted 39 board of supervisors, (2) the Official Committee of `ee of , ' 40 Unsecured Creditors of the County of Orange appointed 94 � SB 126 • —g_ 1 in the pending case; and (3) the Official Co,nmittee of • . 2 Investment Pool Participants appointed in the 3 investment pools case, the trustee determines that the 4 continued exercise of specified powers b � - the board of 5 supervisors is not conducic-e to the most effective action 6 for resoh Mg the pending case, the trustee shall reassume 7 those powers. 8 Upon • (c) termination of the emerge.17cy period 9 specified in subdi t ision (g) of Section 30401 all po i i -ers 10 otherwise granted to the board ofsuperc isors shall rei-ert 11 to the board ofsupervisors. 12 30403. (a) The trustee may emplo j, any staff 13 necessary to assist him or her. 14 (b) To facilitate the appointment of the trustee and 15 the employment ofanv necessary staff, for the purposes 16 of this section, the trustee is exempt from the 17 requirements of Article 6 (commencing with Section 18 999) of Chapter 6 of Division 4 of the _tlilitary and 19 Veterans Code and Part 2 (commencing with Section 20 10100) of Division 2 of the Public Contract Code. 21 (c) :Notwithstanding any other provision of law-, the . • 22 trustee may appoint employees of the state to assist the 23 trustee for up to the duration of the trusteeship. The 24 salary and benefits of the employees shall be established 23 by the trustee and paid by the county. During the time e • 26 of the appointment, the employees shall be deemed to be 27 employees of the county but shall remain in the same 28 retirementsystem under the samep lanasif the emplovee 29 had remained an employee of the state. Upon the 30 expiration or termination of the appointment, the 31 employee shall have the right to return to his or her 32 former position, or to a position at substantialh, the same 33 level as that position, with the state. The time served in 34 th e app oin tm en t shall b e co un te d for all p urp oses a s if th e • • 35 employee had served that time in his or her former 36 position with the state. 37 30404. (a) The trustee may issue or execute and 38 deliver for and in the name and behalf on of the county, 39 any of the following forms of debt or other obligations: 94 0 • 11 C 0 X F, 1 LJ 0 —9— 0 SB 1276 1 (1) _Votes, tax anticipation warrants, or other 2 evidences of indebtedness pursuant to .article 7 3 (commencing with Section 33820), Article 7.3 4 (commencing with Section 33840), or Article 7.6 5 (commencing with Section 53850) of Chapter 4 of Part 1 6 of Di t ision 2 of Title 5 7 (2) Grant anticipation notes pursuant to Article 7.7 8 (commencing with Section 33859) of Chapter 4 of Part 1 9 of Division 2 of Title 5 10 (3) Revenue bonds pursuant to Chapter 6 11 (commencing with Section 34300) of Part 1 of Division 2 12 of Title 3. 13 (4) Refunding bonds pursuant to Article 9 14 (commencing with Section 53550) or Article 10 15 (commencing with Section 53570) of Chapter 3 of Part 1 16 of Division 2 of Title 5. 17 (3) Certificates of participation or lease revenue 18 bonds to finance the lease or lease purchase ofproperty 19 and for this purpose may lease property, for and in the 20 name and on behalf of the County of Orange, to or from 21 any other public or prig ate entity. 22 (b) If the trustee issues notes, tax anticipation 23 warrants. or anv other evidence ofindebtedness or other 24 obligation pursuant to subdiinsion (a), the trustee may 25 provide, in the terms of the issuance, for the pledge ofan ti, 26 taxes, income, revenue, cash receipts, rents, or other 27 moneys of the county, including moneys deposited in 28 inactive or term deposit accounts, or rights to receive the 29 same, to the extent.that the taxes, income, revenue, cash 30 receipts, rents, or other moneys could have been used to 31 payprincipal or interest on theissuance. Thepriorityand 32 perfection ofthe pledge shall be governed by Chapter 3.3 33 (commencing with Section 3450) of Division 6 of Title 1. 34 30405. (a) If a trustee is appointed pursuant to this 35 chapter, the trustee may assume and exercise, solely to 36 the extent necessary to prevent denial of confirmation of 37 the plan of adjustment and consistent with the interests 38 of the state to promote the timely confirmation of the 39 plan, the follouirngspecified powers of those cities, public 40 districts, or other governmental agencies holding claims 94 Jli 1;276 —10— 1 against the coin • based upon in vestment lo• s incurred • . 2 or derived from the failure of the Orange County 3 Investment Pools: 4 (1) The authority to vote to accept or reject the plan 5 of adjustment filed by the county in the pending case, or 6 to change or withdra w such an acceptance or rejection. 7 (2) The authority to subordinate or otherwise • 8 restructure the claims specified in this subdivision against 9 the county. 10 (3) The authority to take actions in the pending case 11 that are consistent with the timely confirmation of the 12 plan. 13 (4) Other powers that are necessary and proper to 14 execute the authority conferred by this section. 13 (b) In exercising the authority conferred by 16 subdivision (a), the trustee shall be serving the public ' 17 purpose of a speedy and just resolution to the pending 18 case. To that end, the trustee shall not act in a manner 19 inconsistent with the fair treatment ofanyparties subject 20 to this section. 21 30406. The provisions of this chapter are severable. If 22 any provision of this chapter or its application is held 23 invalid, that invalidity shall not affect other provisions or 24 25 applications that can be given effect without the invalid provision or application. • O i 26 SEC. 4, Section 2128 is added to the Streets and 27 High wa vs Code, to read 28 2128. (a) :Notwithstanding any other provision of 29 this chapter, the apportionments that would be made to 30 the County of Orange under this chapter shall be 31 apportioned as follows. 32 (1) The Orange County Transportation Authority 33 shall be paid one million nine hundred sixteen thousand 34 six hundred sixty -seven dollars ($'1,916,667) during each 33 calendar month commencing July 1997, and endingJune 36 2013. 37 (2) All remaining apportionments shall be paid to the 38 county at the time each apportionment would have been 39 made to the county. 94 • • — 11— SB 1276 ` • 1 (b) Subject to subdivision (c), this section shrill 2 become operative July 1, 1997, . and shall become 3 inoperative on June 30. 2012. and as ofjanuary 1, 2013. is 4 repealed . unless a later enacted statute, that becomes 5 operative on or before januarv- 1.2013. deletes or extends 6 the dates on which it becomes inoperative and is ® © 7 repealed. 8 (c) This section shall not take effect unless and until 9 (1) a plan of adjustment is confirmed in Case No. 10 S.4- 94- 22272JRin the Lnited StatesBankruptcvCollrtfor 11 the Central District of California or (2) a trustee is 12 appointed pursuant to Chapter 10 (commencing with 13 Section 30400) of Division 3 of Title 3 of the Government 14 Code. 15 SEC. 6. The Legislature herebv� finds and declares 16 that a general statute, within the meaning of Section 16 17 of Article IV of the California Constitution. cannot be 18 made applicable due to the uniquely severe fiscal crisis 19 being experienced by the Countv of Orange. and that. • 20 therefore, this special statute is necessarv. SEC.6. The 21 pro visions of this act aresec-erable.Ifally- 22 provision of this actor its application is held invalid. that 23 invaliditv shall not affect other provisions or upplicat1O11.': ® • 24 25 that can be given effect without the invalid provision or application. 26 SEC. 7 This act shall become operative onlvifSendte 27 Bill 727 of the 1993 -96 Regular Session, Senate Bill 863 of 28 the 1996 -96 Regular Session, and AssemblvBill1664 of the 29 1995 -96 Regular Session are all enacted and become 30 operative on or before january 1, 1996. 31 ant fie; to read 32 {a} Netwithstand4ftg amry ether revision of 33 this ehs}ster; atid as an altemative to the preeedttres set Q Q 34 ferth in Seetien 16731, theeernmittee ffmki° previde fe+ tfre 35 issmaFtee of aA et part of the bends armed to he issue 36 as eozirrnci eisri metes- I me ee -tee ska4 a a 37 r-eselutiem finding that issuanee of the bonds im the fer>:m 38 e€ eemmettiai paper metes ie **_eee„-sash *nd desirable, 39 direetimg the to arrange few preparatiem of the ® • 40 requisite mtfnber 4 suitable meter tH+d speei€yimg ether- S B 13ifi • — 12— authevized - - - - the - - - etitstanding a+ &nN- ene 4tfte ttp to 1 afftetint issue &effi time te tifne ffiety be so-4 bj.v the - one tiffie-T-her-eselutio skttl4inelude • affiount b-y the eemffiAtee - ffiade ttpaft 1 deffiand fer the eefftffiereial paper- n9tes. whenever -- eommittee deterfflines te isstie 24 with the requirements ef Seetien 16:732. • interest payment de+es applieable te t4ie 27 paper metes. GefftmereieA paper netes ffifts, beef tt state 29 rates fft&y be the tifne - - 1 ef eemmereW paper netes. The Fete of interest berne - 33 ehapter, whettewr the eatmnittee Eletermittes . Q 94 i Al C% N • i i u 4 -D 6 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 -j 26 27 78 79 30 31 32 33 34 33 36 J! 38 39 40 C,4 1 - -- -- - - - - - - •. - MR. z -- - _ C,4 94 1 - - - - - - .. - -- -- - -- - - - - -- - -- 1 - -------------- - - . U1 94 0 0 —15— SB 1276 O 0 1 .4 i e • _ the - - _ may, be _ _ _ - - +2+ may be payable order- 14 bearer, J* fftay be in afty dettefaiftatien-, +4* may beff 17 preN,ided therein, +&* ffmy be payable eft et fixed dete ot _ _ - state er - the _ 22 the program ef eemmereial paper. 23 &Fe&.6- T-hiseetisaotit-gene5,statttteneeessar�,fef the 27 eenstilvating the neeessity are, 28 Ift order theA the State of Galiferni ffia-y have the afkoet _ _ '•1%f O 0 1 .4 0 0 Assembly Bill No. 200 CHAPTER 748 An act to amend Sections 25350.6, 23330.7, 25330.8, 25330.9, 25350.10. 29630.5, 30400, and 30400.3 of the Government Code, and to amend Section 2128 of the Streets and Highways Code, relating to local agencies, and making an appropriation therefor. (Approved by Governor October 9, 1993. Filed µith Secretary of State October 10, 1993.1 LEGISLATIVE COUNSEL'S DIGEST AB 200, Brewer. Local agencies. ( 1) Existing law pledges motor vehicle license fee funds to which Orange Countv may be entitled to all certificates of participation or lease revenue bonds issued during 1995 or 1996. This bill would instead pledge these moneys to certificates of participation or lease revenue bonds executed and delivered or issued, as the case may be, during 1996 or 1997. The bill would specify that Line refunding obligations executed and delivered or issued under these provisions may not have a final maturity later than.the final maturity of the refunded obligations. The bill would make similar conforming changes to provisions proposed to be added by AB 1664 of the 1995 -96 Regular Session with regard to funds to which the county is entitled under the Bradlee -Burns Uniform Local Sales and Use Tax Law. (2) Existing law requires the board of supervisors to generally administer the affairs of county government. This bill would revise provisions for the appointment of a county trustee in Orange County, proposed by SB 1276 of the 1995 -96 Regular Session, to redefine the plan of adjustment that the trustee may work to confirm. (3) Existing law apportions funds to each county from the Highway Users Tax Account in the Transportation Fund for county road projects. This bill would revise the dates during which 81,916,667 per year of these funds would be apportioned to the Orange County Transportation Authority instead of the county, as proposed by SB 1276 of the 1995 -96 Regular Session, to conclude on June 30, 2013, rather than June 30, 2012, thus constituting an appropriation. (.4) The bill would provide that it would not become operative unless AB 1664, SB 863, and SB 1276 are enacted and becomes operative on or before January 1, 1996. Appropriation: yes. 91 Ch. 748 • — 2— • The people of the State of California do enact as follows: SECTION 1. Section 23350.6 of the Government Code is amended to read: 25350.6. (a) Moneys credited to the Motor Vehicle License Fee Account in the Transportation Tax Fund to which Orange County may at any time be entitled shall be pledged, without any necessity for specific authorization of the pledge by the board of supervisors, to all certificates of participation or lease revenue bonds executed and delivered or issued, as the case may be, during 1996 or 1997, including obligations executed and delivered or issued before 2010 to refund those certificates of participation or lease revenue bonds, to finance or refinance the lease or lease - purchase of property of the county and having a stated maturity of 20 years or more. Any refunding obligations shall not have a final maturity later than the final maturity of the refunded obligations. The amount so pledged with respect to any fiscal year of the county shall not exceed the amounts to be paid in that Fiscal year on those certificates or lease revenue bonds. (b) The state hereby covenants with the holders of any certificates of participation or lease revenue bonds, including refunding obligations, entitled to the pledge granted by this section that, as long as any of the certificates of participation or lease revenue bonds entitled to the pledge granted by this section shall remain outstanding, the state shall not alter or amend the deposit of moneys into, or the allocation of moneys credited to, the Motor Vehicle License Fee Account in the Transportation Tax Fund under Chapter 5 (commencing with Section 11001) of Part 5 of Division 2 of the Revenue and Taxation Code in anv manner that would adversely affect the security of, or the ability of the county to pay the principal of and interest on, the certificates of. participation or lease revenue bonds entitled to the pledge granted by this section. However, nothing precludes any alteration or amendment if and when adequate provision has been made by law for the protection from impairment of the contract represented by the certificates of participation or lease revenue bonds, and the right to so alter or amend is hereby reserved. The County of Orange may include this covenant of the state in the agreements or other documents underlying the certificates of participation or lease revenue bonds. SEC. 2. Section 25350.7 of the Government Code, as proposed to be added by Assembly Bill 1664 of the 1993 -96 Regular Session, is amended to read: 25350.7. (a) Prior to entering into an agreement to finance the lease or lease- purchase of property through the execution and delivery or issuance, as the case may be, of certificates of participation or lease revenue bonds, the board of supervisors of the County of 91 -3— 0 Ch. 748 Orange may elect, by resolution, to guarantee payment under that financing agreement in accordance with the following: (1) If the county elects to participate under this section, it shall provide notice to the Controller of that election, and the notice shall include a schedule for the payments to be made by the county under that financing agreement and identify a trustee appointed by the county for the purpose of this section. (2) In the event that, for any reason, the funds available to the county will not be sufficient to make any payment under the financing agreement at the time that payment is required, the county shall so notify the trustee and deliver to the Controller a duly certified copy of the resolution of its board of supervisors adopted pursua. -it to Section 29330.5. The trustee shall immediately communicate that information to the affected holders of certificates of participation or bondholders and to the Controller. (3) When the Controller receives notice from the trustee, and a copy of the resolution from the county, as described in paragraph (2) , or, after having adopted the resolution specified in paragraph (2), the county fails to make any payment under the financing agreement at the time that payment is required, the Controller shall make an apportionment to the trustee in the amount of that required payment for the purpose of making that payment. The Controller shall make that payment only from moneys to be transmitted to the county by the State Board of Equalization under Section 7204 of the Revenue and Taxation Code, that are derived from that portion of the sales and use taxes imposed by the county in excess of 1 percent, pursuant to Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code, and that are permitted to be deposited in the general fund of the county pursuant to Section 29530.5. The Controller shall thereupon reduce, by the amount of the payment, the subsequent amounts to which the county would be entitled under that section. (b) As an alternative to the procedure set forth in paragraphs (2) and (3) of subdivision (a), the board of supervisors may, on or after the date of adoption by the board of the resolution specified in Section 29530.3, provide a transfer schedule in a notice to the Controller of its election to participate under this section. The transfer schedule shall set forth the amounts to be transferred to the trustee and the date or dates for the transfers, and the Controller shall, subject to the limitations in the second and third sentences of paragraph (3) of subdivision (a) , make apportionments to the trustee in those amounts on the specified date or dates for the purpose of making those transfers. (c) In the event that, for any reason, the county is no longer obligated, for any period, to make all or a portion of the payments with respect to the lease or lease- purchase financed through the execution and delivery or issuance, as the case may be, of certificates 91 Ch. , 48 • —4— . of participation or lease revenue bonds, the trustee shall so notify the affected holders of certificates of participation or bondholders and the Controller. Upon receipt of the notification, the Controller shall cease making the transfers. If, after the giving of the notice, the obligation of the county to make payments with respect to the lease or lease - purchase financed through the execution and delivery or issuance of certificates of participation or lease revenue bonds is restored, the trustee shall so notify the affected holders of certificates of participation or bondholders and the Controller. Upon receipt of the notification, the Controller shall resume making the transfers. (d) Any election made by the county pursuant to this section shall be in addition to any other election made by the county pursuant to any other applicable provision of law to guarantee the obligation of the county to make payments with respect to the lease or lease - purchase of property financed through the certificates of participation or lease revenue bonds. SEC. 3. Section 23350.8 of the Government Code, as proposed to be added by Assembly Bill 1664 of the 1993 -96 Regular Session, is amended to read: 25350.8. (a) Taxes collected by the State Board of Equalization pursuant to Section 7204 of the Revenue and Taxation Code, that are derived from that portion of the taxes imposed by the County of Orange in excess of 1 percent pursuant to Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code, and that are permitted to be deposited to the general fund of the county pursuant to paragraph (1) of subdivision (a) of Section 29530.5 shall be pledged, without the necessity for specific authorization of the pledge by the board of supervisors, to all certificates of participation or lease revenue bonds executed and delivered or issued, as the case may be, during the years 1996 and 1997, including obligations executed and delivered or issued before 2010, to refund those certificates of participation or lease revenue bonds, to finance or refinance the lease or lease- purchase of property of the county and having a stated maturity of 20 years or more. Any refunding obligations shall not have a final maturity later than the final maturity of the refunded obligations. The amount so pledged with respect to any fiscal year of the county shall not exceed the amounts to be paid in that fiscal year on those certificates or lease revenue bonds. (b) The pledge of taxes pursuant to this section shall constitute a contract between the County of Orange and the owners of any of the certificates of participation or lease revenue bonds and shall be protected from impairment by the United States and California Constitutions. The state hereby covenants with the owners of any certificates of participation or lease revenue bonds entitled to the pledge granted by this section that, as long as any of the certificates of participation or lease revenue bonds entitled to the pledge granted by this section shall remain outstanding, (1) the provisions of Section 91 0 —5— 9 Ch. i 48 7202 which authorize the imposition of the taxes shall not be repealed and (2) the provisions of paragraph ( 1) of subdivision (a) of Section 29530.5 shall not be repealed prior to July 1, 2011, nor shall either section be altered or amended in any man* ner that would adversely affect the security of, or the ability of the county to pay, the principal of and interest on the certificates of participation or lease revenue bonds entitled to the pledge granted by this section. However. nothing precludes any alteration or amendment if and when adequate provision has been made by law for the protection from impairment of the contract represented by the certificates of participation or lease revenue bonds, and the right to so alter or amend is hereby reserved. The county may include this covenant of the state in the agreements or other documents underlying the certificates of participation or lease revenue bonds. SEC. 4. Section 25350.9 of the Government Code, as proposed to be added by Assembly Bill 1664 of the 1995 -96 Regular Session, is amended to read. 25350.9. (a) Prior to entering into an agreement to finance the lease or lease - purchase of property through the execution