HomeMy WebLinkAboutR-10848 Streets Maintenance Dump Truck - Transfer Dump Trailer - Sweeper Truck Purchase - Spec no 91589 and 91595RESOLUTION NO. 10848 (2017 Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING EQUIPMENT LEASE
WHEREAS, the City Council (the "Governing Body") of City of San Luis Obispo (the
"Lessee") have determined that a true and very real need exists for the leasing of the property
described in the Lease/Purchase Agreement presented to this meeting; and
WHEREAS, the Lessee has reviewed the form of the Lease/Purchase Agreement and has
found the terms and conditions thereof acceptable to the Lessee; and
WHEREAS, the Governing Body has taken the necessary steps under applicable law to
arrange for the leasing of such property under the Lease/Purchase Agreement; and.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The terms of said Lease/Purchase Agreement are in the best interests of
Lessee for the leasing of the property described therein.
SECTION 2. The appropriate officers and officials of the Lessee are hereby authorized
and directed to execute and deliver the attached Lease/Purchase Agreement in substantially the
form presented to this meeting and any related documents and certificates necessary to the
consummation of the transactions contemplated by the Lease/Purchase Agreement for and on
behalf of the Lessee. The officers and officials of the Lessee may make such changes to the
Lease/Purchase Agreement and related documents and certificates as such officers deem necessary
or desirable, such approval to be conclusively evidenced by the execution and delivery thereof.
Resolution No. 10848 (2017 Series)
Page 2
SECTION 3. The officers and officials of the Governing Body and the Lessee are hereby
authorized and directed to fulfill all obligations under the terms of the Lease/Purchase Agreement.
Upon motion of Council Member Christianson, seconded by Council Member Gomez, and on the
following vote:
AYES: Council Members Christianson, Gomez and Pease,
Vice Mayor Rivoire and Mayor Harmon
NOES: None
ABSENT: None
The foregoing resolution was adopted this 21 sc day of November, 2017.
ATTEST:
Carrie Gallagher
City Clerk
APPROVED AST-GTORM:
3. Christine 15
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this8� day of , 2017.
,C�ZLZZ"'
Carrie Gallagher
City Clerk
CALIFORNIA FIXED GENERAL EQUIPMENT LEASE
Long Name of Entity:
City of San Luis Obispo
Address:
990 Palm Street
City, State Zip:
San Luis Obispo, CA 93401
Attention:
Kristin Eriksson
Public Finance Office:
County:
San Luis Obispo
Amount:
600,000.00
Rate:
1.94
Maturity Date:
December 1, 2022
First Pmt Date:
December 1, 2018
Payment Dates:
June 1 and December 1
Auto Extend:
5
Governing Body:
City Council
Resolution Date:
November 2, 2017
Dated Date:
December 1, 2017
Day:
1st
State:
California
i, � 11 111 11
FIXED-RATE EQUIPMENT LEASE/PURCHASE AGREEMENT
Dated as of December 1, 2017
by and between
ZB, N.A., as Lessor
and
CITY OF SAN LUIS OBISPO, as Lessee
BANK QUALIFIED
TABLE OF CONTENTS
ARTICLEI. Definitions and Exhibits....................................................................................................2
Section 1.1 Definitions and Rules of Construction......................................................................2
Section1.2 Exhibits........................................................................................................................2
ARTICLEII. Representations Covenants and Warranties..................................................................3
Section 2.1 Representations, Covcuaws and Warranties of the Lessee....................................3
-- .�.,
Section 2.2 Representations., Covenants rind Warranties of the Bank......................................8
ARTICLE III. AGREEMENT TO LEASE; TERM OF LEASE; LEASE PAYMENTS...................9
Section3.1
Lease............................................................................................................................
Section3.2
Term
9
Section 3.3
.................................................................................................
Extension of Lease Term
9
Section3.4
............................................................................................9
1,ca c l'a ments
Section3.5
.........................................................................................................10
Fair Rental Value
Section 3.6
......................................................................................................10
Budget and Appropriation
............................................................. ..........
l i
Section 3.7
Use and Possession................................................................
11
Section 3.8
Abatement of Lease Payments in vent of Loss of Use .........................................
- . f_ ._
l 1
Section 3.9
Possession of Leased Property U non Termination................................................1.1
Section3.10
No Withholdin
Section 3.11
.....................................................................................................11
Net -Net -Net Lease
Section3.12
.................................................................................................12
Offset
......................................................................................................................12
ARTICLEIV. Insurance........................................................................................................................12
Section 4.1 C:asualt and 'I'treft Insurance................................................................................. 12
Section 4.2 Rental Interruption Insurance................................................................................ 12
Section 4.3 General Insurance Provisions..................................................................................13
ARTICLE V. Damage, Destruction and Eminent Domain; Use of Net Proceeds .............................13
Section 5.1 Appligation of Net Proceeds.....................................................................................13
ARTICLE VI. Covenants With Respect to the Leased Property.......................................................14
Section 6.1 Assinment b the Bank........................................................................................14
Section 6.2 Interest in the Letiscd Property and the Lease ...................................................... 14
Section 6.3 Maintenance, Utilities, Taxes and Assessments..................................................... 14
Section 6.4 Modification of the Leased Pro ertv...................................................................... 15
Section 6.5 Permits ................... --.....
Section 6.6 Bank's Right to Perform for ,Lessee .................................. ....................................•. 15
Section 6.7 Bank's Disclaimer of Warranties.......... .......... ......................
............................ 16
Section 6.8 Indemnification................................................................................
....... 16
Section 6.9 Annual financial Information.................................................................................16
ARTICLEVII. Assignment and Subleasing.........................................................................................16
Section 7.1 Assignment by the Bank...........................................................................................16
Section 7.2 Assignment and Subleasing b the Less ..............
ARTICLE VIII. Events of Default and Remedies.................................................................................I7
Section 8.1 Events of Default Defined.......................................................................................17
Section 8.2 Remedies on Default.................................................................................................17
Section8.3 No Remedy Elclusive...............................................................................................17
Section 8.4 Agreement to Pay Attorneys' Fees and Expenses..................................................17
Section 8.5 Waiver of Certain Damages.....................................................................................18
ARTICLEIX. Prepayment of Lease Proceeds......................................................................................18
Section 9.1 Extraordinary Prepayment Front Net Prueeeds....................................................18
Section9.2 Prepayment...............................................................................................................18
ARTICLEX. Miscellaneous...................................................................................................................18
Section10.1
Notices....................................................................................................................18
EXHIBIT C
Section 10.2
System of Reeistration.........................................................................................19
OPINION OF LESSEE'S COUNSEL
Section 10.3
Instruments of Further Assurance ...................... Error! Bookmark not defined.
Section10.4
Binding Effect........................................................................................................19
EXHIBIT G:
Section10.5
Amendments
..........................................................................................................19
Section10.6
Section Headings...................................................................................................19
Section10.7
Severability
..........................................................................................................19
Section 10.8
Entire Agreement............................................................ ...........19
Section 10.9
Execution in Counterparts...................................................................................20
Section10.10
Arbitration
Section10.11
............................................................................................................20
Applicable Law
......................................................................................................20
EXHIBIT A SCHEDULE OF LEASE PAYMENTS
EXHIBIT B
DESCRIPTION OF LEASED PROPERTY
EXHIBIT C
RESOLUTION OF GOVERNING BODY
EXHIBIT D
OPINION OF LESSEE'S COUNSEL
EXHIBIT E
SECURITY DOCUMENTS
EXHIBIT F
DELIVERY AND ACCEPTANCE CERTIFICATE
EXHIBIT G:
FORM 8038
LEASE/PURCHASE AGREEMENT
This Lease/Purchase Agreement, dated as of December 1, 2017, by and between ZB, N.A., a
national banking association duly organized and existing under the laws of the United States of America,
as lessor (the "Bank"), and CITY OF SAN LUIS OBISPO, as lessee (the "Lessee'% a public agency duly
organized and existing; under the Constitution and laws of the State of California (the "State");
WITNESSETH:
WHEREAS, the Lessee desires to finance the acquisition of the equipment and/or other personal
property described as the "Leased Property" in Exhibit B ("Leased Property") by entering into this
Lease/Purchase Agreement with the Bank ("Lease"); and
WHEREAS, the Bank agrees to lease the Leased Property to the Lessee upon the terms and
conditions set forth in this Lease, with rental to be paid by the Lessee equal to the Lease Payments
hereunder; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have
been performed precedent to and in connection with the execution and delivery of this Lease'do exist,
have happened and have been performed in regular and due time, form and manner as required by law,
and the parties hereto are now duly authorized to execute and enter into this Lease;
NOW, THEREFORE, in consideration of the above premises and of the mutual covenants
hereinafter contained and for other good and valuable consideration, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND EXHIBITS
Section 1.1 Definitions and 1tulcs of Construction
Unless the context otherwise requires, the capitalized terms used herein shall, for all purposes of
this Lease, have the meanings specified in the delinitions below. Unless the context otherwise indicates,
words importing the singular number shall include the plural number and vice versa. The terms "hereby",
"hereof', "hereto", "herein", "hereunder" and any similar terms, as used in this Lease, refer to this Lease
as a whole.
"Advance" shall have the meaning set forth in Section 2.1(1)(i)(D) hereof.
"Authorizing Resolution" means the Resolution adopted by the Governing Body authorizing this
Lease, in substantially the form attached hereto as Exhibit C.
"Bank" shall have the meaning set forth in the Preamble hereof.
"Business Day" means any day except a Saturday, Sunday, or other day on which banks in Salt
Lake City, Utah or the State are authorized to close.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commencement Date" means the date this Lease is executed by the Bank and the Lessee.
"Fiscal Year" means the period extending from July 1 of each calendar year to June 30 of the
subsequent calendar year.
"Governing Body" means the governing body of the Lessee.
"Lease" shall have the meaning set forth in the Whereas clauses hereof.
"Lease Payment Date" shall have the meaning set forth in Section 3.4(a) hereof.
"Lease Payments" means the rental payments described in Exhibit A hereto.
"Leased Property" shall have the meaning set forth in the Whereas clauses hereof and in
Exhibit B.
"Lessee" shall have the meaning set forth in the Preamble hereof.
"Net Proceeds " means insurance or eminent domain proceeds received with respect to the
Leased Property, less expenses incurred in connection with the collection of such proceeds.
"Obligation Instrument" shall have the meaning set forth in Section 2.1(c) hereof.
"Permitted Encumbrances" means, as of any particular time: (i) liens for general ad valorem
taxes and assessments, if any, not then delinquent, or which the Lessee may, pursuant to provisions of
Section 6.3 hereof, permit to remain unpaid; (ii) this Lease; (iii) any contested right or claim of any
mechanic, laborer, materialman, supplier or vendor filed or perfected in the manner prescribed by law to
the extent permitted under Section 6.4(b) hereof; (iv) easements, rights of way, mineral rights, drilling
rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the
execution date of this Lease and which the Lessee hereby certifies will not materially impair the use of the
Leased Property by the Lessee; and (v) easements, rights of way, mineral rights, drilling rights and other
rights, reservations, covenants, conditions or restrictions established following the date of execution of
this Lease and to which the. Bank and the Lessee consent in writing.
"Rebate Exemption " shall have the meaning set forth in Section 2. 1 (1)(ii)(A) hereof.
"Regulations" shall have the meaning set forth in Section 2.l(1)(i) hereof.
"Term" means the term of this Lease as described in Section 3.2 hereof.
"State" shall have the meaning set forth in the Preamble hereof.
Section 1.2 Exhibits.
The Exhibits attached to this Lease are by this reference made a part of this Lease.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1 Representations, Covenants and Warranties of the Lessee.
The Lessee represents, covenants and warrants to the Bank as follows:
(a) Due Or ganization and Existence. The Lessee is a public agency of the State duly
organized and existing under the Constitution and laws of the State.
(b) Authorization,• Enforccabilit . The Constitution and laws of the State authorize the
Lessee to enter into this Lease and to enter into the transactions contemplated by, and to carry out its
obligations under, this Lease. The Lessee has duly authorized, executed and delivered this Lease in
accordance with the Constitution and laws of the State. This Lease constitutes the legal, valid and
binding special obligation of the Lessee enforceable in accordance with its terms, except to the extent
limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles affecting the rights of creditors generally, to the exercise of judicial discretion in appropriate
cases and to limitations on legal remedies against public agencies in the State.
(c) No Conflicts or Default: Other Liens or Encumbran„res. Neither the execution and
delivery of this Lease nor the fulfillment of or compliance with the terms and conditions hereof, nor the
consummation of the transactions contemplated hereby (i) conflicts with or results in a breach of the
terms, conditions, provisions, or restrictions of any existing law, or court or administrative decree, order,
or regulation, or agreement or instrument to which the Lessee is now a party or by which the Lessee is
bound, including without limitation any agreement or instrument pertaining to any bond, note,
lease, certificate of participation, debt instrument, or any other obligation of the Lessee (any such
bond, note, lease, certificate of participation, debt instrument, and other obligation being referred to
herein as an "Obligation Instrument"), (ii) constitutes a default under any of the foregoing, or (iii) results
in the creation or imposition of any pledge, lien, charge or encumbrance whatsoever upon any of the
property or assets of the Lessee, or upon the Leased Property except for Permitted Encumbrances.
By way of example, and not to be construed as a limitation on the representations
set forth in the immediately preceding paragraph:
(A) no portion of the Leased Property is pledged or encumbered to secure or
support any Obligation Instrument; and
(B) the interests of the Bank in the Leased Property hereunder do not violate the
terms, conditions or provisions of any restriction or revenue pledge in any
agreement or instrument pertaining to any Obligation Instrument.
(d) Compiian4e with Open Meetii�eq,uirements. The Governing Body has complied with
all applicable open public meeting and notice laws and requirements with respect to the meeting at which
the Lessee's execution of this Lease was authorized.
(e) Compliance with Bidding Reguireme:nts. Either there are no procurement or public
bidding laws of the State applicable to the acquisition and leasing of the Leased Property pursuant to this
Lease, or the Governing Body and the Lessee have complied with all such procurement and public
bidding laws as may be applicable hereto.
(f) No Adverse Litigglion. There are no legal or governmental proceedings or litigation
pending, or to the best knowledge of the Lessee threatened or contemplated (or any basis therefor)
wherein an unfavorable decision, ruling, or finding might adversely affect the transaction contemplated in
or the validity of this Lease.
(g) Opinion of Lessee's Counsel. The letter attached to this Lease as Exhibit D is a true copy
of the opinion of Lessee's Counsel.
(h) Governmental Use of Leased Property. During the Term of this Lease, the Leased
Property will be used solely by the Lessee, and only for the purpose of performing one or more
governmental or proprietary functions of the Lessee consistent with the permissible scope of the Lessee's
authority, and the Leased Property will not be subject to any direct or indirect private business use.
(i) Odtier Iopresen_t_ations and Covenants. The representations, covenants, warranties, and
obligations set forth in this Article are in addition to and are not intended to limit any other
representations, covenants, warranties, and obligations set forth in this Lease.
0) No Defaults. The Lessee has never failed to make an appropriation or defaulted under
any of its payment or performance obligations or covenants, either under any municipal lease of the same
general nature as this Lease, or under any of its bonds, notes, or other obligations of indebtedness for
which its revenues or general credit are pledged or are liable.
(k) No Le I Violation. The Leased Property is not, and at all times during the Term of this
Lease will not be in violation of any federal, state or local law, statute, ordinance or regulation.
(1) General Tax and Arbitra )e Re re a tati ns and Covenants
(i) The certifications and representations made by the Lessee in this Lease are
intended, among other purposes, to be a certificate permitted in Section 1.148-
2(b) of the Treasury Regulations promulgated pursuant to Section 148 of the
Code (the "Regulations"), to establish the reasonable expectations of the Lessee
at the time of the execution of this Lease made on the basis of the facts, estimates
and circumstances in existence on the date hereof. The Lessee further certifies
and covenants as follows:
(A) The Lessee has not been notified of any disqualification or proposed
disqualification of it by the Commissioner of the Internal Revenue
Service as an issuer which may certify bond issues.
(B) To the best knowledge and belief of the Lessee, there are no facts,
estimates or circumstances that would materially change the conclusions,
certifications or representations set forth in this Lease, and the
expectations herein set forth are reasonable.
(C) The Scheduled Term of this Lease does not exceed the useful life of the
Leased Property, and the weighted average term of this Lease does not
exceed the weighted average useful life of the Leased Property.
(D) Each advance of funds by the Bank to finance Leased Property under this
Lease (each an "Advance") will occur only when and to the extent that
the Lessee has reasonably determined and identifies} the nature, need„
and cost of each item of Leased Property pertaining to such Advance.
(E) No use will be trade of the proceeds of this Lease or any such Advance,
or any funds or accounts of the Lessee which may be deemed to be
proceeds of this Lease or any such Advance, which use, if it had been
reasonably expected on the date of the execution of this Lease or of any
such Advance, would have caused this Lease or any such Advance to be
classified as an "arbitrage bond" within the meaning of Section 148 of
the Code.
(F) The Lessee will at all times comply with the rebate requirements of
Section 148(f) of the Code as they pertain to this Lease, to the extent
applicable.
(G) In order to preserve the status of this Lease and the Advances as other
than "private activity bonds" as described in Sections 1 03(b)(I) and 141
of the Code, as long as this Lease and any such Advances are outstanding
and unpaid:
(I) none of the proceeds from this Lease or the Advances or any
facilities or assets financed therewith shall be used for any
"private business use" as that term is used in Section 141(b) of
the Code and defined in Section 141(bX6) of the Code;
(II) the Lessee will not allow any such "private business use" to be
made of the proceeds of this Lease or the Advances or any
facilities or assets financed therewith; and
(III) none of the Advances or Lease Payments due hereunder shall be
secured in whole or in part, directly or indirectly, by any interest
in any property used in any such "private business use" or by
payments in respect of such property, and shall not be derived
from payments in respect of such property.
