Payments of interest with respect to, and proceeds of the sale, redemption or maturity of, tax exempt obligations, including the Series 2023 Bonds, are in certain cases required to be reported to the IRS.
Additionally, backup withholding may apply to any such payments to any Series 2023 Bond Owner who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any Series 2023 Bond Owner who is notified by the IRS of a failure to report any interest or dividends required to be shown on federal income tax returns. The reporting and ba ckup withholding requirements do not affect the excludability of such interest from gross income for federal tax purposes.
In the further opinion of Bond Counsel, interest with respect to the Series 2023 Bonds is exempt from California personal income taxes.
Ownership of the Series 2023 Bonds may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the Series 2023 Bonds. Prospective purch asers of the Series 2023 Bonds should consult their tax advisors regarding the applicability of any such state and local taxes.
The complete text of the final opinion that Bond Counsel expects to deliver upon the delivery of the Series 2023 Bonds is set forth in APPENDIX D—“PROPOSED FORM OF BOND COUNSEL OPINION.”
CERTAIN LEGAL MATTERS
Legal matters incident to the authorization, issuance, sale and delivery by the Authority of the Series 2023 Bonds are subject to the approval as to their validity of Quint & Thimmig LLP, Larkspur, California, Bond Counsel. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed upon for the City by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, acting as Disclosure Counsel, and for the Authority and the City by the City Attorney. Certain matters will be passed on for the Underwriters by Nixon Peabody LLP, Los Angeles, California . Compensation of Bond Counsel and Disclosure Counsel is contingent upon the issuance and delivery of the Series 2023 Bonds.
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FINANCIAL STATEMENTS
The City’s financial statements for the Fiscal Year ended September 30, 2022, included in APPENDIX B—“ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2022,” have been audited by KPMG, LLC, as stated in their reports appearing in such appendix. KPMG, LLC has not undertaken to update its reports or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in this Official Statement, and no opinion is expressed by KPMG, LLC with respect to any event subsequent to its report.
LITIGATION
To the best knowle dge of the Authority and the City, there is no pending or threatened litigation concerning the validity of the Series 2023 Bonds or the pledge of the Revenues or challenging any action taken by the Authority or the City in connection with the authorization of the Series 2023 Indenture or the Series 2023 Lease Agreement, or any other document relating to the Series 2023 Bonds, to which the Authority or the City is or will become a party, or the performance by the Authority or the City of any of their obligations under any of the foregoing.
RATINGS
Fitch Ratings (“Fitch”) and S&P Global Ratings, a Standard & Poor’s Financial Services LLC business (“S&P”), have assigned their municipal bond ratings of “[__]” and “[__],” respectively, to the Series 2023 Bonds. Such ratings reflect only the views of Fitch and S&P and an explanation of the significance of such ratings may be obtained from Fitch and from S&P. Future events could have an adverse impact on the ratings of the Series 2023 Bonds, and there is no assurance that such ratings will continue for any given period of time or that they will not be qualified, revised downward or withdrawn entirely by Fitch or S&P if, in the judgment of Fitch or S&P, circumstances so warrant. Any such qualification, downgrade or withdrawal of a rating may have an adverse effect on the market price of the Series 2023 Bonds. The ratings reflect only the views of S&P (which views and criteria could change at any time), and an explanation of the significance of such ratings may be obtained from S&P. Generally, a rating agency bases its ratings on the information and materials furnished to it (which may include information and material from the City that is not included in this Official Statement) and on investigations, studies and assumptions of its own.
The City has covenanted in a Continuing Disclosure Certificate to file notices of any rating changes on the Series 2023 Bonds with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system. See the captio n “CONTINUING DISCLOSURE.” Notwithstanding such covenant, information relating to rating changes on the Series 2023 Bonds may be publicly available from the rating agencies prior to the time that such information is provided to the City and prior to the date by which the City is obligated to file a notice of rating change. Purchasers of the Series 2023 Bonds are directed to the rating agencies and their respective websites and official media outlets for the most current ratings with respect to the Series 2023 Bonds after the initial issuance of the Series 2023 Bonds.
UNDERWRITING
The Series 2023 Bonds are being purchased by the underwriters listed on the cover page of this Official Statement (the “ Underwriters”) at a price of $_____, which amount represent s the principal amount of the Series 2023 Bonds of $_______, less $_____ representing the Underwriters’ discount, plus $______ representing net original issue premium. The Underwriters intend to offer the Series 2023 Bonds to the public at the offering prices set forth on the inside front cover page of this Official Statement. The Underwriters may offer and sell to certain dealers and others at a price lower than the offering prices stated on the inside front cover page hereof.
The offering price may be changed from time to time by the Underwriters.
The Underwriters have provided the following for inclusion in the Official Statement:
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The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, whi ch may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Under certain circumstances, the Underwriters and their affiliates may have certain creditor and/or other rights against the City and its affiliates in connection with such activities. In the various course of their various business activities, the Underwriters and th eir respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the City (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the City. The Underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.
MUNICIPAL ADVISOR
The City has retained KNN Public Finance, LLC, Los Angel es, California, as municipal advisor (the “Municipal Advisor”) in connection with the delivery of the Series 2023 Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. Compensation of the Municipal Advisor is contingent upon the issuance and delivery of the Series 2023 Bonds. The Municipal Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.
CONTINUING DISCLOSURE
Pursuant to the Rule, the City has entered into the Continuing Disclosure Certificate for the Series 2023 Bonds pursuant to which it has agreed, for the benefit of owners of the Series 2023 Bonds, to provide certain financial information and operating data, by not later than each June 30 after the end of each of its Fiscal Years commencing with the report for Fiscal Year 2022-23 (the “Annual Information”), and to provide notices of the occurrence of certain enumerated events. The Annual Information and notices of enumerated events will be filed by the City with EMMA. The nature of the information to be provided in the Annual Information and the notices of enumerated events is set forth in APPENDIX E—“FORM OF CONTINUING DISCLOSURE CERTIFICATE.”
In 2020, the City filed notice of a material “financial obligation” 18 business days after the incurrence of the obligation. Except as disclosed in the previous sentence, during the past five years, the City has not failed to comply in all material respects with previous continuing disclosure undertakings pursuant to Rule 15c2-12.
In order to assure compliance with its continuing disclosure obligations in the future, the City has retained Digital Assurance Certification, L.L.C., to assist in the preparation and filing of the Undertaking and other continuing disclosure undertakings of the City.
ADDITIONAL INFORMATION
Summaries and explanations of the Series 2023 Bonds and documents contained in this Official Statement do not purport to be complete, and reference is made to such documents for full and complete statements of their provisions.
The preparation and distribution of this Official Statement have been authorized by the Authority and the City.
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FINANCE AUTHORITY OF LONG BEACH
By:
Executive Director
CITY OF LONG BEACH
By
Director of Financial Management
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APPENDIX A
GENERAL, ECONOMIC, AND DEMOGRAPHIC INFORMATION
RELATING TO THE CITY OF LONG BEACH
The following information is presented as general background data. The Series 2023 Bonds are payable solely from moneys of the City as described in the Official Statement. The taxing power of the City, the County, the State of California or any political subdivision thereof is not pledged to the payment of the Series 2023 Bonds.
The City also notes that the below information is the latest available but does not in every ins tance reflect the impact of the COVID-19 pandemic. See the Official Statement under the caption “CITY FINANCIAL INFORMATION—COVID-19.” Accordingly, the historical information below does not necessarily reflect present economic conditions and future infor mation could be significantly different from the historical information below.
Municipal Government
The City was originally incorporated in 1888, and, after a short period of disincorporation, was reincorporated on December 13, 1897. Since 1907, the City has been governed as a charter city. The present City charter was originally adopted in 1921 and has been amended from time to time, most recently in 2022.
The City operates under the council -manager form of government with a nine -member City Council (the “City Council”). The nine City Council members are nominated and elected by district to serve four-year terms, with a maximum of three such terms within a lifetime. The Mayor is nominated and elected by the City at large. The Vice Mayor is elected by t he City Council from among its members. Other city -wide elected offices are City Attorney, City Auditor and City Prosecutor.
The City Manager is appointed by and serves at the discretion of the City Council. As head of the municipal government, the City Manager is responsible for the efficient administration of all departments, with the exception of the elective offices noted above and the following three semi-autonomous commissions: Civil Service Commission, Board of Utilities Commissioners and Board of Harbor Commissioners.
In 1931, a Charter amendment was passed which created the Board of Water Commissioners and authorized the City to join the Metropolitan Water District of Southern California. These decisions sought to ensure an adequate water supply for the City. In 2023 the name of the Board was changed to the Board of Utilities Commissioners, because it now also administers the operations of the City’s natural gas utility.
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Population
The following table contains the population of the City, t he County and the State of California for the last five years.
TABLE A1
CITY OF LONG BEACH, COUNTY OF LOS ANGELES
AND STATE OF CALIFORNIA
Population Data
Year
City of
Long Beach
County of
Los Angeles
State of
California
2018 474,257 10,192,593 39,519,535
2019 472,870 10,163,139 39,605,361
2020 472,052 10,135,614 39,648,938
2021 459,757 9,931,338 39,303,157
2022 460,682 9,861,224 39,185,605
Source: California Department of Finance E-4 Population Estimates for Cities, Counties and State, 2018-2022, with 2020 Census Benchmark.
Personal Income
The following table sets forth certain yearly median household income for the City, the County, the State of California, the United States:
TABLE A2
CITY OF LONG BEACH, COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA AND UNITED STATES
Median Household Income
Year Long Beach
Los Angeles
County California United States
2010 $ 51,173 $ 55,476 $ 60,883 $ 51,914
2011 52,945 56,266 61,632 52,762
2012 52,900 56,241 61,400 53,046
2013 52,711 55,909 61,094 53,046
2014 52,944 55,870 61,489 53,482
2015 52,783 56,196 61,818 53,889
2016 55,151 57,952 63,783 55,322
2017 58,314 61,015 67,169 57,652
2018 60,551 64,251 71,228 60,293
2019 63,017 68,044 75,235 62,843
2020 66,410 71,358 78,672 64,994
2021 71,150 76,367 84,097 69,021
Source: U.S. Census Bureau, American Community Survey (ACS) Employment by Industry
The California Employment Development Department compiles data annually on the status of employment and unemployment in the Co unty. As an integral part of the Los Angeles metropolitan area, the
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City benefits from the wide variety of job opportunities available in neighboring communities throughout the County.
The following table sets forth the average employment for major industry types within the County for the last five years.
