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Fieldman Rolapp & Associates , the City’s municipal advisor (the “Municipal Advisor”), and any notice or report to be provided to the City may be provided to the Municipal Advisor. (b) Except as otherwise set forth in Exhibit A attached hereto, the City will treat the first price at which 1 0% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity. At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the City the price or prices at which it has sold to the public each maturity of the Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the City the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until either (i) the Underwriter has sold all Bonds of that maturity or (ii) the 10% test has been satisfied as to the Bonds of that maturity, provided that, the Un derwriter’s reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the City or Bond Counsel. For purposes of this Section 2, if Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds.
(c) The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “ini tial offering price”), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for w hich the 10% test has not been satisfied and for which the City and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the City to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bo nds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
(1) the close of the fifth (5th) business day after the sale date; or (2) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. (3) The Underwriter will advise the City promptly after the close of the fifth (5th) business day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. (d) The Underwriter confirms that:
(1) any selling group agreement and any third -party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a mem ber of the selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable:
(A) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the
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Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter, and (ii) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter;
(B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below); and (C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(2) any selling group agreement relating to the initial sale of the Bonds to the public, together with the re lated pricing wires, contains or will contain language obligating each dealer that is a party to a third -party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker -dealer that is a part y to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it h ave been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold -the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires. (e) The City acknowledges that, in ma king the representations set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold -the-offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the rela ted pricing wires, and (ii) in the event that a third-party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker -dealer that is a party to such agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the third -party distribution agreement and the related pricing wires. The City further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker -dealer that is a party to a third -party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold -the-offering-price rule, if applicable to the Bonds.
(f) The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section.
Further, for purposes of this section:
(1) “public” means any person other than an underwriter or a related party.
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(2) “underwriter” means (A) any person that agrees pursuant to a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to partic ipate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a membe r of a selling group or a party to a third -party distribution agreement participating in the initial sale of the Bonds to the public), (3) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their c apital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and (4) “Sale date” means the date of executi on of this Purchase Agreement by the City and the Underwriter.
3. Representations, Warranties and Agreements of the City . The City represents, warrants and covenants to and agrees with the Underwriter that:
(a) The City is duly organized and validly existing as a municipal corporation under the laws of the State of California and has duly authorized the formation of the District pursuant to the Resolution of Formation and the Act . The City Council , as the legislative body with respect to the District, has duly adopted the District Resolutions, and has caused to be recorded in the real property records of the County of San Bernardino as Document No. 2005-0241956 recorded on April 7, 2005, a Notice of Special Tax Lien (the “Notice of Special Tax Lien”) (such District Resolutions and Notice of Special Tax Lien being collectively referred to herein as the “Formation Documents”).
Each of the Formation Documents remains in full force and effect as of the date hereof and has not been amended. The District is duly organized and validly existing as a community facilities district under the laws of the State of California. The City has, and at the Closing Date will have, as the case may be, full legal right, power and authority (i) to execute, deliver and perform its obligations under this Purchase Agreement and the City Disclosure Certificate , and to carry out all transactions contemplated by each of such agreements, (ii) to issue, sell and deliver t he Bonds to the Underwriter pursuant to the Resolution of Issuance and the Fiscal Agent Agreement as provided herein, and (iii) to carry out, give effect to and consummate the transactions contemplated by the Formation Documents and by the Fiscal Agent Agr eement, the Escrow Agreement, this Purchase Agreement, and the City Disclosure Certificate (collectively, the “District Documents”) and the Official Statement;
(b) The City has complied, and will at the Closing Date be in compliance, in all material respects, with the Formation Documents and the District Documents, and any immaterial compliance by the City, if any, will not impair the ability of the City to carry out, give effect to or consummate the transactions contemplated by the foregoing. From and after the date of issuance of the Bonds, the City will continue to comply with the covenants of the City contained in the District Documents;
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(c) The City Council has duly and validly: (i) adopted the District Resolutions, (ii) called, held and conducted in accordan ce with all requirements of the Act an election within the District to approve the levy of the Special Tax es within the District and the issuance of the Bonds and recorded the Notice of Special Tax Lien which established a continuing lien on the land withi n the District securing the Special Tax, (iii) authorized and approved the execution, delivery and due performance of the Bonds and the District Documents, (iv) authorized the preparation, delivery and distribution of the Preliminary Official Statement and the Official Statement, and (v) authorized and approved the performance by the City of its obligations contained in, and the taking of any and all action as may be necessary to carry out, give effect to and consummate the transactions contemplated by, eac h of the District Documents (including, without limitation, the collection of the Special Taxes), the Bonds and the Official Statement and at the Closing Date, the Formation Documents will be in full force and effect and the District Documents and the Bond s will constitute the valid, legal and binding obligations of the City and the District and (assuming due authorization, execution and delivery by other parties thereto, where necessary) will be enforceable in accordance with their respective terms, subjec t to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights in general and to the application of equitable principles if equitable remedies are sought;
