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HomeMy WebLinkAboutA09 Placement Agent AgtExecution Version PLACEMENT AGENT AGREEMENT Dated as of February 1, 2024 Tustin Public Financing Authority c/o City of Tustin 300 Centennial Way Tustin, California 92780 City of Tustin 300 Centennial Way Tustin, California 92780 Re: Tustin Public Financing Authority Water Revenue Bonds, Series 2024 (Subordinate Lien) The Tustin Public Financing Authority, a joint powers authority duly organized and existing under the laws of the State of California (the "Issuer"), proposes to issue, offer, and sell in a private placement the above -referenced bonds of the Issuer (the "Bonds") pursuant to an Indenture of Trust dated as of February 1, 2024 (the "Indenture"), by and among the Issuer, the City of Tustin (the "City") and The Bank of New York Mellon Trust Company, N.A., as trustee. The proceeds of the Bonds will be used to finance the acquisition and construction of certain improvements and facilities (the "2024 Project") which constitute part of the City's municipal water enterprise (the "Enterprise"), and to pay the costs of issuing the Bonds. In order to provide for the repayment of the Bonds, the Authority will sell the 2024 Project to the City pursuant to an Installment Sale Agreement dated as of February 1, 2024 (the "Installment Sale Agreement"), between the Issuer and the City, under which the City will agree to make installment payments to the Authority (the "Installment Payments") which will be calculated to be sufficient to enable the Authority to pay the principal of and interest on the Bonds when due and payable. The City's obligation to make Installment Payments will be payable from, and secured by a pledge of, the net revenues of the Enterprise, in all respects, junior, subordinate and inferior to the City's obligations with respect to the payment of debt service on its City of Tustin (Orange County, California) 2016 Water Refunding Revenue Bonds (the "2016 Senior Bonds") and its City of Tustin (Orange County, California) Taxable Water Refunding Revenue Bonds, Series 2020 (the "2020 Senior Bonds"). In connection with the issuance of the Bonds, the City will enter into (i) a First Amendment to Indenture of Trust dated as of February 1, 2024, between the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the "2016 Trustee"), amending that certain Indenture of Trust, dated as of September 1, 2016, by and between the City and the 2016 Trustee relating to the 2016 Senior Bonds, and (ii) a First Amendment to Indenture of Trust dated as of February 1, 2024, between the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the "2020 Trustee"), amending that certain Indenture of Trust, dated as of February 1, 2020, by and between the City and the 2020 Trustee relating to the 2020 Senior Bonds (collectively, the "Amendments"). The Bonds, the Indenture, the Installment Sale Agreement and the Amendments are referred to herein as the "Financing Documents." Capitalized terms used but not defined herein have the meanings given to such terms in the Indenture. This Placement Agent Agreement (this "Agreement") confirms the agreement among the Issuer, the City and Stifel, Nicolaus & Company, Incorporated (the "Placement Agent") as follows: 1. Enmement. The Issuer and the City hereby engage the Placement Agent as their exclusive agent to assist the Issuer in placing the Bonds on a best efforts basis with a purchaser (the "Purchaser") which shall be a lender that regularly extends credit to state and local governments by making loans and acquiring repayment obligations that are evidenced by obligations such as the Bonds as represented by the Purchaser in an executed certificate substantially in the form attached as Exhibit A hereto on a private placement basis (the "Placement"). Sale and delivery of the Bonds by the Issuer and purchase by the Purchaser will occur on the day of closing ("Closing Date"). The Issuer and the City acknowledge and agree that the Placement Agent's engagement hereunder is not an agreement by the Placement Agent or any of its affiliates to underwrite or purchase the Bonds or otherwise provide any financing to the Issuer or the City. The Placement Agent hereby accepts this engagement upon the terms and conditions set forth in this Agreement. 2. Fees and Expenses. (a) For its services under this Agreement, the Issuer and the City agree to pay the Placement Agent a placement fee for its services under this Agreement of $35,000 payable on the Closing Date; and (b) In the event the Issuer or the City terminates this Agreement and within twelve (12) months thereafter the Issuer sells the Bonds to an investor identified by the Placement Agent to the Issuer and the City prior to such termination, the amounts payable under (a) above shall be immediately due and payable by the Issuer. 