APPROVED AS TO FORM AND LEGALITY
_________________________
CITY ATTORNEY’S OFFICE
3681213.4 045979 FILE
OAKLAND CITY COUNCIL
RESOLUTION NO. _______________ C.M.S.
RESOLUTION PROVIDING FOR THE BORROWING OF FUNDS FOR
FISCAL YEAR 2022-2023 AND THE ISSUANCE AND SALE OF THE CITY OF OAKLAND 2022-2023 TAX AND REVENUE ANTICIPATION NOTES IN AN AMOUNT NOT TO EXCEED $165,000,000, AND APPROVING THE
EXECUTION OF ONE OR MORE NOTE PURCHASE AGREEMENTS
RELATING TO SUCH NOTES AND AUTHORIZING OTHER ACTIONS
IN CONNECTION THEREWITH
WHEREAS, pursuant to Section 53850 et seq. of the Government Code of th e State of California (the “Law”) containe d in Article 7.6 of Chapter 4 of Part 1 of Division 2 of Title 5 thereof, entitled “Temporary Borrowing,” on or after the first day of any fiscal year (being July 1), a city may borrow money by issuing notes for any purpose for which a city is authorized to expend moneys, including but not limited to current expenses, capital expenditures, and the discharge of any obligation or indebtedness of a city; and
WHEREAS, pursuant to Section 53853 of the G overnment Code, the City Co uncil (the “Council”) of the City of Oakland (the “City”) has found and de termined that the sum of up to $165,000,000 is needed for the requirements of the City to sati sfy obligations payable from the General Fund of the City, and that it is necessary that an amou nt up to said sum be borrowed for such purpose at this time by the issuance of the Notes (as defi ned below) in anticipation of the receipt of taxes, revenues and other moneys to be received by the City for the General Fund of the City during or allocable to fiscal year of the City beginning July 1, 2022 and ending June 30, 2023 (“Fiscal Year 2022-2023”); and
WHEREAS, it appears, and the Council hereby finds and determines, that the principal amount of the Notes, when added to the interest payable thereon , does not exceed eighty-five percent (85%) of the estimated amount of the uncollected taxes, income, revenue, cash receipts and other moneys of the City anticipated to be received for or accrued to the General Fund during Fiscal Year 2022-2023 that will be available for the payment of the interest on and the principal of the Notes; and
WHEREAS, no money has heretofore been borrowed by the City in anticipa tion of the receipt of, or payable or secured by, any taxes, income, revenue, cash receipts or other moneys of the City to be received for or accrued to the General Fund during Fiscal Year 2022-2023; and _________________________
CITY ATTORNEY’S OFFICE
CIL
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WHEREAS, the City wishes to authorize the issuance of the Notes in one or more series, to be sold by the City to one or more purchasers consisting of one or more banks or other financial institutions to be selected by the City Administrator, the Director of Finance or such other officer as the City Administrator shall designate in writing (such purc hasers as selected by the City Administrator, the Director of Finance or such other officer as the City Administrator shall so designate herein referred to collectively as the “Purchasers” and each a “Purchaser”); and WHEREAS, the City wishes to sell the Notes pursuant to one or more Not e Purchase Agreements to be entered into by the City and each Purchaser (s uch Note Purchase Agreements, in the form attached hereto as Exhibit B and incorporated herei n, with such changes, insertions and omissions as are made pursu ant to this Resolution, being re ferred to herein as the “Note Purchase Agreements” and each a “Note Purchase Agreement”); and WHEREAS, pursuant to the Law, certain taxes, income, revenue, cash receipts and other moneys of the City which will be received for or accrued to the General Fund during Fiscal Year 2022-2023 can and will be pledged fo r the payment of the intere st on and the principal of the Notes.
NOW, THEREFORE , BE IT RESOLVED BY THE COUNCIL OF THE CITY OF OAKLAND AS FOLLOWS:
Section 1. Recitals. All of the recitals hereinabove set forth are true and correct, and the Council so finds and determin es, and the Council further fi nds and determines that all acts, conditions and things required by law to exist, to have occurre d and to have been performed precedent to the issuance and sale of the Notes do exist, have occurred and have been performed in regular and due time, form and manner as required by law, and that the City is empowered under the Law to issue and sell the Notes as provided herein.
Section 2. Defined Terms. Unless otherwise defined herein, capitalized terms used in this Resolution shall have the meanings given such terms in the Note Purchase Agreements.
Section 3. Issuance of Notes.
(a) Solely for the purpose of anticipating taxes, income, revenu e, cash receipts and other moneys of the City to be received for or accrued to the G eneral Fund during Fiscal Year 2022-2023, the City hereby determines at this time to and shall borrow the aggregate principal sum of not to exceed $165,000,000 by the issuance of temporary note s under the Law, designated the “City of Oakland 2022-2023 Tax and Revenue Anticipation Notes” (the “Notes”). The Notes may be issued in one or more series and shall be dated the date of issuance thereof and shall be numbered from 1 consecutively upward in order of issuance. The Notes shall bear interest on the principal amount outstanding from time to time, mature and be p ayable on one more dates as provided in the respective Note P urchase Agreements; provided t hat the maturity dates of the Notes shall not exceed 13 months from the date of issuance of t he Notes, the True Interest Cost shall not exceed 3.5% per annum and the Maximum Rate shall not exceed 10% per annum. Interest on the Notes is not anticipated to be excluded from gross income for federal income tax purposes; provided, however, that the Note Purchase Agreements may provide that the interest on the Notes will be excluded from gross incom e for federal income tax purpo ses if it is determined by the 3 3681213.4 045979 FILE
Director of Finance or such other officer as the City Administrator shall designate in writing (the “Designated Officers”) that such exclusion is beneficial to the City, after consultation with the City Attorney and bond counsel. The principal amount of the Notes sh all be noted on the form of the Notes in accordance with the Note Purchase Agreements. Each Note may be subject to prepayment by the City prior to the maturity date thereof in accordance wi th the terms of the Note Purchase Agreement for such Note if it is determined by a Designated Off icer to be beneficial to the City.
In the event any Note is determined to be subject to prepayment by the City prior to the maturity date thereof, the method of giving notice of redemption to the Purchaser and the price or prices at which such Note shall be subject to redemption shall be specified in the Note Purchase Agreement for such Note.
(b) Each Note shall be initially issued and registered in the na me of the Purchaser purchasing such Note as the registered owner thereof (together with any successors or assigns of the Purchaser purchasing such Note as permitted in the applicable Note Purchase Agreement, the “Owner”).
(c) Each Note shall be evidenced by a single note initially issu ed and registered as provided in Section 3(b) hereof. T he Purchasers shall have the right to sell or transfer the Notes or to otherwise directly or indirectly transfer or assign any interest in the Notes only to the extent permitted in the Note Purchase Agreements.
(d) With respect to each Note, the City shall be entitled to tre at the Purchaser that purchases such Note as the Owner of the Note indicated therein and as the absolute owner of such Note for all purposes under this Resolution and for purposes of payment of principal of and interest on such Note, notwithstanding any notice to the contrary received by the City. (e) The Authorized Representatives, each acting alone, are hereb y authorized and directed to provide any notices or other directions of the City to the Purchaser pursuant to the Note Purchase Agreements.
(f) The Director of Finance will m aintain or cause to be maintai ned, at her office in Oakland, California, sufficient books for the registration of t he Notes, or shall enter into a fiscal agent agreement, with a financial institution selected by the D irector of Finance, containing provisions for the registration of the Notes.
Section 4. Form of Notes. The No tes shall be issued without cou pons and shall be substantially in the form thereof set forth in Exhibit A attached hereto and incorporated herein, the blanks in said form to be filled in with appropriate words and figures after the sale of the Notes and before the execution, authentication and delivery of the Notes.
Section 5. Execution of Notes. The City Administrator and the D esignated Officers, are each hereby authorized to sign the Notes by manual or facsimile signature, and the City Clerk is hereby authorized to countersign the same by manual or facsimile signature and, if required, to affix the seal of the City thereto by facsimile impression thereof. Said signing, countersigning and sealing shall constitute a valid and sufficient execution of th e Notes. Said officials are hereby authorized to cause the blank spaces thereof to be filled in as may be appropriate, and to deliver the Notes to the Purchaser.
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Section 6. Use of Proceeds of Notes. The Director of Finance sh all, immediately upon receiving the proceeds of the sale of the Notes, deposit in the General Fund all amounts representing the proceeds of the Notes received from such sale, and such proceeds shall be used for the purpose specified in the N ote Purchase Agreements, for payments of costs of issuance of the Notes or otherwise permitted by applicable law.
Section 7. Security for Not es: Security Interest.
(a) The City hereby pledges all P roperty Tax Revenues and the Ad ditional Revenues (if any) (collectively, the “Ple dged Property”), as such terms are defined in the Note Purchase Agreement, to the payment of the principal of and interest on the Notes, and the Notes shall be an obligation of the City payable from the Pledged Property. This pledge is valid and binding in accordance with the terms of this Resolution and the Pledged Property shall immediately be subject to the pledge, and the pledge sha ll constitute a first lien and security interest which shall immediately attach to the Pledged Property and be effective, binding, and enforceable against the City, its successors, purchasers of the Pledged Property, creditors, and all others asserting the rights therein, to the extent set forth, and in accordance with, this Resolution irrespective of whether those parties have notice of the pledge and without the need for any physical delivery, recordation, filing, or further act. Nothing in this Resolution shall prohibit the City from spending the Pledged Property for any lawful purpose of the City.
(b) In the event the Director of Finance, upon consultation with the City’s municipal advisor, determines it is financially advantageous to the City, Pledged Property shall be set aside in a separate fund of the City or transferred to a fiscal agent selected by the Director of Finance, in such amounts and on such dates as shall be determined by the D i r e c t o r o f F i n a n c e . T h e provisions for such set aside or transfer of Pledged Property, including the amounts to be set aside or transferred and dates of set aside or transfer, shall be set forth in the Note Purchase Agreements executed by the City pursuant to Section 8 hereof.
(c) Nothing in this Resolution shall prohibit the City from iss uing additional tax and revenue anticipation notes payable from, and with a lien on, th e Pledged Property on a basis subordinate to the Notes (“Subordi nated Notes”); provided that with respect to any such Subordinated Notes, the City shall not, prior to the termination of the Note Purchase Agreements pursuant to the terms therein and payment in full of the Notes, (i) make any scheduled payments of principal thereof or interest thereon, (ii) make any prepaym ent thereof, or (iii) issue any such Subordinated Note that has a maturity date earlier than the stated maturity dates of the Notes.
