HomeMy WebLinkAboutItem 2b: Resolution 6700 Sale of Seller's Proposition 1A Receivable from StateSTAFF REPORT
Administrative Services Department
DATE: November 3, 2009
TO: Mayor and City Council
FROM: Hue C. Quach, Administrative Services Director
Prepared by Shannon Huang, Financial Services anager /City Treasurer4 A_
SUBJECT: RESOLUTION 6700 APPROVING THE FORM OF AND AUTHORIZING
THE EXECUTION AND DELIVERY OF A PURCHASE AND SALE
AGREEMENT AND RELATED DOCUMENTS WITH RESPECT TO THE
SALE OF THE CITY'S PROPOSITION 1A RECEIVABLE FROM THE
STATE; AND DIRECTING AND AUTHORIZING CERTAIN OTHER
ACTIONS IN CONNECTION THEREWITH.
Recommendation: Adopt
SUMMARY
The emergency suspension of Proposition 1A was passed by the Legislature and
signed by the Governor as part of the 2009 -10 budget package on July 28, 2009. Under
the provision, the State will borrow 8% of the amount of property tax revenue
apportioned to cities, counties and special districts. For Arcadia, it is estimated to be
$1,242,012. The state will be required to repay those obligations plus interests by June
30, 2013. As of September 25 the State Department of Finance has set the interest
rate to be 2
California Communities instituted Proposition 1A Securitization Program to enable Local
Agencies to sell their respective Proposition 1A Receivables to California Communities.
Local Agencies may elect to participate in this program by submitting the related
financing documents by November 6, 2009. The participating Agencies will receive
cash proceeds equal 100% of the amount of the property tax reduction in two equal
installments, on January 15, 2010 and May 3, 2010, at no cost to the City.
Staff recommends adopting a resolution to authorize the participation of the 1A
Securitization Program and approve the execution and delivery of the related
documents.
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DISCUSSION
Proposition 1A Suspension: Proposition 1A was passed by California voters in 2004 to
ensure local property tax and sales tax revenues remain with local government thereby
safeguarding funding for public safety, health, libraries, parks, and other local services.
Provisions can only be suspended if the Governor declares a fiscal necessity and two
thirds of the Legislature concurs. A fiscal necessity pursuant to Proposition 1A can only
be declared twice within a ten year period per California Constitution. Since its
passage, the State has already suspended Proposition 1A once in 2005.
The emergency suspension of Proposition 1A was passed by the Legislature and
signed by the Governor under ABX4 14 and ABX4 15 as part of the 2009 -10 budget
package on July 28, 2009. Under the provision, the State will borrow 8% of the amount
of property tax revenue apportioned to cities, counties and special districts. The state
will be required to repay those obligations plus interest by June 30, 2013. The interest
rate has been set at 2
Proposition 1A Securitization Program: Authorized under ABX4 14 and ABX4 15, the
Proposition 1A Securitization Program was instituted by California Communities to
enable Local Agencies to sell their respective Proposition 1A Receivables to California
Communities. Under the Securitization Program, California Communities will
simultaneously purchase the Proposition 1A Receivables, issue bonds "Prop 1A
Bonds and provide each local agency with the cash proceeds in two equal
installments, on January 15, 2010 and May 3, 2010 (to coincide with the dates that the
State will be shifting property tax from local agencies). The purchase price paid to the
local agencies will equal 100% of the amount of the property tax reduction. All
transaction costs of issuance and interest will be paid by the State of California.
Participating local agencies will have no obligation on the bonds and no credit exposure
to the State.
If the City sells its Proposition 1A Receivable under the Proposition 1A Securitization
Program, California Communities will pledge the City's Proposition 1A Receivable to
secure the repayment of a corresponding amount of the Prop 1A Bonds. The City's sale
of its Proposition 1A Receivable will be irrevocable. Bondholders will have no recourse
to the City if the State does not make the Proposition 1A Repayment.
Proposition 1A Program Sponsor: California Statewide Communities Development
Authority "California Communities is a joint powers authority sponsored by the
California State Association of Counties and the League of California Cities. The
member agencies of California Communities include approximately 230 cities and 54
counties throughout California.
Benefits of Participation in the Proposition 1A Securitization Program:
The benefits to the City of participation in the Proposition 1A Securitization Program
include:
Immediate cash relief the sale of the City's Proposition 1A Receivable will
provide the City with 100% of its Proposition 1A Receivable in two equal
installments, on January 15, 2010 and May 3, 2010.
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Mitigates impact of 8% property tax withholding in January and May Per ABX4
14 and ABX4 15, the State will withhold 8% of property tax receivables due to
Cities, Counties, and Special Districts under Proposition 1A. The financing
outlines bond proceeds to be distributed to coincide with the dates that the State
will be shifting property tax from local agencies.
All costs of financing borne by the State of California. The City will not have to
pay any interest cost or costs of issuance in connection with it participation.
No obligation on Bonds. The City has no obligation with respect to the payment
of the bonds, nor any reporting, disclosure or other compliance obligations
associated with the bonds.
Proceeds of the Sale of the City's Proposition 1A Receivable:
Upon delivery of the Proposition 1A Bonds, California Communities will make available
to the City its fixed purchase price, which will equal 100% of the local agency's
Proposition 1A Receivable. These funds may be used for any lawful purpose of the City
and are not restricted by the program.
Proposed Proposition 1A Receivables Sale Resolution:
The proposed Proposition 1A Receivables Sale Resolution:
(1) Authorizes the sale of the City's Proposition 1A Receivable to California
Communities for 100% of its receivable;
(2) Approves the form, and directs the execution and delivery, of the Purchase and
Sale Agreement with California Communities and related documents;
Authorizes and directs any Authorized Officer to send, or to cause to be sent, an
irrevocable written instruction required by statute to the State Controller notifying
the State of the sale of the Proposition 1A Receivable and instructing the
disbursement of the Proposition 1A Receivable to the Proposition 1A Bond
Trustee;
(4) Appoints certain City officers and officials as Authorized Officers for purposes of
signing documents; and
Authorizes miscellaneous related actions and makes certain ratifications, findings
and determinations required by law.
(3)
(5)
Proposed Purchase and Sale Agreement
The proposed Purchase and Sale Agreement:
(1) Provides for the sale of the Proposition 1A Receivable to California Communities;
(2) Contains representations and warranties of the City to assure California
Communities that the Proposition 1A Receivable has not been previously sold, is
not encumbered, that no litigation or other actions is pending or threatened to
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disrupt the transaction and the this is an arm's length "true sale" of the
Proposition 1A Receivable;
(3) Provides mechanics for payment of the Purchase Price;
(4) Contains other miscellaneous provisions.
Proposed Purchase and Sale Agreement Exhibits:
The proposed Proposition 1A Purchase and Sale Agreement Exhibits:
(B1) Opinion of Counsel: This is an opinion of the counsel to the local agency
covering basic approval of the documents, litigation, and enforceability of the
document against the Seller. It will be dated as of the Pricing date of the bonds
(currently expected to be November 10, 2009).
(B2) Bringdown Opinion: This simply "brings down" the opinions to the closing date
(currently expected to be November 19, 2009).
(C1) Certificate of the Clerk of the Local Agency: A certificate of the Clerk confirming
that the resolution was duly adopted and is in full force and effect.
(C2) Seller Certificate: A certification of the Seller dated as of the Pricing Date
confirming that the representations and warranties of the Seller are true as of the
Pricing Date, confirming authority to sign, confirming due approval of the
resolution and providing payment instructions.
(C3) Bill of Sale and Bringdown Certificate: Certificate that brings the certifications of
C2 down to the Closing Date and confirms the sale of the Proposition 1A
Receivable as of the Closing Date.
(D) Irrevocable Instructions to the Controller: Required in order to let the. State
Controller know that the Proposition 1A Receivable has been sold and directing
the State to make payment of the receivable to the Trustee on behalf of the
Purchaser.
(E) Escrow Instruction Letter: Instructs Transaction Counsel (Orrick) to hold all
documents in escrow until closing, and if closing does not occur by December
31, 2009 for any reason, to destroy all documents.
Other Options Available to the City:
The following options are also available to the City although staff do not find them to be
better alternatives than participating in the securitization program:
Not participate in the Securitization program. The City will forego the 8% property
tax revenue for FY2009 -10 and receive the withheld property tax repayment plus
2% of annual interest from the State between June 6 and June 13, 2013.