TABLE A3
COUNTY OF LOS ANGELES
(Los Angeles Long Beach Glendale MD)
Labor Force and Industry Employment
Annual Averages by Industry(1)
2017 2018 2019 2020 2021
January
2023
Total, All Industries 4,455,000 4,520,700 4,566,100 4,171,700 4,300,000 4,577,200
Total Farm 5,700 4,600 4,400 4,400 4,600 4,800
Mining and Logging 2,000 1,900 1,900 1,700 1,600 1,600
Construction 138,700 146,300 149,800 146,500 149,800 142,400 Manufacturing 350,400 342,600 340,700 315,100 311,700 320,000 Wholesale Trade 221,500 223,200 220,500 200,000 202,000 202,800 Retail Trade 425,900 424,600 417,700 380,200 401,400 411,900 Transportation, Warehousing
& Utilities
198,200 203,600 212,900 207,800 214,200 229,800
Information 214,000 214,700 215,300 191,000 213,200 222,500 Financial Activities 221,600 223,200 223,600 212,600 210,800 213,900 Professional & Business
Services
613,200 632,300 647,000 599,800 629,500 680,300
Educational & Health
Services
797,400 817,900 839,900 820,300 839,600 900,000
Leisure & Hospitality 524,600 536,500 547,200 393,500 429,300 520,500 Other Services 155,700 158,800 158,400 128,700 134,100 154,200 Government 586,100 590,600 586,900 570,200 558,200 572,500
(1) Data not seasonally adjusted.
Note: Data may not add due to rounding.
Source: California Employment Development Department, Labor Market Information Division, Employment By Industry Data, March 2021 Benchmark. Monthly preliminary data for January 2023.
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The following table summarizes the civilian labor force, employment and unemployment average statistics for the City, the County, the State and the United States for the past five years.
TABLE A4
CITY OF LONG BEACH, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA
AND UNITED STATES
Civilian Labor Force, Employment and Unemployment
(Annual Averages)(1)
Year Area Labor Force Employment Unemployment
Unemployment
Rate
2017 City of Long Beach 238,900 227,200 11,700 4.9%
Los Angeles County 5,109,800 4,864,100 245,700 4.8
California 19,312,000 18,393,100 918,900 4.8
United States 160,313,000 153,337,000 6,982,000 4.3
2018 City of Long Beach 239,700 228,500 11,300 4.7%
Los Angeles County 5,121,300 4,885,300 236,000 4.6
California 19,263,900 18,442,400 821,500 4.3
United States 162,075,000 155,761,000 6,314,000 3.9
2019 City of Long Beach 240,500 229,500 10,900 4.5%
Los Angeles County 5,153,100 4,926,100 227,000 4.4
California 19,353,700 18,550,500 803,200 4.2
United States 163,539,000 157,538,000 6,001,000 3.7
2020 City of Long Beach 231,200 201,400 29,800 12.9%
Los Angeles County 4,968,900 4,355,900 613,000 12.3
California 18,821,200 16,913,100 1,908,100 10.1
United States 160,742,000 147,795,000 12,947,000 8.1
2021 City of Long Beach 232,500 210,300 22,200 9.6%
Los Angeles County 4,994,100 4,548,900 445,200 8.9
California 18,923,200 17,541,900 1,381,200 7.3
United States 161,204,000 152,581,000 8,623,000 5.3
January
2023 City of Long Beach 230,600 219,100 11,500 5.0%
Los Angeles County 4,985,200 4,739,300 246,000 4.9
California 19,278,100 18,383,800 894,400 4.6
United States 165,832,000 160,138,000 5,694,000 3.4
(1) Data not seasonally adjusted.
Sources: California Employment Development Department, and US Bureau of Labor Statistics, Annual Averages 2017 -2021; monthly data for January 2023.
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Major Employers
The following table sets forth the City’s major employers:
TABLE A5
CITY OF LONG BEACH
Major Employers
As of September 30, 2022
Employer
Number of
Employees
Percent of City
Employment
1. Long Beach Unified School District 12,049 5.10%
2. City of Long Beach 5,395 2.28
3. Long Beach Memorial Medical Center 4,950 2.09
4. Veteran Affairs Medical Center 3,524 1.49
5. California State University, Long Beach (“CSULB”) 3,336 1.41
6. Long Beach City College 3,321 1.41
7. The Boeing Company 2,019 0.85
8. St. Mary Medical Center 1,547 0.65
9. CSULB Research Foundation 1,261 0.53
10. Molina Healthcare Inc. 1,119 0.47
Source: City of Long Beach, California Annual Comprehensive Financial Report for Fiscal Year 2021-22.
Taxable Sales
Taxable sales transactions in the City for the five most recent available calendar years are shown below.
TABLE A6
CITY OF LONG BEACH
Taxable Sales
(in Thousands)
2017 2018 2019 2020 2021 Through
September
30, 2022
Motor Vehicle and Parts Dealers $ 367,657 $ 379,933 $ 374,284 $ 378,845 $ 444,868 $ 306,679 Home Furnishings and Appliance Stores 124,114 127,343 105,498 92,312 123,837 87,461 Building Material and Garden
Equipment and Supplies Dealers 911,203 939,561 1,063,820 1,091,643 1,105,439 888,274 Food and Beverage Stores 320,234 334,299 342,654 383,144 383,737 283,064 Gasoline Stations 522,899 573,905 581,142 363,728 567,185 547,565 Clothing and Clothing Accessories
Stores 219,885 239,967 242,790 178,129 261,233 181,815
General Merchandise Stores 285,164 301,576 317,198 293,064 330,653 261,799 Food Services and Drinking Places 944,078 961,500 1,007,334 749,129 1,013,973 867,032 Other Retail Group 317,574 329,468 356,091 378,365 436,390 335,896 Total Retail and Food Services 4,012,808 4,187,553 4,390,811 3,908,359 4,667,314 3,759,584 All Other Outlets 1,291,635 1,564,027 1,528,068 1,212,549 1,445,565 1,457,266 Total All Outlets $5,304,442 $5,751,580 $5,918,879 $5,120,908 $6,112,878 $5,216,851
Source: California Department of Tax and Fee Administration
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Construction
The following table reflects the five-year history of building permit valuation for the City:
TABLE A7
CITY OF LONG BEACH
Building Permits and Valuation
(in Thousands)
2017 2018 2019 2020 2021
Permit Valuation:
New Single-family $ 22,388 $ 25,351 $ 16,939 $ 15,052 $ 22,001 New Multi-family 197,106 14,759 208,955 72,904 172,115
Res. Alterations/Additions 97,943 106,881 112,610 93,819 93,926 Total Residential 317,438 146,991 321,565 181,775 288,042 Total Nonresidential 376,729 226,838 347,707 188,625 128,927 Total All Building $ 694,167 $ 373,828 $ 669,272 $ 370,399 $ 416,969
New Dwelling Units:
Single Family 104 128 100 223 304
Multiple Family 1,116 73 1,061 541 604
Total 1,220 201 1,161 764 908
Note: Totals may not add due to independent rounding.
Source: Construction Industry Research Board – Annual Building Permit Summary 2017-2021.
Long Beach Convention and Entertainment Center
The City has fostered convention business by expanding convention facilities and encouraging private sector participation. Trade shows, conventions, athletic contests and other events are held regularly at the Long Beach Convention and Entertainment Center (the “Convention Center”), which is part of the Pike at Rainbow Harbor oceanfront development. The Convention Center was clos ed for customary events at the onset of the COVID-19 pandemic, and reopened in August 2021. During the period it was closed to meetings and events, the Convention Center served as a personal protective equipment distribution center, a mass vaccination sit e, and as a temporary shelter for unaccompanied migrant children. The following table shows certain information relating to the Convention Center.
TABLE A8
CITY OF LONG BEACH
Convention and Delegate Attendance
Calendar
Year
Number of
Conventions
Number of
Delegates
2017 293 1,360,923
2018 297 1,410,056
2019 294 1,264,330
2020 53 152,179
2021 54 279,160
Source: Long Beach Convention Center.
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APPENDIX B
ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2022
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APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS The following is a summary of certain definitions and provisions of the S eries 2023 Lease Agreement and the Series 2023 Indenture which are not described elsewhere in the Official Statement. This summary does not purport to be comprehensive and reference should be made to the Series 2023 Lease Agreement and the Series 2023 Indenture for a full and complete statement of their provisions. [TO COME FROM BOND COUNSEL]
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APPENDIX D
PROPOSED FORM OF BOND COUNSEL OPINION
Upon the issuance of the Series 2023 Bonds, Quint & Thimmig LLP, Bond Counsel, proposes to render its final approving opinion in substantially the following form:
May __, 2023
Finance Authority of Long Beach
411 West Ocean Boulevard
Long Beach, California 90802
OPINION: $_________ Finance Authority of Long Beach Lease Revenue Bonds, Series 2023 Members of the Authority:
We have acted as bond counsel to the Finance Authority of Long Beach (the “Authority”) in connection with the delivery by the Authority of $_________ aggregate principal amount of the bonds of the Authority designated the “Finance Authority of Long Beach Lease Revenue Bonds, Series 2023” (the “Bonds”), pursuant to the provisions of Article 4 (commencing with section 6584) of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “Law”), and pursuant to an indenture of trust, dated as of May 1, 2023 (the “Indenture”), by and between the Authority and U.S. Bank Trust Company, National Association, as trustee, and a resolution of the Authority adopted on March 30, 2023. The Bonds are secured by a pledge of Revenues (as defined in the Indenture), primarily consisting of lease payments made by the City of Long Beach, California (the “City”) under a lease agreement, dated as of May 1, 2023 (the “Lease Agreement”), by and between the Authority and the City.
In connection with this opinion, we have examined the Law and su ch certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the Authority and the City contained in the Indenture and Lease Agreement and in the certified proceedings for the Bonds, and upon other certifications furnished to us, without undertaking to verify the same by independent investigation.
Based upon our examination we are of the opinion, under existing law, that:
1. The Authority is a duly constituted joint exercise of powers entity under the laws of the State of California with power to enter into the Indenture, to perform the agreements on its part contained therein and to issue the Bonds.
2. The Bonds constitute legal, valid and binding limited obligations of the Authority enforceable in accordance with their terms and payable solely from the sources provided therefor in the Indenture.
3. The Indenture has been duly approved by the Authority and constitutes a legal, valid and bin ding obligation of the Authority enforceable against the Authority in accordance with its terms.
4. The Lease Agreement has been duly approved by the City and the Authority and constitutes a legal, valid and binding obligation of the City and the Authority enforceable against the City and the Authority in accordance with its terms.
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5. The Indenture establishes a valid first and exclusive lien on and pledge of the Revenues (as such term is defined in the Indenture) and other funds pledged thereby for the se curity of the Bonds, in accordance with the terms of the Indenture.
6. Subject to the Authority’s and the City’s compliance with certain covenants, interest on the Bonds is excludable from gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the alternative minimum tax for individuals under the Internal Revenue Code of 1986, as amended. For tax years beginning after December 31, 2022, interest on the Bonds may affect the corporate alternative minimum tax for certain corporations. Failure to comply with certain of such covenants could cause interest on the Bonds to be includable in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds.
7. Interest on the Bonds is exempt from personal income taxation imposed by the State of California.
Ownership of the Bonds may result in other tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds.
The rights of the owners of the Bonds and the enforceability of the Bonds, the Indenture and the Lease Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and also may be subject to the exercise of judicial discretion in accordance with general principles of equity.
Our opinion represents our legal judgment based upon such review of the law and the facts that we deem relevant to render our opinion and is not a guarantee of a result. This opinion is given as of the date hereof and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.