(H) The Lessee will not take any action, or omit to take any action, which
action or omission would cause the interest component of the Lease
Payments to be ineligible for the exclusion from gross income as
provided in Section 103 of the Code.
(1) The Lessee is a "governmental unit" within the meaning of Section
141(b)(6) of the Code.
(J) The obligations of the Lessee under this Lease are not federally
guaranteed within the meaning of Section 149(b) of the Code.
(K) This Lease and the Advances to be made pursuant hereto will not
reimburse the Lessee for any expenditures incurred prior to the date of
this Lease and do not constitute a "refunding issue" as defined in Section
1.150-1(d) of the Regulations, and no part of the proceeds of this Lease
or any such Advances will be used to pay or discharge any obligations of
the Lessee the interest on which is or purports to be excludable from
gross income under the Code or any predecessor provision of law.
(L) In compliance with Section 149(e) of the Code relating to information
reporting, the Lessee will file or cause to be filed with the Internal
Revenue Service Center, Ogden, UT 84201, within fifteen (15) days
from the execution of this Lease, IRS Form 8038-G or 8038 -GC, as
appropriate, reflecting the total aggregate amount of Advances that can
be made pursuant to this Lease.
(M) None of the proceeds of this Lease or the Advances to be made
hereunder will be used directly or indirectly to replace funds of the
Lessee used directly or indirectly to acquire obligations at a yield
materially higher than the yield on this Lease or otherwise invested in
any manner. No portion of the Advances will be made for the purpose of
investing such portion at a materially higher yield than the yield on this
Lease.
(N) inasmuch as Advances will be made under this Lease only when and to
the extent the Lessee reasonably determines, identifies and experiences
the need therefor, and will remain outstanding and unpaid only until such
time as the Lessee has moneys available to repay the same, the Lessee
reasonably expects that (I) the Advances will not be made sooner than
necessary; (II) no proceeds from the Advances will be invested at a yield
higher than the yield on this Lease; and (III) the Advances and this Lease
will not remain outstanding and unpaid longer than necessary.
(0) The Lessee will either (i) spend all of the moneys advanced pursuant to
this Lease immediately upon receipt thereof, without investment, on the
portion of the Leased Property that is to be financed thereby; or (ii)
invest such moneys at the highest yield allowable and practicable under
the circumstances until they are to be spent on the portion of the Leased
Property that is to be financed thereby, and track, keep records of, and
pay to the United States of America, all rebatable arbitrage pertaining
thereto, at the times, in the amounts, in the manner, and to the extent
required under Section 148(t] of the Code and the Treasury Regulations
promulgated in connection therewith. At least five percent (5°/a) of the
total amount of moneys that are expected to be advanced pursuant to this
Lease are reasonably expected to have been expended on the Leased
Property within six (G) months from the date of this Lease. All moneys
to be advanced pursuant to this Lease are reasonably expected to have
been expended on the Leased Property no later than the earlier of. (1) the
date twelve (12) months from the date such moneys are advanced; and
(II) the date three (3) years from the date of this Lease.
(P) This Lease and the Advances to be made hereunder are not and will not
be part of a transaction or series of transactions that attempts to
circumvent the provisions of Section 148 of the Code and the regulations
promulgated in connection therewith (1) enabling the Lessee to exploit
the difference between tax-exempt and taxable interest rates to gain a
material financial advantage, and (11) overburdening the tax-exempt bond
market, as those terms are used in Section 1.148-I0(a)(2) of the
Regulations.
Arbitrage Rebate Under Section 148(.1;)„ol'the Code. With respect to the arbitrage
rebate requirements of Section 148(f) of the Code, either (check applicable box):
❑ (A) Lessee Dualities for Small Issuer Exemption from Arbitrate_Rebate.
The Lessee hereby certifies and represents that it qualifies for the
exception contained in Section 148(0(4)(D) of the Code from the
requirement to rebate arbitrage earnings from investment of proceeds of
the Advances made under this Lease (the "Rebate Exemption") as
follows:
(1) The Lessee has general taxing powers.
(2) Neither this Lease, any Advances to be made hereunder, nor any
portion thereof are private activity bonds as defined in Section
141 of the Code ("Private Activity Bonds").
(3) Ninety-five percent (95%) or more of the net proceeds of the
Advances to be made hereunder are to be used for local
government activities of the Lessee (or of a governmental unit,
the jurisdiction of which is entirely within the jurisdiction of the
.Lessee).
(4) Neither the Lessee nor any aggregated issuer has issued or is
reasonably expected to issue any tax-exempt obligations other
than Private Activity Bonds (as those terms are used in Section
148(f)(4)(D) of the Code) during the current calendar year,
including the Advances to be made hereunder, which in the
aggregate would exceed $5,000,000 in face amount, or
$15,000,000 in face amount for such portions, if any, of any tax-
exempt obligations of the Lessee and any aggregated issuer as
are attributable to construction of public school facilities within
the meaning of Section 148(f)(4)(Dxvii) of the Code.
For purposes of this Section, "aggregated issuer" means any entity which
(a) issues obligations on behalf ofthe Lessee, (b) derives its issuing
authority from the Lessee, or (c) is subject to substantial control by the
Lessee.
The Lessee hereby certifies and represents that it has not created, does
not intend to create and does not expect to benefit from any entity
formed or availed of to avoid the purposes of Section 148(f)(4)(13)(i)(IV)
of the Code.
Accordingly, the Lessee will qualify for the Rebate Exemption granted to
governmental units issuing less than $5,000,000 under Section
148(f)(4)(D) of the Code ($15,000,000 for the financing of public school
facilities as described above), and the Lessee shall be treated as meeting
the requirements of Paragraphs (2) and (3) of Section 148(0 ofthe Code
relating to the required rebate of arbitrage earnings to the United States
with respect to this Lease and the Advances to be made hereunder.
-or -
❑ (B) Lessee Will K cop Records ofand Will Rebate Arbitra ue. The Lessee
does not qualify for the small issuer Rebate Exemption described above,
and the Lessee hereby certifies and covenants that it will account for,
keep the appropriate records of, and pay to the United States, the rebate
amount, if any, earned from the investment of gross proceeds of this
Lease and the Advances to be made hereunder, at the times, in the
amounts, and in the manner prescribed in Section 148(f) of the Code and
the applicable Regulations promulgated with respect thereto.
(m) Qualified Tax-Exerript Ubli alions. Based on the following representations of the
Lessee, the Lessee hereby designates this Lease and the interest components of the Lease Payments
hereunder as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code:
(i) this Lease and the Lease Payments hereunder are not private activity bonds
within the meaning of Section 141 of the Code;
(ii) the Lessee reasonably anticipates that it, together with all aggregated issuers, will
not issue during the current calendar year obligations (other than those
obligations described in clause (iii) below) the interest on which is excluded from
gross income for federal income tax purposes under Section 103 of the Code
which, when aggregated with this Lease, will exceed an aggregate principal
amount of $10,000,000;
(iii) and notwithstanding. clause (ii) above, Lessee and its aggregated issuers may
have issued in the current calendar year and may continue to issue during the
remainder of the current calendar year private activity bonds other than qua[i tied
501(c)(3) bonds as defined in Section 145 of the Code.
For purposes of this subsection, "aggregated issuer" means any entity which (a) issues
obligations on behalf of the Lessee, (b) derives its issuing authority from the Lessee, or (c) is subject to
substantial control by the Lessee. The Lessee hereby certifies and represents that it has not created, does
not intend to create and does not expect to benefit from any entity formed or availed of to avoid the
purposes of Section 265(b)(3)(C) or (D) of the Code.
Section 2.2 Representations. Covenants and Warranties of Bank.
The Bank is a national banking association, duly organized, existing and in good standing under
and by virtue of the laws of the United States of America, has the power to enter into this Lease, is
possessed of full power to own and hold real and personal property, and to lease and sell the same, and
has duly authorized the execution and delivery of this Lease. This Lease, constitutes the legal, valid and
binding obligation of the Bank, enforceable in accordance with its terms, except to the extent limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles
affecting the rights of creditors generally.
ARTICLE III
AGREEMENT TO LEASE; TERM OF LEASE; LEASE PAYMENTS
Section 3.1 Lease.
The Bank hereby leases the Leased Property to the Lessee, and the Lessee hereby leases the
Leased Property from the Bank, upon the terms and conditions set forth herein.
In conjunction therewith, Lessee shall act as agent of the Bank to acquire and obtain delivery of
the Leased Property and hereby agrees to cause the acquisition and delivery of the Leased Property at the
times and places set forth for such acquisitions and delivery. It is hereby understood that all such Lease
Payments shall be abated until the Leased Property shall be acquired and delivered with such Lease
Payments resuming proportionately with the actual acquisition and delivery of such Leased Property.
Concurrently with its execution of this Lease, the Lessee shall deliver to the Bank fully completed
documents substantially in the forms attached hereto as Exhibits A through E and Exhibit H. Upon
delivery and acceptance of the Leased Property by the Lessee, Lessee shall deliver to Bank an executed
copy of the Delivery and Acceptance Certificate attached hereto as Exhibit F.
As a condition to precedent to each Advance, Lessee shall provide Lessor with a completed Lease
Purchase Agreement Form of Advance attached in Exhibit G along with: 1) the name and address of or
wire instructions for all Payees to whom funds should be disbursed from such Advance; 2) the amount to
be Advanced; 3) the purpose(s) for such Advance; and 4) all invoices of vendors showing that each
obligation, item of cost, or expense has been properly incurred, is a proper charge against this
Lease/Purchase Agreement, and has not been the basis for a previous Advance.
Section 3.2 Term.
The Term of this Lease shall commence on the date of execution hereof and shall end on
December 1, 2022 (the "Maturity Date"), unless extended pursuant to Section 3.3, or unless terminated
prior thereto upon the earliest of any of the following events:
(a) Default and Termination. A default by the Lessee and the Bank's election to terminate
this Lease under Section 8.2 hereof,
(b) Payment of All Lease Payments. The payment by the Lessee of all Lease Payments
required under Section 3.4 hereof;
(c) Prepayment. Upon a prepayment of Lease Payments pursuant to Article IX hereof.
Section 3.3 Extension of Lease Term.
If on the Maturity Date, the Lease Payments shall not be fully paid, or if the Lease Payments
hereunder shall have been abated at any time and for any reason, then the Term shall be extended until all
Lease Payments shall be fully paid, except that the Term shall in no event be extended ten years beyond
the Maturity Date.
Section 3.4 Lease Pavinents.
(a) Time and Amount. Subject to the provisions of Section 3.8 (regarding abatement in event
of loss of use of any portion of the Leased Property), and Article IX (regarding prepayment of Lease
Payments), the Lessee agrees to pay to the Bank, its successors and assigns, as annual rental for the use
and possession of the Leased Property, the Lease Payments (denominated into components of principal
and interest) in the amounts specified in Exhibit A, to be due and payable in arrears on each payment date
identified in Exhibit A (or if such day is not a Business Day, the next succeeding Business Day) specified
in Exhibit A (the "Lease Payment Date").
For purposes of calculating Lease Payments, only the amount of'priucipal outstanding,
which is the cumulative total number of Advances (plus any additional rental), shal I bear interest at the
rates specified in Exhibit A. As each subsequent Advance is made, such Advance shall be added to the
cumulative total number of prior Advances (and any additional rental) and the Lease Payments shall be
recalculated accordingly. The schedule in Exhibit A shall be revised and replaced to reflect the new
schedule of Lease Payments as each such Advance is made.
In the event that the Lessee does not pay a Lease Payment due on the respective Lease
Payment Date, the Bank shall provide prompt written notice to the Lessee of such failure to pay;
r v'ded, however, that failure to give such notice shall not excuse any event of default under such
Section 8.1 hereof.
(b) Rate on Overdue Payments. In the event the Lessee should fail to make any of the Lease
Payments required in this Section, the Lease Payment in default shall continue as an obligation of the
Lessee until the amount in default shall have been fully paid, and the Lessee agrees to pay the same with
interest thereon, to the extent permitted by law, from the date such amount was originally payable at the
rate equal to the original interest rate payable with respect to such Lease Payments.
(c) Additional Payments. Any additional payments required to be made by the Lessee
hereunder, including but not limited to Sections 4.1, 4.2, 4.3, and 6.3 of this Lease, shall constitute
additional rental for the Leased Property.
Section 3.5 Fair Rental Value.
The Lease Payments shall be paid by the Lessee in consideration of the right of possession of, and
the continued quiet use and enjoyment of, the Leased Property during each such period for which said
Lease Payments are to be paid. The parties hereto have agreed and determined that such total rental
represents the fair rental value of the Leased Property. In making such determination, consideration has
been given to the value of the Leased Property, other obligation of the parties under this Lease (including
but not limited to costs of maintenance, taxes and insurance), the uses and purposes which may be served
by the Leased Property and the benefits therefrom which will accrue to the Lessee and the general public,
and the transfer of the Bank's leasehold interest in the Leased Property at the end of the Term.
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Section 3.6 Budot and Armropriation.
Subject to the provisions of Section 3.8, the Lessee covenants to take such action as may be
necessary to include all Lease Payments due hereunder in its annual budget and to make the necessary
annual appropriations therefor, and to maintain such items to the extent unpaid for that Fiscal Year in its
budget throughout such Fiscal Year. The covenants on the part of the Lessee herein contained shall be
deemed to be and shall be construed to be duties imposed by law and it shall be the ministerial duty of
each and every public official of the Lessee to take such action and do such things as are required by law
in the performance of the official duty of such officials to enable the Lessee to carry out and perform the
covenants and agreements in this Lease agreed to be carried out and performed by the Lessee.
Section 3.7 Use and Possession.
The total Lease Payments due in any Fiscal Year shall be for the Lessee's right to use and
possession of the Leased Property for such Fiscal Year.
Section 3.8 Abatement of Lease Payments in Event of Lass of Use.
(a) Period. The obligation of the Lessee to pay Lease Payments shall be abated during any
period in which by reason of damage, destruction or taking by eminent domain or condemnation with
respect to any portion of the Leased Property there is substantial interference with the Lessee's right to use
and possession of such portion of the Leased Property.
(b) Amount. The amount of such abatement shall be determined by the Lessee such that the
resulting Lease Payments represent fair consideration for the Lessee's right to use and possession of the
portion of the Leased Property not damaged, destroyed or taken. Such abatement shall commence with
such damage, destruction or taking and end with the substantial completion of the replacement or work or
repair; provided, however, that during abatement, special sources of money, including without limitation
proceeds of rental interruption insurance, shall be applied to pay the Lease Payments.
(c) Repair or Replacement. In the event of such abatement, the Lessee will use its best
efforts to repair or replace the damaged or destroyed or taken portion of the Leased Property, as the case
may be, from Net Proceeds, subject to the requirements of Section 5.1 hereof, or special funds of the
Lessee or other moneys the application of which would not result in the obligations of the Lessee
hereunder constituting indebtedness of the Lessee in contravention of the Constitution and laws of the
State.
Section 3.9 Possessipn of Leased Pro crt . Upon.'i'ermination.
Upon termination of this Lease pursuant to Section 3.2(a), the Lessee shall transfer the Leased
Property to the Bank in such manner as may be specified by the Bank, and the Bank shall have the right to
take possession of the Leased Property by virtue of the Bank's ownership interest as lessor of the Leased
Property.
To the extent the Leased Property is equipment, the Lessee at the Bank's direction shall ship the
Leased Property to the destination designated by the Bank, by loading the Leased Property at the Lessee's
cost and expense, on board such carrier as the Bank shall specify.
Section 3.10 No WithholdiEza.
Notwithstanding any dispute between the Bank and the Lessee, including a dispute as to the
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failure of any portion of the Leased Property in use by or possession of the Lessee to perform the task for
which it is leased, the Lessee shall make all Lease Payments when due and shall not withhold any Lease
Payments pending the final resolution of such dispute.
Section 3.11 Net -Net -Net Lease.
This Lease shall be deemed and construed to be a "net -net -net lease" and the Lessee hereby
agrees that the Lease Payments shall be an absolute net return to the Bank, free and clear of any expenses,
charges or set -offs whatsoever, except as expressly provided herein.
Section 3.12 Offset.
Subject to the provisions of Section 3.8, Lease Payments or other sums payable by the Lessee
pursuant to this Lease shall not be subject to offset or counterclaim and the Lessee shall not be entitled to
any credit against such Lease Payments or other sums by reason of any dispute between the Lessee and
the Bank, any vendor or manufacturer of any part of the Leased Property, or any other person.
ARTICLE IV
INSURANCE
Section 4.1 Casualty and Theft Insurance.
(a) Casualty and Theft Insurance: Coverage. The Lessee shall procure and maintain, or
cause to be procured and maintained, throughout the Term of this Lease, insurance against loss or damage
to any portion of the Leased Property caused by fire and lightning, with extended coverage and then,
vandalism and malicious mischief insurance. Said extended coverage insurance shall, as nearly as
practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such
other hazards as are normally covered by such insurance.
(b) Amount. Such insurance shall be in an amount (except that such insurance may be
subject to deductible clauses of not to exceed $50,000 for any one loss) not less than the replacement cost
of the Leased Property.
(c) Joint or Self -Insurance. Such insurance may be maintained as part of or in conjunction
with any other insurance carried or required to be carried by the Lessee, and, subject to Bank's consent
and compliance with Section 4.3(b) hereof, may be maintained in the form of self-insurance by the
Lessee.
(d) Payment of Net Proceeds. The Net Proceeds of such insurance shall be applied as
provided in Section 5.1.
Section 4.2 Rental_ Interruption Insurance.