3. Disclosure and Due Diligence. (a) With the assistance of the Placement Agent and the Issuer's municipal advisor, the Issuer and the City will prepare and provide the Placement Agent with a term sheet and/or other documents including the City's audited financial statements, unaudited financials to the extent audits are not available, current year budget information, recent rate studies and associated financial projections, reports, if any, published by Standard & Poor's pertaining to the Enterprise and other information deemed important the Placement Page 2 Agent (the "Information Package") together with the draft Financing Documents (together with all supplements, modifications, and additions thereto prior to the Closing Date, the "Placement Materials"). The Issuer and the City acknowledge and agree that they have prepared the Information Package and are solely responsible for the completeness, truth, and accuracy of the Placement Materials and that the Placement Agent and the Purchaser may rely upon, as complete, true, and accurate, the Placement Materials and all information provided by the Issuer and the City to the Placement Agent for use in connection with the Placement and that the Placement Agent does not assume any responsibility therefor. (b) The Issuer and the City will make available to the Purchaser and the Placement Agent such documents and other information which the Purchaser or the Placement Agent reasonably deems appropriate, will provide access to its officers, directors, employees, accountants, counsel and other representatives, and will provide the Purchaser and the Placement Agent the opportunity to ask questions and receive answers from knowledgeable individuals, including Bond Counsel (whose opinions each shall receive and upon which they may rely) concerning the Issuer, the City, the Bonds, and the security therefor; it being understood that the Purchaser and the Placement Agent will rely solely upon such information supplied by the Issuer, the City and their representatives without assuming any responsibility for independent investigation or verification thereof. (c) In the event that the Placement Agent is unable to complete "due diligence" in order to form a reasonable basis for recommending the Bonds to the Purchaser either (1) because of the failure of the Issuer or the City to comply with sub -paragraph (a) or (b) of this paragraph or (2) because the Placement Agent uncovers "red flags" about the Issuer and/or the City that cause the Placement Agent to be not satisfied that the Placement Agent can in good faith recommend the Bonds to the Purchaser, the Placement Agent may terminate this Agreement without further obligation on the part of the Placement Agent to proceed with the Placement and without any obligation on the part of the Placement Agent to reimburse to the Issuer or the City any monies advanced by the Issuer or the City to the Placement Agent. In such event the amounts due to the Placement Agent under paragraph 2(a) above, with respect to the reimbursement of reasonable expenses, shall be immediately due and payable. 4. Representations, Warranties, and Agreements of the Issuer and the Cam. As of the date of this Agreement, unless otherwise stated, the Issuer and the City represent, warrants, and agrees with the Placement Agent that: Page 3 (a) The Issuer and the City are duly organized and validly existing under the laws of the State of California (the "State") with the power to execute and deliver the Financing Documents to which they are a parry, perform the agreements on their part contained therein and in the agreements approved thereby and cause the issuance of the Bonds. (b) The Issuer and the City will not cause or permit any action to be taken in the placement of the Bonds in violation of the requirements for exemption from registration or qualification of the Bonds under all federal and applicable state securities laws and regulations. (c) The Issuer and the City have complied, and in all respects on the Closing Date will be in compliance, with all of the provisions of applicable law of the State. (d) The Issuer and the City have duly authorized and approved the Placement Materials and the delivery thereof to the Purchaser and the execution and delivery of this Agreement and the Financing Documents to which they are a party pursuant to resolutions adopted by their respective governing bodies (collectively, the "Resolutions"), and the performance of its obligations and the consummation by it of all other transactions contemplated thereby. (e) On the Closing Date, the Issuer and the City will have been duly authorized, executed, and delivered by this Agreement and the Financing Documents they are a parry to, and, assuming due authorization, execution and delivery by the other parties thereto, as applicable, constitute legal, valid and binding agreements of the Issuer and the City enforceable in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles if sought and by the limitations on legal remedies imposed on actions against the Issuer in the State. (f) Neither the Issuer nor the City is, and on the Closing Date will