NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY THE GILROY PUBLIC FACILITIES FINANCING AUTHORITY AS FOLLOWS:
SECTION 1. Approval of Issuance of Series 2022A Bonds by the Authority. The issuance of the Series 2022A Bonds by the Authority on the terms and conditions set forth in, and subject to the limitations specified in the Indenture, dated as of August 1, 2020, by and among the Authority, the City and the Trustee, as amended by the First Supplement to Indenture, and this Resolution, is hereby approved; provided, however, that (i) the aggregate principal amount of Series 2022A Bonds shall not exceed $15,000,000, (ii) the maturity of the Series 2022A Bonds shall not exceed November 1, 2033, and (iii) there shall be expected present value savings with respect to the refunding of the Series 2013 Bonds of at least 5% (assuming a successful conversion from a taxable rate to a tax-exempt rate on or about August 8, 2022) of the principal amount of the Series 2013 Bonds using the yield on the Series 2022A Bonds as the discount rate.
SECTION 2. Approval of First Supplement to Indenture. The form of First Supplement to Indenture presented at this meeting is hereby approved and the Chairman, the Vice-Chairman, the Executive Director, the Treasurer, the Secretary of the Authority (each an “Authorized Officer”) are hereby authorized and directed, for and in the name of and on behalf of the Authority, to execute, acknowledge and deliver the First Supplement to Indenture in substantially the form presented at this meeting with such changes therein as the officers executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.
SECTION 3. Approval of Fourth Amendment to Lease. The form of Fourth Amendment to Lease presented at this meeting is hereby approved and each Authorized Officer is hereby authorized and directed, for and in the name of and on behalf of the Authority, to execute, acknowledge and deliver the Fourth Amendment in substantially the form presented at this meeting with such changes therein as the Authorized Officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.
SECTION 4. Approval of Bond Purchase Agreement. The Authority is hereby authorized to enter into the Bond Purchase Agreement and each Authorized Officer is hereby authorized and directed to execute and deliver the Bond Purchase Agreement on behalf of the Authority, in substantially the form presented to this meeting, with such changes therein, deletions therefrom and additions thereto as the Authorized Officer shall approve in consultation with the Authority’s financial and legal consultants, which approval shall be conclusively evidenced by the execution and delivery thereof.
SECTION 5. Approval of Escrow Agreement. The Authority is hereby authorized to enter into the Escrow Agreement and each Authorized Officer is hereby authorized and directed to execute and deliver the Escrow Agreement on behalf of the Authority, in substantially the form presented to this meeting, with such changes therein, deletions therefrom and additions thereto as the Authorized Officer shall approve in consultation with the Authority’s financial and legal consultants, which approval shall be conclusively evidenced by the execution and delivery thereof.
13.2.1.a
Packet Pg. 294 Attachment: Draft Resolution (Gilroy Public Facilities Financing Authority) (4078 : GPFFA - 2013 LRBs Refunding)
Resolution No. GPFFA 2022-XX
2013 Lease Revenue Bonds Refinancing
Gilroy Public Facilities Financing Authority Regular Meeting | December 5, 2022
SECTION 6. SB 450 and SB 1029 Representation. The Authority adopts and approves the Good Faith Estimates required by Senate Bill 450 (Chapter 625 of the 2017-2018 Session of the California Legislature) (“SB 450”) and obtained by the City from NHA Advisors, as Municipal Advisor.
The Authority confirms, that to the extent applicable, it has adopted the City’s stated debt management policies required by Senate Bill 1029 (“SB 1029”), and further represents that it is in compliance with the applicable SB 1029 pre-issuance requirements and that it expects to comply with all post-issuance requirements of SB 1029 applicable to the Series 2022A Bonds.
SECTION 7. Other Acts. The officers and staff of the Authority are hereby authorized and directed, jointly and severally, to do any and all things, to execute and deliver any and all documents, which in consultation with Authority Counsel and with Nixon Peabody LLP, the Authority’s bond counsel, they may deem necessary or advisable in order to effectuate the purposes of this Resolution, and any and all such actions previously taken by such officers or staff members are hereby ratified and confirmed.
SECTION 8. Effective Date. This Resolution shall take effect upon adoption.
PASSED and ADOPTED this 5th day of December 2022 by the following roll call vote:
AYES: BOARD MEMBERS:
NOES: BOARD MEMBERS:
ABSTAIN: BOARD MEMBERS:
ABSENT: BOARD MEMBERS:
APPROVED:
Marie Blankley, Chair
ATTEST:
_______________________
Thai Nam Pham, Secretary
13.2.1.a
Packet Pg. 295 Attachment: Draft Resolution (Gilroy Public Facilities Financing Authority) (4078 : GPFFA - 2013 LRBs Refunding)
4863-6504-4543.3
FIRST SUPPLEMENT TO INDENTURE
by and among
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION ,
as Trustee,
CITY OF GILROY
and
GILROY PUBLIC FACILITIES FINANCING AUTHORITY
Dated as of ______, 2022
Relating to the
$_________
Gilroy Public Facilities Financing Authority
Lease Revenue Refunding Bonds, Series 2022A (Convertible)
13.2.1.b
Packet Pg. 296 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
4863-6504-4543.3
TABLE OF CONTENTS
Page
-i-
PART 1
PARTICULAR AMENDMENTS
Part 1.1. Amendments to Section 1.01 of the Original Indenture .................................................. 2 Part 1.2. Amendments to Section 5.01(a) of the Indenture ............................................................ 5 PART 2
ADDITION OF ARTICLE XIV
Part 2.1. Addition of Article XIV .................................................................................................. 6
ARTICLE XIV
TEMRS AND CONDITIONS OF SERIES 2022A BONDS
Section 14.01. Authorization of Series 2022A Bonds ................................................................... 6 Section 14.02. Terms of Series 2022A Bonds ............................................................................... 7 Section 14.03. Form of Series 2022A Bonds ................................................................................. 8 Section 14.04. Execution of Series 2022A Bonds ......................................................................... 8 Section 14.05. Deposit of Proceeds of Series 2022A Bonds; Other Moneys ................................ 8 Section 14.06. Redemption of Series 2022A Bonds ...................................................................... 9 Section 14.07. Transfer Restrictions ............................................................................................ 10 PART 3
MISCELLANEOUS
Part 3.1. Effect of First Supplement to Indenture ........................................................................ 11 Part 3.2. Execution in Counterparts ............................................................................................. 11 Part 3.3. Effective Date ................................................................................................................ 11 EXHIBIT A FORM OF SERIES 2022A BONDS .................................................................... A-1 EXHIBIT B BREAKAGE FEE CALCULATION.................................................................... B-1 EXHIBIT C FORM OF PURCHASER LETTER ..................................................................... C-1 EXHIBIT D FORM OF TAX-EXEMPT BOND CONVERSION AGREEMENT .... D-ERROR! BOOKMARK NOT DEFINED.
13.2.1.b
Packet Pg. 297 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
4863-6504-4543.3
FIRST SUPPLEMENT TO INDENTURE
THIS FIRST SUPPLEMENT TO INDENTURE (this “First Supplement to Indenture”), is made and entered into as of _______ 1, 2022, by and among U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as successor trustee (the “Trustee”), the CITY OF GILROY, a political subdivision duly organized and existing under the laws of the State of California (the “City”), and GILROY PUBLIC FACILITIES FINANCING AUTHORITY, a joint powers authority duly organized and existing under and by virtue of the laws of the State of California (the “Authority”);
W I T N E S S E T H:
WHEREAS, the Authority previously issued its Lease Revenue Refunding Bonds, Series 2020A (the “Series 2020A Bonds”), in the aggregate principal amount of $13,740,000, pursuant to an Indenture, dated as of August 1, 2020 (the “Original Indenture”) by and among the Trustee, the City and the Authority, and in accordance with the Joint Exercise of Powers Agreement and its powers thereunder and under the laws of the State of California; WHEREAS, the Original Indenture provides that, subject to the conditions set forth therein, in addition to the Series 2020A Bonds, the Authority may by execution of a Supplemental Indenture without the consent of the Owners, provide for the execution and delivery of Additional Bonds;
WHEREAS, the Authority intends to issue its Lease Revenue Refunding Bonds, Series 2022A (Convertible) (the “Series 2022A Bonds”) pursuant to this First Supplement to Indenture and the Original Indenture (as so amended the “Indenture”), and in accordance with the Joint Exercise of Powers Agreement and its powers thereunder and under the laws of the State of California;
WHEREAS, the proceeds of the Series 2022A Bonds will be applied by the City to (i) refund the Authority’s Refunding Lease Revenue Bonds, Series 2013 (the “Series 2013 Bonds”) and (ii) pay the costs incurred in connection with the issuance of the Series 2022A Bonds; WHEREAS, in order to accomplish such refunding, the Authority and the City are entering into a Fourth Amendment to Lease Agreement, dated as of ________ 1, 2022, in order to amend the First Amended and Restated Lease Agreement, dated as of August 1, 2009, as amended, between the Authority and the City, the “Lease” (i) to increase the amount of Base Payments payable thereunder and (ii) to make certain other modifications in order to provide for the execution and delivery of the Series 2022A Bonds in accordance with the provisions of the Indenture; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this First Supplement to Indenture do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this First Supplement to Indenture;
13.2.1.b
Packet Pg. 298 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
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2 NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties do hereby agree as follows:
PART 1
PARTICULAR AMENDMENTS
Part 1.1. Amendments to Section 1.01 of the Original Indenture. The following definitions, if defined in Section 1.01 of the Original Indenture, are hereby amended and restated and, if not defined, are hereby added, all as follows:
Affiliate
The term “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling or controlled by or under common control with such Person. Without limiting the foregoing, the definition of “affiliate” of any Person shall include any subsidiary of such Person and, with respect to the Series 2022A Bonds Purchaser, shall include Wells Fargo Securities (a trade name) and Wells Fargo Bank, National Association.
Amortization End Date
The term “Amortization End Date” means the earliest to occur of (a) the third (3rd) anniversary of receipt of written notice from the Purchaser of a Downgrade Redemption Event, and (b) the date on which all Series 2022A Bonds are redeemed, repaid, prepaid or cancelled in accordance with the terms of the Indenture.
Amortization Payment Date
The term “Amortization Payment Date” means (a) the six month anniversary of the date of receipt of written notice from the Purchaser of a Downgrade Redemption Event and each six-month anniversary thereafter which occurs prior to the Amortization End Date and (b) the Amortization End Date.
Authorized Denominations
The term “Authorized Denominations” means $5,000 or any integral multiple thereof. In the case of the Series 2022A Bonds, however, Authorized Denominations means $250,000 or any integral multiple of $1 in excess thereof.
Bond Interest is Taxable
The term “Bond Interest is Taxable” means that interest paid or to be paid on a Series 2022A Bond is or will be includable for federal income tax purposes in the gross income of the Series 2022A Bonds Purchaser or any other Owner thereof, but excluding the inclusion of interest on such Series 2022A Bond as an item of tax preference for purposes of the calculation of an alternative minimum tax imposed on the Series 2022A Bonds Purchaser or such other Owner.
13.2.1.b
Packet Pg. 299 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
4863-6504-4543.3
3 Bond Purchase Agreement
The term “Bond Purchase Agreement” means the Bond Purchase Agreement, dated [December __, 2022], by and among the Authority, the City and the Series 2022A Bonds Purchaser, as the same may be amended, modified or supplemented from time to time in accordance with its terms.
Bonds
The term “Bonds” means the Series 2020A Bonds, the Series 2022A Bonds and all Additional Bonds.
BPA Credit Event
The term “BPA Credit Event” has the meaning assigned to “Event of Default” in the Bond Purchase Agreement.
Conversion Date
The term “Conversion Date” shall mean the date on which the Series 2022A Bonds become Tax-Exempt.
Default Rate
The term “Default Rate” has the meaning assigned to such term in the Bond Purchase Agreement.
Determination of Taxability
The term “Determination of Taxability” means (a) any determination, decision, decree or advisement by the Commissioner of Internal Revenue, or any District Director of Internal Revenue or any court of competent jurisdiction to the effect that Bond Interest is Taxable, or (b) the delivery to the Series 2022A Bonds Purchaser, any Owner or the Trustee of an Opinion of Counsel, delivered by Bond Counsel, to the effect that Bond Interest is Taxable. A Determination of Taxability also shall be deemed to have occurred on the first to occur of the following:
(i) the date when the Authority files any statement, supplemental statement, or other tax schedule, return or document, which discloses that Bond Interest is Taxable; (ii) the effective date of any federal legislation enacted or federal rule or regulation promulgated after the date of this Indenture which has the effect that Bond Interest is Taxable; or (iii) if upon sale, lease or other deliberate action within the meaning of Treas. Reg. § 1.141-2(d), the failure to receive an Approving Opinion.
13.2.1.b
Packet Pg. 300 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
4863-6504-4543.3
4 Interest Fund
The term “Interest Fund” means the Series 2020A Interest Fund, the Series 2022A Interest Fund and each additional fund established for the payment of interest of a Series of Additional Bonds within the Revenue Fund established in accordance with Section 5.01(a) hereof.
Downgrade Redemption Event
The term “Downgrade Redemption Event” has the meaning assigned to such term in the Bond Purchase Agreement.
Interest Payment Date
The term “Interest Payment Date” means May 1 and November 1 of each year, commencing November 1, 2020 in the case of Series 2020A Bonds and May 1, 2023 in the case of Series 2022A Bonds.
Maximum Federal Corporate Tax Rate
The term “Maximum Federal Corporate Tax Rate” means the maximum rate of income taxation imposed on corporations pursuant to Section 11(b) of the Code, as in effect from time to time or, if as a result of a change in the Code the rate of income taxation imposed on corporations generally shall not be applicable to the Series 2022A Bonds Purchaser, the maximum statutory rate of federal income taxation which could apply to the Series 2022A Bonds Purchaser. As of the Series 2022A Bonds Closing Date, the Maximum Federal Corporate Tax Rate is 21%.
Principal Fund
The term “Principal Fund” means the Series 2020A Principal Fund, the Series 2022A Principal Fund and each additional fund established for the payment of principal of a Series of Additional Bonds within the Revenue Fund established in accordance with Section 5.01(a) hereof.
Principal Payment Date
The term “Principal Payment Date” means November 1 of each year, commencing on the Principal Payment Date or Dates set forth in Section 2.02 hereof with respect to the Series 2020A Bonds and Section 14.02 hereof with respect to the Series 2022A Bonds.
Series 2022A Bonds
The term “Series 2022A Bonds” means the Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A (Convertible).
Series 2022A Bonds Closing Date
The term “Series 2022A Bonds Closing Date” means ________, 2022.
13.2.1.b
Packet Pg. 301 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
4863-6504-4543.3
5 Series 2022A Bonds Purchaser
The term “Series 2022A Bonds Purchaser” means Wells Fargo Municipal Capital Strategies, LLC, as the initial purchaser of the Series 2022A Bonds.
Taxable Date
The term “Taxable Date” means the date on which interest on the Series 2022A Bonds is first includable in gross income of an Owner (including, without limitation, any previous Owner) thereof as a result of a Determination of Taxability.
Taxable Rate
The term “Taxable Rate” means [__._]%, the rate of interest on the Series 2022A Bonds payable from the Series 2022A Bonds Closing Date to but not including the Conversion Date.
Tax-Exempt Rate
The term “Tax-Exempt Rate” means [__._]%, the rate of interest on the Series 2022A Bonds payable from and after the Conversion Date.
Taxable Gross-Up Rate
The term “Taxable Gross-Up Rate” means, for any date of determination, the rate of interest per annum equal to the product of the interest rate on the Series 2022A Bonds then in effect multiplied by the quotient of (a) one divided by (b) one minus the then current Maximum Federal Corporate Tax Rate in effect on the date of calculation. 2013 Escrow Agent
The term “2013 Escrow Agent” means U.S. Bank Trust Company, National Association, as escrow agent under the 2013 Escrow Agreement.
2013 Escrow Agreement
The term “2013 Escrow Agreement” means the Escrow Agreement, dated as of December 1, 2022, between the Authority and the Escrow Agent, providing for the defeasance and redemption of the Series 2013 Bonds.
Part 1.2. Amendments to Section 5.01(a) of the Indenture. Section 5.01(a) of the Original Indenture is hereby amended to read as follows:
There is hereby established a special fund designated as the “Revenue Fund” which shall be held by the Trustee and which shall be kept separate and apart from all other funds and moneys held by the Trustee. Within the Revenue Fund, the Trustee shall establish and maintain (i) a separate fund designated the “Series 2020A Interest Fund” and a separate fund designated the “Series 2020A Principal Fund,” and (ii) a separate fund designated the “Series 2022A Interest Fund” and a separate
13.2.1.b
Packet Pg. 302 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
4863-6504-4543.3
6 fund designated the “Series 2022A Principal Fund.” Upon the issuance of Additional Bonds, the Trustee shall also establish and maintain, within the Revenue Fund, a separate Interest Fund and a separate Principal Fund for each Series of Additional Bonds. The City hereby irrevocably pledges and transfers to the Trustee, for the benefit of the Owners, all of its right, title and interest in and to all amounts on deposit from time to time in the funds and accounts established hereunder (other than the Rebate Fund), subject to the provisions hereof permitting the disbursement thereof for or to the purposes and on the conditions and terms set forth herein, and in and to the Revenues, which shall be used for the punctual payment of the interest and principal of the Bonds and the Revenues shall not be used for any other purpose while any of the Bonds remain Outstanding. It is the intent of the parties hereto that the Authority shall not have any right, title, in or to the Revenues. In the event, however, that it should be determined that the Authority has any right, title or interest in or to the Revenues, then the Authority hereby irrevocably pledges and transfers to the Trustee, for the benefit of the Owners, all of such right, title and interest, which shall be used for the punctual payment of the interest and principal of the Bonds. These pledges shall constitute a first and exclusive lien on the funds established hereunder and the Revenues in accordance with the terms hereof subject in all events to the power of the City and the Authority to cause the execution and delivery of Additional Bonds pursuant to Section 2.10 hereof which shall be on a parity with the Bonds Outstanding.
PART 2
ADDITION OF ARTICLE XIV
Part 2.1. Addition of Article XIV. The Original Indenture is hereby amended and supplemented by adding thereto an additional Article as follows:
ARTICLE XIV
TEMRS AND CONDITIONS OF SERIES 2022A BONDS
Section 14.01. Authorization of Series 2022A Bonds. A second Series of Bonds is hereby created and designated “Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A (Convertible).” The aggregate principal amount of Series 2022A Bonds which may be issued and Outstanding under this Indenture shall not exceed $__________.