Sell the state repayment obligation to another local Agency. The market for local
agencies purchasing other agency receivables is limited. Furthermore, the
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structuring of the sale agreement between participating agencies would be more
costly as additional time is demanded of staff and counsel as oppose to the
already available option of securitization.
FISCAL IMPACT
By participating in the securitization program, the City will receive bond proceeds equal
100% of the Proposition 1A receivables in two equal installments on January 15, 2010
and May 3, 2010 without incurring additional cost.
RECOMMENDATION
ADOPT RESOLUTION 6700 APPROVING THE FORM OF AND AUTHORIZING
THE EXECUTION AND DELIVERY OF A PURCHASE AND SALE
AGREEMENT AND RELATED DOCUMENTS WITH RESPECT TO THE SALE
OF THE CITY'S PROPOSITION 1A RECEIVABLE FROM THE STATE; AND
DIRECTING AND AUTHORIZING CERTAIN OTHER ACTIONS IN
CONNECTION THEREWITH.
Approved: �Fra€C2 e�wri-an�
Donald Penman, City Manager
Attachments
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RESOLUTION NO. 6700
Vat
OF THE
A RESOLUTION APPROVING THE FORM OF AND AUTHORIZING THE
EXECUTION AND DELIVERY OF A PURCHASE AND SALE AGREEMENT
AND RELATED DOCUMENTS WITH RESPECT TO THE SALE OF THE
SELLER'S PROPOSITION 1A RECEIVABLE FROM THE STATE; AND
DIRECTING AND AUTHORIZING CERTAIN OTHER ACTIONS IN
CONNECTION THEREWITH
WHEREAS, pursuant to Section 25.5 of Article XIII of the California Constitution and
Chapter 14XXXX of the California Statutes of 2009 (Assembly Bill No. 15), as amended (the
"Act certain local agencies within the State of California (the "State are entitled to receive
certain payments to be made by the State on or before June 30, 2013, as reimbursement for
reductions in the percentage of the total amount of ad valorem property tax revenues allocated to
such local agencies during the State's 2009 -10 fiscal year (the "Reimbursement Payments
which reductions have been authorized pursuant to Sections 100.05 and 100.06 of the California
Revenue and Taxation Code;
WHEREAS, the Y1 ita, a local agency within the meaning of Section 6585(f) of
the California Government Code (the "Seller is entitled to and has determined to sell all right,
title and interest of the Seller in and to its "Proposition lA receivable as defined in Section
6585(g) of the California Government Code (the "Proposition IA Receivable namely, the right
to payment of moneys due or to become due to the Seller pursuant to Section 25.5(a)(1)(B)(iii)
of Article XIII of the California Constitution and Section 100.06 of the California Revenue and.
Taxation Code, in order to obtain money to fund public capital improvements or working capital;
WHEREAS, the Seller is authorized to sell or otherwise dispose of its property as the
interests of its residents require;
WHEREAS, the California Statewide Communities Development Authority, a joint
exercise of powers authority organized and existing under the laws of the State (the
"Purchaser has been authorized pursuant to Section 6588(x) of the California Government
Code to purchase the Proposition lA Receivable;
WHEREAS, the Purchaser desires to purchase the Proposition lA Receivable and the
Seller desires to sell the Proposition 1 A Receivable pursuant to a purchase and sale agreement by
and between the Seller and the Purchaser in the form presented to this City Council (the "Sale
Agreement for the purposes set forth herein;
WHEREAS, in order to finance the purchase price of the Proposition 1A Receivable from
the Seller and the purchase price of other Proposition IA Receivables from other local agencies,
the Purchaser will issue its bonds (the "Bonds pursuant to Section 6590 of the California
Government Code and an Indenture (the "Indenture by and between the Purchaser and Wells
Fargo Bank, National Association, as trustee (the "Trustee which Bonds will be payable solely
from the proceeds of the Seller's Proposition 1A Receivable and other Proposition IA
Receivables sold to the Purchaser by local agencies in connection with the issuance of the
Bonds;
WHEREAS, the Seller acknowledges that (i) any transfer of its Proposition lA
Receivable to the Purchaser pursuant to the Sale Agreement shall be treated as an absolute sale
and transfer of the property so transferred and not as a pledge or grant of a security interest by
MOQaa to secure a borrowing, (ii) any such sale of its Proposition 1A Receivable tot the
Purchaser shall automatically be perfected without the need for physical delivery, recordation,
filing or further act, (iii) the provisions of Division 9 (commencing with Section 9101) of the
California Commercial Code and Sections 954.5 to 955.1 of the California Civil Code, inclusive,
shall not apply to the sale of its Proposition IA Receivable, and (iv) after such transfer, the Seller
shall have no right, title, or interest in or to the Proposition IA Receivable sold to the Purchaser
and the Proposition lA Receivable will thereafter be owned, received, held and disbursed only
by the Purchaser or a trustee or agent appointed by the Purchaser;
WHEREAS, the Seller acknowledges that the Purchaser will grant a security interest in
the Proposition lA Receivable to the Trustee and any credit enhancer to secure payment of the
Bonds;
WHEREAS, a portion of the proceeds of the Bonds will be used by the Purchaser to,
among other things, pay the purchase price of the Proposition lA Receivable;
WHEREAS, the Seller will use the proceeds received from the sale of the Proposition lA
Receivable for any lawful purpose as permitted under the applicable laws of the State;
NOW THEREFORE, the V ty Council of the City o Ar ca&a; hereby resolves as follows:
Section 1. All of the recitals set forth above are true and correct, and this City
Col ict`1 hereby so finds and determines.
Section 2. The Seller hereby authorizes the sale of the Proposition lA Receivable
to the Purchaser for a price equal to the amount certified as the Initial Amount (as defined in the
Sale Agreement) b the County auditor pursuant to the Act. The form of Sale Agreement
presented to the t;Gouj is hereby approved. An Authorized Officer (as set forth in
Appendix A of this Resolution, attached hereto and by this reference incorporated herein) is
hereby authorized and directed to execute and deliver the Sale Agreement on behalf of the Seller,
which shall be in the form presented at this meeting.
Section 3. Any Authorized Officer is hereby authorized and directed to send, or
to cause to be sent, an irrevocable written instruction to the State Controller (the "Irrevocable
Written Instruction notifying the State of the sale of the Proposition 1A Receivable and
instructing the disbursement pursuant to Section 6588.6(c) of California Government Code of the
Proposition lA Receivable to the Trustee, on behalf of the Purchaser, which Irrevocable Written
Instruction shall be in the form presented at this meeting.
Section 4. The Authorized Officers and such other Seller officers, as appropriate,
are hereby authorized and directed, jointly and severally, to do any and all things and to execute
and deliver any and all documents, including but not limited to, if required, appropriate escrow
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instructions relating to the delivery into escrow of executed documents prior to the closing of the
Bonds, and such other documents mentioned in the Sale Agreement or the Indenture, which any
of them may deem necessary or desirable in order to implement the Sale Agreement and
otherwise to carry out, give effect to and comply with the terms and intent of this Resolution; and
all such actions heretofore taken by such officers are hereby ratified, confirmed and approved.
Section 5. All consents, approvals, notices, orders, requests and other actions
permitted or required by any of the documents authorized by this Resolution, whether before or
after the sale of the Proposition I Receivable or the issuance of the Bonds, including without
limitation any of the foregoing that may be necessary or desirable in connection with any default
under or amendment of such documents, may be given or taken by an Authorized Officer
without further authorization by this 152 Mt and each Authorized Officer is hereby
authorized and directed to give any such consent, approval, notice, order or request, to execute
any necessary or appropriate documents or amendments, and to take any such action that such
Authorized Officer may deem necessary or desirable to further the purposes of this Resolution.
Section 6. The City Council acknowledges that, upon execution and delivery of
the Sale Agreement, the Seller is contractually obligated to sell the Proposition IA Receivable to
the Purchaser pursuant to the Sale Agreement and the Seller shall not have any option to revoke
its approval of the Sale Agreement or to determine not to perform its obligations thereunder.
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approval.