(a) Coverage and Amount. The Lessee shall maintain or cause to be maintained, rental
income or use and occupancy insurance in an amount not less than the maximum Lease Payments payable
in any one year period (calculated based upon the maximum principal component hereunder as provided
in Exhibit A and an interest rate as provided in Exhibit A hereto), to insure against abatement of Lease
Payments caused by perils covered by the insurance required to be maintained as provided in Section 4.1
hereof.
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(b) Joint Insurance. Such insurance may be maintained as part of or in conjunction with any
other rental income insurance carried by the Lessee.
(c) Payment of Net Proceeds. The Net Proceeds of such rental interruption insurance shall
be paid to the Bank to be credited towards the payment of the Lease Payments in the order in which such
Lease Payments come due and payable.
Section 4.3 General insurance Provisions.
(a) Payment of Premiums. The Lessee shall pay or cause to be paid when due the premiums
for all insurance policies required by this Lease.
(b) Selflnsurance. The Lessee may only self insure against the risks described in Section 4.1
hereof if and to the extent such self-insurance method or plan of protection shall afford reasonable
protection to the Bank in light of all circumstances, giving consideration to cost, availability and similar
plans or methods of protection adopted by other public agencies in the State other than the Lessee.
Insurance provided through a California joint powers authority of which the Lessee is a member or with
which the Lessee contracts for insurance shall be deemed to be self-insurance for purposes hereof. Any
self-insurance maintained by the Lessee pursuant to this Article 1V shall comply with the following terms:
(1) The self-insurance program shall include an actuarially sound claims reserve
fund out of which each self-insured claim shall be paid; the adequacy of such
fund shall be evaluated on an annual basis by an independent insurance
consultant; and any deficiencies in any self-insured claims reserve fund shall be
remedied in accordance with the recommendation of such independent insurance
consultant;
(2) [Reserved]
(3) In the event that the self-insurance program shall be discontinued, the actuarial
soundness of its claims. reserve fund, as determined by an independent insurance
consultant, shall be maintained.
ARTICLE V
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS
Section 5.1 Aplslication of Net „Proceeds.
If Net Proceeds received by the Lessee are expected to equal at least 110% of the projected costs
of replacement or repair, as demonstrated in an attached reconstruction budget provided at the time, and,
in the event that damage, destruction or taking results or is expected to result in an abatement of Lease
Payments, such replacement or repair can be fully completed within a period not in excess of the period in
which rental interruption insurance proceeds, as described in Section 4.2 together with other identified
available moneys, will be available to pay in full all Lease Payments coming due during such period as
demonstrated in an attached reconstruction schedule provided at the time, then such Net Proceeds shall be
used by the Lessee to replace or repair the damaged or taken facilities.
If the Lessee cannot make the representations regarding repair or reconstruction in the paragraph
above or replacement or repair of any portion of the Leased Property is not economically feasible or in the
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best interest of the Lessee, then the Net Proceeds shall be applied to prepayment of Lease Payments as
provided in Article IX hereof; provided that in the event of damage or destruction in whole of the Leased
Property and in the event such Net Proceeds, together with any other funds then on hand are not sufficient
to prepay all the Lease Payments then outstanding, then the Lessee shall not be permitted to certify that
repair, replacement or improvement of all of the Leased Property is not economically feasible or in the
best interest of the Lessee. In such event, the Lessee shall proceed to repair, replace or improve the
Leased Property as described herein from legally available funds in the then current Fiscal Year.
ARTICLE VI
COVENANTS WITH RESPECT TO THE LEASED PROPERTY
Section 6.1 Use of the Leased Prouert
The Lessee represents and warrants that it has an immediate need for, and expects to make
immediate use of, all of the Leased Property to carry out and give effect to the public purposes of the
Lessee, which need is not temporary or expected to diminish in the foreseeable future.
Section 6.2 Interest in the Leased Property and the Lease.
(a) Bank Holds Leasehold Interest During Term. During the Term of this Lease, the Bank
does and shall hold an ownership interest in the Leased Property as lessor thereof. The Lessee shall take
any and all actions reasonably required, including but not limited to executing and filing any and all
documents reasonably required, to maintain and evidence such title and interest at all times during the
Term of this Lease.
(b) Title Transferred to Lessee at End of Term. Upon expiration of the Term as provided in
Section 3.2(b) or 3.2(c) hereof, all right, title and interest of the Bank in and to all of the Leased Property
shall be transferred to and vest in the Lessee, without the necessity of any additional document of transfer.
Section 6.3 Maintenance. Utilities, Taxes and Assessments.
(a) Maintenance; Repair and Replacement. Throughout the Term of this Lease, as part of
the consideration for the rental of the Leased Property, all repair and maintenance of the Leased Property
shall be the responsibility of the Lessee, and the Lessee shall pay for or otherwise arrange for the payment
of the cost of the repair and replacement of the Leased Property resulting from ordinary wear and tear or
want of care on the part of the Lessee or any sublessee thereof. In exchange for the Lease Payments
herein provided, the Bank agrees to provide only the Leased Property, as hereinbefore more specifically
set forth. The Lessee waives the benefits of subsections 1 and 2 of Section 1932 of the California Civil
Code, but such waiver shall not limit any of the rights of the Lessee under the terms of this Lease.
(b) Tax and Assessments; Utility Charges. The Lessee shall also pay or cause to be paid all
taxes and assessments, including but not limited to utility charges, of any type or nature charged to the
Lessee or levied, assessed or charged against any portion of the Leased Property or the respective
interests or estates therein; provided that with respect to special assessments or other governmental
charges that may lawfully be paid in installments over a period o1'years, the Lessee shall be obligated to
pay only such installments as are required to be paid during the Term of this Lease as and when the same
become due.
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(c) Contests. The Lessee may, at its expense and in its name, in good faith contest any such
taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes,
assessments or other charges so contested to remain unpaid during the period of such contest and any
appeal therefrom; provided that prior to such nonpayment it shall furnish the Bank with the opinion of an
independent counsel acceptable to the Bank to the effect that, by nonpayment of any such items, the
interest of the Bank in such portion of the Leased Property will not be materially endangered and that the
Leased Property will not be subject to loss or forfeiture. Otherwise, the Lessee shall promptly pay such
taxes, assessments or charges or make provisions for the payment thereof in form satisfactory to the Bank.
Section 6.4 ModiI ication of the Leased Proper�v.
(a) Additions, Modifications and Improvements. The Lessee shall, at its own expense, have
the right to make additions, modifications, and improvements to any portion of the Leased Property if
such improvements are necessary or beneficial for the use of such portion of the Leased Property. All
such additions, modifications and improvements shall thereafter comprise part of the Leased Properly and
be subject to the provisions of this Lease. Such additions, modifications and improvements shall not in
any way damage any portion of the Leased Property or cause it to be used for purposes other than those
authorized under the provisions of State and federal law or in any way which would impair the State
tax-exempt status or the exclusion from gross income for federal income tax purposes of the interest
components of the Lease Payments; and the Leased Property, upon completion of any additions,
modifications and improvements made pursuant to this Section, shall be of a value which is not
substantially less than the value of the Leased Property immediately prior to the making of such additions,
modifications and improvements.
(b) No Liens. Except for Permitted Encumbrances, the Lessee will not permit (i) any liens or
encumbrances to be established or remain against the Leased Property or (ii) any mechanic's or other lien
to be established or remain against the Leased Property for labor or materials furnished in connection with
any additions, modifications or improvements made by the Lessee pursuant to this Section; prqvi C that
if any such mechanic's lien is established and the Lessee shall first notify or cause to be notified the Bank
of the Lessee's intention to do so, the Lessee may in good faith contest any lien filed or established
against the Leased Property, and in such event may permit the items so contested to remain undischarged
and unsatisfied during the period of such contest and any appeal therefrom and shall provide the Bank
with full security against any loss or forfeiture which might arise from the nonpayment of any such item,
in form satisfactory to the Bank. The Bank will cooperate fully in any such contest.
Section 6.5 Permits.
The Lessee will provide all permits and licenses necessary for the ownership, possession,
operation, and use of the Leased Property, and will comply with all laws, rules, regulations, and
ordinances applicable to such ownership, possession, operation, and use. If compliance with any law,
rule, regulation, ordinance, permit, or license requires changes or additions to be made to the Leased
Property, such changes or additions will be made by the Lessee at its own expense.
Section 6.6 Bank's Righl to Perform for Lessee.
If the Lessee fails to make any payment or to satisfy any representation, covenant, warranty, or
obligation contained herein or imposed hereby, the Bank may (but need not) make such payment or
satisfy such representation, covenant, warranty, or obligation, and the amount of such payment and the
expense of any such action incurred by the Bank, as the case may be, will be deemed to be additional rent
payable by the Lessee on the Bank's demand.
15
Section 6.7 Bank's. Disclaimer of Warranties.
The Bank has played no part in the selection of the Leased Property, the Lessee having selected
the Leased Property independently from the Bank. The Bank, at the Lessee's request, has acquired or
arranged for the acquisition of the Leased Property and shall lease the same to the Lessee as herein
provided; the Bank's only role being the facilitation of the financing of the Leased Property for the
Lessee. THE BANK MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR
IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, QUALITY, DURABILITY, SUITABILITY,
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE
USE CONTEMPLATED BY THE LESSEE OF THE LEASED PROPERTY, OR ANY PORTION
THEREOF. THE LESSEE ACKNOWLEDGES THAT THE BANK IS NOT A MANUFACTURER OR
VENDOR OF ALL OR ANY PORTION OF THE LEASED PROPERTY, AND THAT THE LESSEE IS
LEASING THE LEASED PROPERTY AS IS. In no event shall the Bank be liable for incidental, direct,
indirect, special or consequential damages, in connection with or arising out of this Lease, for the
existence, furnishing, functioning or Lessee's use and possession of the Leased Property.
Section 6.8 Indemnification.
To the extent permitted by applicable law, the Lessee hereby agrees to indemnify and hold
harmless the Bank, its directors, officers, shareholders, employees, agents, and successors from and
against any loss, claim, damage, expense, and liability resulting from or attributable to the acquisition,
construction, or use of the Leased Property. Notwithstanding the foregoing, the Bank shall not be
indemnified for any liability resulting from the gross negligence or willful misconduct of the Bank.
Section 6.9 Annual Financial Information.
During the term of this Lease, the Lessee covenants and agrees to provide the Bank as soon as
practicable when they are available; (i) a copy of the Lessee's final annual budget for each fiscal year; (ii)
a copy of the Lessee's most recent financial statements; and (iii) any other financial reports the Bank may
request from time to time.
ARTICLE VII
ASSIGNMENT AND SUBLEASING
Section 7.1 Assignment by the Bank.
The parties hereto agree that all rights of Bank hereunder may be assigned, transferred or
otherwise disposed of, either in whole or in part, provided that notice of any such assignment, transfer or
other disposition is given to Lessee.
Section 7.2 Asmiwment and Subleasinpe by the Lessee.
The Lessee may not assign this Lease or sublease all or any portion of the Leased Property unless
both of the following shall have occurred: (i) the Bank shall have consented to such assignment or
sublease; and (ii) the Bank shall have received assurance acceptable to the Bank that such assignment or
sublease: (A) is authorized under applicable state law, (B) will not adversely affect the validity of this
Lease, and (C) will not adversely affect the exclusion from gross income for federal income tax purposes
of the interest components of the Lease Payments.
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ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.1 Events ❑fDefault Defined.
The following shall be "events of default" under this Lease and the terms "events of default" and
"default" shall mean, whenever they are used in this Lease, any one or more of the following events:
(a) Payment Default. Failure by the Lessee to pay any Lease Payment required to be paid
hereunder by the corresponding Lease Payment Date.
(b) Covenant Default. Failure by the Lessee to observe and perform any warranty, covenant,
condition or agreement on its part to be observed or performed herein or otherwise with respect hereto
other than as referred to in clause (a) of this Section, for a period of 30 days after written notice
specifying such failure and requesting that it be remedied has been given to the Lessee by the Bank;
p ovided, however, if the failure stated in the notice cannot be corrected within the applicable period, the
Bank shall not unreasonably withhold their consent to an extension of such time if corrective action is
instituted by the Lessee within the applicable period and diligently pursued until the default is corrected.
(c) Bankruptcy or Insolvency. The filing by the Lessee of a case in bankruptcy, or the
subjection of any right or interest of the Lessee under this Lease to any execution, garnishment or
attachment, or adjudication of the Lessee as a bankrupt, or assignment by the Lessee for the benefit of
creditors, or the entry by the Lessee into an agreement of composition with creditors, or the approval by a
court of competent jurisdiction of a petition applicable to the Lessee in any proceedings instituted under
the provisions of the federal bankruptcy code, as amended, or under any similar act which may hereafter
be enacted.
Section 8.2 Remedies on Default.
Whenever any event of default referred to in Section 8.1 hereof shall have happened and be
continuing, it shall be lawful for the Bank to exercise any and all remedies available pursuant to law or
granted pursuant to this Lease. Notwithstanding anything herein to the contrary, THERE SHALL BE NO
RIGHT UNDER ANY CIRCUMSTANCES TO ACCELERATE THE LEASE PAYMENTS OR
OTHERWISE DECLARE ANY LEASE PAYMENTS NOT THEN IN DEFAULT TO BE
IMMEDIATELY DUE AND PAYABLE.
Section 8.3 No Remedy lsxclusive.
No remedy conferred herein upon or reserved to the Bank is intended to be exclusive and every
such remedy shall be cumulative and shall be in addition to every other rernedy given under this Lease or
now or hereafter existing at law or in equity. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Bank to exercise any remedy reserved to it in this Article it shall not be
necessary to give any notice, other than such notice as may be required in this Article or by law.
Section 8.4 Agreement to Pgy Attorneys! Fees artd f x erases.
In the event either party to this Lease should default under any of the provisions hereof and the
nondefaulting party should employ attorneys or incur other expenses for the collection of moneys or the
17
enforcement of performance or observance of any obligation or agreement on the part of the defaulting
party contained herein, the defaulting party agrees that it will pay on demand to the nondefaulting party
the reasonable fees of such attorneys and such other expenses so incurred by the nondefaulting party.
Section 8.5 Waiver o#'Certain DamiWM.
With respect to all of the remedies provided for in this Article VIII, the Lessee hereby waives any
damages occasioned by the Bank's repossession of the Leased Property upon an event of default.
ARTICLE IX
PREPAYMENT OF LEASE PAYMENTS
Section 9.1 ixtraordinary Prenavment From Net Proceeds
The Lessee shall be obligated to prepay the Lease Payments in whole or in part on any date, from
and to the extent of any Net Proceeds or other moneys pursuant to Section 5.1 hereof. The Lessee and the
Bank hereby agree that such Net Proceeds or other moneys shall be credited towards the Lessee's
obligations hereunder (except in the case of such prepayment of the Lease Payments in whole) pro rata
among Lease Payments so that following prepayment, the remaining annual Lease Payments will be
proportional to the initial annual Lease Payments.
Section 9.2 Prepa
Subject to the terms and conditions of this Section, the Bank hereby grants an option to the
Lessee to prepay in whole or in part on any date at a prepayment price equal to the outstanding principal
component of the Lease Payments, without premium, plus the accrued interest component of the Lease
Payments to such prepayment date. To exercise this option, the Lessee must deliver to the Bank written
notice specifying the date on which the prepayment is to be made (the "Closing Date"), which notice must
be delivered to the Bank at least thirty (30) days prior to the Closing Date specified therein.
ARTICLE X
MISCELLANEOUS
Section 10.1 Notices.
Unless otherwise specifically provided herein, all notices shall be in writing addressed to the
respective party as set forth below (or to such other address as the party to whom such notice is intended
shall have previously designated by written notice to the serving party), and may be personally served,
telecopied, or sent by overnight courier service or United States mail:
If to Bank:
ZB, N.A.
One South Main, 17th Floor
Salt Lake City, Utah 84133
Attention: Kirsi Hansen
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If to the Lessee:
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Attention: Kristin Eriksson
Such notices shall be deemed to have been given: (a) if delivered in person, when delivered; (b) if
delivered by telecopy, on the date of transmission if transmitted by 4:00 p.m. (Salt Lake City time) on a
Business Day or, if not, on the next succeeding Business Day; (c) if delivered by an overnight courier
service, two Business Days after delivery to such courier properly addressed; or (d) if by United States
mail, four Business Days after depositing in the United States mail, postage prepaid and properly
addressed.
Section 10.2 System of Registration.
The Lessee shall be the Registrar for this Lease and the rights to payments hereunder. The Bank
shall be the initial Registered Owner of rights to receive payments hereunder. If the Bank transfers its
rights to receive payments hereunder, the Registrar shall note on this Lease the name and address of the
transferee.
Section 10.3 [Reserved]
Section 10.4 F3inding Gffecl.
This Lease shall inure to the benefit of and shall be binding upon the Bank and the Lessee and
their respective successors and assigns.
Section 10.5 Amendments.
This Lease may be amended or modified only upon the written agreement of both the Bank and
the Lessee.
Section 10.6 Section Fleadin s.
Section headings are for reference only, and shall not be used to interpret this Lease.
Section 10.7 5everaij I itv
In the event any provision of this Lease shall be held invalid or unenforceable by a court of
competent jurisdiction, to the extent permitted by law, such holding shall not invalidate or render
unenforceable any other provision hereof.
Section 10.8 Entire ALTeement.
This Lease and the attached Exhibits constitute the entire agreement between the Bank and the
Lessee and supersedes any prior agreement between the Bank and the Lessee with respect to the Leased
Property, except as is set forth in an Addendum, if any, which is made a part of this Lease and which is
signed by both the Bank and the Lessee.
W11
Section 10.9 Uccution_in Counterparts,.
This Lease may be executed in any number of counterparts, each of which shall be an original
and all of which shall constitute but one and the same instrument.
Section 10.10 Arbitration.