The Authority has reviewed all proceedings heretofore taken relative to the authorization of the Series 2022A Bonds and has found, as a result of such review, and hereby finds and determines that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in the issuance of the Series 2022A Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and that the Authority is now duly authorized, pursuant to each and every requirement of the Act, to issue the Series 2022A Bonds in the form and manner provided herein and that the Series 2022A Bonds shall be entitled to the benefit, protection and security of the provisions hereof.
13.2.1.b
Packet Pg. 303 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
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7 The recital contained in the Series 2022A Bonds that the same are issued pursuant to the Act and pursuant hereto shall be conclusive evidence of their validity and of the regularity of their issuance, and all Series 2022A Bonds shall be incontestable from and after their issuance. The Series 2022A Bonds shall be deemed to be issued, within the meaning hereof, whenever the definitive Series 2022A Bonds (or any temporary Series 2022A Bonds exchangeable therefor) shall have been delivered to the purchaser thereof and the proceeds of sale thereof received.
Section 14.02. Terms of Series 2022A Bonds. The Series 2022A Bonds shall be issued in the aggregate principal amount of $_________. The Series 2022A Bonds shall be dated as of the date of initial delivery, shall be executed and delivered in the form of fully registered Series 2022A Bonds in physical form, without coupons, in Authorized Denominations, shall be payable in lawful money of the United States of America, and shall mature on November 1, 2033 and initially bear interest at the Taxable Rate, subject to prior redemption as described in Article IV and Section 14.06 hereof.
On or after August ___, 2023, the Authority and the City may request to the Series 2022A Bonds Purchaser that the Series 2022A Bonds be designated Tax-Exempt. Upon the consent of the Series 2022A Bonds Purchaser and receipt by the Series 2022A Bonds Purchaser of (i) a [Tax- Exempt Bond Conversion Agreement] in substantially the form of [Exhibit D], (ii) an Opinion of Counsel as to the tax-exempt status of the Series 2022A Bonds and (iii) written confirmation that no Event of Default or BPA Credit Event has occurred and is continuing and that all representations and warranties of the Authority and the City in the Bond Purchase Agreement, the Indenture and the Lease Agreement continue to be true and accurate, the Series 2022A Bonds shall bear interest at the Tax-Exempt Rate.
Each Series 2022A Bond shall bear interest from the Interest Payment Date to which interest has been paid or duly provided for next preceding its date of authentication, unless such date of authentication shall be (i) prior to the close of business on May 1, 2023, in which case such Series 2022A Bond shall bear interest from its date of delivery, (ii) subsequent to a Record Date but before the related Interest Payment Date, in which case such Series 2022A Bond shall bear interest from such Interest Payment Date, or (iii) an Interest Payment Date to which interest has been paid in full or duly provided for, in which case such Series 2022A Bond shall bear interest from such date of authentication; provided, however, that if, as shown by the records of the Trustee, interest shall be in default, each Series 2022A Bond shall bear interest from the last Interest Payment Date to which such interest has been paid in full or duly provided for. Interest on the Series 2022A Bonds shall be computed on the basis of a 360-day year of twelve 30-day months.
The interest on the Series 2022A Bonds shall be payable on each Interest Payment Date by check sent by first class mail by the Trustee to the respective Owners of the Series 2022A Bonds as of the Record Date for such Interest Payment Date at their addresses shown on the books required to be kept by the Trustee pursuant to the provisions of Section 2.08 hereof. Payments of defaulted interest on any Series 2022A Bond shall be paid by check to the Owner as of a special record date to be fixed by the Trustee, notice of which special record date shall be given to the Owner of the Series 2022A Bond not less than ten days prior thereto. The principal and premium, if any, of the Series 2022A Bonds shall be payable upon presentation and surrender thereof on maturity or on redemption prior thereto at the Principal Corporate Trust Office of the Trustee.
Notwithstanding the foregoing, so long as Wells Fargo Municipal Capital Strategies, LLC is the
13.2.1.b
Packet Pg. 304 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
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8 Owner of the Series 2022A Bonds, principal of, premium, if any, and interest on the Series 2022A Bonds shall be paid by wire transfer and without presentment or surrender of the Series 2022A Bonds.
The Owner of $1,000,000 or more in aggregate principal amount of the Series 2022A Bonds may request in writing that the Trustee pay the interest on the Series 2022A Bonds by wire transfer to an account in the United States of America and the Trustee shall comply with such request for all Interest Payment Dates following the 15th day after receipt of such request.
Notwithstanding anything to the contrary herein:
(i) on or after the Conversion Date, to the extent the Series 2022A Bonds are Tax- Exempt, from and after any Taxable Date, the interest rate on the Series 2022A Bonds shall be established at a rate equal to the Taxable Gross-Up Rate; and (ii) upon the occurrence and during the continuation of any Event of Default, the interest rate on the Series 2022A Bonds shall be established at a rate equal to the Default Rate.
Section 14.03. Form of Series 2022A Bonds. The Series 2022A Bonds and the assignment to appear thereon shall be in substantially the forms set forth in Exhibit A hereto, with necessary or appropriate insertions, omissions and variations as permitted or required hereby.
Section 14.04. Execution of Series 2022A Bonds. The Chairman or Executive Director of the Authority is hereby authorized and directed to execute each of the Series 2022A Bonds on behalf of the Authority and the Secretary of the Authority is hereby authorized and directed to countersign each of the Series 2022A Bonds on behalf of the Authority. The signatures of such Chairman, Executive Director and Secretary may be by printed, lithographed or engraved by facsimile reproduction. In case any officer whose signature appears on the Series 2022A Bonds shall cease to be such officer before the delivery of the Series 2022A Bonds to the purchaser thereof, such signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until such delivery of the Series 2022A Bonds.
Only those Series 2022A Bonds bearing thereon a certificate of authentication and registration in substantially the form set forth in Exhibit A hereto, executed manually and dated by the Trustee, shall be entitled to any benefit, protection or security hereunder or be valid or obligatory for any purpose, and such certificate of the Trustee shall be conclusive evidence that the Series 2022A Bonds so authenticated and registered have been duly authorized, executed, issued and delivered hereunder and are entitled to the benefit, protection and security hereof.
The Series 2022A Bonds shall not be book-entry bonds but rather physical delivery bonds.
Section 14.05. Deposit of Proceeds of Series 2022A Bonds; Other Moneys. The proceeds received from the sale of the Series 2022A Bonds in the amount of $__________ shall be transferred for deposit by the Trustee to the following respective funds or accounts:
(a) The Trustee shall deposit in the Costs of Issuance Fund established pursuant to Section 3.04 hereof the amount of $_________;
13.2.1.b
Packet Pg. 305 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
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9 (b) The Trustee shall transfer to the Escrow Agent the amount of $_______ for deposit in the Escrow Fund held under the Escrow Agreement.
The deposits required of the Trustee set forth above into funds or accounts shall be deemed made by the transfer of funds by the Trustee in accordance with the instructions of the City. To facilitate any transfers to or for the benefit of the City required in this Section, the Trustee may, in its discretion open a temporary fund or account on its records which shall be closed upon completion of such transfers.
Section 14.06. Redemption of Series 2022A Bonds. The Series 2022A Bonds shall be subject to redemption prior to their Maturity Date as set forth in this Section. (a) Optional Redemption. The Series 2022A Bond may be prepaid in whole at any time upon at least three Business Days’ prior written notice to the Series 2022A Bonds Purchaser specifying the amount of prepayment. In the event that the Authority pursuant to this Section 14.06(a) optionally redeems the Series 2022A Bonds, the Authority shall, at the time of such prepayment, pay to the Series 2022A Bonds Purchaser the principal of the Series 2022A Bonds plus interest accrued to the date of prepayment plus an additional fee or redemption premium equal to the Breakage Fee as described in Exhibit B. (b) Mandatory Sinking Account Redemption. The Series 2022A Bonds shall be subject to redemption from Mandatory Sinking Account Payments in part on November 1, 2023, and on each November 1 thereafter, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium, as follows; provided, however, that in lieu of redemption thereof, such Series 2022A Bonds may be purchased by the Authority and tendered to the Trustee:
Sinking Fund
Redemption Date
(November 1)
Principal Amount to be
Redeemed or Purchased
If some but not all of the Series 2022A Bonds have been redeemed pursuant to optional redemptions, the total amount of Mandatory Sinking Account Payments to be made subsequent to such redemption shall be reduced in an amount equal to the principal amount of the Series 2022A
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10 Bonds so redeemed by reducing each such future Mandatory Sinking Account Payment on a pro rata basis (as nearly as practicable) in integral multiples of $5,000, as shall be designated pursuant to written notice which shall include a revised Mandatory Sinking Account Payment schedule filed by Authority with the Trustee.
(a) Extraordinary Redemption. In the event that the Series 2022A Bonds are subject to extraordinary redemption in accordance with Section 4.01(a) of the Indenture, the Authority shall, at the time of such prepayment, pay to the Series 2022A Bonds Purchaser the principal of the Series 2022A Bonds plus interest accrued to the date of prepayment plus an additional fee or redemption premium equal to the Breakage Fee as described in Exhibit B. (b) Downgrade Redemption Event. Upon receipt of written notice from the Purchaser of a Downgrade Redemption Event and direction to redeem the Series 2022A Bonds, the Series 2022A Bonds shall be redeemed in equal (as nearly as possible) semiannual installments payable on each Amortization Payment Date (each such payment, an “Amortization Payment”) with the final installment in an amount equal to the entire then-outstanding principal amount of such Series 2022A Bonds to be redeemed on the Amortization End Date.
Section 14.07. Transfer Restrictions. The Series 2022A Bonds may be transferred in Authorized Denominations without limitation to any Affiliate of the Series 2022A Bonds Purchaser or to a trust or custodial arrangement established by the Series 2022A Bonds Purchaser or an Affiliate of the Series 2022A Bonds Purchaser, each of the beneficial owners of which are “qualified institutional buyers” as defined in Rule 144A promulgated under the Securities Act of 1933, as amended (each a “Purchaser Transferee”) and subject to the limitations, if any, set forth in the Bond Purchase Agreement. On or after August 8, 2024, the Series 2022A Bonds may be transferred in Authorized Denominations to another purchaser (other than an Affiliate of the Series 2022A Bonds Purchaser or a trust or custodial arrangement as described in the preceding sentence) if (i) written notice of such transfer, together with addresses and related information with respect to such purchaser, is delivered to the Authority and the Trustee by such transferor and (ii) such purchaser shall have delivered to the Authority, the Trustee and the transferor a Purchaser Letter in the form attached hereto as Exhibit C executed by a duly authorized officer of such purchaser; provided that each such purchaser shall constitute (1) a “qualified institutional buyer” as defined in Rule 144A promulgated under the Securities Act of 1933, as amended, and (2) a commercial bank organized under the laws of the United States, or any state thereof, or any other country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of any such country, and, in any such case, having a combined capital and surplus, determined as of the date of any transfer pursuant to this Section, of not less than $5,000,000,000 (each a “Non-Purchaser Transferee”).. Notwithstanding the foregoing, the Series 2022A Bonds Purchaser shall not transfer the Series 2022A Bonds to a Non-Purchaser Transferee prior to [December __, 202_], without the prior written consent of the City and the Authority which shall not be unreasonably withheld.
13.2.1.b
Packet Pg. 307 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
4863-6504-4543.3
11 PART 3
MISCELLANEOUS
Part 3.1. Effect of First Supplement to Indenture. This First Supplement to Indenture and all of the terms and provisions herein contained shall form part of the Original Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Original Indenture. The Original Indenture is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof, as heretofore amended and supplemented, and as amended and supplemented hereby. If there shall be any conflict between the terms of this First Supplement to Indenture and the terms of the Original Indenture (as in effect on the day prior to the effective date of this First Supplement to Indenture), the terms of this First Supplement to Indenture shall prevail.
Part 3.2. Execution in Counterparts. This First Supplement to Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. The parties further agree that facsimile signatures or signatures scanned into .pdf (or signatures in another electronic format designated by the City) and sent by e-mail shall be deemed original signatures.
Part 3.3. Effective Date. This First Supplement to Indenture shall become effective upon its execution and delivery.
[This space intentionally left blank]
13.2.1.b
Packet Pg. 308 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
4863-6504-4543.3
12 IN WITNESS WHEREOF, the parties hereto have executed and attested to this First Supplement to Indenture by their officers thereunto duly authorized as of the day and year first written above.
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, as Trustee
By:
Authorized Officer
CITY OF GILROY
By:
Mayor
Attest:
By:
City Clerk
GILROY PUBLIC FACILITIES
FINANCING AUTHORITY
By:
Executive Director
Attest:
By:
Secretary
13.2.1.b
Packet Pg. 309 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
4863-6504-4543.3
A-1
EXHIBIT A
FORM OF SERIES 2022A BONDS
The Transferability of the Bond is Restricted
as Described in Section 14.07 of the Indenture
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
No. R-__ $___________
GILROY PUBLIC FACILITIES FINANCING AUTHORITY
LEASE REVENUE REFUNDING BONDS, SERIES 2022A (CONVERTIBLE) Interest Rate Maturity Date Dated CUSIP
% initially and
__% after the
Conversion Date
November 1, 2033 _______, 2022
REGISTERED OWNER: WELLS FARGO MUNICIPAL CAPITAL STRATEGIES, LLC PRINCIPAL SUM:
The GILROY PUBLIC FACILITIES FINANCING AUTHORITY, a joint powers authority, duly created and lawfully existing under the Constitution and laws of the State of California (the “Authority”), for value received, hereby promises to pay (but only out of the Revenues, as hereinafter defined) to the registered owner specified above or registered assigns on the maturity date specified above (subject to any right of prior redemption provided for) the principal sum specified above, together with interest thereon from the Interest Payment Date (as defined below) to which interest has been paid or duly provided for next preceding its date of execution, unless such date of authentication shall be (i) prior to the close of business on May 1, 2023, in which case such Bond shall bear interest from its date of delivery, (ii) subsequent to a Record Date but before the related Interest Payment Date, in which case such Bond shall bear interest from such Interest Payment Date, or (iii) an Interest Payment Date to which interest has been paid in full or duly provided for, in which case such Bond shall bear interest from such date of authentication; provided, however, that if, as shown by the records of the Trustee, interest shall be in default, each Bond shall bear interest from the last Interest Payment Date to which such interest has been paid in full or duly provided for. The term “Interest Payment Date” means May 1, 2023, and each May 1 and November 1 thereafter. The term “Record Date” means the close of business on the 15th day of the month preceding any Interest Payment Date, whether or not such day is a Business Day.
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Packet Pg. 310 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
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A-2
This Bond shall initially bear interest at the Taxable Rate. From and after the Conversion Date, this Bond shall bear interest at the Tax-Exempt Rate; provided that from and after any Taxable Date, the interest rate on this Bond shall be established at a rate equal to the Taxable Gross-Up Rate; provided, further, that upon the occurrence and during the continuation of any Event of Default, the interest rate on this Bond shall be established at a rate equal to the Default Rate.
The principal of this Bond shall be payable in lawful money of the United States of America at the corporate trust office of U.S. Bank Trust Company, National Association (the “Trustee”) upon presentation and surrender of this Bond.
Payment of interest on this Bond due on or before the maturity or prior redemption, thereof shall be made to the person in whose name such Bond is registered, as of the Record Date preceding the applicable interest payment date, on the registration books kept by the Trustee at its corporate trust office, such interest to be paid by check mailed by first class m ail on such interest payment date to the registered owner at his address as it appears on such books. Interest on this Bond shall be payable in lawful money of the United States of America and shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. This Bond shall not be entitled to any benefit, protection or security under the Indenture, as hereinafter defined, or become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been signed by the Trustee. Notwithstanding the foregoing, so long as Wells Fargo Municipal Capital Strategies, LLC is the Owner of this Bond, principal of, premium, if any, and interest on this Bond shall be paid by electronic transfer and without presentment or surrender of this Bond.
The Owner of $1,000,000 or more in aggregate principal amount of the Bonds may request in writing that the Trustee pay the interest on such Bonds by wire transfer to an account in the United States of America and the Trustee shall comply with such request for all Interest Payment Dates following the 15th day after receipt of such request.
This Bond is one of a duly authorized issue of bonds of the Authority designated as its “Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A (Convertible)” (the “Bonds”), in the aggregate principal amount $________, all of like tenor and date (except for such variations, if any, as may be required to designate varying numbers, maturities and interest rates), and is issued under and pursuant to the provisions of an Indenture, dated as of August 1, 2020, as amended by a First Supplement to Indenture, dated as of _______ 1, 2022 (collectively, the “Indenture”), by and among the Authority, the City of Gilroy (the “City”) and the Trustee (copies of which are on file at the corporate trust office of the Trustee). Unless the context otherwise requires, capitalized terms not defined herein shall have the meanings ascribed to them in the Indenture.
The Bonds are limited obligations of the Authority and are payable, as to interest thereon and principal thereof, solely from the revenues derived from Base Payments paid by the City pursuant to a First Amended and Restated Lease Agreement, dated as of August 1, 2009, as amended, including as amended by a Fourth Amendment to Lease Agreement, dated as of _______ 1, 2022 (collectively, the “Lease”), between the Authority, as lessor, and the City, as lessee, for the use and possession of the Leased Property as long as the City has such use and possession of
13.2.1.b
Packet Pg. 311 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
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A-3
the Leased Property, as well as from all other benefits, charges, income, proceeds, profits, receipts, rents and revenues derived by the Authority, as assignee of the City’s rights under the Lease, from operation or use of the Leased Property (the “Revenues”). All the Bonds (as defined in the Indenture) are equally and ratably secured by the Revenues and enjoy the benefits of a security interest in the money held in the funds established pursuant to the Indenture (other than the Rebate Fund), subject to the provisions of the Indenture permitting the disbursement thereof for or to the purposes and on the conditions and terms set forth therein.
The obligation of the City to pay Base Payments does not constitute an indebtedness of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The obligation of the City to pay Base Payments does not constitute an indebtedness of the City, the State of California, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. The obligation of the City to make the Base Payments is subject to abatement during any period in which, by reason of material damage, destruction or title defect, there is substantial interference with the use and occupancy of the Leased Property or portions thereof or if the Leased Property or portions thereof are taken under the power of eminent domain, all as more particularly provided in the Lease to which reference is hereby made.
To the extent and in the manner permitted by the terms of the Indenture, the provisions of the Indenture may be amended or supplemented by the parties thereto, in some instances without the consent of the registered owners of the Bonds. No such amendment or supplement shall (1) extend the Principal Payment Date of any Bond or reduce the rate of interest represented thereby or extend the time of payment of such interest or reduce the amount of principal represented thereby without the prior written consent of the registered owner of each Bond so affected, or (2) reduce the percentage of registered owners whose consent is required for the execution of any amendment hereof or supplement hereto without the prior written consent of the registered owners of all Bonds then Outstanding, or (3) modify any of the rights or obligations of the Trustee without its prior written consent thereto, or (4) amend the amendment provisions of the Indenture without the prior written consent of the registered owners of all Bonds then Outstanding.