and delivery or issuance, as the case may be, of certificates of participation or lease revenue bonds, the Board of Supervisors of the County of Orange may elect, by resolution, to guarantee payment under that financing agreement in accordance with the following: (1) If the county elects to participate under this section, it shall provide notice to the Controller of that election, and the notice shall include a schedule for the payments to be made by the county under that financing agreement and identify a trustee appointed by the county for the purpose of this section. (2) In the event that, for any reason, the funds available to the county will not be sufficient to make any payment under the financing agreement at the time that payment is required, the county shall so notify the trustee. The trustee shall immediately communicate that information to the affected holders of certificates of participation or bondholders and to the Controller. (3) When the Controller receives notice from the trustee as specified in paragraph (2) or the county fails to make any payment under the financing agreement at the time that payment is required, the Controller shall make an apportionment to the trustee in the amount of that required payment for the purpose of making that payment. The Controller shall make that payment only from moneys to be transmitted to the county by the State Board of Equalization under Section 7204 of the Revenue and Taxation Code, that are derived from that portion of the sales and use taxes imposed by the county pursuant to Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code, other than that portion of the taxes described in Section 29530.5, and shall thereupon reduce, 91 Ch. 748 • — 6— 0 by the amount of the payment, the subsequent amounts to which the county would be entitled under that section. (b). As an alternative to the procedure set forth in paragraphs (2) and (3) of subdivision (a) , the board of supervisors of the county may provide a transfer schedule in a notice to the Controller of its election to participate under this section. The transfer schedule shall set forth amounts to be transferred to the trustee and the date or dates for the transfers and the Controller shall, subject to the limitation in the second sentence of paragraph (3) of subdivision (a), make apportionments to the trustee in those amounts on the specified date or dates for the purpose of making those transfers. (c) If the county is no longer obligated for any period to make all or a portion of the payments with respect to the lease or lease - purchase financed through the execution and delivery or issuance, as the case may be, of certificates of participation or lease revenue bonds, the trustee shall so notify the affected holders of certificates of participation or bondholders and the Controller. Upon receipt of the notification, the Controller shall cease making the transfers. If, after the giving of the notice, the obligation of the county to make payments with respect to the lease or lease - purchase financed through the execution and delivery or issuance of certificates of participation or lease revenue bonds is restored, the trustee shall so notify the affected holders of certificates of participation or bondholders and the Controller. Upon receipt of the notification, the Controller shall resume making the transfers. (d) Any election made by the county pursuant to this section shall be in addition to any other election made by the county pursuant to any other applicable provision of law to guarantee the obligation of the county to make payments with respect to the lease or lease - purchase of property financed through certificates of participation or lease revenue bonds. SEC. 5. Section 25350.10 of the Government Code, as proposed to be added by Assembly Bill 1664 of the 1995 -96 Regular Session, is amended to read: 25350.10. (a) Taxes collected by the State Board of Equalization pursuant to Section 7204 of the Revenue and Taxation Code, that are derived from the taxes imposed by the County of Orange pursuant to Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code, other than that portion of those taxes specified in Section 29530.5, shall be pledged, without the necessity for specific authorization of the pledge by the board of supervisors, to all certificates of participation or lease revenue bonds executed and delivered or issued, as the case may be, during the years 1996 and 1997, including obligations executed and delivered or issued before 2010, to refund those certificates of participation or lease revenue bonds, to finance or refinance the lease or lease - purchase of property of the county and having a stated maturity of 20 years or more. Any 91 p' b b t1 0 le is rc ai in — 7 — • Ch. 748 refunding obligations shall not have a final maturity later than the final maturity of the refunded obligations. The amount so pledged with respect to any fiscal year of the county shall not exceed the amounts to be paid in the fiscal year on those certificates or lease revenue bonds. (b) The pledge of taxes pursuant to this section shall constitute a contract between the county and the owners of any of the certificates of participation or lease revenue bonds and shall be protected from impairment by the United States and California Constitutions. The state hereby covenants with the owners of any certificates of participation or lease revenue bonds entitled to the pledge granted by this section that, as long as any of the certificates of participation or lease revenue bonds entitled to the pledge granted by this section shall remain outstanding, the provisions of Section 7202 of the Revenue and Taxation Code that authorize the imposition of the taxes shall not be repealed. That section shall not be altered or amended in any manner that would adversely affect the security of, or the ability of the county to pay, the principal of and interest on the certificates of participation or lease revenue bonds entitled to the pledge granted by this section. However, nothing precludes any alteration or amendment if and when adequate provision has been made by law for the protection from impairment of the contract represented by the certificates of participation or lease revenue bonds, and the right to so alter or amend is hereby reserved. The county may include this covenant of the state in the agreements or other documents underlying the certificates of participation or lease revenue bonds. SEC. 6. Section 29530.5 of the Government Code, as proposed to be added by Assembly Bill 1664 of the 1995 -96 Regular Session, is amended to read: 29530.5. (a) Notwithstanding any other provision of this article, the Board of Supervisors of the County of Orange may, upon the adoption of a resolution approved by a majority of all of its members, unilaterally modify its contract, as specified in Section 29530 with the State Board of Equalization, to require that, effective on or after July 1, 1996, except to the extent that subdivision (b) applies during any period, county sales and use tax revenues specified in Section 29530 be deposited into the county general fund payable, on a monthly basis, in an amount equal to three million one hundred sixty-six thousand six hundred sixty-seven dollars ($3,166,667). (b) (1) If the county has elected to guarantee payment of its obligations under an agreement to finance the lease or lease- purchase of property through the execution and delivery or issuance, as the case may be, of certificates of participation or lease revenue bonds pursuant to subdivision (a) of Section 25350.7, the amounts required to be deposited in the general fund of the county, in any month, pursuant to subdivision (a) shall be reduced by the 91 amounts, if any, tran�rred by the Controller to the tree for the certificates of participation or lease revenue bonds, pursuant to subdivision (a) of Section 23350.7. (2) If the county has elected to guarantee its obligations payment of under an agreement to finance the lease or lease- purchase of property through the execution and delivery or issuance, as the case may be, of certificates of participation or lease revenue bonds pursuant to subdivision (b) of Section 23330.7, the amounts required to be deposited in the general fund of the county, in any month, pursuant to subdivision (a) shall be reduced by the amounts transferred by the Controller to the trustee for the certificates of participation or lease revenue bonds, pursuant to subdivision (b) of Section 25350.7. (c) This section shall not take effect unless and until (1) a plan of adjustment is confirmed in Case No. SA -94- 22272 -JR in the United States Bankruptcy Court for the Central District.of California, or (2) a trustee is appointed pursuant to Chapter 10 (commencing %with Section 30400). (d) In enacting this section, the Legislature intends that the provisions of this act shall not be utilized to justify reductions in existing bus and paratransit services. (e) The modification authorized by this section is not applicable to the City of Laguna Beach. (f) This section shall become inoperative on July 1, 2011, and, as of January 1, 2012, is repealed, unless a later enacted statute, that becomes operative on or before January 1, 2012, deletes or extends the dates on which it becomes inoperative and is repealed. SEC. 7. Section 30400 of the Government Code, as proposed to be added by Senate Bill 1276 of the 1995 -96 Regular Session, is amended to read: 30400. (a) It is in the interest of the state and all public debt issuers within the state to enable the County of Orange to finance an acceptable plan of adjustment in order to improve the credit standing of California public debt issuers and to preserve and protect the health, safety, and welfare of the residents of the county and the state. To that end, successfully resolving the county bankruptcy and restoring the financial position of county government is a matter of statewide interest and concern. (b) As a further guarantee that the county will be able to prepare and obtain confirmation of an acceptable plan of adjustment, it is appropriate to create a back -up mechanism for appointment of a state trustee. (c) It is in the further interest of the state to facilitate and expedite the confirmation of an acceptable plan of adjustment by vesting in a state trustee the authority and discretion to present and enforce certain claims held by cities, public districts, or other governmental agencies against the county. 01 14i 0 -9— Ch. 748 he SEC. 8. Section 30400.5 of the Government Code, as proposed to to be added by Senate Bill 1276 of the 1995 -96 Regular Session, is amended to read: •nt 30400.5. For purposes of this chapter. the following words have of the following meanings: Ise (a) "Confirmation of the plan" means confirmation of the plan of As adjustment pursuant to Section 943 of Title 11 of the United States ed Code. th, (b) "County" means the County of Orange. Its (c) "Investment pools case" means Case No. SA- 94- 22273 -JR in the of United States Bankruptcy Court for the Central District of California. of (d) "Pending case" means Case \o. SA -94- 22272 -JR in the United States Bankruptcy Court for the Central District of California. of (e) "Plan of adjustment" means a plan of adjustment as that term ed is used in Sections 941 and 942 of Title 11 of the United States Code, 2) that contains provisions incorporating the material terms of the ith county consensus recovery plan, as specified in the Joint Agreement of the County of Orange, the Official Investment Pool Participants' he Committee and Each Option A Pool Participant for Resolution of All in Claims Against the County of Orange, September 6, 1993. A plan of adjustment may contain other terms and provisions that are not )le inconsistent with the joint agreement. (f) "Specified county officers" means the treasurer -tax collector, as auditor, chief executive officer, and assessor. iat (g) "Trustee" means the person appointed by the Governor ids pursuant to Section 30401. SEC. 9. Section 2128 of the Streets and Highways Code, as be proposed to be added by Senate Bill 1276 of the 1995-96 Regular I.ed Session, is amended to read: 1 2128. (a) Notwithstanding any other provision of this chapter, �bt the apportionments that would be made to the County of Orange an under this chapter shall be apportioned as follows: dit (1) The Orange County Transportation Authority shall be paid pct one million nine hundred sixteen thousand six hundred sixty -seven he dollars ($1,916,667) during each calendar month commencing July nd 1997, and ending June 2013. 1 of (2) All remaining apportionments shall be paid to the county at the time each apportionment would have been made to the county. ire (b) Subject to subdivision (c) , this section shall become operative : is July 1, 1997, and shall become inoperative on June 30, 2013, and, as of f a January 1, 2014, is repealed, unless a later enacted statute, that becomes operative on or before January 1, 2014, deletes or extends ite the dates on which it becomes inoperative and is repealed. in (c) This section shall not take effect unless and until (1) a plan of •ce adjustment is confirmed in Case No. SA -94- 22272 -JR in the United tal States Bankruptcy Court for the Central District of California or (2) 14i Ch. -, 46 —10— a trustee is appointopursuant to Chapter 10 (commencing with Section 30400) of Division 3 of Title 3 of the Government Code. SEC. 10. Section 12, as proposed to be added by Assembly Bill 1664 of the 1995 -96 Regular Session, is amended to read: SEC. 12. County revenues in the amount of the revenues allocated, transferred to, or deposited with, the County of Orange pursuant to the provisions of this act, shall not be used or expended for any purpose other than the satisfaction of the county's obligations pursuant to a confirmed plan of adjustment. SEC. 11. Sections 1 to 10, inclusive, of this act shall not become operative unless Assembly Bill 1664, Senate Bill 863, and Senate Bill 1276 are enacted and become operative on or before January 1, 1996. Eel ! ) \ 4 � t @ e ■ _■ � ■ ■ ■ ■ $ ■ 0 V 0 E=mlxsto 1.1 °° °a as ,,,a■■ ; m. , ■ . � \ � § ■ \ < � +} !�! ■L 112X f �+ ■ )\ MC \�f\ �a 2� ■a !� �! V - ! 1.1 °° °a as ,,,a■■ ; m. , ■ . � \ � § ■ \ < � +} !�! ■L 112X f �+ ■ )\ MC \�f\ �a 2� ■a !� �! V \ ! § 0 ■ � ■ � V N C e � @ CL @ cc ■ _e d ■ ■ ■ ■ @ ■ ■ 0 V 6 a a °a a ■ a °a o a ° ! ) ƒ$ �� # 1`2 2 �} \) L] ! | ! ! � $ � 2 ! k§� dk! , 22! .| � ■7 k!! | {) $(( � | o ° ! ) ƒ$ �� �} \) {) L] ! | ! ! � $ � 2 ! k§� dk! , 22! .| � ■7 k!! | {) $(( � 0 0 CITY OF NEWPORT BEACH OFFICE OF THE CITY CLERK P.O. BOX 1768, NEWPORT BEACH, CA 92659 -1766 Mr. A. Bernard Burke Price Waterhouse LLP 575 Anton Blvd., Ste. 1100 Costa Mesa, CA 92628 -5041 Dear Mr. Burke: (714) 644 -3005 February 14, 1996 On February 12,19% the City Council of the City of Newport Beach approved the Joint Agreement between the City of Newport Beach, the County of Orange, the Official Investment Pool Participants' Committee and all Option A Pool Participants. Enclosed are three (3) copies of the executed Joint Agreement for resolution of the claims against the County of Orange. Please execute all copies and return one to us for our files after it has been signed by all the named parties on the agreement. Thank you. Sincerely, LaVonne M. Harkless, CMC /AAE City Clerk :lh Enclosures (3) cc: Dennis Danner 3300 Newport Boulevard, Newport Beach 0 E forbearance hereunder, be offered or received in evidence or used in any proceeding against any Party, or used in any proceeding, or otherwise, for any purpose whatsoever except with respect to (a) effectuation and enforcement of this Agreement and (b) any proceedings in the Bankruptcy Court to approve this Agreement and the execution and delivery hereof. 26. Due Authorization. Each Party to this Agreement hereby represents and warrants that such Party is duly- authorized to enter into this Agreement. THE COUNTY OF ORANGE BY: ITS: THE OFFICIAL INVESTMENT POOL PARTICIPANTS9 COMMITTEE BY: ITS: City of Newoort Eeach NAME OF OPTION A POO PARTICIPANT BY: ITS: Mayor 323"S -18- f • • Agenda Item No. 23 CITY OF NEWPORT BEACH Office of the City Manager April 10, 1995 TO: Honorable Mayor and Members i1of_the City Council FROM: Kevin J. Murphy, City Manager SUBJECT: ORANGE COUNTY INVESTMENT POOL C _ 3c)V2- BANKRUPTCY SETTLEMENT AGREEMENT RECOMMENDATION 1. Approve the Comprehensive Settlement Agreement negotiated by and between the County of Orange, the Official Investment Pool Participants' Committee of the Orange County Investment Pools Bankruptcy Case, et al; and, 2. Authorize the City Manager to sign the Agreement on the City's behalf and take whatever appropriate steps necessary to effectuate the settlement; and, 3. Authorize the City Manager to select Option A providing for the treatment described in Section 7 (a) of the Comprehensive Settlement Agreement. BACKGROUND On December 6, 1994 the County of Orange filed for protection under Chapter 9 of the Federal Bankruptcy laws. The bankruptcy was filed for two entities, the County itself and the Orange County Investment Pool. The City of Newport Beach was an investor in the Orange County Investment Pool beginning in 1991 and at the time of the bankruptcy had $16,982,000 of City reserve funds in the Pool. These reserves are broken down as follows: General Funds $1,074,702.48 1994 -95 TRAN Issue 4,339,956.56 1994 -95 Water Bond Issue 10,886,537.16 1992 -93 Library COP Reserve 680,803.98 $16,982,000.18 i 0 0 There has been extensive information provided on the activities preceding and following the filing of the bankruptcy in the news media and provided to the • City Council in various forms by City staff. The City Council and staff have received regular briefings during the negotiations by the City's representative on the Investment Pool Committee, Paul Brady, the City Manager of Irvine and special legal counsel and financial advisors to the Committee. On March 25,1995 the County and the Investment Pool Committee reached an agreement on the terms of a Comprehensive Settlement of the Investment Pool Bankruptcy filing and the Settlement Agreement has been forwarded to the City and all other investors for action by April 17, 1995. Even if investors fail to take action on the document by April 17th it is possible after that date to enter into the Settlement Agreement; however, at that time it will require the consent of the County and they must believe that it is in their interest after April 17th. The Settlement Agreement will be presented to the Bankruptcy Court in early May for approval provided that at least 80% of the participants holding 90% of the aggregate pool balances approve participation in the settlement. In the attachments with the agenda materials on this item is a copy of the Settlement Agreement, a summary memorandum from the Counsel representing the Investment Pool Committee on the documents, an Executive Summary of the • Agreement, various graphs describing various components of the monetary settlement, and exhibits describing in actual dollars each investor's proposed settlement, either in Option A or Option B. DISCUSSION The key decisions for the City Council at this time are: 1. Should the City enter into a Settlement Agreement? 2. If the answer to #1 is Yes, then should the City selection Option A or B? After nearly four months of negotiations and discussion with the County's representatives, it has been represented to the over 180 individual investors that this Settlement Agreement is the best that could be obtained under the current circumstances. In a memorandum from Patrick Shea, Counsel for the Investment Pool Committee, it is stated... "The Committee believes it has negotiated the best • agreement possible under the circumstances, given the County's unwillingness and /or inability to meet the demands of the Committee in full. As a "settlement," there are both substantive issues and procedural matters which reflect one or more compromises. Thus, the Settlement Agreement does not reflect the desired terms of settlement of the Committee." 