Respectfully submitted,
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
Upon issuance of the Series 2023 Bonds, the City proposes to enter into a Continuing Disclosure Certificate in substantially the following form:
This CON TINUING DISCLOSURE CERTIFICATE (the “ Disclosure Certificate ”) is executed and delivered by the CITY OF LONG BEACH, CALIFORNIA (the “City”) in connection with the issuance by the Finance Authority of Long Beach (the “ Authority”) of its $_____ Lease Revenue Bonds, Series 2023 (the “ Bonds”). The Bonds are being issued pursuant to an Indenture of Trust, dated as of May 1, 2023 (the “Indenture”), by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “ Trustee”). Pursuan t to Section 5.11 of that certain Lease Agreement, dated as of May 1, 2023, by and between the Authority and the City, the City covenants and agrees as follows:
Section 1. Definitions. In addition to the definitions set forth above and in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 1, the following capitalized terms shall have the following meanings:
“Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Annual Report Date” means the date that is nine months after the end of the City’s Fiscal Year (currently June 30 based on the City’s Fiscal Year end of September 30). “Dissemination Agent” shall mean, initially, the City, or any successor Dissemination Agent designated in writing by the City and which has been filed with the then -current Dissemination Agent a written acceptance of such designation.
“Financial Obligation ” means a: (a) d ebt obligation; (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) guarantee of (a) or (c). The term “Financial Obligation” does not include municipa l securities as to which a final official statement has been provided to the MSRB consistent with the Rule. “Fiscal Year” means any twelve-month period beginning on October 1 in any year and extending to the next succeeding September 30, both dates inclusive, or any other twelve-month period selected and designated by the City as its official fiscal year period under a certificate of the City filed with the Trustee. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Sec urities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.
“Official Statement” means the final official statement dated April __, 2023 executed by the Authority and the City in connection with the issuance of the Bonds.
“Participating Underwriter” means collectively, RBC Capital Markets, LLC and Cabrera Capital Markets, LLC, the original underwriters of the Bonds.
“Rule” means Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as it may be amended from time to time. “Significant Events” means any of the events listed in Section 5(a) of this Disclosure Certificate.
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Section 2. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with Section (b)(5) of the Rule.
Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing June 30, 2024, with the report for Fiscal Year 2022 -23 provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not re ceived a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Significant Event under Section 5(c). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder.
(b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City in a timely manner shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A. (c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then -applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and (ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.
Section 4. Content of Annual Reports. The City’s Annual Report shall contain or incorporate by reference the following:
(a) Audited financial statements of the City for the preceding Fiscal Year, prepared in accordance with generally accepted accounting principles. If the City’s audited financial statements are not a vailable by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Unless otherwise provided in the audited financial statements filed on or prior to the annual filing deadline for Annual Reports provided for in Section 3 above, financial information and operating data with respect to the City for preceding Fiscal Year, of the type provided in Tables 1, 2, 3, 4, 5, 6, 7, 8, 10 and 13 in the Official Statement for the Bonds in the section therein entitled “CITY FINANCIAL INFORMATION.” (c) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on the MSRB’s Electronic Municipal Market Access website (“EMMA”). The City shall clearly identify each such other document so included by reference. If the document included by reference is a final official statement, it must be available on EMMA.
(d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on
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EMMA or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Significant Events with respect to the Bonds:
(i) Principal and interest payment delinquencies;
(ii) Non-payment related defaults, if material;
(iii) Unscheduled draws on debt service reserves reflecting financial difficulties; (iv) Unscheduled draws on credit enhancements reflecting financial difficulties; (v) Substitution of credit or liquidity providers, or their failure to perform; (vi) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security;
(vii) Modifications to rights of security holders, if material; (viii) Bond calls, if material, and tender offers;
(ix) Defeasances;
(x) Release, substitution, or sale of property securing repayment of the securities, if material; (xi) Rating changes;
(xii) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person; (xiii) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (xiv) Appointment of a successor or additional trustee or the chan ge of name of a trustee, if material;
(xv) The incurrence of a Financial Obligation of the City or other obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the City or other obligated person, any of which affect security holders, if material; or (xvi) A default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of t he City or other obligated person, any of which reflect financial difficulties.
(b) Whenever the City obtains knowledge of the occurrence of a Significant Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Significant Event. Notwithstanding the foregoing, notice of Significant Events described in subsection (a)(viii)
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above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Indenture.
(c) The City acknowledges that the events described in subparagraphs (a)(ii), (a)(vii), (a)(viii) (if the event is a bond call), (a)(x), (a)(xiii), (a)(xiv) and (a)(xv) of this Section 5 contain the qualifier “if material.” The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that the City determines the event’s occurrence is material for purposes of U.S. federal securities law. (d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(xii) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders o f a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the C ity.
Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.
Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the stated final maturity of the Bonds, the City shall give notice of such termination in the manner prescribed for a Significant Event in Section 5(b).
Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its ob ligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. Any Dissemination Agent may resign by providing 30 days’ written notice to the City.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the t ime of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver either: (i) is approved by holders of the Bonds in the manne r provided in the Indenture for amendments to the Indenture with the consent of holders; or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall exp lain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles
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and those prepared on t he basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative.
The Dissemination Agent shall not be obligated to enter into any amendment increasing or affecting its duties or obligations hereunder.
A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Significant Event under Section 5(b).
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Significant Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Significant Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Sign ificant Event.
Section 11. Default. If the City fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) Article VIII of the Indenture is hereby made applicable to this Disclosure Certificate as if this Disclosure Certificate were (solely for this purpose) contained in the Indenture. The Dissemination Agent shall be entitled to the protections and limitations from liability afforded to the Trustee thereunder. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the City hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the Bond holders or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. (b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and the Owners and Beneficial Owners from t ime to time of the Bonds and shall create no rights in any other person or entity.
Date: May __, 2023
CITY OF LONG BEACH, as Dissemination Agent
By
Authorized Officer
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EXHIBIT A
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Name of Obligor: City of Long Beach, California
Names of Issue: $__________ Finance Authority of Long Beach Lease Revenue Bonds, Series 2023 Date of Issuance: May __, 2023
NOTICE IS HEREBY GIVEN that the Obligor has not provided an Annual Report with respect to the above- named Issue as required by the Continuing Disclosure Certificate, dated May __, 2023, furnished by the Obligor in connection with the Issue. The Obligor anticipates that the Annual Report will be filed by __________.
Date: __________
CITY OF LONG BEACH, as Dissemination Agent
By
Name
Title
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APPENDIX F
BOOK-ENTRY ONLY SYSTEM
The following description of the procedures and record keeping with respect to beneficial ownership interests in the Series 2023 Bonds, payment of principal, redemption premium, if any, and interest with respect to the Series 2023 Bonds to The Depository Trust Company (“DTC”), New York, N Y, its Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Series 2023 Bonds and other related transactions by and between DTC, its Participants and the Beneficial Owners is based solely on the understanding of the Authority of such procedures and record keeping from information provided by DTC.
Accordingly, no representations can be made concerning these matters and neither DTC, its Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or its Participants, as the case may be. The City, the Authority, the Trustee and the Underwriters understand that the current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and that the current “Procedures” of DTC to be followed in dealing with Participants are on file with DTC.
DTC will act as securities depository for the Series 2023 Bonds. The Series 2023 Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered Bond certificate will be issued for each maturity of the Series 2023 Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.
DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTTC i s owned by users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodia l relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC is rated AA+ by Standard & Poor’s. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.
Purchases of the Series 2023 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2023 Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase.
Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2023 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial
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Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Series 2023 Bonds, except in the event that use of the book-entry system for the Series 2023 Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Series 2023 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in benef icial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2023 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, a nd by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Series 2023 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2023 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Indenture. For example, Beneficial Owners of the Series 2023 Bonds may wish to ascertain that the nominee holding the Series 2023 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC, if less than all of the Series 2023 Bonds within a maturity are being redeemed. DTC’s practice is to determine by lot the amount of t he interest of each Direct Participant in each issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2023 Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Series 2023 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Payments of principal of, premium, if any, and interest on the Series 2023 Bonds will be made to Cede & Co., or such other nominee as may be requested by an author ized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City, the Authority or the Trustee, on payable date in accordance with their respective holding s shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee, the City or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments of principal of, premium, if any, and interest on the Series 2023 Bonds by Cede & Co (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City, the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsib ility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Series 2023 Bonds at any time by giving re asonable notice to the City, the Authority or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered.
The Authority may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered.
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The foregoing information concerning DTC and DTC’s book-entry system has been provided by DTC, and neither the Authority nor the Trustee takes any responsibility for the accuracy thereof.
NEITHER THE AUTHORITY NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR
OBLIGATION TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS WITH
RESPECT TO THE PAYMENTS OR THE PROVIDING OF NOTICE TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS OR THE SELECTION OF BONDS FOR REDEMPTION.
Neither the Authority nor the Trustee can give any assurances that DTC, DTC Participants, Indirect Participants or others will distribute payments of principal of, premium, if any, and interest on the Series 2023 Bonds paid to DTC or its nominee, as the registered Owner, or any redemption or other notice, to the Beneficial Owners or that they will do so on a timely basis or that DTC will serve and act in a manner described in this Official Statement.
In the event that the book -entry system is discontinued as described above, the requirements of the Indenture will apply.
The City, the Authority and the Trustee cannot and do not give any assurances that DTC, the Participants or others will distribute payments of principal, interest or premium, if any, evidenced by the Series 2023 Bonds paid to DTC or its nominee as the registered owner, or will distribute any redemption notices or ot her notices, to the Beneficial Owners, or that they will do so on a timely basis or will serve and act in the manner described in this Official Statement. Neither the Authority nor the Trustee are responsible or liable for the failure of DTC or any Participant to make any payment or give any notice to a Beneficial Owner with respect to the Series 2023 Bonds or an error or delay relating thereto.