not be, in breach of or default under any applicable law or administrative regulation of the State or any department, division, agency or instrumentality thereof, or of the United States, or any applicable judgment or decree or any loan agreement, note, resolution, certificate, agreement or other instrument to which the Issuer or the City is a party or is otherwise subject, which breach or default would materially and adversely affect the Issuer or the City or its ability to perform their respective duties and obligations under the Financing Documents, and the execution and delivery of the Financing Page 4 Documents, the adoption of the Resolutions and the issuance by the Issuer of the Bonds and compliance with the provisions of each will not conflict with or constitute a breach of or default under any applicable law or administrative regulation of the State or under any certificate, agreement or other instrument to which the Issuer or the City is a party or is otherwise subject, or which breach or default would materially and adversely affect the Issuer or the City or their ability to perform their respective duties and obligations under the Financing Documents. (g) No action, suit, proceeding or investigation at law or in equity before or by any court, governmental agency, public board or body is, and on the Closing Date will not be, pending or, to the knowledge of the Issuer or the City, threatened: (i) in any way affecting the existence of the Issuer or the City or the titles of the members of their respective governing bodies to their respective offices, (ii) seeking to prohibit, restrain or enjoin the issuance, sale or delivery of the Bonds, the Financing Documents or collection or payment by the Issuer of any amounts pledged or to be pledged as security to pay the principal of and interest on Bonds, (iii) seeking to prohibit, restrain or enjoin the execution and delivery of the Financing Documents or collection or payment by the City of any amounts pledged or to be pledged as security to pay the Installment Payments under the Installment Sale Agreement, (iv) in any way contesting or affecting the validity or enforceability of, or the power or authority of the Issuer to issue or to enter into (as applicable) the Bonds or the Financing Documents, (v) in any way contesting or affecting the validity or enforceability of, or the power or authority of the City to enter into the Financing Documents, (vi) contesting in any way the completeness, truth, or accuracy of the Placement Materials, (vi) except as disclosed in the Placement Materials, wherein an unfavorable decision, ruling or finding would materially adversely affect the financial position or condition of the Issuer or the City, would result in any material adverse change in the ability of the Issuer to pledge or apply the security or source of payment of, or to pay debt service on the Bonds, or would result in any material adverse change in the ability of the City to pledge or apply the security or source of payment of, or to pay, the Installment Payments, or (vii) contesting the status of the interest on the Bonds as excludable from gross income for federal income tax purposes or as exempt from any applicable state tax. (h) Regarding information provided by the Issuer and the City to the Placement Agent: Page 5 (1) The Issuer and the City will furnish the Placement Agent and the Purchaser with the Information Package. The Issuer and the City represent and warrant that all information made available to the Placement Agent by the Issuer and the City or contained in the Information Package, when provided will be, and will be at all times thereafter during the period of the engagement of the Placement Agent hereunder, be complete, true, and accurate in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in light of the circumstances under which such statements are made; or (2) except as otherwise indicated to the contrary in the City 's Financial statements, all historical financial statements of the City provided to the Placement Agent and the Purchaser will be prepared in accordance with generally accepted accounting principles and practices then in effect in the United States and will fairly present the financial condition and operations of the entities covered thereby in all material respects; (3) any forecasted financial or market information with respect to the City or its market provided to the Placement Agent and the Purchaser by the Issuer has been or will be prepared in good faith with a reasonable basis for the assumptions and the conclusions reached therein. (i) On the Closing Date, the Issuer will deliver or cause to be delivered to the Placement Agent, in form and substance satisfactory to the Placement Agent, the following documents: (1) The opinion of Quint & Thimmig LLP, Bond Counsel to the Issuer, dated the Closing Date relating to: (i) the validity of the Bonds; (ii) exemption from registration and qualification under federal and state securities