PASSED AND ADOPTED by the City Council of the City of Arcadia, State of
California, this 3rd day of November 2009, by the following vote:
AYES:
NOES:
ABSENT:
Attest:
Approved as to form
SELLER'S COUNSEL
Section 7. This Resolution shall take effect from and after its adoption and
By
Dated:
4
Mayor
Authorized Officers:
a,
e; c
APPENDIX A
Ajj, 4 age
ir.
anager,
nistrative Services Director
ho Works
any designee of any of them, as appointed in a written certificate of
such Authorized Officer delivered to the Trustee.
xX, CALIFORNIA,
as Seller
and
CALIFORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY,
as Purchaser
PURCHASE AND SALE AGREEMENT
Dated as of November 1, 2009
TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATION 2
2. AGREEMENT TO SELL AND PURCHASE; CONDITIONS PRECEDENT 2
3. PURCHASE PRICE, CONVEYANCE OF PROPOSITION IA RECEIVABLE
AND PAYMENT OF PURCHASE PRICE 3
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 4
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER 5
6. COVENANTS OF THE SELLER 7
7. THE PURCHASER'S ACKNOWLEDGMENT 9
8. NOTICES OF BREACH 9
9. LIABILITY OF SELLER; INDEMNIFICATION 9
10. LIMITATION ON LIABILITY 10
11. THE SELLER'S ACKNOWLEDGMENT 10
12. NOTICES 10
13. AMENDMENTS 10
14. SUCCESSORS AND ASSIGNS 10
15. THIRD PARTY RIGHTS 11
16. PARTIAL INVALIDITY 11
17. COUNTERPARTS 11
18. ENTIRE AGREEMENT 11
19. GOVERNING LAW 12
EXHIBIT A DEFINITIONS A -1
EXHIBIT B1 OPINION OF SELLER'S COUNSEL B 1 -1
EXHIBIT B2 BRINGDOWN OPINION OF SELLER'S COUNSEL B2 -1
EXHIBIT CI CLERK'S CERTIFICATE C1-1
EXHIBIT C2 SELLER CERTIFICATE C2 -1
EXHIBIT C3 BILL OF SALE AND BRINGDOWN CERTIFICATE C3 -1
EXHIBIT D IRREVOCABLE INSTRUCTIONS TO CONTROLLER D -1
EXHIBIT E ESCROW INSTRUCTION LETTER E -1
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Page
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT, dated as of November 1, 2009
(this "Agreement is entered into by and between:
(1) 1174t '=t a local agency of the State of California within the
meaning of Section 6585(0 of the California Government Code (the "Seller and.
(2) CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT
AUTHORITY, a joint exercise of powers authority organized and existing under the laws of the
State of California (the "Purchaser
RECITALS
A. Pursuant to Section 25.5 of Article XIII of the California Constitution and
Section 100.06 of the California Revenue and Taxation Code, local agencies within the meaning
of Section 6585(0 of the California Government Code are entitled to receive certain payments to
be made by the State of California (the "State on or before June 30, 2013, as reimbursement for
reductions in the percentage of the total amount of ad valorem property tax revenues allocated to
such local agencies during the State's 2009 -10 fiscal year, which reductions have been
authorized pursuant to Sections 100.05 and 100.06 of the California Revenue and Taxation Code.
B. The Seller is the owner of the Proposition 1A Receivable (as defined
below) and is entitled to and has determined to sell all right, title and interest in and to the
Proposition lA receivable, namely, the right to payment of moneys due or to become due to the
Seller pursuant to Section 25.5(a)(1)(B)(iii) of Article XIII of the California Constitution and
Section 100.06 of the California Revenue and Taxation Code, in order to obtain money to fund
any lawful purpose as permitted under the applicable laws of the State.
C. The Seller is authorized to sell or otherwise dispose of its property as the
interests of its residents require.
D. The Purchaser, a joint exercise of powers authority organized and existing
under the laws of the State, has been authorized pursuant to Section 6588(x) of the California
Government Code to purchase the Proposition IA Receivable.
E. The Seller is willing to sell, and the Purchaser is willing to purchase, the
Proposition lA Receivable upon the terms specified in this Agreement.
F. Pursuant to its Proposition IA Receivable Financing Program (the
"Program the Purchaser will issue its bonds (the "Bonds pursuant to an Indenture (the
"Indenture between the Purchaser and Wells Fargo Bank, National Association, as trustee (the
"Trustee and will use a portion of the proceeds thereof to purchase the Proposition IA
Receivable from the Seller.
G. The Purchaser will grant a security interest in such Proposition lA
Receivable to the Trustee and each Credit Enhancer to secure the Bonds.
NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
AGREEMENT
1. Definitions and Interpretation.
(a) For all purposes of this Agreement, except as otherwise expressly provided
herein or unless the context otherwise requires, capitalized terns not otherwise defined herein
shall have the meanings ascribed to such terns in Exhibit A attached hereto and which is
incorporated by reference herein.
(b) The words "hereof," "herein," "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement; section and exhibits references contained in this Agreement are
references to sections and exhibits in or to this Agreement unless otherwise specified; and the
term "including" shall mean "including without limitation."
(c) Any agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such agreement, instrument or
statute as from time to time may be amended, modified or supplemented and includes (in the
case of agreements or instruments) references to all attachments and exhibits thereto and
instruments incorporated therein; and any references to a Person are also to its permitted
successors and assigns.
2. Agreement to Sell and Purchase; Conditions Precedent.
(a) The Seller agrees to sell, and the Purchaser agrees to purchase, on the Closing
Date, for an amount equal to the Purchase Price, all right, title and interest of the Seller in and to
the "Proposition lA receivable" as defined in Section 6585(g) of the California Government
Code (the "Proposition lA Receivable namely, the right to payment of moneys due or to
become due to the Seller pursuant to Section 25.5(a)(1)(B)(iii) of Article XIII of the California
Constitution and Section 100.06 of the California Revenue and. Taxation Code. The Purchase
Price shall be paid by the Purchaser to the Seller in two equal cash installment payments, without
interest (each, an "Installment Payment" and, collectively, the "Installment Payments on
January 15, 2010, and May 3, 2010 (each a "Payment Date" and, collectively, the "Payment
Dates The Purchaser shall pay the Purchase Price by wire transfer pursuant to wire
instructions provided by the Seller to the Trustee by e -mail to john.deleray @wellsfargo.com or
by facsimile to 213- 614 -3355, Attention: John Deleray. If wire instructions are not provided to
the Trustee (or if such wire instructions are invalid) payment will be made by check mailed to
the Seller's Principal Place of Business.
(b) The performance by the Purchaser of its obligations hereunder shall be
conditioned upon:
(i)
Transaction Counsel receiving on or before the date the Bonds are sold
(the "Pricing Date to be held in escrow until the Closing Date and then
delivered to the Purchaser on the Closing Date, the following documents
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duly executed by the Seller or its counsel, as applicable: (1) an opinion of
counsel to the Seller dated the Pricing Date in substantially the form
attached hereto as Exhibit B 1, (2) certificates dated the Pricing Date in
substantially the forms attached hereto as Exhibit C 1 and Exhibit C2,
(3) irrevocable instructions to the Controller dated as of the Closing Date
in substantially the form attached hereto as Exhibit D, (4) this Agreement,
(5) a certified copy of the resolution of the Seller's City Council approving
this Agreement, the transactions contemplated hereby and the documents
attached hereto as exhibits, and (6) an escrow instruction letter in
substantially the form attached hereto as Exhibit E;
CO Transaction Counsel receiving on or before the Pricing Date, (1) a
bringdown opinion of counsel to the Seller dated as of the Closing Date in
substantially the form attached hereto as Exhibit B2, and (2) a bill of sale
and bringdown certificate of the Seller (the "Bill of Sale in substantially
the form attached hereto as Exhibit C3: provided that the Purchaser may
waive, in its sole discretion, the requirements of Section 2(b)(ii)( 1);
(iii) the Purchaser issuing Bonds in an amount which will be sufficient to pay
the Purchase Price; and
(iv) the receipt by the Purchaser of a certification of the County Auditor
confirming the Initial Amount of the Proposition 1A Receivable pursuant
to the Act.
(c) The performance by the Seller of its obligations hereunder shall be
conditioned solely upon the Purchaser's issuance of the Bonds its execution and delivery of this
Agreement, pursuant to which it is legally obligated to pay the Installment Payments to the Seller
on the Payment Dates as set forth in this Agreement, and no other act or omission on the part of
the Purchaser or any other party shall excuse the Seller from performing its obligations
hereunder. Seller specifically disclaims any right to rescind this Agreement, or to assert that title
to the Proposition lA Receivable has not passed to the Purchaser, should Purchaser fail to make
Installment Payments in the requisite amounts on the Payment Dates.