NP DRAFT 3/17/2023
BOND PURCHASE AGREEMENT
$[___________] Finance Authority of Long Beach Lease Revenue Bonds, Series 2023 [__________], 2023 Finance Authority of Long Beach 411 West Ocean Boulevard Long Beach, CA 90802 City of Long Beach, California 411 West Ocean Boulevard Long Beach, CA 90802 Ladies and Gentlemen: The undersigned, RBC Capital Markets, LLC, on behalf of itself and as representative (the “Representative”) of Cabrera Capital Markets, LLC (collectively, the “Underwriters”), hereby offers to enter into this bond purchase agreement (this “Bond Purchase Agreement”) with the Finance Authority of Long Beach (the “Authority”) and the City of Long Beach, California (the “City”). Upon the acceptance hereof by the Authority and the City, this offer will be binding upon the Authority, the City and the Underwriters. This offer is made subject to (a) the written acceptance hereof by the Authority and the City, and (b) withdrawal by the Underwriters upon written notice (given electronically or otherwise) delivered to the Authority and the City at any time prior to the acceptance hereof by each of the Authority and the City. The City and the Authority acknowledge and agree that: (a) the Underwriters are not acting as municipal advisors within the meaning of Section 15B of the Securities Exchange Act, as amended; (b) the primary role of the Underwriters, as underwriters, is to purchase securities, for resale to investors, in an arm’s length commercial transaction among the City, the Authority and the Underwriters and the Underwriters have financial and other interests that differ from those of the City and the Authority; (c) the Underwriters are acting solely as principals and is not acting as municipal advisors, financial advisors or fiduciary to the City or the Authority and have not assumed any advisory or fiduciary responsibility to the City and the Authority with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriters have provided other services or is currently providing other services to the City or the Authority on other matters); (d) the only obligations the Underwriters have to the City and the Authority with respect to the transaction contemplated hereby expressly are set forth in this Bond Purchase Agreement; and (e) the City and the Authority have consulted their own financial and/or municipal, legal, accounting, tax and other advisors, as applicable, to the extent they have deemed appropriate. The Authority and the City hereby acknowledge receipt from the Underwriters of disclosures required by Municipal Securities Rulemaking Board (“MSRB”) Rule G-17 (as set forth in MSRB
2 Notice 2012-25 (May 7, 2012)), relating to disclosures concerning the Underwriters’ role in the transaction, disclosures concerning the Underwriters’ compensation, conflict disclosures, if any, and disclosures concerning complex municipal securities financing, if any. Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements set forth herein, the Underwriters hereby agree to purchase on the Closing Date (as hereinafter defined), and the Authority hereby agrees to sell and deliver to the Underwriters on the Closing Date, all of its Finance Authority of Long Beach $[____________] Lease Revenue Bonds, Series 2023 (the “Bonds”). The Bonds shall be dated their date of delivery, and shall mature on the dates and in the principal amounts, bear interest at the rates, have reoffering yields and prices, and be subject to redemption, as shown on Exhibit A hereto. The purchase price to be paid by the Underwriters for the Bonds is hereby agreed to be $[________________], which amount represents the principal amount of the Bonds of $[_____________], less $[______________] representing the Underwriters’ discount, plus $[_____________] representing original issue premium (the “Purchase Price”). Such payment and delivery of the Bonds and the other actions contemplated hereby to take place at the time of such payment and delivery being herein sometimes called the “Closing” and the date on which they are to occur on [May __], 2023, being sometimes called the “Closing Date.” The Bonds are being issued pursuant to the provisions of Article 4 of Chapter 5 of Division 7 of Title 1 (commencing with section 6584) of the California Government Code. The Bonds are also being issued pursuant to a resolution of the Authority, adopted on [April 4, 2023] (the “Authority Resolution”), and an Indenture of Trust, dated as of [May] 1, 2023 (the “Indenture”), by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). All capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Indenture. The Bonds are being issued by the Authority to (a) finance the acquisition and refurbishment of a municipal building; (b) finance various capital improvements of the City; (c) fund a portion of the interest on the Bonds; and (d) pay costs of issuance of the Bonds. The Bonds are limited obligations of the Authority payable from Revenues consisting primarily of lease payments (the “Lease Payments”). The Lease Payments are payable by the City under a Lease Agreement, dated as of [May 1], 2023 (the “Lease Agreement”), between the Authority, as lessor, and the City, as lessee. Under each Lease Agreement, the City is required to make the Lease Payments from legally available funds in amounts calculated to be sufficient to pay principal of and interest on the respective series of Bonds when due, subject to abatement. All of the Authority’s right, title and interest in and to the Lease Agreement (except for the right to receive Additional Payments to the extent payable to the Authority and certain rights to indemnification), including the right to receive Lease Payments under the Lease Agreement, are assigned to the Trustee under each Indenture for the benefit of the Owners of the respective series of Bonds.
3 A preliminary official statement of the Authority and the City, dated [___________], 2023 (together with the Appendices thereto and any supplements or amendments thereto, the “Preliminary Official Statement”), has been prepared for use in marketing the Bonds. The Authority and the City will prepare a final official statement to be dated the date hereof (together with the Appendices thereto, and any supplements or amendments thereto, the “Official Statement”). The Official Statement shall be in substantially the form of the Preliminary Official Statement, with only such changes and amendments thereto as are necessary to reflect the terms of this Bond Purchase Agreement or as may be mutually agreed upon by the Underwriters, the Authority and the City. It shall be a condition to the Authority’s obligation to sell and to deliver the Bonds to the Underwriters and to the obligation of the Underwriters to purchase, to accept delivery of and to pay for the Bonds that the entire aggregate principal amount of the Bonds, as authorized by the Indenture, shall be sold and delivered by the Authority and accepted and paid for by the Underwriters at the Closing. The obligation of the Authority to sell and deliver the Bonds to the Underwriters shall also be conditioned upon the delivery by Quint & Thimmig LLP, Bond Counsel (“Bond Counsel”), of its approving legal opinions with respect to the Bonds. The Authority and the City hereby authorize the Underwriters to use and distribute the Lease Agreement, the Indenture, the Preliminary Official Statement and the Official Statement and the information contained in such documents in connection with the public offering and sale of the Bonds. The Authority and the City have authorized the use of the Preliminary Official Statement in connection with the public offering of the Bonds by the Underwriters prior to the date hereof. Section 2. Offering; Establishment of Issue Price. The Underwriters agree to make an initial bona fide public offering of the Bonds at a price or prices not in excess of the initial offering price or prices or yields not less than the yields set forth in Exhibit A hereto, which prices may be changed from time to time by the Representative after such initial offering as the Representative deems necessary or desirable, in its sole discretion, in connection with the marketing of the Bonds (but in all cases subject to the requirements of this Section 2), and may offer and sell the Bonds to certain dealers, unit investment trusts and money market funds, certain of which may be sponsored or managed by the Underwriters at prices lower than the public offering prices or yields greater than the yields set forth in Exhibit A (but in all cases subject to the requirements of this Section 2). The Representative, on behalf of the Underwriters, agrees to assist the Authority and the City in establishing the issue price of the Bonds and shall execute and deliver to the Authority and the City at Closing an “issue price” certificate, together with supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit B, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Representative, the Authority, the City and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds. [Except as otherwise set forth in Exhibit A attached hereto,] [T]he Authority and the City will treat the first price at which 10% of each maturity of Bonds (the “10% test”) is sold to the public as the issue price of that maturity. At or promptly after the execution of this Bond Purchase Agreement, the Representative shall report to the Authority and the City the price or prices at which the Underwriters have sold to the public each maturity of Bonds. For purposes of this Section, if the 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.
4 The Representative confirms that the Underwriters have offered the Bonds to the public on or before the date of this Bond Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit A sets forth, as of the date of this Bond Purchase Agreement, the maturities, if any, of the Bonds for which the 10% test has been satisfied (the “10% Test Maturities”). Exhibit A also sets forth, as of the date of this Bond Purchase Agreement, the maturities, if any, of the Bonds for which the 10% test has not been satisfied (the “Hold-the-Price Maturities”) and for which the Authority, the City and the Underwriters, agrees that the restrictions set forth in the next sentence shall apply, which will allow the Authority and the City to treat the initial offering price to the public of each such Hold-the-Price Maturities 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 Bonds, the Underwriters will neither offer nor sell unsold Hold-the-Price Maturities 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: (i) the close of the fifth (5th) business day after the sale date; or (ii) the date on which the Underwriters have sold at least 10% of such Hold-the-Price Maturities to the public at a price that is no higher than the initial offering price to the public. The Representative will advise the Authority and the City promptly after the close of the fifth (5th) business day after the sale date whether it has sold 10% of that Hold-the-Price Maturities to the public at a price that is no higher than the initial offering price to the public. The Authority and the City acknowledge that, in making the representation set forth in this subsection, the Representative will rely on (i) the agreement of each Underwriter to comply with the hold-the-offering-price rule, as set forth in an agreement among underwriters and the related pricing wires, (ii) 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 hold-the-offering-price rule, as set forth in a selling group agreement and the related pricing wires, and (iii) in the event that an Underwriter is a party to a retail distribution agreement that 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 hold-the-offering-price rule, as set forth in the retail distribution agreement and the related pricing wires. The Authority and the City further acknowledge that each Underwriter shall be solely liable for its failure to comply with its agreement regarding the hold-the-offering-price rule and that no Underwriter shall be liable for the failure of any other Underwriter, or of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a retail distribution agreement, to comply with its corresponding agreement regarding the hold-the-offering-price rule as applicable to the Bonds. The Underwriters acknowledge 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 shall not constitute sales to the public for purposes of this Section. Further, for purposes of this Section: (i) “public” means any person other than an underwriter or a related party, (ii) “underwriter” means (A) any person that agrees pursuant to a written contract with the Authority (or with the lead underwriter to form an underwriting syndicate) to participate in the initial
5 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 member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public), (iii) 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 (i) 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), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) 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 (iv) “sale date” means the date of execution of this Purchase Contract by all parties. Section 3. The Bonds. The Bonds will be issued, executed and delivered pursuant to the Indenture. The City Council of the City adopted a resolution on [April 18], 2023, relating to the Bonds and approving the form and authorizing the execution of related documents, including the Lease Agreement (the “City Resolution”). This Bond Purchase Agreement, the Lease Agreement, the Site and Facility Lease, dated as of [May 1], 2023, (the “Site and Facility Lease”), by and between the City, as lessor, and the Authority, as lessee, and the Continuing Disclosure Certificate (as hereinafter defined), are collectively referred herein to as the “City Documents.” This Bond Purchase Agreement, the Indenture, the Site and Facility Lease and the Lease Agreement are collectively referred to herein as the “Authority Documents.” Section 4. Official Statement, Continuing Disclosure. (a) The Authority and the City represent that they have deemed the Preliminary Official Statement to be final as of its date, except for any information that is permitted to be omitted therefrom in accordance with paragraph (b)(1) of Rule 15c2-12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Rule”), including revisions or additions to the offering price(s), interest rate(s), yield(s) to maturity, selling compensation, aggregate principal amount, principal amount per maturity, delivery date, rating(s) and other terms of the Bonds which depend upon the foregoing as provided in and pursuant to the Rule. (b) The Authority agrees to deliver to the Underwriters, at such addresses as the Underwriters shall specify, as many copies of the Official Statement as the Underwriters shall reasonably request as necessary to comply with the Rule, MSRB Rule G-32 and all other applicable rules of the MSRB. The Authority agrees to deliver the Official Statement within seven business days after the execution hereof, and in any event not later than two business days before the Closing Date. The Representative agrees to give notice to the Authority on the date after which the Underwriters shall no longer be obligated to deliver the Official Statements pursuant to paragraph (b)(4) of the Rule, which date shall be no earlier than 25 days after the “end of the underwriting period,” as determined in accordance with Section 13 hereof.