law; and (i) the tax-exempt status of the Bonds, dated the Closing Date; (2) a certificate of the Issuer, dated the Closing Date, to the effect that: (i) the representations and warranties of the Issuer contained in this Agreement are true and correct as if made on the Closing Date; Page 6 (ii) the Issuer has complied with and fully satisfied all of its agreements with and obligations to the Placement Agent under this Agreement; and (iii) as of its date and the date hereof, the information contained in the Placement Materials is complete, true, and accurate and such information does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (3) a certificate of the City, dated the Closing Date, to the effect that: (i) the representations and warranties of the City contained in this Agreement are true and correct as if made on the Closing Date; (ii) the City has complied with and fully satisfied all of its agreements with and obligations to the Placement Agent under this Agreement; and (iii) as of its date and the date hereof, the information contained in the Placement Materials is complete, true, and accurate and such information does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (4) A Purchaser Letter, in the form attached as Exhibit B to the Indenture, executed by the Purchaser and addressed to the Issuer, the City and the Placement Agent; and (5) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Placement Agent or its counsel, if any, and Bond Counsel may reasonably request to evidence compliance by the Issuer and the City with legal requirements, the truth and accuracy, as of the Closing Date, of the representations of the Issuer and the City, and the due performance or satisfaction by the Issuer and the City at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Issuer and the City. 5. Termination. This Agreement may be terminated by either party upon ten (10) business days' prior written notice; provided that the provisions of Paragraph 2 and obligations thereunder shall not be affected by such termination. Page 7 6. Re2ulatory Disclosure. The Issuer and the City acknowledge, in connection with the purchase and sale of the Bonds, the offering of the Bonds for sale and the discussions and negotiations relating to the terms of the Bonds pursuant to and as set forth in this Agreement, that: (a) the Placement Agent has acted at arm's length, is acting solely for its own account and is not an agent of or advisor to (including, without limitation, a Municipal Advisor (as such term is defined in Section 975(e) of the Dodd -Frank Wall Street Reform and Consumer Protection Act)), and owes no fiduciary duty to the Issuer, the City or any other person, (b) the Placement Agent's duties and obligations to the Issuer and the City shall be limited to those contractual duties and obligations set forth in this Agreement, (c) the Placement Agent may have interests that differ from those of the Issuer and the City, and (d) the Issuer and the City have consulted their legal and financial advisors to the extent they deemed appropriate in connection with the offering and sale of the Bonds. The Issuer and the City further acknowledge and agree that they are responsible for making their judgment with respect to the offering and sale of the Bonds and the process leading thereto. The Issuer and the City agree that they will not claim that the Placement Agent acted as a Municipal Advisor to the Issuer or the City or rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Issuer or the City, in connection with the offering or sale of the Bonds or the process leading thereto. 7. Survival of Certain Representations and Obligations. The respective agreements, covenants, representations, warranties and other statements of the Issuer, the City and their officers set forth in or made pursuant to this Agreement shall survive delivery of and payment for the Bonds and shall remain in full force and effect, regardless of any investigation, or statements as to the results thereof, made by or on behalf of the Placement Agent. 8. Notices. Any notice or other communication to be given to the Issuer or the City under this Agreement may be given by delivering the same in writing to the Issuer and the City at their respective address set forth above. Any notice or other communication to be given to the Placement Agent under this Agreement may be given by delivering the same in writing to Stifel, Nicolaus & Company, Incorporated, 2121 Avenue of the Stars, Suite 2150, Los Angeles, California 90067; Attention: Sara Oberlies Brown, Public Finance. Page 8 9. No Boycott. By entering into this Agreement, the Placement Agent certifies that it and its parent company, wholly or majority -owned subsidiaries, and other affiliates, are not currently engaged in, or for the duration of this Agreement will not engage in, a boycott of goods or services from the State of Israel; companies doing business in or with Israel or authorized by, licensed by, or organized under the laws of the State of Israel; or persons or entities doing business in the State of Israel. The Placement Agent understands that "boycott" includes, but is not limited to, refusing to deal with, terminating business activities with, or otherwise taking any action that is intended to penalize, inflict economic harm on, or limit commercial relations, but does not include an action made for ordinary business purposes. 