9-, • • Patrick Shea also indicates that... "In considering the Settlement Agreement, you should be aware that the Committee was not able to obtain all of the information which it considered desirable and /or relevant to your decision in less than four • months... However, waiting to receive all the information the Committee wanted would have significantly delayed negotiations, and may have jeopardized the possibility of a settlement and the immediate distribution of the cash component of the proposal." There are pros and cons to approving the Settlement Agreement at this time. If the City approves the Settlement Agreement at this time it would immediately receive $13.6 million in cash in early June and preclude the possibility that in further negotiations the County's fiscal situation could worsen and jeopardize the distribution to the City of a majority of its cash remaining in the Investment Pool after its liquidation earlier this year. If the City opts to reject the Settlement Agreement, it is likely that it would have to proceed on its own through litigation to achieve a settlement "better" than that which is proposed at this time. The time, effort, and expense to proceed independently or as part of a larger coalition of investors on litigation would be very costly and without any certainty of achieving success. In fact, the risk of proceeding with litigation and leaving the money in the pool, while the County faces very troubling and difficult financial circumstances, could jeopardize an immediate distribution of 80% of our original • deposits in the Investment Pool. It is my recommendation that the City Council approve the Settlement Agreement and authorize me to sign the Agreement on the City's behalf prior to April 17th. OPTION A OR B? On Page 3 of Exhibit 2 of the Settlement Agreement the City's proposed distribution of proceeds and notes is described in detail. An easier one page description of our City's financial breakdown is described on an attachment to this report. It was prepared by Tom Woodruff, counsel to the Sanitation Districts in a format that he utilized for the Sanitation District. In summary, if the City accepts Option A we will receive $13.6 million in June 1995, $1.5 million in a Settlement Secured Claim, and $1.8 million in Repayment Claims. The CPA's for the Investment Pool Committee, Price Waterhouse, and the CPA's for the County, Arthur Andersen, have reached an agreement on the calculations of the various components of the proposed distribution of Option A including interest earned prior to the bankruptcy filing, and the cash value of the reallocation of • interest due to errors in allocation by the County during the last three years. These calculations are included within the dollars represented above, and upon a distribution of proceeds should the City accept Option A, there would be a payment made shortly thereafter for post - petition interest which is estimated as approximately 2% for the period from liquidation of the pool to distribution. For our City this could approximate $300,000. In addition, there are certain proceeds of the sale of the pool when it was liquidated that may still be owed the • • Investment Pool from various broker /dealers which may be paid to the investors over time. If the City accepts Option A, we will receive immediately $13.6 million, plus the estimated $300,000 in interest earned or nearly $14.0 million. • The Settlement Secured Claims are proceeds the City would receive from a 65/35 split of litigation recovery (65% to Non - County Investors) and are secured by a first priority security interest. Repayment Claims are secured by a second priority security interest on up to 65% of litigation recoveries by the County; however, if these claims are not paid by litigation recovery then they cannot be repaid until Recovery Notes, Settlement Secured Claims, and administrative and other priority claims against, and certain bond debt of the County, and other claims of the County's vendors are paid. Thus, the last component of Option A, the Repayment Claims, will take the longest and have the least likelihood of being paid in the near term. In summary, if the City accepts Option B we will receive an immediate cash distribution of $13.6 million and soon thereafter an interest payment of approximately $300,000, but without the right to recover the withheld proceeds held by broker /dealers, Settlement Secured Claims and Recovery Claims. Investors who select Option B preserve their legal rights to recover the remaining balance of their investments in the pool, plus any damages against the County • and others through litigation or further negotiations. SUMMARY OF PROS AND CONS OF OPTION A OR B As a summary of the various pros and cons of Option A or B, I've attached a summary of the pros and cons prepared by Tom Woodruff for the Sanitation District which succinctly summarizes the options. In our particular case, because we were an investor in both the commingled County pool and the bond County pool, we will receive a higher percentage immediate payment (approximately 80.8 %) than other strictly commingled pool investors (75 %) and we are not reliant on having the County make "good as gold" on Recovery Notes as they must for other investors by June 5th. A unique feature of the Settlement Agreement is the ability to initially choose Option A or B and then within eleven days following the Bankruptcy Court's approval of the Settlement Agreement, switch to the other Option. This Option is preserved to provide flexibility if the Court or participants through motions • should change the current provisions of the Settlement Agreement. After reviewing the pros and cons of Option A or B and discussing these with the City Attorney, it is my recommendation that the City choose Option A at this time. Should there be significant modifications to the Agreement, new issues raised by investors upon further review of the document, or adjustments made to C. • • i the document by the Bankruptcy Court, then we will have the ability to switch to Option B. • In Option A I believe there is a reasonable chance that the City will recover its full investment, plus interest earnings, albeit over a two to three year period. Under Option B there is the likelihood of years of litigation and no guarantee when it is completed that you will recover the full investment, plus interest and possible damages. In fact, you may have to receive a successful judgment against the County, which the Bankruptcy Court may place in a long line of recovery. If the City opts for Option A, and must wait for repayment of the Settlement Secured Claims and Repayment Claims (total of $3.3 million), the City has established an interim plan of action to increase its reserves. It is City staff's plan to set aside $500,000 to replenish reserves in the 1995 -96 budget and each year thereafter until the City reaches a minimum of 15% of annual operating expenditures in reserves. This is up from 10% which is the City's current standard. At the conclusion of litigation for the Settlement Secured Claims and various alternatives for the County to repay investors for the Repayment Claims, the City would in this two to three year period have set aside an additional $1.5 million in reserves and upon full recovery be in much better financial condition in total City reserves. • • • • • OPTION A ADVANTAGES: 1. Claims are assignable; 2. Breach of authority claims are better asserted through and with the County; 3. Remain with well informed, Federal Bankruptcy Judge; 4. A final resolution of disputes with the County; 5. Receive 65% ( ±) of value of County's claims recovered against brokers, accountants and others. DISADVANTAGES: 1. Limited control over lawsuit, especially with respect to key litigation strategy and possibly settlement; 2. County is a more vulnerable plaintiff due to their direct involvement; 3. County may have conflicts of interest with respect to certain causes of action; 4. Loss of strategic position as independent plaintiff. r • • OPTION B ADVANTAGES: C� Preservation of all causes of action against every potential defendant, including County; 2. Claims against the County have merit; 3. Maintains control over all lawsuits and litigation (greater flexibility, control over strategy, control over settlement); 4. Possible leverage over County and third -party defendants (depending upon number of Option B participants); 5. Final settlements will probably be "global ", including Option B participants. • DISADVANTAGES: 1. Problems with proving certain causes of action; 2. Might lose favorable forum (Bankruptcy Court); 3. Will not directly benefit from County's litigation efforts; 4. It may allow the third -party defendants to divide and conquer the numerous plaintiffs; 5. Potential significant cost; 6. Claims against the County are subject to Bankruptcy Court treatment of claim, even if successfully prosecuted. Thus, actual recovery of any amounts awarded is still subject to the final Bankruptcy Plan of adjustment filed by the County and approved by the Court, which could well be significantly less than 100¢1$1.00 of claim. • 11 • OPTION A SETTLEMENT AGREEMENT ORIGINAL (X) (Y) (Z) Investment Investment Investment Value Value Balance 12/06/95 12/06/95 12/06/95 [$] [ %] $16,982,000 $13,716,989 80.8% RECOVERY (A) (B) (C) (D) (E) (F) (G) Other Future Receipts Emergency [7] III 171 Withdrawals Cash Settlement Prof. Fees Wdhheld Received Distribution Recovery Secured Repayment Reserve Proceeds Feb., 1995 May, 1995 Notes Loans Claims Reimb. Reimb. • -0- $13,654,509 -0 -[3] $1,519,705 $1,813,859 $52,097 $298,389 SUBTOTAL: SUBTOTAL: CASH= $13,654,509 (A +B) $16,988,073 (A +B +C +D +E) [2] TOTAL POSSIBLE RECOVERY $17,338,559 (A +B +C +D +E +F +G) TOTAL NEAR CERTAIN RECOVERY $15,472,603 (A +B +C +D +G) Ill INCLUDES A PRO RATA SHARE OF INTEREST EARNED BY COUNTY TREASURER THAT WAS ORIGINALLY MISALLOCATED TO THE COUNTY INSTEAD OF CITY OF NEWPORT BEACH AND A PRO RATA SHARE OF THE DISCOUNTED INTEREST EARNED ON THE ENTIRE COMMINGLED POOL FROM 07101194 TO 12106194. THE TOTAL INTEREST EARNED HAS BEEN DISCOUNTED BY 23% IN ITS CASH VALUE TO ACCOUNT FOR THE INVESTMENT LOSS IN THE FUND WHILE ON DEPOSIT. [2] INTEREST WILL ALSO BE PAID TO THE CITY OF NEWPORT BEACH THAT HAS BEEN ACCRUED ON THE AVERAGE DAILY BALANCE • REMAINING IN THE COMMINGLED POOL FROM 12/06/94 TO DATE OF DISTRIBUTION (MAY, 1995). [3] NO RECOVERY NOTES BECAUSE WITH $8,11",818.22 IN THE BOND POOL, IT YIELDED HIGHER INTEREST WHICH, WHEN COMBINED WITH 76.4% RETURN ON THE COMMINGLED POOL, EXCEEDED THE "TARGET AND AGREEMENT OF GETTING ALL CITIES TO 80% CASH IMMEDIATELY. LAW OFFICES OF PILLSBURY MADISON & SUTRO SAN FRANCISCO SUITE 1600 LOS ANGELES 101 WEST BROADWAY SAN JOSE WASHINGTON, D.C. SAN DIEGO, CALIFORNIA 92101 WRITER'S DIRECT DIAL NUMBER TELEPHONE (619) 234 -5000 TELECOPIER(619) 236 -1995 (619) 544 -3177 March 27, 1995 TO ORANGE COUNTY INVESTMENT POOL PARTICIPANTS' DISTRIBUTION LIST Re: In re Countv of Orange, Orange Countv Investment Dear Orange County Investment Pool Participant: ORANGE COUNTY SACRAMENTO MENLO PARK TOKYO Enclosed herewith you will find a copy of a "Comprehensive Settlement Agreement re Orange County Investment Pools" ( "Settlement Agreement "). The Settlement Agreement was negotiated by and between the County of Orange ( "County "), The Official Investment Pool Participants' Committee of the Orange County Investment Pools Bankruptcy Case ( "Committee ") and others. Also enclosed is an Executive Summary of the significant terms of the Settlement Agreement ( "Summary ") prepared by the Committee. The purpose of this letter is to advise you of your opportunity to participate in the settlement contemplated by the Settlement Agreement and to provide you with an understanding of some of the limitations under which the Settlement Agreement was negotiated. The Committee was appointed by the Bankruptcy Court to act on behalf of the collective interests of the Non- County Pool Participants in the Orange County Investment Pools ( "OCIP ") bankruptcy case. The Committee is not a party to the Settlement Agreement. Rather, the Committee has negotiated the Settlement Agreement with the legal and financial representatives of the County with the goal of providing meaningful options regarding the early recovery of Pool assets and resolution of other claims to all Non - County Pool Participants. The Committee believes it has negotiated the best agreement possible under the circumstances, given the County's unwillingness and /or inability to meet the demands of the Committee in full. As a "settlement ", there are both substantive issues and procedural matters which reflect one or more compromises. Thus, the Settlement Agreement does not reflect the desired terms of settlement of the Committee. March 27, 1995 Page 2 • There are over 180 Pool Participants, and each Pool Participant has different interests. Thus, the approach of the Committee regarding the settlement options for Pool Participants as a class does not necessarily respond to the needs of any one Pool Participant. Therefore, it is important for each Pool Participant to review and analyze the Settlement Agreement in view of its own interests. The Settlement Agreement is a complex legal document. Executing the Settlement Agreement will alter your rights irrevocably. In particular, Option A of the Settlement Agreement includes broad releases which will waive legal rights, the present value of which have not been determined. Moreover, choosing among the options available (if any) will affect your treatment under any later plan of adjustment by the County of Orange in its pending bankruptcy. Therefore, it is imperative that each Pool Participant fully review and analyze the Settlement Agreement with the assistance of its own attorneys, accountants and other professionals as is necessary to gain a full understanding of the effect of the Settlement Agreement. Neither the Committee nor its professionals represents the interests of any particular Pool Participant; each Pool Participant must independently evaluate the Settlement Agreement and the options provided to determine how its best interests are served. In considering the Settlement Agreement, you should be aware that The Committee was not able to obtain all of the information which it considered desirable and /or relevant to your decision in the less than four months which have elapsed since the bankruptcy filings. Some of the information disseminated by the County has not been complete and /or accurate. The County has not been as forthcoming as desired in disclosing transactional, accounting and other irregularities, either because the information was not available, or for other reasons. The Orange County and OCIP bankruptcies are extremely factually complex. The receipt of additional information might have affected the negotiations or the final terms of Settlement Agreement. However, waiting to receive all the information the Committee wanted would have significantly delayed negotiations, and may have jeopardized the possibility of a settlement and the immediate distribution of the cash component of the proposal. The Committee believes that the Settlement Agreement is based on the best financial analysis available to it in these limited circumstances. The Executive Summary provided by the Committee should not be considered an analysis of all of the benefits and risks resulting from execution of the Settlement Agreement, or of the • • March 27, 1995 Page 3 benefits and risks associated with choosing one of the options available to Non - County Pool Participants. The Summary is provided for your convenience only. Neither this letter nor the Summary were approved by the Bankruptcy Court as disclosure statements under the Bankruptcy Code ( "Code "), and no effort has been made to provide you with "adequate information," as that term is defined in the Code, regarding the benefits and risks of the Settlement Agreement. The Settlement Agreement is not a bankruptcy plan of adjustment, but is subject to approval by the Bankruptcy Court. It is possible that the Court could decide not to approve the Settlement Agreement and /or specific provisions or conditions of the Settlement Agreement which might affect the effectiveness of the Settlement Agreement. Distributions under the Settlement Agreement could be delayed by events set forth in the Settlement Agreement. Nevertheless, the Committee believes that the settlement contemplated by the Settlement Agreement affords the best possibility for obtaining the earliest possible distribution of the assets of the Investment Pool to Pool Participants. If, after careful consideration, the enclosed Settlement Agreement is acceptable, please execute the Agreement To Become Settling Non - County Pool Participant, clearly indicate which settlement option has been chosen and return the executed Agreement To Become Settling Non - County Pool Participant to Price Waterhouse LLP, 575 Anton Boulevard, Suite 1100, Costa Mesa, California 92626, Attn: Bernie Burke, no later than April 17, 1995. Very truly yours, Patric�. Shea Enclosure cc: Members, Official Investment Pool Participants Committee EXECUTIVE SUMMARY OF COMPREHENSIVE SETTLEMENT AGREEMENT RE ORANGE COUNTY INVESTMENT POOLS PLEASE BE ADVISED THAT THIS EXECUTIVE SUMMARY IS BEING PROVIDED TO YOU FOR YOUR CONVENIENCE ONLY, AND IS NOT INTENDED TO BE, AND SHOULD NOT BE, RELIED UPON BY YOU IN DETERMINING WHETHER TO ACCEPT OR REJECT THE SETTLEMENT AGREEMENT. YOU SHOULD CAREFULLY REVIEW THE SETTLEMENT AGREEMENT IN ITS ENTIRETY WITH YOUR COUNSEL AND OTHER PROFESSIONALS. IN THE EVENT THAT ANY PROVISION OF THE SETTLEMENT AGREEMENT IS INCONSISTENT WITH THIS EXECUTIVE SUMMARY, THE TERMS OF THE SETTLEMENT AGREEMENT SHALL CONTROL. I. General. The Settlement Agreement provides that you may elect to have your rights in the Orange County Investment Pools treated in one of three ways, as outlined herein. Each Pool Participant is directed to the financial schedules (Exhibits 1, 2 and 3) attached to the Settlement Agreement for a compilation of how its rights will be treated. A. Participants who elect Option A will receive cash which averages approximately 778 of their December 6, 1994 investment balances in the pools, and notes, and allowed claims against the County in return for a broad release of the County, and other persons, entities, and parties as described in the Settlement Agreement, and assignment of all Pool- related Claims to the County. It is the intent that Participants electing Option A receive the consideration provided for in the Settlement Agreement as their sole consideration, and, except as specifically provided that they not retain litigation rights or claims against any person, entity or party related to the investment pools and /or this case. B. Participants who elect Option B will receive the above cash distribution only, with reservation of most of their litigation rights against the County. C. Participants who choose not to settle will not receive any distribution and will preserve their present rights and claims. Ii. A -D below. A. Cash Distributions: 20729387 B. C. • • 1. Cash distributions will be received from one of three separate pools (overall approximately 770/$1 minus Withheld Proceeds identified below). Each Participant will receive differing amounts depending upon, among other things, the pool in which its funds were invested. a. Bond Pool b. Commingled Pool C. Special Investment Funds 2. Withheld Proceeds are funds remaining with broker /dealers and banks -- currently approximately 20/$1 -- and are not available for immediate distribution. a. County expects Withheld Proceeds to be less than 10 /$1 by Effective Date of Settlement Agreement. b. Withheld Proceeds are to be distributed to settling Participants upon recovery by the County. i. Delay in distribution is required to avoid loss of litigation claims. ii. Any Pool Participant electing Option A may, as identified in the Settlement Agreement, elect to receive Recovery Notes (21.63% of total), Settlement Secured Claim (31.38 %) & Repayment Claim (46.99 %) instead of waiting for distribution of Withheld Proceeds. Recovery Notes: 1. Each Non - School Pool Participant receives face amount of Recovery Notes to reach approximately 800/$1. 2. County must use its best efforts to make Recovery Notes easily convertible to cash at face value by June 5, 1995. Settlement Secured Claims: 1. Each Non - School Pool Participant receives a Settlement Secured Claim in an amount to reach approximately 890/$1. 2. The Settlement Secured Claims are secured by a first priority security interest on up to 65% of litigation recoveries by County against third -party defendants. However, the percentage of litigation proceeds securing the Settlement Secured Claims declines with the percentage of Participants electing Option B. 20729387 -2- III. IV. 0 • 3. Settlement Secured Claims shall be treated as allowed claims against the County in the County's bankruptcy case. D. RepaVment Claims: Each Non - School Pool Participant receives Repayment Claims in an amount of 110 /$1. (The purpose of this package is to provide each Participant electing Option A payments and claims having a face value of 1000 /$1.) Repayment Claims are secured by a second - priority security interest on up to 65% of litigation recoveries by County. 3. Repayment Claims are allowed claims against the County in the County's bankruptcy case. However, Repayment Claims cannot be paid, except from litigation recoveries, until Recovery Notes, Settlement Secured Claims, and administrative and other priority claims against, and certain bond debt of, the County and the claims of the County's vendors are paid and certain County - administered accounts are restored to the 890/$1 level. bcnool rarLicipanLs. A shall receive A -C below. A. Cash Distributions: 1. Generally, same as Non - School Participants. 2. "Taxable note school districts" will have their cash distributions reduced by amounts being withheld from Pools by FNMA concerning those notes and receive an assignment of the County's claims against FNMA instead. B. Recovery Notes: Each School Pool Participant receives Recovery Notes in a face amount to reach 900/$1. C. Repayment Claims: Each School Pool Participant receives Repayment Claims in the amount of 100 /$1. The purpose of this package is to provide School Participants electing Option A payments and claims having a face value of 1000 /$1. Participants e A. Cash Distributions: Same as Option A but without the right to recover Withheld Proceeds as Recovery Notes, Settlement Secured Claims and Repayment Claims. 20729387 -3- • • B. C. Reservation of Rights: Participants who elect Option B shall reserve all rights against the County except the ability to prevent the distribution of the Pool assets or to recover any distribution of Pool assets. V. Non - Settling Pool Participants. The Settlement Agreement will preserve the legal claims of non - settling Participants. VI. Timing of Implementing Settlement. 20729387 A. Election by each Pool Participant to enter into Settlement Agreement must be made by April 17, 1995. B. Effective Date of Settlement Agreement: 1. 11 days after the Bankruptcy Court enters an order approving the Settlement Agreement (anticipated by end of April), provided 80% in number and 90% in dollar amount of all Pool Participants become Settling Pool Participants. Cash from the pools to be distributed within 5 business days of the Effective Date unless an order approving the settlement is stopped by appeal. 2. Pool Participants may change election of Option A or B after the Bankruptcy Court enters an order approving the Settlement Agreement and prior to the expiration of the 11 -day period after the Court's order is entered but before it becomes a final order. 3. Pool Participants electing Option B may thereafter change their election to Option A until the earlier of June 5, 1995 or the date on which the County sends a notice that no further changes will be permitted. 