Section 8. Sale of Notes. The City Administrator and the Design ated Officers, each acting alone, are hereby authorized to select a Purchaser or Pu rchasers consisting of one or more banks or other financial institutions. The Note Purchase Agreements providing for the sale of the Notes proposed to be entered into between each Purchaser and th e City, in substantially the form thereof set forth in Exhibit B attached hereto and incorporated herein, is hereby approved, and the City Administrator and the Design ated Officers, each acting alo ne, are hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to one or more Note Purchase Agreements in substantially said form (which Note Purc hase Agreements shall contain the maturity dates and the interest rates and the prepayment pr ovisions, if any, for the Notes and the provisions, if any, for the set aside or transfer of Pledge d Property pursuant to Section 7(b) 5 3681213.4 045979 FILE
hereof), with such changes as such officer executing the Note P urchase Agreements may require or approve upon consultation with the City Attorney, such approval to be conclusively evidenced by the execution and delivery thereof.
Section 9. Further Actions. The C ity Administrator, Director of Finance, and the City Clerk are each hereby authorized and directed, for and in the name and on behalf of the City, to do any and all things and take any and all actions and execute any and all certificates, agreements and other documents, including but not limited to, a fiscal agent agreement with a financial institution selected by such official and a rate lock agreement that may include a breakage fee related to the Notes (provided that, such rate lock agreement shall be designe d to reduce the amount of the interest rate when used in combination with the issuance of the Notes), which they, or any of them, may deem necessary or advisable in order to consummate the lawf ul issuance and delivery of the Notes in accordance with this Resolution, and all actions heret ofore taken by such officers with respect to the sale and issuance of the Notes are hereby approv ed, confirmed and ratified. Any authority delegated under this Resolution to a specified official (including officials acting in these positions on an interim basis) of the City may also be exercise d by the specified official’s authorized designee.
Section 10. Resolution to Constitute Contract. It is hereby cov enanted and warranted by the City that all representations and recitals contained in this Resolution are true and correct, and that the City, and its appropr iate officials, have duly tak en all proceedings necessary to be taken by them, and will take any additional proceedings necessary to be taken by them for carrying out the provisions of this Resolution. It is hereby further co venanted and warranted by the City that the provisions of the Note and of this Resolution shall co nstitute a contract between the City and the Owners, and such provisions shall be enforceable by man damus or any other appropriate suit, action or proceeding at law or in equity in any court of competent jurisdiction; provided, that notwithstanding any other provision hereof to the contrary, upo n the City’s failure to observe, or refusal to comply with, the cove nants contained herein, no one other than the Owners or former Owners of the Notes shall be entitled to exercise any right or remedy under this Resolution on the basis of the City’s failure to observe, or refusal to comply with, such covenants.
Section 11. Appointment of Bond C ounsel and Municipal Advisor. The City Council hereby acknowledges the appointment by the City Attorney of Haw kins Delafield & Wood LLP, as bond counsel. The selection by the Director of Finance of Ur ban Futures, Inc., as municipal advisor with respect to the Notes, is hereby affirmed.
Section 12. Amendments. This Resolution may be amended by a sup plemental resolution adopted by the City Council.
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Section 13. Severability. If any one or more of the provisions of this Resolution shall to any extent be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the decision, finding, order or decree of which becomes final, none of the remaining provisions of this Resolution shall be affected thereby, and such provisions shall be valid and enforceable to the fullest extent permitted by applicable law.
IN COUNCIL, OAKLAND, CALIFORNIA,
PASSED BY THE FOLLOWING VOTE:
AYES – FIFE, GALLO, KALB, KAPLAN, REID, TAYLOR, THAO AND PRESI DENT
FORTUNATO BAS
NOES –
ABSENT –
ABSTENTION –
ATTEST:
ASHA REED
City Clerk and Clerk of the Council of
the City of Oakland, California
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3681213.4 045979 FILE
EXHIBIT A
FORM OF NOTE
R-___ $ _______________
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, [Purchaser], has an interest herein. This Note is non-negotiab le and [Purchaser] has the right to sell or transfer the Note or to otherwise directly or indirectly transfer or assign any interest in the Note only to the extent permitted by the Note Purchase Agreement.
CITY OF OAKLAND, CALIFORNIA
2022-2023 TAX AND REVENUE ANTICIPATION NOTE
INTEREST RATE DATED DATE MATURITY DATE
FOR VALUE RECEIVED, the City of Oakland, California, acknowledges itself indebted to and promises to pay to [Purchaser] (together with any of its successors and assigns as permitted under the Note Purchase Agreement (defined below), the “Purchaser”), at the office of Director of Finance, the Principal Sum of _______ the Dollars ($______, in lawful money of the United States of America, on __________, together with interest on the principal amount outstanding hereunder from time to time at the rate or rates per annum set forth in that certain Note Purchase Agreement (the “Note Purchase Agreement”) by and between the City and the Purchaser dated ___________, 2022 (computed on the basis set forth in the Note Purchase Agreement) in like lawful money from the date hereof until payment in full of said principal sum. Interest hereon shall be payable to the Purchaser at the address shown on the registration books of the Director of Finance; provided that the address may be changed pursuant to the terms of the Note Pu rchase Agreement, and at such other times as may be required under the Note Purchase Agreement. The principal of and interest at maturity on this Note shall be payable only to the Purchaser and in the manner provided in the Note Purchase Agreement. Upon payment in full of this Note, th is Note shall be surrendered for cancellation.
It is hereby certified, recited and declared that this Note is one of an authorized issue of notes entitled “City of Oakland 2022-2023 Tax and Revenue Antic ipation Notes” (the “Notes”), in the aggregate principal amount of ___________ Dollars ($_________), to be issued by authority of Article 7.6 (commencing wi th section 53850) of Chapter 4, Pa rt 1, Division 2, Title 5 of the Government Code of the State of California and Resolution No. __________ adopted by the City Council on __________, 2022 (together with the Note Purchase Agreement appended thereto, the “Resolution”), and that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of this Note have existed, happened and been performed in regular and due time, form and manner as r equired by law, and that this Note, together with all other indebtedness and obligations of the City does not exceed any limit prescribed by the Constitution or laws of the State of Californ ia. Capitalized terms not other wise defined herein shall have the meaning ascribed thereto in the Resolution.
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The Note is [not] subject to redemption prior to maturity [at t he times and upon the terms set forth in the Note Purchase Agreement].
Pursuant to the Resolution, the City has pledged all Property Tax Revenues and Additional Revenues (collectively, the “Ple dged Property”), as such terms are defined in the Note Purchase Agreement, to the payment of the principal of and interest on t he Notes, and this Note is an obligation of the City payable from the Pledged Property.
This Note shall not be valid or become obligatory for any purpo se until the Certificate of Authentication hereon shall have been signed by the Director of Finance.
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IN WITNESS WHEREOF, the City of Oakland has caused this Note to be executed by the manual or facsimile si gnature of its City Administrator and cou ntersigned by the manual or facsimile signature of the City Clerk and caused a facsimile of the official seal to be imprinted hereon, all as of the ___ day of _________, 2022.
CITY OF OAKLAND
By:
City Administrator
(SEAL)
Countersigned:
By:
City Clerk
CERTIFICATE OF AUTHENTICATION
This Note is one of an authorized issue of notes entitled “City of Oakland, California 2022- 2023 Tax and Revenue Anticipation Notes” described in the within mentioned Resolution.
Date of Authentication: _____________, 2022
Director of Finance
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EXHIBIT B
FORM OF NOTE PURCHASE AGREEMENT
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NOTE PURCHASE AGREEMENT
between
CITY OF OAKLAND
and
[PURCHASER]
Dated [Closing Date]
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions ..................................... ......................................................................1 Section 1.02. Construction .................................... ....................................................................5
ARTICLE II
NOTE
Section 2.01. Purchase of Note ................................ .................................................................5 Section 2.02. Repayment ....................................... ....................................................................6 Section 2.03. Interest ........................................ .........................................................................6 Section 2.04. Reserved ........................................ ......................................................................7 Section 2.05. No Prepayment ................................... .................................................................7 Section 2.06. Security Interest ............................... ....................................................................7 Section 2.07. Method and Pla ce of Payment .............................................................................7 Section 2.08. Net Payment ..................................... ...................................................................7 Section 2.09. Reserved ........................................ ......................................................................8 Section 2.10. Evidence of Indebtedness ........................ ............................................................8 Section 2.11. No Note Rating; DTC; CUSIP ...................... ......................................................8
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Conditions to the Bank’ s Entering Into Agreement ............................................8
ARTICLE IV
REPRESENTATIONS OF THE CITY
Section 4.01. Valid Existence ................................. .................................................................10 Section 4.02. Authorization and Validity ...................... ..........................................................10 Section 4.03. Compliance with Laws and Contracts .............. .................................................10 Section 4.04. Litigation ...................................... .....................................................................10 Section 4.05. No Event of Default ............................. .............................................................10 Section 4.06. Projections and Budget Material ................. ......................................................11 Section 4.07. Accurate and Complete Disclosure ................ ...................................................11 Section 4.08. Regulato ry Approvals ........................................................................................11 Section 4.09. Prospective Change in Law ....................... ........................................................11 Section 4.10. Sovereign Immunity .............................. ............................................................11 Section 4.11. Priority of Pledge .............................. .................................................................11 - ii -
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Section 4.12. Ordinance and Resolution ........................ .........................................................11 Section 4.13. City Charter .................................... ...................................................................11 Section 4.14. The Note ........................................ ....................................................................12 Section 4.15. Usury ........................................... ......................................................................12 Section 4.16. Sanctions C oncerns and Anti-Corruption Laws ................................................12
ARTICLE V
COVENANTS OF THE CITY
Section 5.01. Notice of Default ............................... ................................................................12 Section 5.02. Compliance With Laws ............................ .........................................................12 Section 5.03. Ordinance and Resolution ........................ .........................................................12 Section 5.04. No Impairment ................................... ...............................................................13 Section 5.05. Budgets; Financial Sta tements; Reports, Certificates and Other Information ........................................................................................................13 Section 5.06. Inspection Rights ............................... ................................................................14 Section 5.07. Use of Proceeds ................................. ................................................................14 Section 5.08. Existence ....................................... ....................................................................14 Section 5.09. Indebtedness and Liens .......................... ...........................................................14 Section 5.10. Assignments ..................................... .................................................................14 Section 5.11. Further Assurances .............................. ..............................................................14 Section 5.12. Certain Information ............................. ..............................................................15 Section 5.13. Accuracy of Information ...................................................................................15 Section 5.14. No Immunity ..................................... ................................................................15 Section 5.15. Books and Records ............................... .............................................................15
ARTICLE VI
EVENTS OF DEFAULT; REMEDIES
Section 6.01. Events of Default ............................... ................................................................15 Section 6.02. Remedies ........................................ ...................................................................17 Section 6.03. No Waiver; Cum ulative Remedies ....................................................................17
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments ...................................... ................................................................18 Section 7.02. Assignment by the Bank .......................... ..........................................................18 Section 7.03. Governing Law; Waiver of Jury Trial; Waiver of Special Damages; Sovereign Immunity ..........................................................................................20 Section 7.04. Severability .................................... ....................................................................21 Section 7.05. Counterparts .................................... ..................................................................21 Section 7.06. Expenses ........................................ ....................................................................21 Section 7.07. Indemnification ................................. ................................................................22 - iii -
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Section 7.08. Term of t he Agreement .....................................................................................22 Section 7.09. Notice .......................................... ......................................................................22 Section 7.10. Holidays ........................................ .....................................................................23 Section 7.11. Survival ........................................ .....................................................................23 Section 7.12. USA PATRIOT Act Notification .................... ..................................................23 Section 7.13. No Liability .................................... ...................................................................23 Section 7.14. No Advisory or Fi duciary Relationship ............................................................23 EXHIBIT A — DEBT SERVICE SCHEDULE ......................................................................... A-1 EXHIBIT B — FORM OF PURCHASER LETTER ..................................................................C-1 EXHIBIT C — FORM OF COMPLIANCE CERTIFICATE .................................................... D-1 3683081.2 045979 AGMT
This NOTE PURCHASE AGREEMENT, dated [Closing Date], is entered into by and between the CITY OF OAKLAND, a municipal corporation duly organ ized and existing under and by virtue of the laws of the State of California and its charter (the “City”), and [PURCHASER], a national banking association (including its successors and assigns, the “Bank”).
