Resolution 2004- 09
RESOLUTION NO, 2004-09
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
GILROY APPROVING AND AUTHORIZING THE EXECUTION
OF AMENDMENT TO SENIOR LIEN LOAN AGREEMENT FOR
CITY OF GILROY SENIOR LIEN PROJECT REVENUE BONDS
(BONF ANTE GARDENS THEME PARK PROJECT) AND
DIRECTING RELATED ACTIONS
RESOLVED, by the City Council (the "Council") of the City of Gilroy (the "City"), as
follows:
WHEREAS, under the authority of Ordinance No. 2000-6, adopted July 10, 2000,
enacting the Nonprofit Corporation Project Financing Law of the City of Gilroy, the Council has
previously authorized, issued, sold and delivered the City of Gilroy Senior Lien Project Revenue
Bonds (Bonfante Gardens Theme Park Project), Series 2000 in the aggregate principal amount of
$27,920,000 (the "Bonds");
WHEREAS, the proceeds of the Bonds have been applied to assist in the financing of the
Bonfante Gardens Theme Park (the "Project"), and are payable solely from the revenues of the
Project and from the Bonfante Gardens, Inc., a Delaware non-profit corporation (the
"Corporation"), under a Senior Lien Loan Agreement dated as of December 1,2000 (the "Senior
Lien Loan Agreement") between the Corporation as borrower and the City as lender;
WHEREAS, Section 4.4(b) of the Senior Lien Loan Agreement currently provides that if
the Corporation is delinquent for more than three business days in the payment of its loan
obligations under the Senior Lien Trust Indenture, the Project Revenue Fund (as defined therein)
is required to be transferred to the Bond trustee and applied as provided in the Senior Lien Loan
Agreement;
WHEREAS, the Corporation and the owners of a majority in aggregate principal amount
of the outstanding Bonds have determined that such provision could adversely affect the
operation of the Project, and have requested the City to approve an amendment of the Senior Lien
Loan Agreement whereby the Project Revenue Fund is transferred to the Bond trustee only at the
request of a majority of the Bondowners; and
WHEREAS, there has been presented to this meeting the proposed form of Amendment
Agreement dated as of January 8, 2004 (the "Amendment Agreement") amending the Senior Lien
Loan Agreement, in the form attached hereto as Exhibit A and hereby made a part hereof; and
WHEREAS, the Council wishes to take action at this time to approve the Amendment
Agreement.
RESOLUTION NO. 2004-09
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NOW, THEREFORE, BE IT ORDERED AND DIRECTED by the City of Gilroy, as
follows:
Section 1, Recitals. The foregoing recitals are true and correct,
Section 2. Amendment Approved. This Council hereby finds that the making of the
amendments in the Amendment Agreement are in the best interests of the City and hereby
approves the form of the Amendment Agreement as set forth in Exhibit A hereto together with
any changes therein or additions thereto deemed advisable by the City's Administrator or the
Director of Administrative Services, provided that the execution of the Amendment Agreement by
the Mayor shall be conclusive evidence of the approval of any such amendment. The Mayor is
hereby authorized and directed to execute the final form of the Amendment Agreement for and on
behalf of the City.
Section 3. Effective. This Resolution shall take effect from and after its adoption.
PASSED AND ADOPTED this 20th day of January, 2004 by the following vote:
AYES: COUNCILMEMBERS: CORREA, DILLON, GARTMAN, MORALES,
VELASCO, PINHEIRO
NOES: COUNCILMEMBERS: NONE
ABSENT: COUNCILMEMBERS: VALIQUETTE
APPROVED:
~.
J\1bert Pinheiro, Mayor
RESOLUTION NO. 2004-09
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I, RHONDA PELLIN, City Clerk ofthe City of Gilroy, do hereby certify that the attached
Resolution No, 2004-09 is an original resolution, or true and correct copy of a city resolution,
duly adopted by the Council of the City of Gilroy at a regular meeting of said Council held on the
20th day of January, 2004, at which meeting a quorum was present.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of
the City of Gilroy this 21st day of January, 2004.