6 (c) The Authority and the City agree that, for a period between the date hereof and the date which is 25 days after the “end of the underwriting period” (as defined in the Rule), if any event of which they have actual knowledge occurs as a result of which the information in the Official Statement as then in existence would include any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading, the Authority and the City shall promptly prepare, or cooperate in the preparation of, an amendment or supplement to the Official Statement which will correct such statement or omission. The Authority and the City shall advise the Representative promptly of any proposal to so amend or supplement the Official Statement and shall effect such amendment or supplement in a form reasonably approved by the Representative. The Official Statement as so supplemented or amended will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which made, not misleading. The Authority and the City shall promptly advise the Representative of the commencement of any action, suit, proceeding, inquiry or investigation seeking to prohibit, restrain or otherwise affect the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. (d) In order to assist the Underwriters in complying with the Rule, the City hereby covenants and agrees that it will, on or prior to the Closing Date, enter into separate continuing disclosure certificates for each series of the Bonds to provide annual financial and operating information and notices of the occurrence of specified events in the forms attached as Appendix E to the Official Statement (the “Continuing Disclosure Certificates”). (e) The Representative agrees to file the Official Statement with the MSRB through the MSRB’s Electronic Municipal Market Access system or as otherwise provided by the Securities and Exchange Commission or the MSRB within one business day after receipt thereof from the Authority and the City, but in no event later than the Closing Date. Section 5. Representations, Warranties and Agreements of the City. The City represents and warrants to, and agrees with the Authority and the Underwriters, as follows: (a) The City is a municipal corporation and chartered city duly organized and validly existing under the Constitution and laws of the State of California (the “State”). (b) The City has full legal right, power and authority (i) to enter into, execute and deliver the City Documents; and (ii) to carry out and consummate the transactions on its part contemplated by the City Documents, the Preliminary Official Statement and the Official Statement. (c) By all necessary official action, the City has duly authorized and approved the City Documents, has duly authorized and approved the Preliminary Official Statement and the Official Statement and approved the distribution thereof, has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained in the City Documents, and the consummation by it of all other transactions on its part contemplated by the City Documents, all pursuant to the City Resolution adopted at a meeting duly called and held in accordance with the requirements of all applicable laws and at which a quorum of the members of the City Council of the City was continuously present. The City Resolution has not been modified, amended or rescinded since the date of its adoption.
7 (d) The City has executed and delivered, or will execute and deliver on or before the Closing Date, each of the City Documents. Each of the City Documents constitutes, or will, as of the Closing Date, constitute, a legal, valid and binding obligation of the City enforceable in accordance with its terms, subject to any applicable bankruptcy, insolvency or other laws affecting creditors’ rights or remedies heretofore or hereafter enacted. Each of the City Documents has been executed and delivered, or will be executed and delivered on or before the Closing Date, by each respective signatory and is currently in full force and effect or, as of the Closing Date, will be in full force and effect. (e) The City is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of the State or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement (including, without limitation, the City Documents) or other instrument to which the City is a party which breach or default has or may have an adverse effect on the ability of the City to perform its obligations under the City Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the execution and delivery by the City of the City Documents, and compliance with the provisions on the City’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City or under the terms of any such law, regulation or instrument, except as provided by the City Documents. (f) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the City of its obligations under the City Documents or the consummation by it of all other transactions on its part contemplated by the City Documents have been duly obtained, except for such approvals, consents and orders as may be required under the “blue sky” or securities laws of any state in connection with the offering and sale of the Bonds; except as described in or contemplated by the Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the City of its obligations under the City Documents have been duly obtained. (g) There is no action, suit, proceeding, inquiry or investigation, notice of which has been duly served on the City, at law or in equity before or by any court, government agency, public board or body, pending or to the best knowledge of the officer of the City executing this Bond Purchase Agreement, threatened against the City, affecting the existence of the City or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, execution or delivery of the Bonds pursuant to the Indenture, or contesting or affecting as to the City the validity or enforceability of the Bonds or the City Documents, or
8 contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or contesting the powers of the City to cause the execution and delivery by the City of the City Documents, or in any way contesting or challenging the consummation of the transactions contemplated hereby or thereby; nor, to the best knowledge of the officer of the City executing this Bond Purchase Agreement, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity of the Bonds or the authorization, execution, delivery or performance by the City of the City Documents. (h) The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriters as the Underwriters may reasonably request in order (i) to qualify the Bonds for offer and sale under the “blue sky” or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriters may designate; and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds; provided, however, that the City shall not be required to execute a general or special consent to service of process or qualify to do business in connection with any such qualification or determination in any jurisdiction, and the Underwriters shall bear all costs in connection with the foregoing. (i) As of the date thereof and at all times up to the City’s acceptance of this Bond Purchase Agreement, the information in the Preliminary Official Statement (other than information relating to the Underwriters and DTC and its book-entry system, as to which no representation is made) was and is true and correct, and the Preliminary Official Statement (other than information relating to the Underwriters and DTC and its book-entry system, as to which no representation is made) did not and does not, except for the omission of certain information permitted to be omitted in accordance with the Rule, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (j) At the time of the City’s acceptance hereof, and (unless an event occurs of the nature described in Section 4(c) hereof) at all times subsequent thereto up to and including the Closing Date, the information in the Official Statement (other than information relating to the Underwriters and DTC and its book-entry system, as to which no representation is made) is and will be true and correct, and the Official Statement (other than information relating to the Underwriters and DTC and its book-entry system, as to which no representation is made) does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (k) If the Official Statement is supplemented or amended pursuant to Section 4(c) hereof, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto up to and including the Closing Date, the Official Statement (other than information relating to the Underwriters and DTC and its book-entry system) as so supplemented or amended will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
9 (l) If between the date of this Bond Purchase Agreement and that date which is 25 days after the end of the underwriting period (as determined in accordance with Section 13 hereof) any event shall occur affecting the City which might adversely affect the marketability of the Bonds or the market prices thereof, or which might cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the City shall notify the Representative thereof, and if in the opinion of the Representative such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will at its expense prepare and furnish to the Representative a reasonable number of copies of such supplement to, or amendment of, the Official Statement in a form reasonably approved by the Representative and the Authority. (m) Any certificate signed by any officer of the City and delivered to the Representative pursuant to the City Documents or any document contemplated thereby shall be deemed a representation and warranty by the City to the Underwriters as to the statements made therein. (n) So long as any of the Bonds are outstanding, the City will not issue or sell, or cause to be issued or sold, any bonds or other obligations the interest on or principal of which will be payable from Lease Payments. (o) The City shall honor all covenants on its part contained in the Lease Agreement. (p) Except as otherwise described in the Preliminary Official Statement in the last five years, the City has not failed to comply in all material respects with any undertaking of the City pursuant to the Rule. (q) The audited financial statements of the City appended to the Preliminary Official Statement and the Official Statement for the City’s fiscal year ended September 30, 2022, and any stub financial information presented in the body thereof, fairly present the financial position and results of the City as of the dates and for the periods set forth therein. Prior to the Closing Date, there will have been no adverse change of a material nature in such financial position, results of operations or condition, financial or otherwise, of the City. The City is not a party to any litigation or other proceeding pending with respect to which the City has been served with process, or to the knowledge of the officer of the City executing this Bond Purchase Agreement, threatened, which if, decided adversely to the City, would have a materially adverse effect on the financial condition of the City. Section 6. Representations, Warranties and Agreements of the Authority. The Authority represents warrants to, and agrees with the City and the Underwriters, as follows: (a) The Authority is a joint exercise of powers entity duly organized and validly existing under the laws of the State pursuant to a Joint Exercise of Powers Agreement, dated as of December 8, 2015 (the “JPA Agreement”), by and between the City and the Housing Authority of the City of Long Beach.
10 (b) The Authority has full legal right, power and authority (i) to enter into, execute and deliver the Authority Documents and to sell and deliver the Bonds to the Underwriters as provided herein; and (ii) to carry out and consummate the transactions on its part contemplated by the Authority Documents, the Preliminary Official Statement and the Official Statement. (c) By all necessary official action, the Authority has duly authorized and approved the issuance of the Bonds and the execution and delivery by it of the Authority Documents, has duly authorized and approved the Preliminary Official Statement and approved the distribution thereof, has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations in connection with the execution and delivery of the Bonds on its part contained in the Bonds and the Authority Documents, and the consummation by it of all other transactions on its part contemplated by the Authority Documents in connection with the execution and delivery of the Bonds, all pursuant to the Authority Resolution adopted at a meeting of its Board of Directors duly called and held in accordance with the requirements of all applicable laws and at which a quorum of the Board of Directors of the Authority was continuously present. The Authority Resolution has not been modified, amended or rescinded since the date of its adoption and each Authority Document is the valid and binding obligation of the Authority. (d) The Authority is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of the State or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or the JPA Agreement, or any loan agreement, indenture, bond, note, resolution, agreement (including, without limitation, the Authority Documents) or other instrument to which the Authority is a party which breach or default has or may have an adverse effect on the ability of the Authority to perform its obligations under the Bonds or the Authority Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the execution and delivery by the Authority of the Bonds and the Authority Documents, and compliance with the provisions on the Authority’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Authority or under the terms of any such law, regulation or instrument, except as provided by the Bonds and the Authority Documents. (e) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the Authority of its obligations in connection with the execution and delivery of the Bonds under the Authority Documents or the consummation by it of all other transactions on its part contemplated by the Authority Documents have been duly obtained, except for such approvals, consents and orders as may be required under the “blue sky” or securities laws of any state in connection with the offering and sale of the Bonds; except as described in or contemplated by the Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having
11 jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the Authority of its obligations under the Bonds and the Authority Documents have been duly obtained. (f) The Indenture and the Bonds conform to the descriptions thereof contained in the Official Statement and the Bonds, when executed, issued, authenticated and delivered in accordance with the Indenture, and sold to the Underwriters as provided herein, will be validly executed and outstanding limited obligations of the Authority, entitled to the benefits of the Indenture, and upon such execution and delivery, the Indenture will provide, for the benefit of the Owners from time to time of the Bonds, the legally valid and binding security interest it purports to create. (g) The Authority has executed and delivered, or will execute and deliver on or before the Closing Date, each of the Authority Documents. Each of the Authority Documents constitutes, or will, as of the Closing Date, constitute, a legal, valid and binding obligation of the City enforceable in accordance with its terms, subject to any applicable bankruptcy, insolvency or other laws affecting creditors’ rights or remedies heretofore or hereafter enacted. Each of the Authority Documents has been executed and delivered, or will be executed and delivered on or before the Closing Date, by each respective signatory and is currently in full force and effect or, as of the Closing Date, will be in full force and effect. (h) There is no action, suit, proceeding, inquiry or investigation, notice of which has been duly served on the Authority, at law or in equity before or by any court, government agency, public board or body, pending or to the best knowledge of the officer of the Authority executing this Bond Purchase Agreement, threatened against the Authority, affecting the existence of the Authority or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance, execution or delivery of the Bonds pursuant to the Indenture, or contesting or affecting as to the Authority the validity or enforceability of the Bonds or the Authority Documents, or contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or contesting the powers of the Authority to cause the execution and delivery of the Bonds, or the execution and delivery or adoption by the Authority of the Authority Documents, or in any way contesting or challenging the consummation of the transactions contemplated hereby or thereby; nor, to the best knowledge of the officer of the Authority executing this Bond Purchase Agreement, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity of the Bonds or the authorization, execution, delivery or performance by the Authority of its obligations under or with respect to the Bonds or the Authority Documents. (i) The Authority will furnish such information, execute such instruments and take such other action in cooperation with the Underwriters as the Underwriters may reasonably request in order (i) to qualify the Bonds for offer and sale under the “blue sky” or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriters may designate; and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds; provided, however, that the Authority shall not be required to execute a general or special consent to service of process or qualify to do business in connection with any such qualification or
12 determination in any jurisdiction, and the Underwriters shall bear all costs in connection with the foregoing. (j) As of the date thereof and at all times up to the Authority’s acceptance of this Bond Purchase Agreement, the information regarding the Authority in the Preliminary Official Statement was and is true and correct and did not, except for the omission of certain information permitted to be omitted in accordance with the Rule, contain any untrue statement of a material fact with respect to the Authority or omit to state a material fact necessary to make the statements therein with respect to the Authority, in the light of the circumstances under which they were made, not misleading. (k) At the time of the Authority’s acceptance hereof, and (unless an event occurs of the nature described in Section 4(c) hereof) at all times subsequent thereto up to and including the Closing Date, the information regarding the Authority in the Official Statement is and will be true and correct and does not and will not contain any untrue statement of a material fact with respect to the Authority or omit to state a material fact necessary to make the statements therein with respect to the Authority, in the light of the circumstances under which they were made, not misleading. (l) If the Official Statement is supplemented or amended pursuant to Section 4(c) hereof, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto up to and including the Closing Date, the information regarding the Authority in the Official Statement as so supplemented or amended will be true and correct and will not contain any untrue statement of a material fact with respect to the Authority or omit to state a material fact necessary to make the statements therein with respect to the Authority, in the light of the circumstances under which they were made, not misleading. (m) If between the date of this Bond Purchase Agreement and that date which is 25 days after the end of the underwriting period (as determined in accordance with Section 13 hereof) any event shall occur affecting the Authority which might adversely affect the marketability of the Bonds or the market prices thereof, or which might cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Authority shall notify the Representative, and if in the opinion of the Representative such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority will, at the expense of the City, cooperate with the City in the preparation of, and furnish to the Underwriters a reasonable number of copies of, such supplement to, or amendment of, the Official Statement in a form reasonably approved by the Representative and the City. (n) Any certificate signed by any officer of the Authority and delivered to the Representative pursuant to the Authority Documents or any document contemplated thereby shall be deemed a representation and warranty by the Authority to the Underwriters as to the statements made therein. (o) The Authority will cause the proceeds from the sale of the Bonds to be paid to the Trustee for the purposes specified in the Indenture and the Official Statement. So long as any of the Bonds are outstanding and except as may be authorized by the Indenture, the
13 Authority will not issue or sell any Bonds or other obligations, other than the Bonds delivered thereunder, the interest on and premium, if any, or principal of which will be payable from the Revenues. (p) The Authority shall honor all covenants on its part contained in the Indenture and the Lease Agreement. Section 7. Closing. At 8:00 a.m., California time, on the Closing Date the Authority will, subject to the terms and conditions hereof, deliver to the Underwriter, through the facilities of The Depository Trust Company (“DTC”), the Bonds in definitive, fully registered form (one Bond for each maturity of each series of the Bonds), duly executed and registered in the name of Cede & Co. as nominee of DTC; and, subject to the terms and conditions hereof, the Underwriters shall wire to the Trustee Federal Reserve Bank Funds in the amount of the Purchase Price. Physical delivery of the Bonds shall be made to the Trustee, as agent for DTC under the Fast Automated Securities Transfer System. Section 8. Closing Conditions. The Underwriters have entered into this Bond Purchase Agreement in reliance upon the representations and warranties of the Authority and the City contained herein, and in reliance upon the representations and warranties to be contained in the documents and instruments to be delivered at the Closing and upon the performance by the Authority and the City of their obligations hereunder, both as of the date hereof and as of the Closing Date. Accordingly, the Underwriters’ obligations under this Bond Purchase Agreement to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the performance by the Authority and the City of their respective obligations to be performed hereunder and under such documents and instruments at or prior to the Closing Date, shall be subject, at the option of the Representative, to the accuracy in all material respects of the statements made by the officers and other officials of the Authority and of the City, Bond Counsel, the Trustee, and counsel to the Authority and the City in any certification or other documents furnished pursuant to the provisions hereof, and shall also be subject to the following additional conditions: (a) The respective representations and warranties of the Authority and the City contained herein shall be true and correct on the date hereof and on and as of the Closing Date, as if made on the Closing Date. (b) At the time of Closing, the City Documents and the Authority Documents shall be in full force and effect and shall not have been amended, modified or supplemented and the Official Statement shall not have been supplemented or amended, except in any such case as may have been agreed to by the Representative. (c) All necessary official action of the Authority and the City relating to the City Documents and the Authority Documents shall have been taken and shall be in full force and effect and shall not have been amended, modified or supplemented in any material respect. (d) Subsequent to the date hereof, there shall not have occurred any change in or affecting particularly the Authority, the City or the Bonds, as the foregoing are described in the Official Statement, which in the reasonable opinion of the Representative materially impairs the investment quality of the Bonds.
14 (e) At or prior to the Closing Date, the Representative shall have received each of the following documents: (i) specimen copies of the Bonds; (ii) the Official Statement and each supplement or amendment, if any, thereto, executed by authorized officers of the Authority and the City; (iii) copies of the Indenture, executed by the parties thereto; (iv) copies of the Site and Facility Lease, executed by the parties thereto; (v) copies of the Lease Agreement, executed by the parties thereto; (vi) copies of the Continuing Disclosure Certificate, executed by the City; (vii) a certified copy of the JPA Agreement; (viii) a receipt from the Trustee for the proceeds of the Bonds; (ix) a certificate or certificates of the City, dated the Closing Date, to the effect that: (A) the representations and warranties of the City contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date and the City has complied with all of the terms and conditions of this Bond Purchase Agreement required to be complied with by the City at or prior to the Closing Date; (B) none of the proceedings or authority for (1) the authorization, sale, execution and delivery of the Bonds; (2) the adoption of the City Resolution; or (3) the execution and delivery by the City of the City Documents and performance of its obligations thereunder, has been repealed, modified, amended, revoked or rescinded; (C) subsequent to September 30, 2022, and prior to Closing, there has been no material adverse change in the financial position of the City; (D) no event affecting the City has occurred since the date of the Official Statement that should be disclosed in the Official Statement for the purposes for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; (E) the information and statements contained in the Official Statement (other than information relating to the Underwriters and DTC and its book-entry system) do not contain an untrue statement of a material fact or omit to state a material fact necessary to make such statements therein, in the light of the circumstances under which they were made, not misleading; and to the best knowledge of the officers of the City executing the certificate after
15 reasonable investigation, the City is not in breach of or default under any applicable law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, which would have a material adverse impact on the City’s ability to perform its obligations under the City Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument; (F) no consent is required for the inclusion of the City’s audited financial statements for the Fiscal Year ending September 30, 2022 in the Preliminary Official Statement and the Official Statement; (G) the City is in compliance in all material respects, with the terms of the City Documents; (H) the Bonds conform to the descriptions thereof contained in the Official Statement under the caption “THE SERIES 2023 BONDS” and the proceeds of sale of the Bonds will be applied as described in the Official Statement under the captions “ESTIMATED SOURCES AND USES OF FUNDS” and “PLAN OF FINANCING”; and (I) there is no lawsuit, regulatory or other action now pending with respect to which the City has been given notice, or, to the best knowledge of the officer of the City executing the certificate, threatened, to attempt to limit, enjoin or otherwise restrict or prevent the City from making the Lease Payments under the Lease Agreement; (x) a certificate or certificates of the Authority, dated the Closing Date, to the effect that: (A) the representations and warranties of the Authority contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date and the Authority has complied with all of the terms and conditions of this Bond Purchase Agreement required to be complied with by the Authority at or prior to Closing Date; (B) none of the proceedings or authority for (1) the authorization, sale, execution and delivery of the Bonds; (2) the adoption of the Authority Resolution; or (3) the execution and delivery by the Authority of the Authority Documents, has been repealed, modified, amended, revoked or rescinded; (C) no event affecting the Authority has occurred since the date of the Official Statement that should be disclosed in the Official Statement for the purposes for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein with respect to the Authority not misleading in any material respect; and
16 (D) the information and statements contained in the Official Statement with respect to the Authority do not contain any untrue statement of a material fact with respect to the Authority or omit to state a material fact necessary to make such statements therein with respect to the Authority, in the light of the circumstances under which they were made, not misleading; and to the best of the knowledge of the officer of the Authority executing the certificate after reasonable investigation, the Authority is not in breach of or default under any applicable law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject, which would have a material adverse impact on the Authority’s ability to perform its obligations under the Authority Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument; (xi) an opinion, dated the Closing Date and addressed to the Representative, the Trustee, and the Authority, of the City Attorney, to the effect that: (A) the City is a municipal corporation and chartered city duly organized and validly existing under the Constitution and laws of the State; (B) the City Documents have been duly approved by the City Resolution, which City Resolution was adopted at a meeting duly called and held in accordance with the requirements of all applicable laws, with all public notice required by law, and at which a quorum of the members of the City Council of the City was continuously present and the City Resolution has not been modified, amended or rescinded since the date of its adoption; (C) except as described in the Official Statement, there is no litigation, inquiry, or investigation pending with respect to which the City has been served with process or to the best of such counsel’s knowledge after due inquiry, threatened, which: (1) challenges the right or title of any member of the City Council of the City or officer of the City to hold his or her office or exercise or perform the powers and duties pertaining thereto; (2) challenges the validity or enforceability of the Bonds or the City Documents; (3) seeks to restrain or enjoin the sale of the Bonds or the execution and delivery by the City of, or the performance by the City of its obligations under, the City Documents or in which a final adverse decision could materially adversely affect the operations of the City; or (4) contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement, nor, to the best of such counsel’s knowledge, is there any basis therefor; (D) the execution and delivery by the City of, and the performance by the City of its obligations under, the City Documents, do not conflict with, violate or constitute a default under any provision of any law, court order or decree or any contract, instrument or agreement to which the City is a party or by which it is bound and of which such counsel has knowledge;
17 (E) the City Documents have been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery of the City Documents by the other parties thereto, the City Documents constitute legal, valid and binding agreements of the City, enforceable against the City in accordance with their respective terms except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the enforcement of creditors’ rights and remedies in general, or by the application of equitable principles if equitable remedies are sought; (F) except as may be required under the “blue sky” or securities laws of the United States or any state, there is no authorization, approval, consent or other order of, or filing with, or certification by, the State or any other governmental authority or agency within the State having jurisdiction over the City required for the issuance of the Bonds or the consummation by the City of the transactions on its part contemplated by the Official Statement and the City Documents; and (G) based on the information made available to the City Attorney, and without having undertaken to determine independently or assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement, nothing has come to his attention which would lead him to believe that the Official Statement as of its date and as of the date of Closing (excluding therefrom the financial and statistical data and forecasts included therein, and the information with respect to the Underwriters or DTC and its book entry system as to all of which no opinion is 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; (xii) an opinion or opinions, dated the Closing Date and addressed to the Representative, and the Trustee of the City Attorney in his capacity as counsel for the Authority, to the effect that: (A) the Authority is a joint exercise of powers authority duly organized and validly existing under the laws of the State pursuant to the JPA Agreement; (B) the Authority Documents have been duly approved by the Authority Resolution which were adopted at a meeting of the Board of Directors of the Authority duly called and held in accordance with the requirements of all applicable laws, with all public notice required by law, and at which a quorum of the members of the Board of Directors of the Authority was continuously present and the Authority Resolution has not been modified, amended or rescinded since the date of its adoption; (C) except as described in the Official Statement, there is no litigation, inquiry, or investigation pending with respect to which the Authority has been served with process or to the best of such counsel’s knowledge after due inquiry, threatened, which: (1) challenges the right or title of any member
18 of the Board of Directors of the Authority or officer of the Authority to hold his or her office or exercise or perform the powers and duties pertaining thereto; (2) challenges the validity or enforceability of the Bonds or the Authority Documents; (3) seeks to restrain or enjoin the sale of the Bonds or the execution and delivery by the Authority of, or the performance by the Authority of its obligations under, the Authority Documents or in which a final adverse decision could materially adversely affect the operations of the Authority; or (4) contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement, nor, to the best of such counsel’s knowledge, is there any basis therefor; (D) the execution and delivery by the Authority of, and the performance by the Authority of its obligations under, the Authority Documents, do not conflict with, violate or constitute a default under any provision of any law, court order or decree or any contract, instrument or agreement to which the Authority is a party or by which it is bound and of which such counsel has knowledge; (E) the Authority Documents have been duly authorized, executed and delivered by the Authority and, assuming due authorization, execution and delivery of the Authority Documents by the other parties thereto, the Authority Documents constitute legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance with their respective terms except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the enforcement of creditors’ rights and remedies in general, or by the application of equitable principles if equitable remedies are sought; (F) except as may be required under the “blue sky” or securities laws of the United States or any state, there is no authorization, approval, consent or other order of, or filing with, or certification by, the State or any other governmental authority or agency having jurisdiction over the Authority required for the issuance of the Bonds or the consummation by the Authority of the transactions on its part contemplated by the Official Statement and the Authority Documents; and (G) based on the information made available to counsel to the Authority, and without having undertaken to determine independently or assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement under the captions entitled “INTRODUCTION—The Authority,” “THE AUTHORITY” and “LITIGATION,” nothing has come to such counsel’s attention that would lead such counsel to believe that the statements contained under the above-referenced captions as of the date of the Official Statement and as of the date of Closing 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;
19 (xiii) opinions, dated the Closing Date and addressed to the Authority, of Bond Counsel, substantially in the forms set forth in Appendix D to the Official Statement, together with a letter from such counsel, dated the Closing Date and addressed to the Representative, to the effect that the foregoing opinions may be relied upon by the Representative to the same extent as if such opinions were addressed to the Representative; (xiv) a supplemental opinion, dated the Closing Date and addressed to the Representative, of Bond Counsel, to the effect that: (A) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture are exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; (B) the Bond Purchase Agreement has been duly executed and delivered by the Authority and the City and is a valid and binding agreement of the Authority and the City, subject to customary exceptions; (C) the statements contained in the Official Statement under the captions “THE SERIES 2023 BONDS,” “SECURITY FOR THE SERIES 2023 BONDS” and “TAX MATTERS,” and in “APPENDIX C—SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS” and “APPENDIX D—PROPOSED FORMS OF BOND COUNSEL OPINION,” are accurate in all material respects insofar as such statements expressly summarize certain provisions of the Indenture, the Lease Agreement, certain tax matters relating to the Bonds and the final opinion of Bond Counsel; (xv) a letter, dated the Closing Date and addressed to the Authority and the Representative of Stradling Yocca Carlson & Rauth, a Professional Corporation, Disclosure Counsel (“Disclosure Counsel”), to the effect that based upon its participation in the preparation of the Official Statement as Disclosure Counsel, without assuming any responsibility for the accuracy, completeness or fairness of any of the statements contained in the Official Statement nor making any representation regarding independent verification of the accuracy, completeness or fairness of any of the statements contained in the Official Statement, such counsel advises that during the course of such representation of the City and the Authority as disclosure counsel on this matter, no information came to the attention of the attorneys in such firm rendering legal services in connection with such representation which caused them to believe that the Official Statement as of its date or as of the Closing Date (except for any financial, statistical or economic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, the information in Appendices A, B, C, D and F to the Official Statement or any information about book-entry or DTC included therein, as to which no opinion or view is expressed) contained or contains any untrue statement of a material fact or omitted or omits to state any 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; (xvi) an opinion of Nixon Peabody LLP, Underwriters’ counsel, satisfactory to the Representative;
20 (xvii) a certificate of an authorized officer of the Trustee satisfactory to the Representative and the City, certifying substantially as follows: (A) the Trustee is a national banking association duly organized and in good standing under the laws of the United States of America and has all necessary power and authority to enter into the Indenture and to perform its duties under the Indenture; (B) the Trustee is duly authorized to enter into the Indenture and to authenticate and deliver the Bonds to the Underwriters pursuant to the terms of the Indenture and, when executed by the Authority, the Indenture will constitute a legal, valid and binding obligation of the Trustee enforceable in accordance with its terms; (C) the Bonds have been duly authenticated and delivered to the Underwriters pursuant to direction from the Authority; (D) the Trustee is not in breach of or default under any law or administrative rule or regulation of the State or of any department, division, agency or instrumentality thereof, of any applicable court or administrative decree or order, or any other material instrument to which the Trustee is a party or is otherwise subject or bound and which would materially impair the ability of the Trustee to perform its obligations under the Indenture; (E) to the knowledge of the Trustee, there is no action, litigation, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending and served on or threatened against or affecting the existence of the Trustee, seeking to restrain or enjoin the authentication of any of the Bonds by the Trustee, or contesting or affecting the powers of the Trustee or its authority to execute, deliver, enter into and perform its obligations under the Indenture to which it is a party or its authority to authenticate the Bonds, wherein an unfavorable decision, ruling or finding would adversely affect the validity of the Bonds or the Indenture to which it is a party; (F) the execution and delivery of the Indenture will not conflict with or constitute a breach of or default under the Trustee’s duties under such documents, or any law, administrative regulation, court decree, resolution, articles of association, bylaws or other material agreement to which the Trustee is subject or by which it is bound; and (G) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the authentication and delivery of the Bonds, the execution and delivery of the Indenture, the performance of the Trustee’s duties under the Indenture or the consummation by the Trustee of the other transactions contemplated by the Indenture, except as such may be required under the state securities or “blue sky” laws in connection with the distribution of the Bonds by the Underwriters;
21 (xviii) Reserved. (xix) an opinion of counsel to the Trustee in form and substance acceptable to the Representative and Bond Counsel; (xx) 15c2-12 certificates, dated the date of the Preliminary Official Statement, of the City and the Authority; (xxi) certified copies of the City Resolution and the Authority Resolution; (xxii) evidence that Fitch Ratings and S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC, have assigned ratings of “[AA-]” and “[AA-]”, respectively, to the Bonds; (xxiii) an Arbitrage Certificate relating to the Bonds in a form satisfactory to Bond Counsel; (xxiv) evidence satisfactory to Bond Counsel and the Underwriter, of the insurance, including a CLTA title insurance policies, required to be obtained pursuant to the Lease Agreement; (xxv) a copy of the Blanket Letter of Representations from the Authority to DTC; (xxvi) a transcript of the proceedings relating to the authorization, issuance, execution and delivery of the Bonds; and (xxvii) such additional legal opinions, certificates, instruments and other documents as the Representative may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the date of the Closing, of the City’s and the Authority’s representations and warranties contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the City and the Authority on or prior to the date of the Closing of all the agreements then to be performed and conditions then to be satisfied by each of them. All the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Bond Purchase Agreement shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to Bond Counsel, Disclosure Counsel and the Representative. If the Authority and the City shall be unable to satisfy the conditions to the obligations of the Underwriters to purchase, to accept delivery of and to pay for the Bonds contained in this Bond Purchase Agreement, or if the obligations of the Underwriters to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and none of the Underwriters, the Authority or the City shall be under any further obligation hereunder. Section 9. Termination. The Underwriters shall have the right to terminate its obligations under this Bond Purchase Agreement to purchase, to accept delivery of and to pay for the Bonds by
22 notifying the Authority and the City in writing, of its election to do so, if, after the execution hereof and prior to the Closing: (a) an amendment to the Constitution of the United States or the State shall have been passed or legislation shall have been introduced in or enacted by the Congress of the United States or the legislature of any state having jurisdiction of the subject matter or legislation pending in the Congress of the United States shall have been amended or legislation shall have been recommended to the Congress of the United States or to any state having jurisdiction of the subject matter or otherwise endorsed for passage (by press release, other form of notice or otherwise) by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or legislation shall have been proposed for consideration by either such Committee by any member thereof or presented as an option for consideration by either such Committee by the staff of such Committee or by the staff of the joint Committee on Taxation of the Congress of the United States, or legislation shall have been favorably reported for passage to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or a decision shall have been rendered by a court of the United States or of the State or the Tax Court of the United States, or a ruling shall have been made or a regulation or temporary regulation shall have been proposed or made or any other release or announcement shall have been made by the Treasury Department of the United States, the Internal Revenue Service or other federal or State authority, with respect to federal or State taxation upon revenues or other income of the general character to be derived by the City or the Authority or upon interest received on obligations of the general character of the Bonds which, in the judgment of the Representative, may have the purpose or effect, directly or, indirectly, of affecting the tax status of the City, the Authority, its property or income, their securities (including the Bonds) or the interest thereon, or any tax exemption granted or authorized by State legislation; or (b) legislation shall have been introduced in or enacted, resolution passed, or considered for enactment with an effective date prior to the Closing Date, or a decision by a court of the United States shall have been rendered, the effect of which is that the Bonds, including any underlying obligations, or the Indenture, as the case may be, are not exempt from the registration, qualification or other requirements of the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or (c) a stop order, ruling, regulation or offering circular by the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall have been issued or made or any other event occurs, the effect of which is that the issuance, offering or sale of the Bonds, including any underlying obligations, or the execution of the Indenture, as contemplated hereby or by the Official Statement, is or would be in violation of any provisions of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or (d) there shall have occurred any outbreak or escalation of hostilities or any national or international calamity or crisis, or escalation thereof, including a financial crisis, a material disruption in commercial banking or securities settlement or clearance services, or a
23 material disruption or deterioration in the fixed income or municipal securities market; the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Representative, would materially adversely affect the market for or market price of the Bonds; or (e) there shall be in force a general suspension of trading on the New York Stock Exchange, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Representative, would materially adversely affect the market for or market price of the Bonds; or (f) a general banking moratorium shall have been declared by federal, New York, or California authorities; or (g) any proceeding shall be pending or threatened by the Securities and Exchange Commission against the Authority or the City; or (h) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange; or (i) the New York Stock Exchange or other national securities exchange, or any governmental or regulatory authority, shall impose, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of the Underwriters; or (j) a rating on the Bonds or on any other general fund secured bonds or notes or other obligations of the City, shall have been placed on review, downgraded, suspended, withdrawn or changed to negative watch in credit watch status by a national rating service which, in the opinion of the Representative, materially adversely affects the market price of the Bonds; or (k) any amendment to the federal or State Constitution or action by any federal or State court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the City or the Authority, or their property, income, or securities (or interest thereon); or (l) any event shall occur, or information become known which, in the judgment of the Representative, makes untrue in any material respect any statement or information contained in the Official Statement, or has the effect that the Official Statement contains any untrue statement of material fact or omits 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; or (m) any fact or event shall exist or have existed that, in the Representative’s judgment, requires or has required an amendment of or supplement to the Official Statement; or
24 (n) there shall have occurred any materially adverse change in the affairs or financial condition of the City, other than as disclosed in the Official Statement; or (o) the purchase of and payment for the Bonds by the Underwriter, or the resale of the Bonds by the Underwriters, on the terms and conditions herein provided, shall be prohibited by any applicable law, governmental authority, board, agency or commission. If this Bond Purchase Agreement shall be terminated pursuant to Section 8 hereof or this Section 9, or if the purchase of the Bonds provided for herein is not consummated because any condition to the Underwriters’ obligations hereunder is not satisfied or because of any refusal, inability or failure on the part of the City or the Authority to comply with any of the terms or to fulfill any of the conditions of this Bond Purchase Agreement, or if for any reason the City or the Authority shall be unable to perform all of its respective obligations under this Bond Purchase Agreement, none of the City or the Authority shall be liable to the Underwriters for damages on account of loss of anticipated profits arising out of the transactions covered by this Bond Purchase Agreement. The Representative may, in its sole discretion, waive any of the conditions set forth in Section 8 hereof or this Section 9. Section 10. Payment of Costs and Expenses. (a) All costs and expenses incident to the sale and delivery of the Bonds to the Underwriters shall be payable by the Authority from the proceeds of the Bonds, including, but not limited to: (i) all advertising expenses in connection with the offering of the Bonds; (ii) the fees and expenses of the City, its counsel, municipal advisor and consultants; (iii) the fees and expenses of the Authority, its counsel and consultants; (iv) the fees and expenses of Bond Counsel; (v) the fees and expenses of Disclosure Counsel; (vi) all expenses in connection with the preparation and printing of the Bonds; (vii) all expenses in connection with the preparation, printing, distribution and delivery of the Preliminary Official Statement, the Official Statement and any amendment or supplement thereto; (viii) the initial fees and expenses of the Trustee, including the reasonable fees and expenses of its counsel; and (ix) the fees and expenses of any rating agency rating the Bonds. (b) The Underwriters shall pay all expenses incurred by them in connection with the public offering and distribution of the Bonds including, but not limited to: (i) the fees and disbursements of Underwriters’ Counsel, and (ii) all out-of-pocket disbursements and expenses incurred by the Underwriters in connection with the offering and distribution of the Bonds, including, air travel and hotel accommodations in connection with the pricing of the Bonds; investor meetings, rating agency trips and meetings; the Closing; meals and transportation for the City, the Underwriters and other working group personnel during rating agency, investor meetings; pricing and Closing trips; expenses related to attending working group meetings, such as parking, meals and transportation and any other miscellaneous costs associated with the Closing; (iii) all other expenses incurred by the Underwriters in connection with the public offering and distribution of Bonds, except as provided in Section 10(a) hereof or as otherwise agreed to by the Underwriters, the Authority and the City; and (iv) the fees of the California Debt and Investment Advisory Commission. Such items may be included as an expense component of the Underwriter’s discount. The Authority and the City acknowledge that they have had an opportunity, in consultation with such advisors as they may deem appropriate, if any, to evaluate and consider the fees and expenses being incurred as part of the issuance of the Bonds.
25 Section 11. Notices. Any notice or other communication to be given under this Bond Purchase Agreement to a party hereto may be given by delivering the same in writing: to the Authority: Finance Authority of Long Beach 411 West Ocean Boulevard, 6th Floor Long Beach, CA 90802 Attention: Treasurer/Auditor to the City: City of Long Beach 411 West Ocean Boulevard, 6th Floor Long Beach, CA 90802 Attention: Treasurer to the Representative: RBC Capital Markets, LLC 777 S. Figueroa Street, Suite 850 Los Angeles, California 90017 Attention: John Solarczyk Section 12. Parties in Interest. This Bond Purchase Agreement is made solely for the benefit of the Authority, the City and the Underwriters (including the successors or assigns of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof. All of the Authority’s and the City’s representations, warranties and agreements contained in this Bond Purchase Agreement shall remain operative and in full force and effect, regardless of: (a) any investigations made by or on behalf of the Underwriter, (b) delivery of and payment for the Bonds pursuant to this Bond Purchase Agreement, and (c) any termination of this Bond Purchase Agreement. Section 13. Determination of End of the Underwriting Period. For purposes of this Bond Purchase Agreement, the end of the underwriting period for the Bonds shall mean the earlier of (a) the Closing Date unless the City and the Authority have been notified in writing by the Representative, on or prior to the Closing Date, that the “end of the underwriting period” for the Bonds for all purposes of the Rule will not occur on the Closing Date; or (b) the date on which notice is given to the City and the Authority by the Representative in accordance with the following sentence. In the event that the Representative has given notice to the City and the Authority pursuant to clause (a) above that the “end of the underwriting period” for the Bonds will not occur on the Closing Date, the Representative agrees to notify the City and the Authority in writing as soon as practicable following the “end of the underwriting period” for the Bonds for all purposes of the Rule. Section 14. No Assignment. This Bond Purchase Agreement is entered into among the City, the Authority and the Representative, and none of them shall assign any right or obligation hereunder without the prior written consent of the other parties hereto. Section 15. Effectiveness. This Bond Purchase Agreement shall become effective upon the execution of the acceptance hereof by an authorized representative of the City and an authorized representative of the Authority, and shall be valid and enforceable at the time of such acceptance. Section 16. Headings. The headings of the sections of this Bond Purchase Agreement are inserted for convenience only and shall not be deemed to be a part hereof.
26 Section 17. Governing Law. This Bond Purchase Agreement shall be interpreted, governed and enforced in accordance with the laws of the State applicable to contracts made and performed in California. Section 18. Counterparts. This Bond Purchase Agreement may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. [Remainder of page intentionally left blank; signature page follows]
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If the foregoing is in accordance with your understanding of this Bond Purchase Agreement please sign and return to us the enclosed duplicate copies hereof, whereupon it will become a binding agreement among the City, the Authority and the Underwriters in accordance with its terms. Very truly yours, RBC CAPITAL MARKETS, LLC CABRERA CAPITAL MARKETS, LLC BY: RBC CAPITAL MARKETS, LLC, as Representative By:_______________________________ Authorized Signatory Accepted by: FINANCE AUTHORITY OF LONG BEACH By [________________________] CITY OF LONG BEACH, CALIFORNIA By [_______________________] [Signature page to Bond Purchase Agreement]
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EXHIBIT A*
$[___________] Finance Authority of Long Beach Lease Revenue Bonds, Series 2023 MATURITY DATES, PRINCIPAL AMOUNTS, INTEREST RATES, YIELDS AND PRICES Maturity Date ([____] 1) Principal Amount Interest Rate Yield
Price $ % % % REDEMPTION PROVISIONS [Update if optional or sinking fund redemption is added] Extraordinary Redemption From Insurance or Condemnation Proceeds The Bonds shall be subject to redemption as a whole or in part on any date, to the extent the Trustee has received hazard insurance proceeds or condemnation proceeds not used to repair or replace any portion of the Property damaged or destroyed and elected by the City to be used for such purpose as provided in Section 5.06 of the Indenture, at a redemption price equal to the principal amount thereof to be redeemed, together with interest accrued thereon to the date fixed for redemption, without premium. * [No Hold-The-Price Maturities, at least 10% of each maturity was sold.]
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EXHIBIT B FORM OF ISSUE PRICE CERTIFICATE OF THE UNDERWRITER The undersigned, on behalf of RBC Capital Markets, LLC and as representative of Cabrera Capital Markets, LLC (collectively, the “Underwriting Group”), hereby certifies as set forth below with respect to the sale and issuance of the $[___________] Finance Authority of Long Beach Lease Revenue Bonds, Series 2023 (the “Bonds”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Tax Certificate relating to the Bonds, to which this certificate is attached. 1. Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the [Bonds][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. [The Underwriter 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. As set forth in the Bond Purchase Agreement, the Underwriting Group 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 unsold Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-the-offering-price rule”) nor would they permit a related party to do so, and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any third-party distribution agreement shall contain the agreement of each broker-dealer who is a party to the third-party distribution agreement, to comply with the hold-the-offering-price rule. Pursuant to such agreements, no Underwriter has offered or sold any unsold Bonds of any Maturity of the Bonds at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.] 3. Defined Terms. General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.” [Hold-the-Offering-Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.” 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, or (ii) the date on which the Underwriters have 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. ]
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Issuer means Finance Authority of Long Beach. 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. Public means any person (including 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 means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. 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 [May _], 2023. 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 written 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 third-party distribution agreement participating in the initial sale of the Bonds to the Public). 4. Other Certifications. (a) The aggregate of the Initial Offering Prices of the Bonds is $[_____________]. (b) We have provided the attached schedules, at the direction of Bond Counsel, relating to the calculation of the arbitrage yield with respect to the Bonds. (c) We have provided the attached schedules, at the direction of Bond Counsel, relating to the calculation of the weighted average maturity of the Bonds. We have performed this calculation using the following formula: we calculated the total number of bond years and divided that number into the total initial offering price of the bonds of the offering. For purposes of calculating the total bond years, we calculated the sum of the products of each respective maturity’s initial offering price and the number of years from the dated date to each respective maturity, doing so on a 12-month, 360-day year basis. We express no view regarding the legal sufficiency of the above computations or the correctness of any legal interpretation made by Bond Counsel. Further, notwithstanding the Underwriter having performed the calculations as set forth in the Statistics using the DBC Software, we remind you that we are not accountants or actuaries, nor are we engaged in the practice of law. The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents the Underwriter’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. 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 and with respect to compliance with the federal income tax rules affecting the Bonds, and by Quint & Thimmig LLP in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for
B-3
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. RBC Capital Markets, LLC, as Representative of the Underwriting Group By: Authorized Representative Dated: [May __], 2023
B-4
SCHEDULE A SALE PRICES OF THE [GENERAL RULE MATURITIES AND INITIAL OFFERING PRICES OF THE HOLD THE OFFERING PRICE MATURITIES]/[BONDS] (Attached) MATURITY SCHEDULE Maturity Date ([_____] 1) Principal Amount Interest Rate Yield Price $ % % % [*General Rule Maturities **Hold the Offering Price Maturities]