To the extent permitted by law, any dispute, controversy or claim arising out of or based upon the
terms of this Lease or the transactions contemplated hereby shall be settled exclusively and finally by
binding arbitration. Upon written demand for arbitration by any party hereto, the parties to the dispute
shall confer and attempt in good faith to agree upon one arbitrator. If the parties have not agreed upon an
arbitrator within thirty (30) days after receipt of such written demand, each party to the dispute shall
appoint one arbitrator and those two arbitrators shall agree upon a third arbitrator. Any arbitrator or
arbitrators appointed as provided in this section shall be selected from panels maintained by, and the
binding arbitration shall be conducted in accordance with the commercial arbitration rules of, the
American Arbitration Association (or any successor organization), and such arbitration shall be binding
upon the parties. The arbitrator or arbitrators shall have no power to add or detract from the agreements
of the parties and may not make any ruling or award that does not conform to the terms and conditions of
this Lease. The arbitrator or arbitrators shall have no authority to award punitive damages or any other
damages not measured by the prevailing party's actual damages. Judgement upon an arbitration award
may be entered in any court having jurisdiction. The prevailing party in the arbitration proceedings shall
be awarded reasonable attorney fees and expert witness costs and expenses.
Section 10.11 Applicable Law.
This Agreement shall be governed by and construed in accordance with the laws of the State of
California.
20
IN WITNESS WHEREOF, the Bank has caused this Lease to be executed in its name by its duly
authorized officer, and the Lessee has caused this Lease to be executed in its name by its duly authorized
officer, as of the date first above written.
ZB, N.A., as Lessor
By -- —
Title
CITY OF SAN LUIS OBISPO, as Lessee
By
-�j Aw is riled Officer
22
IN WITNESS WHEREOF, the Bank has caused this Lease to be executed in its name by its duly
authorized officer, and the Lessee has caused this Lease to be executed in its name by its duly authorized
officer, as of the date first above written.
ZB, N.A., as Lessor
By .—
Title
CITY OF SAN LUIS OBISPO, as Lessee
By
— uthorized Officer
22
IN WITNESS WHEREOF, the Bank has caused this Lease to be executed in its name by its duly
authorized officer, and the Lessee has caused this Lease to be executed in its name by its duly authorized
officer, as of the date first above written.
ZB, N.A., as Lessor
By
Title
CITY OF SAN LUIS OBISPO, as Lessee
By
uthorized.Officer
22
IN WITNESS WHEREOF, the Bank has caused this Lease to be executed in its name by its duly
authorized officer, and the Lessee has caused this Lease to be executed in its name by its duly authorized
officer, as of the date first above written.
ZB, N.A., as Lessor
By -
Title
CITY OF SAN LUIS OBISPO, as L • • •e
By
uthorized Officer
22
EXHIBIT A
SCHEDULE OF LEASE PAYMENTS
1. Interest.
Interest components have been computed at the rate of one point ninety-four percent (1.94%) per
annum calculated based on actual number of days elapsed during a 360 day year.
2. Payment Dates and Amounts.
Cit, of San Luis Oi€ais o, Caiifornia
$600,000.00 Loan (Specification 01627)
Dated: December 1. 2017
Debt Service Schedule
D+tle
principal
OatF1}Orl
Int41'PSt-
+
Ibcai i Dud
12+b1+2017
-
Net latnesi Cost (N3IC}
_X71
19399492'y
1101'2018
58,973.53
1.940'°
11,640,00
70,613.53
70,613.53
06.0112019
65,365.57
1.9ap°,
5,247.96
70,613.53
1052 Yettrs
12+01,2019
65,999.62
1.940••.
4,61391
70,61353
141,227.06
66.639 81 _ --__
1.9g0'� —
3.973.71
F0.613 52
12+0I12020
67286.22
1.9401;6
_-_ .
3,327.31
_
70,613.53
141,227.05
0610V2021
67,938.89
1.940'4
2,674.63
70,613 52
12+01+2021
68,59790
1-940•.
2,015.62
70,61352
141,227.04
OG'0112022
69,263.30
1.940°.
1,350.23
70,613.53
1.1%12022
69.935.I6
19401.
678.37
70.613.53
1.31 X27,06
Total
S600,000.00
S�13y52i.74
$635,521.74
Yield-Sultsdrs
Bond Year Dolls
$1.831.02
3.052 Years
Net latnesi Cost (N3IC}
—
19399492'y
T nte•Iuterest Cost fT[C1
1.9368599%
Rmd Yield fm Arbitrage Pwvosm
1.9368599%
AD laclusAve Cwt (AIC) --
1.9368599':
LRS Fut in 0M
Net Interest Cost
1,9399998°/.
W-!cahtc l AVP -'ape tilihuuti'
1052 Yettrs
EXHIBIT B
DESCRIPTION OF LEASED PROPERTY
One (l) Street Sweeper
One (1) Dump Truck
EXHIBIT C
RESOLUTION OF GOVERNING BODY
A resolution approving the form of the Lease/Purchase Agreement with
ZB, N.A., Salt Lake City, Utah
and authorizing the execution and delivery thereof.
Whereas, the City Council (the "Governing Body") of City of San Luis Obispo (the "Lessee")
have determined that a true and very real need exists for the leasing of the property described in the
Lease/Purchase Agreement presented to this meeting; and
Whereas, the Lessee has reviewed the form of the Lease/Purchase Agreement and has found the
terms and conditions thereof acceptable to the Lessee; and
Whereas, the Governing Body has taken the necessary steps under applicable law to arrange for
the leasing of such property under the Lease/Purchase Agreement; and
Be it resolved by the Governing Body as follows:
Section 1.
The terms of said Lease/Purchase Agreement are in the best interests of Lessee for the leasing of
the property described therein.
Section 2.
The appropriate officers and officials of the Lessee are hereby authorized and directed to execute
and deliver the Lease/Purchase Agreement in substantially the form presented to this meeting and any
related documents and certificates necessary to the consummation of the transactions contemplated by the
Lease/Purchase Agreement for and on behalf of the Lessee. The officers and officials of the Lessee may
make such changes to the Lease/Purchase Agreement and related documents and certificates as such
officers deem necessary or desirable, such approval to be conclusively evidenced by the execution and
delivery thereof.
Section 3.
The officers and officials of the Governing Body and the Lessee are hereby authorized and
directed to fulfill all obligations under the terms of the Lease/Purchase Agreement.
I hereby certify that the foregoing is a full, true and correct copy of a resolution duly adopted by
the City Council of the City of San Luis Obispo at a meeting thereof on 12 ajs: , 2017
by the following vote of the members thereof:
AYES: Council Members Christianson, Gomez and Peace; Vice Mayor Rivoire; and Mayor Harmon
NOES: None
ABSENT: None
CITY OF SAN LUIS OBI`
By
Print Name
Title it � /1__.�1��i�l
Attest:
By
n
EXHIBIT D
FORM OF OPINION OF COUNSEL TO LESSEE
To: ZB, N.A.
One South Main Street, 17' Floor
Salt Lake City, Utah 84133
Gentlemen:
As counsel for City of San Luis Obispo ("Lessee"), I have examined duly executed originals of the
Lease/Purchase Agreement (the "Lease") dated this 1 st day of December, 2017, between the Lessee and ZB,
N.A., Salt Lake City, Utah (`Bank"), and the proceedings taken by Lessee to authorize and execute the Lease
(the "Proceedings"). Based upon such examination as I have deemed necessary or appropriate, I am of the
opinion that:
1. Lessee is a body corporate and politic, legally existing under the laws of the State of California
(the "State").
2. The Lease and the Proceedings have been duly adopted, authorized, executed, and delivered by
Lessee, and do not require the seal of Lessee to be effective, valid, legal, or binding.
3. The governing body of Lessee has complied with all applicable open public meeting and notice
laws and requirements with respect to the meeting at which the Proceedings were adopted and the Lessee's
execution of the Lease was authorized.
4. The Lease is a legal, valid, and binding obligation of Lessee, enforceable against the Lessee in
accordance with its terms except as limited by the state and federal laws affecting remedies and by
bankruptcy, reorganization, or other laws of general application affecting the enforcement of creditor's
rights generally.
5. Either there are no usury laws of the State applicable to the Lease, or the Lease is in accordance
with and does not violate all such usury laws as may be applicable.
6. Either there are no procurement or public bidding laws of the State applicable to the acquisition
and leasing of the Leased Property (as defined in the Lease) from the Bank under the Lease, or the acquisition
and leasing of the Leased Property from the Bank under the Lease comply with all such procurement and
public bidding laws as may be applicable.
7. There are no legal or governmental proceedings or litigation pending or, to the best of my
knowledge, threatened or contemplated (or any basis therefor) wherein an unfavorable decision, ruling or
finding might adversely affect the transactions contemplated in or the validity of the Lease.
8. The adoption, execution and/or delivery of the Lease and the Proceedings, and the compliance by
the Lessee with their provisions, will not conflict with or constitute a breach of or default under any court
decree or order or any agreement, indenture, lease or other instrument or any existing law or administrative
regulation, decree or order to which the Lessee is subject or by which the Lessee is or may be bound.
Attorney for Lessee
7G77,7W2 1 d-
City Attorney's Office
990 Palm Street San Luis Obispo. CA 93401-3249
80:1.781 7140
December 4, 2017
To: ZB, N.A.
One South Main Street, 17`" Floor
Salt Lake City, Utah 84133
Gentlemen:
As counsel for City of San Luis Obispo ("Lessee"), I have examined duly executed
originals of the Lease/Purchase Agreement (the "Lease") dated this 1 st day of December, 2017,
between the Lessee and ZB, N.A., Salt Lake City, Utah (`Bank"), and the proceedings taken by
Lessee to authorize and execute the Lease (the "Proceedings"). Based upon such examination
as I have deemed necessary or appropriate, I am of the opinion that:
1. Lessee is a body corporate and politic, legally existing under the laws of the State of
California (the "State").
2. The Lease and the Proceedings have been duly adopted, authorized, executed, and
delivered by Lessee, and do not require the seal of Lessee to be effective, valid, legal, or binding.
3. The governing body of Lessee has complied with all applicable open public meeting
and notice laws and requirements with respect to the meeting at which the Proceedings were
adopted and the Lessee's execution of the Lease was authorized.
4. The Lease is a legal, valid, and binding obligation of Lessee, enforceable against
the Lessee in accordance with its terms except as limited by the state and federal laws affecting
remedies and by bankruptcy, reorganization, or other laws of general application affecting the
enforcement of creditor's rights generally.
Either there are no usury laws of the State applicable to the Lease, or the Lease is in
accordance with and does not violate all such usury laws as may be applicable.
6. Either there are no procurement or public bidding laws of the State applicable to the
acquisition and leasing of the Leased Property (as defined in the Lease) from the Bank under
the Lease, or the acquisition and leasing of the Leased Property from the Bank under the Lease
comply with all such procurement and public bidding laws as may be applicable.
7. There are no legal or governmental proceedings or litigation pending or, to the best
Page 1
of my knowledge, threatened or contemplated (or any basis therefor) wherein an unfavorable
decision, ruling or finding might adversely affect the transactions contemplated in or the validity
of the Lease.
8. The adoption, execution and/or delivery of the Lease and the Proceedings, and the
compliance by the Lessee with their provisions, will not conflict with or constitute a breach of
or default under any court decree or order or any agreement, indenture, lease or other instrument
or any existing law or administrative regulation, decree or order to which the Lessee is subject
or by which the Lessee is or may be bound.
J. Christine Dietrick
City Attorney
City gf San Luis Obispo
!Assistant City Attorney
City of San Luis Obispo
i
Page 2
EXHIBIT E
SECURITY DOCUMENTS
Attach California Certificates of Title showing the following lien holder:
ZB, N.A.
One South Main Street, 17" Floor
Salt Lake City, UT 84133
EXHIBIT F
DELIVERY AND ACCEPTANCE CERTIFICATE
To: ZB, N.A.
Reference is trade to the fixed rate Equipment Lease Agreement between the undersigned
("Lessee'), and ZB, N.A. ("Lessor"). dated December 1, 2017, ("the Lease") and to the Equipment as
such term is defined'therein. In connection therewith we are pleased to confirm to you the following:
I . All of the Equipment has been delivered to and received by the undersigned; all installation or
other work necessary prior to the use thereof has been completed; said Equipment has been examined
and/or tested and is in good operating order and condition and is in all respects satisfactory to the
undersigned and as represented, and that said Equipment has been accepted by the undersigned and
complies with all [erins of the Lease. Consequently, you are hereby authorized to pay for the Equipment
in accordance with clic: terms of any purchase orders for the same.
2. In the future, in the event the Equipment fails to perform as expected or represented we will
continue to honor the Lease in all respects and continue to make our rental and other payments thereunder
in the normal course of business and we will look solely to the vendor, distributor or manufacturer for
recourse.
3. We acknowledge that Bank is neither the vendor nor manufacturer or distributor of the
Equipment and has no control, knowledge or familiarity with the condition, capacity, functioning or other
characteristics of the Equipment.
4. The serial number for each item of Equipment which is set forth on Exhibit "B" to the Lease is
correct.
This certificate shall not be considered to alter, construe, or amend the terms of the Lease.
Lessee:
CITY OF SAN LUIS OBISPO
M.
(Authorized Signature)
Date:
EXHIBIT G
FORM OF ADVANCE
RE: CITY OF SAN LUIS OBISPO
ZB, N.A.
One South Main Street, 17th Floor
Salt Lake City, UT 84133
You are hereby authorized to disburse with regard to the above -referenced transaction the
following:
ADVANCE NUMBER:
NAME AND ADDRESS OF PAYEE:
OR,
WIRE INSTRUCTIONS OF PAYEE:
AMOUNT: $
PURPOSE FOR WHICH EXPENSE HAS BEEN INCURRED:
PLEASE ATTACH INVOICES.
Each obligation, item of cost, or expense mentioned herein has been properly incurred, is a proper
charge against the Lease/Purchase Agreement, and has not been the basis for a previous Advance.
DATED: _ By;
Title:
ADVANCE
RE: CITY OF SAN LUIS OBISPO
ZB, N.A.
One South Main Street, 17th Floor
Salt Lake City, UT 84133
You are hereby authorized to disburse with regard to the above -referenced transaction the
following:
ADVANCE NUMBER: 1
WIRE INSTRUCTIONS OF PAYEE: SEE ATTACHED CLOSING MEMORANDUM
AMOUNT: SEE ATTACHED CLOSING MEMORANDUM
PURPOSE FOR WHICH EXPENSE HAS BEEN INCURRED:
Closing costs and initial deposit for equipment
acquisition contracts.
Each obligation, item of cost, or expense mentioned herein has been properly incurred, is a proper
charge against the Lease/Purchase Agreement, and has not been the basis for a previous Advance.
DATED: December 5, 2017 By:
Title: A/? wce �%/ YZdw C
ADVANCE
RE: CITY OF SAN LUIS OBISPO
ZB, N.A.
One South Main Street, 17th Floor
Salt Lake City, UT 84133
You are hereby authorized to disburse with regard to the above -referenced transaction the
following:
ADVANCE NUMBER: l
WIRE INSTRUCTIONS OF PAYEE: SEE ATTACHED CLOSING MEMORANDUM
AMOUNT: SEE ATTACHED CLOSING MEMORANDUM
PURPOSE FOR WHICH EXPENSE HAS BEEN INCURRED:
Closing costs and initial deposit for equipment
acquisition contracts.
Each obligation, item of cost, or expense mentioned herein has been properly incurred, is a proper
charge against the Lease/Purchase Agreement, and has not been the basis for a previous Advance.
DATED: December 5, 2017 By:
Title: - {1.at ca
ADVANCE
RE: CITY OF SAN LUIS OBISPO
ZB, N.A.
One South Main Street, 17th Floor
Salt Lake City, UT 84133
You are hereby authorized to disburse with regard to the above -referenced transaction the
following:
ADVANCE NUMBER: 1
WIRE INSTRUCTIONS OF PAYEE: SEE ATTACHED CLOSING MEMORANDUM
AMOUNT: SEE ATTACHED CLOSING MEMORANDUM
PURPOSE FOR WHICH EXPENSE HAS BEEN INCURRED:
CIosing costs and initial deposit for equipment
acquisition contracts.
Each obligation, item of cost, or expense mentioned herein has been properly incurred, is a proper
charge against the Lease/Purchase Agreement, and has not been the basis for a previous Advance.
DATED: December 5, 2017 By:
Title: hNao-14A A C.4,oK--
ADVANCE
RE: CITY OF SAN LUIS OBISPO
ZB, N.A.
One South Main Street, 17' Floor
Salt Lake City, UT 84133
You are hereby authorized to disburse with regard to the above -referenced transaction the
following:
ADVANCE NUMBER: 1
WIRE INSTRUCTIONS OF PAYEE: SEE ATTACHED CLOSING MEMORANDUM
AMOUNT: SEE ATTACHED CLOSING MEMORANDUM
PURPOSE FOR WHICH EXPENSE HAS BEEN INCURRED:
Closing costs and initial deposit for equipment
acquisition contracts.
Each obligation, item of cost, or expense mentioned herein has been pi-olierly incurred, is a proper
charge against the Lease/Purchase Agreement, and has not been the has's for a previous Advance.
DATED: December 5, 2017 By:�`�
Title: ' /1T aoNle 2
EXHIBIT H
FORM 8038
(Attached)
Tax Certificate
CITY OF SAN LUIS OBISPO
Not to exceed $600,000
FIXED-RATE EQUIPMENT LEASE/PURCHASE AGREEMENT
This Tax Certificate is executed and delivered by the City of San Luis Obispo (the
"Issuer") in connection with its execution of that certain Fixed -Rate Equipment Lease/Purchase
Agreement, made and entered into as of December 1, 2017 (the "Agreement"), by and between the
Issuer and ZB, N.A. (the "Lessor"). The Agreement contemplates the financing of certain
equipment and/or personal property in an amount not to exceed $600,000 and the repayment of
such amounts through an obligation of the Issuer to make quarterly payments denominated as
principal and interest payments (the "Obligation"). Pursuant to Sections 2.1(1) of the Agreement,
and in part pursuant to Treasury Regulations Section 1.148-2(b)(2), the Issuer certifies, covenants,
warrants and represents as follows:
ARTICLE I
IN GENERAL
1.1 The Issuer. The Issuer is a municipal corporation duly organized and existing
under and by virtue its charter and the Constitution of the State of California. The Issuer has the
general authority to exercise the powers of taxation and of eminent domain in furtherance of its
governmental purposes.