3. Purchase Price, Conveyance of Proposition 1 A Receivable and Payment of
Purchase Price.
(a) Upon pricing of the Bonds by the Purchaser, the Purchaser will inform the
Seller that it will pay the Purchase Price in Installment Payments on the Payment Dates.
(b) In consideration of the Purchaser's agreement to pay and deliver to the Seller
the Installment Payments on the Payment Dates, the Seller agrees to (i) transfer, grant, bargain,
sell, assign, convey, set over and deliver to the Purchaser, absolutely and not as collateral
security, without recourse except as expressly provided herein, and the Purchaser agrees to
purchase, accept and receive, the Proposition 1A Receivable, and (ii) assign to the Purchaser, to
the extent permitted by law, all present or future rights, if any, of the Seller to enforce or cause
the enforcement of payment of the Proposition 1 A Receivable pursuant to the Act and other
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applicable law. Such transfer, grant, bargain, sale, assignment, conveyance, set over and
delivery is hereby expressly stated to be a sale and, pursuant to Section 6588.6(b) of the
California Government Code, shall be treated as an absolute sale and transfer of the Proposition
lA Receivable, and not as a grant of a security interest by the Seller to secure a borrowing. This
is the statement referred to in Sections 6588.6(b) and (c) of the California Government Code.
4. Representations and Warranties of the Purchaser. The Purchaser represents
and warrants to the Seller, as of the date hereof, as follows:
(a) The Purchaser is duly organized, validly existing and in good standing under
the laws of the State of California.
(b) The Purchaser has full power and authority to enter into this Agreement and to
perform its obligations hereunder and has duly authorized such purchase and assignment of the
Proposition IA Receivable by the Purchaser by all necessary action.
(c) Neither the execution and delivery by the Purchaser of this Agreement, nor
the performance by the Purchaser of its obligations hereunder, shall conflict with or result in a
breach or default under any of its organizational documents, any law, rule, regulation, judgment,
order or decree to which it is subject or any agreement or instrument to which it is a party.
(d) To the best of the knowledge of the Purchaser, no action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court, public board or body, is
pending or threatened in any way against the Purchaser affecting the existence of the Purchaser
or the titles of its commissioners or officers, or seeking to restrain or to enjoin the purchase of
the Proposition IA Receivable or to direct the application of the proceeds of the purchase
thereof, or in any way contesting or affecting the validity or enforceability of any of the
Transaction Documents or any other applicable agreements or any action of the Purchaser
contemplated by any of said documents, or in any way contesting the powers of the Purchaser or
its authority with respect to the Transaction Documents to which it is a party or any other
applicable agreement, or any action on the part of the Purchaser contemplated by the Transaction
Documents, or in any way seeking to enjoin or restrain the Purchaser from purchasing the
Proposition IA Receivable or which if determined adversely to the Purchaser would have an
adverse effect upon the Purchaser's ability to purchase the Proposition IA Receivable, nor to the
knowledge of the Purchaser is there any basis therefor.
(e) This Agreement, and its execution, delivery and performance hereof have
been duly authorized by it, and this Agreement has been duly executed and delivered by it and
constitutes its valid and binding obligation enforceable against it in accordance with the terms
hereof, subject to the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws relating to or affecting creditors' rights generally or the
application of equitable principles in any proceeding, whether at law or in equity.
(f) The Purchaser is a separate legal entity, acting solely through its authorized
representatives, from the Seller, maintaining separate records, books of account, assets, bank
accounts and funds, which are not and have not been commingled with those of the Seller.
4
(g) All approvals, consents, authorizations, elections and orders of or filings or
registrations with any governmental authority, board, agency or commission having jurisdiction
which would constitute a condition precedent to, or the absence of which would adversely affect,
the purchase by the Purchaser of the Proposition IA Receivable or the performance by the
Purchaser of its obligations under the Transaction Documents to which it is a party and any other
applicable agreements, have been obtained and are in full force and effect.
(h) Insofar as it would materially adversely affect the Purchaser's ability to enter
into, carry out and perform its obligations under any or all of the Transaction Documents to
which it is a party, or consummate the transactions contemplated by the same, the Purchaser is
not in breach of or default under any applicable constitutional provision, law or admix istrative
regulation of the State of California or the United States or any applicable judgment or decree or
any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which it
is a party or to which it or any of its property or assets is otherwise subject, and, to the best of the
knowledge of the Purchaser, no event has occurred and is continuing which with the passage of
time or the giving of notice, or both, would constitute a default or an event of default under any
such instrument, and the execution and delivery by the Purchaser of the Transaction Documents
to which it is a party, and compliance by the Purchaser with the provisions thereof, under the
circumstances contemplated thereby, do not and will not conflict with or constitute on the part of
the Purchaser a breach of or default under any agreement or other instrument to which the
Purchaser is a party or by which it is bound or any existing law, regulation, court order or
consent decree to which the Purchaser is subject.
5. Representations and Warranties of the Seller. The Seller hereby represents
and warrants to the Purchaser, as of the date hereof, as follows:
(a) The Seller is a local agency within the meaning of Section 6585(f) of the
California Government Code, with full power and authority to execute and deliver this
Agreement and to cany out its terms.
(b) The Seller has full power, authority and legal right to sell and assign the
Proposition IA Receivable to the Purchaser and has duly authorized such sale and assignment to
the Purchaser by all necessary action; and the execution, delivery and performance by the Seller
of this Agreement has been duly authorized by the Seller by all necessary action.
(c) This Agreement has been, and as of the Closing Date the Bill of Sale will have
been, duly executed and delivered by the Seller and, assuming the due authorization, execution
and delivery of this Agreement by the Purchaser, each of this Agreement and the Bill of Sale
constitutes a legal, valid and binding obligation of the Seller enforceable in accordance with its
terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws relating to or affecting creditors' rights generally or the
application of equitable principles in any proceeding, whether at law or in equity.
(d) All approvals, consents, authorizations, elections and orders of or filings or
registrations with any governmental authority, board, agency or commission having jurisdiction
which would constitute a condition precedent to, or the absence of which would adversely affect,
the sale by the Seller of the Proposition 1 A Receivable or the performance by the Seller of its
5
obligations under the Resolution and the Transaction Documents to which it is a party and any
other applicable agreements, have been obtained and are in full force and effect.
(e) Insofar as it would materially adversely affect the Seller's ability to enter into,
carry out and perform its obligations under any or all of the Transaction Documents to which it is
a party, or consummate the transactions contemplated by the same, the Seller is not in breach of
or default under any applicable constitutional provision, law or administrative regulation of the
State of California or the United States or any applicable judgment or decree or any loan
agreement, indenture, bond, note, resolution, agreement or other instrument to which it is a party
or to which it or any of its property or assets is otherwise subject, and, to the best of the
knowledge of the Seller, no event has occurred and is continuing which with the passage of time
or the giving of notice, or both, would constitute a default or an event of default under any such
instrument, and the adoption of the Resolution and the execution and delivery by the Seller of the
Transaction Documents to which it is a party, and compliance by the Seller with the provisions
thereof, under the circumstances contemplated thereby, do not and will not conflict with or
constitute on the part of the Seller a breach of or default under any agreement or other instrument
to which the Seller is a party or by which it is bound or any existing law, regulation, court order
or consent decree to which the Seller is subject.
(f) To the best of the knowledge of the Seller, no action, suit, proceeding, inquiry
or investigation, at law or in equity, before or by any court, public board or body, is pending or
threatened in any way against the Seller affecting the existence of the Seller or the titles of its
City Gounci members or officers to their respective offices, or seeking to restrain or to enjoin
the sale of the Proposition IA Receivable or to direct the application of the proceeds of the sale
thereof, or in any way contesting or affecting the validity or enforceability of any of the
Transaction Documents or any other applicable agreements or any action of the Seller
contemplated by any of said documents, or in any way contesting the powers of the Seller or its
authority with respect to the Resolution or the Transaction Documents to which it is a party or
any other applicable agreement, or any action on the part of the Seller contemplated by the
Transaction Documents, or in any way seeking to enjoin or restrain the Seller from selling the
Proposition IA Receivable or which if determined adversely to the Seller would have an adverse
effect upon the Seller's ability to sell the Proposition IA Receivable, nor to the knowledge of the
Seller is there any basis therefor.