(Seal)
EXHIBIT A
AMENDMENT AGREEMENT
Amendment Agreement dated as of January 8, 2004 between Bonfante Gardens, Inc., a
Delaware nonprofit corporation (the "Corporation"), and the City of Gilroy, a California charter
city and municipal corporation (the "City").
WHEREAS, the Corporation and the City are parties to the Senior Lien Loan Agreement
dated as of December I, 2000 (the "Senior Lien Loan Agreement") between the Corporation as
borrower and the City ~ lender, and
WHEREAS, the obligations of the Corporation under the Senior Lien Loan Agreement
have been pledged by the City to secure the City's Senior Lien Project Revenue Bonds (Bonfante
Gardens Theme Park Project), Series 2000 (the "Bonds") pursuant to the Senior Lien Trust
Indenture dated as of December I, 2000 (the "Senior Lien Trust Indenture") between the City
and BNY Western Trust Company, a California banking corporation, as trustee (the "Trustee");
and
WHEREAS, the Corporation has been delinquent for more than three Business Days (as
defined in the Senior Lien Trust Indenture) in the payment of Loan Repayments (as defined in
the Senior Lien Trust Indenture) and other obligations; and
WHEREAS, pursuant to Section 4.4(b) of the Senior Lien Loan Agreement, in the event
of such delinquency the Project Revenue Fund (as defined in the Senior Lien Trust Indenture) is
required to be transferred to the Trustee and applied as provided in said Section 4.4(b); and
WHEREAS, the Coiporation, the beneficial owners of a majority of the outstanding
aggregate principal amount of the Bonds and other parties are in discussions as to how to resolve
the delinquencies and related concerns; and
WHEREAS, the transfer of the Project Revenue Fund to the Trustee at this time pursuant
to Section 4.4(b) of the Senior Lien Loan Agreement could have a material adverse effect on the
ability of the Corporation to continue its operations; and
WHEREAS, the Corporation has requested that the operation of Section 4.4(b) of the
Senior Lien Loan Agreement be deferred while the discussions regarding the delinquencies
continue; and
WHEREAS, pursuant to Section 10.1 of the Senior Lien Loan Agreement and Section
6.07(b) of the Senior Lien Trust Agreement, the provisions of the Senior Lien Loan Agreement
may be amended by the Corporation and the City with the consent of the Trustee, the Trustee's
consent to be upon the consent of the holders of a majority in principal amount of the Bonds at
the time outstanding; and
WHEREAS, by their execution of the consent attached hereto the holders of a majority in
principal amount of the Bonds now outstanding have consented to this Amendment Agreement;
9346359.Bragg Amendment to Indenture
NOW, THEREFORE, the Corporation and the City agree that the Senior Lien Loan
Agreement is hereby amended by amending the second sentence of the third paragraph of
Section 4.4(b) of the Senior Lien Loan Agreement to read in its entirety as follows:
Unless such delinquent amount is paid within five (5) Business Days after receipt of such
notice, then at the direction of the Trustee (to be rendered only upon the request of a
majority in aggregate principal amount of the Owners of the Outstanding Bonds), the '
Corporation shall cause the depositorybank(s) to, and the depositorybank(s) shall,
transfer the Project Revenue Fund to the name and credit of the Trustee.
Neither the execution and delivery of this Amendment Agreement or any consent thereto,
. nor any other act in connection herewith or therewith, shall constitute or be interpreted as a
waiver of any default or of any remedy or other right on the part of the City, the Trustee or any
holder of Bonds under the Bonds, the Senior Lien Trust Indenture, the Senior Lien Loan
Agreement or any related instrument, or as an agreement or undertaking to forbear for, any period
from exercising any such remedy or right.
This Amendment Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute one instrument.
This Amendment Agreement is governed by and construed under the laws of California.
IN WITNESS WHEREOF, the City and the Corporation have caused this Amendment
Agreement to be executed in their respective names as of the date first above written.
CITY OF GILROY
By
Mayor
BONF ANTE GARDENS, INC.
By
Name:
Title:
9346359.8ragg Amendment to Indenture
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The foregoing Amendment
Agreement is hereby consented to:
BNY WESTERN TRUST COMPANY, as
Trustee
By
Authorized Officer
CONSENT OF MAJORITY HOLDERS
Each of the undersigned represents that it is the beneficial owner of the principal amount
of Bonds set forth below next to its signature and confirms that it consents to the amendment of
Section 4.4(b) of the Senior Lien Loan Agreement set forth in the foregoing Amendment
Agreement dated as of January 8, 2004 and to the execution by the Trustee of a consent to such
Amendment Agreement.
Outstanding
Principal Amount
of Bonds
PUTNAM [MUNICIPAL HIGH
YIELD FUND]
By
Name:
Title:
9346359.8ragg Amendment to Indenture
;i\t
A SUBSlDlAll Y OJ'
THE BANK OF NEW YORK COMPANY. INC,
January 13, 2004
City of Gilroy
7351 Rosanna Street
Gilroy, California 95020-6197
Attention: Administrative Services Director
Re: Notice of delinquent Loan Repayment under Senior Lien Loan Agreement (the "Gilroy
Loan Agreement''), dated as of December 1, 2000, between the City of Gilroy (the "City") and
Bonfante Gardens, Inc. ("Bonfante Gardens''), relating to the $27,920,000 City of Gilroy Senior
Lien Project Revenue Bonds (Bonfante Gardens Theme Park Project), Series 2000
Dear Administrative Services Director:
As you are aware,'Bonfante Gardens is delinquent in the payment of a Loan Repayment.
It has come to our attention that Bonfante Gardens is also delinquent in making payments due
under the loan made by GE Capital Public Finance, Inc. ("GECPF") pursuant to the Loan
Agreement, dated as of October 31, 2000, among Bonfante Gardens, GECPF and the California
Statewide Communities Development Authority. Each failure ofBonfante Gardens to make
such payments has resulted ~ various defaults under the Gilroy Loan Agreement and constitutes
a Loan Default Event under Section 9.1 ofthe Gilroy Loan Agreement; each such Loan Default
Event constitutes an Event of Default under the Senior Lien Bond Trust Indenture, dated as of
December 1,2000, between the City and BNY Western Trust Company, as Trustee (in such
capacity, the "Trustee'').
Pursuant to Section 4.4(b) of the Gilroy Loan Agreement, the Trustee hereby notifies the
City of such events, and pursuant to such section, Bonfante Gardens is now required to cause the
depository banks maintaining accounts for the Project Revenue Fund to transfer such accounts
into the Trustee's name because more than five Business Days have passed since Bonfante
Gardens received notice of the delinquency of the Loan Repayment.
This letter shall constitute written notice to the City delivered by the Trustee pursuant to
Section 4.4(b) of the Gilroy Loan Agreement.
Capitalized terms not otherwise defined herein shall have the meanings assigned to such
terms in the Gilroy Loan Agreement.
Please acknowledge your receipt of this notice by countersigning a copy of this letter and
700 South Flower Street, Suite 500 · Los Angeles, California 90017-4104
SANFRAN 64143 v2 (2K)
BNY Western Trust Company
faxing it to my attention at (213) 630-6210. Please feel free to contact me with any questions
you may have.
BNY WESTERN TRUST COMPANY,
&~
By: acqueline Nowak
RECEIPT OF NOTICE ACKNOWLEDGED,
CITY OF GILROY
By:
Name:
Title:
Date Received:
cc: Carson Warden, Esq.
President ofBonfante Gardens
David L. Nevis, Esq.
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