1.2 Delivery of the Obligation. The Obligation is being delivered to the Lessor on the
date hereof in exchange for payments to the Issuer or to the Issuer's vendors in the aggregate
amount of $600,000.
1.3 Purpose of Tax Certificate. The Issuer is delivering this Tax Certificate to Orrick,
Herrington & Sutcliffe LLP as special counsel ("Special Counsel"), with the understanding that
Special Counsel will rely in part upon this Tax Certificate in rendering their opinion that the
interest component of the Obligation payments is excluded from gross income for federal income
tax purposes under Section 103 of the Internal Revenue Code of 1986.
1.4 Purpose of Financing. All of the proceeds of the Obligation will be used on the
date hereof to finance the acquisition of certain equipment for Issuer as further described in the
Agreement (the "Projects").
1.5 Single Issue. The Obligation is being acquired by the Lessor on the Closing Date.
All of the interests in the Obligation are being issued pursuant to the same plan of financing, and
all of the debt service on the Obligation is expected to be paid out of substantially the same source
of funds. No other governmental obligations which are expected to be paid out of substantially the
same source of funds as the Obligation have been or will be sold within the 31 -day period
beginning 15 days before the Closing Date pursuant to the same plan of financing as the
Obligation.
OHSUSA:767717126
Advances on the Obligation will be made over time as needed to pay costs of the
Project. On the Closing Date, an initial advance of $330,000 is being made pursuant to the
Obligation. Pursuant to Treasury Regulation § 1. 150-1 (c)(4)(i), Special Counsel has advised that
the Obligation will be treated as a single issue, with an issue date of the Closing Date.
1.6 Definitions. Capitalized terms used and not otherwise defined herein shall have
the respective meanings set forth in the Agreement. Unless the context otherwise requires, the
following capitalized terms have the following meanings:
"Bona Fide Debt Service Funds" means those funds and accounts (or portions of
those funds and accounts) identified in Section 3.4 of this Tax Certificate.
"Bond Year" means, for purposes of certain federal income tax computations, the
period beginning on the Closing Date and ending on December 5, 2018 (or such shorter
period selected by the Issuer in accordance with Treasury Regulations Section 1.148-1(b)),
and each successive one year period thereafter. The last Bond Year will end on the last
day on which any Obligation payment is outstanding for Federal tax purposes.
"Closing Date" means the date of this Tax Certificate.
"Code" means the Internal Revenue Code of 1986 (including amendments thereto).
"Governmental Unit" means any State, or political subdivision of a State, but
excludes the United States and its agencies or instrumentalities.
"Gross Proceeds" has the meaning used in Section 1.148-1(b) of the Treasury
Regulations, and generally means all proceeds derived from or relating to the Obligation,
including Sale Proceeds, Investment Proceeds, and other amounts expected to be used to
pay debt service on the Obligation.
"Investment Proceeds" means earnings received from investing and reinvesting
Sale Proceeds and from investing and reinvesting such earnings.
"Investment Property" means any security or obligation, any annuity contract, or
any other investment -type property, but does not include any Tax -Exempt Obligation
unless such obligation is a "specified private activity bond" within the meaning of Section
57(a)(5)(C) of the Code.
"Net Sale Proceeds" means the Sale Proceeds, minus any such amount invested as
part of a "minor portion" as described in Code Section 148(e).
"Nongovernmental Person" means any person or entity other than a Governmental
Unit or an individual that is not acting in the capacity of a trade or business.
"Nonpurpose Investment" means any Investment Property in which Gross Proceeds
are invested.
2
OHSUSA:767717126
"Opinion of Counsel" means a written opinion of nationally recognized bond
counsel, to the effect that the exclusion from gross income for federal income tax purposes
of the interest component of the Obligation payments will not be adversely affected.
"Private Use" means the use of proceeds of the Obligation or of the Projects in the
manner described in Section 2.3 hereof.
"Proceeds" means Sale Proceeds and Investment Proceeds.
"Rebate Requirement" means the amount of rebatable arbitrage computed pursuant
to Section 1.148-3 of the Treasury Regulations as described in Section 5.3 hereof.
"Sale Proceeds" means the amount of $600,000.00.
"Short -Term Arrangement" means as lease, rental or other use of the facilities
comprising the Projects that is for a term not exceeding 50 days (or 100 days if the rates
charged for such use are standardized and equally applied).
"Tax -Exempt Obligation" means any obligation the interest on which is excluded
from gross income for federal income tax purposes pursuant to Section 103 of the Code or
Section 103 of the Internal Revenue Code of 1954, as amended (the "1954 Code"), and
Title XIII of the Tax Reform Act of 1986, as amended, as well as stock in a regulated
investment company to the extent at least 95 percent of income to the stockholder is treated
as interest that is excludable from gross income under Section 103 of the Code.
"Yield" means that discount rate which is 1.9368% as described in Section 4.1 of
this Tax Certificate.
1.7 Reliance. With respect to certain matters contained in this Tax Certificate, the
Issuer specifically relies upon certifications of the Lessor outlined in the Lessor Certificate
attached hereto as ExhiOlt A. The Issuer is not aware of any facts or circumstances that would
cause it to question the accuracy or reasonableness of any representation made in this Tax
Certificate or in the Exhibits hereto.
1.8 Bank Qualified. The Issuer hereby designates the Obligation as a "qualified tax-
exempt obligation" pursuant to Section 265(b) of the Code. The Issuer represents that it and all
entities subordinate to it are not, and do not reasonably expect to become beneficiaries of any Tax -
Exempt Obligations issued in 2017 other than the Obligation. The Issuer has not designated and
will not designate, and has not permitted and will not permit any subordinate entity or issuer
issuing on behalf of the Issuer to designate, during calendar year 2017, any other Tax -Exempt
Obligations as "qualified tax-exempt obligations" pursuant to Section 265(b) of the Code such that
the aggregate amount of such other obligations, together with the amount of the Obligation, in
total will exceed $10,000,000. The Issuer has not issued and does not reasonably expect to issue,
either directly or through any subordinate entity or on -behalf -of issuer, other Tax -Exempt
Obligations during calendar year 2017 in an aggregate amount that, together with the amount of
the Obligation, would exceed $10,000,000.
3
OI[SUSA:767717126
ARTICLE II
GENERAL TAX LIMITATIONS
2.1 Application of Sale Proceeds. The Sale Proceeds will be used on or after the date
hereof to pay the Issuer's vendors for the Projects. Sale Proceeds from each advance of the
Obligation are expected to be spent immediately, but to the extent such Sale Proceeds are invested
by the Issuer, Investment Proceeds earned will be used to finance additional costs of the Project.
2.2 Expenditure of Gross Proceeds. For purposes of this Tax Certificate, Gross
Proceeds will be treated as spent when they are used to pay costs of the Issuer that are (i) capital
expenditures or (ii) other miscellaneous expenditures described in Treasury Regulations Section
1.148-6(d)(3)(ii). Absent an Opinion of Counsel, all expenditures of Gross Proceeds will be made
in respect of payments made by the Issuer on or after the Closing Date. In connection with all
expenditures of Gross Proceeds, any allocation of Proceeds to expenditures will be done no later
than 18 months after the later of the date of the expenditure or the date on which the Project
incorporating such expenditure is placed in service.
2.3 Governmental Obligation Status. Absent an Opinion of Counsel, the Issuer will
not (a) loan any Obligation proceeds to one or more Nongovernmental Persons or (b) allow more
than 10% of Sale Proceeds and Investment Proceeds of the Obligation to be used directly or
indirectly by any Nongovernmental Person in any trade or business (a "Private Use") in a manner
that would cause the Obligation to be treated as private activity obligations. Private Use includes
any ownership or lease (other than a Short -Term Arrangement) of facilities by a Nongovernmental
Person, and any use of facilities by a Nongovernmental Person under a service or management
contract (a "Management Contract") that does not comply with Revenue Procedure 2017-13 (the
"Guidelines").
The Issuer has not entered into, does not expect to and will not enter into any Management
Contract with a Nongovernmental Person (a "Service Provider") that provides for such Service
Provider to manage, operate or provide services with respect to any part of the Project unless such
Management Contract either (a) satisfies the safe harbor set forth in Rev. Proc. 2017-13, which is
described in Exhibit B attached hereto, or (b) is reviewed by Bond Counsel. The Issuer and the
Authority understand that the requirements of Rev. Proc. 2017-13, are, as of the Closing Date,
subject to substantial interpretive uncertainty, and will consult with Bond Counsel before entering
into a contract that may constitute a Management Contract. Contracts for incidental services, such
as janitorial, maintenance of building mechanical, safety and electrical systems, as set forth in
Treasury Regulations Section 1.141-3(b)(4)(iii)(A), are not treated as Management Contracts for
this purpose, nor are contracts relating to work on capital improvements to the Project
2.4 Change in Use. The Issuer reasonably expects to use all Obligation proceeds and
all Projects as set forth in Section 2.3 of this Tax Certificate for the entire stated term to maturity
of the Obligation. Absent an Opinion of COLIMei, the Issuer in fact will use all Obligation
proceeds and each facility financed from Obligation proceeds as set forth in Section 2.3 of this
Tax Certificate.
4
OHSUSA:767717126
2.5 Registered Form. The Obligation is not being issued in registered form because
the Obligation is not of a type to be offered to the public.
2.6 No Federal Guarantee. The Issuer will not directly or indirectly use or permit the
use of any Obligation proceeds or any other funds of the Issuer or any related party or take or omit
to take any action that would cause the Obligation to be an obligation that is "federally
guaranteed" within the meaning of Section 149(b) of the Code. In furtherance of this covenant,
the Issuer will not allow the payment of principal or interest with respect to the Obligation to be
guaranteed (directly or indirectly) in whole or in part by the United States or any agency or
instrumentality thereof.
2.7 Information Reporting. The Issuer will cause a properly completed and executed
IRS Form 8038-G to be filed with respect to the Obligation no later than February 15, 2018.
2.8 No Refunding. Obligation proceeds will not be used directly or indirectly to make
principal, interest or premium payments with respect to any governmental obligation.
2.9 No Pooling. The Issuer will not use any Obligation proceeds directly or indirectly
to make or finance loans to two or more ultimate borrowers.
2.10 No Hedge Obligations. The Issuer reasonably expects that more than 85% of Net
Sale Proceeds will be expended for governmental purposes of the Obligation before December 5,
2020. Not more than 50% of Obligation proceeds will be invested in Nonpurpose Investments
having a substantially guaranteed yield for four years or more.
2.11 Retention of Records. The Issuer covenants to maintain all records relating to the
requirements of the Code and the representations, certifications and covenants set forth in this Tax
Certificate until the date three years after the last Obligation payment. If any of the Obligation is
refunded by Tax -Exempt Obligations (the "Refunding Obligations"), the Issuer covenants to
maintain all records required to be retained by this Section 2.11 until the later of the date three
years after the last Obligation payment or the date three years after the last Refunding Obligations
have been retired. The records that must be retained include, but are not limited to:
(i) Basic records and documents relating to the Obligation (including the Agreement, this
Tax Certificate, the Form 8038-G, and the opinion of Special Tax Counsel);
(ii) Documentation evidencing the expenditure of Obligation proceeds;
(iii) Documentation evidencing the use of the Project by public and private sources (i.e.,
copies of management contracts, leases, output contracts, etc.)
(iii) Documentation evidencing all sources of payment or security for the Obligation; and
(iv) Documentation pertaining to any investment of Obligation proceeds (including the
purchase and sale of securities, SLGs subscriptions, yield calculations for each class of
investments, actual investment income received from the investment of proceeds,
guaranteed investment contracts, and rebate calculations).
0HSUSA:767717 l26
ARTICLE III
ARBITRAGE -GENERAL
3.1 Reasonable Expectations. This Article III states the Issuer's reasonable
expectations with respect to the amounts and uses of Obligation proceeds and certain other
moneys.
3.2 Issue Price. The Issuer is delivering the Obligation to the Lessor on the date hereof
in exchange for payment, directly or indirectly, of $600,000.00, which represents the total amount
of Sale Proceeds. Based upon the certificate of the Lessor (attached hereto as Exhibit A), the issue
price of the Obligation is $600,000.00, the price at which the Lessor has acquired the Obligation.
3.3 Funds and Accounts. No funds or accounts are established in or maintained for
the Agreement or the Obligation. The Issuer does not expect that either it or any other person
benefiting from the issuance of the Obligation will use any moneys in any fund or account other
than the Issuer's general operating fund to pay principal of or interest on the Obligation; nor is any
other fund or account, however established, so pledged as security for the Obligation that there is a
reasonable assurance that amounts held in such other fund or account will be available if needed to
pay debt service on the Obligation.
3.4 Bona Fide Debt Service Funds. The Obligation is a limited obligation of the
Issuer payable from general revenues. The Issuer's general operating fund will be used primarily
to achieve a proper matching of revenues and debt service within each Bond Year. The portion of
such fund used for this purpose will be depleted at least once a year except for a carryover amount
not to exceed 1/12th of the prior Bond Year's debt service in respect of the Obligation. Amounts
contributed to the Issuer's general operating fund for this purpose will be spent within thirteen
months after the date of such contribution, and any amounts received from the investment or
reinvestment of monies held in such fund will be expended within one year after the date of
accumulation thereof in such fund. Amounts in the Issuer's general operating fund shall be
invested without regard to yield.
3.5 Rebate Fund. As described in Section 5.3, the Obligation qualifies for the small
governmental issuer exception to the arbitrage rebate requirements, set forth in Section
148(f)(4)(D) of the Code.
3.6 Three -Year Temporary Period. Sale Proceeds will be used to pay costs of the
Projects. The Issuer reasonably expects that not less than 85% of the Net Sale Proceeds will be
spent to pay costs of the Projects or costs of issuing the Obligation before December 5, 2020. The
Issuer heretofore has incurred a binding obligation to one or more unrelated parties involving an
expenditure of not less than 5% of Net Sale Proceeds. Allocations of Net Sale Proceeds and
Investment Proceeds to costs of the Projects will proceed with due diligence. Sale Proceeds and
Investment Proceeds will be invested without regard to yield until December 5, 2020.
3.7 No Other Replacement Proceeds. Neither the Issuer nor any related person will
use any Gross Proceeds of the Obligation directly or indirectly to replace funds of the Issuer or
any related person, which funds are or will be used directly or indirectly to acquire Investment
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Property reasonably expected to produce a yield that is materially higher than the yield on the
Obligation. The weighted average maturity of the Obligation (3.052 years) does not exceed 120%
of the expected weighted average economic useful life of the Projects.
3.8 No Overissuance. Proceeds from the sale of the Obligation, taking into account
anticipated investment income thereon until expended, do not exceed the amount necessary to
finance the Projects.
3.9 No Abusive Arbitrage Device. The Obligation is not and will not be part of a
transaction or series of transactions that (a) enables the Issuer or any related person to exploit the
difference between tax-exempt and taxable- interest rates to gain a material financial advantage,
and (b) overburdens the market for tax-exempt obligations in any manner, including, without
limitation, by selling obligations that would not otherwise be sold, or selling more obligations, or
issuing obligations sooner, or allowing obligations to remain outstanding longer, than otherwise
would be necessary.
3.10 No Expected Sale. It is not expected that the facilities or any part thereof
refinanced in whole or in part by the Obligation will be sold or otherwise disposed of before
December 1, 2022, the last scheduled maturity date of the Obligation.
ARTICLE IV
ARBITRAGE - YIELD AND YIELD RESTRICTION
4.1 Yield. For purposes of this Tax Certificate, yield is calculated as set forth in
Section 148(b) of the Code and Treasury Regulations Sections 1.148-4 and 1.148-5. Thus, yield
on the Obligation or yield on Investment Property generally means that discount rate which, when
used in computing the present value of all unconditionally payable payments representing
principal adjusted, as required, for any substantial discounts or premiums, interest and costs of
qualified guarantees produces an amount equal to the issue price of the Obligation or the purchase
price of the Investment Property, as appropriate. The aggregate issue price of the Obligation is
$600,000.00, which represents the price at which the Obligation is being acquired by the Lessor.
See Exhibit A hereto. The yield on the Obligation has been calculated by the Lessor to be at least
1.9368%.
4.2 No Qualified Hedges. No contract has been, and (absent an Opinion of Counsel)
no contract will be entered into such that failure to take the contract into account would distort the
yield on the Obligation or otherwise would fail clearly to reflect the economic substance of the
transaction.
4.3 No Qualified Guarantee. The Obligation is not insured or otherwise covered by
any contract that would be treated as a qualified guarantee with respect to the Obligation.
4.4 Yield Restriction. Absent an Opinion of Counsel, if the sum of (A) all unspent
Sale Proceeds of the Obligation after December 5, 2020, and (ii) all Investment Proceeds
remaining after a one-year period beginning on the date of receipt of such amounts, plus (B) any
amounts held in Bona Fide Debt Service Funds and remaining unexpended after 13 months from
the date of accumulation in such funds, at any time in the aggregate exceeds the lesser of $100,000
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or 5% of the Sale Proceeds, the excess will be invested either (i) in Investment Property with a
yield not exceeding the yield on the Obligation, (ii) in assets that are not treated as Investment
Property (e.g:, Tax -Exempt Obligations), or (iii) in assets that satisfy the requirements for
qualified yield reduction payments set forth in Treasury Regulations Section 1.148-5(c), subject to
the limitation set forth in Section 1.148-10(b)(1)(ii).