(d) Neither the District nor the City is in breach of or default under any applicable law or administrative rule or regulation of the State of California (the “State”) or the United States, or of any department, division, agency or instrumentality thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, fiscal agent agreement, contract, agreement or other instrument to which the District or the City is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the performance by the District or the City of its obligations under the Bonds, the Formation Documents or the District Documents, and compliance with the provisions of each thereof will not conflict with or constitute a breach of or defau lt under any applicable law or administrative rule or regulation of the State or the United States, or of any department, division, agency or instrumentality thereof, or under any applicable court or administrative decree or order, or a material breach of or default under any loan agreement, note, resolution, trust agreement, contract, agreement or other instrument to which the District or the City, as the case may be, is a party or is otherwise subject or bound; (e) Except for compliance with the blue sky or o ther states securities law filings, as to which the City makes no representations, all approvals, consents, authorizations, elections and orders of or filings or registrations with any State governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the City of its obligations hereunder, or under the Formation Documents or the District Documents, have been obtained and are in full force and effect; (f) The Special Taxes constituting the security for the Bonds has been duly and lawfully authorized and may be levied under the Act , the State Constitution and the applicable laws of the State, and such Special Tax, when levied, w ill constitute a valid and legally binding continuing lien on the properties on which it has been levied;
(g) The City shall not supplement or amend the Official Statement or cause the Official Statement to be supplemented or amended without the prior written consent of the Underwriter.
Until the date which is twenty -five (25) days after the “end of the underwriting period” (as hereinafter defined), if any event shall occur of which the City is aware, as a result of which it may be necessary to supplement the Official Statement in order to make the statements in the Official
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Statement, in light of the circumstances existing at such time, not misleading, the City shall forthwith notify the Underwriter of any such event of which it has knowledge and shall coopera te fully in furnishing any information available to it for any supplement to the Official Statement necessary, in the Underwriter’s opinion, so that the statements therein as so supplemented will not be misleading in light of the circumstances existing at such time and the City shall promptly furnish to the Underwriter a reasonable number of copies of such supplement. As used herein, the term “end of the underwriting period” means the later of such time as (i) the City delivers the Bonds to the Underwriter, or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the “end of the underwriting period” shall be deem ed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the City at or prior to the Closing Date, and shall specify a date (other than the Closing Date) to be deemed the “end of the underwriting period”;
(h) The Fiscal Agent Agreement creates a valid pledge of the Special Tax Revenues and the moneys in the Special Tax Fund, the Bond Fund, and the Reserve Fund established pursuant to the Fiscal Agent Agreement, including the investments thereof, subject in all cases to the provisions of the Fiscal Agent Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein. Until such time as moneys have been set aside in an amount sufficient to pay all then outstanding Bonds at maturity or to the date of redemption if redeemed prior to maturity, plus unpaid interest thereon to maturity or to the date of redemption if redeemed prior to maturity, and premium, if any, the City will faithfully perform and abide by all o f the covenants, undertakings and provisions contained in the Fiscal Agent Agreement; (i) Except as disclosed in the Official Statement, no acti on, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, publ ic board or body is pending or, to the best knowledge of the City, threatened (i) which would materially adversely affect the ability of either the City to perform its obligations under the Bonds, the Formation Documents or the District Documents, or (ii) seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Fiscal Agent Agreement, or the collection or application of the Special Tax es pledged or to be pledged to pay the p rincipal of and interest on the Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Bonds, the Formation Documents, the District Documents, or any action contemplated by any of said documents, or (iii) in any way contesting the completeness or accuracy of the Preliminary Official Statement or the powers or authority of the City or the District with respect to the Bonds, the Formation Documents, the District Documents, or any action of the City or the District contemplated by any of said documents; nor is there any action pending or, to the best knowledge of the City, threatened against the City or the District which alleges that interest on the Bonds is not excludable from gross income for federal income tax purposes or is not exempt from California personal income taxation;
(j) The City will furnish such information, execute such instruments and ta ke such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order for the Underwriter to qualify the Bonds for offer and sale under the “Blue Sky” or other securities laws and regulations of such states and other j urisdictions of the United States as the Underwriter may designate; provided, however, the City shall not be required to register as a dealer or a broker of securities or to consent to service of process in connection with any blue sky filing;
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(k) Any certificate signed by any official of the City authorized to do so shall be deemed a representation and warranty to the Underwriter as to the statements made therein; (l) The City will apply the proceeds of the Bonds in accordance with the Fiscal Agent Agreement and as described in the Official Statement;
(m) The information contained in the Preliminary Official Statement (other than under the caption “THE BONDS — Book-Entry Only System,” as to which no view is expressed) was as of the date thereof, and the information contained in the Official Statement (other than under the caption “THE BONDS — Book-Entry Only System,” as to which no view is expressed) as of its date and on the Closing Date shall be, true and correct in all material respects and such information does not and shall not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