10. No Assignment. This Agreement has been made by the Issuer, the City and the Placement Agent, and no person other than the Issuer, the City and the Placement Agent, shall acquire or have any right under or by virtue of this Agreement. 11. Applicable Law. This Agreement shall be interpreted, governed and enforced in accordance with the laws of the State. 12. Effectiveness. This Agreement shall become effective upon its execution by duly authorized officials of all parties hereto and shall be valid and enforceable from and after the time of such execution. 13. Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 14. Counterparts. This Agreement may be executed in several counterparts (including counterparts exchanged by email in PDF format), each of which shall be an original and all of which shall constitute but one and the same instrument. Page 9 B B r Respectfully submitted, STIFEL, NICOLAUS & COMPANY INCORPORATED ....................................................................... Sara Oberlies Brown, Managing Director ACCEPTED as of the I" day of February, 2024. TUSTIN PUBLIC FINANCING AUTHORITY B........0................ Executive Director CITY OF TUSTIN By......... ......................................... ........ City Manager S-1 EXHIBIT A (attached) FORM OF LENDER CERTIFICATE Dated: February _, 2024 ("[Lender] ") hereby certifies as follows with regard to the Water Revenue Bond, Series 2024 (Subordinate Lien) (the "Bond") in the principal amount of $ issued by the Tustin Public Financing Authority (the "Authority ") pursuant to an Indenture of Trust (the "Indenture ") between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee "), debt service with respect to which will be paid from installment payments made by the City of Tustin (the "Borrower") under an Installment Sale Agreement (together with the Bond, the "Loan Obligation "): 1. [Lender] has full power and authority to carry on its business as now conducted, deliver this Original Purchaser Certificate and make the representations and certifications contained herein. 2. [Lender] is a lender that regularly extends credit to state and local governments by making loans and acquiring repayment obligations that are evidenced by obligations such as the Loan Obligation; has knowledge and experience in financial and business matters that make it capable of evaluating the Borrower, the Loan Obligation and the risks associated with the extension of credit evidenced by the Loan Obligation; has the ability to bear the economic risk of extending the credit evidenced by the Loan Obligation; and is a limited liability company controlled by a bank engaged in the primary business of extending credit and making loans to state and local governments and non-profit entities and has total assets in excess of $1 billion. [Lender] is not acting as a broker, dealer, municipal securities underwriter, municipal advisor or fiduciary in connection with its extension of credit evidenced by the Loan Obligation. 3. [Lender] has conducted its own investigation of the financial condition of the Borrower, of the purpose for which the Loan Obligation is being executed and delivered, and of the security for the payment of the principal of and interest on the Loan Obligation and has obtained such information regarding the Loan Obligation and the Borrower and its operations, financial condition, and financial prospects as [Lender] deems necessary to make an informed lending decision with respect to its extension of credit evidenced by the Loan Obligation. 4. [Lender] extending credit to the Borrower evidenced by the Loan Obligation and is acquiring the interests in the Loan Obligation as a vehicle for making a commercial loan for its own loan account and with the present intention of holding the Loan Obligation to maturity or earlier prepayment, provided that [Lender] retains the right at any time to dispose of the Loan Obligation or any interest therein or portion thereof, but agrees that any such sale, transfer or distribution by [Lender] shall be made in accordance with applicable law and the provisions of the Loan Obligation and related documents only in whole to (a) an affiliate of [Lender] or (b) a bank, trust, custodian, insurance company, or other financial institution or an affiliate thereof. [Lender] and its assignees further retain the right to sell or assign participation interests in the Loan Obligation, in minimum amounts of $250,000, to an entity listed in (a) or (b) of this Section 4, provided that any participation, custodial, or similar agreement under which multiple ownership interests are created in the Loan Obligation shall provide the method by which the owners of such interests shall establish the rights and duties of a single entity, owner, servicer, or other fiduciary or agent acting on behalf of all of the assignees to act on their behalf with respect to the rights and interests of the registered owner of the Loan Obligation, including with respect 1 to the exercise of rights and remedies of the registered owner on behalf of such owners upon the occurrence of an event of default under the Loan Obligation. 