ARTICLE V
REBATE
5.1 Undertakings. Pursuant to the Indenture, the Issuer has covenanted to comply
with certain requirements of the Code. The Issuer acknowledges that the United States
Department of the Treasury has issued regulations with respect to certain of these undertakings,
including the proper method for computing whether any rebate amount is due the federal
government under Section 148(f) of the Code. (Treas. Reg. Sections 1.148-1 through 1.148-11,
1.150-1 and 1.150-2.) The Issuer further acknowledges that the United States Department of the
Treasury may yet issue additional regulations with respect to certain other of these undertakings.
The Issuer covenants that it will undertake to determine what is required with respect to the rebate
provisions contained in 'Section 148(f) of the Code and said regulations from time to time and will
comply with any requirements that may apply to the Obligation. As described in Section 5.3,
below, the Issuer is expected to qualify for an exception from rebate with respect to the
Obligation.
5.2 Recordkeeping. The Issuer shall maintain or cause to be maintained detailed
records with respect to each Nonpurpose Investment attributable to Gross Proceeds, including:
(a) purchase date; (b) purchase price; (c) information establishing fair market value on the date
such investment became a Nonpurpose Investment; (d) any accrued interest paid; (e) face amount;
(f) coupon rate; (g) periodicity of interest payments; (h) disposition price; (i) any accrued interest
received; and 0) disposition date. Such detailed recordkeeping is required to facilitate the
calculation of the Rebate Requirement.
5.3 Rebate Exception. The Issuer is a governmental unit with general taxing powers
and represents that:
(1) None of the proceeds of the Obligation will be used in any manner that
would cause the Obligation to be "private activity bonds" within the meaning of Section 141 of
the Code;
(2) At least ninety-five percent (95%) of the Proceeds of the Obligation will be
used for local governmental activities of the Issuer; and
(3) The aggregate face amount of all Tax -Exempt Obligations (other than
"private activity bonds," as defined in Section 141 of the Code), including the Obligation, issued
by the Issuer (and any subordinate entities thereof) during calendar year 2017 is not expected to
exceed $5,000,000.
For this purpose, the term "aggregate face amount" means aggregate stated principal
amount of the Obligation, unless there is more than a de minimis amount of original issue discount
8
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or premium (as defined in Section 1.148-1(b) of the Treasury Regulations), in which case
"aggregate face amount" means the "aggregate issue price" of the Obligation (determined without
regard to pre -issuance accrued interest). The term "de minimis amount" means an amount of
discount or premium that does not exceed two percent (2%) of the stated redemption price at
maturity, plus any original issue premium attributable exclusively to reasonable purchaser's
compensation for the Obligation.
Based on the foregoing, the Issuer has been advised by Special Counsel that the Obligation
qualifies for the small governmental issuer exception to the arbitrage rebate requirement, set forth
in Section 148(f)(4)(D) of the Code. Special Counsel has noted that the Obligation or Gross
Proceeds of the Obligation may be subject to yield restriction as described in Section 4.4.
5.4 Investments and Dispositions.
(a) General Rule. No Investment Property may be acquired with Gross
Proceeds for an amount (including transaction costs, except as otherwise provided in Section
1.148-5(e) of the Treasury Regulations) in excess of the fair market value of such Investment
Property. No Investment Property may be sold or otherwise disposed of for an amount (including
transaction costs, except as otherwise provided in Section 1.148-5(e) of the Treasury Regulations)
less than the fair market value of the Investment Property.
(b) Fair Market Value. In general, the fair market value of any
Investment Property is the price a willing buyer would pay to a willing seller to acquire the
Investment Property, with no amount paid artificially to reduce or increase the yield on such
Investment Property. This Section 5.5 describes various safe harbors for determining fair market
value. With an Opinion of Counsel, other methods may be used to establish fair market value,
provided, however, that such methods comply with the requirements of Section 1.148-5(d)(6) of
the Treasury Regulations.
(c) Arm's-length Purchases and Sales. If Investment Property is
acquired pursuant to an arm's length transaction without regard to any amount paid to reduce the
yield on the Investment Property, the fair market value of the Investment Property shall be the
amount paid for the Investment Property (without increase for transaction costs, except as
otherwise provided in Section 1.148-5(e) of the Treasury Regulations). If Investment Property is
sold or otherwise disposed of in an arm's length transaction without regard to any reduction in the
disposition price to reduce the Rebate Requirement, the fair market value of the Investment
Property shall be the amount realized from the sale or other disposition of the Investment Property
(without reduction for transaction costs, except as otherwise provided in Section 1.148-5(e) of the
Treasury Regulations).
(d) SLGS. If a United States Treasury obligation is acquired directly
from or disposed of directly to the United States Department of the Treasury (as in the case of the
United States Treasury Securities - State and Local Government Series), such acquisition or
disposition shall be treated as establishing a market for the obligation and as establishing the fair
market value of the obligation.
9
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(e) Investment Contracts. The purchase price of any Investment
Property acquired pursuant to an investment contract (a) (within the meaning of Section 1,148-
1(b) of the Treasury Regulations) shall be determined as provided in Section 1.148-5 of the
Treasury Regulations. No investment contract shall be acquired with Gross Proceeds unless the
requirements of Section 1.148-5 of the Treasury Regulations and this Section 5.5(e) are satisfied.
With respect to any investment contract, the Issuer will obtain from the provider of the investment
contract, broker thereof or other party, such information, certification or representation as will
enable the Issuer to determine that these requirements are satisfied.
The purchase price of an investment contract will be considered to be fair market
value if:
(1) the Issuer has made (or has had made on its behalf) a bona fide solicitation for the
investment contract; the solicitation must have specified the material terms of the investment
contract (i.e., all the terms that could directly or indirectly affect the yield or the cost of the
investment including the collateral security requirements for the investment contract) and, unless
the moneys invested pursuant to such investment contract will be held in the Bona Fide Debt
Service Funds, the Issuer's reasonably expected draw -down schedule for the moneys to be
invested; the solicitation has a legitimate business purpose (i.e., a purpose other than to increase
the purchase price or reduce the yield) for every term of the bid specification;
(2) all bidders have an equal opportunity to bid so that, for example, no bidder is given
the opportunity to review other bids (a last look) before bidding;
(3) the Issuer solicits bids from at least three (3) investment contract providers with
established industry reputations as competitive providers of investment contracts;
(4) the Issuer includes in the bid specifications a statement to potential bidders that by
submitting a bid, the provider is making certain representations that the bid is bona fide, and
specifically that (i) the bidder did not consult with any other potential provider about its bid, (ii)
the bid was determined without regard to any other formal or informal agreement that the potential
provider had with the Issuer or any other person, and (iii) the bid was not submitted solely as a
courtesy to the Issuer or any other person for purposes of satisfying the requirements of Section
1.148-5 of the Treasury Regulations;
(5) at least three bids meeting the qualification requirements of the bid solicitation (as
set forth in (1) above) have been received from different providers of investment contracts that
have no material financial interest in the Obligations (the following investment contract providers
are considered to have a material financial interest in the issue: (i) a lead underwriter in a
negotiated underwriting, but only until 15 days after the issue date of the issue, (ii) an entity acting
as a financial advisor with respect to the purchase of the investment contract at the time the bid
specifications were forwarded to potential providers; and (iii) any related party to a provider that is
disqualified for one of the two preceding reasons);
(6) at least one of the bids received by the Issuer that meets the requirements of the
preceding paragraph is from an investment contract provider with an established industry
reputation as a competitive provider of investment contracts;
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(7) the investment contract has a yield (net of any broker's fees) at least equal to the
highest yielding of the qualifying bids received from the bidders that have no material financial
interest in the Obligation; if the investment contract is not the highest -yielding of the qualifying
bids, the Issuer must have significant non -tax reasons, such as creditworthiness of the bidder, for
failure to purchase the highest -yielding investment contract offered;
(8) if an agent for the Issuer conducts the bidding process, the agent does not bid;
(9) the provider of the investment contract certifies as to all administrative costs to be
paid on behalf of the Issuer, including any fees paid as broker commissions in connection with the
investment contract.
M Deemed Acquisition or Sale. The fair market value of any
Investment Property not directly purchased with Gross Proceeds for which there is an established
securities market generally is the price at which a willing buyer would purchase Investment
Property from a willing seller in a bona fide, arm's length transaction.
(g) Certificates of Deposit. The purchase price of a certificate of
deposit issued by a commercial bank that has a fixed interest rate, a fixed principal payment
schedule, a fixed maturity and a substantial penalty for early withdrawal, will be considered to be
fair market value if:
(1) the yield on the certificate of deposit is not less than the yield on reasonably
comparable direct obligations of the United States; and
(2) the yield on the certificate of deposit is not less than the highest published yield of
the provider thereof which is currently available on comparable certificates of deposit offered to
the public.
(h) Broker Compensation. For purposes of computing the Yield on
any investment contract acquired through a broker, reasonable compensation received by such
broker, whether payable by or on behalf of the obligor or obligee of such investment contract, may
be taken into account in determining the cost of the investment contract (as provided in Section
1.148 5(e)(2)(iii) of the Treasury Regulations).. For calendar year 2017, compensation is deemed
reasonable if does not exceed the lesser of (i) $39,000 or (ii) 0.2% of the amount reasonably
expected, as of the date of acquisition of the investment contract, to be invested Ander the
investment contract over its term, or $4,000 (if 0.2% of such amount reasonably expected to be
invested under the investment contract over its term is less than $4,000), and the total fees
received by the broker with respect to the investment of any proceeds of the Obligations that are
taken into account with respect to all investment contracts, at any time, may not exceed $111,000.
All amounts referenced are to be adjusted for inflation after the Closing Date.
5.5 Segregation of Proceeds. In order to perform the calculations required by the
Code, it is necessary to track separately all of the Gross Proceeds. To that end, the Issuer shall
cause to be established separate accounts or subaccounts, or shall cause the Trustee to take such
other accounting measures as are necessary in order to account fully for all Gross Proceeds.
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5.6 Filing Requirements. The Issuer will file or cause to be filed such reports or other
documents with the Internal Revenue Service as are required by the Code.
ARTICLE VI
OTHER MATTERS
6.1 Expectations. The undersigned is an authorized representative of the Issuer acting
for and on behalf of the Issuer in executing this Tax Certificate. To the best of the knowledge and
belief of the undersigned, there are no other facts, estimates or circumstances that would
materially change the expectations as set forth herein, and said expectations are reasonable.
6.2 Amendments. Notwithstanding any other provision of this Tax Certificate, the
Issuer may amend this Tax Certificate and thereby alter any actions allowed or required by this
Tax Certificate if such amendment is signed by an authorized officer and is supported by an
Opinion of Counsel.
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6.3 Survival of Defeasance. Notwithstanding any provision in this Tax Certificate or
the Indenture to the contrary, the obligation to remit the Rebate Requirement, if any, to the United
States Department of the Treasury and to comply with all other requirements contained in this Tax
Certificate shall survive defeasance of the Obligation.
Dated: December 5, 2017.
CITY OF SAN LUIS OBISPO
Fay
orired Officer
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6.3 Survival of Defeasance. Notwithstanding any provision in this Tax Certificate or
the Indenture to the contrary, the obligation to remit the Rebate Requirement, if any, to the United
States Department of the Treasury and to comply with all other requirements contained in this Tax
Certificate shall survive defeasance of the Obligation.
Dated: December 5, 2017.
CITY OF SAN LUIS OBISPO
13
uthoria..e Officer
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6.3 Survival of Defeasance. Notwithstanding any provision in this Tax Certificate or
the Indenture to the contrary, the obligation to remit the Rebate Requirement, if any, to the United
States Department of the Treasury and to comply with all other requirements contained in this Tax
Certificate shall survive defeasance of the Obligation.
Dated: December 5, 2017.
CITY OF SAN LUIS OBISPO
By-- -- -
' r�u[horizcc Officer
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6.3 Survival of Defeasance. Notwithstanding any provision in this Tax Certificate or
the Indenture to the contrary, the obligation to remit the Rebate Requirement, if any, to the United
States Department of the Treasury and to comply with all other requirements contained in this Tax
Certificate shat I survive defeasance of the Obligation.
Dated: December 5, 2017.
CITY OF SAN LUIS OBISPO
Authorized Officer
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EXHIBIT A
CERTIFIC'AT%: OF LESSON
ZB, N.A. (the "Lessor") has acquired the municipal obligation (the "Obligation")
of The City of San Luis Obispo (the "Issuer") that is represented by the Municipal Lease
Purchase Agreement, made and entered into on December 1, 2017 (the "Lease Agreement"), by
and between the Issuer and the Lessor in the aggregate principal amount of $600,000. The
Lessor hereby certifies and represents the following:
A. Issue Price.
1. On the date hereof, the Lessor has purchased all of the Obligation at a
price of $600,000.00. The Lessor is not acting as an underwriter with respect to the Obligation.
The Lessor has no present intention to sell, reoffer, or otherwise dispose of the Obligation (or
any portion of the Obligation or any interest in the Obligation). The terms of the sale and the
purchase for the Obligation Bonds were negotiated at arm's-length between the Lessor and the
Issuer based solely on the terms and conditions set forth in the Lease Agreement and without
regard to any relationship or other arrangement between the Lessor and the Issuer.
2. The yield on the Obligation is 1.9368%. The weighted average maturity
of the Obligation is 3.052 years.
Dated: December 5, 2017.
ZB, N.A.
Authorized Signatory
A-1
OHSUSA:767717126
EXHIBIT B
MANAGEMENT CONTRACT SAFE HARBOR UNDER REV. PROC. 2017-13
(a) Fees -General Requirements. The compensation of the Service Provider under
the contract must be reasonable for the services rendered.
(1) No Share of Net Profits. The contract must not provide to the Service
Provider a share of net profits from the operation of the Projects. Compensation to the Service
Provider will not be treated as providing a share of net profits if no element of the compensation
takes into account, or is contingent upon, either the Project's net profits or both the Project's
revenues and expenses (other than any reimbursements of direct and actual expenses paid by the
Service Provider to unrelated third parties) for any fiscal period. For this purpose, the elements
of the compensation are the eligibility for, the amount of, and the timing of the payment of the
compensation. Incentive compensation will not be treated as providing a share of net profits if
the eligibility for the incentive compensation is determined by the Service Provider's
performance in meeting one or more standards that measure quality of services, performance, or
productivity, and the amount and the timing of the payment of the compensation meet the
requirements of this paragraph (a).
(2) No Share of Net Operating Losses. The contract must not, in substance,
impose upon the Service Provider the burden of bearing any share of net losses from the
operation of the Projects. An arrangement will not be treated as requiring the Service Provider to
bear a share of net losses if. (A) the determination of the amount of the Service Provider's
compensation and the amount of any expenses to be paid by the Service Provider (and not
reimbursed), separately and collectively, do not take into account either the Project's net losses
or both the Project's revenues and expenses for any fiscal period, and (B) the timing of the
payment of compensation is not contingent upon the Project's net losses. For example, a Service
Provider whose compensation is reduced by a stated dollar amount (or one of multiple stated
dollar amounts) for failure to keep the Project's expenses below a specified target (or one of
multiple specified targets) will not be treated as bearing a share of net losses as a result of this
reduction.
(3) Certain Types of Compensation. Without regard to whether the Service
Provider pays expenses with respect to the operation of the Projects without reimbursement by a
Issuer, compensation for services will not be treated as providing a share of net profits or
requiring the Service Provider to bear a share of net losses under paragraphs (a)(1) and (a)(2),
respectively, if the compensation for services is: (a) based solely on a capitation fee, a periodic
fixed fee, or a per-unit fee; (b) incentive compensation described in the last sentence of
paragraph (a)(2); or (c) a combination of these types of compensation. For purposes of this
paragraph (a)(3), a "capitation" fee means a fixed periodic amount for each person for whom the
Service Provider or Issuer assumes the responsibility to provide all needed services for a
specified period so long as the quantity and type of services actually provided to such persons
DOCSSF 1:241349.1 A-1
DOCSSF 1:575945.1
40111-99 RIH
DOCSSF1:575945.2
40111-99 RIH
DOCS SF i : 575945.3
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40111-99 RIH
varies substantially, a "periodic fixed fee" means a stated dollar amount for services rendered for
a specified period of time and a "per-unit fee" means a fee based on a unit of service provided
specified in the contract or otherwise specifically determined by an independent third party or the
Issuer.
(4) Deferral of Compensation. Deferral due to insufficient net cash flows
from the operation of the Projects of the payment of compensation that otherwise meets the
requirements of paragraphs (a)(1) and (a)(2) will not cause the deferred compensation to be
treated as contingent upon net profits or net losses under paragraphs (a)(1) and (a)(2) if the
contract includes requirements that (A) the compensation is payable at least annually; (B) the
Issuer is subject to reasonable consequences for late payment, such as reasonable interest charges
or late payment fees; and (C) the Issuer will pay such deferred compensation (with interest or
late payment fees) no later than the end of five years after the original due date of the payment.
(b) Term Limitations. The term of the contract, including renewal options, is not
longer than the lesser of 30 years or 80 percent of the weighted average reasonably expected
economic life of the financed property.
(c) Required Approvals of Issuer. The Management Contract requires the Issuer to
approve:
(1) The annual budget of the Projects;
(2) Capital expenditures with respect to the Projects (for this purpose, the
Issuer may show approval of capital expenditures for the Projects by approving an annual budget
for capital expenditures described by functional purpose and specific maximum amounts);
(3) Each disposition of property that is part of the Projects;
(4) Rates charged for use of the Projects (for this purpose, the Issuer may
show approval of rates charged for use of the managed property be expressly approving such
rates or a general description of the methodology for setting such rates), or by requiring that the
Service Provider charge rates that are reasonable and customary as specifically determined by, or
negotiated with, an independent third party (such as a medical insurance company); and
(5) The general nature and type of use of the Projects (for example, the type
of services).