(n) The Preliminary Official Stat ement heretofore delivered to the Underwriter has been deemed final by the City as of its date, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(1) of Rule 15c2-12. The City hereby covenants and agrees that, within seven (7) business days from the date hereof, the City shall cause a final printed form of the Official Statement to be delivered to the Underwriter in a quantity mutually agreed upon by the Underwriter and the City so that the Underwrite r may comply with paragraph (b)(4) of Rule 15c2-12 and Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board; (o) Except as otherwise disclosed in the Preliminary Official Statement, the City is, and has always been, in material compliance with respect to all reporting obligations in the last five years that it has undertaken under Rule 15c2-12 for all indebtedness issued by the City; (p) Except as otherwise disclosed in the Preliminary Official Statement, the Formation Documents have not been amended, terminated, rescinded or modified; (q) The City shall not knowingly take or omit to take any action that, under existing law, may adversely affect the exemption from state income taxation or the exclusion from gross income for federal income tax purposes of the interest on the Bonds.
4. Conditions to the Obligations of the Underwriter. The obligations of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and warranties on the part of the City contained herein, as of the date hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the officers and other officials of the City made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the City of its obligations to be performed hereunder at or prior to the Closing Date and to the following additional conditions:
(a) At the Closing Date, the Formation Documents and the District Documents shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the Bonds and with the transactions contem plated thereby and by this Purchase Agreement, all such actions as, in the opinion of Jones Hall, A Professional Law
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Corporation, Bond Counsel for the City, and Stradling Yocca Carlson & Rauth LLP, counsel to the Underwriter, shall be necessary and appropriate;
(b) The information contained in the Official Statement will, as of the Closing Date and as of the date of any supplement or amendment thereto pursuant to Section 3(g) hereof, be true, correct and complete in all material respects and will not, as of the Closing Date or as of the date of any supplement or amendment thereto pursuant to Section 3(g) hereof, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (c) Between the date hereof and the Closing Date, the market price or marketability of the Bonds at the initial offering prices set forth in the Official Statement shall not have been materially adversely affected, in the judgment of the Underwriter (evidenced by a written notice to the City terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following:
(1) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress by the President of the United States, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department or the Internal Revenue Service of the United States of America, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon the interest that would be received by the holders of the Bonds beyond the extent to which such interest is subject to taxation a s of the date hereof;
(2) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America, or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Fiscal Agent Agreement is not exempt from qualification un der or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds, or of the Bonds, including any or all underwriting arrangements, as contemplated hereby o r by the Official Statement or otherwise is or would be in violation of the federal securities laws, rules or regulations as amended and then in effect; (3) any amendment to the federal or California Constitution or action by any federal or California court, l egislative body, regulatory body or other authority materially adversely affecting the tax status of the City or the District, its property, income, securities (or interest thereon), the validity or enforceability of the Special Tax es or the ability of the City to refund the Refunded Bonds as contemplated by the District Documents or the Official Statement;
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(4) any event occurring, or information becoming known, which, in the judgment of the Underwriter, makes untrue in any material respect any statement or in formation contained in the Preliminary Official Statement or the Official Statement, or results in the Preliminary Official Statement or the Official Statement containing any untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (5) the declaration of war or the escalation of, or engagement in, military hostilities by the United States or the occ urrence of any other national or international emergency or calamity relating to the effective operation of the government of, or the financial community in, the United States;
(6) the declaration of a general banking moratorium by federal, State of New York or State of California authorities, or the general suspension of trading on any national securities exchange or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on the New York Stock Exchange or other national securities exchange, whether by virtue of determination by that exchange or by order of the Securities and Exchange Commission (the “SEC”) or any other governmental authority having jurisdiction;
(7) the imposition by the New York Stock Exchange or other national securities exchange, or any governmental authority, of any material restrictions not now in force with respect to the Bonds or obligations of the general character of the Bonds or securi ties generally, or the material increase of any such restrictions now in force, including those relating to the extension of credit by, or the charge to the net capital requirements of, the Underwriter; (8) a material disruption in securities settlement, payme nt or clearance services affecting the Bonds shall have occurred;
(9) there shall have been any material adverse change in the affairs of the City or the District;
(10) there shall be filed or threatened any litigation described in Section 3(i) hereof;
(11) there shall be established any new restriction on transactions in securities materially affecting the free market for securities (including the imposition of any limitation on interest rates) or the extension of credit by, or a change to the net capital requirements o f, Underwriter established by the New York Stock Exchange, the SEC, any other federal or State agency or the Congress of the United States, or by Executive Order; (12) a stop order, release, regulation, or no-action letter by or on behalf of the SEC or any other governmental agency having jurisdiction of the subject matter shall have been issued or made to the effect that the issuance, offering, or sale of the Bonds, including all the underlying obligations as contemplated hereby or by the Official Statement, o r any document relating to the issuance, offering or sale of the Bonds is or would be in violation of any provision of the federal securities laws at the Closing Date, including the Securities Act, the Exchange Act, and the Trust Indenture Act of 1939, as amended.