4. Any Participant may change its election at any time with the County's consent. C. If the County does not make Recovery Notes easily convertible to cash by June 5, 1995, Pool Participants previously electing Option A may change their election to Option B by June 8, 1995. -4- =1 0. U N 0 (6 C a) U ^L LL W 0 U OR 0 0 0 0 0 0 0 N O 00 CO � N r r cn N E U � cn (D cp aa) o Z � o > N O Q- U a) � I= cn a) U O ^L 1 - Cam; yam-+ U 0 0 0 0 0 0 IL _ U O L- a) O Na) I..L W -1 c U L O O E E U 0 U i c O Z • • 0 0 0 0 0 0 0 O O O O O O O O O O O O O O N O 00 co IRT N a6eluOOJad N E m U c m E T m 0. N El N E O N N � O w U c N U) r- 0 N N O' a)0 cn N a) 0 C o — Z c ,o > m o CL U ' N � cr a.. ■ N .0 N N U O d 'O N t L N w U U 0 U L •� O 06 70 O O � m ca O O N � U VJ 'U^ L ^� L LL O Z • • 0 0 0 0 0 0 0 O O O O O O O N O co (OD v N O 1 1 OBUIUa0aad c w E ca :? U � c 0 Eo ca °- n N °' o IL El El Cn C cu U a� m c U) — c o N Q CO CL CD U O L IL 4) � L N U ■ • • March 28, 1995 6:25pm MASTER COMPREHENSIVE SETTLEMENT AGREEMENT RE ORANGE COUNTY INVESTMENT POOLS THIS AGREEMENT is entered into as of , 1995, by and among the County of Orange (the "County "), on its own behalf and on behalf of the Orange County Investment Pools, an instrumentality of the County (the 'Pools "), and each of the school districts, special districts, cities and other public agencies and instru- mentalities identified on Exhibits 1 and 2 hereto (in the singular, each such entity being a "Non- County Pool Participant," and collectively the "Non- County Pool Participants ") which becomes a party to this Agreement by timely executing an "Agreement to Become Settling Non - County Pool Participant" in the form of Exhibit 4 hereto on or before the Deadline specified below (each such Non - County Pool Participant being a "Settling Non - County Pool Participant"; and the County, the Pools, and the Settling Non- County Pool Participants being referred to collectively as the 'Parties" and individually as a 'Party "), with reference to the following facts and recitals: RE fTALS A. The County and the Pools are each debtors in cases pending under chapter 9 of title 11 of the United States Code in the United States Bankruptcy Court for the Central District of California, which cases have been assigned Case Nos. SA 94- 22272 -JR (the "County Chapter 9 Case ") and 94- 22273 -JR (the 'Pools Chapter 9 Case "), respectively (collectively, the "Chapter 9 Cases "). 68 -013F 3865.000 6 • • B. The Pool Committee and the Subcommittees (each as defined in Section 1) and their professionals, though involved in the administration of the Pools Chapter 9 Case and the negotiations leading to this Agreement, are not parties to this Agreement between the County, the Pools and Settling Non - County Pool Participants and make no representations or warranties regarding the substance of this Agreement or the accuracy of the Exhibits thereto. C. Prior to the filing of the Chapter 9 Cases, funds of or administered by the County and funds of each of the Non - County Pool Participants were invested by the County Treasurer as part of the Pools. D. The Pool Assets are insufficient to permit the payment in full of all of the Pool Balances (as defined in Section 1) of all of the County Claimants (as defined in Section 1) and of all of the Non - County Pool Participants. Substantial disputes have developed among the Parties with respect to, among other things, (i) the legal interests of the Parties in the Pool Assets; (ii) the appropriate allocation of the Pool Assets among the County Claimants and the Non - County Pool Participants, and (iii) Pool- Related Claims (as defined in Section 1). Among other assertions, the Settling Non - County Pool Participants claim that they are entitled to receive the full amount of their investments in the Pools before any distribution is made therefrom to the County Claimants. The County disputes this claim. E. The Parties desire to agree upon an allocation and distribution of the Pool Assets and the resolution of any and all Pool - Related Claims and Pools- related matters between or among certain of them. 88 -013F 3865.000 -2- 1,. IN CONSIDERATION OF THE FOREGOING, and for other good and valu- able consideration, the receipt of which is hereby acknowledged, it is hereby agreed by and between the Parties hereto as follows: meanings: AGREEMENT 1. Definitions. As used herein, the following terms have the following a. "Affiliate" of a person or entity means any other person or en- tity which is controlled by, controls or is commonly controlled with such person or entity, directly or indirectly. b. "Agreement' means this Comprehensive Settlement Agreement Re Orange County Investment Pools. C. "Agreement to Become Settling Non - County Pool Participant' means an agreement in the form of Exhibit 4 hereto. d. "Assigned Pool - Related Claims" means Pool - Related Claims which are assigned to the County or which are to be prosecuted by the County and the proceeds of which are to be received by the County pursuant to the provisions of Section 12. e. 'Bankruptcy Code" means title 11 of the United States Code, 11 U.S.C. §§ 101 et sea., as in effect on the Petition Date, together with all amendments, modifications and replacements as the same exist on any relevant date to the extent applicable to the Chapter 9 Cases. f. 'Bankruptcy Court" means the United States Bankruptcy Court for the Central District of California or, in the event such court ceases to BB -013F 3965.000 -3- • • exercise jurisdiction over the Chapter 9 Cases, such court or adjunct thereof that exercises jurisdiction over the Chapter 9 Cases in lieu of the United States Bankruptcy Court for the Central District of California. g. "Business Day" means any day other than a Saturday, a Sunday, or a "legal holiday," as the term "legal holiday" is defined in Bankruptcy Rule 9006. hereto. graph hereof. h. "Chapter 9 Cases" has the meaning set forth in the Recitals i. "County" has the meaning set forth in the introductory para- I. "County- Administered Accounts" means the accounts admin- istered by the County which are identified in Exhibit 3 and, notwithstanding anything to the contrary in this Agreement, the accounts labeled "Irvine Coast Assessment District" and "Irvine Coast CFD 88 -1" on Exhibit 2. All references to "Irvine Coast CFD 88 -1" on Exhibit 2 shall be deemed to be references to "Irvine Coast Assessment District," and the amounts listed on Exhibit 2 under the headings 'Total Recovery Notes," 'Total Settlement Secured Claims," 'Total Repayment Claim" and "Professional Reserve" next to the names "Irvine Coast Assessment District" and 'Irvine Coast CFD 88 -1" shall be deemed for all purposes to be zero. k. "County Chapter 9 Case" has the meaning set forth in the Recitals hereto. BB -013F 3965.000 -4- • I. "County Claimant' means the County and each County Ad- ministered Account; when used in the plural, "County Claimants" means the County and all County- Administered Accounts. M. "County Creditors' Committee" means the Official Committee of Creditors of the County of Orange appointed in the County Chapter 9 Case pursuant to section 1102(a)(1) of the Bankruptcy Code. n. "Deadline" means 5:00 p.m. on April 17, 1995, the latest date on which a Non - County Pool Participant may elect, without the consent of the County, to become a Settling Non - County Pool Participant by executing and de- livering to the County, in the manner specified therein, an Agreement to Become Settling Non - County Pool Participant. o. "Deficiency Amount' means, as to each Non - County Pool Participant listed on Exhibit 1 or 2, the sum of the amounts listed next to the name of such Non - County Pool Participant on such Exhibit under the headings 'Total Recovery Notes," 'Total Settlement Secured Claims" and 'Total Repayment Claims." p. "Effective Date" has the meaning set forth in Section 16. q. "Excluded Claims" means any claims, demands, obligations, debts, liabilities, suits, causes of action, remedies or rights: (1) arising under this Agreement; (2) arising from acts or omissions occurring after the Effective Date which are not required or specifically contemplated by this Agreement; (3) which a Settling Option A Pool Participant may have against (i) any underwriter of secur- ities issued by or for the benefit of such Settling Option A Pool Participant, with respect to any indebtedness incurred by such Settling Option A Pool Participant 88 -013F 3865.000 -5- 68-013F 3865.000 in connection therewith or (ii) any financial advisor, attorney, accountant or other professional advisor to such Settling Option A Pool Participant arising out of advice given or services rendered in its capacity as such to such Settling Option A Pool Participant regarding a decision to invest in the Pools or the issuance of debt by such Settling Option A Pool Participant; (4) which the County may have against (i) any underwriter of securities issued by or for the benefit of the County, with respect to the issuance of such securities or the incurring of any debt evidenced thereby or (ii) any financial advisor, attorney, accountant or other professional advisor to the County arising out of advice given or services rendered in its capacity as such to the County with respect to matters unrelated to the management or investment of assets allocated to the Pools; (5) which a Settling Option A Pool Participant may have respecting the deposit of funds by such Settling Option A Pool Participant in any court or with the clerk of any court in accordance with applicable law, but only to the extent that such deposit is not reflected in such Settling Option A Pool Participant's Pool Balance and does not form a basis for a distribution to such Settling Option A Pool Participant under section 3; and (6) resulting from the collection of developer impact fees by the County for the benefit of any Settling Option A Pool Participant. r. "Fannie Mae Escrow" means the escrow established pursuant to the "Stipulation with Respect to Preservation of Claims and Setoff Claims be- tween Debtors and Federal National Mortgage Association," in which $118,500,000 has been deposited. S. "Final Order" means an order or judgment issued by and en- tered on the docket of the Bankruptcy Court or another court with jurisdiction I)) • • over the matter that has not been reversed, stayed, modified, or amended, and as to which either (i) the time to appeal has expired and no appeal has been timely filed, or (ii) if an appeal has been timely filed, such appeal has been resolved by the highest court to which the order or judgment was timely appealed or from which certiorari was sought. t. "Interim Distribution" means, with respect to any County Claimant or Non - County Pool Participant, any distribution made to such County Claimant or Non - County Pool Participant subsequent to December 6, 1994, out of the Pools pursuant to any order of the Bankruptcy Court other than the Tax Dis- tribution Order, and any other distribution out of the Pools made subsequent to December 6, 1994, which has been or is to be applied against such County Claimant's or Non - County Pool Participant's distribution entitlement or Pool Balance or distributional entitlement in respect thereof pursuant to any order of the Bankruptcy Court, but does not include any distributions under the Tax Distri- bution Order. U. "Litigation Costs" means all costs and expenses incurred by the County in prosecuting or otherwise attempting to collect or realize upon Pool - Related Claims against anyone other than a Party to this Agreement (including Pool - Related Claims of the County and Assigned Pool - Related Claims), the pro- ceeds of which would constitute Litigation Proceeds, including, without limitation, the fees and costs of attorneys and other professionals, including experts, engaged in connection therewith and the cost of computerized document management systems. 88 -013F 3865.000 -7- I .. • • V. "Litigation Proceeds" means any cash or other property (ex- cluding any cancellation or modification of indebtedness of the County, but subject to Section 11(f)) received or recovered from anyone other than a Parry to this Agreement, including, but not limited to, awards of interest, attorney's fees, penalties, actual or punitive damages, and increased ownership interests in property, on account of any Pool - Related Claims of the County and any of the Assigned Pool - Related Claims, whether by way of settlement, litigation, or otherwise, but specifically excluding any payment or distribution received by the County out of Pool Assets or out of the Withheld Proceeds or the Fannie Mae Escrow and any other payment or other distribution received by the County under this Agreement. W. "Net Litigation Proceeds" means the amount which remains after deducting Litigation Costs from Litigation Proceeds. X. "Net Proceeds," when used with respect to an asset, means the proceeds received upon the sale or other disposition of or realization upon such asset, less (i) commissions and other costs incurred in such sale or other disposition or realization, and (ii) any payments made or withheld from such proceeds on account of any claim secured by such asset. y. "Non -County Pool Participant" and "Non -County Pool Partici- pants" have the meanings set forth in the introductory paragraphs hereof; provided, however, that notwithstanding anything to the contrary in this Agreement, the Irvine Coast Assessment District and Irvine Coast CFD 88 -1 shall not be deemed to be Non -County Pool Participants, and shall instead be deemed to be County- Administered Accounts. BB -013F 3865.000 -8- • • Z. "Non - School Pool Participant' means, in the singular, each Non - County Pool Participant that is identified on Exhibit 2, and, in the plural ( "Non - School Pool Participants "), all Non - County Pool Participants identified on Exhibit 2. aa. "Non- Settling Pool Participant' means any Non - County Pool Participant which is not a Settling Non - County Pool Participant. ab. "Option A" means, for any Settling Non - County Pool Partici- pant, the treatment described in Section 7(a). ac. "Option B" means, for any Settling Non - County Pool Particle pant, the treatment described in Section 7(b). ad. "Party" and 'Parties" have the meanings set forth in the intro- ductory paragraph of this Agreement. ae. 'Petition Date" means December 6, 1994, the date on which both of the Chapter 9 Cases were filed with the Bankruptcy Court. af. 'Pools" has the meaning set forth in the introductory paragraph of this Agreement. ag. 'Pool Assets" means the securities, cash and other similar assets which are or should have been reflected on the books and records of the County as assets of the Pools as of December 6, 1994 (including any proceeds thereof), but does not include any amounts paid pursuant to the Tax Distribution Order. ah. 'Pool Balance" means, as to each County Claimant and Non- County Pool Participant identified in Exhibit 1, 2 or 3, the aggregate amounts set BB -013F 3865.000 -9- 1 • forth next to the name of such County Claimant or Non - County Pool Participant on such Exhibit under the heading "Pool Cash Value." ai. "Pool Balance Fraction" means, as to each County Claimant or Settling Non - County Pool Participant, that fraction, the numerator of which is such County Claimant's or Settling Non - County Pool Participants' Pool Balance, and the denominator of which is $5,688,240,393.41 (reflecting the aggregate Pool Balances). aj. "Pools Chapter 9 Case" has the meaning set forth in the Recital "A" hereto. ak. "Pool Committee" means the Official Investment Pools Partick pants' Committee appointed in the Pool Chapter 9 Case pursuant to sections 901(a) and 1102(a)(1) of the Bankruptcy Code. In the event that the Pools Committee is reconstituted as a separate committee or a subcommittee of the County Committee in the County Chapter 9 case, "Pools Committee" shall thereafter mean such reconstituted committee or subcommittee. al. "Pool- Related Claims" means any and all claims, demands, obligations, debts, liabilities, suits, causes of action, remedies or rights of any kind whatsoever, at law, in equity, by statute or otherwise, whenever arising, whether known or unknown, suspected or unsuspected, fixed or contingent, liquidated or unliquidated, matured or unmatured, choate or inchoate, pending or not pending, which in any way relate or pertain to the Pools, the operation or management of the Pools, any transaction entered into by or on behalf of the Pools, any investment made in, by, or on behalf of the Pools, the manner in which assets of the Pools have been invested, purchased or sold, any purchase 88.013F 3865.000 -10- lv or sale of assets by or on behalf of the Pools, any deposit of funds into the Pools or withdrawal of funds from the Pools, any other transfer of assets by the Pools or of assets of the Pools, the conduct, act or omission of any person or entity (including, without limitation, the County, the Non - County Pool Participants, and the officers, officials, directors and employees thereof (in their capacity as such)) in connection with the Pools or with any transaction with, or investment of, the Pools, any statement, representation or omission to state respecting or relating to the Pools, and any other act or omission which otherwise in any way relates or pertains to the Pools or the manner in which the affairs of the Pools have been conducted; provided, however, that the term 'Pool- Related Claims" does not include any Excluded Claims. am. 'Professional Fees Reserve" means a reserve fund to be created and held for the payment of expenses of the Pool Committee and all Subcommittees thereof, as approved for payment by the Pool Committee or ap- propriate Subcommittee, including, without limitation, all fees and expenses of any attorneys and financial advisors retained by the Pool Committee and all Subcommittees thereof, as approved for payment by the Pool Committee or appropriate Subcommittee. an. "Recovery Notes" means notes to be issued by the County, which shall be general obligations of the County with a superpriority over all other administrative, priority and general unsecured claims and have such other terms and provisions as are agreed upon in writing by the County and the Pool Com- mittee. 88 -013F 3865.000 1� • ao. "Related Parties" means, with respect to any Party, such Party's successors, predecessors, assigns and present and former officers, directors, officials, and employees, in each case only in their respective capacities as such. ap. "Released Claims" has the meaning set forth in Section 20. aq. "Releasing Party" means each Settling Non - County Pool Par- ticipant, the Pools and the County (on its own behalf, and on behalf of any County Administered Account only to the extent, if any, that the County has authority to grant a release on behalf of such County Administered Account). ar. "Repayment Claim" means an allowed, nonpriority, noncontin- gent, fully liquidated, undisputed claim in the County Chapter 9 case: (i) which shall be deemed to have arisen prior to the County Chapter 9 Petition Date; (ii) on account of which the holder shall not be entitled to receive and shall not receive any payment or other distribution from the County or out of any assets of the County, whether under a plan of adjustment for the County or otherwise, other than the Secured Claim Percentage of the Net Litigation Proceeds following the payment of all Settlement Secured Claims under Section 11(d)(ii), until after the payment in full of all Senior Claims against the County and the payment in full of all interest on such Senior Claims which accrues or matures after the County Petition Date, whether or not any claim for such post -County Petition Date interest is allowed under the Bankruptcy Code, and even if such claim for post - County Petition Date interest is disallowed as a claim in the County Chapter 9 Case, whether as a result of section 502(b) of the Bankruptcy Code or otherwise; (iv) which shall be secured only by a second priority lien on the Secured Claim 88 -013F 3865.000 -12- Percentage of Net Litigation Proceeds which shall be junior only to the lien granted under Section 11 to secure the Settlement Secured Claims and shall share ratably with all other Repayment Claims in the Secured Claim Percentage of the Net Litigation Proceeds following the payment of Settlement Secured Claims, as provided in Section 11; and (v) which shall bear interest, allowable only as a Repayment Claim, only to the extent, if any, that such interest is required under applicable law and is allowable as a claim under the Bankruptcy Code. tion 9. tion 9. as. "Reserved Recovery Notes" has the meaning set forth in Sec- at. "Reserved Distributions" has the meaning set forth in Sec- au. "School Pool Participant' means each Non - County Pool Par- ticipant listed on Exhibit 1 hereto. ay. "Section _" means a section of this Agreement. aw. "Secured Claim Percentage" means the product of multiplying 65% by that fraction, the numerator of which is the sum of the Deficiency Amounts of all Settling Non - School Pool Participants who elect Option A, and the denominator of which is $832,833,023.61 (representing the sum of the Deficiency Amounts of all Non - School Pool Participants). ex. "Senior Claim" means any allowed claim against the County (i) which is an administrative or other claim against the County which is entitled to priority under the Bankruptcy Code; (ii) under or evidenced by the County of Orange California 1994 -95 Tax and Revenue Anticipation Notes, Series A; the 68-013F 3U5.000 -13- �I • • County of Orange California 1994 -95 Tax and Revenue Anticipation Notes, Series B; the County of Orange California 1994 -95 Taxable Notes; the County of Orange 1994 -95 (Teeter Plan) Taxable Notes; the County of Orange 1994 -95 (Teeter Plan) Tax - Exempt Notes; the County of Orange California 1994 -95 Pooled Tax and Revenue Anticipation Notes; any tax exempt Tax and Revenue