W I T N E S S E T H :
WHEREAS, the City desires to s ell its City of Oakland 2022-2023 Tax and Revenue Anticipation Note, consisting of a note in the original princip al amount of $[Par Amount] (as amended, restated or othe rwise modified, the “ Note”), in anticipation of the City’s receipt of Property Tax Revenues (as defined herein) in order to prepay a portion of the City’s employer unfunded accrued liability contri bution to the California Publi c Employees’ Retirement System for the fiscal year ending June 30, 2023; and
WHEREAS, the Bank is willing, on the terms and conditions contained herein, to purchase the Note as further described herein from the City.
NOW, THEREFORE, in consideration of the respective agreements c ontained herein and for other good and valuable consideration, the receipt and suff iciency of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. The following terms have the meanings indicated below or in the referenced Section of this Agreement, unless the context shall clearly indicate otherwise:
“Additional Revenues” means all l egally available taxes, income , revenue, cash receipts, and other moneys of the City attributable to the City’s Fiscal Year ending June 30, 2023 and chargeable to the City’s gene ral fund and excluding moneys whic h, when received by the City, will be encumbered for a special purpose.
“Affiliate” means with respect t o any Person, another Person th at directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the man agement or policies of a Perso n, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have correlative meanings.
“Agreement” means this Note Purchase Agreement, as amended, mod ified and supplemented from time to time.
“Applicable Lending Office” means the office of the Bank at whi ch the Note are carried on the books and records of the Bank, which, initially, is [Purchaser City], California. 2 3683081.2 045979 AGMT
“Authorized Representative” means any of the following officers of the City: the City Administrator, the Director of Finance and any individual designated in writing to the Bank as an Authorized Representative by the City Administrator or the Director of Finance. “Authorizing Law” means California Government Code Sections 538 50 to 53858 (inclusive).
“Bank” has the meaning assigned to that term in the introductor y paragraph of this Agreement.
“Bank Affiliate” shall mean, as to the Bank, any other Person t hat directly or indirectly controls, is controlled by, or is under common control with the Bank. As used in this definition, “control” (and the correlative terms, “controlled by” and “under common control with”) shall mean possession, directly or indirectly , of power to direct or cause the direction of management or policies (whether through ownership of securities or partnershi p or other ownership interests, by contract or otherwise).
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York, New York, [Purchaser City], Calif ornia or Oakland, California are authorized or required by law to remain closed.
“City” has the meaning assigned to that term in the introductor y paragraph of this Agreement.
“Default” means the occurrence of any event or the existence of any circumstances that, with the passage of time, the giving of notice, or both, would become an Event of Default. “Default Rate” has the meaning assigned to that term in Section 2.03(b) hereof. “Designated Jurisdiction” means any country or territory to the extent that such country or territory itself is the subject of any Sanction.
“Director of Finance” means the individual who from time to tim e occupies the office of the Director of Finance of the City or, if such office is vacan t, the office of the acting Director of Finance.
“Dollars” and “$” means the lawful currency of the United States of America. “Effective Date” means [Closing Date].
“Event of Default” has the meaning assigned to that term in Section 6.01 hereof. “Excess Interest” has the meaning assigned to that term in Section 2.03(d) hereof. “Federal Funds Effective Rate” means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, a s published for such day (or, if such day is not a Business Day, for the immediately preceding B usiness Day) by the Federal 3 3683081.2 045979 AGMT
Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m., California time, on such day on such transactions received by the Bank from three Federal funds brokers of recognized standing selected by the Bank in its sole discretion.
“Fiscal Year” means each twelve-month period commencing on July 1 and ending on June 30.
“GO Indebtedness” has the meaning assigned to that term in Section 6.01(d) hereof. “Governmental Authority” means the government of the United States of America, or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. “Indebtedness” means, without duplication, (a) all indebtedness (including principal and interest) of the City for borrowed money or for the deferred purchase price of property or services; (b) all liabilities secured by any Lien on any property owned b y the City, whether or not such liabilities have been assumed by the City; (c) the aggregate amount required to be capitalized under leases under which the City is the lessee; and (d) all Continge nt Obligations of the City. As used in this definition, the term “ Contingent Obligation” means, as to the City, any obligation of the City guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations (“primary obligations ”) of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly includi ng, without limitation, any oblig ation of the City, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (x) for the purchase or payment of any such primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring th e holder of any such primary obligation of the ability of the primary obligor to make paymen t of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such pr imary obligation against loss in respect thereof; provided, however, that the term Contingent Obligation shall not include endorsements of instruments for d eposit or collection in the or dinary course of business. The amount of any Contingent Obligat ion shall be deemed to be an am ount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determin able, the maximum reasonably anticipated liability in respect thereof (assuming the City is required to perform thereunder) a s determined by the City in good faith.
“Indemnitee” has the meaning assigned to that term in Section 7.07(a) hereof. “Interest Invoice” has the meaning assigned to that term in Section 2.03(c) hereof. “Interest Rate” has the meaning assigned to that term in Section 2.01 hereof. “Investment Policy” means the investment policy, guidelines and permitted investments of the City.
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“Lien” means any mortgage, pledge, hypothecation, assignment, d eposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement of any kind or nature whatsoever (including , without limitation, any condit ional sale or other title retention agreement).
“Margin Stock” has the meaning provided in Regulation U of the Board of Governors of the Federal Reserve System.
“Maturity Date” has the meaning assigned in Section 2.01 hereto. “Maximum Rate” means ten percent (10%) per annum.
“Moody’s” means Moody’s Investors Service, Inc. and any successor rating agency. “Note” has the meaning assigned to that term in the recitals of this Agreement. “Noteholder” shall mean the Bank and each Bank Transferee or No n-Bank Transferee pursuant to Section 7.02 hereof so long as such Bank Transferee or Non-Bank Transferee is an owner of the Note.
“Notice” or “notice” means any f orm of written communication or a communication by means of electronic mail, facsimile device, telegraph or cable and confirmed telephonically. “Obligations” means all amounts owing to the Bank pursuant to t he terms of this Agreement and the Note.
“OFAC” means The Office of Forei gn Assets Control of the U.S. D epartment of the Treasury.
“Ordinance” means Ordinance No. [______] C.M.S. entitled, “Ordinance Providing for the Borrowing of Funds and the Iss uance and Sale of 2022-2023 Notes Payable from Revenues Received during the Fiscal Year 2022-2023 in an Amount Not to E xceed $165,000,000 and Approving Certain Related Matters,” adopted by the City Council on June [____], 2022. “Parent” means the Bank’s holding company.
“Person” means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organization, inclu ding a government or a political subdivision or an agency or instrumentality thereof.
“Pledged Property” has the meaning assigned to that term in Section 2.06 hereof. “Prime Rate” means the rate of interest per annum announced fro m time to time by the Bank as its prime rate. The Prime Rate is a variable rate and e ach change in the Prime Rate is effective from and including the date the change is announced a s being effective. THE PRIME RATE IS A REFERENCE RATE AND MAY NOT BE THE BANK’S LOWEST RATE. 5 3683081.2 045979 AGMT
“Property Tax Revenues” means all secured ad valorem property t ax pay ments that the City receives from the County of Alameda, California in respect of the Fiscal Year ending June 30, 2023 (but not including (i) property taxes levied for general o bligation bonds as provided under Section 1(b) of Article XIIIA of the California Constitution or (ii) property taxes in excess of the 1% limit to pay pension obligations).
“Related Documents” means the Note, the Ordinance and the Resolution. “Resolution” means Resolution No. [_______] C.M.S. adopted by the City Council of the City on June [___], 2022.
“Sanction(s)” means any international economic sanction administered or enforced by the United States Government (incl uding, without limitation, OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority. “Section 5.05 Documents” means the documents required to be delivered by Section 5.05 hereof.
“State” means the State of California.
“Taxes” has the meaning assigned to that term in Section 2.08 hereof. “Usury Rate” has the meaning assigned to that term in Section 2.03(d) hereof. “2021 ACFR” means the City’s Annua l Comprehensive Financial Rep ort for the Fiscal Year ended June 30, 2021.
Section 1.02. Construction. The definitions of terms herein sha ll apply equally to the singular and plural forms of th e terms defined. Whenever the co ntext may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed t o have the same meaning and eff ect as the word “shall.” Unless the context requires otherwise ( a) any definition of or referen ce to any agreement, instrument or other document herein shall be construed as referring to such a greement, instrument or other document as from time to time ame nded, supplemented or otherwis e modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’ s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular pro vision hereof and (d) all references herein to Articles, Sections and Exhibits shall be construed to refer to Articles and Sections of, and Exhibits to, this Agreement.