(d) No Share of Project Casualty Loss. The Issuer bears the risk of loss upon
damage or destruction of the Projects (for example, due to force majeure). The Issuer does not
fail to meet this risk of loss requirement as a result of insuring against risk of loss through a third
party or imposing upon the Service Provider a penalty for failure to operate the Projects in
accordance with the standards set forth in the Management Contract.
(e) No Inconsistent Positions. The Service Provider must agree that it is not entitled
to and will not take any tax position that is inconsistent with being a Service Provider to the
Issuer with respect to the Projects.
C-2
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C-1
OHSUSA:767717126
Form 8038-G Information Return for Tax -Exempt Govemmental Obllgations
(Rev. September 2011) ► Under Internal Revenue Code section 149(e)
0 -See separate instructions.
Department of the Treasury
OMB No. 1545-0720
Caution: If the issue rice is under $100,000, use Form 8038 -GC.
Internal Revenue Service P
ieporting Authority _
If Amended Retum, check here ► ❑
1 Issuer's name
2 Issuer's employer Identification number (EIN)
City of San Luis Obispo
95-6000781
38 Name of person (other than issuer) with whom the IRS may communicate about this return (see instructions)
3b Telephone number or other person shown on 3a
4 Number and street (or P.O. box if mall Is not delivered to street address) Room/suite
5 Report number (For IRS Use Only)
990 Palm Street
t 3 f
0 City, town, or post office, state, and ZIP code
7 Date of issue 1 I L
San Luis Obispo, CA 93401
12/05/2017
6 Name of Issue
9 CUSIP number
Lease/Purchase Agreement
None
108 Name and title of officer or other employee of the issuer whom the IRS may call for more information (see
10b Telephone number of officer or other
instructions)
employee shown on 10a
Kristin Eriksson - Purchasing Analyst
805-781-7510
Type of Issue enter the issue rice). See the instructions and attach schedule.
11 Education . . . . . . . . . . . . . . . .
11
12 Health and hospital . . . . . . . . . . . . . . . . . . . .
. , 12
13 Transportation . . . . . . . . . . . . . . . . . . . . . . .
. . . 13
14 Public safety . . . . . . . . . . . . . . . . . . . . . . . .
. . . . 14
15 Environment (including sewage bonds) . . . . . . . . . . . . .
15
16 Housing . . . . . . . . . . . . . . . . . . . . . .
. . 16
17 Utilities
17
18 Other. Describe No -Street Sweeper and Dump Truck _
18 600,000 00
19 If obligations are TANs or RANs, check only box 19a . . . . . .
► ❑
If obligations are BANs, check only box 19b . . . . . . . . . . . .
. . 00.❑
20 If obligations are in the form of a lease or installment sale, check box
► ❑
Description of Obligations. Complete for the entire issue for which this form is being filed.
(a) Final maturity date (b) Issue price (c) Stated redemption (d) weighted
price at maturity average maturity
(e) Yield
21
12/01/2022 600,000.00 $ 600,000.00 3.052 ears
1.9368 %
LM
11 -U - ses of Proceeds of Bond Issue (includingunderwriters' discount
22
Procees used for accrued interest . . . . . . . . . . . . . . . . . . . . .
22
0
00
23
Issue price of entire issue (enter amount from line 21, column (b)) . . . . .
23
600,000
00
24
Proceeds used for bond issuance costs (including underwriters' discount) .
24 0 00
25
Proceeds used for credit enhancement . . . . . . . .
25 0 00
26
Proceeds allocated to reasonably required reserve or replacement fund
26 0 00
27
Proceeds used to currently refund prior issues . . . . . . . . .
27 0 00
28
Proceeds used to advance refund prior issues . . . . . . . .
28 0 00
29
Total (add lines 24 through 28) . . . . . . . . . . . . . . . . . . . . . . .29
1
01
oo
30
Nonrefunding proceeds of the issue (subtract line 29 from line 23 and enter amount here) .
30 1
600,000
00
Description of Refunded Bonds. Complete this part only for refunding bonds.
31
Enter the remaining weighted average maturity of the bonds to be currently refunded ►
N/A
32
.
Enter the remaining weighted average maturity of the bonds to be advance refunded ►
Yea
— NIA
33
.
Enter the last date on which the refunded bonds will be called (MM/DD/YYYY) ►
ears
NIA
34
Enter the daze(s) the refunded bonds were issued IN. (MMIDD/YYYY) NIA
For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 637733
Form 8038-G (Rev. 9-2011)
Form 8038-G (Rev 9-2011)
UAM_ Miscellaneous
35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) 35 N/A
36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract
(GIC) (see instructions) . . . . . .
• . 36a NIA
b Enter the final maturity date of the GIC ► N/A
c Enter the name of the GIC provider ► N/A
37 Pooled financings: Enter the amount of the proceeds of this issue that are to be used to make loans
to other governmental units 37 NIA
36a If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► ❑ and enter the following information:
b Enter the date of the master pool obligation ► N/A
c Enter the EIN of the issuer of the master pool obligation ► N/A
d Enter the name of the issuer of the master pool obligation ► N/A
39 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III) (small issuer exception), check box . . . , ► 0
40 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . . . . . . . . ► ❑
41a If the issuer has identified a hedge, check here ► ❑ and enter the following information:
b Name of hedge provider► N/A
c Type of hedge ► N/A
d Term of hedge ► N/A
42 If the issuer has superintegrated the hedge, check box .. . . . • • . . . ► ❑
43 If the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated
according to the requirements under the Code and Regulations (see instructions), check box . . . . . . . , ► ❑
44 If the issuer has established written procedures to monitor the requirements of section 148, check box . ► ❑
45a If some portion of the proceeds was used to reimburse expenditures, check here ► ❑ and enter the amount
of reimbursement . . . . . . . . . ► _ _ N/A
b Enter the date the official intent was adopted ► N/A
Paqe 2
under penalties of perjury. i declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge
Signature and belief, they ars true, correct, and Complete, I further declare that t consent to the IRS's disciosum of the Issuer's relum information, as necessary to
and process this r+eZvm, la the per �atjthorized ahove-
Consent 12/0512017Signature of uer's rrr Date Type or print name and Title
Paid PrinVrypa preparer's fRtme Preparer's signature Date Check PTIry
❑rf
Preparer Kirsi Hansen self-employed P01881383
Use Only ms's rake P. zs, N.A. Firm's Ew ► 87-0189025
Firms address ► One South Main Suet, 17th Floor, Salt Lake CI!y, Utah Phone no. 801-844-7769
Form 8038-G (Rev. 8-2011)
Form 8038-G (Rev. 9-2011) Wage 2
Miscellaneous -
35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) 35 NIA
36a Enter the amount of gross proceeds Invested or to be invested in a guaranteed investmentcontract
(GIC) (see instructions) . . . . . . . . . .
• NJA
b Enter the final maturity date of the GIC 1110-_ N/A 36a
c Enter the name of the GIC provider No- N/A
37 Pooled financings: Enter the amount of the proceeds of this issue that are to be used to make loans
to other governmental units . . . . . . . . . . . . . . . . . . . . . . . . 37 N/A
38a If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► ❑ and enter the following information:
b Enter the date of the master pool obligation ► N/A
..........— .
_..._ -
c Enter the EIN of the issuer of the master pool obligation ► NIA
d Enter the name of the issuer of the master pool obligation ► N/A
39 If the issuer has designated the issue under section 265(b)(3)(13)(i)(III) (small issuer exception), check box . . ► ❑✓
40 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . . . . . . . . . ► ❑
41a If the issuer has identified a hedge, check here ► ❑ and enter the following information:
b Name of hedge provider► N/A
C Type of hedge ► N/A
d Term of hedge ► N/A
42 If the issuer has superintegrated the hedge, check box . .. . . . _ ► ❑
43 If the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated
according to the requirements under the Code and Regulations (see instructions), check box . . . . . . . . ►
44 If the issuer has established written procedures to monitor the requirements of section 148, check box . , . ► []
45a If some portion of the proceeds was used to reimburse expenditures, check here ► ❑ and enter the amount
of reimbursement . . . . . . . . . ► N/A
Enter the date the official intent was adopted ► NIA — -
Signature
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge
and belief, they are true, correct, and complet I further declare that I consent to the IRS's disclosure of the issuer's return Information, as necessary to
and process this return, to the person th a thorixad above.
Consent _ 12/05/2017 r
Lam. 6n, w
Signature of..
f issu s aut repreSenlativa Date Type or print name and title
Paid L
reparer's Preparer's s7Salftt
Date PTIN
en Check ❑ if
Preparer self-employed P01881383
Use Only ► ZB, N.A.Firma EiN ► 87-0189025
ss ► One South Main Sheet. 17th Fl10!%ahPhonon❑. 801-844-7769
Form 8038-G (Rev. 9-2011)
Form W-9
(Rev. November 2017)
Deparlrrkull of Ilse Treasury
Inlermol Revenue Service
co
ar
Cd,
0
di c
02
C N
.0 C
a o
CL
U)
r�
I Name
Request for Taxpayer
Identification Number and Certification
► Go to www.irs.gov1FormW9 for instructions and the latest information.
shown on your income tax r RF(f1). Name Is required on this line; do not leave this line blank.
SAN LUIS OBISPO
nameldisragarded entity name, if different from above
3 Check appropriate box for federal tax classification of the person whose name is entered on line 1. Check only one of the
following seven boxes.
❑ Individual/sole proprietor or ❑ C Corporation ❑ S Corporation ❑ Partnership ❑ Trust/estate
single -member LLC
❑ Limited liability company. Enter the tax classification (C=C corporation, S=S corporation, P=Partnership) Do -
Note:
Note: Check the appropriate box in the line above for the tax classification of the single -member owner Do not check
LLC if the LLC is classified as a single -member LLC that is disregarded from the owner unless the owner of the LLC is
another LLC that is not disregarded from the owner for U.S, federal tax purposes. Otherwise, a single -member LLC that
is disregarded from the owner should check the appropriate box for the tax classification of its owner.
14 Other (sen instructions) ► .��') _ i �; l ' V( ;,� Irl YIIA (t•t-
5 Address (number, street, and apt. or suite aa.) See instructions.
990 PALM STREET
0 Lily, state, and ZIP Code
5AN LUIS OBISPQ CA 93401
7 List account numbers) here (optional)
NumDer
Give Form to the
requester. Do not
send to the IRS.
4 Exemptions (codes apply only to
certain entities, not individuals; see
instructions on page 3):
Exempt payee code (If any)
Exemption from FATCA reporting
code (if any)
(Applies to accounts enainlainw oulslde the us.)
Requester's name and address
Enter your TIN in the appropriate box. The TIN provided must match the name given on line t to avoid
social security number
backup wlien. sole .For individuals, this is generally your social security number (SS N), However, far a
resident alien, sole proprietor, or disregarded entity, see the instructions for Part I, later. For otllc3r
entitles, it is your employer identillcation number (El N). If do not have
you a number, see Now to get a
TIN, iater.
Note: If the account is in more than one name, see the instructions for line 1. Also see What Name and
or
Employer Identification number
Number To Give the Requester for guidelines on whose number to enter.
r --r-1 r ?
MEW Certification
Under penalties of perjury, I certify that:
1. The number shown on this form Is my correct taxpayer Identification number (or I am waiting for a number to be issued to me); and
2. 1 am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends. or (q) the IRS has notified me that I am
no longer subject to backup withholding; and
3. 1 am a U.S. citizen or other U.S. person (defined below); and
4. The FATCA codes) entered on Ihis form (H any) indicating that I am exempt from FATCA reporting is correct.
Certification Instructions. You must crass out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because
you have failed to report all Interest and dividends an your lax return. For real estate transactions, item 2 does not apply. For mortgage interest paid.
acquisition or abandonment of secured property, cancellation of debt, contributions to an Individual retirement arrangement (IRA), and generally, payments
other than interest and diwdands, you arta not required 10 sign the certification, but you must provide your correct TIN. See the instructions for Part 11, later,
Sign
Here
Signature of
U.S. person►
General Instructions
Section references are to the Internal Revenue Code unless otherwise
noted.
Future developments. For the latest information about developments
related to Form W-9 and its Instructions, such as legislation enacted
after they were published, go to www.irs.gov/FormWg.
Purpose of Form
An Individual or entity (Form W-9 requester) who is required to file an
Information return with the IRS must obtain your correct taxpayer
identification number (TIN) which may be your social Security number
(SSN), Individual taxpayer identification number (ITIN), adoption
taxpayer Identification number (ATIN), or employer Identification number
(EIN), to report on an information return the amount paid to you, or other
amount reportable on an Information return. Examples of information
returns include, but are not limited to, the following.
• Form 1099 -INT (interest earned or paid)
Date► ' a, it
• Form 1099 -DIV (dividends, including those from stocks or mutual
funds)
• r rant 1099-MISC (various types of income, prizes, awards, or gross
proceeds)
• Form 1099-8 (stock or mutual fund sales and certain other
transactions by brokers)
• Form 1099-9 (proceeds from real estate transactions)
• Farm 1099•K (merchant card and third party network transactions)
• Form 1098 (home mortgage interest), 1098-E (student loan interest),
10913-T (tuition)
• Form 1099-C (canceled debt)
• Form 1099-A (acquisition or abandonment of secured property)
Use Form W-9 only if you are a U.S. person (including a resident
alien), to provide your correct TIN.
If you do not return Form w-9 to the requester with a TIN, you might
be subject to backup w(fhhol(1ing. See Whot is backup withholding,
later.
Cat, No. 10231X Form W-9 (Rev. 11-2017)
Form W-9 (Rev. 11-2017)
By signing the filled -out form, you:
1. Certify that the TIN you are giving is correct (or you are waiting for a
number to be issued),
2. Certify that you are not subject to backup withholding, or
3. Claim exemption from backup withholding if you are a U.S. exempt
payee. If applicable, you are also certifying that as a U.S. person, your
allocable share of any partnership income from a U.S. trade or business
is not subject to the withholding tax on foreign partners' share of
effectively connected income, and
4. Certify that FATCA code(s) entered ore this form (if any) indicating
that you are exempt from the FATCA reporting, is correct. See What is
FATCAreporfing, later, for further information.
Note: if you are a U.S. person and a requester gives you a form other
than Form W-9 to request your TIN, you must use the requester's form if
It is substantlally similar to thls Form W-9.
Definition of a U.S. person. For federal tax purposes, you are
considered a U.S. person if you are:
• An individual who is a U.S, citizen or U.S. resident alien;
• A partnership, corporation, company, or association created or
organized in the United States or under the laws of the United States;
• An estate (other than a foreign estate); or
• A domestic trust (as defined in Regulations section 301.7701-7).
Special rules for partnerships. Partnerships that conduct a trade or
business In the United States are generally required to pay a withholding
tax under section 1 446on any foreign partners' share of effectively
connected taxable income from such business. Further, in certain cases
Where a Form W-9 has not been received, the rules under section 1446
require a partnership to presume that a partner is a foreign person, and
pay the section 1446 withholding tax. Therefore, If you are a U.S. person
that is a partner in a partnership conducting a trade or business in the
United States, provide Form W-9 to the partnership to establish your
U.S. status and avoid section 1446 withholding on your share of
partnership income.
In the cases below, the following person must give Form W-9 to the
partnership for purposes of establishing its U.S. status and avoiding
withholding on its allocable share of net income from the partnership
conducting a trade or business in the United States.
• In the case of a disregarded entity with a U.S. owner, the U.S. owner
of the disregarded entity and not the entity;
• In the case of a grantor trust with a U.S. grantor or other U.S. owner,
generally, the U.S. grantor or other U.S. owner of the grantor trust and
not the trust; and
• In the case of a U.S. trust (other than a grantor trust), the U.S. trust
(other than a grantor trust) and not the beneficiaries of the trust.
Foreign person. If you are a foreign person or the U.S. branch of a
foreign bank that has elected to be treated as a U.S. person, do not use
Forma W-9. instead, use the appropriate Form W-8 or Form 8233 (see
Pub. 515, Withholding of Tax on Nonresldent Aliens and Foreign
Entities).
Nonresident alien who becomes a resident alien. Generally, only a
nonresident alien IndivlduaI may use tha terms of a tax treaty to reduce
or eliminate U.S, tax on certain types of income. However, most tax
treaties contain a provision known as a "saving clause." Exceptions
specified in the saving clause may permit an exemption from tax to
continue for certain types of income even after the payee has otherwise
become a U.S. resident alien for tax purposes.
If you are a U.S. resident alien who is relying on an exception
contained in tha saving clause of a tax treaty to claim an exemption
from U.S. tax on certain types of income, you must attach a statement
to Form W-9 that spsoIfles the toIto wing five items.
1. The treaty country. Generally, this must be the same treaty under
which you claimed exemption from tax as a nonresident alien.
2. The treaty article addressing the income.
3. The article number (or location) in the tax treaty that contains the
saving clause and its exceptions.
4. The type and amount of income that qualifies for the exemption
from tax.
5. Sufficient facts to justify the exemption from tax under the terms of
the treaty article.
Page 2
Example. Article 20 of the U.S.-China income tax treaty allows an
exemption from tax for scholarship income received by a Chinese
student ternporanly pros ant in the United States. Under U.S. lava, this
student will become a resident alien for tax purposes if his or her stay in
the United States exceeds 5 calendar years. Flowever, paragraph ? of
the flrst Protocol to the U.S.-China treaty (dated April 30, 198 4) allows
the provisions of Article 20 to continue to apply even after the Chinese
student becornas a resident alien 0f the United States. A Chinese
student who qualifies for tIrl s exception (under paragraph 2 of the lirst
protacol) and is relying on this exceptions to claim an exemption from tax
on his or her scholarship or fellowship income would attach to Form
W-9 a statement that includes the information described above to
support that exemption.