5. [Lender] acknowledges that (a) the Loan Obligation (i) has not been registered under the Securities Act of 1933, as amended, (ii) has not been registered or otherwise qualified for sale under the securities laws of any state, and (iii) will not be listed on any securities exchange and (b) there is no established market for the Loan Obligation and that none is likely to develop. [Lender] understands and acknowledges that (a) its extension of credit evidenced by the Loan Obligation is not intended to be subject to the requirements of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended, and (b) in connection with [Lender]'s extension of credit evidenced by the Loan Obligation, the Borrower has not prepared or caused to be prepared, any official statement, private placement memorandum or other offering document. 6. [Lender] is acting solely for its own loan account and not as a fiduciary for the Borrower or in the capacity of broker, dealer, placement agent, municipal securities underwriter, municipal advisor, or fiduciary. [Lender] has not provided, and will not provide, financial, legal (including securities law), tax, accounting, or other advice to or on behalf of the Borrower (including to any municipal advisor or any placement agent engaged by the Borrower) with respect to the structuring, issuance, sale, or delivery of the Loan Obligation. [Lender] has no fiduciary duty pursuant to Section 15B of the Securities Exchange Act of 1934, as amended, to the Borrower with respect to the transactions relating to the structuring, issuance, sale, or delivery of the Loan Obligation and the discussions, undertakings, and procedures leading thereto. Each of the Borrower, its municipal advisor, and its placement agent has sought and shall seek and obtain financial, legal (including securities law), tax, accounting, and other advice (including as it relates to structure, timing, terms, and similar matters and compliance with legal requirements applicable to such parties) with respect to the Loan Obligation from its own financial, legal, tax, and other advisors (and not from the undersigned or its affiliates) to the extent that the Borrower, its municipal advisor, or its placement agent desires to, should, or needs to obtain such advice. [Lender] expresses no view regarding the legal sufficiency of its representations for purposes of compliance with any legal requirements applicable to any other party, including but not limited to the Borrower's municipal advisor or placement agent, or the correctness of any legal interpretation made by counsel to any other party, including but not limited to counsel to the Borrower's municipal advisor or placement agent, with respect to any such matters. The transactions between the Borrower and [Lender] are arm's-length, commercial transactions in which [Lender] is acting and has acted solely as a principal and for its own interest, and [Lender] has not made recommendations to the Borrower with respect to the transactions relating to the Loan Obligation. 7. [Lender] acknowledges and agrees that the Borrower and its placement agent take no responsibility for, and make no representation to [Lender], or any subsequent purchaser, with regard to, a sale, transfer or other disposition of the Bond in violation of the provisions of the Indenture, or any securities law or income tax law consequences thereof. [Lender] also acknowledges that, with respect to the Borrower's obligations and liabilities, [Lender] is solely responsible for compliance with the restrictions on transfer of the Bond in connection with any subsequent transfer of the Bond made by [Lender]. 8. [Lender] acknowledges that the issuance of the Bond to [Lender] is made in reliance upon the certifications, representations, and warranties herein made for the benefit of the Borrower, its placement agent, the Authority, and the Trustee. 2 9. The interpretation of the provisions hereof shall be governed and construed in accordance with California law without regard to principles of conflicts of laws. 10. All representations of [Lender] contained in this letter shall survive the execution and delivery of the Bond to [Lender] as representations of fact existing as of the date of execution and delivery of this Lender Certificate. IN WITNESS WHEREOF, , has caused this Lender Certificate to be executed by its officer there -unto duly authorized, all as of the day and year first above written. By: _ Name: Title: