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VinsonBF£lkins
ATTORNEYS AT LAW
December 27, 2004
Kathy K. Mitchell
Court Coordinator
The County Court of Kerr County, Texas
700 Main Street
Kerrville, Texas 78028
Stuart Kratter
Vice-President
Bank of New York
Default Administration Group
Corporate Trust
101 Barclay Street - 8W
New York, New York 10286
VINSON & ELHINS L.L.P.
3700 TRAMNIELL QiOW CENTER
2001 ROSS AVENUE
DALLAS, TEXAS 75201-2975
TELEPHONE (214) 220.7700
FAX (214) 220-7716
vctiva:velaw.com
Michael L. Malone
Direct Dia1214-220-7712
Direct Fax 214-999-7712
irunalone@velaw com
Re: Hill Country Juvenile Facility Corporation Lease Revenue Bonds, Series 2002 (Kerr
County, Texas Juvenile Detention Facilities Project) (the "Bonds')
Dear Kathy and Stuart:
Enclosed for each of your files is a fully executed copy of the First Amendment to Extension
Agreement entered into to be effective as of December 1, 2004, by and between the Bank of
New York Trust Company, N.A. and the Kerr County entities named therein. I am forwarding
photocopies of the enclosure to complete the files of the persons named below.
I understand that Tom Spurgeon is in the process of circulating a document for our tiles to
indicate the action of the Commissioner's Court taken on December 13 to extend the term of the
Extension Agreement through the end of January, 2005.
Thank you for your continuing cooperation.
Very truly yours,
Michael L. Malone
909456 l .doc
Enclosure
AUSTIN BEIJING DALLAS DUBAI HOUSTON LONDON MOSCOW NEW YORK TOKYG WASHINGTON, D.C.
Kathy K. Mitchell
Stuart Kratter
Page 2
December 27, 2004
cc: Herb Bristow (w/enclosure)
Karen Hart (w/enclosure)
Loretta Lundberg (w/enclosure)
Thomas K. Spurgeon (w/enclosure)
FIRST AMENDMENT TO EXTENSION AGREEMENT
This First Amendment to Extension Agreement (this "First Amendment") is entered into
this 3~d day of December 2004, by and between The Bank of New York Trust Company, N.A.,
f/k/a The Bank of New York Trust Company of Florida, N.A. (the "Trustee"), Kerr County,
Texas (the "Coup "), Hill Country Juvenile Facility Corporation (the "Issuer"), and the Kerr
County Juvenile Board (the "Board"), to be effective as of December 1, 2004 (the "Effective
Date"}.
RECITALS
A. The Issuer has previously issued its Lease Revenue Bonds, Series 2002 (Kerr
County, Texas Juvenile Detention Facilities Project) (the "Bonds") pursuant to that certain Trust
Agreement, dated as of November 15, 2002 (the "Indenture"), between the Issuer and the
Trustee.
B. In connection with the issuance of the Bonds, the County, as lessee, and the
Issuer, as lessor, entered into that certain Lease Agreement, dated as of November 15, 2002 (the
"Lease"), under which the Issuer leased the Project to the County. All capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms in the Lease.
C. The Board performs certain of the County's obligations under the Lease and
manages the Project on a day-to-day basis pursuant to that certain Operating Agreement, dated as
of November 15, 2002 (the "Operating Agreement"), between the County and the Board.
D. The Bonds are secured by (i) the Lease Payments under the Lease, (ii) that certain
Deed of Trust and Assignment of Rents and Leases, dated as of November 15, 2002, from the
Issuer to the Mortgage Trustee for the benefit of the Trustee, and (iii) that certain Security
Agreement, dated as of November 15, 2002, between the Trustee and the Issuer.
E. On September 27, 2004, the County adopted its fiscal year 2004-2005 budget, and
in said budget failed to appropriate funds in an amount sufficient to pay Lease Payments under
the Lease, thereby causing an Event of Nonappropriation to occur under the Lease.
F. On September 28, 2004, the County notified the Trustee of such Event of
Nonappropriation, and of its intent to transfer possession and control of the Project to the Issuer
or the Trustee as of 12:00 A.M. on October 1, 2004, in accordance with Section 10.03(c) of the
Lease.
G. On September 30, 2004, in order to (i) ensure the health, safety and security of the
inmates of the Project and the citizens of the community, (ii) ensure an appropriate and orderly
transition of possession and control of the Project to the Issuer or the Trustee pursuant to Section
10.03(c) of the Lease, and (iii) maintain the Project as a going concern, the Trustee, the County
and the Issuer executed a letter agreement placing a moratorium on the transfer of possession and
control of the Project until November 1, 2004 (the "Letter Agreement"), with the Lease and
Operating Agreement to remain in effect during such moratorium.
880477 2.DOC 1
H. Effective as of November 1, 2004, the parties entered into an agreement (the
"Extension Agreement") which (i) extended the moratorium contained in the Letter Agreement,
(ii) extended the terms of the Lease and the Operating Agreement, and (iii) provided for the
payment of the Project's operation and maintenance expenses until the earlier of December 31,
2004 (which date may be extended as provided in Section 3.2 thereof), or the date the Extension
Agreement is terminated as provided therein.
I. On November 22, 2004, the Commissioners Court of the County approved an
order in which the County offered to take action to proceed with the issuance of certificates of
obligation for the purpose of providing $1,750,000 to purchase the Juvenile Facility from the
Issuer and provide such amount to the bondholders, subject to certain conditions including the
execution by all bondholders of a full and complete written release of all claims or potential
claims the bondholders may allege to have against the County, the Issuer and the Board.
K. Following discussions with some or all of the bondholders, counsel for the
Trustee informed representatives of the County, that a decision had not been reached by all
bondholders to accept, reject or counter the County's offer and that additional time had been
requested to respond to the County's offer.
L. The Commissioners Court approved an order on December 1, 2004, authorizing
the County Judge to execute an amendment to the Extension Agreement for the limited purpose
of reducing the amount of time (from 30 to 15 days) pursuant to which the County must notify
the Trustee of the County's election to extend the termination date of the Extension Agreement
for an additional month.
M. This First Amendment is being entered into solely for the purpose of amending
Section 3.2 of the Extension Agreement to evidence the aforementioned authority granted by the
Commissioners Court.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
ARTICLE 1
Amendment of Section 3.2 of Extension Agreement
1.1 Amendment of Section 3.2. Section 3.2 of the Extension Agreement is hereby
amended to read in its entirety as follows:
3.2 Extension of Term at Option of the County. The term of this Agreement
may be extended for one or more additional monthly periods at the option of the County
upon delivery by the County to the Trustee at least 1 S days in advance of the scheduled
termination date of an order approved by the Commissioners Court exercising its option
to extend the term of this Agreement for one or more additional months.
saoa~~ z.DOC 2
1.2 No Other Amendments Intended. Notwithstanding anything herein to the
contrary, no other amendments to the Extension Agreement are intended to be made by this First
Amendment, and all other terms and conditions of the Extension Agreement, except as expressly
amended by this First Amendment, shall remain in full force and effect.
ARTICLE 2
Miscellaneous
2.1 Entire Agreement; Amendment. THE EXTENSION AGREEMENT, AS
AMENDED BY THIS FIRST AMENDMENT, AND THE FINANCING DOCUMENTS AS
INCORPORATED HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT BETWEEN
THE PARTIES HERETO REGARDING THE SUBJECT MATTER HEREOF, AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF, AND MAY NOT BE CONTRADICTED
OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO. The provisions of the Extension
Agreement, as amended by this First Amendment, may be amended or waived only by an
instrument in writing signed by the Trustee, the Issuer, the County and the Board. The Financing
Documents remain in full force and effect and continue to evidence the agreement of the parties
with respect to the subject matter thereof. Notwithstanding the execution of the Extension
Agreement or this First Amendment, the Trustee expressly reserves all of its rights and remedies
under the Financing Documents with respect to the Event of Nonappropriation and the Defaults.
2.2 Due Authorization. Each party to this First Amendment represents and warrants
that (i) the execution, delivery and performance of this First Amendment by such party does not
require any approval, consent of or filing with any person or entity that has not been obtained or
made, and (ii) the person executing this agreement on behalf of such party has been duly
authorized to do so.
2.3 Counterparts. This First Amendment may be executed and delivered in any
number of counterparts, each of which when so executed and delivered shall be deemed to be an
original and all of which counterparts taken together shall constitute one and the same
instrument. Execution of this First Amendment via facsimile shall be effective, and signatures
received via facsimile shall be binding upon the parties hereto and shall be effective as originals.
2.4 Definitions. All capitalized terms used in this First Amendment and not
otherwise defined herein shall have the meanings assigned to them in the Lease.
[Remainder of page intentionally left blank.]
gsoa~~ z.DOC 3
IN WITNESS WHEREOF, this Agreement has been entered into as of the date and year
first written above.
KERR COUNTY, TEXAS
BNaine: `~
Title:
HILL COUNTRY JUVENILE FACILITY
CORPORATION
~~ r
By: _
Name: t-V~"'"
Title:
KERB COUNTY JUVENILE BOARD
By: ~`
Name: F ~-..)
Title:
THE BANK OF NEW YORK TRUST
COMPANY, N.A., as Trustee
By:_
Name:
Title:
ssoa~~_z.DOc
IN WITNESS WHEREOF, this Agreement has been entered into as of the date and year
first written above.
KERR COUNTY, TEXAS
By:_
Name:
Title:
HILL COUNTRY JUVENILE FACILITY
CORPORATION
By:_
Name:
Title:
KERR COUNTY JUVENILE BOARD
By:_
Name:
Title:
THE B OF NEW YORK TRUST
COMPA N.~.., as Trustee
By:
Name: %~'" = ~ ~i ~1t i Z~r'l
Title: ~.' .' ~ { '~ r -~ 5 ,~ ~. ,~~'
saoa~~ z.~oc 4