ARTICLE II
NOTE
Section 2.01. Purchase of Note. On the basis of the representat ions, warranties and covenants contained herein, but subject to the terms and condit ions herein set forth, the Bank 6 3683081.2 045979 AGMT
hereby agrees to purchase from the City, and the City hereby agrees to sell to the Bank, the Note.
The Note shall be in a principa l amount equal to $ [Par Amount] , shall bear interest at the non- default rate of [_____] percent ([_____]%) per annum (the “ Interest Rate ”) and shall have a maturity date of June 30, 2023 (the “ Maturity Date”). The purchase price of the Note shall be 100% of the principal amount there of. The Bank shall wire trans fer the purchase price to the account set forth in the City’s request for funds dated [Closing Date].
Section 2.02. Repayment. The City hereby agrees to pay or cause to be paid the outstanding principal of the Note together with interest thereon on the Maturity Date thereof in the amounts set forth on Exhibit A attached hereto.
Each payment shall be made to the Bank by wire transfer of imme diately available funds to:
To: [Purchaser]
[Wiring instructions to come.]
Section 2.03. Interest. The City agrees to pay interest in resp ect of the unpaid principal amount of the Note as follows:
(a) The City agrees to pay intere st in respect of the unpaid principal amount of the Note from the date the proceeds thereof are made available to the Ci ty until the date the Note (or any portion of the principal amount thereof) is paid in full at a rate per annum equal to the Interest Rate or the Default Rate, as applicable.
(b) Overdue principal and, to the extent permitted by law, overd ue interest in respect of the Note shall, subject to S ection 2.03(d) below, bear interest at a rate per annum equal to the highest of (i) the Federal Funds Effective Rate plus [_____]%, (ii) the Prime Rate plus [_____]%, or (iii) [_____] % (the “Default Rate”).
(c) Interest shall be payable on the Maturity Date for the inter est accrued on the Note from and including the Effective Date. The Bank shall deliver a n invoice (an “Interest Invoice”) to the City no later than ten (10) Business Days prior to Maturity Date; provided that failure of the Bank to deliver an Interest Invoice shall not affect the City’s obligations in respect of such interest.
If the Note has not been paid in full by its Maturity Date, int erest shall be payable upon demand of the Bank.
(d) If the rate of interest payable on the Note, including amoun ts payable under Section 2.08 hereof, shall exceed the Maximum Rate or, if less, any maximum interest rate payable by law for any period for which interest is payable (the “ Usury Rate”), then (i) interest at the Maximum Rate or the Usury Rate, as the case may be, shall be due and payable on such Note and (ii) interest at the rate equal to the difference between (A) t he rate of interest calculated in accordance with the terms hereof and (B) the Maximum Rate or th e Usury Rate, as the case may be (the “ Excess Interest”), shall be deferred until such date as the rate of interest c alculated in accordance with the terms hereof ceases to exceed the Maximum R ate or the Usury Rate, as the case may be, at which time the City shall pay or cause to be pa id to the Bank, with respect to amounts then payable to the Bank that are required to accrue in terest hereunder, such portion of 7 3683081.2 045979 AGMT
the deferred Excess Interest as will cause the rate of interest then paid to the Bank to equal the Maximum Rate or the Usury Rate, as the case may be, which payments of deferred Excess Interest shall continue to apply to suc h unpaid amounts hereunder until the earlier of (x) the date all deferred Excess Interest is fully paid to the Bank or (y) the Maturity Date of such Note. (e) All computations of interest (other than interest that is de termined by reference to the Default Rate) shall be made on the basis of a 30/360 day ye ar. All computations of interest at the Default Rate shall be made on the basis of a 365 day year and actual days lapsed.
Section 2.04. Reserved.
Section 2.05. No Prepayment. (a) The Note is not subject to prepayment of principal or interest prior to the Maturity Date.
Section 2.06. Security Interest. Pursuant to the Ordinance and the Resolution, the City has pledged all Property Tax Re venues and the A dditional Revenues (collectively, the “ Pledged Property”) to the payment of the principal of and interest on the Note. The pledge is valid and binding in accordance with the terms of the Ordinance and the R esolution, and the Pledged Property shall immediately be sub ject to the pledge, and the pl edge shall constitute a lien and security interest which shall immediately attach to the Pledged Property and be effective, binding, and enforceable against the City, its successors, purchasers of the Pledged Property, creditors, and all others asserting the rights therein, to the extent set forth, and in accordance with, the Ordinance and the Resolution irrespective of whether those parties have notice of the pledge and without the need for any physical delivery, recordation, filing, or further act. Notwithstanding anything to the contrary contained herein, the obligations of the City under th is Agreement and the Note shall be payable solely from the Pledged Property.
Section 2.07. Method and Place of Payment. All payments under t his Agreement or the Note shall be made to the Bank not later than 12:00 Noon (California time) on the date when due and shall be made in Dollars in immediately available funds by wire transfer to the account of the Bank set forth in Section 2.01 herein or by check delivered to the office of the Bank set forth in any invoice of the Bank, or such other account as the Bank may hereafter designate in writing as such to the City. Any Notice of a change in the account of the Bank shall become effective on the fifth calendar day after the delivery of such Notice to the City. Whenever any payment to be made hereunder or under the Note shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Busin ess Day and, with respect to payments of principal, interest shall be payable at the applicable rate during such extension.
Section 2.08. Net Payment. All payments made by the City hereunder or under the Note will be made without setoff, count erclaim or other defense. All such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature n ow or hereafter imposed by any jurisdiction or by any political subdivision or taxing authorit y thereof or therein (but excluding any tax imposed on or measured by the net income of the Bank pu rsuant to the laws of the jurisdiction (or any political subdivision or taxing authority thereof or therein) in which the Applicable Lending Office of the Bank is located) and all inter est, penalties or similar liabilities with respect thereto (collectively, “Taxes”). If any Taxes are so levied or imposed, the City agrees, 8 3683081.2 045979 AGMT
subject to Section 2.03(d) hereof, to pay the full amount of such Taxes and such additional amounts as may be necessary so that every payment of all amounts due he reunder or under the Note, after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein or in the Note. The City will furnish to the Bank, w ithin forty-five (45) days after the date the payment of any Taxes is due pursuant to applicable law , certified copies of tax receipts evidencing such payment by the City. To the extent permitted by law, the City hereby agrees, subject to Section 2.03(d) hereof, to indemnify and hold harmle ss the Bank, and reimburse the Bank upon its written request, for the amount of any Taxes so l evied or imposed and paid by the Bank. The provisions of this Section 2.08 shall survive the termination of this Agreement.
Section 2.09. Reserved.
Section 2.10. Evidence of Indebtedness. The Bank shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the City under the Note and the amount of principal and interest payable and paid from time to time thereunder. In any legal action or proceeding in respect of this Agreement or the Note, the entries made in such account or accounts shall be conclusive evidence (absent manifest error) of the existence and amounts of the obligations of the City therein recorded.
Section 2.11. No Note Rating; DTC; CUSIP. So long as the Bank o wns the Note, such Note shall not be (i) assigned a separate rating by any rating agency, (ii) registered with The Depository Trust Company or any other securities depository, (iii) offered pursuant to any type of offering document or official statement or (iv) assigned a CUSI P number by CUSIP Global Services.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Conditions to the Bank’s Entering Into Agreement. It shall be a condition precedent to the Bank’s entering into this Agreement and purchasing the Note that all proceedings taken in connection with the transactions contemplated hereby and all documents incident thereto, including the Related Documents, shall be in form and substance satisfactory to the Bank and that the conditions enumerated in this Section 3.01 have been fulfil led to the satisfaction of the Bank.
Delivery by the Bank of a fully executed signature page to this Agreement and a fully executed signature page to the Purchaser Letter, which such Purchaser Le tter shall be in the form attached hereto as Exhibit B, constitute acknowledgment and acceptance b y the Bank that all such conditions have been met or waived.
(a) Representations. On the Effe ctive Date, (i) there shall exist no Event of Default or Default; (ii) all representations and warranties made by the Ci ty herein or in any of the Related Documents shall be true and correct with the same effect as tho ugh such representations and warranties had been made at and as of such time; and (iii) each of the Related Documents to which the City is a party, as amended (if applicable), is in full force and effect and has not been amended, modified or changed.
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(b) Documents. On or prior to the Effective Date, the Bank shal l have received, in form and substance satisfactory to the Bank, the following:
(i) True and complete executed c opies of this Agreement and the Note; (ii) The Ordinance and the Resolut ion certified as being accurate and complete and in full force and effect as of the Effective Date by the City Clerk; (iii) Signature and incumbency certificates, dated the Effective D a t e , o f t h e signatories of the City executing this Agreement and the Note; (iv) A certificate of an Authorized Representative dated the Eff ective Date, confirming that the budget for the Fiscal Year ending June 30, 2023 has been approved by the City Council and making the representations set forth in Se ction 3.01(a) with respect to the City;
(v) Executed copies of (A) the legal opinion of counsel to the C ity addressed to the Bank; and (B) the legal opinion of Hawkins Delafield & Wood LLP, which opinions, in each case, shall be in form and substance satisfactory to the Bank; (vi) If the annual proposed budget for the Fiscal Year ending Ju ne 30, 2023 in the form considered by the City Council at its meeting on June [___], 2022 is changed after such date and before the Effective Date, a synopsis of the meeting at which the City Council approved such changes to the annual budget for the City’s Fisca l Year ending June 30, 2023 certified by an Authorized Representative;
(vii) A copy of the City’s Investment Policy, in form and substa nce satisfactory to the Bank;
(viii) Recent evidence that the unenhanced long-term ratings ass igned to the general obligation bonds of the City are “[Aa1]” by Moody’s and “[AA]” by S&P; and (ix) Such further documentation, certificates or opinions as the B a n k m a y reasonably request in connecti on with the matters arising under this Agreement and the Related Documents.
(c) Absence of Material Adverse Change. The Bank shall be satis fied that, on the Effective Date, no ma terial adverse change in or effect upon th e financial condition of the City shall have occurred since June 30, 2021 or the City’s ability t o perform its obligation under this Agreement and the Related Documents. In addition, on or prior t o the Effective Date, no change shall have occurred in any law, rule or regulation or in any interpretation thereof that, in the opinion of counsel to the Bank, would make it illegal for the Bank to e xecute and deliver this Agreement or for the City to execute, deliver and perform under the terms of this Agreement and the Note. (d) Payment. The City shall have paid the fees and expenses of counsel to the Bank as provided in Section 7.06 hereof.