The Bonds are authorized to be executed and delivered in the form of fully registered Bonds without coupons, in denominations of two hundred fifty thousand dollars ($250,000) or any integral multiple of $1 in excess thereof (each, an “Authorized Denomination”).
This Bond is transferable by the Owner hereof, in person or by his attorney duly authorized in writing, at the office of the Trustee in Los Angeles, California, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture; and upon surrender of this Bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer, a new Bond or Bonds of Authorized Denominations of the same Principal Payment Date equal to the principal amount hereof will be executed and delivered by the Trustee to the Owner thereof in exchange or transfer herefor. The Trustee shall not be required to transfer or exchange any Bond during any period in which it is selecting Bonds for redemption, nor shall the Trustee be required to transfer or exchange any Bond or portion thereof selected for redemption from and after the date of mailing the notice of redemption. The Trustee may treat the Owner hereof as the absolute owner hereof for all purposes, whether or not this Bond shall be overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the principal of,
13.2.1.b
Packet Pg. 312 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
4863-6504-4543.3
A-4
premium, if any, and interest on this Bond shall be made only to such Owner as above provided, which payments shall be valid and effectual to satisfy and discharge the liability on this Bond to the extent of the sum or sums so paid.
The Bonds are subject to redemption prior to maturity as described in the Indenture , including as set forth in Article IV and Section 14.06 of the Indenture.
As provided in the Indenture, notice of redemption hereof or of any part hereof shall be mailed, first class postage prepaid, not less than 30 nor more than 60 days before the redemption date, to the Owner of this Bond at his or her address as it appears in the registration books maintained by the Trustee and as specified in the Indenture, but neither failure to receive any such notice nor any defect contained therein shall affect the validity of the proceedings for the redemption of this Bond. If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, the interest represented hereby shall cease to accrue from and after the designated redemption date.
Notwithstanding the foregoing, this Bond may be prepaid in whole at any time upon at least three Business Days’ prior written notice to the Owner specifying the amount of prepayment.
In the event that the Authority pursuant to Section 14.06(a) of the Indenture optionally redeems this is Bond, the Authority shall, at the time of such prepayment, pay to the Owner the principal of this Bond plus interest accrued to the date of prepayment plus an additional fee or redemption premium equal to the Breakage Fee as described in the Indenture.
The Trustee has no obligation or liability to the registered owners of the Bonds for the payment of the interest or principal or redemption premiums, if any, on the Bonds; but rather the Trustee’s sole obligation is to administer, for the benefit of the City, the Authority and the registered owners of the Bonds, the various funds established under the Indenture. The Authority has no obligation or liability whatsoever to the registered owners of the Bonds.
The Indenture provides that the occurrences of certain events constitute Events of Default.
Subject to certain limitations and to the rights of the Trustee or the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding shall be entitled to take whatever action at law or in equity may appear necessary or desirable to enforce its rights as assignee.
13.2.1.b
Packet Pg. 313 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
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A-5
IN WITNESS WHEREOF, the Gilroy Public Facilities Financing Authority has caused this Bond to be executed in facsimile by its Chairman and by its Secretary all as of _____________, 2022.
GILROY PUBLIC FACILITIES FINANCING AUTHORITY
____________________________ ____________________________ Secretary Chairman
13.2.1.b
Packet Pg. 314 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
4863-6504-4543.3
A-6
CERTIFICATE OF AUTHENTICATION AND REGISTRATION
This is one of the Bonds described in the within mentioned Indenture which has been authenticated and registered.
Dated: ___________, 2022
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, as Trustee
By:
Authorized Signatory
13.2.1.b
Packet Pg. 315 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
4863-6504-4543.3
A-7
FORM OF ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto __________________ the within Bond and do(es) hereby irrevocably constitute and appoint ______________________ attorney to transfer such Bond on the register of the Trustee, with full power of substitution in the premises.
Dated:
SIGNATURE GUARANTEED BY:
Note: The signature(s) to this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular, without alteration or enlargement or any change whatsoever, and the signature(s) must be guaranteed by an eligible guarantor institution.
Social Security Number, Taxpayer Identification Number or other identifying number of Assignee:
________________________________
13.2.1.b
Packet Pg. 316 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
4863-6504-4543.3
B-1
EXHIBIT B
BREAKAGE FEE CALCULATION
Each capitalized term used herein and not otherwise defined herein shall have the meaning provided therefor in the Indenture, unless the context otherwise requires.
Upon the occurrence of a Break Event, the Breakage Fee shall be calculated and paid as follows:
“Break Date” means any date that an optional redemption is made.
“Break Event” means any optional redemption or extraordinary redemption of the Bonds.
“Calculation Agent” will be Wells Fargo Bank, National Association. If for any reason Wells Fargo Bank, National Association is unable or unwilling to calculate the Breakage Fee, the Calculation Agent shall be an independent financial advisor or investment banker appointed by the Authority with the consent of the Series 2022A Bonds Purchaser.
“Day Count Fraction” is the anticipated basis on which interest at the Taxable Rate is to be computed on each of the Series 2022A Bonds. The Day Count Fraction utilizes a 360-day year and consisting of twelve 30-day months.
“Maturity Date” means November 1, 2033.
“Interest Rate” means the Taxable Rate.
“Scheduled Due Date” means each date specified on the Amortization Schedule attached as Schedule I hereto.
“Schedule of Principal Amount” is the anticipated principal amount of the Series 2022A Bonds scheduled to be outstanding on the date the Series 2022A Bond is funded and on the Scheduled Due Date. The Schedule of Principal Amounts for the Scheduled Due Dates is specified on the Amortization Schedule attached as Schedule I hereto.
1. In connection with any Break Event, a Breakage Fee shall be paid by the Authority if the Breakage Fee is a positive number. No Breakage Fee shall be payable for a Break Event if the Breakage Fee for that Break Event is a negative number. Breakage Fees will be determined by the Calculation Agent, on the Business Day next preceding any Break Date and will be calculated for the Series 2022A Bonds as follows:
“Breakage Fee” for any Break Event is the difference of:
(i) the sum of the present values of a series of amounts computed for each Scheduled Due Date after the Break Date through the Maturity Date for the Series 2022A Bond, each of which amounts is equal to the product of (A) the Affected Principal Amount for the Affected Principal Period ending on the
13.2.1.b
Packet Pg. 317 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
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B-2
Scheduled Due Date, times (B) the Interest Rate, times (C) the Day Count Fraction for such Affected Principal Period,
minus
(ii) the sum of the present values of a series of amounts computed for each Scheduled Due Date after the Break Date through the Maturity Date for the Series 2022A Bond, each of which amounts is equal to the product of (A) the Affected Principal Amount for the Affected Principal Period ending on the Scheduled Due Date, times (B) the Break Rate, times (C) the Day Count Fraction for such Affected Principal Period,
where:
(1) the Calculation Agent computes such present values by discounting each such series of amounts described in clause (i) and (ii) above from the Scheduled Due Date to the Break Date using a series of discount factors corresponding to the Scheduled Due Date as determined by the Calculation Agent from the swap yield curve that the Calculation Agent would use as of the Break Date in valuing a series of fixed rate interest rate swap payments similar to such series of amounts;
(2) the “Affected Principal Amount” for an Affected Principal Period is the principal amount of the Series 2022A Bonds reflected in the Schedule of Principal Amounts scheduled to be outstanding during that Affected Principal Period determined as of the relevant Break Date by the reference to such Schedule of Principal Amounts before giving effect to any Break Event on that Break Date, and for any Break Event, multiplying each such principal amount times the Prepayment Fraction;
(3) “Affected Principal Period” is each period from and including a Scheduled Due Date to but excluding the next succeeding Scheduled Due Date; provided, however, if the Break Date is not a Scheduled Due Date, the initial Affected Principal Period shall be the period from and including the Break Date to but excluding the next succeeding Scheduled Due Date and the Affected Principal Period for such initial Affected Principal Period shall be the amount stated in the Schedule of Principal Amounts outstanding for the Scheduled Due Date next preceding the Break Date; (4) “Prepayment Fraction” means, for each Scheduled Due Date, a fraction the numerator of which is the amount of the credit to be applied pursuant to the applicable provisions of the Series 2022A Bond and the Indenture to reduce the amount of the prepayment otherwise due on such date and the denominator of which is the amount of the payment otherwise due on such date (without regard to such credit); and
(5) “Break Rate” means, for any Break Date, and with respect to each Series 2022A Bond, the fixed rate the Calculation Agent determines is representative of what swap dealers would be willing to pay to the Calculation Agent (or, if required to be cleared under the Commodity
13.2.1.b
Packet Pg. 318 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
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Exchange Act or a Commodity Futures Trading Commission rule or regulation promulgated thereunder, to a swap clearinghouse) as fixed rate payors on a semi-annual basis in return for receiving the daily average of SOFR over a one-month period (or such alternate rate index designated for use in lieu of SOFR by the International Swaps and Derivatives Association) based payments monthly under interest rate swap transactions that would commence on such Break Date, and mature on, or as close as commercially practicable to, the Maturity Date for such Series 2022A Bond;
2. The Calculation Agent shall determine the Breakage Fee hereunder in good faith using such methodology as the Calculation Agent deems appropriate under the circumstance, and the Calculation Agent’s determination shall be conclusive and binding in the absence of manifest error.
13.2.1.b
Packet Pg. 319 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
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B-4
SCHEDULE I
AMORTIZATION SCHEDULE1
Scheduled Due Date Schedule of Principal Amounts
1 Such amount to be the outstanding principal of the Bonds on each such date after the required amortization payment has been m ade.
13.2.1.b
Packet Pg. 320 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
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C-1
EXHIBIT C
FORM OF PURCHASER LETTER
__________, 20__
City of Gilroy
Gilroy, California
Gilroy Public Facilities Financing Authority
Gilroy, California
U.S. Bank Trust Company, National Association
Los Angeles, California
Nixon Peabody LLP
Los Angeles, California
Re: Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A (Convertible)
Ladies and Gentlemen:
The undersigned, __________ (the “Purchaser”), hereby acknowledges receipt of the above-referenced bonds (the “Bonds”), dated ________, 2022, in fully registered form and in the aggregate principal amount of $__________. The Bonds have been checked, inspected and approved by the Purchaser.
The undersigned further acknowledges that the Bonds are secured by a certain Indenture, dated as of August 1, 2020, as amended by the First Supplement to Indenture, dated as of December 1, 2022 (collectively, the “Indenture”), among the City of Gilroy (the “City”), the Gilroy Public Facilities Financing Authority (the “Authority”) and U.S. Bank Trust Company, National Association (the “Trustee”).
In connection with the sale of the Bonds to the Purchaser, the Purchaser hereby makes the following representations upon which you may rely:
1. The Purchaser hereby certifies that it is a “qualified institutional buyer” within the meaning of Rule 144A(a)(1) promulgated under the Securities Act of 1933, as amended (the “Act”) and applicable state securities laws (a “Qualified Buyer”).
2. The Purchaser (a) is a bank, any entity directly or indirectly controlled by the bank or under common control with the bank, other than a broker, dealer or municipal securities dealer registered under the Securities Exchange Act of 1934, or a consortium of such entities; and (b) has the present intent to hold the Bonds to maturity; provided, however, that the Purchaser shall not be precluded from transferring, participating or assigning its interest in the Bonds in accordance with the terms and conditions set forth in
13.2.1.b
Packet Pg. 321 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
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C-2
the Indenture. The Purchaser understands that it may need to bear the risks of this investment for an indefinite period of time, since a sale of the Bonds, or any portion thereof, may not be possible. The Purchaser is not participating, directly or indirectly, in a distribution of the Bonds and will not take, or cause to be taken, any action that would cause the Purchaser to be deemed an “underwriter” of such Bonds as defined in Section 2(a)(11) of the Act. The Purchaser understands that the Authority has no obligation to register the Bonds for resale under the Act. The Purchaser further understands that the Bonds are being sold in a transaction that is exempt from the registration requirements of the Act. The Purchaser acknowledges that the City will not be entering into a continuing disclosure undertaking for the Bonds pursuant to Section 15c2-12 of the Securities Exchange Act of 1934, as amended; provided, however, that the City has agreed in the Indenture to provide certain ongoing information to the Purchaser.
3. The Purchaser has received and carefully read all information and other items of disclosure relating to the City and the Bonds that the Purchaser has deemed material for it to make an informed lending decision with respect to its purchase of the Bonds and, in connection therewith, has had access to all other materials, books, records, documents, and information relating to the City and the Bonds, and has been able to verify the accuracy of, and supplement, the information contained therein.
4. The Purchaser acknowledges that it has either been supplied with or been given access to information, financial statements or other financial information, which it has requested from the City and to which a reasonable investor would attach significance in making an investment decision (collectively, the “Disclosure Items”). The Purchaser has had an opportunity to ask questions of, and receive satisfactory answers from, duly designated representatives of the City concerning the terms and conditions pursuant to which the offer to purchase the Bonds is being made, and is satisfied with the information provided in response to its requests, and is satisfied that its request for such information has been fully complied with by the City.
5. The Purchaser has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of purchasing the Bonds based upon (i) the information furnished to it by the City; (ii) its or such representative’s personal knowledge of the business and affairs of the City; (iii) such additional information as it or such representative may have requested and have received from the City; and (iv) the independent inquiries and investigations undertaken by it or such representative.
6. The Purchaser represents that it can bear the economic risk of loss of the Bonds.
7. No person has given any information or made any representation not contained in any Disclosure Items referred to above or otherwise provided to the Purchaser in writing by a person employed or authorized in writing by the City. The Purchaser understands and agrees that any information or representation not contained therein must not, and will not, be relied upon and that nothing contained therein should be construed as legal or tax advice to the Purchaser.
13.2.1.b
Packet Pg. 322 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
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8. The signatory of this letter is a duly authorized officer of the Purchaser with the authority to sign this letter on behalf of the Purchaser, and this letter has been duly authorized, executed, and delivered by the Purchaser.
9. The Purchaser understands that the purchase of the Bonds involves significant credit risks. The Purchaser is aware that there are certain economic and regulatory variables and risks that could adversely affect the security for the Bonds. The Purchaser has reviewed the documents executed in conjunction with the issuance of Bonds, or summaries thereof, including, without limitation, the Indenture.
10. The Purchaser acknowledges and agrees that the Authority and the City take no responsibility for, and make no representation to the Purchaser, or any subsequent purchaser, with regard to, a sale, transfer or other disposition of the Bond in violation of the provisions of the Indenture, or any securities law or income tax law consequences thereof. The Purchaser also acknowledges that, with respect to the City’s obligations and liabilities, the Purchaser is solely responsible for compliance with the sales restrictions on the Bond in connection with any subsequent transfer of the Bonds made by the Purchaser.
11. The Purchaser has been informed that the Bonds (i) have not been and will not be registered or otherwise qualified for sale under the “Blue Sky” laws and regulations of any jurisdiction, (ii) will not be listed on any stock or other securities exchange and (iii) will carry no rating from any rating service.
12. The Purchaser acknowledges that the sale of the Bonds to the Purchaser is made in reliance upon the certifications, representations and warranties herein by the addresses hereto.
Capitalized terms used herein and not otherwise defined have the meanings given such terms in the Indenture.
[PURCHASER]
By: ______________________________
Its: ______________________________
13.2.1.b
Packet Pg. 323 Attachment: First Supplement to Indenture (4078 : GPFFA - 2013 LRBs Refunding)
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EXHIBIT D
FORM OF TAX-EXEMPT BOND CONVERSION AGREEMENT
TAX-EXEMPT BOND CONVERSION AGREEMENT
THIS TAX-EXEMPT BOND CONVERSION AGREEMENT (the “Agreement”) is made by and among the CITY OF GILROY, a political subdivision duly organized and existing under the laws of the State of California (the “City”), the GILROY PUBLIC FACILITIES FINANCING AUTHORITY, a joint powers authority duly organized and existing under and by virtue of the laws of the State of California (the “Authority”) and [__________] (the “Owner”).
RECITALS
WHEREAS, pursuant to the provisions of the Indenture, dated as of August 1, 2020, as amended by a First Supplement to Indenture, d ated as of December 1, 2022 (collectively, the “Indenture”), each by and among U.S. Bank Trust Company, National Association (the “Trustee”), the City and the Authority, the Authority issued its Lease Revenue Refunding Bonds, Series 2022A (Convertible) (th e “Bond”);
WHEREAS, the Indenture provides that the Owner, the Authority and the City may agree to convert the rate at which the Bond bears interest from the Taxable Rate to the Tax-Exempt Rate effective as of the Conversion Date, subject to meeting certain conditions; WHEREAS, the Authority, the City, and the Owner now wish to enter into this Agreement in order to effectuate such conversion in accordance with Section 14.02 of the Indenture and to acknowledge that such conversion constitutes a “reissuance” of the Bond for federal income tax purposes, creating a new debt instrument the issuer of which is the Authority; NOW, THEREFORE, and in consideration of the respective promises and mutual covenants and benefits hereinafter set forth, the Authority, the City, and the Owner agree as follows:
AGREEMENT
Section 1. Definitions, Declarations, Findings and Determinations. The definitions, declarations, determinations and findings contained in the recitals to this Agreement are hereby adopted, restated and made a part of the operative provisions hereof. Capitalized terms used herein and not otherwise defined shall have the meanings assigned thereto in the Indenture.
Section 2. Conversion to Tax-Exempt Rate. The Authority, the City, and the Owner hereby agree that the interest rate on the Bond will convert to the Tax-Exempt Rate on the Conversion Date (the “Conversion”), subject to compliance with the conditions set forth in Section
14.02 of the Indenture, including, particularly, the issuance of the Opinion of Counsel described therein. The Authority, the City, and the Owner acknowledge that the Conversion of the Bond
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D-2
from the Taxable Rate to the Tax-Exempt Rate is intended to constitute a “reissuance” of the Bond for federal income tax purposes, creating a new debt instrument the issuer of which is the Authority.
Section 3. Compliance with Covenants Regarding Tax Exemption and Filing of Form 8038-G.
(a) The Authority and the City hereby agree that the covenants contained in the tax certificate, dated the date hereof, will become operative on the Conversion Date and shall be incorporated as operative terms of the Indenture.
(b) The Authority agrees to file a Form 8038-G with the Internal Revenue Service in connection with Conversion and the deemed reissuance of the Bond, solely for federal tax purposes, as tax-exempt bonds.
Section 4. Delivery of Agreement to Trustee. Upon compliance with the provisions of Section 14.02 of the Indenture, the Authority, the City, and the Owner hereby agree to deliver an executed copy of this Agreement to the Trustee for the Bond.