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(d) On the Closing Date, the Underwriter shall have received counterpart originals or certified copies of the following documents, in each case satisfactory in form and substance to the Underwriter:
(1) The Formation Documents and the District Documents, together with a certificate dated as of the Closing Date of the City to the effect that each Formation Document is a true, correct and complete copy of the one duly adopted by the City Council; (2) The Official Statement;
(3) An unqualified approving opinion for t he Bonds, dated the Closing Date and addressed to the City, of Jones Hall, A Professional Law Corporation , Bond Counsel for the City, in the form attached to the Preliminary Official Statement as Appendix D, and an unqualified letter of such counsel, dated the Closing Date and addressed to the Underwriter, to the effect that such approving opinion addressed to the District may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it;
(4) A supplemental opinion, dated the Closing Date and addressed to the Underwriter, of Jones Hall, A Professional Law Corporation, Bond Counsel for the City, to the effect that (i) the District Documents have been duly authorized, executed and delivered by the City, and, assuming such agreements constitute a valid and binding obligation of the other parties thereto, constitute the legally valid and binding agreements of the City enforceable in accordance with their terms, except as enforcement may be limited b y bankruptcy, moratorium, insolvency or other laws affecting creditor’s rights or remedies and may be subject to general principles of equity (regardless of whether such enforceability is considered in equity or at law); (ii) the Bonds are not subject to t he registration requirements of the Securities Act of 1933, as amended, and the Fiscal Agent Agreement is exempt from qualification under the Trust Indenture Act of 1939, as amended; (iii) the information contained in the Official Statement on the cover an d under the captions “INTRODUCTION,” “THE 2024 BONDS,” “SECURITY FOR THE 2024 BONDS,” “TAX MATTERS” and Appendices C and D thereof (except that no opinion or belief need be expressed as to any financial or statistical data contained in the Official Stateme nt), insofar as it purports to summarize or replicate certain provisions of the Act , the Bonds and the Fiscal Agent Agreement and the exclusion from gross income for federal income tax purposes and exemption from State of California personal income taxes of interest on the Bonds present a fair and accurate summary of such provisions; and (iv) the Special Taxes has been duly and validly authorized in accordance with the provisions of the Act and, except as the same may be limited by bankruptcy, insolvency, r eorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles and by the exercise of judicial discretion in appropriate cases, a lien to secure pa yment of the Special Tax Revenues has been imposed on all nonexempt property in the District;
(5) A defeasance opinion of Bond Counsel with respect to the Refunded Bonds, dated the Closing Date and addressed to the Underwriter and the Fiscal Agent, to the effect that, upon the deposit with the Escrow Agent as provided for in the Escrow Agreement, the Refunded Bonds will no longer be considered Outstanding within the meaning of the fiscal agent agreement or indenture under which such obligations were issued, and will not have any lien on, or be payable from, the Special Tax Revenues;
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(6) An opinion of Jones Hall, A Professional Law Corporation , as Disclosure Counsel to the City (“Disclosure Counsel”), dated the Closing Date and addressed to the City and to the Underwriter, to the effect that based upon an examination which they have made, and without having undertaken to determine independently the accuracy or completeness of the statements contained in the Preliminary Official Statement or the Official Statement, the y have no reason to believe that the Preliminary Official Statement as of its date and as of the date hereof, or the Official Statement as of its date and as of the Closing Date (excluding therefrom any CUSIP numbers, financial statements and other statist ical and financial data, projections, estimates, assumptions and expressions of opinion, and information relating to The Depository Trust Company, New York, New York, and its book -entry system contained therein and incorporated therein by reference, and statements contained in Appendix A, as to which no view need be expressed) contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (7) An opinion, dated the Closing Date and addressed to the Underwriter, of Stradling Yocca Carlson & Rauth LLP, counsel for the Underwriter, in form and substance acceptable to the Underwriter;