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(e) Other Matters. All other lega l matters pertaining to the ex ecution and delivery of this Agreement and the Related Documents shall be satisfactory to the Bank, and the Bank shall have received such other stateme nts, certificates, agreements, documents and information with respect to the City and matters contemplated by this Agreement as the Bank may reasonably request.
ARTICLE IV
REPRESENTATIONS OF THE CITY
The City makes the following representations and warranties to the Bank as of the date hereof:
Section 4.01. Valid Existence. The City is a municipal corporat ion duly organized and existing under and by virtue of t he laws of the State and its C harter and has the necessary power and authority to execute and deli ver this Agreement and the Rel ated Documents, and to perform its obligations hereunder and thereunder.
Section 4.02. Authorization and Validity. The execution, delive ry and performance by the City of this Agreement, the Note and the other Related Documents have been duly authorized by proper proceedings of the City, and no further approval, authorization or consents are required by law or otherwise. This Agreement, the Note and the Resolutio n constitute the legal, valid and binding obligations of the City enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, moratori um and other laws affecting cre ditors’ rights generally and principles of equity and public policy.
Section 4.03. Compliance with Laws and Contracts. Neither the e xecution and delivery by the City of this Agreement or the Note, or the passage or ad option of the Ordinance and the Resolution, nor the consummation by the City of the transactions herein and therein contemplated, nor compliance by the City with the provisions hereof or thereof will (a) violate any provision of its Charter, (b) violate any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on the City, (c) result in any breach of, or default un der the provisions of any material indenture, resolution, instrument or agreement to which the Cit y is a party or is subject, or by which it or its property is bound, or (d) conflict with or result in the creation or imposition of any Lien pursuant to the terms of any such indenture, instrument or agreement.
Section 4.04. Litigation. Other than has been previously disclosed in writing to the Bank, there is no action, suit, proceeding, inquiry or investigation at law or in equity or before or by any court, public board or body pending with service of process accomplished or, to the knowledge of the City’s Director of Finance, threatened against or affecting the City (a) wherein an unfavorable decision, ruling or finding would materially adversely affect (i) the transactions contemplated by or the validity of this Agreement, the Note or any of the other Related Documents, or (ii) the City’s ability to perform its obligations hereunder or under the Note, or the other Related Documents; or (b) which in any way contests the existence, organization or powers of the City or the titles of the officers of the City to their respective offices.
Section 4.05. No Event of Default. No Event of Default or Defau lt has occurred and is continuing.
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Section 4.06. Projections and Budget Material. The City represe nts that the proposed budget for the Fiscal Year ending June 30, 2023 in the form considered by the City Council at its meeting on June [___], 2022 was prepared on the basis of information and estimates that the City believed on the Effective Date to be reasonable.
Section 4.07. Accurate and Complete Disclosure. The City certif ies as of the Effective Date that a true, correct and complete copy of the 2021 ACFR has been furnished to the Bank. The City also certifies that the i nformation contained in the 2021 ACFR was accurate as of the respective dates of such information. The Director of Finance certifies that he or she has not failed to disclose any material information relating to the Property Tax Revenues of which he or she has actual knowledge, after due inquiry, where such omission would reasonably be expected to impact the Bank’s decision to enter into the Agreement.
Section 4.08. Regulatory Approvals. Each authorization, consent , approval, license or formal exemption from or filing, declaration or registration with, any court, governmental agency or regulatory authority (federal, state or local), required to be obtained by the City in connection with the City’s execution and delivery of, and performance unde r this Agreement, the Note and the other Related Documents has been obtained or made and is in full force and effect.
Section 4.09. Prospective Change in Law. To the knowledge of th e City’s Director of Finance, there is no amendment, or proposed amendment certified for placement on a ballot, to the City Charter or the Constitution of the State or any published administrative interpretation of the Constitution of the State or any State law, or any legislation which has passed either house of the State legislature or is under consideration by any conference o r similar committee, or any published judicial decision interpreting any of the foregoing, the effect of which is to invalidate, eliminate or materially reduce the Property Tax Revenues.
Section 4.10. Sovereign Immunity. Under existing law, the City is not entitled to raise the defense of sovereign immunity in connection with any legal proceeding to enforce or collect upon this Agreement or any Related Document, including payment of the principal of and interest on the Note; provided that the Cit y is entitled to raise the de fense of sovereign immunity in connection with actions based on torts.
Section 4.11. Priority of Pledge. Pursuant to the Ordinance and the Resolution, the City has pledged all Pledged Property to the payment of the principa l of and interest on the Note, the priority of which is set forth in the Resolution, and the Bank is required to take no further action to perfect or maintain this pledge.
Section 4.12. Ordinance and Resolution. Each of the Ordinance and the Resolution is in full force and effect. Each of the Ordinance and the Resolution has not been amended or supplemented except by such amendm ents or supplements as have p reviously been delivered to the Bank.
Section 4.13. City Charter. The City Charter is in full force a nd effect and has not been amended or supplemented except b y such amendments or supplement s as have previously been disclosed on the City’s website.
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Section 4.14. The Note. As of the E ffective Date, the Note has been duly and validly issued under the Ordinance and the Resolution and is entitled to the benefits thereof.
Section 4.15. Usury. The terms of this Agreement, the Note and the other Related Documents regarding the calculation and payment of interest and fees do not violate any applicable usury laws.
Section 4.16. Sanctions Concerns and Anti-Corruption Laws. (a) Sanctions Concerns. Neither t he City, nor, to the knowledge of the City, any council member, officer, employee , agent, affiliate or represen tative thereof, is an individual or entity that is, or is owned or c ontrolled by any individual or entity that is (i) currently the subject or target of any Sanctions, (ii) included on OFAC’s List of Specially Designated Nationals, HMT’s Consolidated List of Financial Sanctions Targets and the Investment Ban List, or any similar list enforced by any other relevant sanctions authority or (iii) loc ated, organized or resident in a Designated Jurisdiction.
(b) Anti-Corruption Laws. The Cit y has conducted its business in compliance with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010 and other similar anti-corruption legislation in o ther jurisdictions, and have in stituted and maintained policies and procedures designed to promote and achieve compliance with such laws.
ARTICLE V
COVENANTS OF THE CITY
During the term of this Agreement, and until the Obligations are paid in full, including full payment of the Note, unless the Bank shall otherwise consent in writing, the City covenants and agrees as follows:
Section 5.01. Notice of Default. As soon as practicable but in any event not more than three (3) Business Days after an Authorized Representative of t he City shall have obtained knowledge of the occurrence of an Event of Default or Default p rovide to the Bank the written statement of an Authorized Representative setting forth the details of each such Event of Default or Default and, to the extent the City has made any determinati on with respect thereto, the action or actions which the City proposes to take with respect thereto.
Section 5.02. Compliance With Laws. The City shall comply with all laws, rules and regulations, and with all final orders, writs, judgments, injunctions, decrees or awards to which it may be subject; provided, however , that the City may contest th e validity or application thereof and appeal or otherwise seek relief therefrom, and exercise any and all of the rights and remedies which it may have with regard thereto, so long as such acts do not affect the City’s power and authority to execute and deliver this Agreement, to perform its obligations and pay all amounts payable by it hereunder or under the Note, or to execute and deliver the other Related Documents and to perform its obligations thereunder.
Section 5.03. Ordinance and Resolution. The City agrees that it will perform and comply with each and every covenant and agreement required to be perfo rmed or observed by it in the 13 3683081.2 045979 AGMT
Ordinance and the Resolution, each of which covenants and agree ments is, by this reference, incorporated into this Agreement in its entirety together with all defined terms and construction provisions necessary for a correct understanding thereof. The C ity shall not amend, modify, terminate or grant, or permit the amendment, modification, term ination or grant of, any waiver under, or consent to, or permit or suffer to occur any action o r omission which results in, or is equivalent to, an amendment, termination, modification, or grant of a waiver under the Ordinance or the Resolution which would materially impair the ability of the City to perform its obligations under this Agreement without the prior written consent of the Bank.
Section 5.04. No Impairment. The City will not take any action that would materially impair the City’s ability to perform its obligations under this Agreement, the Note and the other Related Documents.
Section 5.05. Budgets; Financial Statements; Reports, Certificates and Other Information.
The City shall provide or cause to be provided to the Bank copies of:
(a) As soon as available, a cop y of the City’s annual budget for the City’s Fiscal Year ending June 30, 2023, as said budget shall have been adopted by the City Council; (b) As soon as available, and, in any event, no later than nine months following the end of the Fiscal Year ended June 30, 2022, the City’s Annual Compr ehensive Financial Report for Fiscal Year ended June 30, 2022 together with an opinion of the independent accountants who conducted the audit of the finan cial statements of the City con tained in such Annual Comprehensive Financial Report, which opinion shall contain no qualifications other than qualifications relating to the imp lementation of rules issued b y the Government Accounting Standards Board (the failure to comply with which would not, in the opinion of the Bank in its sole discretion, individually or in the aggregate, have a material impact on any financial statement line item);
(c) Concurrently with the furnishin g of the financial statements described under Section 5.05(b) hereof, a certificate signed by an Authorized R epresentative in the form attached hereto as Exhibit C stating that (i) the City has complied with all of the terms, provisions and conditions of this Agreement and the other Related Documents, ( ii) to the best of his/her knowledge, the City has kept, obs erved, performed and fulfilled each and every covenant, provision and condition of this Agreement and the other Related Documents on the City’s part to be performed and (iii) no Default or Event of Default has occurred or, if such Default or Event of Default has occurred, specifying the nature of such Default or Event of Default, the period of its existence, the nature and status thereof and any remedial steps taken or proposed to correct such Default or Event of Default;
(d) As soon as practicable, after a written request by the Bank, such other information respecting the affairs, conditions and/or operations, financial or otherwise, of the City as the Bank may from time to time reasonably request;
(e) As soon as available and, in any event, within ten (10) Busi ness Days after adoption by the City Council of any changes to the annual budget for the City for the Fiscal Year ending 14 3683081.2 045979 AGMT
June 30, 2023, including, but not limited to, all interim budget reports, if any, but only to the extent that such changes relate to Property Tax Revenues;
(f) Promptly, notice of (i) any action, suit or proceeding known to it at law or in equity or by or before any governmental instrumentality, entity or oth er agency or (ii) any pending or threatened in writing investigation by any governmental instrum entality, entity or other agency, which, if adversely determined, w ould materially impair the abi lity of the City to carry out its obligations under this Agreement, the Note or any other Related Document or any other document, instrument or agreement required hereunder or thereunder, or wo uld materially and adversely affect its assets or financial condition; and
(g) Promptly, notice of any matter or event which may result in a material adverse change in the City’s financial condition or operations.