(g) Prior to the sale of the Proposition IA Receivable to the Purchaser, the Seller
was the sole owner of the Proposition IA Receivable, and has such right, title and interest to the
Proposition IA Receivable as provided in the Act. From and after the conveyance of the
Proposition IA Receivable by the Seller to Purchaser on the Closing Date, the Seller shall have
no right, title or interest in or to the Proposition IA Receivable. Except as provided in this
Agreement, the Seller has not sold, transferred, assigned, set over or otherwise conveyed any
right, title or interest of any kind whatsoever in all or any portion of the Proposition IA
Receivable, nor has the Seller created, or to the best knowledge of the Seller permitted the
creation of, any lien, pledge, security interest or any other encumbrance (a "Lien thereon.
Prior to the sale of the Proposition lA Receivable to the Purchaser, the Seller held title to the
Proposition IA Receivable free and clear of any Liens. As of the Closing Date, this Agreement,
together with the Bill of Sale, constitutes a valid and absolute sale to the Buyer of all of the
Seller's right, title and interest in and to the Proposition IA Receivable.
6
Purchaser.
(h) The Seller acts solely through its authorized officers or agents.
(i) The Seller maintains records and books of account separate from those of the
(j) The Seller maintains its respective assets separately from the assets of the
Purchaser (including through the maintenance of separate bank accounts); the Seller's funds and
assets, and records relating thereto, have not been and are not commingled with those of the
Purchaser.
(k The Seller's .nnci al lace of business and chief executive office is located at
NZ) Y 9 006.
(1) The aggregate amount of the Installment Payments is reasonably equivalent
value for the Proposition IA Receivable. The Seller acknowledges that the amount payable to or
on behalf of the Purchaser by the State with respect to the Proposition IA Receivable will be in
excess of the Purchase Price and the Initial Amount of the Proposition IA Receivable and
confines that it has no claim to any such excess amount whatsoever.
(m) The Seller does not act as an agent of the Purchaser in any capacity, but
instead presents itself to the public as an entity separate from the Purchaser.
(n) The Seller has not guaranteed and shall not guarantee the obligations of the
Purchaser, nor shall it hold itself out or permit itself to be held out as having agreed to pay or as
being liable for the debts of the Purchaser; and the Seller has not received nor shall the Seller
accept any credit or financing from any Person who is relying upon the availability of the assets
of the Purchaser in extending such credit or financing. The Seller has not purchased and shall
not purchase any of the Bonds or any interest therein.
(o) All transactions between or among the Seller, on the one hand, and the
Purchaser on the other hand (including, without limitation, transactions governed by contracts for
services and facilities, such as payroll, purchasing, accounting, legal and personnel services and
office space), whether existing on the date hereof or entered into after the date hereof, shall be on
terms and conditions (including, without limitation, terms relating to amounts to be paid
thereunder) which are believed by each such party thereto to be both fair and reasonable and
comparable to those available on an anus- length basis from Persons who are not affiliates.
(p) The Seller has not, under the provisions of Section 100.06(b) of the California
Revenue and Taxation Code, received a reduction for hardship or otherwise, nor has it requested,
made arrangements for, or completed a reallocation or exchange with any other local agency, of
the total amount of the ad valorem property tax revenue reduction allocated to the Seller pursuant
to Section 100.06(a) of the California Revenue and Taxation Code.
6. Covenants of the Seller.
(a) The Seller shall not take any action or omit to take any action which adversely
affects the interests of the Purchaser in the Proposition lA Receivable and in the proceeds
thereof. The Seller shall not take any action or omit to take any action that shall adversely affect
7
the ability of the Purchaser, and any assignee of the Purchaser, to receive payments of the
Proposition 1 A Receivable.
(b) The Seller shall not take any action or omit to take any action that would
impair the validity or effectiveness of the Act, nor, without the prior written consent of the
Purchaser or its assignees, agree to any amendment, modification, termination, waiver or
surrender of, the terms of the Act, or waive timely performance or observance under the Act.
Nothing in this agreement shall impose a duty on the Seller to seek to enforce the Act or to seek
enforcement thereof by others, or to prevent others from modifying, terminating, discharging or
impairing the validity or effectiveness of the Act.
(c) Upon request of the Purchaser or its assignee, (i) the Seller shall execute and
deliver such further instruments and do such further acts (including being named as a plaintiff in
an appropriate proceeding) as may be reasonably necessary or proper to carry out more
effectively the purposes and intent of this Agreement and the Act, and (ii) the Seller shall take all
actions necessary to preserve, maintain and protect the title of the Purchaser to the Proposition
IA Receivable.
(d) On or before the Closing Date, the Seller shall send (or cause to be sent) an
irrevocable instruction to the Controller pursuant to Section 6588.6(c) of California Government
Code to cause the Controller to disburse all payments of the Proposition IA Receivable to the
Trustee, together with notice of the sale of the Proposition 1A Receivable to the Purchaser and
the assignment of all or a portion of such assets by the Purchaser to the Trustee. Such notice and
instructions shall be in the form of Exhibit D hereto. The Seller shall not take any action to
revoke or which would have the effect of revoking, in whole or in part, such instructions to the
Controller. Upon sending such irrevocable instruction, the Seller shall have relinquished and
waived any control over the Proposition 1A Receivable, any authority to collect the Proposition
IA Receivable, and any power to revoke or amend the instructions to the Controller
contemplated by this paragraph. Except as provided in Section 2(c) of this Agreement, the Seller
shall not rescind, amend or modify the instruction 'described in the first sentence of this
paragraph. The Seller shall cooperate with the Purchaser or its assignee in giving instructions to
the Controller if the Purchaser or its assignee transfers the Proposition IA Receivable. In the
event that the Seller receives any proceeds of the Proposition I Receivable, the Seller shall
hold the same in trust for the benefit of the Purchaser and the Trustee and each Credit Enhancer,
as assignees of the Purchaser, and shall promptly remit the same to the Trustee.
(e) The Seller hereby covenants and agrees that it will not at any time institute
against the Purchaser, or join in instituting against the Purchaser, any bankruptcy, reorganization,
arrangement, insolvency, liquidation, or similar proceeding under any United States or state
bankruptcy or similar law.
(f) The financial statements and books and records of the Seller prepared after the
Closing Date shall reflect the separate existence of the Purchaser and the sale to the Purchaser of
the Proposition 1A Receivable.
(g) The Seller shall treat the sale of the Proposition IA Receivable as a sale for
regulatory and accounting purposes.
8
(h) From and after the date of this Agreement, the Seller shall not sell, transfer,
assign, set over or otherwise convey any right, title or interest of any kind whatsoever in all or
any portion of the Proposition 1A Receivable, nor shall the Seller create, or to the knowledge of
the Seller permit the creation of any Lien thereon.
7. The Purchaser's Acknowledgment. The Purchaser acknowledges that the
Proposition IA Receivable is not a debt or liability of the Seller, and that the Proposition IA
Receivable is payable solely by the State from the funds of the State provided therefor.
Consequently, neither the taxing power of the Seller, nor the full faith and credit thereof is
pledged to the payment of the Proposition IA Receivable. No representation is made by the
Seller concerning the obligation or ability of the State to make any payment of the Proposition
IA Receivable pursuant to Section 100.06 of the Revenue and Taxation Code and Section 25.5
of Article XIII of the California Constitution, nor is any representation made with respect to the
ability of the State to enact any change in the law applicable to the Transaction Documents
(including without limitation Section 100.06 of the Revenue and Taxation Code or Section
6588.6 of the Government Code). The Purchaser acknowledges that the Seller has no obligation
with respect to any offering document or disclosure related to the Bonds.
8. Notices of Breach.
(a) Upon discovery by the Seller or the Purchaser that the Seller or Purchaser has
breached any of its covenants or that any of the representations or warranties of the Seller or the
Purchaser are materially false or misleading, in a manner that materially and adversely affects
the value of the Proposition 1A Receivable or the Purchase Price thereof, the discovering party
shall give prompt written notice thereof to the other party and to the Trustee, as assignee of the
Purchaser, who shall, pursuant to the Indenture, promptly thereafter notify each Credit Enhancer
and the Rating Agencies.
