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1 NRF DRAFT
2/2/22
CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the “Disclosure Agreement ”), dated as of [As of Date] , is executed and delivered by the City of Rialto (the “City”), and _____________, as dissemination agent (the “Dissemination Agent”) in connection with the issuance by the City of its [Par Amount] Taxable Pension Obligation Bonds, Series 2022 (the “Bonds”). The Bonds are being issued pursuant to a Trust Agreement, dated as of [As of Date] (the “Trust Agreement”), between the City and U.S. Bank National Association , as t rustee (the “Trustee”). The City and the Disseminat ion Agent covenant and agree as follows:
Section 1. Purpose of the Disclosure A greement. This Disclosure Ag reement is being executed and delivered by the City and the Dissemination Agent for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule (as defined below).
Section 2. Definitions. In addition to the definitions set forth in the Trust Agreement, which apply to any capitalized term used in this Disclosure Agreement, unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report ” shall mean any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. “Dissemination Agent ” shall mean ______________, or any successor Dissemination Agent accepted by the City.
“EMMA” shall mean the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System for Municipal Securities disclosures, maintained on the internet at http://emma.msrb.org. “Financial obligation” shall mean a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term “financial obligation” shal l not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule. “Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. “MSRB” shall mean the Municipal Securities Rulemaking Board. “Official Statement” shall mean the final Official Statement, dated __________, 2022, relating to the Bonds.
“Participating Underwriter” shall mean the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. “Rule” shall mean Rule 15c2-12 adopted by the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “State” shall mean the State of California.
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Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than each [March 31], or the next succeeding business day if that day is not business day, commencing with [March 31], 202 3, provide to the MSRB, in an electronic format accompanied by id entifying information as prescribed by the MSRB, an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided , that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the City’s fiscal year change s, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). (b) Not later than fifteen (15) business days prior to the date specified in subsection (a) above for providing the Annual Report to the MSRB, the City shall pr ovide the Annual Report to the Dissemination Agent (if other than the City). If by such date, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the first sentence of this subsection (b). (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the date required in subsection (a), the Dissemination Agent shall send a notice to the MSRB in substantially the form attached as Exhibit A , or in such other form as prescribed or acceptable to MSRB.
Section 4. Content of Annual R eports. The City’s Annual Report shall contain or incorporate by reference the following:
1. Audited financial statements of the City prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be file d in the same manner as the Annual Report when they become available.
2. An update as of the most recently ended Fiscal Year for the following tables contained in Appendix A of the Official Statement: A-1, A-2, A-5 and A-7 (but not including the column “Description of Primary Business Use”).
Any or all of the items listed above may be included by specific reference to other documents, including the audited financial statements, official statements of debt issues of the City or related public entities, which have been available to the public on the MSRB’s i nternet website or filed with the U.S.
Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference in the applicable Annual Report.
Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of thi s Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds, which notice shall be given in a timely manner, not in excess of ten (10) business days after the occurrence o f such Listed Event:
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3 (1) Principal and interest payment delinquencies;
(2) Non-payment related defaults, if material;
(3) Unscheduled draws on debt service reserves reflecting financial difficulties; (4) Unscheduled draws on credit enhancements reflecting financial difficulties; (5) Substitution of credit or liquidity providers, or their failure to perform; (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 - TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; (7) Modifications to rights of security holders, if material; (8) Bond calls, if material, and tender offers;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the secur ities, if material
(11) Rating changes;
(12) Bankruptcy, insolvency, receivership or similar event of the City; (13) The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other th an in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (14) Appointment of a successor o r additional trustee or the change of name of a trustee, if material;
(15) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material; and
(16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City, any of which reflect financial difficulties.
(b) If a Listed Event occurs, the City shall provide, in a timely manner and in no event in excess of ten (10) Business Days after the occurrence of such Listed Event, notice of such Listed Event with the MSRB.
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4 Section 6. Termination of Reporting O bligation. The City’s obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all the Bonds.
Section 7. Dissemination Agent. U.S. Bank National Association will serve as the initial Dissemination Agent hereunder. The City may, from time to time, appoint or engage a different Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Agent, with or without appointing a successor Dissemination Agent.
The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Agreement.
Section 8. Amendment; Waiver . Notwithstanding any other provision of this Disclosure Agreement, the City may amend this Disclosure Agreement , and any provision of this Disclosure Agreement may be waived, provided that, in the opinion of nationally recognized bond counsel, such amendment or waiver is permitted by the Rule. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the City shall describe such amen dment in the same manner as for a Listed Event. The City shall obtain the consent of the Dissemination Agent for any amendment of the Disclosure Agreement that affects the duties or obligations of the Dissemination Agent.
Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that w hich is specifically required by this Disclosure Agreement, the City shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
The City acknowled ges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 10b -5 promulgated under the Securities Exchange Act of 1934, may apply to the City, and that under some circumstances compliance with th is Disclosure Agreement, without additional disclosures or other action, may not fully discharge all duties and obligations of the City under such laws.
Section 10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Agreeme nt, the sole legal remedy of any Holder or Beneficial Owner of the Bonds or the Participating Underwriter shall be an action to compel performance. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Trust Agreement . No Bondholder or Beneficial Owner may institute such action, suit or proceeding to compel performance unless they shall have first delivered to the City satisfactory written evidence of their status as such, and a written notice of and request to cure such failure, and the City shall have refused to comply therewith within a reasonable time.
Section 11. Duties, Immunities and Liabilities of Dissemination A gent. The Dissemination Agent shall have only s uch duties as are specifically set forth in this Disclosure Agreement, and the City agrees to indemnify and save the Dissemination Agent, and its, officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney’s fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent may rely and shall be protected in acting or
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5 refraining from acting upon any direction from the City or an opinion of nationally recognized bond counsel. The Dissemination Agent shall have the same rights, privileges and immunities hereunder as are afforded to the Trustee under the Trust Agreement. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
Section 12. Notices. Any noti ces or communications to or among any of the parties to this Disclosure Agreement may be given as follows:
To the City: City of Rialto
16600 Civic Center Drive
Rialto, California 90706
Attention: City Manager
To the Dissemination Agent: U.S. Bank National Association 400 South Hope Street, Suite 500
Los Angeles, CA 90071
Attention: Cynthia Cerda
Unless otherwise required by the MSRB, all notices, documents and information provided to the MSRB shall be provided to the MSRB’s EMMA system, the current Internet Web address of which is www.emma.msrb.org. All notices, documents and information provided to the MSRB shall be provided in an electronic format as prescribed by the MSRB and shall be accompanied by identifying information as prescribed by the MSRB.
Section 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the City the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 14. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of the date first written above.
CITY OF RIALTO
______________________________________
City Manager
U.S. BANK NATIONAL ASSOCIATION,
as Dissemination Agent
______________________________________
Authorized Signatory
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EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING
BOARD OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: City of Rialto
Name of Bond Issue: [Par Amount] initial principal amount of City of Rialto Taxable Pension Obligation Bonds, Series 2022
Date of Issuance: __________, 2022
NOTICE IS HEREBY GIVEN that the City of Rialto (the “City”) has not provided an Annual Report with respect to the above-captioned Bonds as required by the Trust Agreement, dated as of [As of Date], between the City and U.S. Bank National Association, as trustee. The City anticipates that the Annual Report will be filed by ____________.
Date: __________, 20_ _______________________,
as Dissemination Agent
By:
Title:
cc: City Manager, City of Rialto