Section 5.06. Inspection Rights. At any reasonable time and from time to time the City shall permit the Bank or any agents or representatives thereof to examine and make copies of the records and books of account related to the Property Tax Revenu es and the transactions contemplated by this Agreement, the Note and the other Related Documents, to visit the City’s properties and to discuss its affairs, finances and accounts with any of its officers and independent accountants.
Section 5.07. Use of Proceeds. The City shall use the proceeds of the Note to (i) prepay a portion of the City’s employer unfunded accrued liability con tribution to the California Public Employees’ Retirement System (“CalPERS”) for the Fiscal Year en ding June 30, 2023 and (ii) pay the costs of issuance of the Note. Without limiting the for egoing, the City agrees that no part of the proceeds of the Note will be used by the City to (a) pur chase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock or (b) to fund any activities of or business with any Person, or in any country or territory, that, at the time of such funding, is the subject of Sanc tions. The Bank acknowledges tha t the City does not have any control over how the proceeds of the Note are invested by CalPERS.
Section 5.08. Existence. The City shall maintain its legal existence and shall not merge or consolidate with or into any other Person.
Section 5.09. Indebtedness and Liens. The City shall not create o r s u f f e r to e xi s t a n y Indebtedness secured by a Lien upon, or with respect to, any of the Pledged Property, except with respect to Subordinated Notes as defined in, and as permitted pursuant to, the Resolution.
Section 5.10. Assignments. Except for the City’s pledge, and the lien and security interest resulting therefrom, in the Pledged Property to the payment of the Note, the City shall not assign, transfer or otherwise convey any security interest in the Pledged Property without the prior written consent of the Bank.
Section 5.11. Further Assurances. From time to time hereafter, the City will execute and deliver such additional instruments, certificates or documents, and will take all such actions as the Bank may reasonably request for the purpose of implementing or effectuating the provisions of this Agreement and the Related Documents or for the purpose of more fully perfecting or renewing the Bank’s rights with respect to the Pledged Property. 15 3683081.2 045979 AGMT
Section 5.12. Certain Information. Except to the extent required in the reasonable opinion of the City in consultation with the City Attorney under any un dertaking of the City entered into for the purpose of permitting an underwriter to comply with Rul e 15c2-12 of the Securities and Exchange Act of 1934, the City shall not include in any amendment or supplement to any offering or disclosure document with respect to any Indebtedness, whether offered publicly or private, any information concerning the Bank that is not supplied in writing, or otherwise consented to, by the Bank expressly for inclusion ther ein, other than the Bank’s nam e and a brief description of this Agreement, which may be included in such offering or other docu ment without the Bank’s prior written consent.
Section 5.13. Accuracy of Information. The City agrees that it shall provide the Bank with true, correct and complete copies of the Section 5.05 Docu ments. The City also agrees that the information contained in the Section 5.05 Documents (excluding any budget materials) will be accurate as of the respective dates of such information. The Director of Finance agrees that, to his or her actual knowledge, the information contained in the Section 5.05 Documents (excluding any budget materials) will be complete in all material respects wit h respect to the Property Tax Revenues.
Section 5.14. No Immunity. To the fullest extent permissible by law, the City will not assert any immunity it may have as a public entity under the la ws of the State from lawsuits with respect to this Agreement or any Related Document. To the extent the City may hereafter acquire under any applicable law any rights to immunity from legal proceedings on a ground of sovereign immunity, the City hereby waives and agrees not to claim, to th e extent permitted by law, such rights to immunity for itself in respect of its obligations arising under or related to this Agreement or any Related Document.
Section 5.15. Books and Records. The City agrees that it shall keep proper books of record and account in which full, true, and correct entries in accordance with the City’s budget basis, accounting principles and reporting requirements and all requirements of law shall be made of all dealings and transactions relating to the City’s general fund.
ARTICLE VI
EVENTS OF DEFAULT; REMEDIES
Section 6.01. Events of Default. Each of the following events shall constitute an “Event of Default” hereunder:
(a) Payments. The City shall (i) default in the payment when du e of any principal of or interest on the Note, and such default shall continue unreme died for one (1) or more Business Days; or (ii) default, and such d efault shall continue unremedi ed for two (2) or more Business Days, in the payment when due of any Obligation (other than the payment of the principal of and interest on the Note which is governed by clause (i) above). (b) Representations Untrue. Any representation, warranty, certi fication or statement made by the City in this Agreement, in the Ordinance or in the Resolution shall (in any such case) have been incorrect or untrue in any material respect when made or deemed to have been made. 16 3683081.2 045979 AGMT
(c) Covenant Defaults. (i) The City shall default in the due performance on or observance of any term, covenant or agreement contained in Sections 5.01, 5.03, 5.04, 5.08, 5.09,
5.10 and 5.14 of this Agreement.
(ii) The City shall default in the due performance on or observa nce of any term, covenant or agreement containe d in Section 5.05 of this Agreeme nt and such default, if capable of being remedied, shall remain unremedied for ten (10) days after written notice thereof shall have been given to the City by the Bank.
(iii) The City shall default in t he due performance or observanc e of any term, covenant or agreement contained herein or incorporated herein (other than those described in subsections (c)(i) and (c)(ii) of this Section 6.01) and suc h default, if capable of being remedied, shall remain unremedie d for thirty (30) days after th e earlier of (A) actual knowledge thereof by any Authoriz ed Representative or (B) recei pt of written notice thereof from the Bank.
(d) Cross Default. The City shall (i) default in one or more pa yments of scheduled debt service in an aggregate amount in excess of $10,000,000 with respect to any Indebtedness payable from ad valorem taxes levied on taxable property within the Cit y (collectively, the “ GO Indebtedness”) (other than the Note) beyond the period of grace (not to exc eed thirty (30) days), if any, provided in the instrumen t or agreement under which suc h GO Indebtedness was created, or (ii) default in the observance or performance of any agreement or condition relating to any GO Indebtedness (other than the Note) or contained in any instrume nt or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit t he holder or holders of such GO Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause (determined without regard to whether any notice is required), any such GO Indebtedness to become due prior to its stated maturity.
(e) Cross Acceleration. Any GO Indebtedness shall be declared t o be due and payable, or required to be prepaid other than by a regularly scheduled r equired prepayment, prior to the stated maturity thereof.
(f) Invalidity; Repudiation. (i) Any material provision of thi s Agreement, the Note, the Authorizing Law, the Ordinance or the Resolution is declare d to be null and void by a final non-appealable judgment of court of competent jurisdiction; or (ii) The City, pursuant to official action on the part of its Ci ty Council, shall deny that it has any or further liability or obligation under t his Agreement, the Note, the Authorizing Law, the Ordinance or the Resolution.
(g) Insolvency, Etc. The City shall become insolvent or admit i n writing its inability to pay its debts as they mature or shall declare a moratorium o n the payment of its debts or apply for, consent to or acquiesce in the appointment of a trustee, c ustodian, liquidator or receiver for itself or any substantial part o f its property, or shall take a ny action to authorize or effect any of the foregoing; or in the absence of any such application, conse nt or acquiescence, a trustee, custodian, liquidator or receiver shall be appointed for it or for a substantial part of its property or 17 3683081.2 045979 AGMT
revenues and shall not be discharged within a period of ninety (90) days; or the State or any other Governmental Authority having jurisdiction over the City impose s a debt moratorium, debt restructuring, or comparable restriction on repayment when due and payable of the principal of or interest on any debt by the City ; or any bankruptcy, reorganiza tion, debt arrangement or other proceeding under any bankruptcy or insolvency law or any dissol ution or liquidation proceeding shall be instituted by or against the City (or any action shall be taken to authorize or effect the institution by it of any of the foregoing) and if instituted ag ainst it, shall be consented to or acquiesced in by it, or shall not be dismissed within a period of ninety (90) days. (h) Pledge, Etc. The pledge of the Pledged Property created by the Resolution shall fail to provide the Bank, as holder of the Note, with the secur ity interest in the Pledged Property or the priority thereof purported to be provided, or the Bank, as holder of the Note, shall cease to have a valid security interest in the Pledged Property. (i) Resolution Default. The City shall default in the due perfo rmance or observance of any material term, covenant or agreement contained in the Re solution and the same shall not have been cured within any applicable cure period.
(j) Certain Unsatisfied Judgments. A judgment or court order fo r the payment of money in excess of $10,000,000 shall be rendered against the City that is payable from the City’s general fund, and such judgment or court order shall continue unsatisfied and in effect for a period of sixty (60) consecutive days without being vacated, discharge d, satisfied, or stayed or bonded pending appeal.
(k) Ratings. (i) The long-term rating assigned by Moody’s or S& P to any long-term, unenhanced GO Indebtedness of the City is reduced below “A3” (o r its equivalent) or “A” (or its equivalent), respectively or (ii ) the long-term rating assigned by Moody’s and S&P to any long- term, unenhanced GO Indebtedness of the City shall be withdrawn or suspended, in either case, due to credit-related reasons.
Section 6.02. Remedies. If any Event of Default shall have occurred and be continuing, the interest on the Note or any portion outstanding shall automatically accrue interest at the Default Rate, and the Bank may by Notice to the City take any or all of the following actions, without prejudice to the rights of the Bank to enforce its claims against the City (provided, that, if an Event of Default specified in Section 6.01(g) shall occur, the result which would occur upon the giving of Notice by the Bank to the City as specified in clauses (i) and (ii) below shall occur automatically without the giving of any such Notice): (i) declare the princip al of and any accrued interest in respect of the Note and all other Obligations owing hereunder t o be, whereupon the same shall become, forthwith due and payabl e without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the City; and/or (ii) exercise any other rights or remedies the Bank may have under the Resolution, at law or in equity.
Section 6.03. No Waiver; Cumulative Remedies. No failure or del ay on the part of the Bank in exercising any right, power or privilege hereunder, und er the Note or under any other Related Document and no course of dealing between the City and the Bank shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder, under the Note or under any other Related Document preclude any other or further exercise thereof 18 3683081.2 045979 AGMT
or the exercise of any other right, power or privilege hereunde r or thereunder. The rights, powers and remedies herein, under the No te or in any other Related Doc ument expressly provided are cumulative and not exclusive of any rights, powers or remedies which the Bank would otherwise have. No notice to or demand on the City in any case shall enti tle the City to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Bank to any other or further action in any circumstances without notice or demand.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments. No provision of this Agreement may be amended, modified, changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the parties hereto.
Section 7.02. Assignment by the Bank.
(a) Assignments Generally. Subjec t to subsection (b) below, the Bank may assign, negotiate, pledge or otherwise h ypothecate, or grant participat ions in, its rights and security hereunder, including the instruments securing the City’s obliga tions hereunder. In case of such assignment, the City shall accord full recognition thereto and agrees that all rights and remedies of the Bank in connection with the interest so assigned shall be enforceable against the City by such assignee with the same force and effect and to the same extent as the same would have been enforceable by the Bank, but for such assignment. No such assignment by the Bank, however, will relieve the Bank of its obligations under this Agreement either voluntarily or by operation of law.
In connection with any proposed assignment, the Bank may disclose to the proposed assignee any information that the City is required to deliver to the Bank pu rsuant to this Agreement; provided, however, that in the event of any such disclosure the Bank shall obtain from the proposed assignee appropriate assurances of confidential treatment of the disclosed information. (b) Related Document Assignment Provisions.
(i) Successors and Assigns Genera lly. This Agreement is a conti nuing obligation and shall be binding upon the City, their successors, transferees and assigns and shall inure to the benefit of the Noteholder and its respective permitted successors, transferees and assigns. The City may not assign or otherwise t ransfer any of its rights or obligations hereunder or under the Related Documents without the prior written consent of the Bank. Each Noteholder may, in its sole discretion and in ac cordance with applicable law and this Agreement, from time to time assign, sell or transfer in whole, this Agreement, its interest in the Note and the Related Documents in accordanc e with the provisions of paragraph (ii) or (iii) of this Section. Each Noteholder may at any time and from time to time enter into participation agreements in accordance with the provisions of paragraph (c) of this Section. Each Noteholder may at any time pledge or assign a security interest subject to the restrictions of paragraph (d) of this Section. The City agrees that it shall, from time to time at the request of the Ba nk, execute and deliver such am endments, documents and do such acts and things as the Bank may reasonably request in o rder to provide for or effectuate any assignment, transfer or sale by the Bank of this Agreement, its interest in 19 3683081.2 045979 AGMT
the Note and/or the Related Documents in accordance with the pr ovisions of this Section 7.02.
(ii) Sales and Transfers by Notehol der to a Bank Transferee. Without limitation of the foregoing generality, a Noteholder may at any time sell or otherwise transfer to a transferee the Note, in whole, to a Person that is (A) a Bank Affiliate or (B) a trust or other custodial arrangement establishe d by the Bank or a Bank Affilia te, the owners of any beneficial interest in which are limited to “qualified institutional buyers” as defined in Rule 144A promulgated under the Securities Act of 1933, as amended (the “1933 Act”) (each, a “Bank Transferee”) all or a portion of such Note in minimum denominations of $1,000,000 and integral multiples of $5,000 in excess thereof and its righ ts under this Agreement and the Documents. From and after th e d a t e o f s u c h s a l e o r t r a n s f e r, [Purchaser] (and its successors) shall continue to have all of the rights of the Ban k hereunder and under the Related Documents as if no such transfer or sale had occurred; provided, however, that (x) no such sale or transfer referred to in the foregoing clauses (A) or (B) shall in any way affect the obligations of the Bank hereunder, (y) the City shall be required to deal only with the Bank with respect to any matters under this Agreement and ( z) in the case of a sale or transfer referred to in the foregoing clauses (A) or (B), only the Bank shall be entitled to enforce the provisions of this Agreement against the Bank. (iii) Sales and Transfers by Noteholder to a Non-Bank Transferee . Without limitation of the foregoing gener ality, a Noteholder may at any time sell or otherwise transfer to a transferee which is not a Bank Transferee but each of which constitutes (A) a “qualified institutional buyer” as defined in Rule 144A promulg ated under the Securities Act of 1933, as amended (the “1933 Act”) and (B) a commercial bank organized under the laws of the United States, or any state thereof, or any other c ountry which is a member of the Organization for Economic C ooperation and Development, or a political subdivision of any such country, and, in any such case, having a combined c apital and surplus, determined as of the date of any transfer pursuant to this clau se (iii), of not less than $5,000,000,000 (each a “Non-Bank Transferee”), the Note and its related rights under this Agreement and the Related Docume nts if (A) written notice of su ch sale or transfer, including that such sale or transfer is to a Non-Bank Transfere e, together with addresses and related information with respect to the Non-Bank Transferee, shall have been given to the City and the Bank (if different than the Noteholder) by suc h selling Noteholder and Non-Bank Transferee, and (B) the Non-Bank Transferee shall have delivered to the City and the selling Noteholder, an investment letter in substantially the form attached hereto as Exhibit B (the “ Purchaser Letter ”); provided, however, that no such sale or transfer referred to in the foregoing clauses (A) or (B) shall in any way affect the obligations of the Bank to purchase the Note hereunder. Notwithstanding the foregoing, no Noteholder may (i) sell or transfer the Note pursuant to this subsection (iii) (other than with respect to Bank Transferees) or (ii) transfer its rights, security or interest hereunder or the benefit of any other provision, in each case pursuant to this subsection (iii) , without the prior written consent of the City (which consent shall not be unreasonably wi thheld, conditioned or delayed); provided, however that no such consent shall be r equired in the event that an Event of Default shall have occ urred and be continuing; provide d further, however, that the City shall be deemed to have given its consent to such sale or transfer unless it objects 20 3683081.2 045979 AGMT
thereto by written notice to the Bank within fifteen (15) Busin ess Days after having received notice thereof.
From and after the date the applicable parties referenced above have received written notice, an executed Purchaser Letter and the consents required by Section 7.02(b)(iii) hereof, (A) the Non-Bank Transferee thereunder shall be a party hereto and shall have the rights and obligations of a Noteholder hereunder and under the Related Documents, and this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to effect the addition of the Non-Bank Transferee, and any reference to the assigning Noteholder hereunder and under the Related Documents shall thereafter refer to such transferring N oteholder and to the Non-Bank Transferee to the extent of thei r respective interests, and (B) if the transferring Noteholder no longer owns the Note, then it shall relinquish its rights and be released from its related obligations hereunder and under the Related Documents.
(c) Participations. The Bank shall have the right to grant part icipations in all or a portion of the Bank’s interest in the Note, this Agreement and the Related Documents to one or more other banking institutions; provided, however, that (i) no such participation by any such participant shall in any way affect the obligations of the Bank hereunder and (ii) the City shall be required to deal only with the Bank, with respect to any matter s under this Agreement, the Note and the Related Documents and no such participant shall be enti tled to enforce any provision hereunder against the City.
(d) Certain Pledges. Notwithsta nding the foregoing provisions of Section 7.02(a)-(c), (i) the Bank may assign and pledge all or any portion of the am ounts owing to it with respect to the Note to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserv e System and any Operating Circular issued by such Federal Reserve Bank; and (ii) any paym ent in respect of such assigned amounts owed with respect to the Note made by the City to the Bank in accordance with the terms thereof shall satisfy the City’s obligations thereunder in respect of such assigned obligation to the extent of such payment. No such assignment shall release the Bank from its obligations hereunder.
Section 7.03. Governing Law; Waiver of Jury Trial; Waiver of Spe cial Damages; Sovereign Immunity.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
(b) THE CITY AND THE BANK (BY ITS ACCEPTANCE HEREOF) HEREBY, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, VOLUNTARILY,
KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED O N
CONTRACT, TORT, OR OTHERWISE) BETWEEN THE CITY AND THE BANK ARI SING
OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, THE NOTES AND T HE OTHER RELATED DOCUMENTS. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK TO PROVIDE THE FINANCING EVIDENCED BY THIS AGREEMENT. IF AND
TO THE EXTENT THAT THE FOREGOING WAIVER OF THE RIGHT TO A JURY TRIAL
IS UNENFORCEABLE FOR ANY REASON IN SUCH FORUM, THE CITY AND THE BANK 21 3683081.2 045979 AGMT
HEREBY CONSENT TO THE ADJUDICATION OF ANY AND ALL CLAIMS PURSUA NT
TO JUDICIAL REFERENCE AS PROVIDED IN CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638, AND THE JUDICIAL REFEREE SHALL BE EMPOWERED TO
HEAR AND DETERMINE ANY AND ALL ISSUES IN SUCH REFERENCE WHETHER FACT OR LAW. THE CITY AND THE BANK REPRESENT THAT EACH HAS REVIEWED
THIS WAIVER AND CONSENT AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS AND CONSENTS TO JUDICIAL REFERENCE
FOLLOWING THE OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL OF ITS CHOICE ON SUCH MATTERS. IN THE EVENT OF LITIGATION, A COPY OF T HIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE C OURT
OR TO JUDICIAL REFERENCE UNDER CALIFORNIA CODE OF CIVIL PROCEDU RE SECTION 638 AS PROVIDED HEREIN.
(c) THE CITY WAIVES, TO THE EXTENT NOT PROHIBITED BY LAW, ANY
RIGHT THE UNDERSIGNED MAY HAVE TO CLAIM OR RECOVER FROM THE BAN K
IN ANY LEGAL ACTION OR PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.
(d) THE BANK HEREBY RECOGNIZES THAT THE PROCEDURAL
REQUIREMENTS AND REMEDIES APPLICABLE TO COMMENCING AN ACTION
AGAINST THE CITY DIFFER FROM REQUIREMENTS APPLICABLE TO NONGOVERNMENTAL ENTITIES.
Section 7.04. Severability. If any provision of this Agreement shall be held or deemed to be or shall in fact be illegal, inoperative or unenforceable th e same shall not affect any other provisions herein contained or render the same invalid, inoperative or unenforceable to any extent whatever.
Section 7.05. Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be deemed an original and all of which shall constitute but one and the same instrument.
Section 7.06. Expenses. The City shall pay the reasonable fees and costs of counsel for the Bank not to exceed $[______] for expenses of Bank Counsel r elated to this transaction. The City shall also pay (a) all reasonable out-of-pocket expenses o f the Bank, including reasonable fees and expenses of counsel retained by the Bank in connection with any waiver or consent hereunder or under any Related Documents or any amendment hereof or thereof, including without limitation, any fee payable to the California Debt and Investme nt Advisory Commission by the Bank with respect to the Note (the “CDIAC Fee”), which CDIAC Fee shall be reimbursed within thirty (30) days of the Effective Date; provided that simple am endments (as determined by the Bank in its sole discretion) s hall be subject to a fee equal to $[______] plus attorney’s fees and expenses and more complex amendments (as determined by the Bank in its sole discretion) shall be subject to a fee determined by the Bank on a case-by-case basis; and (b) if any Default or Event of Default occurs, all out-of-poc ket expenses incurred by the B ank, including the fees and disbursements of counsel and experts retained by the Bank in co nnection with such Default or Event of Default and collection and other enforcement proceedings resulting therefrom. 22 3683081.2 045979 AGMT
Section 7.07. Indemnification. (a) To the extent permitted by law, the City agrees to indemnify and hold harmless the Bank, its Affiliates and their respective officers, directors, employees and their agents (each, an “Indemnitee”) from and against any and all claims, damages, penalties, actions, losses, liabilities, judgments, suits and reasonable costs or expenses (including, without limitation, reasonable attorney’s fees and expenses) whatsoever which an Indemnitee may incur (or which may be claimed against an Indemnitee by any per son or entity whatsoever) by reason of or in connection with a ny action, proceeding or investigation (whether or not the Bank is a party thereto) arising from the entering into and/or perfo rmance of this Agreement or any Related Document or the use of the proceeds of the Note or the consummation of any transactions contemplated herein or in any Re lated Document, including, with out limitation, the reasonable fees and disbursements of counsel incurred in connection with a ny such action, proceeding or investigation (but excluding any such claims, damages, penaltie s, actions, losses, liabilities, judgments, suits and reasonable costs or expenses, to the exten t incurred by reason of the gross negligence or willful misconduct of the Indemnitee).
(b) To the extent permitted by law, the City agrees to indemnify and hold the Bank and its officers, directors, employe es and their agents harmless (o n a net after-tax basis) from any present or future claim or liability for stamp, transfer, documentary, excise or other similar tax and any penalties or interest with respect thereto, which may be as sessed, levied or collected by any jurisdiction in connection with the execution, delivery and performance of, or any payment made under, this Agreement, the Note and the other Related Documents, or any amendment thereto.
Section 7.08. Term of the Agreement. Except for the City’s obligations to indemnify the Bank and each other Indemnitee, t his Agreement shall terminate when all Obligations have been paid in full.
Section 7.09. Notice. Any notice, demand, direction, request or other instrument authorized or required by this Agreement to be given to or filed with the City or the Bank shall be deemed or have been sufficiently given or filed for all purposes, if any, when delivered by hand or three (3) Business Days after be ing sent by registered mail, re turn receipt requested, postage prepaid, and if given electronically shall be deemed given when transmitted (receipt electronically confirmed):
If to the City:
City of Oakland – Finance Department
150 Frank H. Ogawa, Suite 5330
Oakland, CA 94612-2093
Attention: Director of Finance
Telephone: (510) 238-2026
Facsimile: (510) 238-2137
Email: [email protected]
23 3683081.2 045979 AGMT
If to the Bank:
[Purchaser]
[Address]
Telephone:
Facsimile:
Email:
or to such other address, telephone number or facsimile number as one party hereto shall notify to the other party hereto.
Section 7.10. Holidays. Except as otherwise provided herein, whenever any payment or action to be made or taken hereunder shall be stated to be due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, and such extension of time shall be incl uded in computing interest or fe es, if any, in connection with such payment or action.
Section 7.11. Survival. All representations, warranties, covenants and agreements of the City contained in this Agreement as amended or supplemented fro m time to time or made in writing in connection herewith sh all survive the execution and delivery hereof shall continue in full force and effect until payment in full of the Obligations, it being understood that the agreements of the City found in Sections 2.05, 2.08 and 7.07 he reof shall survive the termination of this Agreement and payment in full of the Obligations.
Section 7.12. USA PATRIOT Act Notification. The Bank hereby not ifies the City that pursuant to the requirements of t he USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to o btain, verify and record information that identifies the City, which information includes the name a nd address of the City and other information that will allow the Bank to identify the City in ac cordance with the Patriot Act. The City agrees to, promptly following a request by the Bank, provi de all such other documentation and information that the Bank requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act.
Section 7.13. No Liability. The City agrees that none of the Bank, its officers, directors, employees and their agents shall have any liability or responsi bility for the acts or omissions of the City in respect of its use of this Agreement or any amounts made available by the Bank hereunder. The Bank agrees that none of the City, its officers, City Council members, employees and their agents shall have any liability or responsibility for the acts or omissions of the Bank in respect of the performance of the Bank’s obligations under this Agreement.
Section 7.14. No Advisory or Fiduciary Relationship. In connect ion with all aspects of the transactions contemplated her eby (including in connection w ith any amendment, waiver or other modification hereof or of a ny Related Document), the City acknowledges and agrees, and acknowledges its Affiliates’ unde rstanding, that: (a) (i) the s ervices regarding this Agreement provided by the Bank and any Affiliate thereof are arm’s-length commercial transactions between the City, on the one hand, and the Bank and its Affiliates, on the other hand, (ii) the City has 24 3683081.2 045979 AGMT
consulted its own legal, account ing, regulatory and tax advisor s to the extent it has deemed appropriate, and (iii) t he City is capable of evaluating, and u nderstands and accepts, the terms, risks and conditions of the tran sactions contemplated hereby an d by the Related Documents; (b) (i) the Bank and its Affiliates ea ch is and has been acting sol ely as a principal and, except as expressly agreed in writing by the relevant parties, has not be en, is not, and will not be acting as an advisor, agent or fiduciary, for the City, or any other Pers on and (ii) neither the Bank nor any of its Affiliates has any obligation to the City with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Related Documents; and (c) the Bank and its Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the City, and neither the Bank nor any of its Affiliates has any obligation to disclose any of such interests to the City. To the fullest exte nt permitted by law, the City, hereby waives and releases any claims that it may have against the Ban k or any of its Affiliates with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transactions contemplated hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW.]
Signature Page to Note Purchase Agreement
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IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed and delivered this Agreement, effective as of the day and year first above written.
CITY OF OAKLAND
By:
Name:
Title:
Approved as to form:
By:
Name:
Title:
Signature Page to Note Purchase Agreement
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[PURCHASER]
By:
Name:
Title:
A-1
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EXHIBIT A
DEBT SERVICE SCHEDULE
Maturity
Date Principal Interest
Total Debt
Service
June 30, 2023 $[Par Amount] $[_______] $[_______]
B-1
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EXHIBIT B
FORM OF PURCHASER LETTER
_____________, 20___
City of Oakland – Finance Department
150 Frank H. Ogawa, Suite 5330
Oakland, CA 94612-2093
Attention: Director of Finance
Re: Purchaser Letter
Sir or Madam:
Reference is hereby made to that certain Note Purchase Agreemen t, dated [Closing Date] (as amended from time to time, the “ Note Purchase Agreement”; the terms defined therein being used herein as therein defined), between the City of Oakland (t he “City”) and [Purchaser] (the “Bank”).
In connection with the Note Purchase Agreement, the Bank hereby represents, warrants to and agrees with the City that:
1. The Bank has authority to purchase the Note and to enter int o the Note Purchase Agreement on a negotiated basis without provision by the City o f an official statement or other offering document;
2. The Bank has sufficient knowle dge and experience in financia l and business matters, including purchase and ownership of municipal obligati ons, to be able to evaluate the risks and merits of the Note and is able to bear the economic risks of the Note;
3. The Note is being acquired by the Bank for its own account a nd not with a view to, or for resale in connection wit h, any distribution of the Note. The Bank intends to hold the Note for its own loan portfolio, and acknowledges that transfer of the Note is restricted. The Bank cannot transfer, sell, assign or create a participation in the Note, e xcept in accordance with the Note Purchase Agreement;
4. The Bank understands that the Note is not registered under t he Securities Act of 1933 and that such registration is not legally required as of the date hereof; and further understands that the Note (a) is not being registered or otherwise qualified for sale under the “Blue Sky” laws and regulations of any state; (b) will not be listed on any sto ck or other securities exchange; (c) will not carry a rating from any rating service; and (d) will be delivered in physical form;
5. The Bank acknowledges that it h as either been supplied with or been given access to information to which a reasona ble investor would attach sign ificance in making lending decisions, and the Bank has had the opportunity to ask question s and receive answers from knowledgeable individuals concerning the financial condition of the City, the Note and the security B-2
3683081.2 045979 AGMT
therefor so that, as a reasonable investor, the Bank has been able to make an informed decision to purchase the Note;
6. The Bank acknowledges that the obligation of the City to pay debt service on the Note is an obligation payable solely from Property Tax Revenues and Additional Revenues; and
7. The Bank has made its own inquiry and analysis with respect to the Note and the security therefor, and other material factors affecting the security and payment of the Note. [PURCHASER]
By:
Name:
Title:
C-1
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EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
[Date]
[Purchaser]
[Address]
Ladies and Gentlemen:
Reference is hereby made to that certain Note Purchase Agreemen t, dated [Closing Date] (as amended from time to time, the “ Note Purchase Agreement”; the terms defined therein being used herein as therein defined), between the City of Oakland (t he “City”) and [Purchaser] (the “Bank”).
In accordance with Section 5.05(b) of the Note Purchase Agreement, enclosed herewith is the City’s Annual Comprehensive Financial Report for Fiscal Yea r ended June 30, 2022 (the “ACFR”) together with an opinion of the independent accountants who conducted the audit of the financial statements of the City contained in the ACFR.
In accordance with Section 5.05(c) of the Note Purchase Agreeme nt, the undersigned, an Authorized Representative of the City, hereby certifies to the Bank that, as of the date hereof, (i) the City has complied with a ll of the terms, provisions and conditions of the Note Purchase Agreement and the other Related Documents, (ii) to the best of his/her knowledge, the City has kept, observed, performed and fulfilled each and every covenant, provision and condition of the Note Purchase Agreement a nd the other Related Documents on the City’s part to be performed and (iii)1 [no Default or Event of Default has occurred] OR [the followin g Default(s) or Event of Default(s) has(have) occurred].2
The undersigned Authorized Representative has executed this Compliance Certificate this [______] day of [__________], 20__.
CITY OF OAKLAND
By:
Name:
Title:
1 Select one of the applicable statements by deleting the inapplicable statement. 2 If this statement is selected, specify the period of each Default or Event of Default, the nature and status thereof and any remedial steps taken or proposed by the City to correct such Default or Event of Default.