(b) The Seller shall not be liable to the Purchaser, the Trustee, the holders of the
Bonds, or any Credit Enhancer for any loss, cost or expense resulting from the failure of the
Trustee, any Credit Enhancer or the Purchaser to promptly notify the Seller upon the discovery
by an authorized officer of the Trustee, any Credit Enhancer or the Purchaser of a breach of any
covenant or any materially false or misleading representation or warranty contained herein.
9. Liability of Seller: Indemnification. The Seller shall be liable in accordance
herewith only to the extent of the obligations specifically undertaken by the Seller under this
Agreement. The Seller shall indemnify, defend and hold harmless the Purchaser, the Trustee and
each Credit Enhancer, as assignees of the Purchaser, and their respective officers, directors,
employees and agents from and against any and all costs, expenses, losses, claims, damages and
liabilities to the extent that such cost, expense, loss, claim, damage or liability arose out of, or
was imposed upon any such Person by the Seller's breach of any of its covenants. contained
herein or any materially false or misleading representation or warranty of the Seller contained
herein. Notwithstanding anything to the contrary herein, the Seller shall have no liability for the
payment of the principal of or interest on the Bonds issued by the Purchaser.
9
10. Limitation on Liability.
(a) The Seller and any officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Seller shall not be under
any obligation to appear in, prosecute or defend any legal action regarding the Act that is
unrelated to its specific obligations under this Agreement.
(b) No officer or employee of the Seller shall have any liability for the
representations, warranties, covenants, agreements or other obligations of the Seller hereunder or
in any of the certificates, notices or agreements delivered pursuant hereto, as to all of which
recourse shall be had solely to the assets of the Seller.
11. The Seller's Acknowledgment. The Seller hereby agrees and acknowledges
that the Purchaser intends to assign and grant a security interest in all or a portion of (a) its rights
hereunder and (b) the Proposition 1 A Receivable, to the Trustee and each Credit Enhancer
pursuant to the Indenture. The Seller further agrees and acknowledges that the Trustee, the
holders of the Bonds, and each Credit Enhancer have relied and shall continue to rely upon each
of the foregoing representations, warranties and covenants, and further agrees that such Persons
are entitled so to rely thereon. Each of the above representations, warranties and covenants shall
survive any assignment and grant of a security interest in all or a portion of this Agreement or the
Proposition 1A Receivable to the Trustee and each Credit Enhancer and shall continue in full
force and effect, notwithstanding any subsequent termination of this Agreement and the other
Transaction Documents. The above representations, warranties and covenants shall inure to the
benefit of the Trustee and each Credit Enhancer.
12. Notices. All demands upon or, notices and communications to, the Seller, the
Purchaser, the Trustee or the Rating Agencies under this Agreement shall be in writing,
personally delivered or mailed by certified mail, return receipt requested, to such party at the
appropriate notice address, and shall be deemed to have been duly given upon receipt.
13. Amendments. This Agreement may be amended by the Seller and the
Purchaser, with (a) the consent of the Trustee, (b) the consent of each Credit Enhancer, and (c) a
Rating Agency Confirmation, but without the consent of any of the holders of the Bonds, for the
purpose of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement.
Promptly after the execution of any such amendment, the Purchaser shall furnish
written notification of the substance of such amendment to the Trustee and to the Rating
Agencies.
14. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Seller, the Purchaser and their respective successors and permitted assigns.
The Seller may not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Purchaser. Except as specified herein, the Purchaser may
not assign or transfer any of its rights or obligations under this Agreement without the prior
written consent of the Seller.
10
15. Third Party Rights. The Trustee and each Credit Enhancer are express and
intended third party beneficiaries under this Agreement. Nothing expressed in or to be implied
from this Agreement is intended to give, or shall be construed to give, any Person, other than the
parties hereto, the Trustee, and each Credit Enhancer, and their permitted successors and assigns
hereunder, any benefit or legal or equitable right, remedy or claim under or by virtue of this
Agreement or under or by virtue of any provision herein.
16. Partial Invalidity. If at any time any provision of this Agreement is or
becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither
the legality, validity or enforceability of the remaining provisions of this Agreement nor the
legality, validity or enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.
17. Counterparts. This Agreement may be executed in any number of identical
counterparts, any set of which signed by all the parties hereto shall be deemed to constitute a
complete, executed original for all purposes.
18. Entire Agreement. This Agreement sets forth the entire understanding and
agreement of the parties with respect to the subject matter hereof and supersedes any and all oral
or written agreements or understandings between the parties as to the subject matter hereof.
1 1
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Agreement to be duly executed as of the date first written above.
as Seller
By:
Authorized Officer
CALIFORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY, as Purchaser
By:
Authorized Signatory
12
For all purposes of this Agreement, except as otherwise expressly provided herein
or unless the context otherwise requires, capitalized terms not otherwise defined herein shall
have the meanings set forth below.
"Act" means Chapter 14XXXX of the California Statutes of 2009 (Assembly Bill
No. 15), as amended.
"Bill of Sale" has the meaning given to that term in Section 2(b)(ii) hereof.
"Closing Date" means the date on which the Bonds are issued. The Closing Date
is expected to be November 19, 2009, but the Purchaser may change the Closing Date by
providing e -mail notification to Effegnail tall not later than one day prior to the
Closing Date.
"Controller" means the Controller of the State.
EXHIBIT A
DEFINITIONS
"County Auditor" means the auditor or auditor controller of the county within
which the Seller is located.
"Credit Enhancer" means any municipal bond insurance company, bank or other
financial institution or organization which is performing in all material respects its obligations
under any Credit Support Instrument for some or all of the Bonds.
"Credit Support Instrument" means a policy of insurance, a letter of credit, a
stand -by purchase agreement, a revolving credit agreement or other credit arrangement pursuant
to which a Credit Enhancer provides credit or liquidity support with respect to the payment of
interest, principal or purchase price of the Bonds.
"Initial Amount" means, with respect to the Proposition 1 A Receivable, the
amount of property tax revenue reallocated away from the Seller pursuant to the provisions of
Section 100.06 of the Revenue and Taxation Code, as certified by the County Auditor pursuant
to the Act.
"Installment Payments" have the meaning set forth in Section 2(a).
"Payment. Dates" have the meaning set forth in Section 2(a).
"Pricing Date" means the date on which the Bonds are sold. The Pricing Date is
expected to be November 10, 2009, but the Purchaser may change the Pricing Date by providing
r� i�;� not later than one day prior to the Pricing notification to �q C�e1 &�p�,,�� u� Y P g Date.
"Principal Place of Business" means, with respect to the Seller, the location of the
Seller's rmcipal place of business and chief executive office located. at 240 W Huntington
Drive =NZ
A -1
"Proposition 1A Receivable" has the meaning set forth in Section 2(a).
"Purchase Price" means an amount equal to the Initial Amount.
"Rating Agency" means any nationally recognized rating agency then providing
or maintaining a rating on the Bonds at the request of the Purchaser.
"Rating Agency Confirmation" means written confirmation from each Rating
Agency that any proposed action will not, in and of itself, cause the Rating Agency to lower,
suspend or withdraw the rating then assigned by such Rating Agency to any Bonds.
"Resolution" means the resolution adopted by the City Co u cif approving the sale
of the Proposition 1A Receivable.
"State" means the State of California.
"Transaction Counsel" means Orrick, Herrington Sutcliffe LLP.
"Transaction Documents" mean this Agreement, the Bill of Sale, the Indenture,
the Bonds and the Irrevocable Instructions For Disbursement of Proposition IA Receivable of
Cty oArca,, dated as of the Closing Date.
Wells Fargo Bank, National Association
Los Angeles, California
Ladies Gentlemen:
OPINION OF COUNSEL
0
Dated: Pricing Date
California Statewide Communities Development Authority
Sacramento, California
Re: Sale of Proposition 1 A Receivable
This Office ha acted as counsel for the City of Arcadia (the "Seller in
connection with the adoption of that certain resolution (the "Resolution of the City Council of
the Seller (the "Governing Body pursuant to which the Seller authorized the sale to the
California Statewide Communities Development Authority (the "Purchaser of the Seller's
"Proposition lA Receivable as defined in and pursuant to the Purchase and Sale Agreement
dated as of November 1, 2009 (the "Sale Agreement between the Seller and the Purchaser. In
connection with these transactions, the Seller has issued certain Irrevocable Instructions For
Disbursement of the Seller's Proposition lA Receivable to the Controller of the State of
California (the "Disbursement Instructions and a Bill of Sale and Bringdown Certificate of the
Seller (the "Bill of Sale" and, collectively with the Sale Agreement and the Disbursement
Instructions, the "Seller Documents
Unless the context otherwise requires, capitalized terms used but not o et
defined herein shall have the meanings given to such terms in the Sale. Agreement. {t We have
examined and are familiar with the Seller Documents and with those documents relating to the
existence, organization, and operation of the Seller, the adoption of the Resolution, and the
execution of the Seller Documents, and have satisfied ourselves as to such other matters as
deeni necessary in order to render the following opinions. As to paragraphs numbered 3 and 4
below, t "e have relied as to factual matters on the representations and warranties of the Seller
contained in the Sale Agreement.