Anticipation Notes which the County issues in the future; the County of Orange Series 19948 Taxable Pension Obligation Bonds and any extension, renewal, modification, refunding or refinancing of any of the foregoing to the extent that such extension, renewal, modification, refunding or refinancing is in a principal amount not in excess of the amount of the indebtedness which is extended, renewed, modified, refunded or refinanced; (iii) for goods or services provided, delivered or rendered to the County or any agency or instrumentality thereof prior to the Petition Date (other than claims of any County Administered Account) limited, in the case of a claim described in this clause (iii) for which a County Administered Account is liable, to the extent that funds are not made available for the payment thereof by such County Administered Account as a result of the distributions made to such County Administered Account under this Agreement; (iv) under the Recovery Notes; (v) which is a Settlement Secured Claim; or (vi) which the County agrees to grant or allow to any County Administered Account which is a Releasing Party and is bound by the assignment contained in Section 12, to compensate such County Administered Account for all or any portion of the amount by which such County Administered Account's Pool Balance exceeds the amount of the distributions made to such County Administered Account out of Pool Assets, but only to the extent of (x) debt containing the same terms and conditions of the BB -013F 3865.000 -14- , • • Recovery Notes in a principal amount equal to up to three percent (3 %) of such County Administered Account's Pool Balance; and (y) debt containing the same terms and conditions as Settlement Secured Claims in a principal amount equal to up to nine percent (9 %) of such County Administered Account's Pool Balance; provided, however, that the term "Senior Claim" shall not include any allowed claim against the County (x) which is subordinated to any other allowed claim against the County under section 510(b) or 510(c) of the Bankruptcy Code (other than by reason of any contractual subordination provision governed by Section 510(a)), (y) which is a claim allowed under Section 7(a)(2) or Section 7(b)(3) of this Agreement; or (z) which is held for the benefit of any bank, broker, dealer or other third party against which any Party has a Pool - Related Claim (determined without regard to the provisions of Section 12), or any Affiliate or Related Party of any such bank, broker, dealer or other third party. The County agrees that it will not utilize any debt repayment funds reflected in the County Administered Accounts applicable to claims of the type described in clause (ii) to the extent that such debt repayment funds are or have been maintained by the County as a reserve with respect to a claim of the type described in clause (ii), to fund the County's operating expenses or those of any other County Claimant. ay. "Settlement Secured Claim" shall mean a non - priority, non- contingent, fully liquidated, undisputed, allowed general unsecured claim against the County, which shall be deemed to have arisen prior to the County Petition Date, which shall not be subject to subordination to any other non - priority unsecured claim against the County under Section 510 of the Bankruptcy Code or otherwise and which shall be secured as provided in Section 7 by a first 69 -013F 3865.000 -15- 't � priority security interest in and lien on the Secured Claim Percentage of the Net Litigation Proceeds. Regardless of any valuation of the collateral securing the Settlement Secured Claim under Section 506(b) of the Bankruptcy Code, the entire unpaid amount of the Settlement Secured Claim shall be and remain secured by the Secured Claim Percentage of the Net Litigation Proceeds. az. "Settling Non - County Pool Participant" has the meaning set forth in the introductory paragraph hereof. ba. "Settling Non - School Pool Participant" means each Non- School Pool Participant who becomes a Party to this Agreement by executing an Agreement to Become Settling Non - County Pool Participant. bb. "Settling Option A Pool Participant" means each Settling Non- County Pool Participant who has elected Option A as of June 8, 1995 or who timely elects Option A thereafter in accordance with Section 7. bc. "Settling School Pool Participant" means each School Pool Participant who becomes a party to this Agreement by executing an Agreement to Become Settling Non - County Pool Participant. bd. "Subcommittees" means the Official School and College Dis- tricts Subcommittee of the Pool Committee, the Official Orange County Cities Subcommittee of the Pool Committee, and the Official Non- Orange County Cities Subcommittee of the Pool Committee. In the event that any Subcommittee is re- constituted as a separate subcommittee in the County Chapter 9 case, the term "Subcommittees" shall include such reconstituted subcommittee. be. 'Tax Distribution Order" means the "Order Authorizing Dis- bursement of Certain Prepetition Real Property and Other Taxes, and Other Col- 88 -013F 3865.000 -16- �r lected Receipts in Accordance with Non - Bankruptcy Law and Otherwise Applic- able Orange County Regulatory Procedures" entered by the Bankruptcy Court in the Pools Chapter 9 case on or about January 26, 1995. bf. 'Transfer" has the meaning set forth in section 101 (54) of the Bankruptcy Code, 11 U.S.C. § 101(54). bg. "Unallocated Interest" means any interest actually earned by the Pools, other than on any amounts in the Fannie Mae Escrow, on any investments described in Exhibit 8, and on any Withheld Proceeds, which was not taken into account by the accountants for the County and the Pool Committee in calculating the amounts set forth under the heading "Cash Distribution on Effective Date" in Exhibits 1, 2 and 3. bh. "Withheld Proceeds" means any cash or cash equivalents withheld from the Pools which constitute the proceeds of any Pool Assets, but which have been withheld by a third party other than in the Fannie Mae Escrow under an adverse claim of right to such proceeds. The Withheld Proceeds include the amounts held by the adverse claimants identified in Exhibit 5 hereto. In the event that any amounts are recovered from any such adverse claimant which could only constitute a recovery of Withheld Proceeds or Litigation Proceeds, whether as a result of a judgment of a court, an award of an arbitrator, or a settlement with such adverse claimant, then unless such recovery is the result of a court order or arbitrator's award which is accompanied by findings which permit an allocation of such recovery as between Withheld Proceeds and Litigation Proceeds, the amounts so received from such adverse claimant, up to the amount of the Withheld Proceeds held by and not previously recovered from BB-013F 3865.000 -17- such adverse claimant, shall be deemed to be a recovery of Withheld Proceeds, and the remainder be deemed to be Litigation Proceeds. bi. "Withheld Proceeds Fraction" means, as to each County Claimant or Settling Non - County Pool Participant, that fraction, the numerator of which is such County Claimant's or Settling Non - County Pool Participants' Withheld Proceeds Share, and the denominator of which is $121,213,282.32 (representing the total Withheld Proceeds Shares). bj. "Withheld Proceeds Share" means, as to each County Claimant or Non - County Pool Participant identified on Exhibit 1, 2 or 3, the amount set forth next to the name of such County Claimant or Non - County Pool Participant on such Exhibit under the heading "Withheld Proceeds." bk. "Withheld Proceeds Shortfall" means, as to each Settling Option A Pool Participant, the amount by which such Settling Option A Pool Par- ticipant's Withheld Proceeds Share exceeds the amount of the Withheld Proceeds distributed to such Settling Option A Pool Participant under section 3(d). 2. Distribution of Pool Assets to County Claimants. Subject to Section 4, the Pools, through the County, shall distribute to each County Claimant the following amounts out of the Pool Assets: a. Except as set forth in Section 2(b), the amount set forth next to the name of such County Claimant under the heading "Cash Distribution on Effective Date" on Exhibit 3, minus any Interim Distribution to such County Claimant made after March 17, 1995. b. Notwithstanding Section 2(a), the Irvine Coast Assessment District (which includes Irvine Coast CFD 88 -1) shall receive, in lieu of the 86-013F 3865.000 'i • • distribution specified in Section 2(a): (i) those unliquidated mutual fund securities which are reflected in the balance listed next to "Irvine Coast Assessment District" on Exhibit 2 under the heading "Pool Cash Value" — "Specific "; and (ii) the amount by which the aggregate balances listed next to "Irvine Coast Assessment District" and "Irvine Coast CFD 88 -1" under the heading "Cash Distribution on Effective Date" on Exhibit 2 exceeds $47,994,429.38, minus any Interim Distributions made to the Irvine Coast Assessment District (or Irvine Coast CFD 88 -1) after March 17, 1995. C. Such County Claimant's Withheld Proceeds Fraction of any Withheld Proceeds which are released from the claim of the adverse party by which they are held and turned over to the Pools. d. Such County Claimant's ratable portion of any Unallocated Interest which is in excess of $2,176,493.13 (such $2,176,493.13 representing amounts owing and unpaid to Salomon Brothers for its services in the liquidation of Pool Assets, which amount shall be paid to Salomon Brothers out of the Unallocated Interest), based on the relationship of the weighted average daily balances of such County Claimant in the Pools subsequent to the Petition Date to those of all County Claimants and Non - County Pool Participants (n each case, calculated by excluding any balance attributable to the investments described on Exhibit 8). 3. Distribution of Pool Assets to Settling Non - County Pool Participants. Subject to Section 4, the Pools, through the County, shall distribute to each Settling Non - County Pool Participant the following amounts out of the Pool Assets: BB -013F 3865.000 -19- 0� • a. Except as provided in Section 3(b), the amount set forth next to the name of such Settling Non - County Pool Participant under the heading "Cash Distribution on Effective Date" on Exhibit 1 or 2, as applicable, min any Interim Distributions made to such Settling Non - County Pool Participant after March 17, 1995. b. Notwithstanding Section 3(a), each Settling Non - County Pool Participant who is identified on Exhibit 8 shall receive the following in lieu of the distribution specified in Section 3(a): (i) the unliquidated Guaranteed Investment Contract ( "GIC ") which was included in calculating such Settling Non - County Pool Participant's balance under the heading "Pool Cash Value" — "Specific" on Exhibits 1 or 2, as described on Exhibit 8; and (ii) the amount by which the balance listed next to the name of such Settling Non - County Pool Participant under the heading "Cash Distribution on Effective Date" on Exhibit 1 or 2 exceeds the amount set forth next to the name of such Settling Non - County Pool Parti- cipant on Exhibit 8 under the heading "Balance As of December 6, 1994," minus any Interim Distributions made to such Settling Non - County Pool Participant after March 17, 1995. C. Such Settling Non - County Pool Participant's Withheld Pro- ceeds Fraction of any Withheld Proceeds which are released from the claim of the adverse parry by which they are held and turned over to the Pools; provided, however, that following the assignment by a Settling Option A Pool Participant of its right to distributions out of Withheld Proceeds under this Section 3(c) to the County in accordance with Section 7(a)(4), any amounts which would otherwise 88 -013F 3865.000 -20- �y • • be paid under this Section 3(c) to such assigning Settling Option A Pool Participant shall instead be distributed to the County. d. Such Settling Non - County Pool Participant's ratable portion of any Unallocated Interest which is in excess of $2,176,493.13 (such $2,176,493.13 representing amounts owing and unpaid to Salomon Brothers for its services in the liquidation of Pool Assets, which amount shall be paid to Salomon Brothers out of the Unallocated Interest), based on the relationship of the weighted average daily balances of such Settling Non - County Pool Participant in the Pools subsequent to the Petition Date to those of all County Claimants and Non - County Pool Participants (in each case, calculated by excluding any balance attributable to the investments described on Exhibit 8). 4. Procedures for Distributions of Pool Assets. On or before the fifth Business Day after the Effective Date, the Pools, through the County, shall make an initial distribution out of the amounts available for distribution out of Pool Assets (i) pursuant to Sections 2(a), 2(b), 3(a) and 3(b); (ii) pursuant to Sections 2(c) and 3(c) (to the extent, if any, that Withheld Proceeds are then available for distribution); and (iii) pursuant to Sections 2(d) and 3(d) (to the extent, if any, that the allocation of Unallocated Interest can be timely determined and the Unallocated Interest exceeds $2,176,493.13). In the event that, following such initial distribution, additional Withheld Proceeds or previously undistributed Unallocated Interest in excess of such $2,176,493.13 are or become available for distribution to County Claimants and Non - County Pool Participants, the County, on behalf of the Pools, shall make a distribution therefrom as soon as practicable thereafter in accordance with Sections 2 and 3. Each Settling Non - County Pool Participant shall furnish the County, acting on behalf of the 88 -013F 3865.000 -21- • • Pools, with its bank wire or other payment instructions in writing; and the County may rely on such written instructions in making distributions under this Agreement. 5. Professional Fee Reserve. On or before the fifth Business Day fol- lowing the Effective Date, the County, acting on behalf of the Pools, shall distribute into the Professional Fee Reserve, out of the amount available for distribution out of Pool Assets, the aggregate of all amounts listed under the heading "Professional Reserve" following each Settling Non - County Pool Participant's name on Exhibits f and 2 which have not previously been paid pursuant to Bankruptcy Court order to the professionals engaged by the Pool Committee and the Subcommittees. This distribution to the Professional Fee Reserve shall be placed in escrow with an escrow agent selected by the Pool Committee pursuant to an escrow agreement in a form to be approved by the Pool Committee. Payments shall be made out of the Professional Fee Reserve only upon the entry of an order of the Bankruptcy Court authorizing such payments. Any funds remaining in the Professional Fees Reserve after the payment of all professional fees and expenses of the Pool Committee and the Subcommittees shall be retained in such escrow to be used to pay the fees and expenses of the professionals utilized by the Pool Committee and the Subcommittees as they may be reconstituted in the County Chapter 9 Case and for such other purposes as may be specified in the escrow agreement. 6. Assignment by Pools of Rights Respectino Fannie Mae Escrow. The Parties agree and acknowledge that all amounts presently contained in the Fannie Mae Escrow, and the securities whose sale generated such amounts, constitute Pool Assets, and not assets of any particular County Claimant or Non - County Pool Participants. As a matter of settlement only, and in an effort to achieve an overall 88 -013F 3865.000 -22- resolution of their disputes, the Parties have agreed to allocate the amounts in the Fannie Mae Escrow (and any interest earned thereon or allocable thereto) as part of the distribution of Pool Assets to the County and to the Non - County Pool Participants with respect to whose indebtedness such amounts were withheld. This settlement and allocation in no way constitutes an admission or acknowledgement by any Party that the amounts in the Fannie Mae Escrow are anything other than Pool Assets or that any par- ticular County Claimant or Non - County Pool Participant has or had any specific interest in the amounts in the Fannie Mae Escrow or in any securities whose sale generated such amounts, and in no way constitutes any other admission or acknowledgement as among the Parties or as to anyone not a Party to this Agreement. As part of their settlement, the Parties agree that: a. The Pools hereby assign, convey and transfer to the County any and all rights and claims of the Pools with respect to the $90,000,000 amount reserved in the Fannie Mae Escrow with respect to $90,000,000 of County of Orange, California 1994 -95 Taxable Notes and any interest earned on or allocable to such amount after the Effective Date. The Parties agree that to the extent that any amounts so reserved (and any interest earned thereon or allocable thereto) are released from the Fannie May Escrow, they shall be paid to and become funds of the County which the County may retain and utilize for its own account. b. The Pools hereby assign, convey and transfer to the Orange County Board of Education any and all rights and claims of the Pools with respect to the $6,300,000 amount reserved in the Fannie Mae Escrow with respect to $6,300,000 in Orange County Board of Education 1994 Taxable Notes, and any interest earned on or allocable to such amount after the Effective Date. B8-013F 3865.000 -23- •, • • The Parties agree that to the extent that any amounts so reserved (and any interest earned thereon or allocable thereto) are released from the Fannie Mae Escrow, they shall be paid to and become funds of the Orange County Board of Education, which the Orange County Board of Education may retain, and utilize for its own account. C. The Pools hereby assign, convey and transfer to the Newport-Mesa Unified School District any and all rights and claims of the Pools with respect to the $7,000,000 amount reserved in the Fannie Mae Escrow with respect to $7,000,000 in Newport-Mesa Unified School District 1994 Taxable Notes, and any interest earned on or allocable to such amount after the Effective Date. The Parties agree that to the extent that any amounts so reserved (and any interest earned thereon or allocable thereto) are released from the Fannie Mae Escrow, they shall be paid to and become funds of the Newport-Mesa Unified School District, which the Newport-Mesa Unified School District may retain and utilize for its own account. d. The Pools hereby assign, convey and transfer to the North Orange County Community College District any and all rights and claims of the Pools with respect to the $7,000,000 amount reserved in the Fannie Mae Escrow with respect to $7,000,000 in North Orange County Community College District 1994 Taxable Notes, and any interest earned on or allocable to such amount after the Effective Date. The Parties agree that to the extent that any amounts so reserved (and any interest earned thereon or allocable thereto) are released from the Fannie Mae Escrow, they shall be paid to and become funds of the North 88.013F 3865.000 -24- • Orange County Community College District, which the North Orange County Community College District may retain and utilize for its own account. e. The Pools hereby assign, convey and transfer to the Irvine Unified School District any and all rights and claims of the Pools with respect to the $8,200,000 amount reserved in the Fannie Mae Escrow with respect to $8,200,000 in Irvine Unified School District 1994 Taxable Notes, and any interest earned on or allocable to such amount after the Effective Date. The Parties agree that to the extent that any amounts so reserved (and any interest earned thereon or allocable thereto) are released from the Fannie Mae Escrow, they shall be paid to and become funds of the Irvine Unified School District, which the Irvine Unified School District may retain and utilize for its own account. 