Section 5. Multiple Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original instrument and each will have the force and effect of an original and all of which together constitute, and will be deemed to constitute, one and the same instrument.
Section 6. Effective Date. This Agreement shall become effective upon satisfaction of all of the conditions described in Section 14.02 of the Indenture.
Section 7. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California.
Section 8. Severability. The provisions of this Agreement are severable, and if any provision or part of this Agreement or the application hereof to any person or circumstance shall ever be held by any court of competent jurisdiction to be invalid or unconstitutional for any reason, the remainder of this Agreement and the application of such provision or part of this Agreement to other persons or circumstances shall not be affected thereby. [Execution Page Follows]
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EXECUTED in multiple counterparts as of ________ , 20__.
CITY OF GILROY
By:
Name: _________________________________
Title: __________________________________
Attest:
By:
City Clerk
GILROY PUBLIC FACILITIES
FINANCING AUTHORITY
By:
Name: _________________________________
Title: __________________________________
Attest:
By:
Secretary
[OWNER]
By:
Name: _________________________________
Title: __________________________________
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TO BE RECORDED AND WHEN RECORDED
RETURN TO:
Nixon Peabody LLP
300 South Grand Avenue, Suite 4100
Los Angeles, California 90071
Attention: Danny Kim, Esq.
This document is recorded for the benefit of the City of Gilroy and the recording is fee-exempt under Section 6103 of the California Government Code and the recording is exempt under Section 27383 of the California Government Code and Section 11928 of the California Revenue and Taxation Code.
FOURTH AMENDMENT TO LEASE AGREEMENT
by and between
GILROY PUBLIC FACILITIES FINANCING AUTHORITY
as Lessor
and
CITY OF GILROY
as Lessee
Dated as of December 1, 2022
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Table of Contents
Page
i
SECTION 1 Definitions .................................................................................................. 2 SECTION 2 Revised Lease Payment Schedule ............................................................... 2 SECTION 3 Amendment of Section 3.5 Additional Payments ....................................... 2 SECTION 4 Recordation Hereof ..................................................................................... 3 SECTION 5 Amendments Authorized ............................................................................ 3 SECTION 6 Governing Law ........................................................................................... 3 SECTION 7 Binding Effect ............................................................................................. 3 SECTION 8 Severability of Invalid Provisions ............................................................... 3 SECTION 9 Third Party Beneficiary .............................................................................. 3 SECTION 10 Execution of Counterparts .......................................................................... 3
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[Fourth Amendment to Lease Agreement]
FOURTH AMENDMENT TO
LEASE AGREEMENT
This FOURTH AMENDMENT TO LEASE AGREEMENT (this “Fourth
Amendment”), dated as of December 1, 2022, is between the GILROY PUBLIC FACILITIES FINANCING AUTHORITY, a joint powers authority duly organized and existing under the laws of the State of California (the “Authority”), as lessor, and the CITY OF GILROY, a charter city and municipal corporation duly organized and existing under the Constitution and laws of the State of California (the “City”), as lessee.
BACKGROUND:
1. The Authority has been formed under a Joint Exercise of Powers Agreement dated as of March 21, 1994, between the City and the Community Development Agency of the City of Gilroy, as amended by a First Amendment to Joint Powers Agreement on July 1, 2013, among the City, the Successor Agency of the Community Development Agency of the City of Gilroy and the Industrial Development Authority of the City of Gilroy, and is authorized thereunder to finance the acquisition and construction of public capital improvements for its members.
2. In order to provide financing for the construction of a police station, a fire station, a corporation yard and a playfield sports complex (the “2003 Projects”), the Authority and the City have previously authorized the execution and delivery of Certificates of Participation (City of Gilroy — Public Buildings Project) Series 2003 (Auction Rate) in the aggregate principal amount of $45,900,000 (the “2003 Certificates”).
3. In connection with the refunding of the 2003 Certificates, the Authority issued its $46,370,000 aggregate principal amount of Gilroy Public Facilities Financing Authority 2009 Bond Anticipation Notes, Series 2009 (the “2009 Notes”) and the City and the Authority have previously entered into that certain First Amended and Restated Lease Agreement, dated as of August 1, 2009, which was recorded in the Official Records of Santa Clara County on August 25, 2009 as Document No. 20409795 (the “2009 Lease”).
4. In connection with the refunding of the 2009 Notes, the Authority issued its Gilroy Public Facilities Financing Authority Refunding Bond Anticipation Notes, Series 2010 (the “2010 Notes”), in the aggregate principal amount of $22,840,000, and its Gilroy Public Facilities Financing Authority Refunding Lease Revenue Bonds, Series 2010 (the “2010 Bonds”), in the aggregate principal amount of $24,475,000.
5. In connection with the refunding of the 2010 Notes, the Authority issued its Gilroy Public Facilities Financing Authority Refunding Lease Revenue Bonds, Series 2013 (the “2013 Bonds”) and the City and the Authority have previously entered into that certain Second Amendment to Lease Agreement, dated as of August 1, 2013 (the “Second Amendment”), which was recorded in the Official Records of Santa Clara County on August 1, 2013 as Document No. 22357436.
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[Fourth Amendment to Lease Agreement]
6. In connection with the refunding of the 2010 Bonds, the Authority issued its Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2020A (the “2020A Bonds”) and the City and the Authority have previously entered into that certain Third Amendment to Lease Agreement, dated as of August 1, 2020 (the “Third Amendment”), which was recorded in the Official Records of Santa Clara County on August 6, 2020 as Document No. 24566122.
7. In connection with the refunding of the 2013 Bonds, the Authority intends to issue its Lease Revenue Refunding Bonds, Series 2022A (Convertible) (the “2022A Bonds”), in the aggregate principal amount of $________ pursuant to an Indenture, dated as of August 1, 2020, as amended by the First Supplement to Indenture, dated as of December 1, 2022 (collectively, the “Indenture”), by and among the Authority, the City and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).
8. The City and the Authority wish to further amend the 2009 Lease at this time for the purpose of revising the Lease Payment schedule to reflect the payment of Debt Service on the 2022A Bonds in addition to the payment of Debt Service on the 2020A Bonds.
9. Such amendments are permitted to be made under Section 7.3 of the 2009 Lease, since such amendments will not materially adversely affect the interests of the owners of any Authority Debt, in the opinion of bond counsel which has been filed with the Authority, the City and the Trustee.
10. The Authority and the City have each duly authorized the execution and delivery of this Second Amendment.
AGREEMENT:
In consideration of the above premises and of the mutual promises and covenants herein contained and for other valuable consideration, the parties hereto do hereby agree as follows:
SECTION 1 Definitions. All capitalized terms in this Fourth Amendment and not otherwise defined herein have the respective meanings given them in the Indenture.
SECTION 2 Revised Lease Payment Schedule. The Lease Payment schedule set forth in Exhibit C to the Third Amendment is hereby revised to reflect the payment of Debt Service on the 2022A Bonds in addition to the payment of Debt Service on the 2020A Bonds. Such Lease Payment schedule is attached to this Fourth Amendment as Exhibit B and is subject to adjustment upon the occurrence of a BPA Credit Event or a Determination of Taxability as more fully set forth in the Indenture.
SECTION 3 Amendment of Section 3.5 Additional Payments. Section 3.5 of the 2009 Lease is hereby amended by the addition of a new paragraph (f) which shall appear immediately following paragraph (e) and shall read as follows:
(f) All amounts due and owing under that certain Bond Purchase Agreement dated [December __, 2022], among the City, the Authority and Wells Fargo Municipal Capital Strategies, LLC, as purchaser of the 2022A Bonds, as the same may be amended, modified or supplemented from time to time in accordance with its terms.
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[Fourth Amendment to Lease Agreement]
SECTION 4 Recordation Hereof. On or before the Series 2022A Bonds Closing Date the City shall cause this Fourth Amendment to be recorded in the office of the Santa Clara County Recorder with respect to the Leased Property.
SECTION 5 Amendments Authorized. The Authority and the City hereby find and determine that the amendments made under Section 1 and 2 are authorized to be made under Section 7.3 of the 2009 Lease. Such amendment is necessary to conform to the terms and conditions upon which the 2022A Bonds are issued, and such amendments to do not materially adversely affect the interests of the owners of the 2020A Bonds.
SECTION 6 Governing Law. This Fourth Amendment shall be construed in accordance with and governed by the Constitution and laws of the State of California.
SECTION 7 Binding Effect. This Fourth Amendment shall inure to the benefit of and shall be binding upon the Authority, the City and their respective successors and assigns, subject, however, to the limitations contained herein.
SECTION 8 Severability of Invalid Provisions. If any one or more of the provisions contained in this Fourth Amendment are for any reason held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Fourth Amendment and such invalidity, illegality or unenforceability shall not affect any other provision of this Fourth Amendment, and this Fourth Amendment shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Authority and the City each hereby declares that it would have entered into this Fourth Amendment and each and every other Section, paragraph, sentence, clause or phrase hereof irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses or phrases of this Fourth Amendment may be held illegal, invalid or unenforceable.
SECTION 9 Third Party Beneficiary. The Trustee is hereby made a third party beneficiary under this Fourth Amendment with all rights of a third party beneficiary.
SECTION 10 Execution of Counterparts. This Fourth Amendment may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original and all of which shall together constitute but one and the same instrument.
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[Fourth Amendment to Lease Agreement]
IN WITNESS WHEREOF, the Authority and the City have caused this Fourth Amendment to be executed in their respective names by their duly authorized officers, all as of the date first above written.
GILROY PUBLIC FACILITIES
FINANCING AUTHORITY, as Lessor
By:
Executive Director
ATTEST:
By:
Secretary
CITY OF GILROY, as Lessee
By:
City Administrator
ATTEST:
By:
City Clerk
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Packet Pg. 332 Attachment: Fourth Amendment to Lease Agreement (4078 : GPFFA - 2013 LRBs Refunding)
A-1
EXHIBIT A
DESCRIPTION OF LEASED PROPERTY
All that certain real property, situated in the City of Gilroy, County of Santa Clara, State of California, described on the attached pages.
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B-1
EXHIBIT B
BASE RENTAL PAYMENT SCHEDULE AS AMENDED
(TAXABLE RATE)
2020A Lease Revenue Bonds 2022A Lease Revenue Bonds
Payment
Date Principal Interest Principal Interest1 Total Lease Payment 11/01/20 $790,000 $162,208.33
05/01/21 323,750.00
11/01/21 715,000 323,750.00
05/01/22 305,875.00
11/01/22 755,000 305,875.00
05/01/23 287,000.00
11/01/23 795,000 287,000.00
05/01/24 267,125.00
11/01/24 840,000 267,125.00
05/01/25 246,125.00
11/01/25 880,000 246,125.00
05/01/26 224,125.00
11/01/26 925,000 224,125.00
05/01/27 201,000.00
11/01/27 1,000,000 201,000.00
05/01/28 176,000.00
11/01/28 1,030,000 176,000.00
05/01/29 150,250.00
11/01/29 1,085,000 150,250.00
05/01/30 123,125.00
11/01/30 1,140,000 123,125.00
05/01/31 94,625.00
11/01/31 1,200,000 94,625.00
05/01/32 64,625.00
11/01/32 1,260,000 64,625.00
05/01/33 33,125.00
11/01/33 1,325,000 33,125.00
$13,740,000 $5,155,708.33
1 Subject to adjustment upon a BPA Credit Event as more fully set forth in the Indenture.
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B-2
BASE RENTAL PAYMENT SCHEDULE AS AMENDED
(TAX-EXEMPT RATE AFTER CONVERSION)
2020A Lease Revenue Bonds 2022A Lease Revenue Bonds
Payment
Date Principal Interest Principal Interest1 Total Lease Payment 11/01/20 $790,000 $162,208.33
05/01/21 323,750.00
11/01/21 715,000 323,750.00
05/01/22 305,875.00
11/01/22 755,000 305,875.00
05/01/23 287,000.00
11/01/23 795,000 287,000.00
05/01/24 267,125.00
11/01/24 840,000 267,125.00
05/01/25 246,125.00
11/01/25 880,000 246,125.00
05/01/26 224,125.00
11/01/26 925,000 224,125.00
05/01/27 201,000.00
11/01/27 1,000,000 201,000.00
05/01/28 176,000.00
11/01/28 1,030,000 176,000.00
05/01/29 150,250.00
11/01/29 1,085,000 150,250.00
05/01/30 123,125.00
11/01/30 1,140,000 123,125.00
05/01/31 94,625.00
11/01/31 1,200,000 94,625.00
05/01/32 64,625.00
11/01/32 1,260,000 64,625.00
05/01/33 33,125.00
11/01/33 1,325,000 33,125.00
$13,740,000 $5,155,708.33
1 Subject to adjustment upon a BPA Credit Event or a Determination of Taxability as more fully set forth in the Indenture.
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CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property conveyed by the Fourth Amendment to Lease Agreement, dated as of December 1, 2022, by and between the Gilroy Public Facilities Financing Authority (the “Authority”) and the City of Gilroy (the “City”), from the Authority to the City, is hereby accepted by the undersigned on behalf of the City pursuant to authority conferred by resolution of the City Council of the City adopted on December 5, 2022, and the City consents to recordation thereof by its duly authorized officer.
Dated as of December 1, 2022
CITY OF GILROY
By: _______________________________
City Administrator
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
) ss
COUNTY OF SANTA CLARA )
On _________________, 2022, before me, ______________________________, Notary Public, personally appeared __________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
) ss
COUNTY OF SANTA CLARA )
On _________________, 2022, before me, ______________________________, Notary Public, personally appeared __________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
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Packet Pg. 338 Attachment: Fourth Amendment to Lease Agreement (4078 : GPFFA - 2013 LRBs Refunding)
BOND PURCHASE AGREEMENT
among
CITY OF GILROY,
GILROY PUBLIC FACILITIES FINANCING AUTHORITY
and
WELLS FARGO MUNICIPAL CAPITAL STRATEGIES, LLC
Relating to
[$_________]
Gilroy Public Facilities Financing Authority
Lease Revenue Refunding Bonds
Series 2022A (Convertible)
Dated [December __, 2022]
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Packet Pg. 339 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4078 : GPFFA - 2013 LRBs Refunding)
ARTICLE I
DEFINITIONS
Section 1.01. Definitions........................................................................................................ 1 Section 1.02. Incorporation of Certain Definitions by Reference; Interpretation .................. 5
ARTICLE II
PURCHASE OF OBLIGATION
Section 2.01. Execution of this Agreement; Purchase of Bond ............................................. 6
ARTICLE III
CONDITIONS PRECEDENT TO PURCHASE OF OBLIGATION
Section 3.01. Conditions Precedent to Execution and Closing .............................................. 6
ARTICLE IV
REPRESENTATION AND WARRANTIES
Section 4.01. The City represents and warrants to the Purchaser as follows: ....................... 8 Section 4.02. The Authority represents and warrants to the Purchaser as follows: ............. 12
ARTICLE V
COVENANTS
Section 5.01. Covenants ....................................................................................................... 15
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01. Events of Default ........................................................................................... 18 Section 6.02. Consequences of an Event of Default ............................................................ 20 Section 6.03. Downgrade Redemption Event ...................................................................... 20
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments and Waivers ............................................................................. 20 Section 7.02. Counterparts ................................................................................................... 20 Section 7.03. Notices ........................................................................................................... 20 Section 7.04. Severability .................................................................................................... 21 Section 7.05. Governing Law; Waiver of Jury Trial ........................................................... 22 Section 7.06. Complete and Controlling Agreement ........................................................... 22 Section 7.07. Indemnification .............................................................................................. 22 Section 7.08. Patriot Act ...................................................................................................... 22 Section 7.09. No Advisory or Fiduciary Responsibility ...................................................... 23 Section 7.10. Excess Interest ............................................................................................... 23 Section 7.11. Contractual Interpretation .............................................................................. 23
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Section 7.12. EMMA Posting .............................................................................................. 24 Section 7.13. Electronic Signatures ..................................................................................... 24
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Packet Pg. 341 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4078 : GPFFA - 2013 LRBs Refunding)
BOND PURCHASE AGREEMENT
THIS BOND PURCHASE AGREEMENT is dated [December __, 2022] (as amended, modified or restated from time to time, this “Agreement”), among the CITY OF GILROY (the “City”), the GILROY PUBLIC FACILITIES FINANCING AUTHORITY (the “Authority”) and WELLS FARGO MUNICIPAL CAPITAL STRATEGIES, LLC (the “Purchaser”).
W I T N E S E T H:
WHEREAS, pursuant to that certain Resolution No. [_____] adopted by the City on [December __, 2022] (the “Resolution”) and the certain Resolution No. [_____] adopted by the Authority on [December __, 2022] (the “Authority Resolution”), the City has approved (i) the issuance of the Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A (Convertible) (the “Bond”) for the purpose of refunding a portion of the Gilroy Public Facilities Financing Authority Refunding Lease Revenue Bonds, Series 2013 (the “Refunded Bond”) and the payment of costs associated with the issuance of the Bond and (ii) the execution and delivery of a purchase agreement and other documentation related to the issuance of the Bond and the purchase of the Bond in advance of its issuance on [December __, 2022]; and WHEREAS, the Bonds will be issued pursuant to the Indenture, dated as of August 1, 2020, as supplemented by the First Supplement to Indenture, dated as of [December __, 2022], each by and among U.S. Bank Trust Company, National Association (the “Trustee”), the City and the Authority; and
WHEREAS, the Purchaser hereby agrees to purchase the Bond when issued in compliance with the requirements and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, including the covenants, terms and conditions hereinafter contained, and to induce the Purchaser to purchase the Bond, the Purchaser, the Authority and the City agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. In addition to terms defined at other places in this Agreement, the following defined terms are used throughout this Agreement with the following meanings:
“affiliate” means, with respect to any Person, any other Person directly or indirectly controlling or controlled by or under common control with such Person. Without limiting the foregoing, the definition of “affiliate” of any Person shall include any subsidiary of such Person and, with respect to the Purchaser, shall include Wells Fargo Securities (a trade name) and Wells Fargo Bank, National Association.
“Additional Payments” has the meaning set forth in the Lease Agreement.
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Packet Pg. 342 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4078 : GPFFA - 2013 LRBs Refunding)
2 “Agreement” means this Bond Purchase Agreement as originally executed and as it may from time to time be amended or supplemented in accordance with the term hereof. “Anti-Corruption Laws” means (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended, (b) the U.K. Bribery Act of 2010, as amended, and (c) any other anti-bribery or anti- corruption laws, regulations or ordinances in any jurisdiction in which the City is located or doing business.
“Anti-Money Laundering Laws” means applicable laws or regulations in any jurisdiction in which the City is located or doing business that relate to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto. “Assignment Agreement” has the meaning set forth in the Indenture. “Authority” means the Gilroy Public Facilities Financing Authority, a joint powers authority duly organized and existing under and by virtue of the laws of the State of California. “Base Payments” has the meaning set forth in the Lease Agreement. “Bond” means the Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A (Convertible).
“Bond Counsel” means Nixon Peabody LLP.
“Bond Documents” means, collectively, this Agreement, the Resolution, the Authority Resolution, the Bond, the Indenture, the First Supplement to Indenture, the Lease Agreement, the Fourth Amendment to Lease Agreement, the Assignment Agreement and the Site Lease. “Business Day” means a day which is not (a) a Saturday, Sunday or legal holiday on which banking institutions in Gilroy, California or New York, New York are authorized by law to close or (b) a day on which the New York Stock Exchange or the Federal Reserve Bank is closed. “City” means the City of Gilroy, a charter city duly organized and existing under the Constitution and laws of the State of California.
“Conversion Date” means the date on which the conditions to the conversion of the interest rate on the Bond from the Taxable Fixed Rate to the Tax-Exempt Fixed Rate pursuant to Section
3.01(b) hereof have been satisfied, which such date shall be on or after [August 8, 2023]. “City Representative” means the Mayor, City Administrator, Finance Director or City Clerk of the City, or such other person designated in writing by the City. “Closing Date” means the date of issuance of the Bond, [December __, 2022], or such other date if acceptable to the Purchaser, subject to the satisfaction of the conditions precedent set forth in Section 3.01(a).
“Confidential Information” means any sensitive or confidential information regarding the Purchaser or any affiliate of the Purchaser including, without limitation, address and account
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Packet Pg. 343 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4078 : GPFFA - 2013 LRBs Refunding)
3 information, e-mail addresses, telephone numbers, facsimile numbers, and names and signatures of officers and employees.
“Default Rate” means, for any day, a fluctuating rate of interest per annum equal to the greatest of (i) the Prime Rate in effect at such time plus four percent (4.0%), (ii) the Federal Funds Rate in effect at such time plus five percent (5.0%), and (iii) ten percent (10.0%). “Determination of Taxability” has the meaning set forth in the Indenture. “EMMA” means Electronic Municipal Market Access as provided by the Municipal Securities Rulemaking Board.
“Event of Default” with respect to this Agreement shall have the meaning set forth in Section 6 of this Agreement.
“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that: (a) if such day is not a Business Day, then the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day; and (b) if no such rate is so published on such next succeeding Business Day, then the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of one-hundredth of one percent) charged to the Purchaser on such day on such transactions as determined by the Purchaser. If the Federal Funds Rate determined as provided above would be less than zero percent (0.0%), then the Federal Funds Rate shall be deemed to be zero percent (0.0%).
“Fitch” means Fitch Ratings, Inc., and any successor rating agency. “First Supplement to Indenture” means the First Supplement to Indenture, dated as of December 1, 2022, by and among the Trustee, the City and the Authority. “Fourth Amendment to Lease Agreement” means the Fourth Amendment to Lease Agreement, dated as of December 1, 2022, between the Authority, as lessor, and the City, as lessee. “Indenture” means the Indenture by and among the Trustee, the City and the Authority, dated as of August 1, 2020, as originally executed and as it may from time to time be amended or supplemented in accordance therewith.
“Lease Agreement” means the First Amended and Restated Lease Agreement dated as of August 1, 2009, by and between the City, as sublessee, and the Authority, as sublessor, as originally executed and as it may be amended or supplemented in accordance therewith. “Lease Payments” has the meaning set forth in the Lease Agreement. “Leased Property” has the meaning set forth in the Indenture.
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Packet Pg. 344 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4078 : GPFFA - 2013 LRBs Refunding)
4 “Lease Obligation Debt” means any debt of the City and/or the Authority, the payment of which is payable from and/or secured by lease revenue rental payments payable under real property (but not equipment) leases from the general fund of the City. “Material City Debt” means any debt of the City that is outstanding in a principal amount of $5,000,000 or more.
“Maximum Federal Corporate Tax Rate” has the meaning set forth in the Indenture. “Moody’s” means Moody’s Investors Service, Inc. and any successor rating agency. “Owner” means the registered owner of the Bond.
“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Title III of Pub. L. 107 56 (signed into law October 26, 2001).
“Person” means any individual, corporation, not for profit corporation, partnership, limited liability company, joint venture, association, professional association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other form of entity.
“Prime Rate” means on any day, the rate of interest per annum then most recently established by Wells Fargo Bank, National Association as its “prime rate.” Any such rate is a general reference rate of interest, need not be related to any other rate, and need not be the lowest or best rate actually charged by Wells Fargo Bank, National Association to any customer or a favored rate and need not correspond with future increases or decreases in interest rates charged by other lenders or market rates in general; Wells Fargo Bank, National Association may make various business or other loans at rates of interest having no relationship to such rate. If Wells Fargo Bank, National Association ceases to establish or publish a prime rate from which the Prime Rate is then determined, the applicable variable rate from which the Prime Rate is determined thereafter shall be instead the prime rate reported in The Wall Street Journal (or the average prime rate if a high and a low prime rate are therein reported), and the Prime Rate shall change without notice with each change in such prime rate as of the date such change is reported. If the Prime Rate determined as provided above would be less than zero percent (0.0%), then the Prime Rate shall be deemed to be zero percent (0.0%).
“Property” means, when used in connection with any Person, any and all rights, title and interests of such Person in and to any and all property (including cash) whether real, personal or mixed, or tangible or intangible, and wherever situated. “Purchaser” means Wells Fargo Municipal Capital Strategies, LLC, and its successors and assigns.
“Purchase Price” has the meaning assigned in Section 2.01(a). “Refunded Bond” means the Gilroy Public Facilities Financing Authority Refunding Lease Revenue Bonds, Series 2013.
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Packet Pg. 345 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4078 : GPFFA - 2013 LRBs Refunding)
5 “Rating Agency” means any of S&P, Moody’s and Fitch, as applicable. “Rental Payments” has the meaning set forth in the Indenture. “Revenues” has the meaning set forth in the Indenture.
“S&P” means S&P Global Ratings, and any successor rating agency. “Sanction” or “Sanctions” means any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and restrictions and anti-terrorism laws imposed, administered or enforced from time to time by: (a) the United States of America, including those administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the U.S. Department of State, the U.S. Department of Commerce, or through any existing or future statute or Executive Order, (b) the United Nations Security Council, (c) the European Union, (d) the United Kingdom, or (e) any other governmental authority with jurisdiction over the City. “Sanctioned Target” means any target of Sanctions, including: (a) Persons on any list of targets identified or designated pursuant to any Sanctions, (b) Persons, countries or territories that are the target of any territorial or country-based Sanctions program, (c) Persons that are a target of Sanctions due to their ownership or control by any Sanctioned Target(s), or (d) otherwise a target of Sanctions, including vessels and aircraft, that are designated under any Sanctions program. “Site Lease” has the meaning set forth in the Indenture. “State” means the State of California.
“Taxable Date” has the meaning set forth in the Indenture. “Taxable Gross-Up Rate” has the meaning set forth in the Indenture. “Taxable Rate” means [__._]%, the rate of interest on the Bond payable from the Closing Date to but not including the Conversion Date.
“Tax-Exempt Rate” means [__._]%, the rate of interest on the Bond payable from and after the Conversion Date.
“Trustee” means U.S. Bank Trust Company, National Association.
Section 1.02. Incorporation of Certain Definitions by Reference; Interpretation .
Each capitalized term used herein and not otherwise defined herein shall have the meaning provided therefor in the Indenture, unless the context otherwise requires. In the event of any conflict between the terms and provisions of this Agreement and the provisions of the Indenture, the provisions of the Indenture shall be controlling.
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Packet Pg. 346 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4078 : GPFFA - 2013 LRBs Refunding)
6 ARTICLE II
PURCHASE OF OBLIGATION
Section 2.01. Execution of this Agreement; Purchase of Bond. (a) Purchase. Upon the terms and conditions and based on the representations, warranties and covenants of the Authority and the City set forth herein and in the Bond Documents, the Purchaser hereby agrees to purchase from the Authority, and the Authority hereby agrees to issue and sell to the Purchaser, the Bond at the purchase price of [$________] representing the aggregate principal amount of the Bond (the “Purchase Price”).
(b) Closing. On the Closing Date, the Authority and the City, as applicable, shall deliver to the Purchaser the documents described in and that satisfy the conditions set forth in Section 3.01(a). Upon delivery of such documents and satisfaction of such conditions, the Purchaser will pay the Purchase Price for the Bond in immediately available federal funds at the direction of the Authority. One fully registered Bond, in the aggregate principal amount equal to the Purchase Price, shall be issued to and registered in the name of the Purchaser, and shall be delivered at the direction of the Purchaser. (c) Conversion Date. On the Conversion Date, the City shall deliver to the Purchaser the documents described in and satisfy the conditions set forth in Section 3.01(b) hereof. Upon delivery of such documents and satisfaction of such conditions, the interest rate on the Bond shall convert to the Tax-Exempt Rate; provided that from and after any Taxable Date, the interest rate on the Bond shall be established at a rate at all times equal to the Taxable Gross-Up Rate.
ARTICLE III
CONDITIONS PRECEDENT TO PURCHASE OF OBLIGATION
Section 3.01. Conditions Precedent to Execution and Closing. The Purchaser has entered into this Agreement in reliance upon the representations, warranties and covenants of the City and the Authority contained herein and the Bonds Documents and to be contained in the documents and instruments to be delivered on the Closing Date and upon the agreement of the City to perform its obligations hereunder and thereunder. Accordingly, the Purchaser’s obligation under this Agreement to purchase and pay for the Bond shall be subject to the performance by the City and the Authority of their obligations to be performed hereunder and under such other documents and instruments to be delivered at or prior to the Closing Date, and shall also be subject to the requirements of the Indenture and the following conditions:
(a) Conditions to Effectiveness of this Agreement. On or prior to the Closing Date, the Purchaser shall have received the following documents in form and substance satisfactory to the Purchaser:
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Packet Pg. 347 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4078 : GPFFA - 2013 LRBs Refunding)
7 (i) an executed original or certified copy, as applicable, of this Agreement, the Indenture, the First Supplement to Indenture, the Lease Agreement, the Fourth Amendment to Lease Agreement, the Site Lease, the Assignment Agreement, the Resolution and the Authority Resolution; (ii) the fully executed and authenticated Bond in physical form and registered in the name of the Purchaser; provided that the Bond may bear a CUSIP number, but it shall not carry a rating from any ratings service or be offered pursuant to an offering statement (or other disclosure document) or by a placement agent; (iii) a certificate executed by a City Representative certifying that on and as of the Closing Date: (1) each representation and warranty of the City in this Agreement is true and correct in all material respects (except to the extent that such representation and warranty expressly relates to an earlier date), (2) no Event of Default has occurred and is continuing or would result from the execution or performance of the Bond Documents; (3) since June 30, 2021, no event has occurred or condition arisen, either individually or in the aggregate, that has had or could reasonably be expected to have a material impairment of the ability of the City to perform its obligations under the Bond Documents; and (4) the names and signatures of the persons authorized to sign the Bond Documents executed on the Closing Date on behalf of the City;
(iv) a certificate executed by an authorized representative of the Authority certifying, on and as of the Closing Date, the names and signatures of the persons authorized to sign the Bond Documents executed on the Closing Date on behalf of the Authority;
(v) evidence satisfactory to the Purchaser that the long-term unenhanced rating assigned to Lease Obligation Debt is not less than “AA” from S&P;
(vi) a certificate of the City that the requirements of Section 2.10 of the Indenture have been met, including a certificate of the City as to the annual fair rental value of the Leased Property;
(vii) certified copies of the policies of insurance required by Article IV of the Lease Agreement or certificates thereof, which shall evidence that the amounts of the insurance required under Section 4.4 and 4.5 of the Lease Agreement have been increased, if necessary, to cover the amount of the Bond; (viii) a CLTA or ALTA title insurance policy or other appropriate form of policy in the amount of the Bond of the type and with the endorsements described in Section 4.6 of the Lease Agreement;
(ix) an opinion of counsel to the City, in form and substance satisfactory to the Purchaser addressing the due authorization, execution, adoption, delivery and
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Packet Pg. 348 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4078 : GPFFA - 2013 LRBs Refunding)
8 enforceability of this Agreement and the other Bond Documents to which the City is a party and such other matters as the Purchaser may require; (x) an Opinion of Counsel as required under Section 2.11(a) of the Indenture addressed to the Purchaser or on which the Purchaser is otherwise expressly authorized to rely;
(xi) the City will cause to be delivered to the Purchaser a copy of the City’s audited financial statements for the fiscal year ended June 30, 2021; (xii) the Purchaser shall have received reimbursement of the fees and expenses of Kutak Rock LLP, as counsel to the Purchaser, incurred in connection with the preparation, review, negotiation, execution and delivery of this Agreement and the Bond Documents, which fees may be paid directly to Kutak Rock LLP; and (xiii) such additional certificates, instruments, opinions or other documents as the Purchaser may reasonably request.
(b) Conditions to Conversion of Interest Rate. The interest rate on the Bond shall convert to the Tax-Exempt Rate, subject to the conditions precedent set forth in this Section 3.01(b), and the Purchaser shall have received, on or before the applicable Conversion Date, the items listed below in this Section, each dated and in form and substance as is satisfactory to the Purchaser:
(i) the City, the Authority and the Purchaser shall have delivered to the Trustee a [Tax-Exempt Bond Conversion Agreement] in substantially the form of [Exhibit E] to the First Supplement to Indenture;
(ii) the Purchaser shall have received an opinion of Bond Counsel addressed to the Purchaser to the effect that, as of the Conversion Date, interest on the Bond is excludable from gross income for federal income tax purposes; and (iii) A certificate from the authorized officers of the City and the Authority, certifying that: (A) the representations and warranties of the City and the Authority contained in this Agreement and in the Bond Documents are true and correct as of the Conversion Date; and (B) no Event of Default has occurred and is continuing.
In the event the conditions to the conversion of the interest rate set forth in Section 3.01(b) are not satisfied on the Conversion Date, the interest rate on the Bond shall remain at the Taxable Rate.
ARTICLE IV
REPRESENTATION AND WARRANTIES
Section 4.01. The City represents and warrants to the Purchaser as follows:
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Packet Pg. 349 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4078 : GPFFA - 2013 LRBs Refunding)
9 (a) Organization and Power. The City (a) is a charter city and is validly existing under the laws of the State under and pursuant to the Constitution of the State and (b) has all governmental power and authority, and all governmental licenses, authorizations, consents and approvals, to execute, deliver and perform its obligations under this Agreement and, as of the Closing Date, will have all g overnmental power and authority, and all governmental licenses, authorizations, consents and approvals, to execute, deliver and perform its obligations under the other Bond Documents. (b) Consents. No consent, approval, authorization or order of any court or governmental body is required for the performance by the City of its obligations under the Bond Documents.
(c) No Conflict With Other Instruments or Law. Neither the execution and delivery of this Agreement or the other Bond Documents, nor compliance with the provisions thereof, or the issuance of the Bond conflicts with or will result in a breach of or default under (i) any indenture, mortgage, commitment, note or other agreement or instrument to which the City is a party or by which it is bound or (ii) to the best of the City’s knowledge, any other law, rule, regulation or ordinance or judgment, order or decree of any court or governmental agency or body having jurisdiction over the City or any of its activities or properties.
(d) Power and Authority; Enforceability. (i) The City has taken all action required to be taken by it to authorize the issuance and delivery of the Bond and the performance of its obligations thereunder, (ii) the City has full legal right, power and authority to enter into this Agreement and the other Bond Documents and to perform its obligations hereunder and thereunder, and (iii) this Agreement and the other Bond Documents have been duly authorized and (assuming due authorization, execution and delivery by the other parties thereto) when executed, constitute valid and binding obligations of the City enforceable against the City in accordance with their respective terms, subject to equitable principles, bankruptcy, insolvency and similar laws. (e) No Material Litigation; Pending Legislation. (i) There is no action, suit, proceeding, inquiry or investigation at law or in equity or before or by any court, public board or body pending, or, to the best knowledge of the City, threatened against or affecting the City wherein an unfavorable decision, ruling or finding would have a material adverse effect on (1) the transactions contemplated by, or the validity or enforceability of, this Agreement or the other Bond Documents or (2) the tax-exempt status of interest on the Bond on or after the Conversion Date, if applicable.
(ii) There is no amendment, or to the knowledge of the City, proposed amendment to the Constitution of the State or any State law or any administrative interpretation of the Constitution of the State or any State law, or any legislation that has passed either house of the legislature of the State, or any judicial decision interpreting any of the foregoing, the effect of which will materially adversely affect the issuance of the Bond, the security for the Bond or the City’s obligations under this Agreement, the Indenture, the Bond or the other Bond Documents, or the City’s ability to repay when due its obligations under the Lease Agreement.
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Packet Pg. 350 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4078 : GPFFA - 2013 LRBs Refunding)
10 (f) Financial Statements. The audited financial statements of the City for the fiscal year ended June 30, 2021, heretofore furnished to the Purchaser, fairly present the financial condition of the City in all material respects as of such date and the results of its operations for the period then ended in conformity with generally accepted accounting principles applicable to State political subdivisions, except as otherwise expressly noted therein. Since June 30, 2021, there has been no change in the financial condition or operations of the City that could reasonably be expected to result in a material adverse change in the operations, business, properties, liabilities or condition of the City or the ability of the City to perform its obligations under any Bond Document. (g) No Default. No Event of Default or any event that, with the giving of notice or the lapse of time or both, would constitute an Event of Default has occurred and is continuing.
(h) Usury. Under State law, the City may not plead the defense of usury or maintain any action thereon or therefor.
(i) Anti-Corruption Laws and Anti-Money Laundering Laws. To the best of City’s knowledge, after due care and inquiry, no affiliate, officer, director or agent acting on behalf of the City is under investigation for an alleged violation of Anti-Money Laundering Laws or Anti-Corruption Laws by a governmental authority that enforces such laws.
(j) Sanctions. (i) The City is not a Sanctioned Target and (ii) to the best of City’s knowledge, after due care and inquiry, no affiliate, officer, director or agent acting on behalf of the City is under investigation for an alleged violation of Sanction(s) by a governmental authority that enforces Sanctions.
(k) Security. The Bond is a limited obligation of the Authority and is payable, as to interest thereon and principal thereof, solely from the revenues derived from Base Payments paid by the City pursuant to Lease Agreement. The Bond is equally and ratably secured by the Revenues and enjoys the benefits of a security interest in the money held in the funds established pursuant to the Indenture (other than the Rebate Fund (as defined in the Indenture)), subject to the provisions of the Indenture permitting the disbursement thereof for or to the purposes and on the conditions and terms set forth therein. The obligation of the City to pay Base Payments does not constitute an indebtedness of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The obligation of the City to pay Base Payments does not constitute an indebtedness of the City, the State of California, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. The obligation of the City to make the Base Payments is subject to abatement during any period in which, by reason of material damage, destruction or title defect, there is substantial interference with the use and occupancy of the Leased Property or portions thereof or if the Leased Property or portions thereof are taken under the power of eminent domain.
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Packet Pg. 351 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4078 : GPFFA - 2013 LRBs Refunding)
11 (l) Immunity. Under State law, an action may be maintained against the City upon a contract made by the City, including the Bond Documents, and the City agrees not to assert the defense of sovereign immunity in any legal proceeding arising under or relating to the enforcement of the obligations of the City under the Bond Documents. (m) Investment Company. The City is not an “investment company” or a company “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.
(n) Margin Stock. The City is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock, and no part of the proceeds from the issuance of the Bond will be used to purchase or carry any such margin stock or extend credit to others for the purpose of purchasing or carrying any such margin stock. (o) Environmental Matters. The operations of the City are in material compliance with all of the requirements of applicable federal, state and local environmental, health and safety statutes and regulations and are not the subject of any governmental investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, where a failure to comply with any such requirement or the need for any such remedial action could reasonably be expected to result in a material adverse effect on its obligations under the Bond Documents.
(p) Insurance. The City currently maintains insurance coverage with insurance companies believed by the City to be capable of performing their obligations under the respective insurance policies issued by such insurance companies to the City (as determined in its reasonable discretion) and in full compliance with the Lease Agreement and the other Bond Documents.
(q) Title to Property; Site Lease; Lease Agreement. The City has good and marketable fee simple title to all Leased Property, subject only to Permitted Encumbrances (as defined in the Lease Agreement). The Lease Agreement and Site Lease are in full force and effect. The City, as lessee under the Lease Agreement, is in peaceable possession of the Leased Property. No waiver, indulgence or postponement of any of the City’s obligations under the Lease Agreement has been granted by the Authority. There exists no event of default or event, occurrence, condition or act that, with the giving of notice, the lapse of time or the happening of any further event or condition, would become a default under the Lease Agreement or Site Lease.
(r) Essentiality. The Leased Property is an essential asset of the City necessary to serve the needs of the residents of the City. The City believes that at all times while any Rental Payments or any obligation of the City under the Bond Documents remains unpaid, the Leased Property will remain an essential asset of the City. (s) Fair Rental Value. The total Base Payments for the Leased Property do not exceed the annual fair rental value of the Leased Property. In making such determination of annual fair rental value, consideration has been given to the uses and purposes which
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Packet Pg. 352 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4078 : GPFFA - 2013 LRBs Refunding)
12 may be served by the Leased Property and the benefits therefrom which will accrue to the City and the general public.
(t) Additional Rentals. All obligations of the City hereunder, other than the principal of and interest with respect to the Bond, shall be paid as Additional Payments pursuant to Section 3.5 of the Lease Agreement.
Section 4.02. The Authority represents and warrants to the Purchaser as follows:
(a) Organization and Power. The Authority (a) is a joint powers authority duly organized and existing under and by virtue of the laws of the State of California and (b) has all governmental power and authority, and all governmental licenses, authorizations, consents and approvals, to execute, deliver and perform its obligations under this Agreement and, as of the Closing Date, will have all governmental power and authority, and all governmental licenses, authorizations, consents and approvals, to execute, deliver and perform its obligations under the other Bond Documents. (b) Consents. No consent, approval, authorization or order of any court or governmental body is required for the performance by the Authority of its obligations under the Bond Documents.
(c) No Conflict With Other Instruments or Law. Neither the execution and delivery of this Agreement or the other Bond Documents, nor compliance with the provisions thereof, or the issuance of the Bond conflicts with or will result in a breach of or default under (i) any indenture, mortgage, commitment, note or other agreement or instrument to which the Authority is a party or by which it is bound or (ii) to the best of the Authority’s knowledge, any other law, rule, regulation or ordinance or judgment, order or decree of any court or governmental agency or body having jurisdiction over the Authority or any of its activities or properties.
(d) Power and Authority; Enforceability. (i) The Authority has taken all action required to be taken by it to authorize the issuance and delivery of the Bond and the performance of its obligations thereunder, (ii) the Authority has full legal right, power and authority to enter into this Agreement and the other Bond Documents and to perform its obligations hereunder and thereunder, and (iii) this Agreement and the other Bond Documents have been duly authorized and (assuming due authorization, execution and delivery by the other parties thereto) when executed, constitute valid and binding obligations of the Authority enforceable against the Authority in accordance with their respective terms, subject to equitable principles, bankruptcy, insolvency and similar laws. (e) No Material Litigation; Pending Legislation. (i)There is no action, suit, proceeding, inquiry or investigation at law or in equity or before or by any court, public board or body pending, or, to the best knowledge of the Authority, threatened against or affecting the Authority wherein an unfavorable decision, ruling or finding would have a material adverse effect on (1) the transactions contemplated by, or the validity or enforceability of, this Agreement or the other Bond Documents or (2) the tax-exempt status of interest on the Bond upon the Conversion Date, if applicable.
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Packet Pg. 353 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4078 : GPFFA - 2013 LRBs Refunding)
13 (ii) There is no amendment, or to the knowledge of the Authority, proposed amendment to the Constitution of the State or any State law or any administrative interpretation of the Constitution of the State or any State law, or any legislation that has passed either house of the legislature of the State, or any judicial decision interpreting any of the foregoing, the effect of which will materially adversely affect the issuance of the Bond, the security for the Bond or the Authority’s obligations under this Agreement, the Bond or the other Bond Documents, or the Authority’s ability to repay when due its obligations under the Bond.
(f) No Default. No Event of Default or any event that, with the giving of notice or the lapse of time or both, would constitute an Event of Default has occurred and is continuing.
(g) Usury. Under State law, the Authority may not plead the defense of usury or maintain any action thereon or therefor.
(h) Anti-Corruption Laws and Anti-Money Laundering Laws. To the best of Authority’s knowledge, after due care and inquiry, no affiliate, officer, director or agent acting on behalf of the Authority is under investigation for an alleged violation of Anti- Money Laundering Laws or Anti-Corruption Laws by a governmental authority that enforces such laws.
(i) Sanctions. (i) The Authority is not a Sanctioned Target and (ii) to the best of Authority’s knowledge, after due care and inquiry, no affiliate, officer, director or agent acting on behalf of the Authority is under investigation for an alleged violation of Sanction(s) by a governmental authority that enforces Sanctions. (j) Security. The Bond is a limited obligation of the Authority and is payable, as to interest thereon and principal thereof, solely from the revenues derived from Base Payments paid by the City pursuant to Lease Agreement. The Bond is equally and ratably secured by the Revenues and enjoys the benefits of a security interest in the money held in the funds established pursuant to the Indenture (other than the Rebate Fund (as defined in the Indenture)), subject to the provisions of the Indenture permitting the disbursement thereof for or to the purposes and on the conditions and terms set forth therein. The obligation of the City to pay Base Payments does not constitute an indebtedness of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The obligation of the City to pay Base Payments does not constitute an indebtedness of the City, the State of California, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. The obligation of the City to make the Base Payments is subject to abatement during any period in which, by reason of material damage, destruction or title defect, there is substantial interference with the use and occupancy of the Leased Property or portions thereof or if the Leased Property or portions thereof are taken under the power of eminent domain.
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Packet Pg. 354 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4078 : GPFFA - 2013 LRBs Refunding)
14 (k) Immunity. Under State law, an action may be maintained against the Authority upon a contract made by the Authority, including the Bond Documents, and the Authority agrees not to assert the defense of sovereign immunity in any legal proceeding arising under or relating to the enforcement of the obligations of the Authority under the Bond Documents.
(l) Investment Company. The Authority is not an “investment company” or a company “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.
(m) Margin Stock. The Authority is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock, and no part of the proceeds from the issuance of the Bond will be used to purchase or carry any such margin stock or extend credit to others for the purpose of purchasing or carrying any such margin stock. (n) Environmental Matters. The operations of the Authority are in material compliance with all of the requirements of applicable federal, state and local environmental, health and safety statutes and regulations and are not the subject of any governmental investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, where a failure to comply with any such requirement or the need for any such remedial action could reasonably be expected to result in a material adverse effect on its obligations under the Bond Documents.
(o) Insurance. The Authority currently maintains insurance coverage with insurance companies believed by the Authority to be capable of performing their obligations under the respective insurance policies issued by such insurance companies to the Authority (as determined in its reasonable discretion) and in full compliance with the Lease Agreement and the other Bond Documents.
(p) Title to Property; Site Lease; Lease Agreement; Assignment Agreement.
The Authority has good and marketable leasehold title to all of the Leased Property pursuant to the Site Lease. The Lease Agreement and Site Lease are in full force and effect.
The Authority, as lessee under the Site Lease, is in peaceable possession of the Leased Property. No waiver, indulgence or postponement of any of the Authority’s obligations under the Site Lease has been granted by the City. There exists no event of default or event, occurrence, condition or act that, with the giving of notice, the lapse of time or the happening of any further event or condition, would become a default under the Lease Agreement or the Site Lease. Pursuant to the Assignment Agreement, the Authority has assigned without recourse all its rights to receive Base Payments scheduled to be paid by the City under and pursuant to the Lease Agreement to the Trustee for the benefit of the owners of the Bond.
(q) Pledged Revenues. The Indenture creates a valid pledge of the Revenues as security for the punctual payment and performance of the obligations of the Authority under the Bond.
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Packet Pg. 355 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4078 : GPFFA - 2013 LRBs Refunding)
15 ARTICLE V
COVENANTS
Section 5.01. Covenants. The City and the Authority covenant and agree that they will comply with the following covenants until the date on which no amount is due or owing to the Purchaser under this Agreement or the other Bond Documents, unless the Purchaser shall otherwise consent in writing.
(a) Financial Reporting and Notices. The City and the Authority will prepare or cause to be prepared and delivered to the Purchaser the following:
(i) The City shall provide to the Purchaser within two hundred seventy (270) days of the end of each fiscal year of the City, a copy of its audited financial statements for such fiscal year along with a certificate executed by an authorized officer of the City certifying that no Event of Default or event that with the lapse of time or the giving of notice would constitute an Event of Default has occurred, or if any such default has occurred, specifying the nature of such default, the period of its existence, the nature and status thereof and any remedial steps taken or proposed to correct such default.
(ii) The City shall provide to the Purchaser the City’s annual budget within sixty (60) days of the end of each fiscal year of the City.
(iii) The City and the Authority shall provide prompt written notice to the Purchaser of (1) any Event of Default or event that with the lapse of time or the giving of notice would constitute an Event of Default, and (2) all actions, suits or proceedings pending against the City or the Authority in any court before any governmental authority which could reasonably be expected to result in a material adverse effect upon the operations, business, properties, liabilities or condition of the City or the Authority or a material impairment of the ability of the City or the Authority to perform its obligation under the Bond Documents.
(b) Existence, Etc. The Authority shall maintain its existence as a joint powers authority duly organized and existing under and by virtue of the laws of the State of California. The City shall maintain its existence as a municipal corporation duly organized and existing under the Constitution and laws of the State of California. (c) Defaults. The Authority and the City will promptly (and in any event within five Business Days after becoming aware thereof) notify the Purchaser of the occurrence of any Event of Default, specifying the details of such Event of Default and, to the extent a determination has been made, the action that the Authority and the City propose to take with respect thereto.
(d) Litigation; Material Change. The Authority and the City shall promptly notify the Purchaser of (i) the existence and status of any litigation which individually or in the aggregate could, in the event of an unfavorable outcome, have a material adverse effect on, or (ii) the occurrence of any other event or change which could have a material
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16 adverse effect on, (A) the ability of the Authority or the City to perform their respective obligations hereunder or under the other the Bond Documents or (B) the enforceability or validity of this Agreement or any of the other Bond Documents. (e) Compliance with Laws. The City and the Authority shall comply in all material respects with all applicable laws, ordinances, rules, regulations and requirements of any governmental authority unless noncompliance would not have a material impairment on the ability of the City or the Authority to perform its obligations under this Agreement or the other Bond Documents or a material adverse effect upon the legality, validity, binding effect or enforceability against the City or the Authority of this Agreement or the other Bond Documents including, without limitation, environmental laws, Anti- Money Laundering Laws, Anti-Corruption Laws and Sanctions. (f) Maintenance of Books and Records; Inspections. The City and the Authority shall maintain adequate books, accounts and records, and prepare all financial statements required under this Agreement in accordance with generally accepted accounting principles applicable to State political subdivisions and joint powers authorities and in compliance with the regulations of any governmental authority having jurisdiction over it. The City and the Authority shall permit any employee or representative of the Purchaser to visit and inspect any of their properties, to examine and audit their books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss its affairs, finances and accounts with its officers and, upon prior notice to the City or the Authority, its independent public accountants (and by this provision the City and Authority authorize said accountants to discuss their finances and affairs with the Purchaser and to provide the Purchaser with access to such accountants’ work papers), all upon reasonable notice and during business hours and as often as may be reasonably requested. (g) Modifications. The City and the Authority shall not enter into or consent to any alteration, modification, supplement or amendment to this Agreement or the other Bond Documents, without the prior written consent of the Purchaser, except in connection with the issuance of Additional Bonds under the Indenture, which shall not require written consent of the Purchaser.
(h) [Maintenance of Rating. The City and the Authority shall at all times maintain a long-term unenhanced rating on Lease Obligation Debt from any of Moody’s, S&P or Fitch.]
(i) Other Agreements. In the event that the City or the Authority has entered into or shall enter into any credit agreement, purchase agreement, liquidity agreement or other agreement (each an “Other Agreement”) under which any person or entity undertakes to purchase Lease Obligation Debt from the City or Authority or extend credit or liquidity to the City or the Authority or provides credit enhancement for Lease Obligation Debt of the City or the Authority, and such Other Agreement provides such person or entity with different or more restrictive covenants, different or additional events of default and/or greater rights and remedies than are provided to the Purchaser in this Agreement or the other Bond Documents, the City and the Authority shall provide the Purchaser with a copy of each such Other Agreement and such different or more restrictive covenants, different
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17 or additional events of default and/or greater rights and remedies shall automatically be deemed to be incorporated into this Agreement and the Purchaser shall have the benefits of such different or more restrictive covenants, different or additional events of default and/or greater rights and remedies as if specifically set forth herein. The City and the Authority shall promptly enter into an amendment to this Agreement to include different or more restrictive covenants, different or additional events of default and/or greater rights and remedies; provided that the Purchaser shall have and maintain the benefit of such different or more restrictive covenants, different or additional events of default and/or greater rights and remedies even if the City or the Authority fails to provide such amendment.
(j) Anti-Money Laundering Laws; Anti-Corruption Laws; Sanctions. The City and the Authority shall not use any proceeds of the Bond to fund, finance or facilitate any activities, business or transactions that would be prohibited by Anti-Money Laundering Laws, Anti-Corruption Laws or Sanctions.
(k) Source of Repayment. The City and the Authority shall not fund any repayment of the Bond with proceeds, or provide as collateral any Property, that is directly or indirectly derived from any transaction or activity that is prohibited by Sanctions, Anti- Money Laundering Laws or Anti-Corruption Laws, or that could otherwise cause the Purchaser or any other party to this Agreement to be in violation of Sanctions, Anti-Money Laundering Laws or Anti-Corruption Laws.
(l) Limitation on Liens. The Authority and the City shall not create a pledge, lien or charge on any part of the Revenues, other than the lien in favor of the holders of the Series 2020A Bonds (as defined in the Indenture), Additional Bonds (as defined in the Indenture) and the Purchaser. The Authority and the City shall not create a pledge, lien or charge on any part of the Leased Property other than Permitted Encumbrances (as defined in the Lease Agreement). The City and the Authority covenant (i) to keep the Leased Property and all parts thereof free from judgments, and materialmen’s and mechanics’ liens, claims, demands, encumbrances, liabilities and other liens of whatever nature or character, which, in each case, might hamper the City or the Authority in utilizing the Leased Property; and (ii) promptly, upon request of the Purchaser, to take such action from time to time as may be reasonably necessary or proper to remedy or cure any cloud upon or defect in the title to the Leased Property or any part thereof, whether now existing or hereafter developing, to prosecute all actions, suits, or other proceedings as may be reasonably appropriate for such purpose.
(m) Lease Payments. The City and the Authority will not issue or authorize the issuance of any obligation payable from Revenues other than as permitted under the Indenture and the Lease Agreement.
(n) Maintenance of Title Insurance. Throughout the term of the Lease Agreement, the City and the Authority shall maintain or cause to be maintained title insurance in the manner and in form and substance as required by the Lease Agreement and the other Bond Documents.
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18 (o) Maintenance of Insurance. Throughout the term of the Lease Agreement, the City and the Authority shall maintain or cause to be maintained insurance in the manner and in form and substance as required by the Lease Agreement and the other Bond Documents.
(p) Incorporation of Covenants by Reference. The Authority and the City each agrees that it will perform and comply with each and every covenant and agreement required to be performed or observed by it in the Bond Documents to which it is a party, which provisions, as well as related defined terms contained herein, are hereby incorporated by reference herein with the same effect as if each and every such provision were set forth herein in its entirety. To the extent that any such incorporated provision permits any person to waive compliance with or consent to such provision or requires that a document, opinion or other instrument or any event or condition be acceptable or satisfactory to any person, for purposes of this Agreement, such provision shall be complied with only if it is waived or consented to by the Purchaser and such document, opinion or other instrument shall be acceptable or satisfactory only if it is acceptable or satisfactory to the Purchaser.
(q) Covenants and Legal Duties. Subject to the Lease Agreement, the City covenants to take such action as may be necessary to include all Lease Payments and all estimated Additional Payments due under the Lease Agreement in each of its final approved budgets for the general fund of the City and to make the necessary appropriations (including any supplemental appropriations) from the general fund of the City for all such Lease Payments and Additional Payments coming due and payable during the period covered by each such budget.
(r) Voluntary Rent Abatement. Except as required by law and the terms of the Lease Agreement, the City shall not seek or assert a claim for abatement of any of the Lease Payments under the Lease Agreement.
(s) Immunity. To the fullest extent permitted by law, the City and the Authority agree not to assert the defense of immunity (on the grounds of sovereignty or otherwise) in any proceeding by the Purchaser to enforce any of the obligations of the City and the Authority under this Agreement or any other Bond Document.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01. Events of Default. The occurrence of any of the following events (whatever the reason for such event and whether voluntary, involuntary, or effected by operation of law) shall be an “Event of Default”, unless waived in writing by Purchaser:
(a) the City or the Authority shall fail to pay the principal of or interest on the Bond when due;
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19 (b) any representation or warranty made by or on behalf of the City or the Authority in this Agreement or any certificate or document delivered to the Purchaser related thereto shall provide to have been incorrect or untrue in any material respect when made; (c) the City or the Authority shall default in the performance of any of the covenants set forth in Section 5.01(b), (c), (g), (j), (k), (l), (m), (n), (o), (q), (r) or (s) hereof. (d) the City or the Authority shall fail to observe or perform any other covenant, restriction or agreement set forth in this Agreement or the other Bond Documents and such failure shall remain unremedied for a period of thirty days after the occurrence thereof; (e) the City or the Authority shall (i) have entered involuntarily against it an order for relief under the United States Bankruptcy Code, as amended, (ii) become insolvent or shall not pay, or be unable to pay, or admit in writing its inability to pay, its debts generally as they become due, (iii) make a general assignment for the benefit of creditors, (iv) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its property, (v) institute any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, marshalling of assets, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any corporate action in furtherance of any matter described in parts (i) through (v) above, or (vii) fail to contest in good faith any appointment or proceeding described in paragraph (e) below;
(f) a custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for the City or the Authority or any substantial part of its respective property, or a proceeding described in paragraph (d)(v) above shall be instituted against the City or the Authority and such proceeding continues undischarged or any such proceeding continues undismissed or unstayed for a period of thirty (30) or more days; (g) a debt moratorium, debt restructuring, debt adjustment or comparable restriction is imposed on the repayment when due and payable of the principal of or interest on any indebtedness of the City or the Authority by the City or the Authority or any governmental authority with appropriate jurisdiction;
(h) the City shall (i) default on the payment of the principal of or interest on any Material City Debt, beyond the period of grace, if any, provided in the instrument or agreement under which such Material City Debt was created or incurred; or (ii) default in the observance or performance of any agreement or condition relating to any Material City Debt or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event shall occur or condition ex ist, the effect of which default, event of default or similar event or condition is to permit remedial action to be taken with respect to such Material City Debt;
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20 (i) any final, unappealable judgment or judgments, writ or writs or warrant or warrants of attachment, or any similar process or processes, which are not covered in full by insurance, with written acknowledgement of such coverage having been provided by the provider of such insurance coverage to the Purchaser, in an aggregate amount not less than $5,000,000 shall be entered or filed against the City or the Authority or against any of its property and remain unpaid, unvacated, unbonded or unstayed for a period of sixty (60) days; or
(j) any material provision of this Agreement or any other Bond Documents shall at any time for any reason cease to be valid and binding on the City or the Authority or shall be declared in a final non-appealable judgment by any court with competent jurisdiction to be null and void, invalid, or unenforceable, or the validity or en forceability thereof shall be publicly contested by the City or the Authority.
Section 6.02.Consequences of an Event of Default. Upon the occurrence and during the continuance of an Event of Default the interest rate on the Bond shall increase to the Default Rate as more fully set forth in the Bond and the Indenture, and the Purchaser may exercise, or cause to be exercised, any and all remedies as it may have under the other Bond Documents and as otherwise available at law and at equity.
Section 6.03. [Downgrade Redemption Event. In the event that any of Fitch, Moody’s or S&P shall have downgraded its rating of any Lease Obligation Debt to below “A-” (or its equivalent), “A3” (or its equivalent), or “A-” (or its equivalent) respectively, or suspended or withdrawn its rating of the same (a “Downgrade Redemption Event”), the Purchaser may provide written notice of such Downgrade Redemption Event to the Trustee and the City and direct a mandatory redemption of the Bonds in accordance with [Section 14.06(d)] of the First Supplement to Indenture.]
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments and Waivers. No amendment or waiver of any provision of this Agreement or consent to any departure by the City or the Authority from any such provision shall in any event be effective unless the same shall be in writing and signed by the Purchaser.
Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. In the event any agreement contained in this Agreement should be breached by the City or the Authority and thereafter waived by the Purchaser, such waiver shall be limited to the particular breach so waived for the specific period set out in such waiver and such waiver shall not constitute a waiver of such breach for any other period and shall not waive any other or similar breach hereunder.
Section 7.02. Counterparts. This Agreement may be signed in any number of counterpart copies (and by different parties on different counterparts), each of which shall constitute an original but all such copies shall constitute one and the same instrument.
Section 7.03. Notices. All notices, requests, demands, directions and other communications (collectively “notices”) under the provisions of this Agreement shall be in writing
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21 (including facsimile communication), unless otherwise expressly permitted hereunder, and shall be properly addressed and sent by registered or certified mail or by express courier for next Business Day delivery and shall be deemed received as follows: (a) if by registered or certified mail, five (5) days after mailing; (b) if by express courier, on the next Business Day; and (c) if by facsimile, when confirmation of transmission is obtained if prior to 5:00 p.m. local time on a Business Day, and otherwise, on the next Business Day; provided that service of a notice prescribed by any applicable law shall be considered complete when the requirements of such applicable law are met. Notices by electronic mail (e mail) shall not constitute notice under this Agreement and are only to be used in addition to notice given as prescribed under subsections (a), (b) or (c) of this Section. All notices shall be sent to the applicable party at the following address or in accordance with the last unrevoked written direction from such party to the other party hereto:
if to the City, addressed to it at:
City of Gilroy
7351 Rosanna Street
Gilroy, California 95020
Attention: Finance Director
Email: [email protected]
if to the Authority, addressed to it at:
Gilroy Public Facilities Financing Authority
7351 Rosanna Street
Gilroy, California 95020
Attention: Treasurer
Email: [email protected]
or if to the Purchaser, addressed to if at:
Wells Fargo Municipal Capital Strategies, LLC
c/o Wells Fargo Bank, National Association
1655 Grant Street, 3rd Floor
Concord, California 94520
Attention: Zina Monroe
Telephone: (925) 852-1061
Email: [email protected]
The Purchaser may in its sole discretion rely on any notice (including telephone communication or e-mail communication) purportedly made by or on behalf of the City or the Authority, but it shall have no duty to accept any notice not given as prescribed in this Section and shall have no duty to verify the identity or authority of the Person giving such notice, unless such actions or omissions would amount to gross negligence or intentional misconduct.
Section 7.04. Severability. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or nonauthorization without invalidating the
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22 remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction.
Section 7.05. Governing Law; Waiver of Jury Trial. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State without giving effect to conflicts of laws provisions.
(b) To the extent permitted by applicable laws, each of the parties hereto hereby waives its right to a jury trial of any claim or cause of action based upon or arising out of this Agreement, the Bond Documents or any of the transactions contemplated hereby or thereby, including contract claims, tort claims, breach of duty claims, and all other common law or statutory claims. If and to the extent that the foregoing waiver of the right to a jury trial is unenforceable for any reason in such forum, each of the parties hereto hereby consents to the adjudication of all claims pursuant to judicial reference as provided in California Code of Civil Procedure Section 638, and the judicial referee shall be empowered to hear and determine all issues in such reference, whether fact or law. Each of the parties hereto represents that each has reviewed this waiver and consent and each knowingly and voluntarily waives its jury trial rights and consents to judicial reference following consultation with legal counsel on such matters. In the event of litigation, a copy of this Agreement may be filed as a written consent to a trial by the court or to judicial reference under California Code of Civil Procedure Section 638 as provided herein.
Section 7.06. Complete and Controlling Agreement. This Agreement and the other Bond Documents completely set forth the agreements between the Purchaser, the Authority and the City and fully supersede all prior agreements, both written and oral, between the Purchaser, the Authority and the City relating to all matters set forth herein and in the other Bond Documents.
Section 7.07. Indemnification. In addition to any and all rights of reimbursement, indemnification, subrogation or any other rights pursuant hereto or under law or equity, the City and the Authority hereby agree (to the extent permitted by law) to indemnify and hold harmless the Purchaser and its officers, directors and agents (each, an “Indemnitee”) from and against any and all claims, damages, losses, liabilities, reasonable costs or expenses whatsoever (including reasonable attorneys’ fees) which may incur or which may be claimed against an Indemnitee by any Person or entity whatsoever (collectively, the “Liabilities”) by reason of or in connection with (a) the execution and delivery of, or payment or failure to pay under, this Agreement or any other Bond Document; (b) the issuance and sale of the Bond; and (c) the use of the proceeds of the Bond; provided that the City and the Authority shall not be required to indemnify an Indemnitee for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by the willful misconduct or gross negligence of such Indemnitee. The obligations of the City and the Authority under this Section shall survive the payment of the Bond and the termination of this Agreement.
Section 7.08. Patriot Act. The Purchaser hereby notifies the City and the Authority that pursuant to the requirements of the Patriot Act it is required to obtain, verify and record information that identifies the City and the Authority, which information includes the name and address of the City and the Authority and other information that is necessary for the Purchaser to identify the City and the Authority in accordance with the requirements of the Patriot Act. The
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23 City and the Authority hereby agree that they shall promptly provide such information upon request by the Purchaser.
Section 7.09. No Advisory or Fiduciary Responsibility. In connection with all aspects of the transactions contemplated by this Agreement and the other Bond Documents (including in connection with any amendment, waiver or other modification of this Agreement or of any Bond Document), the City and the Authority acknowledge and agree that: (a)(i) any arranging, structuring and other services regarding this Agreement and the Bond Documents provided by the Purchaser or any affiliate of the Purchaser are arm’s length commercial transactions between the City and the Authority on the one hand, and the Purchaser and any affiliate of the Purchaser on the other hand, (ii) the City and the Authority have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate, and (iii) the City and the Authority are capable of evaluating, and understand and accept, the terms, risks and conditions of the transactions contemplated by this Agreement and the Bond Documents; (b)(i) the Purchaser and each affiliate of the Purchaser is and has been acting solely as a principal and has not been, is not, and will not be acting as an advisor, agent or fiduciary for the City or the Authority or any other Person and (ii) neither the Purchaser nor any affiliate of the Purchaser has any obligation to the City or the Authority with respect to the transactions contemplated by this Agreement and the Bond Documents, except those obligations expressly set forth herein; and (c) the Purchaser and each affiliate of the Purchaser may be engaged in a broad range of transactions that involve interests that differ from those of the City and the Authority, and neither the Purchaser nor any affiliate of the Purchaser has any obligation to disclose any of such interests to the City or the Authority. To the fullest extent permitted by applicable laws, the City and the Authority hereby waive and release any claims that it may have against the Purchaser and each affiliate of the Purchaser with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of the transactions contemplated by this Agreement and the Bond Documents.
Section 7.10. Excess Interest. If the amount of interest payable for any period in accordance with the terms of the Bond or the Bond Documents exceeds the amount of interest that would be payable for such period had interest for such period been calculated at the maximum interest rate permitted by law, then interest for such period shall be payable in an amount calculated at the maximum interest rate permitted by law. Any interest that would have been due and payable for any period but for the operation of the immediately preceding sentence shall accrue and be payable as provided in the foregoing sentence and shall, less interest actually paid to the Purchaser for such period, constitute the “Excess Interest Amount.” If there is any accrued and unpaid Excess Interest Amount as of any date, then the principal amount with respect to which interest is payable shall bear interest at the maximum interest rate permitted by law until payment to the Purchaser of the entire Excess Interest Amount. Notwithstanding the foregoing, on the date on which no principal amount with respect to the Bond remains unpaid, the City shall pay to the Purchaser a fee equal to any accrued and unpaid Excess Interest Amount.
Section 7.11. Contractual Interpretation. The parties acknowledge that they have read and fully understand the terms of this Agreement, have consulted with such attorneys, accountants, advisors, or other professionals as they have deemed appropriate prior to executing this Agreement with adequate opportunity and time for review thereof, and are fully aware of its contents and of its legal effect. Accordingly, neither this Agreement nor any ambiguity herein shall be construed
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24 against any party on the grounds that such party drafted this Agreement and instead, this Agreement shall be interpreted as though drafted equally by all parties.
Section 7.12. EMMA Posting. In the event the City or the Authority files with EMMA this Agreement or any other Bond Document or any description of the material terms thereof or notice of any agreement to covenants, events of default, remedies, priority rights or other similar terms, either voluntarily or as required pursuant a continuing disclosure agreement or Rule 15c2- 12 promulgated pursuant to the Securities and Exchange Act of 1934, as amended (the “Rule”) (each such posting, an “EMMA Posting”), the City and the Authority shall (i) provide the Purchaser with a copy of each EMMA Posting prior to submitting or posting on EMMA and (ii) shall not file or permit the filing of any EMMA Posting that includes Confidential Information.
The City and the Authority acknowledge and agree that although the Purchaser may request review, edits or redactions of such materials prior to filing, the Purchaser is not responsible for the City’s or the Authority’s or any other entity’s (including, but not limited to, any broker-dealer’s) compliance or noncompliance (or any claims, losses or liabilities arising therefrom) with any continuing disclosure agreement or any applicable securities or other laws, including, but not limited to, those relating to the Rule.
Section 7.13. Electronic Signatures. The parties agree that the electronic signature of a party to this Agreement shall be as valid as an original signature of such party and shall be effective to bind such party to this Agreement. The parties agree that any electronically signed document (including this Agreement) shall be deemed (i) to be “written” or “in writing,” (ii) to have been signed and (iii) to constitute a record established and maintained in the ordinary course of business and an original written record when printed from electronic files. Such paper copies or “printouts”, if introduced as evidence in any judicial, arbitral, mediation or administrative proceeding, will be admissible as between the parties to the same extent and under the same conditions as other original business records created and maintained in documentary form. Neither party shall contest the admissibility of true and accurate copies of electronically signed documents on the basis of the best evidence rule or as not satisfying the business records exception to the hearsay rule. For purposes hereof, “electronic signature” means a manually signed original signature that is then transmitted by electronic means; “transmitted by electronic means” means sent in the form of a facsimile or sent via the internet as a “pdf” (portable document format) or other replicating image attached to an e mail message; and, “electronically signed document” means a document transmitted by electronic means and containing, or to which there is affixed, an electronic signature.
[Signatures Begin on the Following Page]
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Signature Page to Bond Purchase Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Bond Purchase Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
CITY OF GILROY
By:
Mayor
Attest:
By:
City Clerk
GILROY PUBLIC FACILITIES
FINANCING AUTHORITY
By:
Executive Director
Attest:
By:
Secretary
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Signature Page to Bond Purchase Agreement
WELLS FARGO MUNICIPAL CAPITAL
STRATEGIES, LLC
By
Name: Brian Goins
Title: Vice President
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4874-8329-4527.4
NP DRAFT 11/29/22
ESCROW AGREEMENT
by and between the
GILROY PUBLIC FACILITIES FINANCING AUTHORITY
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
AS PRIOR TRUSTEE AND AS ESCROW AGENT
Dated as of [December 1, 2022]
Relating to the Defeasance of
Gilroy Public Facilities Financing Authority
Refunding Lease Revenue Bonds, Series 2013
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4874-8329-4527.4
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this “Escrow Agreement”), executed and entered into as of [December 1, 2022], is by and between the GILROY PUBLIC FACILITIES FINANCING AUTHORITY, a joint exercise of power authority duly organized and existing under the laws of the State of California (the “Authority ”) and U.S. Bank Trust Company, National Association, a national banking association organized and existing under the laws of the United States of America, as successor to MUFG UNION BANK, N.A., as Prior Trustee (as defined herein) and as Escrow Agent (the “Escrow Agent”).
W I T N E S S E T H:
WHEREAS, there are currently outstanding Gilroy Public Facilities Financing Authority Refunding Lease Revenue Bonds, Series 2013 (the “Prior Bonds”); WHEREAS, the Prior Bonds were issued under the Trust Agreement, dated as of August 1, 2013 (the “2013 Trust Agreement”), by and between the Authority and U.S. Bank Trust Company, National Association, as successor to MUFG Union Bank, N.A., as trustee (the “Prior Trustee”); WHEREAS, the Escrow Agent is the Prior Trustee under the 2013 Trust Agreement; WHEREAS, the Authority has determined that a savings will be realized by the City of Gilroy (the “City”) exercising its options to prepay its obligations under the Lease Agreement (as defined in the 2013 Trust Agreement) and redeem and to cause the Authority to defease, pay and redeem the Prior Bonds on November 1, 2023 (the “Redemption Date”) at a redemption price (the “Redemption Price”) equal to the principal amount of the Prior Bonds, plus the accrued but unpaid interest on the Prior Bonds to the Redemption Date;
WHEREAS, the Prior Bonds maturing on or before November 1, 2023 (the “Non-Callable Bonds”) are not subject to optional redemption prior to their stated maturity dates; WHEREAS, the Prior Bonds maturing on or after November 1, 2024 (the “Callable Bonds”) are subject to optional redemption prior to their stated maturity dates; WHEREAS, in order to provide the funds necessary to exercise said option, on [December __, 2022], the Authority has caused to be sold, $[________] aggregate principal amount of Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A (Convertible) (the “Series 2022A Bonds”), pursuant to an Indenture, dated as of August 1, 2020 (the “ Original Indenture”), by and among U.S. Bank Trust Company, National Association, as successor trustee (the “Trustee”), the City and the Authority, as supplemented by the First Supplement to Indenture, dated as of [________] 1, 2022, by and among the Trustee, the City and the Authority (the “First Supplement to Indenture,” and together with the Original Indenture, the “Indenture”) and will use the proceeds to defease, pay and redeem the Prior Bonds; and
WHEREAS, the Callable Bonds are subject to redemption on the Redemption Date and the Authority has determined to provide for the call for redemption on the Redemption Date of the Callable Bonds outstanding on the Redemption Date;
NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, the Authority and the Escrow Agent agree as follows:
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2 Section 1. Definitions. Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the 2013 Trust Agreement.
Section 2. The Escrow Fund. (a) There is hereby established a fund (the “Escrow Fund”) to be held as an irrevocably pledged escrow by the Escrow Agent, which the Escrow Agent shall keep separate and apart from all other funds of the Authority and the Escrow Agent and to be applied solely as provided in this Escrow Agreement.
Pending application as provided in this Escrow Agreement, amounts on deposit in the Escrow Fund are hereby pledged solely to the payment of interest due on the Prior Bonds on each May 1 and November 1 of 2023, the principal payable on the Non-Callable Bonds on November 1, 2023, and the Redemption Price on the Redemption Date for the Callable Bonds, which amounts shall be held in trust by the Escrow Agent for the Owners of the Prior Bonds.
(b) The Prior Trustee was previously instructed and is hereby instructed to liquidate the investments held in the funds and accounts established under the 2013 Trust Agreement. Upon the authentication and issuance of the Series 2022A Bonds, there shall be deposited in the Escrow Fund the following (1) $[___________] received from the proceeds of the sale of the Series 2022A Bonds and (2) $[_________] from the Reserve Account established under the 2013 Trust Agreement. (c) The Authority represents, and [_______] (the “Verification Agent”) has verified, that upon the deposit of moneys pursuant to Section 2(b) hereof, the moneys on deposit in the Escrow Fund will be at least equal to an amount sufficient to purchase the aggregate principal amount of non-callable Federal Securities set forth in Exhibit A hereto (the “Exhibit A Securities”), which principal, together with all interest due or to become due on such Exhibit A Securities, and any uninvested cash held by the Escrow Agent in the Escrow Fund, will be sufficient to make the payments required by Section 4 hereof.
Section 3. Use and Investment of Moneys. (a) The Escrow Agent hereby acknowledges deposit of the moneys described in Section 2(b) hereof and agrees to invest $[________] of such moneys in the Exhibit A Securities. Except as provided in Section 3(b) or Section 3(c) hereof, the balance of the moneys described in Section 2 hereof shall be held uninvested in the Escrow Fund. (b) Upon the written request of the Authority, but subject to the conditions and limitations herein set forth, the Escrow Agent shall purchase substitute non-callable Federal Securities, for the non- callable Federal Securities then held in the Escrow Fund with the proceeds derived from the sale, transfer, redemption or other disposition of non-callable Federal Securities then on deposit in the Escrow Fund and any uninvested money then held by the Escrow Agent hereunder in accordance with the provisions of this Section. Such sale, transfer, redemption or other disposition of non-callable Federal Securities then on deposit in the Escrow Fund and substitution of other non-callable Federal Securities shall be effected by the Escrow Agent upon the written request of the Authority but only by a simultaneous transaction and only upon receipt of (i) certification by a nationally recognized firm of independent certified public accountants that the non-callable Federal Securities to be substituted, together with the non-callable Federal Securities which will continue to be held in the Escrow Fund, will mature in such principal amounts and earn interest in such amounts and, in each case, at such times so that sufficient moneys will be available from maturing principal and interest on such non-callable Federal Securities held in the Escrow Fund, together with any uninvested moneys, to make all payments required by Section 4 hereof, which have not previously been made, and (ii) receipt by the Escrow Agent of an opinion of counsel of recognized standing in the field of law relating to municipal bonds to the effect that the sale, transfer, redemption or other disposition and substitution of non-callable Federal Securities will not adversely affect the exclusion of interest on any Prior Bonds or any Series 2022A Bonds from gross income for purposes of federal income taxation.
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3 (c) Upon the written request of the Authority, but subject to the conditions and limitations herein set forth, the Escrow Agent will apply any moneys received from the maturing principal of or interest or other investment income on any non-callable Federal Securities held in the Escrow Fund, or the proceeds from any sale, transfer, redemption or other disposition of non-callable Federal Securities pursuant to Section 3(b) hereof not required for the purposes of said Section: (i) to the extent such moneys will not be required at any time for the purpose of making a payment required by Section 4 hereof, as certified by a nationally recognized firm of independent certified public accountants delivered to the Escrow Agent, such moneys shall, upon the written request of the Authority, be transferred to the Trustee for deposit in the Series 2022A Interest Fund established under the Indenture as received by the Escrow Agent, free and clear of any trust, lien, pledge or assignment securing the Prior Bonds or otherwise existing hereunder, and (ii) to the extent such moneys will be required for such purpose at a later date, shall, to the extent practicable, be invested or reinvested in non-callable Federal Securities maturing at times and in amounts sufficient, as certified by a nationally recognized firm of independent certified public accountants delivered to the Escrow Agent, to make such payment required by Section 4 hereof. (d) All non-callable Federal Securities purchased pursuant to this Escrow Agreement shall be deposited in and held for the credit of the Escrow Fund. Except as provided in this Section 3 hereof, no moneys or non-callable Federal Securities deposited with the Escrow Agent pursuant to this Escrow Agreement nor principal of, or interest payments or other investment income on, any such non-callable Federal Securities shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the Prior Bonds as provided in Section 4 hereof. (e) The Owners of the Prior Bonds shall have a first and exclusive lien on the moneys and non- callable Federal Securities in the Escrow Fund until such moneys and non-callable Federal Securities are used and applied as provided in this Escrow Agreement.
(f) The Escrow Agent shall not be held liable for investment, reinvestment or liquidation of investment losses, tax, fees or other charges resulting from compliance with the provisions of this Escrow Agreement.
(g) Absent such written requests by the Authority, the Escrow Agent shall hold moneys uninvested.
Section 4. Payment of Prior Bonds. From the maturing principal of the non-callable Federal Securities held in the Escrow Fund and the investment income and other earnings thereon and any uninvested money then held in the Escrow Fund, the Escrow Agent shall apply such amounts as follows:
(a) on May 1, 2023, the Escrow Agent, as the Prior Trustee, shall pay the interest on the Prior Bonds in accordance with the terms of the 2013 Trust Agreement; (b) on the Redemption Date, the Escrow Agent, as the Prior Trustee, shall pay the interest on the Non-Callable Bonds in accordance with the terms of the 2013 Trust Agreement; (c) on the Redemption Date, the Escrow Agent, as the Prior Trustee, shall pay the principal of the Non-Callable Bonds in accordance with the terms of the 2013 Trust Agreement; and (d) on the Redemption Date, the Escrow Agent, as the Prior Trustee, shall pay the Redemption Price for the Callable Bonds in accordance with the terms of the 2013 Trust Agreement.
To the extent that the amount on deposit in the Escrow Fund on the Redemption Date is in excess of the amount necessary to make the required payments with respect to the Prior Bonds, as shown in the
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4 then applicable escrow verification of the nationally recognized firm of independent certified public accountants, such excess shall be transferred to the Trustee for deposit in the Series 2022A Interest Fund established under the Indenture.
Section 5. Irrevocable Instructions to Mail Notices. The Authority hereby designates the Prior Bonds for defeasance, payment and optional redemption on the Redemption Date as indicated in Section 4 hereof and hereby irrevocably instructs the Escrow Agent, as the Prior Trustee, (1) to post notice with EMMA of defeasance of the Prior Bonds (substantially in the form of Exhibit B hereto) and (2) to timely provide mailed notice of redemption of the Prior Bonds (substantially in the form of Exhibit C hereto) in accordance with Section 2.03 of the 2013 Trust Agreement.
Section 6. Performance of Duties; Acknowledgement with Respect to Irrevocable Instructions. The Escrow Agent agrees to perform the duties set forth herein and agrees that the irrevocable instructions to the Escrow Agent, as the Prior Trustee, herein provided are in a form satisfactory to it.
Section 7. Escrow Agent’s Authority to Make Investments. The Escrow Agent shall have no power or duty to invest any funds held under this Escrow Agreement except as provided in Section 3 hereof. The Escrow Agent shall have no power or duty to transfer or otherwise dispose of the moneys held hereunder except as provided in this Escrow Agreement.
Section 8. Indemnity. To the extent permitted by law, the Authority hereby assumes liability for, and hereby agrees to indemnify, protect, save and keep harmless the Escrow Agent and its respective successors, assigns, agents, employees and servants, from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including reasonable legal fees, expenses and disbursements) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against, the Escrow Agent at any time in any way relating to or arising out of the execution, delivery and performance of this Escrow Agreement, the establishment hereunder of the Escrow Fund, the acceptance of the funds and securities deposited therein, the purchase of any securities to be purchased pursuant thereto, the retention of such securities or the proceeds thereof and any payment, transfer or other application of moneys or securities by the Escrow Agent in accordance with the provisions of this Escrow Agreement; provided, however, that the Authority shall not be required to indemnify the Escrow Agent against the Escrow Agent’s own gross negligence or willful misconduct or the gross negligence or willful misconduct of the Escrow Agent’s respective successors, assigns, agents and employees or the material breach by the Escrow Agent of the terms of this Escrow Agreement. In no event shall the Authority or the Escrow Agent be liable to any person by reason of the transactions contemplated hereby other than to each other as set forth in this Section. The indemnities contained in this Section shall survive the termination of this Escrow Agreement and the resignation or removal of the Escrow Agent.
Section 9. Responsibilities of Escrow Agent. The Escrow Agent makes no representation as to the sufficiency of the securities to be purchased pursuant hereto and any uninvested moneys to accomplish the redemption of the Prior Bonds pursuant to the 2013 Trust Agreement or to the validity of this Escrow Agreement as to the Authority and, except as otherwise provided herein, the Escrow Agent shall incur no liability in respect thereof. The Escrow Agent shall not be liable in connection with the performance of its duties under this Escrow Agreement except for its own gross negligence, willful misconduct or default, and the duties and obligations of the Escrow Agent shall be determined by the express provisions of this Escrow Agreement. The Escrow Agent may consult with counsel of its selection and in reliance upon the written opinion of such counsel shall have full and complete authorization and protection in respect of any action taken, suffered or omitted by it in good faith in accordance therewith.
Whenever the Escrow Agent shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering, or omitting any action under this Escrow Agreement, such matter (except the matters set forth herein as specifically requiring a certificate of a nationally recognized firm of independent
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5 certified public accountants or an opinion of counsel of recognized standing in the field of law relating to municipal bonds) may be deemed to be conclusively established by a written certification of the Authority.
Whenever the Escrow Agent shall deem it necessary or desirable that a matter specifically requiring a certificate of a nationally recognized firm of independent certified public accountants or an opinion of counsel of recognized standing in the field of law relating to municipal bonds be proved or established prior to taking, suffering, or omitting any such action, such matter may be established only by a certificate signed by a nationally recognized firm of certified public accountants or such opinion of counsel of recognized standing in the field of law relating to municipal bonds.
The Escrow Agent undertakes to perform only such duties as are expressly set forth in this Escrow Agreement and no implied duties, covenants or obligations shall be read into this Agreement against the Escrow Agent.
The Escrow Agent may resign by giving written notice to the Authority, and upon receipt of such notice the Authority shall promptly appoint a successor Escrow Agent. If the Authority does not appoint a successor Escrow Agent within thirty days of receipt of such notice, the resigning Escrow Agent may petition a court of competent jurisdiction for the appointment of a successor Escrow Agent, which court may thereupon, upon such notice as it shall deem proper, appoint a successor Escrow Agent. Upon acceptance of appointment by a successor Escrow Agent, the resigning Escrow Agent shall transfer all amounts held by it in the Escrow Fund to such successor Escrow Agent and be discharged of any further obligation or responsibility hereunder.
Section 10. Amendments. The Authority and the Escrow Agent may (but only with the consent of the Owners of all of the Prior Bonds) amend this Escrow Agreement or enter into agreements supplemental to this Escrow Agreement.
Section 11. Term. This Escrow Agreement shall commence upon its execution and delivery and shall terminate on the date upon which (i) the Prior Bonds have been paid in accordance with this Escrow Agreement and (ii) any remaining amounts on deposit in the Escrow Fund have been transferred to the Authority, in accordance with this Escrow Agreement.
Section 12. Compensation. The Authority shall from time to time pay or cause to be paid to the Escrow Agent the agreed upon compensation for its services to be rendered hereunder, and reimburse the Escrow Agent for all of its advances in the exercise and performance of its duties mutually agreed upon in writing hereunder; provided, however, that under no circumstances shall the Escrow Agent be entitled to any lien whatsoever on any moneys or obligations in the Escrow Fund for the payment of fees and expenses for services rendered or expenses incurred by the Escrow Agent under this Escrow Agreement or otherwise.
The provisions contained in this Section shall survive the termination of this Escrow Agreement and the resignation or removal of the Escrow Agent.
Section 13. Severability. If any one or more of the covenants or agreements provided in this Escrow Agreement on the part of the Authority or the Escrow Agent to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenants or agreements shall be null and void and shall be deemed separate from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Escrow Agreement.
Section 14. Counterparts. This Escrow Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as an original but all of which shall constitute and be but one and the same instrument. The exchange of copies of this Escrow Agreement and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Escrow Agreement as to the parties hereto and may be used in lieu of the original Escrow Agreement and signature
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6 pages for all purposes. Each party agrees that the electronic signatures, whether digital or encrypted, of the parties included in this Escrow Agreement are intended to authenticate this writing and to have the same force and effect as manual signatures. Electronic signature means any electronic sound, symbol, or process attached to or logically associated with a record and executed and adopted by a party with the intent to sign such record, including facsimile or email electronic signatures. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to the Escrow Agreement or any document to be signed in connection with the Escrow Agreement shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper- based recordkeeping system, as the case may be, and the parties hereto consent to conduct the transactions contemplated hereunder by electronic means.
Section 15. Governing Law. This Escrow Agreement shall be construed under the laws of the State of California.
Section 16. Force Majeure. In no event shall the Escrow Agent be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused b y, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, pandemics, epidemics, recognized public emergencies, quarantine restrictions, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Escrow Agent shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
Section 17. U.S.A. Patriot Act. The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Escrow Agent like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Escrow Agent. The parties to this Escrow Agreement agree that they will provide the Escrow Agent with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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7 IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of the date first above written.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, AS PRIOR TRUSTEE AND AS
ESCROW AGENT
By:
Authorized Signatory
GILROY PUBLIC FACILITIES FINANCING
AUTHORITY
By:
Executive Director
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A-1
EXHIBIT A
Type
Maturity
Date
Par
Amount
Interest
Rate
Purchase
Price
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B-1
EXHIBIT B
NOTICE OF DEFEASANCE
GILROY PUBLIC FACILITIES FINANCING AUTHORITY
REFUNDING LEASE REVENUE BONDS, SERIES 2013
Date of Issuance: August 14, 2013
CUSIP No.*
Maturity
(November 1) Rate Amount
376060CN7 2023 5.000% $1,080,000
376060CP2 2024 4.000 1,130,000
376060CQ0 2025 4.250 1,175,000
376060CR8 2026 4.375 1,225,000
376060CS6 2027 4.500 1,285,000
376060CT4 2028 4.750 1,345,000
376060CU1 2029 5.000 1,410,000
376060CV9 2033 6.000 6,535,000
NOTICE IS HEREBY G IVEN, on behalf of the Gilroy Public Facilities Financing Authority (the “Authority”) to the owners of the outstanding Gilroy Public Facilities Financing Authority Refunding Lease Revenue Bonds, Series 2013 (the “Bonds”), that pursuant to the Trust Agreement, dated as of August 1, 2013 (the “Trust Agreement ”), by and between the Authority and U.S. Bank Trust Company, National Association, as successor to MUFG Union Bank, N.A., as trustee, authorizing the issuance of Bonds, the lien of the Trust Agreement with respect to the Bonds has been discharged through the irrevocable deposit of cash and federal securities into the escrow fund (the “Escrow Fund”). The Escrow Fund has been established and is being maintained pursuant to that certain Escrow Agreement, dated as of [December 1, 2022], by and between the Authority and U.S.
Bank Trust Company, National Association, as Escrow Agent (the “Escrow Agent”). As a result of such deposit, the Bonds are deemed to have been paid and defeased in accordance with the Trust Agreement. The pledge of the funds provided for under the Trust Agreement and all other obligations of the Authority to the owners of the Bonds shall hereafter be limited to the application of moneys in the Escrow Fund for the payment of the principal of and interest on the Bonds as such payments become due and payable and the payment of the redemption price of the Bonds as described below.
The cash and federal securities held in the Escrow Fund are calculated to provide sufficient moneys to pay the principal of interest as such payments becomes due and payable and to redeem the Bonds in full on November 1, 2023 at a redemption price equal to 100% of the principal thereof plus accrued interest to such date.
Dated: [December __, 2022] U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Escrow Agent
* CUSIP numbers are provided for convenience of reference only. None of the Authority nor the Escrow Agent shall be held responsible for the selection or use of the CUSIP numbers, nor is any representation made as to their correctness in this Notice.
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C-1
EXHIBIT C
NOTICE OF FULL OPTIONAL REDEMPTION
GILROY PUBLIC FACILITIES FINANCING AUTHORITY
REFUNDING LEASE REVENUE BONDS, SERIES 2013
Date of Issuance: August 14, 2013
NOTICE IS HEREBY GIVEN by U.S. Bank Trust Company, National Association, as Escrow Agent for the Gilroy Public Facilities Financing Authority, that the Authority intends to exercise its option to redeem the maturities identified below of its outstanding Gilroy Public Facilities Financing Authority Refunding Lease Revenue Bonds, Series 2013 (the “Series 2013 Bonds” and the maturities thereof being redeemed, the “Refunded Bonds”) on November 1, 2023 (the “Redemption Date”) prior to their stated maturity, at a redemption price equal to 100% of the principal amount of the Refunded Bonds plus accrued interest thereon to the Redemption Date, without premium (the “Redemption Price”). The Series 2013 Bonds were originally issued on August 14, 2013.
CUSIP No.*
Maturity
(November 1) Rate Amount Price
376060CP2 2024 4.000% $1,130,000 100.00
376060CQ0 2025 4.250 1,175,000 100.00
376060CR8 2026 4.375 1,225,000 100.00
376060CS6 2027 4.500 1,285,000 100.00
376060CT4 2028 4.750 1,345,000 100.00
376060CU1 2029 5.000 1,410,000 100.00
376060CV9 2033 6.000 6,535,000 100.00
To receive payment of the Redemption Price, the Refunded Bonds described above must be presented to:
BY MAIL OR BY HAND
[U.S. Bank National Association
Global Corporate Trust Services
111 Fillmore Avenue E
St. Paul, MN 55107]
On the Redemption Date, there shall become due and payable upon the Refunded Bonds the Redemption Price, and from and after the Redemption Date interest on the Refunded Bonds shall cease to accrue and be payable. This notice and such redemption may be rescinded by the Authority on or prior to the date set for redemption. This notice of redemption shall be cancelled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not const itute an Event of Default under the Trust Agreement.
Bondholders presenting their bonds in person for same day payment must surrender their bond(s) by 1:00 P.M. CST on the Redemption Date and a check will be available for pick up after 2:00 P.M. CST. Checks not picked up by 4:30 P.M. CST will be mailed out to the bondholder via first class mail. If payment of the Redemption Price is to be made to the registered owner of the Bond, you are not required to endorse the Bond to collect the Redemption Price.
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C-2
For a list of redemption requirements please visit our website at www.usbank.com/corporatetrust and click on the “Bondholder Information” link for Redemption instructions. You may also contact our Bondholder Communications team at 1-800-934-6802 Monday through Friday from 8 AM to 6 PM CST.
IMPORTANT NOTICE
Federal law requires the Agent to withhold taxes at the applicable rate from the payment if an IRS Form W-9 or applicable IRS Form W-8 is not provided. Please visit www.irs.gov for additional information on the tax forms and instructions.
Dated: ________, 2023 U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Escrow Agent
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