Based upon the foregoing, and subject to the limitations and qualifications set
forth herein, are of the opinion that:
IA
EXHIBIT B1
1. The Seller is a local agency, within the meaning of Section 6585(f) of the
California Government Code. The Governing Body is the governing body of the Seller.
2. The Resolution was' duly adopted at a meeting of the Governing Body,
which was called and held pursuant to law and with all public notice required by law, and at
which a quorum was present and acting throughout, and the Resolution is in full force and effect
and has not been modified, amended or rescinded since the date of its adoption.
3. To the best of Emy knowledge, no action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public board or body, is pending or
threatened in any way against the Seller (i) affecting the existence of the Seller or the titles of its
Governing Body members or officers to their respective offices; (ii) seeking to restrain or to
enjoin the sale of the Proposition IA Receivable or to direct the application of the proceeds of
the sale thereof, or materially adversely affecting the sale of the Proposition IA Receivable; (iii)
in any way contesting or affecting the validity or enforceability of the Resolution, Seller
Documents or any other applicable agreements or any action of the Seller contemplated by any
of said documents; or (iv) in any way contesting the powers of the Seller or its authority with
respect to the Resolution or the Seller Documents or any other applicable agreement, or any
action on the part of the Seller contemplated by any of said documents.
4. To the best of oouu knowledge, prior to the sale of the Proposition 1 A
Receivable to the Purchaser, the Seller ha not sold, transferred, assigned, set over or otherwise
conveyed any right, title or interest of any kind whatsoever in all or any portion of the Seller's
Proposition lA Receivable, nor had the Seller created., or permitted the creation of, any Lien
thereon.
5. The Seller has duly authorized and executed the Seller Documents and,
assuming the due authorization execution and delivery of the Sale Agreement by the Purchaser,
each Seller Document will be legal, valid and binding against the Seller and enforceable against
the Seller in accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or laws relating to or affecting
creditors' rights, and the application of equitable principles and the exercise of judicial discretion
in appropriate areas.
No opinion is expressed concerning the obligation or ability of the State of
California to make any payment of the Proposition IA Receivable pursuant to Section 100.06 of
the Revenue and Taxation Code and Section 25.5 of Article XIII of the California Constitution,
nor is any opinion expressed with respect to the ability of the State to enact any change in the
law applicable to the Seller Documents (including, without limitation, Section 100.06 of the
Revenue and Taxation Code or Section 6588.6 of the Government Code). Furthermore, w0]
express no opinion as to the value of the Proposition 1A Receivable or as to any legal or
equitable remedies that may be available to any person should the Proposition 1A Receivable
have little or no value. No opinion is expressed with respect to the sale of Bonds by the
Purchaser.
The legal opinion set forth herein is intended for the information solely of the
addressees hereof and for the purposes contemplated by the Sale Agreement. The addressees
may not rely on it in connection with any transactions other than those described herein, and it is
not to be relied upon by any other person or entity, or for any other purpose, or quoted as a whole
or in part, or otherwise referred to, in any document, or to be filed with any governmental or
administrative a:ency other than the Purchaser or with any other person or entity for any purpose
without fig, prior written consent. In addition to the addressees hereof, each Credit
Enhancer an t e underwriters of the Bonds may rely upon this legal opinion as if it were
addressed to them. 44 We do not undertake to advise you of matters that may come to
attention subsequent to t ie date hereof that may affect the opinions expressed herein.
Very truly yours,
By:
&,44 Lt_
Seller's Counsel
Wells Fargo Bank, National Association
Los Angeles, California
Ladies Gentlemen:
OPINION OF COUNSEL
0
Dated: Closing Date.
California Statewide Communities Development Authority
Sacramento, California
Re: Sale of Proposition IA Receivable (Brinadown Opinion)
Seller's Counsel.
EXHIBIT B2
Pursuant to that certain Purchase and Sale Agreement dated as of November 1,
2009 (the "Sale Agreement between the City of Arcadia (the "Seller and the California
Statewide Communities Development Authority (the "Purchaser this Office delivered an
opinion (the "Opinion dated the Pricing Date as counsel for the Seller in connection with the
sale of the Seller's Proposition IA Receivable (as defined in the Sale Agreement), the execution
of documents related thereto and certain other related matters.
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Sale Agreement.
4-cont rm that you may continue to rely upon the Opinion as if it were dated as of
the date hereof:
ereo Each Credit Enhancer and the underwriters of the Bonds may rely upon this
legal opinion as if it were addressed to them. This letter is delivered to you pursuant to Section
2(b)(ii)(1) of the Sale Agreement.
Very truly yours,
By:
&A Y-kilatQr LLP
Dated: Pricing Date
The undersigned itilda of the Ciit fkArcadia (the "Seller a local agency of the
State of California within the meaning of Section 6585(f) of the California Government Code,
does hereby certify that the foregoing is a full, true and correct copy of Resolution No.
duly adopted at a reM meeting of the ,Ci ty4fCoupcil of said Seller duly and
legally held at the regular meeting place thereof on the day of
2009, of which meeting all of the members of said Cjty0uncil had due notice and at which a
quorum was present and acting throughout, and that at said meeting said resolution was adopted
by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
CERTIFICATE OF THE
OF
CALIFORNIA
WITNESS by my hand as of the Pricing Date.
By:
Cl y_Cl
California
EXHIBIT C1
CLERK'S CERTIFICATE
I do hereby further certify that I have carefully compared the same with the original
minutes of said meeting on file and of record in my office and that said resolution is a full, true
and correct copy of the original resolution adopted at said meeting and entered in said minutes
and that said resolution has not been amended, modified or rescinded since the date of its
adoption and the same is now in full force and effect.
I do hereby further certify that an agenda of said meeting was posted at least 72 hours
before said meeting at a location in the City of Arcac, California freely accessible to members
of the public, and a brief general description of said resolution appeared on said agenda.
Capitalized terms used but not defined herein shall have the meanings given to such
terms in the Purchase and Sale Agreement, dated as of November 1, 2009, between the Seller
and the California Statewide Communities Development Authority.
of the City of
ca la,
Dated: Pricing Date
We, the undersigned officers of the ri R -cdSii (the "Seller a local agency
of the State of California within the meaning of Section 6585(f) of the California Government
Code, holding the respective offices herein below set opposite our signatures, do hereby certify
that on the date hereof the following documents (the "Seller Transaction Documents were
officially executed and delivered by the Authorized Officer or Officers whose names appear on
the executed copies thereof, to wit:
3. Bill of Sale, dated the Closing Date.
We further certify as follows:
SELLER CERTIFICATE
Document
1. Purchase and Sale Agreement, dated as of November 1, 2009 (the
"Sale Agreement between the Seller and the California
Statewide Communities Development Authority (the "Purchaser
2. Irrevocable Instructions For Disbursement of Seller's Proposition
IA Receivable to the Controller of the State of California, dated
the Closing Date.
EXHIBIT C2
SELLER CERTIFICATE
Capitalized terms used herein and not defined herein shall have the meaning given
such terms in the Sale Agreement.
1. At the time of signing the Seller Transaction Documents and the other documents and
opinions related thereto, we held said offices, respectively, and we now hold the same.
2. The representations and warranties of the Seller contained in the Seller Transaction
Documents are true and correct as of the date hereof in all material respects.
3. The mom duly adopted its resolution (the "Resolution") approving the sale of the
Seller's Proposition 1A Receivable at a meeting of the ,1t eCauncl which was duly called
and held pursuant to law with all public notice required by law and at which a quorum was
present and acting when the Resolution was adopted, and such Resolution is in full force and
effect and has not been amended, modified, supplemented or rescinded.
Name, Official Title
genuine.
Q
lager
I HEREBY CERTIFY that the signatures of the officers named above are
Dated: Pricing Date
ecto�'
By:
Signature
California
of the City of Arcadia,
Pursuant to terms and conditions of the Purchase and. Sale Agreement (the "Sale
Agreement dated as of November 1, 2009, between the undersigned (the "Seller and the
California Statewide Communities Development Authority (the "Purchaser and in
consideration of the obligation of the Purchaser to pay and deliver to the Seller the Purchase
Price (as defined in the Sale Agreement), in two equal installment payments to be made on
January 15, 2010, and May 3, 2010 (collectively, the "Payment Dates the Seller does hereby
(a) transfer, grant, bargain, sell, assign, convey, set over and deliver to the Purchaser, absolutely
and not as collateral security, without recourse except as expressly provided in the Sale
Agreement, the Proposition 1 A Receivable as defined in the Sale Agreement (the "Proposition
IA Receivable and (b) assign to the Purchaser, to the extent permitted by law (as to which no
representation is made), all present or future rights, if any, of the Seller to enforce or cause the
enforcement of payment of the Proposition IA Receivable pursuant to the Act and other
applicable law. Such transfer, grant, bargain, sale, assignment, conveyance, set over and
delivery is hereby expressly stated to be a sale and, pursuant to Section 6588.6(b) of the
California Government Code, shall be treated as an absolute sale and transfer of the Proposition
1A Receivable, and not as a grant of a security interest by the Seller to secure a borrowing.
Seller specifically disclaims any right to rescind the Agreement, or to assert that title to the
Proposition IA Receivable has not passed to the Purchaser, should Purchaser fail to make the
installment payments in the requisite amounts on the Payment Dates.
The Seller hereb certifies that the representations and warranties of the Seller set
forth in the Certificate of the ovolig dated the Pricing Date, the Seller Certificate dated dated
the Pricing Date and in the Transaction Documents to which the Seller is a party are true and
correct in all material respects as of the date hereof (except for such representations and
warranties made as of a specified date, which are true and correct as of such date). Capitalized
terms used but not defined herein shall have the meanings given to such terms in the Sale
Agreement.
Dated: Closing Date
EXHIBIT C3
BILL OF SALE AND BRINGDOWN CERTIFICATE
BILL OF SALE AND BRINGDOWN CERTIFICATE
CADIA
By:
Authorized Officer
EXHIBIT D
IRREVOCABLE INSTRUCTIONS TO CONTROLLER
Office of the Controller
State of California
P.O. Box 942850
Sacramento, California 94250 -5872
IRREVOCABLE INSTRUCTIONS FOR DISBURSEMENT
OF PROPOSITION lA RECEIVABLE OF
atV OF ARCADI
Dated: Closing Date
Re: Notice of Sale of Proposition 1A Receivable by the City of'.
Wiring Instructions Information Form
Dear Sir or Madam:
Pursuant to Section 6588.6(c) of the California Government Code, City of
Ai (the "Seller hereby notifies you of the sale by Seller, effective as of the date of these
instructions written above, of all right, title and interest of the Seller in and to the "Proposition
1A Receivable" as defined in Section 6585(g) of the California Government Code (the
"Proposition 1 Receivable namely, the right to payment of moneys due or to become due to
the Seller pursuant to Section 25.5(a)(1)(B)(iii) of Article XIII of the California Constitution and
Section 100.06 of the California Revenue and Taxation Code.
By resolution, the Seller's 'ell authorized the sale of the Proposition IA
Receivable to the California Statewide Communities Development Authority (the "Purchaser
pursuant to a Purchase and Sale Agreement, dated as of November 1, 2009 (the "Purchase and
Sale Agreement and a Bill of Sale, dated the Closing Date (as defined in the Purchase and Sale
Agreement). The Proposition 1 Receivable has been pledged and assigned by the Purchaser
pursuant to an Indenture, dated as of November 1, 2009 (the "Indenture between the Purchaser
and Wells Fargo Bank, National Association, as Trustee (the "Trustee
The Seller hereby irrevocably requests and directs that, commencing as of the
date of these instructions written above, all payments of the Proposition 1A Receivable (and
documentation related thereto) be made directly to Wells Fargo Bank, National Association, as
Trustee, in accordance with the wire instructions and bank routing information set forth below.
Please note that the sale of the Proposition IA Receivable by the Seller is
irrevocable and that: (i) the Seller has no power to revoke or amend these instructions at any
time; (ii) the Purchaser shall have the power to revoke or amend these instructions only if
there are no notes of the Purchaser outstanding under the Indenture and the Indenture has
been discharged; and (iii) so long as the Indenture has not been discharged, these instructions
cannot be revoked or amended by the Purchaser without the consent of the Trustee. Should
D -1
cadia and
the Purchaser, however, deliver a written notice to the Office of the Controller stating that:
(a) the Seller failed to meet the requirements set forth in the Purchase and Sale Agreement;
(b) the Purchaser has not waived such requirements; and (c) the Purchaser has not purchased
the Proposition lA Receivable as a result of the circumstances described in (a) and (b) above,
then these instructions shall be automatically rescinded and the Seller shall again be entitled
to receive all payment of moneys due or to become due to the Seller pursuant to Section
25.5(a)(1)(B)(iii) of Article XIII of the California Constitution and Section 100.06 of the
California Revenue and Taxation Code.
Bank Name:
Bank ABA Routing
Bank Account
Bank Account Name:
Further Credit To:
Bank Address:
Bank Telephone
Bank Contact Person:
Wells Fargo Bank, N.A.
121000248
0001038377
Corporate Trust Clearing
CSCDA Proposition lA Bonds
707 Wilshire Blvd., 17th Floor
MAC E2818 -176
Los Angeles, CA 90017
(213) 614 -3353
Robert Schneider
Please do not hesitate to call the undersigned if you have any questions regarding
this transaction. Thank you for your assistance in this matter.
Very truly yours,
CIYOFCA
By:
Authorized Officer
D -2
California Statewide Communities Development Authority
1100 K Street
Sacramento, CA 95814
Re: Proposition IA Receivable Financing
Dear Sir or Madam:
The Al (the "Seller hereby notifies you of its agreement to
participate in the California Statewide Communities Development Authority Proposition IA
Receivable Financing. By adoption of a resolution (the "Resolution authorizing the sale of its
Proposition IA Receivable, the Seller's CIyGolulcl has agreed to sell to the California
Statewide Communities Development Authority (the "Purchaser for a purchase price that
meets the conditions set forth in the Resolution, all of its right, title and interest in the
Proposition lA Receivable.
Enclosed herewith are the following documents which have been duly approved
and executed by the Seller and which are to be held in escrow by Orrick, Herrington
Sutcliffe LLP, as transaction counsel "Transaction Counsel as instructed below:
certified copy of the Resolution, together with a certificate of the Lity Clerk,
dated the Pricing Date;
2. the Seller Certificate, dated the Pricing Date;
3. the Opinion of Seller's Counsel, dated the Pricing Date;
4. the Opinion of Seller's Counsel (bringdown opinion), dated the Closing Date;
5. the Purchase and Sale Agreement, dated as of November 1, 2009;
6. the Bill of Sale and Bringdown Certificate, dated the Closing Date; and
the Irrevocable Instructions to Controller, dated the Closing Date.
1.
7.
ESCROW INSTRUCTION LETTER
E -1
EXHIBIT E
ESCROW INSTRUCTION LETTER
2009
The foregoing documents are to be held in escrow by Transaction Counsel and
shall be delivered on the Closing Date (as defined in the Purchase and Sale Agreement),
provided that such Closing Date occurs on or before December 31, 2009.
Should (i) the Closing Date not occur on or berfore December 31, 2009, or (ii)
Transaction Counsel receive prior to the Closing Date written notification from Seller or Seller's
Counsel stating, respectively and in good faith, that the representations made in the Seller's
Certificate are not true and accurate, or the opinions set forth in the Opinion of Seller's Counsel
are not valid, in each case as of the Closing Date and provided that the Purchaser may, in its sole
discretion, choose to waive receipt of such representations or opinions, then this agreement shall
terminate and Transaction Counsel shall destroy all of the enclosed documents.
Enclosures
cc: Orrick, Herrington Sutcliffe LLP
Very truly yours,
By:
Authorized Officer