7. Distribution by County in Respect of Deficiency Amounts of Settling Non - County Pool Participants. Each Settling Non - County Pool Participant may elect treatment with respect to its Deficiency Amount in accordance with either Option A or Option B, described below. The election shall be made by initialing the applicable box marked "Option A" or "Option B" in Paragraph 2 of the Agreement to Become Settling Non - County Pool Participant. Such election may be changed only as follows: () such election may be changed by submitting to the County, at the address for notice to the County, a new Agreement to Become Settling Non - County Pool Participant, appropri- ately executed and with the new option elected by proper initialing, at any time prior to the eleventh day following the entry of the order of the Bankruptcy Court described in Section 16(b); (ii) an election of Option B thereafter may be changed to an election of Option A only until the earlier of (x) 9:00 a.m. PDT on June 5, 1995 and (y) the date and time on which the County provides written notice that the ability to change an election of 88 -013F 3865.000 -25- • • Option B to an election of Option A is no longer available, provided that for purposes of this clause (ii), and notwithstanding Section 22, such notice will be deemed to have been provided and to be effective at 9:00 a.m. PDT of the morning of the date on which such notice is mailed or otherwise transmitted by the County, regardless of the time of day on which such notice is actually transmitted and regardless of when such notice is actually received; and n if and only if the County fails to obtain a liquidity facility satisfactory to the Pools Committee as described in Section 15 by no later than June 5, 1995, an election of Option A may be changed to an election of Option B until 5:00 P.M. PDT June 8, 1995. Except as provided in clauses (i), (ii) and (iii) above, an election of Option A or Option B may be changed only with the written consent of the County, which may be granted or wtthheld in the County's sole discretion. a. Option A: Subject to Sections 8 through 10, inclusive, each Settling Non - County Pool Participant who elects Option A shall: (1) receive from the County a principal amount of Recov- ery Notes equal to the amount set forth next to that Settling Non - County Pool Participant's name on Exhibit 1 or 2 under the heading "Total Recovery Notes;" (2) in the case of a Settling Non - School Pool Participant who elects Option A, be allowed a Settlement Secured Claim against the County in the County Chapter 9 Case in an amount equal to the amount set forth next to that Settling Non - School Pool Participant's name on Exhibit 2 under the heading 'Total Settlement Secured Claims;" (3) be allowed a Repayment Claim against the County in the County Chapter 9 Case in an amount equal to the amount set forth BB -013F 3865.000 -26- next to that Settling Non - County Pool Participant's name on Exhibit 1 or 2 under the heading "Total Repayment Claims'; and (4) if and only if such Settling Non - County Pool Participant has a Withheld Proceeds Shortfall after all distributions to such Settling Non - County Pool Participant have been made pursuant to Sections 3(c) and 4, then such Settling Non - County Pool Participant shall receive: (i) an additional principal amount of Recovery Notes out of the Reserved Recovery Notes equal to 21.63% of such Settling Non - County Pool Partici- pant's Withheld Proceeds Shortfall; (ii) be allowed an additional Repayment Claim against the County in the County Chapter 9 Case in the amount of 46.99% of such Settling Non - County Pool Participant's Withheld Proceeds Shortfall; and (iii) be allowed a Settlement Secured Claim against the County in the County Chapter 9 Case in the amount of 31.360/6 of such Settling Non - County Pool Participant's Withheld Proceeds Shortfall. Notwithstanding the foregoing, each Settling Non - County Pool Participant who elects Option A may, at any time, assign, transfer and convey to the County, by a writing in form and substance reasonably satisfactory to the County, all of such Settling Non - County Pool Participant's rights to receive any further distribution out of Withheld Proceeds under Sections 3(c) and 4. In the event of such assignment, such Settling Non - County Pool Participant shall receive a principal amount of additional Recovery Notes out of the Reserved Recovery Notes and be allowed an additional Repayment Claim and a Settlement Secured Claim calculated in accordance with the first sentence of this Section 7(a)(4) except that, for BB -013F 3865.000 -27- 3 • • purposes of making such calculation, such Settling Non - County Pool Participant's Withheld Proceeds Shortfall shall be deemed to be the amount by which such Settling Non - County Pool Participant's Withheld Proceeds Share exceeds the amount theretofore distributed to such Settling Non - County Pool Participant with respect to Withheld Proceeds pursuant to Sections 3(c) and 4. b. Option B: Each Settling Non - County Pool Participant who elects Option B shall reserve and retain, unimpaired by this Agreement, all rights and claims it may have, if any, against the County and the other County Claimants and their Related Parties, including all claims that the County or any other County Claimant or such Related Party is liable in damages for any and all alleged misconduct (whether before or after the Petition Date) of the County, any other County Claimant, the Pools, the Orange County Treasurer or any other officers, officials, employees or agents of the County, any other County Claimant or the Pools, and including specifically with respect to alleged self - dealing by the Orange County Treasurer and other alleged breaches of fiduciary duty, fraud, conversion, misappropriation of funds, negligent investments and other alleged misconduct and the alleged withholding of the funds of such Pool Participants. Each County Claimant and the Pools shall reserve and retain all of its rights: (i) to object to, defend against or otherwise challenge the validity, allowability, amount, priority and any other characteristic of any such reserved right or claim of any Settling Non - County Pool Participant who elects Option B, (ii) to assert any rights, claims and remedies it may have against each Settling Non - County Pool Participant who elects Option B and its Related Parties, and (iii) to seek to 68 -013F 3865.000 -28- • • subordinate any reserved right, remedy or claim of a Settling Non - County Pool Participant who elects Option B under section 510 of the Bankruptcy Code or any other provision of applicable law. Notwithstanding anything to the contrary contained in the foregoing provisions of this Section 7(b) or in any other provision of this Agreement, the County (for itself and on behalf of each County Adminis- tered Account, which shall be bound by the allocation of Pool Assets in Section 2) and each Settling Non - County Pool Participant (including, without limitation, each Settling Non - County Pool Participant who elects Option B) hereby waives, relinquishes, and releases any right or claim to, and agrees that it shall in no manner seek to, reallocate and seek to recover, impose a trust upon or other- wise reclaim as the res of a trust for its benefit, or for any other reason or other- wise recover any of the cash distributed from the Pools under Sections 2, 3 and 4 of this Agreement or in the form of any Interim Distributions to any County Claimant or Settling Non - County Pool Participant (the foregoing release being limited to claims to any such distributions and not applying to the assertion of general unsecured claims against the County). The County shall use its best efforts to recover all Withheld Proceeds as soon as practicable in view of the goal of prosecuting litigation on Pool - Related Claims against holders of Withheld Proceeds to the fullest extent possible and to pay or cause to be paid in full all Recovery Notes, Secured Settlement Claims and Repayment Claims through expense reductions and revenue enhancements; provided, however, that the foregoing shall in no way be deemed to constitute or require a waiver of any rights of the County under the Bankruptcy Code or any other applicable law. 58 -013F 3865.000 -29- • • 8. Initial Distribution of Recovery Notes and Initial Allowance of Repay- ment Claims and Settlement Secured Claims. By no later than the later of (i) June 13, 1995 and (ii) five (5) Business Days after the Effective Date: (a) the County shall distrib- ute to each Settling Option A Pool Participant the principal amount of Recovery Notes which such Settling Option A Pool Participant is entitled to receive under Section 7(a)(1); and (b) each Settling Option A Pool Participant shall have a Repayment Claim and, in the case of each Settling Non - School Pool Participant who has elected Option A, a Settlement Secured Claim, in the respective amounts calculated pursuant to Sections 7(a)(2) and 7(a)(3). 9. Reserve With Respect to Recovery Notes, Repayment Claims. and Settlement Secured Claims Relating to Withheld Proceeds Shortfall. Upon the distribu- tion of Recovery Notes and the allowance of Repayment Claims and Settlement Secured Claims pursuant to Section 8, and until such time as all distributions required under Sec- tions 2 and 3 have been completed: (a) additional Recovery Notes in the principal amount of 21.63% of the sum of the Withheld Proceeds Shares of all Settling Option A Pool Participants (the "Reserved Recovery Notes ") (and any interest paid on or proceeds from the sale of the Reserved Recovery Notes, which the County shall be permitted to sell only at face) shall be held in trust by the County in a segregated account for the benefit of the Settling Option A Pool Participants who become entitled thereto under Section 7(a)(4); and (b) the distributions (the "Reserved Distributions') that would be made out of the Net Litigation Proceeds under Section 11 on account of (i) an additional Repayment Claim in the amount of 46.99% of the sum of the Withheld Proceeds Shares of all Settling Option A Pool Participants; and (ii) a Settlement Secured Claim in the amount of 31.38% of the sum of the Withheld Proceeds Shares of all 88 -013F 3M5.000 -30- • • Settling Option A Pool Participants, along with any interest earned on the Reserved Distributions, shall be held in trust by the County in a segregated account for the benefit of the Settling Option A Pool Participants who are ultimately entitled thereto under Sections 7(a)(4). 10. Distribution of Reserved Items. The Reserved Recovery Notes, any interest paid thereon, any proceeds from the sale of the Reserved Recovery Notes and interest earned on such proceeds, and any Reserved Distributions and interest earned thereon shall be distributed as follows: a. In the event that a Settling Option A Pool Participant elects to assign its rights to a distribution out of Withheld Proceeds to the County in accor- dance with Section 7(a)(4): (i) such Settling Option A Pool Participant shall re- ceive, out of the reserve described in Section 9, the principal amount of Recovery Notes (or, if the Reserved Recovery Notes have been sold, cash proceeds thereof in such principal amount) that such Settling Option A Pool Participant is entitled to receive upon such assignment under Section 7(a)(4); any interest earned on or allocable to such principal amount of Reserved Recovery Notes or sale proceeds; that portion of the Reserved Distributions which is allocable to the Settlement Secured Claim and the Repayment Claim which are allowed to such Settling Option A Pool Participant upon such assignment under Section 7(a)(4); and any interest in the reserve allocable to such portion of the Reserved Distributions and (iii) the amount of the Repayment Claim described in Section 9(b)(i) and the Settlement Secured Claim described in Section 9(b)(ii) shall be reduced, respectively, by the amount of the Repayment Claim and the Settlement 68 -013F 3865.000 -31- • • Secured Claim which are allowed to such Settling Option A Pool Participant upon such assignment. b. As soon as practicable after a final determination that there are no further Withheld Proceeds which may be recovered by the County or the Pools and distributed under this Agreement, either by Final Order or Final Orders of the Bankruptcy Court or written agreement of the County and the Pool Com- mittee following fifteen (15) days' written notice to the County Committee, each Settling Option A Pool Participant who has not previously assigned its rights to distributions out of Withheld Proceeds to the County under Section 7(a)(4) shall: (i) receive, out of the Reserved Recovery Notes (or the cash proceeds thereof), a principal amount of Recovery Notes (or cash) equal to the principal amount of the Recovery Notes which such Settling Option A Pool Participant is entitled to receive under Section 7(a)(4), plus the interest earned on such principal amount of Recovery Notes (or on the cash proceeds thereof); (ii) be allowed a Repayment Claim and, a Settlement Secured Claim, computed in accordance with the provisions of Section 7(a)(4), and be paid, out of the Reserved Distributions, that portion of the Reserved Distributions which are allocable to the Repayment Claim and Settlement Secured Claim which are so allowed to such Settling Option A Pool Participant, plus any interest in the reserve allocable to such portions of the Reserved Distributions. C. Any and all property which remains in the reserve established under Section 9 following the distributions required under Sections 10(a) and 10(b) shall be retained by the County as funds of the County. 88 -013F 3865.000 -32- • • 11. Security Interests in and Distribution of Net Litigation Proceeds. a. The County hereby grants to each Settling Non - School Pool Participant who elects Option A a first priority security interest in and lien upon the Secured Claim Percentage of the Net Litigation Proceeds, to secure the Settlement Secured Claim of such Settling Non - School Pool Participant which is allowed pursuant to Section 7(a)(2) and (4). Such lien and security interest shall secure all Settlement Secured Claims on a ratable basis. b. The County hereby grants to each Settling Option A Pool Participant a second priority security interest in and lien upon the Secured Claim Percentage of the Net Litigation Proceeds, to secure the Repayment Claim of such Settling Option A Pool Participant which is allowed pursuant to Section 7(a)(3) or (4). Such lien and security interest shall secure all Repayment Claims on a ratable basis. C. The County shall execute such financing statements and other documents to evidence and perfect the liens and security interests granted under Sections 11(a) and 11(b) as the Pool Committee may reasonably request. d. Upon the receipt of any Litigation Proceeds in the form of cash, the County shall be entitled first to reimburse itself therefrom for any and all Litigation Costs. Promptly following such receipt and reimbursement, the County shall: (i) pay in cash the Secured Claim Percentage of the Net Litigation Proceeds which it receives in the form of cash to the holders of Settlement Secured Claims on a ratable basis, in an amount which shall not exceed the unpaid portion of such Settlement Secured Claims and; (ii) then pay in cash any remaining portion of such cash Net Litigation Proceeds to the holders of 98-013F 3865.000 -33- • • Repayment Claims on a ratable basis, in an amount which shall not exceed the unpaid amount of such Repayment Claims. To the extent that, prior to the satisfaction in full of the Settlement Secured Claims and Repayment Claims allowed or reserved for under Sections 7(a), 8, and 9, the County receives more than 35% of the Net Litigation Proceeds, the County shall not use such additional Net Litigation Proceeds received by the County to fund the County's operating expenses or those of any other County Claimant. After the Repayment Claims have been paid in full, the County shall be entitled to retain, for its own account, all remaining Net Litigation Proceeds which are in the form of cash, up to an amount equal to the sum of: (i) $236,735,199.55; plus (ii) 21.66% of the difference between (x) $81,979,261.49 and (y) 67.63% of the Withheld Proceeds which become available for distribution; and (iii) all interest that would have ac- crued on a principal amount of Recovery Notes equal to the sum of (i) and (ii) under the terms of the Recovery Notes through the date upon which the County has been able to recover the full amount of such principal amount of Recovery Notes and interest hereunder. Following all distributions out of Net Litigation Proceeds described above, the County shall pay to each Settling Option A Pool Participant that portion of any additional Net Litigation Proceeds which are received in the form of cash which equals the product of multiplying such addi- tional Net Litigation Proceeds by such Settling Option A Pool Participant's Pool Balance Fraction, and the County shall be entitled to retain for its own account the remaining portion of such additional Net Litigation Proceeds. e. Upon the receipt by the County of any Litigation Proceeds which consist of property which is not cash (including, without limitation, readily BB -013F 3865.000 -34- • • marketable securities), the County shall hold such property subject to the liens granted by this Section 11 and may not sell or transfer such non -cash property without either (i) the written consent of the Pool Committee; or (ii) an order of the Bankruptcy Court authorizing such sale which is entered at a hearing of which counsel to the Pool Committee has been provided at least ten (10) days notice. The County shall use its best efforts to sell or otherwise dispose of such non- cash property expeditiously on a commercially reasonable basis. Upon the sale or transfer of any such non -cash property, any cash Net Proceeds thereof shall be treated and distributed as Litigation Proceeds under Section 11(d), and any non -cash Net Proceeds shall continue to be treated under this Section 11(e). f. Notwithstanding anything to the contrary contained in Section 11(d) or 11(e), in the event that a County- Administered Account receives proceeds of a Pool - Related Claim of such County- Administered Account which do not constitute Litigation Proceeds, but which would have constituted Litigation Proceeds but for the inability of the County to assign Pool - Related Claims of such County- Administered Account in accordance with Section 12, then: (i) the Net Litigation Proceeds shall be deemed to have been increased by the amount by which such proceeds received by such County- Administered Account on account of such Pool - Related Claim exceeds all costs and expenses incurred by the County or such County- Administered Account in prosecuting or otherwise attempting to collect upon or realize upon such Pool - Related Claim; and (ii) to the extent that any additional amounts are payable to Settling Option A Pool Participants under Section 11(d) or 11(e) as a result of such deemed increase in 68 -013F 3865.000 -35- ,a 88.013E 3865.000 • • Net Litigation Proceeds, such excess shall be paid out of amounts that would otherwise have been retained by the County pursuant to S €ction 11(d) or 11(e). g. Until all Settlement Secured Claims and all Repayment Claims have been paid in full, the County shall not settle any Pool - Related Claims of the County or Assigned Pool- Related Claims on terms whereunder any portion of the consideration to be received by the County for such Pool - Related Claims of the County or Assigned Pool - Related Claims would consist of the cancellation or modification of any indebtedness of the County, whether under a plan of adjustment or otherwise, without the written consent (which written consent shall not be unreasonably withheld) of the Pool Committee to such settlement and the terms on which the holders of Repayment Claims and Settlement Secured Claims will share in the benefits of such debt cancellation or modification. 12. Assignment of Pool - Related Claims or Proceeds Thereof to County. a. Each Settling Option A Pool Participant and the County, on behalf of each County Administered Account, but only to the extent, if any, that the County has the authority to make such assignment on behalf of such County Administered Account, hereby assigns, transfers and conveys to the County, to the fullest extent allowed by law without destruction or material impairment thereof, any and all Pool - Related Claims of such Settling Option A Pool Participant or County Administered Account against any person or entity which is not a Party to this Agreement and which is not specifically released under the terms of Section 14 and any and all proceeds of such Pool - Related Claims. Such assignments shall vest in the County all rights to recovery of Litigation Proceeds for such assigned claims, subject only to the terms provided in this Agreement. -36- • • Each Settling Option A Pool Participant and the County, on behalf of each County Administered Account (to the extent, if any, that the County has authority to make the foregoing assignment on behalf of such County Administered Account) acknowledges the County's ownership of the claims, rights to recovery and pro- ceeds assigned hereunder and the County's right to prosecute such claims and rights to recover in the County's name, and /or in the name of the assigning Settling Option A Pool Participant. b. All Pool - Related Claims of Settling Option A Pool Participants or County Administered Accounts which would be assigned to the County under Section 12(a) but for the fact that such Pool - Related Claims would be destroyed or materially impaired by their assignment or attempted assignment to the County under Section 12(a) shall be retained by the Settling Option A Pool Participants to which they belong prior to the Effective Date. The Settling Option A Pool Particle pants or County Administered Accounts retaining such Pool - Related Claims shall cooperate with the County to enable the County to prosecute such Pool - Related Claims on behalf of and in the name of such Settling Option A Pool Participant or County Administered Accounts in the same manner and with the same degree of control by the County and its legal counsel as though such Pool - Related Claims had been assigned to the County; provided, however, that such Settling Option A Pool Participant or County Administered Account shall not be obligated to incur any expense or liability in rendering such cooperation. The Litigation Proceeds from any such Pool - Related Claims shall be paid over to the County and shall be subject to all terms of this Agreement as though they had been assigned to the County under Section 12(a) above. To the extent that any judgment is rendered 88-013F 3865.000 .37- c1 • • against a Settling Option A Pool Participant (including an award of attorneys' fees and costs to the opposing party in any such litigation) on account of the cooperation of such Settling Option A Pool Participant in the prosecution of a Pool - Related Claim of such Settling Option A Pool Participant, the amount of such judgment shall be considered a Litigation Cost to be paid before any distribution of Net Litigation Proceeds. In addition, if the County files suit on an Assigned Pool - Related Claim in the name of a Settling Option A Pool Participant or County Administered Account and not in its own name, and such Settling Option A Pool Participant or County Administered Account is adjudged liable for participating in the filing of such suit without fault on the part of such Settling Option A Pool Participant or County Administered Account, the amount of such judgment shall be considered a Litigation Cost to be paid by the County before any distribution of Net Litigation Proceeds, and, in the event that the litigation Proceeds are insufficient to pay such Litigation Cost and such judgment is for a liability in tort other than an award of attorney's fees, the County shall indemnify and hold harmless such Settling Pool Participant or County Administered Account as an administrative expense in the County Chapter 9 case, and any amounts paid on account therefor by the County shall be a Litigation Cost to be reimbursed to the County before any distribution of Net Litigation Proceeds. C. Without in any manner limiting the scope of the foregoing, each Settling Option A Pool Participant and the County, on behalf of each County Administered Account (to the extent, if any, the County has the authority to bind such County Administered Account hereby) hereby agrees that the County shall have the ability to enter into binding and enforceable settlements and releases of BB -013F 3865.000 -38- �,L • • Assigned Pool - Related Claims, subject to the provisions of Section 11(f) and any necessary Bankruptcy Court approval thereof. d. In connection with the foregoing, each Settling Option A Pool Participant hereby represents and warrants to the County that such Settling Option A Pool Participant has not previously assigned, pledged, hypothecated or otherwise made the subject of a Transfer to any person or entity any Pool- Related Claim held by such Settling Option A Pool Participant. e. The County shall use its best efforts to maximize the Net Liti- gation Proceeds resulting from the Pool- Related Claims assigned to the County or which the County is being given the right and power to prosecute pursuant to this Section 12; provided, however, that nothing contained herein shall be construed to require the County to incur any liability other than for its own attorney's and other professional fees and other costs in the prosecution of Pool - Related Claims. Notwithstanding the foregoing, any liability incurred by the County in prosecuting any Pool - Related Claims shall be treated as a Utigation Cost to be reimbursed to the County before any distribution of Net Utigation Proceeds. The provisions of Exhibit 6, the Litigation Review Provisions, are hereby specifically incorporated into this Agreement; and the County and each of the Settling Option A Pool Participants agree to observe and shall be bound by such provisions. No term or provisions of this Section 12 shall be construed to eliminate or restrict any right or obligation of any Party under Exhibit 6. 13. Joint Powers Authority. As soon as practicable following the Effective Date, the County and all interested Non -County Pool Participants shall form a new Joint Powers Authority (" JPX) for the purpose of managing the investment of funds B8 -013F 3865.000 -39- • • for the County and all public agencies located therein. The charter of the JPA shall be in such form as may be agreed upon between the County and the Pools Committee. The JPA shall have a board of directors appointed by the Pool Participants who participated in the JPA, including the County. The JPA shall have the authority either to hire its own staff or private management firms to manage and direct the investment of funds deposited with the JPA, subject in all respects and at all times to appropriate guidelines established by the JPA board of directors. The JPA board of directors shall conduct public meetings no less frequently than quarterly. 14. Su000rt For Termination of Certain Distribution Arrangements. The Settling Non - County Pool Participants shall not oppose (including in proceedings before the Bankruptcy Court) the discontinuation, effective five (5) Business Days following the Effective Date, of all interim distribution programs. 15. Recovery Note Liquidity. The County shall use its best efforts to cause the Recovery Notes to be immediately liquid at par at the time they are to be dis- tributed, without discount or brokerage commissions, through the use of a credit en- hancement liquidity facility satisfactory to the Pool Committee which is obtained on or before June 5, 1995. 16. Conditions to Effectiveness of Agreement and Effective Date. Save and except for the provisions of Section 17, which shall take effect immediately, the pro- visions of this Agreement shall not become effective until the first date on which each of the following conditions shall have been satisfied or, in the case of any condition which is waivable by its terms, been waived in writing by the Parry specified therein as being entitled to waive such condition (the "Effective Date "): 88 -013F 3865.000 -40- �v a. Non - County Pool Participants who constitute at least 80% in number of the Non - County Pool Participants and hold at least 90% of the aggre- gate amount of the Pool Balances of all Non - County Pool Participants shall have become Settling Non - County Pool Participants by executing Agreements to Become Settling Non- County Pool Participants by the Deadline; provided, however, that this condition may be waived in writing by the County, without any prior notice, in a writing delivered to counsel to the Pools Committee. b. The Bankruptcy Court in the Chapter 9 Cases shall have en- tered an order or orders, in form and substance satisfactory to the County, which shall have become a Final Order or Final Orders, which shall: (i) contain provisions reasonably satisfactory to the County and the Pool Committee; (ii) approve and authorize the distribution of unallocated taxes made pursuant to the Tax Distribution Order and provide that any County Claimant or Settling Non- County Pool Participant who has received any payments made pursuant to the Tax Distribution Order shall be released from any obligation to return all or any portion of such payments arising under any provision of the Bankruptcy Code; (iii) approve the settlements, compromises, releases, and all other terms and conditions contained in this Agreement and authorize the County and the Pools to enter into and perform all of their respective obligations under this Agreement; and (iv) provide for the grant of the security interests and liens provided in Section 11, that such security interests shall be fully perfected without the need for any filing or other action, and substantially incorporate the provisions of Section 11; provided, however, that the requirement that any such order or BB -013F 3865.000 -41- • • orders have become a Final Order may be waived in writing by the County, without any prior notice, in a writing delivered to counsel to the Pools Committee. If both of the conditions to the Effective Date have not occurred or been duly waived, and the Effective Date has not occurred, by June 5, 1995, or by such later date or dates as may be agreed to in writing by the County and the Pool Committee, then this Agreement shall terminate and be null and void and of no further force or effect, and each Agreement to Become Settling Non - County Pool Participant which has been executed by any Non - County Pool Participant shall become null and void and of no further force or effect. In such event, nothing contained in this Agreement or any Agreement to Become Settling Non - County Pool Participant shall in any way constitute a waiver of any rights by, or in any manner prejudice the rights of, the County Claimants or any Non - County Pool Participant. 17. Cooperation And Best Efforts In Seeking Bankruptcy Court Orders. Each Party agrees to cooperate with the County and the Pools in seeking, and not to hinder or interfere with any proceedings to obtain, the order or orders described in Sec- tion 16(b). The County agrees to use its best efforts to (i) file an appropriate motion with the Bankruptcy Court as soon as reasonably practicable and, thereafter, to obtain the order or orders described in Section 16(b); and (ii) to obtain the authority to grant the release provided in Section 19(b) and make the assignment described in Section 12 on behalf of County Administered Accounts by the Effective Date. 18. Reconstitution of Pool Investors' Committee. The Parties shall use their best efforts, including supporting any necessary requests to the Bankruptcy Court or the United States Trustee, to have the Pool Committee be reconstituted as a sub- committee of the County Creditors' Committee and to have certain of its members 88 -013F 3865.000 42- • • become members of the County Creditors' Committee, or to have the Pool Committee be reconstituted as a separate committee in the County Chapter 9 Case. Any expenses of such subcommittee or separate committee, including without limitation professional fees, shall be paid out of the Professional Fees Reserve in accordance with Section 5; provided, however, that nothing in this Agreement shall prejudice professionals representing such separate committee, such subcommittee and /or any individual Non - County Pool Participant from applying for and receiving compensation from the County pursuant to Section 503(b) of the Bankruptcy Code "in making a substantial contri- bution" in the County Chapter 9 Case after the Effective Date, as the quoted phrase is used in Section 503, if the Bankruptcy Court determines such committee, subcommittee or individual Non - County Pool Participant or professional has made a "substantial contribution" in the County Chapter 9 Case after the Effective Date, or prejudice the County from opposing any such request. 19. Release. a. Each Settling Option A Pool Participant hereby fully, finally, and forever irrevocably releases, relieves, quitclaims, and discharges the County, any County Administered Account which does not attempt to prosecute a claim that would be released under Section 19(b) if such County Administered Account was bound by Section 19(b) (a "Released County Administered Account "), the Pools, each other Settling Option A Pool Participant and all the County's, the Pool's, each such Released County Administered Account's and each such other Settling Option A Pool Participant's Related Parties from, and waives and relinquishes, any and all Pool - Related Claims which such Settling Option A Pool Participant, or any person or entity claiming from, through, or under such Settling 88 -013F 3865.000 -43- S1 • • Option A Pool Participant, ever had, now has, or hereafter can, shall, or may have against the County, the Pools, any Released County Administered Account, any other Settling Option A Pool Participant or any of the County's, the Pool's, each such Released County Administered Account's and each such other Settling Option A Pool Participant's Related Parties (and any right of indemnity, contribution or subrogation arising therefrom or relating thereto), including, without limitation, with respect to any distribution from the Pools to the County, any County Administered Account or any Settling Option A Pool Participant; provided, however, that nothing contained herein shall release (i) any claims against, or obligations of, any Party arising under this Agreement or (ii) the claim of any Settling Option A Pool Participant against a Related Party of the County or the Pools to whom the County or the Pools has denied indemnification for Pool- Related Claims under the County's indemnification policies or applicable law if and only if such Settling Option A Pool Participant provides the County with a written agreement, in form and substance reasonably satisfactory to the County, to indemnify the County and the Pools against any claim for indemnification which such Related Party of the County or the Pools may assert against the County as a result of such Settling Option A Pool Participant's assertion of a Pool- Related Claim against such Related Party of the County or the Pools, if such Related Party is adjudged by a court to have any such right of indemnification against the County or the Pools. b. The County (on its own behalf and on behalf of each County Administered Account which is a Releasing Parry) hereby fully, finally, and forever irrevocably releases, relieves, quitclaims, and discharges each Settling Option A 88-013F 3M.000 -44- h. • • Pool Participant and all of each such Settling Option A Pool Participant's Related Parties from, and waives and relinquishes, any and all Pool - Related Claims which the County, any County Administered Account which is a Releasing Party, or the Pool, or any person or entity claiming from, through, or under the County, any County Administered Account which is a Releasing Party, or the Pool, ever had, now has, or hereafter can, shall, or may have against any Settling Option A Pool Participant or any such Settling Option A Pool Participant's Related Parties (and any right of indemnity, contribution or subrogation arising therefrom or relating thereto), including, without limitation, with respect to any distribution from the Pools to such Settling Option A Pool Participant, provided, however, that nothing contained herein shall release any claims against, or obligations of, any Party arising under this Agreement. C. Each Settling Non -County Pool Participant hereby fully, finally, and forever irrevocably releases, relieves, quitclaims, and discharges each and every other Settling Non - County Pool Participant and all of each such other Settling Non - County Pool Participant's Related Parties from, and waives and relinquishes, any and all Pool - Related Claims which such Settling Non - County Pool Participant, or any person or entity claiming from, through, or under such Settling Non - County Pool Participant, ever had, now has, or hereafter can, shall, or may have against any other Settling Non - County Pool Participant or any of such other Settling Non - County Pool Participant's Related Parties (and any right of indemnity, contribution or subrogation arising therefrom or relating thereto), including, without limitation, with respect to any distribution from the Pools to any Settling Non - County Pool Participant; provided, however, that nothing contained BB -013F 3865.000 -45- ,,I� herein shall release any claims against, or obligations of, any Party arising under this Agreement. d. Each Party hereby fully, finally, and forever irrevocably re- leases, relieves, quitclaims, and discharges the Pool Committee and any individual members thereof, each Subcommittee and any individual members thereof, each individual who has acted as an independent intermediary (in its capacity as such) between the County and the Pools Committee in connection with this Agreement, and the attorneys, accountants and other professionals employed by the Pool Committee or any Subcommittee from, and waives and relinquishes, any and all claims, demands, obligations, debts, liabilities, suits, causes of action, remedies or rights which in any way relate to services rendered to, on, or on behalf of the Pools Committee, any Subcommittee or any individual member thereof through the Effective Date, which such Party, or any person or entity claiming from, through, or under such Parry ever had, now has, or hereafter can, shall, or may have against the Pool Committee, any individual member thereof, any Subcommittee, any individual member thereof, each individual who has acted as an independent intermediary (in its capacity as such) between the County and the Pools Committee in connection with this Agreement, or the attorneys, accountants or other professionals employed by the Pool Committee or any Subcommittee and any right of indemnity, contribution or subrogation arising therefrom or relating thereto; provided, however, that nothing contained herein shall release any claims against, or obligations of, any Party arising under this Agreement. 60-013F 3865.000 -46- �p • • e. Each Settling Non - County Pool Participant listed on Exhibit 8 hereby fully, finally and forever irrevocably releases, relieves, quitclaims and discharges the County, any County- Administered Account, the Pools, and all of the County's, the Pools' and the County- Administered Accounts' Related Parties from, and waives and relinquishes, any and all claims, demands, obligations, debts, liabilities, suits, causes of action, remedies or rights which arise out of or relate to the investment of funds in Guaranteed Investment Contracts or securities which are reflected or taken into account in the balance set forth next to the name of such Settling Non - County Pool Participant under the heading "Pool Cash Value" — "Specific" in Exhibit 1 or 2, whenever arising, whether known or unknown, suspected or unsuspected, fixed or contingent, liquidated or unliquidated, matured or unmatured, choate or inchoate, pending or not pending, which such Settling Non - County Pool Participant, or any person or entity claiming from, through, or under such Settling Non - County Pool Participant ever had, now has, or hereafter can, shall or may have against the County, any County - Administered Account, the Pools, or any of the County's, any County - Administered Account's, or the Pools' Related Parties (and any right of indemnity, contribution or subrogation arising therefrom or relating thereto); provided, however, that nothing contained in this Section 19(e) shall release any claims against, or obligations of, any Party arising under this Agreement, or any Pool - Related Claims other than those relating to the investments described in this Section 19(e) or in Section 3(b) or 3(c). f. EACH RELEASING PARTY EXPRESSLY UNDERSTANDS THAT section 1542 of the Civil Code of the State of California provides as follows: 88 -013F 3865.000 -47- • A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR. g. EACH RELEASING PARTY HEREBY AGREES THAT THE PROVISIONS OF SECTION 1542 of the Civil Code of the State of California and all similar federal or state laws, rights, rules, or legal principles, legal or equitable, which may be applicable hereto, to the extent that they may apply to any of the matters released herein, ARE HEREBY KNOWINGLY AND VOLUNTARILY WAIVED AND RELINQUISHED BY EACH RELEASING PARTY in each and every capacity, to the full extent that such rights and benefits pertaining to the matters released herein may be waived, and each Party to this Agreement hereby agrees and acknowledges that this waiver and relinquishment is an essential term of this Agreement, without which the consideration provided to it would not have been given. h. In connection with such waiver and relinquishment, each Re- leasing Parry acknowledges that it is aware that it may hereafter discover claims presently unknown or unsuspected, or facts in addition to or different from those which it now knows or believes to be true, with respect to the matters released herein. Nevertheless, it is the intent of each Releasing Party in executing this Agreement or an Agreement to Become Settling Pool Participant, as applicable, fully, finally, and forever to settle and release all such matters, and all claims rela- tive thereto, which exist, may exist or might have existed (whether or not previ- ously or currently asserted in any action) which are the subject of the releases granted under subsections (a), (b) and (c). Each Releasing Parry acknowledges B13-013F 3865.000 -48- ,1 • • that it has received or had the opportunity to obtain independent legal advice regarding any release which it is granting under this Agreement and that is has conducted such investigation as it deems appropriate, necessary and possible with respect to any such release. 20. Nonassignment of Released Claims. Each Releasing Parry hereby represents and warrants that every claim, demand, debt, liability, obligation, action, cause of action, suit and other matter released by such Releasing Party pursuant to the provisions of Section 19 ( "Released Claims ") has not heretofore been assigned, en- cumbered, or hypothecated, and is not the subject of a Transfer, by such Releasing Party. Each Releasing Party hereto agrees to indemnify each other Releasing Party and such other Releasing Party's Related Parties, and hold them harmless, from the assertion of any Released Claims which is based upon or arises in connection with any such prior assignment, hypothecation, Transfer, or encumbrance. 21. Notices. All notices, requests, demands, and other communications under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service if served personally or by facsimile transmission on the Party to whom directed with confirmation of transmission; or on the third Business Day after mailing if mailed to the Parry to whom directed, by first class mail, postage prepaid, registered or certified, return receipt requested, and properly addressed to such Party's address as set forth next to such Party's signature line in this Agreement or in the Agreement to Become Settling Pool Participant executed by such Party. Any Party may change its address by giving written notice to the other parties in the manner set forth above. 88-013F 3865.000 -49- • • 22. Entire Agreement: Modification: Waiver. This Agreement, including the Exhibits hereto, constitutes the entire agreement between the Parties and supersedes all prior and contemporaneous agreements, representations, warranties, and understandings of the Parties, whether oral, written or implied, as to the subject matter hereof. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by all Parties affected thereby. No waiver of any of the provisions of this Agreement shall be deemed or constitute a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the Party making the waiver. 23. No Third -Party Beneficiaries. Except as otherwise specifically pro- vided in this Section 23, nothing contained in this Agreement is intended to confer any rights or remedies under or by reason of this Agreement on any person or entity other than the Parties hereto; grovided, however, that solely for purposes of enforcing the re- strictions on the payment of Repayment Claims set forth in clause (ii) of the definition thereof in Section 1: (i) each holder of a Senior Claim who becomes such as a result of the lending of money or other extension of credit to the County following the Effective Date (whether or not such holder relied on such restrictions in lending money or otherwise extending credit to the County); and (ii) each holder of a Senior Claim who the County agrees in writing shall be a third party beneficiary of such restriction, shall be deemed to be a third -party beneficiary of such restriction on the payment of Repayment Claims with the right to enforce such restrictions directly for its own benefit. Nothing contained in this Agreement is intended to relieve or discharge the obligation or liability of any third party to any Party to this Agreement except as expressly provided herein, nor shall any provision give any third party any right of subrogation or action over or 88.013F 3865.000 -50- • L against any Party to this Agreement or any third parry released under this Agreement. Nothing in this Agreement shall in any way affect the rights of, or confer any rights upon, any Non - County Pool Participant who elects not to become a Party to this Agreement by executing this Agreement or an Agreement to Become Settling Non - County Pool Participant. 24. Assignment. This Agreement shall be binding upon, and shall inure to the benefit of, the Parties and their respective successors and assigns. 25. Further Assurances. Each Party hereto agrees to execute any and all documents and to do and perform any and all acts and things necessary or proper to effectuate or further evidence the terms and provisions of this Agreement. 26. No Representations or Warranties. Except as expressly set forth in this Agreement, none of the Parties hereto makes any representation or warranty, written or oral, express or implied. 27. Severability. If any portion of this Agreement shall be held to be in- valid or unenforceable, then that portion shall be deemed to have been modified to the minimum extent necessary in order to cause it to be valid and enforceable and to ac- complish its intent as evidenced by the entirety of this Agreement; and the Parties ac- knowledge that the balance of this Agreement shall be unaffected by such modifications and remain valid and enforceable. 28. Headings. The descriptive headings of the several Sections of this Agreement are inserted for convenience of reference only and do not constitute a part of this Agreement. 29. Applicable Law. This Agreement shall be governed in all respects, including the validity, interpretation and effect, by title 11 of the United States Code and BS-013F 3865.000 -51- C the laws of the State of California, without giving effect to the principles of conflicts of law thereof. 30. Consent to Entry of Orders and Judgments by Bankru y Court. Each Party hereto hereby consents to the determination by the Bankruptcy Court, as a "core proceeding" within the meaning of 28 U.S.C. § 157 or any successor provision, and to have the Bankruptcy Court hear and determine and enter appropriate orders and judgments subject to review under 28 U.S.C. § 158, as provided in 28 U.S.C. § 157(c)(1) or any successor provision, in any action brought to enforce, interpret, reform or rescind this Agreement or any of the provisions hereof and over any action to determine or declare the rights of any of the Parties under this Agreement. 31. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The execution of an Agreement to Become Settling Pool Participant shall be deemed to constitute the execution of this Agreement. 32. No Admissions. Neither this Agreement, nor any of the terms hereof, nor any negotiations or proceedings in connection herewith, shall constitute or be construed as or be deemed to be evidence of an admission on the part of any Party of any liability or wrongdoing whatsoever, or the truth or untruth, or merit or lack of merit, of any claim or defense of any Party or directly or indirectly impair or adversely affect any rights or claims not released, modified, waived or otherwise affected under this Agreement; nor shall this Agreement, or any of the terms hereof, or any ne- gotiations or proceedings in connection herewith, or any performance or forbearance hereunder, be offered or received in evidence or used in any proceeding against any Party, or used in any proceeding, or otherwise, for any purpose whatsoever except with BB -013F 3665.000 -52- ,.w • • respect to (a) effectuation and enforcement of this Agreement and (b) any proceedings in the Bankruptcy Court to approve this Agreement and the execution and delivery hereof. 33. Due Authorization. Each Party to this Agreement hereby represents and warrants that (i) such Party is duly- authorized to enter into this Agreement; and (ii) the person purporting to execute this Agreement or an Agreement to Become Settling Pool Participant on behalf of such Party has been duly authorized to execute this Agreement or such Agreement to Become Settling Pool Participant on behalf of and to bind such Parry. 34. Attorneys' Fees. In any action or proceeding brought by a Party against any another Party to enforce any provision of this Agreement, or to seek damages for a breach of any provision hereof, or where any provision hereof is validly asserted as a defense, the prevailing Parry shall be entitled to recover reasonable attorneys' fees from the other Party in addition to any other available remedy. 35. Construction. The Parties acknowledge that each Party and its counsel have reviewed this Agreement, and each Party has had its interests represented in the drafting of this Agreement, and that the rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement, the Agreement to Become Settling Non - County Pool Participant, or any document executed and delivered by any Parry in connection with the transactions contemplated by this Agreement. 36. Terms Generally. The defined terms in this Agreement shall apply equally to both the singular and the plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine BB -013F 3865.000 -53- t,1 • • and neuter forms. The term "person" includes individuals, corporations, partnerships, trusts and other entities and associations. The words "include," "includes" and "including" shall be deemed to be followed by the phrase "without limitation." The words "approval," "consent" and "notice" shall be deemed to be preceded by the word "written." 37. 1994 -95 School Pooled Notes. To the extent that the County has and continues to intercept and retain property taxes and other revenues ( "School Property Taxes ") to be collected and retained by the County as security for the payment of those certain School District Notes ( "School District Notes "), the proceeds of which School District Notes were pledged for payment of those certain 1994 -95 School Pooled Tax and Revenue Anticipation Notes (1994 -95 School Pooled Notes ") issued by the County in connection with the School District Notes, the County shall timely pay equal amounts owing under the 1994 -95 School Pooled Notes which the County issued to purchase the School District Notes of those Settling Non -County Pool Participants listed in Exhibit "7" ( "Participants "). The County acknowledges that it has collected and deposited in segregated accounts, and agrees to continue to collect and deposit in segregated accounts, the School Property Taxes as security for the repayment of the School District Notes of the Participants in connection with which those 1994 -95 School Pooled Notes were issued. The County shall use the School Property Taxes to pay the amounts owing under the School District Notes and the 1994 -95 School Pooled Notes issued to purchase the School District Notes of the Participants. Nothing in this Section 38 shall affect any right or claim reserved and retained under Section 7(b) by a Settling Non -County Pool Participant listed on Exhibit 1, which is not a Settling Option A Pool Participant. BB -013F 3865.000 -54- ,Q, • IN WETNESS WHEREOF, each of the Parties hereto has caused this Agreement or an Agreement to Become Settling Pool Participant to be executed on its behalf by its officers or other official representatives thereunto duly authorized, all as of the day and year first above written. BB-013F 3865.000 -55- ,. 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It '�r°f'iN$b$b��rcrc mArcs °p�$�y$E€ hfi $ ` =b'w�8'Oe oy 41 N N Z Z Z Z Z Z^ pp QQ pp e g b p o x FS y4 W U U Q Q< N 0 IL N ° ■ � k ) LLI k § § § 0 k § k § 0 ` ! #@a ■;aa■s#@ ,R 6 6 6 a ci , a !77 2 §| (�$ r ;#eRrm0 8vv8 - °R § ■#■ ) - e =! � •! #kk$ | |!|I! ƒ{k } #!!$| |)} §•!!2 # #t!| §! \ ; } 0 §# §¥! ##& ■k## §§;■ {a�e% ( | | � ; At ( � ) (/ )) jj ($ \\ �( }$ \ k \ k � C • Insert Name of • Non- County Pool 1. As used in this Agreement to Become Settling Non- County Pool Participant ( "Agreement ") , the following terms have the following meanings: a. "Comprehensive Settlement Agreement Re Orange County Investment Pools" means that certain Comprehensive Settlement Agreement Re Orange County Investment Pools, dated as of March _, 1995, by and among the County, on its own behalf and on behalf of the Pools, and each of the ' school districts, special districts, cities, and other public agen- cies and instrumentalities identified on Exhibits 1 and 2 thereto which becomes a Party thereto by timely executing an "Agreement to Become Settling Non - County Pool Participant" in the form of this Agreement. A copy of the Comprehensive Settlement Agreement, without the exhibits thereto, is attached hereto as Exhibit "A ". b. "County" means the County of Orange. C. "Non- County Pool Participants" has the meaning set forth in the Comprehensive Settlement Agreement. d. "Pools" means the Orange County Investment Pools, an instrumentality of the County. 2. The undersigned acknowledges that the execution of this Agreement to Become Settling Non - County Pool Participant and joinder as a party to the Agreement will substantially modify the legal right of the undersigned with regard to its interest in the Pools and other matters described in the Agreement. The under- IMP -002A E]CMIT 4 sebs.000 -1- o\ signed represents and warrants that, prior to executing this Agreement to Become Settling Non - County Pool Participant, the undersigned has obtained separate legal and financial advice re- garding this Agreement. 3. In consideration for the benefits to be received by the undersigned under the Comprehensive Settlement Agreement, the execution of other agreements in the form of this Agreement by other Non - County Pool Participants, and other good and valuable consideration, the undersigned, being designated as a Non - County Pool Participant in the Comprehensive Settlement Agreement,.hereby joins as a Party to the Comprehensive Settlement Agreement as if the undersigned had executed the Comprehensive Settlement Agree- ment and agrees to be bound by all of the terms and conditions thereof and to be a "Settling Non - County Pool Participant" there- under. 4. In accordance with Section 7 of the Comprehensive Settlement Agreement, the undersigned elects the following treat- ment in respect of its "Deficiency Amount" (as defined in the Com- prehensive Settlement Agreement): IMP -002A IT 4 3965.000 -2- �� (Please initial the appropriate box) [ ] The undersigned elects Option A, providing for the treatment described in Section 7(a) of the Compre -' hensive Settlement Agreement. [ ] The undersigned elects Option B, providing for the treatment described in Section 7(b) of the Compre- hensive Settlement Agreement. DATED: 19 [Name of Settling Pool Participant] By Address to which all notices under the Comprehensive Settlement Agreement should be transmitted: [Name of Settling Pool Participant] [Street Address] [City, State, and Zip Code] [Phone and Fax Number] Attention: IMP -002A EXHIBIT 4 3865.000 -3- � � EXHIBIT 5 � b u Si C H YN Ca C 3a u C uj to m e i w O Y Z 2 Z W A N m o Ix J a IL W< m y F X EXHIBIT 5 (, d 0 o ao o f q N C 9 M O Y O f S N O i0 10 V. O O cl O C U ? ? N o (f N N N N C 7 t u � b u Si C H YN Ca C 3a u C uj to m e i w O Y Z 2 Z W A N m o Ix J a IL W< m y F X EXHIBIT 5 (, d EXHIBIT "6" LITIGATION REVIEW PROVISIONS 1. RECITALS March 24, 1995 10:47pm MASTER a. Under Section 12 of the Settlement Agreement of which this Exhibit is a part, certain Pool - Related Claims are either being assigned to the County or the County is being given the right and power to prosecute such claims and receive the proceeds thereof (collectively, the "Assigned Pool- Related Claims ") by Settling Option A Pool Participants. b. The County and the Settling Option A Pool Participants (collectively, the "Exhibit '6' Parties ") desire to establish a method for efficiently and confi- dentially reviewing the litigation of the Assigned Pool - Related Claims in a manner reasonably necessary to accomplish the common goals of the Exhibit "6 "Parties. (Throughout this Exhibit "6 ", "litigation" shall refer to all types of dispute resolution, including court proceedings, arbitration, and mediation.) 2. REPORTING a. Each law firm representing the County in the prosecution of the Assigned . Pool- Related Claims, through litigation or otherwise (a "County law Finn "), will meet periodically (and at least monthly) with the "Designated Counsel" (as defined in subparagraph (b)) regarding the prosecution of the Assigned Pool - Related Claims. b. The meetings will be confidential and will include one or more cpunsel (not to exceed representatives of 3 law funs) designated by the Pools Committee, se-015 / 3865.000 4,\ or if such a designation cannot be made, then one or more counsel (not to exceed representatives of 3 law firms) designated by the Bankruptcy Court (the "Designated Counsel "). C. Each meeting shall include, at the request of Designated Counsel a discus- sion of the following information: (1) The general status of the prosecution of the Assigned Pool- Related Claims, particularly including a timely discussion of hearing dates and deadlines. (2) The causes of action and claims for relief filed by any side• in litiga- tion on the Assigned Pool - Related Claims and the reasons for includ- ing or excluding possible causes of action and claims for relief. (3) The defendants in the litigation on the Assigned Pool - Related Claims, and the reasons for including or excluding possible defendants. (4) The defenses asserted by any side in litigation on the Assigned Pool- Related Claims. (5) Significant information concerning the Assigned Pool - Related Claims obtained through discovery, investigation, or otherwise. (6) The future plans and prospects for discovery by any party to the liti- gation on the Assigned Pool - Related Claims. (7) The future plans and prospects for motions by any party to the litiga- tion on the Assigned Pool - Related Claims, particularly including sum- mary judgment motions. (8) The status of settlement discussions and proposals, provided that ini- tial settlement proposals and settlement strategy will be disclosed at BB -015 3865.000 -2- 41n least 10 days prior to communication to adverse parties unless Desig- nated Counsel otherwise agrees. 3. REVIEW The Designated Counsel will have reasonable opportunity to review strategy with each County Law Firm regarding the prosecution of the Assigned Pool - Related Claims, and will have reasonable opportunity to suggest strategy in prosecuting the Assigned Pool - Related Claims. 4. PLEADINGS AND DOCUMENTS a. Each County Law Firm will deliver in a timely manner to Designated Coun- sel all pleadings, including all motions and supporting papers and all filings responsive thereto, served on or by such law firm as part of any litigation on the Assigned Pool - Related Claims, unless Designated Counsel agrees that such delivery is unnecessary or burdensome. b. Each County Law Firm will make available for review by the Designated Counsel, at reasonable times, any documents provided or made available as part of any discovery or investigation in any litigation on the Assigned Pool - Related Claims (other than documents which are subject to a protective order that would require such County law Firm to restrict such access) and shall provide access to all computer databases in which data produced in such discovery have been stored. Copies of any documents and access to computer databases to be made available hereunder will be provided to Designated Counsel and the County Law Firm providing such copies shall be reimbursed any direct costs of providing access thereto by the Settling Option A Pool Participants. BB -015 3865.000 -3- b1 5. CONFIDENTIALITY a. All information, knowledge, and documents provided to any Designated Counsel pursuant to this Exhibit "6 "(other than documents which are avail- able as a matter of public record or nonprivileged documents which Desig- nated Counsel is required to produce by court order or legal process) shall be held in the strictest confidence by the Designated Counsel. In the event that Designated Counsel is asked to disclose or produce any such informa- tion, knowledge, or documents in connection with any legal proceeding, such Designated Counsel shall give prompt written notice of such request to each County Law Firm and shall cooperate with the County Law Firms in oppos- ing such production or disclosure. b. The information, knowledge, and documents exchanged under this Exhibit "6" may include confidential communications, mental impressions, or other matters that are privileged or otherwise protected from disclosure because of the attorney - client privilege, the work - product doctrine, or any other appli- cable privileges or protections; any such privileged information and docu- ments shall be held in confidence. C. The Exhibit "6 "Parties shall enter into a Joint Prosecution Agreement, in a . form acceptable to counsel to the County and the Designated Counsel, which agreement shall preserve all applicable privileges and work product doctrine rights of the County and shall cause their legal counsel to cooperate and consult with each other so as to assert and preserve all privileges that may apply. No such privileges and other protections shall be waived without the express, written approval of the County's counsel and the Designated BB -015 3865.000 G`b 0 • Counsel. Any inadvertent waiver or disclosure, or any other waiver or dis- closure of privileged or otherwise protected materials by one Exhibit "6" Party shall not constitute a waiver of the privilege on the part of any other Exhibit "6 "Party. d. Notwithstanding anything to the contrary in this Exhibit "6 ",any attorney at any County Law Firm may refuse to provide information (whether orally or in writing) or documents to any Designated Counsel, if such attorney reason- ably believes that the disclosure or production of any such information or document would result in the waiver or other loss of an otherwise applicable privilege. 6. MISCELLANEOUS a. The Exhibit "6" Parties agree to execute any and all documents and to do and perform any and all acts and things necessary or proper to effectuate or further evidence the terms and provisions of this Exhibit "6 ". b. The cost of providing documents to Designated Counsel will be paid by the Settling Option A Pool Participants. BB -015 5865.000 -$- A EXHIBIT "7" TRANS PARTICIPANTS GM Lei* I :u.• Anaheim City $8,700,000 Brea - Olinda Unified 3,300,000 Capistrano Unified 28,000,000 Centralia Elementary 5,000,000 Coast Community College 15,000,000 Cypress 4,395,000 Fountain Valley 3,400,000 Fullerton Elementary 5,000,000 Fullerton Joint Union High 9,790,000 Garden Grove Unified 20,000,000 Huntington Beach City 5,000,000 Huntington Beach Union High 17,500,000 La Habra City 3,000,000 Laguna Beach Unified 3,500,000 Los Alamitos Unified 3,500,000 Magnolia 5,000,000 Newport-Mesa Unified 22,300,000 North Orange County Community College 16,000,000 Ocean View 5,000,000 Orange County Department of Education 18,300,000 Orange Unified 17,400,000 Placentia -Yorba Linda Unified 18,500,000 Saddleback Community College 14,800,000 Santa Ana Unified 33,900,000 Savanna 2,200,000 Tustin Unified 6,175,000 Westminster 5,000,000 TOTAL $299,660,000 SENT BY: 3 -28 -85 : 15:52: COUNTY OF ORANGE- 31LTM.1.\ TREISTER:4 2/ 2 Orange County Investment Pool Secific Investment Funds - Not Held at Batik of America Foad Fond Balaote As of Number Name Inveatme dDe+aiption Dw*aber6,1994 4885 RANCH SANTA MARGARITA CFD 86.1 GIC w/ Union Bartle of Fidand (6/26/95) - 7.8% 4968 LOMAS LAGUNA CFD 88-2 GIC w/ Crown Life (next coupon 8/14/95) - 5.5% SMS PORTOLA HILLS CFD 87-2A GIC w/ Union Bank of Finland (Hatt coupon 8/14/95) - 7.8% 5065 IRVINE COAST AJT DISTRICT Fidelity Tax- Exempt Mutcai Fund - 3.79% Dteyfoa Tax - Exempt Mutual Fund - 3.66% Sm RANCHO SANTA MARGARITA 87-56 GIC w/ Crown Life (nett coupon 8/14/915) - 5.5% S15S SANTA TERFSITA CFD 87-9 GIC w/ Crown Life (next coupon 8/14/96) - B.6% 5175 RANCHO SANTA MARGARITA CFD V-SC GIC w/ Algemene Bank (next coupon 8/14/9!5) - 8.4% EXHIBIT 8 $ 15,593.74 213,000.00 1558,500.00 47,994,32938 230,080.00 520,580.00 680,080.00 Tomb S 52 "2 2''=12 0 (Please initial the appropriate box) [ ] The undersigned elects option A, providing for the treatment described in Section 7(a) of the Compre- hensive Settlement Agreement. [ ] The undersigned elects option B, providing for the treatment described in Section 7(b) of the Compre- hensive Settlement Agreement. DATED: , 19 [Name of Settling Pool Participant] By is Address to which all notices under the Comprehensive Settlement Agreement should be transmitted: [Name of Settling Pool Participant] [Street Address] [City, State, and Zip Code] [Phone and Fax Number] Attention: IMP -00ZA EXHIBIT 4 3865.000 -3- (Please initial the appropriate box) [ X] The undersigned elects Option A, providing for the treatment described in Section 7(a) of the Compre- hensive Settlement Agreement. [ ] The undersigned elects Option B, providing for the treatment described in Section 7(b) of the Compre- hensive Settlement Agreement. DATED: Agril 11 19qr' Citv of Newoort Beach ettlina Pool Partic (1l Address to which all notices under the Comprehensive Settlement Agreement should be transmitted: C - 3c�z City of Newport Beach [Name of Settling Pool Participant] 3300 Newport Blvd. [Street Address] Newport Beach, CA 92660 (City, State, and Zip Code] 644 -3000 —b44. -30120 fax [Phone and Fax Number] Attention: Kevin J. Murphy W-002A EXHIBIT 4 3865.000 - 3 -