(8) A certificate or cert ificates, dated the Closing Date and signed by an authorized officer of the City, ratifying the use and distribution by the Underwriter of the Preliminary Official Statement and the Official Statement in connection with the offering and sale of the Bonds; and certifying that (i) the representations and warranties of the City contained in this Purchase Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) to the best of his or her knowledge, no event has occurred since the date of the Official Statement affecting the matters contained therein which should be disclosed in the Official Statement for the purposes for which it is to be used in order to make the statements an d information contained in the Official Statement not misleading in any material respect, and the Bonds, the Formation Documents and the District Documents conform as to form and tenor to the descriptions thereof contained in the Official Statement; (iii) the City has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under the Formation Documents, the District Documents and the Official Statement at or prior to the Closing Date; and (iv) the representations and warranties of the City contained in the Rule 15c2-12 Certificate are true and correct in all material respects on and as of the Closing Date, with the same effect as if made on the Closing Date, except that all references therein to the Preliminary Official Statement shall be deemed to be references to the Official Statement; (9) An opinion, dated the Closing Date and addressed to the Underwriter, of the City Attorney , to the effect that (i) except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or b y any court, regulatory agency, public board or body is pending or , to its current actual knowledge, threatened, as to which the City is or would be a party, which would materially adversely affect the ability of the City or the District to perform its obl igations under the Bonds, the Formation Documents or the District Documents, or which seeks to restrain or enjoin the issuance, sale and delivery of the Bonds or exclusion from gross income for federal income tax purposes or State of California personal in come taxes of interest on the Bonds, or the application of the proceeds thereof in accordance with the Fiscal Agent Agreement, or the collection or application of the Special Taxes to pay the principal of and interest on the Bonds, or which in any way cont ests or affects the validity or enforceability of the Bonds, the Formation Documents or the District Documents or the accuracy of the Official Statement, or any action of the City contemplated by any of said documents; (ii) the City is duly organized and v alidly existing as a
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municipal corporation under the laws of the State of California and the District is duly organized and validly existing as a community facilities district under the laws of the State of California, and the City has full legal right, po wer and authority to issue the Bonds and to perform all of its obligations under the Formation Documents and the District Documents; (iii) the City has obtained all approvals, consents, authorizations, elections and orders of or filings or registrations wi th any State governmental authority, board, agency or commission having jurisdiction which constitute a condition precedent to the levy of the Special Taxes, the issuance of the Bonds or the performance by the City of its obligations thereunder or under th e Fiscal Agent Agreement, except that no opinion need be expressed regarding compliance with blue sky or other securities laws or regulations, whatsoever; (iv) the City Council has duly and validly adopted the Formation Documents at meetings of the City Council which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the Formation Documents are now in full force and effect and have not been amended; and (v) the City has duly authorized, executed and delivered the District Documents and the Bonds and has duly authorized the preparation and delivery of the Official Statement;
(10) One or more certificates dated the Closing Date from NBS addressed to the City and the Underwriter to the effect that (i) the description of the Rate and Method in the Official Statement under the caption “SECURITY FOR THE 2024 BONDS —Rate and Method” is true and correct in all material respects and does not omit any material informa tion as of the date of the Official Statement and as of the Closing Date; (ii) the Special Tax, if collected in the maximum amounts permitted from the properties in the District whose Special Tax will not have been prepaid in full at or before the Closing Date, and without regard to the portion thereof levied to pay Administrative Expenses, will generate in each Fiscal Year at least 110% of the debt service payable with respect to the Bonds in the calendar year that begins in such Fiscal Year; ( iii) all inf ormation appearing in the Official Statement for which the Special Tax Consultant is identified as being the source is true and correct as of the date of the Official Statement and as of the Closing Date; and (i v) the statements concerning the Special Tax and the statistical and financial data set forth in the tables and discussion in the Official Statement which were derived from information supplied by the Special Tax Consultant for use in the Official Statement are true, correct and complete in all mater ial respects and do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and no events or occurrences have been ascertained by the Special Tax Consultant or have come to its attention that would substantially change such information set forth in the Official Statement;
(11) A certificate of the City dated the Closing Date, in a form ac ceptable to Bond Counsel, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended;
(12) A certificate of the Fiscal Agent and an opinion of counsel to the Fiscal Agent dated the Closing Date and addressed to the City and the Underwriter to the effect that the Fiscal Agent has authorized the execution and delivery of the Fiscal Agent Agreement and that the Fiscal Agent Agreement is a valid and binding obligation of the Fiscal Agent , enforceable in accordance with its terms;
(13) A certificate of the Escrow Agent and an opinion of counsel to the Escrow Agent dated the Closing Date and addressed to the City and the Underwriter to the effect that the Escrow Agent has authorized the execution and delivery of the Escrow Agreement and t hat the
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Escrow Agreement is a valid and binding obligation of the Escrow Agent, enforceable in accordance with its terms;
(14) A report, dated the Closing Date , prepared by a firm of independent certified public accountants (the “Verification Agent”), to the e ffect that it has verified the accuracy of the mathematical computations of the adequacy of the money and investment earnings thereon (if any) to be held by the Escrow Agent to make full and timely payment of all principal (including premium, if any) and interest due with respect to the Refunded Bonds to be defeased with the funds held pursuant to the Escrow Agreement, as are then outstanding on the dates specified in the Official Statement at the then applicable redemption price;
(15) A certified copy of the ge neral resolution of the Fiscal Agent and Escrow Agent authorizing the execution and delivery of certain documents by certain officers of the Fiscal Agent and Escrow Agent, which resolution authorizes the execution and delivery of the Fiscal Agent Agreement;
(16) Evidence satisfactory to the Underwriter that [an underlying/uninsured rating has been assigned to the Bonds and an insured rating has been assigned to the Insured Bonds] as described in the Official Statement and that such ratings have not been revoked or revised; (17) The Insurance Policy issued by the Insurer, insuring the payment of principal and interest on the Bonds in accordance with the terms thereof as described in the Official Statement, together with an opinion of counsel to the Insurer, dated the C losing Date, in form and substance satisfactory to the Authority and the Underwriter;
(18) A certificate, dated as of the Closing Date, of the Insurer, to the effect that the information included in the Official Statement under the heading “BOND INSURANCE” and in Appendix G thereto is accurate;
(19) A municipal bond debt service reserve insurance policy (the “Reserve Policy”) issued by the Insurer guaranteeing certain payments from the Reserve Fund as provided in such Reserve Policy and in the Fiscal Agent Agreement;
(20) Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the statements and information contained in th e Preliminary Official Statement and the Official Statement, of the City’s representations and warranties contained herein and the due performance or satisfaction by the City at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by the City and the District in connection with the transactions contemplated hereby and by the Official Statement; (21) Written confirmation from Solve or another firm acceptable to the Underwriter in a form acceptable to the Underwri ter that , except as disclosed in the Official Statement, the City has timely filed materially complete continuing disclosure reports with respect to City’s non-community facilities district continuing disclosure requirements relating to Rule 15c2-12 in each of the last five fiscal years; and
(22) G-17 letter from the Underwriter acknowledged by the City.
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If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay fo r the Bonds shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and neither the Underwriter nor the City shall be under any further obligation hereunder, except that the respective obligations of the City and the Underwriter set forth in Section 6, Section 7 and Section 9 hereof shall continue in full force and effect.
5. Conditions of the City’s Obligations. The City’s obligations hereunder are subject to the Underwriter’s performance of its obliga tions hereunder, and are also subject to the following conditions:
(a) As of the Closing Date, no litigation shall be pending or, to the knowledge of the duly authorized officer of the City executing the certificate referred to in Section 4(d)(8) hereof, threatened, to restrain or enjoin the issuance or sale of the Bonds or in any way affecting any authority for or the validity of the Bonds, the Formation Documents, the District Documents or the existence or powers of the City; and
(b) As of the Closing Date, the City shall receive the approving opinion of Bond Counsel referred to in Section 4(d)(3) hereof, dated as of the Closing Date.
6. Expenses. Whether or not the Bonds are delivered to the Underwriter as set forth herein:
(a) The City will pay or cause to be paid the approved expenses incident to the performance of its obligations hereunder and certain expenses relating to the sale of the Bonds, including, but not limited to, (a) the cost of the preparation and printing or other reproduction of the District Documents (other than this Purchase Agreement); (b) the fees and disbursements of Bond Counsel, Disclosure Counsel, the Fiscal Agent, the Escrow Agent and any other experts or other consultants retained by the City; (c) the costs and fees of the credit rating agenci es; (d) the cost of preparing and delivering the definitive Bonds; (e) the cost of providing immediately available funds on the Closing Date; (f) the cost of the printing or other reproduction of the Preliminary Official Statement and Official Statement an d any amendment or supplement thereto, including a reasonable number of certified or conformed copies thereof; (g) the Underwriter ’s out -of-pocket expenses incurred with the financing; (h) the fees of Municipal Disclosure Advisors for a continuing disclosure undertaking compliance review; and (i) expenses (included in the expense component of the spread) incurred on behalf of the City’s employees which are incidental to implementing this Purchase Agreement. The Underwriter will pay the expenses of the prep aration of this Purchase Agreement and all other expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds, and the fee and disbursements of Underwriter ’s Counsel. The Underwriter is required to pay the fees of the California Debt and Investment Advisory Commission in connection with the offering of the Bonds. The City acknowledges that it has had an opportunity, in consultation with such advisors as it may deem appropriate, if any, to evaluate and consider such fees.
Notwithstanding that such fees are solely the legal obligation of the Underwriter the City agrees to reimburse the Underwriter for such fees.
(b) The Underwriter shall pay, and the City shall be under no obligation to pay, all expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds.
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7. Notices. Any notice or other communication to be given to the City under this Purchase Agreement may be given by delivering the same in writing to the City at 9700 Seventh Avenue, Hesperia, California 92345, Attention: City Manager ; and any notice or ot her communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Stifel, Nicolaus & Company, Incorpora ted, 2121 Avenue of the Stars, Suite 2150, Los Angeles, CA 90067, Attention: Sara Oberlies Brown, Managing Director.
8. Parties in Interest . This Purchase Agreement is made solely for the benefit of the City and the Underwriter (including their successors or assigns), and no other person shall acquire or have any right hereunder or by virtue hereof.
9. Survival of Representations and Warranties . The representations and warranties of the City set forth in or made pursuant to this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or termination of this Purchase Agreement and regardless of any investigations made by or o n behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the City and regardless of delivery of and payment for the Bonds.
10. Effective. This Purchase Agreement shall become effect ive and binding upon the respective parties hereto upon the execution of the acceptance hereof by the City and shall be valid and enforceable as of the time of such acceptance.
11. No Prior Agreements . This Purchase Agreement supersedes and replaces all pri or negotiations, agreements, and understandings between the parties hereto in relation to the sale of Bonds for the City.
12. Governing Law. This Purchase Agreement shall be governed by the laws of the State of California.
[Remainder of page intentionally blank]
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13. Counterparts. This Purchase Agreement may be executed simultaneously in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument.
Very truly yours,
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:
Title: Authorized Officer
Accepted as of the date first stated above:
CITY OF HESPERIA
By:
Casey Brooksher,
Assistant City Manager
Time of Execution: _____ a.m./p.m. Pacific Time
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EXHIBIT A
MATURITY SCHEDULE
$__________
CITY OF HESPERIA
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(BELGATE DEVELOPMENT RESTRUCTURING)
COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA
SPECIAL TAX REFUNDING BONDS, SERIES 2024
Maturity Date
(September 1) Principal Amount Interest Rate Yield Price 10% Test
Used
Hold the
Offering Price
Used
2025 $ % %
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
The purchase price of the Bonds shall be $ ______, which is the principal amount thereof ($______) plus a net original issue premium of $______ and less Underwriter’s discount of $______.
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REDEMPTION
No Optional Redemption . The Bonds are not subject to opti onal redemption prior to their maturity dates.
Redemption From Special Tax Prepayments. Special Tax Prepayments and any corresponding transfers from the Reserve Fund pursuant to the Fiscal Agent Agreement shall be used to redeem Bonds on the next Interest Payment Date for which notice of redemption can timely be given under the Fiscal Agent Agreement, among maturities so as to maintain substantially the same debt service profile for the Bonds as in effect prior to such redemption and by lot within a maturi ty, at a redemption price (expressed as a percentage of the principal amount of the Bonds to be redeemed), as set forth below, together with accrued interest to the date fixed for redemption:
Redemption Dates Redemption Prices
Any Interest Payment Date before March 1, 20__ _%
On September 1, 20__ and March 1, 20__ _
On September 1, 20__ and March 1, 20__ _
On September 1, 20__ and thereafter _
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EXHIBIT B
$__________*
CITY OF HESPERIA
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(BELGATE DEVELOPMENT RESTRUCTURING)
COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA
SPECIAL TAX REFUNDING BONDS, SERIES 2024
RULE 15c2-12 CERTIFICATE
The undersigned hereby certifies and represents that he is the Assistant City Manager of the City of Hesperia (the “City”), and, as such, is duly authorized to execute and deliver this certificate and further hereby certifies that:
(1) this certificate is being delivered in connection with the sale and issuance of the City of Hesperia Community Facilities District No. 2005 -1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 20 24 (the “Bond s”) in order to enable the underwriter of the Bonds to comply with Rule 15c2-12 promulgated under the Securities and Exchange Act of 1934, as amended (the “Rule”);
(2) in connection with the sale and issuance of the Bonds, there has been prepared a Preliminary Official Statement dated ________, 2024 setting forth information concerning the Bonds and the City (the “Preliminary Official Statement”); and
(3) except for the Permitted Omissions, the Preliminary Official Statement is deemed final within the meani ng of the Rule. As used herein, the term “Permitted Omissions” refers to the offering price(s), interest rates(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bonds depend ing on such matters, all as set forth in the Rule.
IN WITNESS WHEREOF, I have hereunto set my hand as of _______, 2024.
CITY OF HESPERIA
By:
Its: Assistant City Manager
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EXHIBIT C
$__________
CITY OF HESPERIA
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(BELGATE DEVELOPMENT RESTRUCTURING)
COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA
SPECIAL TAX REFUNDING BONDS, SERIES 2024
FORM OF ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated (“Stifel”), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (the “Bonds”).
1. Sale of the General Rule Maturities . As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.
2. Initial Offering Price of the Hold-the-Offering-Price Maturities. (a) Stifel offered the Hold -the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B.
(b) As set forth in the Bond Purchase Agreement, dated _________ , 2024, by and between Stifel and the Issuer, Stifel has agreed in writing that, (i) for each Maturity of the Hold - the-Offering-Price Maturities, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Of fering Price for such Maturity during the Holding Period for such Maturity (the “hold -the-offering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker -dealer who is a party to the retail distribution agreement, to comply with the hold -the-offering-price rule. Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Matu rity of the Hold -the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.
3. Reserve Fund.
The establishment of the Reserve Fund for the Bonds in the amount of the Reserve Requirement (as such term is defined in the Fiscal Agent Agreement, dated as of December 1, 2024, by and between the Issuer and U.S Bank Trust Company, National Association, as Fiscal Agent (the Fiscal Agent”) pursuant to which the Bonds are being issued) was vital to the marketing of the Bonds and reasonably required to assure payment of debt service on the Bonds.
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4. Insurance Policy and Reserve Policy.
(a) The present value of the amount paid to obtain the Insurance Policy and Reserve Policy is less than the present value of the interest reasonably expected to be saved as a result of having the Insurance Policy and Reserve Policy, using the yield with respect to the Bonds as the discount factor for this purpose.
(b) To the best knowledge of the undersigned, the amount paid by the Issuer to the Insurer for the Insurance Policy and the Reserve Policy is within a reasonable range of premiums charged for comparable credit enhancement for obligations comparable to the Bonds.
5. Defined Terms.
(a) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(b) Hold-the-Offering-Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.” (c) Holding Period means, with respect to a Hold -the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date (_______, 2024), or (ii) the date on which Stifel has sold at least 10% of such Hold-the-Offering-Price Maturity to the Public at prices that are no higher than the Initial Offering Price for such Hold-the-Offering-Price Maturity.
(d) Issuer means the Temecula Public Financing Authority. (e) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.
(f) Public means any person (i ncluding an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.
The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (g) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is _______, 2024. (h) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a w ritten contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Stifel’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder.
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The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate relating to the City of Hesperia Community Facilities District No. 2005 -1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bond s, Series 2024 (the “Bonds”) and with respect to compliance wit h the federal income tax rules affecting the Bonds, and by Jones Hall, A Professional Law Corporation, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038 -G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.
Stifel, Nicolaus & Company, Incorporated
By:
Name:
By:
Name:
Dated: ________, 2024
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SCHEDULE A
SALE PRICES OF THE GENERAL RULE MATURITIES AND INITIAL OFFERING
PRICES OF THE HOLD-THE-OFFERING-PRICE MATURITIES
(Attached)
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SCHEDULE B
PRICING WIRE OR EQUIVALENT COMMUNICATION
(Attached)