If you are a nonresident alien or a foreign entity, give the requester the
appropriate completed Form W-8 or Form 8233.
Backup Withholding
What is backup withholding? Persons making certain payments to you
must under certain conditions withhold and pay to the IRS 26% of such
payments. This is called "backup withholding." Payments that may be
subject to backup withholding Include interest, tax-exempt interest,
dividends, broker and barter exchange transactions, rents, royalties,
nonemployee pay, payments r'nade in settlement of payment card and
third party network transactions, and certain payments from fishing boat
operators- Heal estate transactions are not subject to backup
withholding.
You will not be subject to backup withholding on payments you
receive if you give the requester your correct TIN, make the proper
certifications, and report all your taxable interest and dividends on your
W return.
Payments you receive will be subject to backup withholding if:
1. You do not furnish your TIN to the requester,
2. You do riot certify your TIN when required (see the instructions for
Part II for details),
3. The IRS tells the requester that you furnished an incorrect TIN,
4. The IRS tells you that you are subject to backup withholding
because you did not report all your interest and dividends on your tax
return (for reportable interest and dividends only), or
5. You do not certify to the requester that you are not subject to
backup withholding under 4 above (for reportable interest and dividend
accounts opened after 1983 only).
Certain payees and payments are exempt from backup withholding.
See Exempt payee code, later, and the separate Instructions for the
Requester of Form W-9 for more information.
Also see Special rules for partnerships, earlier.
What is FATCA Reporting?
The Foreign Account Tax Compliance Act (FATCA) requires a
participating foreign financial institution to report all United States
account holders that are specified United States persons. Certain
payees are exempt from FATCA reporting. See Exemption from FATCA
reporting code, later, and the Instructions for the Requester of Form
W-9 for more information.
Updating Your Information
You must provide updated Information to any person to whom you
claimed to be an exempt payee if you are no Ion ger an exempt payee
and anticipate recwving reportable payments in the future from this
person. For example, you may need to provide updated information if
you are a C corpofation that elects to be an 5 corporation, or if you no
longer are tax exempt. In addition, you must furnish a new Form W-9 if
the name or TIN changes for the account; for example, if the grantor of a
grantor trust dies.
Penalties
Failure to furnish TIN. If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure
unless your failure is due to reasonable cause and not to willful neglect.
Civil penalty for false information with respect to withholding. If you
make a false statement with no reasonable basis that results in no
backup withholding, you are subject to a $500 penalty.
Form W-9 (Rev. 11-2017)
Criminal penalty for falsifying information. Willfully falsifying
r:ertificatlons or affirmations may subject you to criminal penalties
including fines andlor imprisonment.
Misuse of TINS. If the requester discloses or uses TINs in violation of
federal law, the requester may be subject to civil and criminal penalties.
Specific Instructions
Line 1
You must enter one of the following on this line; do not leave this line
blank. The name should match the name on your tax return.
If this Form W-9 is for a joint account (other than an account
maintained by a foreign financial institution (FFI)), list first, and then
circle, the name of tha person or entity whose number you entered in
Part I of Form W-9. If you are providing Form W-9 to an FFI to document
a joint account, each holder of the account that is a U.S, person must
provide a Form W-9.
a. Individual. Generally, enter the name shown on your tax ratum, if
you have changed your last name without Informing the Social Security
Administration (SSA) of the name change, enter your first name, the last
name as shown on your social security card, and your new last name.
Note: ITIN applicant: Enter your individual name as it was entered on
your Form W-7 application, line 1a. This should also be the same as the
name you entered on the Form 1040/1040A/1040EZ you filed with your
application.
b. Sole proprietor or single -member LLC. Enter your individual
name as shown on your 1040/1040AI1040EZ on line 1. You may enter
your business, trade, or "doing business as" (OBA) name on line 2.
c. Partnership, LLC that is not a single -member LLC, C
corporation, or S corporation. Enter the entity's name its shown on the
entity's tax return on line 1 and any business, trade, or DBA name on
line 2.
d. Other entities. Enter your name as shown on required U.S. federal
tax documents on line 1. This name should match the name shown on the
charter or other legal document creating the entity. You may enter any
business, trade, or DBA name on line 2.
e. Disregarded entity. For U.S. federal tax purposes, an entity that is
disregarded as an entity separate from its owner is treated as a
"disregarded entity." See Regulations section 301.7701-2(c)(2)(N). Enter
the owner's name on line 1. The name of the entity entered on line 1
should never be a disregarded entity. The name on line 1 should be the
name shown on the income tax return on which the income should be
reported. For example, If a foreign LLC that is treated as a disregarded
entity for U.S. federal tax purposes has a single owner that is a U.S.
person, the U.S. owner's name Is required to be provided an line 1. If
the direct owner of the entity is also a disregarded entity, enter the first
owner that Is not disregarded for federal tax purposes. Enter the
disregarded entity's name on line 2, "Business name/disregarded entity
name." If the owner of the disregarded entity is a foreign person, the
owner must complete an appropriate Form W-8 instead of a Form W-9.
This is the case even if the foreign person has a U.S. TIN.
Line 2
If you have a business rinrrle, trade name, DBA name, or disregarded
entity name, you may enter it on line 2.
Line 3
Check the appropriate box on line 3 for the U.S. federal tax
classification of the person whose name is entered on line 1. Check only
one box on line 3.
Page 3
IF the entity/person on line 1 is
THEN check the box for.. .
a(n) ...
• Corporation
Corporation
• Individual
Individual/sole proprietor or single-
• Sole proprietorship, or
member LLC
• Single -member limited liability
company (LLC) owned by an
individual and disregarded for U.S.
federal tax purposes.
• LLC treated as a partnership for
Limited liability company and enter
U.S. federal tax purrooses,
the appropriate tax classification.
• LLC that has filed Form 8832 or
(P= Partnership; C= C corporation;
2553 to be taxed as a corporation,
or S= S corporation)
or
• LLC that is disregarded as an
entity separate from its owner but
the owner is another LLC that is
not disregarded for U.S. federal tax
purposes.
• Partnership
Partnership
• Trust/estate
Trust/estate
Line 4, Exemptions
If you are exempt from backup withholding and/or FATCA reporting,
enter in the appropriate space on line 4 any code(s) that may apply to
you.
Exempt payee code.
• Generally, individuals (including sole proprietors) are not exempt from
backup withholding.
• Except as provided below, corporations are exempt from backup
withholding for certain payments, including interest and dividends.
• Corporations are not exempt from backup withholding for payments
made in settlement of payment Card or third party network transactions.
• Corporations are not exempt from backup withholding with respect to
attorneys' fees or gross proceeds paid to attorneys, and corporations
that provide mod icaI or health care services are not exempt with respect
to payments reportab[a on Form 1099-MISC.
The following codes Identify payees that are exempt from backup
withholding. Enter the appropriate code in the space in line 4.
t --An organization exempt from tax under section 501(a), any IRA, or
a custodial account under section 403(b)(7) if the account satisfies the
requiremems of section 401 10(2)
2—The United States or any of its agencies or instrumentalities
3—A state, the District of Columbia, a U.S. commonwealth or
possession, or any of their political subdivisions or instrumentalities
4—A foreign government or any of its political subdivisions, agencies,
or instrumentalities
5—A corporation
6—A dealer in securities or commodities required to register in the
United States, the District of Columbia, or a U.S. commonwealth or
possession
7 —A futur^s commiss+o, 4>>erchant registered with the Commodity
Futures I-rading Commissofln
8—A real estate investment trust
9—An entity registered at all times during the tax year under the
Investment Company Act of 1940
10—A common trust fund operated by a bank under section 584(a)
11 —A financial institution
12—A middleman known in the investment community as a nominee or
custodian
13—A trust exempt from tax under section 664 or described in section
4947
Form W-9 (Rev. 11-2017)
The following chart shows types of payments that may be exempt
from backup withholding. The chart applies to the exempt payees listed
above, 1 through 13.
IF the payment is for.. .k THEN the payment is exempt
for...
Page 4
M—A tax exempt trust under a section 403(b) plan or section 457(g)
plan
Note: You may wish to consult with the financial institution requesting
this form to determine whether the FATCA code and/or exempt payee
code should be comOle[ ed -
Interest and dividend paymentsi All exempt payees except Line 5l for 7
Broker transactions [nnoncovered
empt payees 1 through 4 and 6
rough 11 and all C corporations.
corporations must not enter an
empt payee code because they
e exempt only for sales of
securities acquired
prior to 2012.
Barter exchange transactions and Exempt payees 1 through 4
patronage dividends
Payments over $600 required to be Generally, exempt payees
reported and direct sales over 1 through 52
$5,000'
Payments made in settlement of 1 Exempt payees 1 through 4
payment card or third party n0wnrk
transactions
1 See Form 1099-MISC, Miscellaneous Income, and its instructions.
2 However, the following payments made to a corporation and
reporlaWe on Form 1099 MISC are not exempt from backup
withholding: medical and health care payments, attorneys' fees, gross
proceeds paid to an attorney reportable under section 6045(f), and
payments for services paid by a federal executive agency.
Exemption from FATCA reporting code. The following codes Identify
payees that are exempt from reporting under FATCA. These codes
apply to persons submitting this form for accounts maintained aulside
of the United States by certain foreign financial institutions. Therefore, if
you are only submitting this form for an account you told In the United
States, you may leave this field blank. Consult with the person
requesting this form if you are uncertain if the financial institution is
subject to these requirements. A requester may indicate that a code is
not required by providing you with a Form W-9 With'rNot Applicable" (or
any similar indication) written or printed on the Ilne for a FATCA
exemption code.
A—An organization exempt from tax under section 501(a) or any
individual retirement plan as defined in section 7701(a)(37)
B—The United States or any of its agencies or instrumentalities
C—A state, the District of Columbia, a U.S. commonwealth or
possession, or any of their political subdivisions or instrumentalities
D—A corporation the stock of which is regularly traded on one or
more established securities markets, as described in Regulations
section 1.1472-1(c)(t)(i)
E—A corporation that is a member of the same expanded affiliated
group as a corporation described in Regulations section 1. 1472-1 (c)(1)(i)
F—A dealer in securities, commodities, or derivative financial
Instruments {Including notional principal contracts, futures, forwards,
and options) that is registered as such under the laws of the United
States or any state
G—A real estate investment trust
H—A regulated investment company as defined in section 851 or an
entity registered at all times during the tax year underthe Investment
Company Act of 1940
1—A common trust fund as defined in section 584(a)
J—A bank as defined in section 581
K—A broker
L—A trust exempt from tax under section 664 or described in section
4947(a)(1)
Enter your address (number, street, and apartment or suite number),
This is where the requester of this Form W•9 will mail your Information
returns. If this address differs from the one the requester already has on
Nle, write NEW at the top. If a new address is provided, there is still a
chance the old address will be used until the payor changes your
address in their records.
Line 6
Enter your city, state, and ZIP code.
Part I. Taxpayer identification Number (TIN)
Enter your TIN in the appropriate box. If you are a resident alien and
you do not have and are not eligible to gat an SSN, your TIN is your IRS
individual taxpayer identification number (ITIN). Enter It In the social
security number box. If you do not have an ITIN, see Flow to gar a TIN
below.
If you are a sole proprietor and you have an EIN, you may enter either
your SSN or EIN.
if you are a single -member LLC that is disregarded as an entity
separate from Its owner, enter the owner's SSN (or EIN, if the owner has
one). Do not enter the disregarded entity's EIN. If the LLC is classified as
a corporation or partnership, enter the entity's EIN.
Note: Sea What Name and Number To Give the Requester, later, for
further clarification of name and TIN combinations.
How to gat a TIN. I! you do riot have a TIN, apply for one immediately:
To apply for an SSN, get Form SS -5, Application for a Social Security
Card, from your local SSA office or get this form online at
www,SSA.gov. You may also get this form by calling 1.800-772-1213.
Use Form W-7, Application for IRS Individual Taxpayer Iden tificatlon
Number, to apply for an ITIN, or Form SS -4. Application for Employer
Identification Plumber, to apply for an EIN. You can apply for an EIN
online by accessing the IRS website at www.irs.govlBusinssses and
clicking on Employer Identification Number (EIN) under Starting a
Business. Go to www.irs.gov/F'orfns to view, download, or print Form
W- 7 and/or Form SS -4. Or, you can go to www.rrs.govldrdarForms to
place an order and have Form W-7 and/or SS -4 mailed to you within 10
business days.
if you are asked to complete Form W-9 but do not have a TIN, apply
for a TIN and write "Applied For" in the space for the TIN, sign and date
the form, and give a to the requester. For interest and dividend
payments, and certain payments made with respect to readily IradaWe
instruments, generally you will have 60 days to get a TIN and give it to
the requester before you are subject Io backup withholding on
Payments, The 60 -day rule does not apply to other types of payments.
You will be subject to backup withholding on all such payments until
you provide your TIN to the requester.
Note: Entering "Applied For" means that you have already applied for a
TIN orthat you Intend to apply for one soon.
Caution: A disregarded U.S. entity that has a foreign owner must use
the appropriate Form W-8.
Part If. Certification
To establish to the withholding agent that you are a U.S. person, or
resident alien, sign Form W-9. You may be requested to sign by the
withholding agent even if item 1, 4, or 5 below indicates otherwise.
For a Joint account, only the person whose TIN is shown In Part I
should sign (when required), In the case of a disregarded entity, the
person ideniffied on line 1 must sign. Exempt payees, see Exempt payee
code, earlier.
Signature requirements. Complete the certification as indicated in
items 1 through 5 below,
Form W-9 (Rev. 11-2017)
1. Interest, dividend, and barter exchange accounts opened
before 1984 and broker accounts considered active during 1983.
YOU must give your correct TIN, but you do not have to sign the
certification.
2. Interest, dividend, broker, and barter exchange accounts
opened after 1983 and broker accounts considered inactive during
1983. You must sign the certification or backup withholding will apply. If
you are subject to backup withholding and you are merely providing
your correct TIN to the requester, you must cross out Item 2 in the
certification before signing the form.
3. Real estate transactions. You must sign the certification. You may
cross out Item 2 of the certification.
4. Other payments. You must give your correct TIN, but you do not
have to sign the certification unless you have been notified that you
have previously given an incorrect TIN. "Other payments" include
payments made in the course of the requester's trade or business for
rents, royalties, goods (other than bills for merchandise), medical and
health care services (including payments to corporations), payments to
a nonemployee for services, payments made In settlement of payment
card and third party network transactions, payments to certain fishing
boat crew members and fisherman, and gross proceeds paid to
attorneys (including payments to corporations).
5. Mortgage interest paid by you, acquisition or abandonment of
secured property, cancellation of debt, qualified tuition program
payments (under section 529), ABLE accounts (under section 529A),
IRA, CoverdaII ESA, Archer MSA or HSA contributions or
distributions, and pension distributions. You must give your correct
TIN, but you do not have to sign the certification.
What Name and Number To Give the Requester
For this type of account:
Individual
2. Two or more individuals (joint
account) other than an account
maintained by an FFI
3. Two or more U.S. persons
(joint account maintained by an FFI)
4. Custodial account of a minor
(Uniform Gift to Minors Act)
5. a. The usual revocable savings trust
(grantor is also trustee)
b. So-called trust account that is not
a legal or valid trust under state law
6. Sole proprietorship or disregarded
entity owned by an individual
7. Grantor trust filing under Optional
Form 1099 Filing Method 1 (see
Regulations section 1 671-4(b)(2)(1)
For this type of account:
8. 07 sregarded entity not owned by an
Individual
9. A valid trust, estate, or pension trust
10. Corporation or LLC electing
corporate status on Form 8832 or
Form 2553
11, Association, club, religious,
charitable, educational, or other tax-
exempt organization
12. Partnership or multi -member LLC
13. A broker or registered nominee
For this type of account:
14. Account with th 3 Department of
Agriculture in the name of a public
entity (such as a state or local
government, school district, or
prison) that receives agricultural
program payments
15. Grantor trust filing under the Form
1041 Filing Method or the Optional
Form 1099 Filing Method 2 (see
1309W11011s section 1.671.41b)(2)(1)(13
Page 5
Give name and EIN of:
the Pubic entity
The trust
' List first and circle the name of the person whose number you furnish.
If only one person on a joint account has an SSN, tliat person's number
must be furnished.
z Circle the minor's name and furnish the minor's SSN.
' You must show your individual name and you may also enter your
business or DBA name an the " Busin e:3s namaldisregarded enhly"
name line. You may use either your SSN or EIN (if you have one), but the
IRS encourages you to use your SSN.
4 Llst first and circle the name of the trust, estate, or pension trust. (Do
not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title.) Also see Special
rules for partnerships, earlier.
'Note: The grantor also must provide a Form W-9 to trustee of trust.
Note: If no name is circled when more than one name is listed, the
number will be considered to be that of the first name listed.
Give name and SSN of:
Secure Your Tax Records From Identity Theft
The individual
Identity theft occurs when someone uses your personal Information
The actual owner of the account or, if
such as your name, SSN, or other Identifying information, without your
combined funds, the first individual on
permission, to commit fraud or other crimes. An identity thief may use
the account'
Your SSN to get a fob a may file a tax retum using your SSN to receive
The corporation
a refund.
Each holder of the account
To reduce your risk:
The minor'
• Protect your SSN,
The organization
• Ensure your employer is protecting your SSN, and
The grantor -trustee'
• Be careful when choosing a tax preparer.
If your tax records are affected by identity theft and you receive a
The actual owner'
notice from the IRS, respond right away to the name and phone number
The partnership
printed on the IRS notice or letter.
The owner'
If your tax records are not currently affected by identity theft but you
think you are at risk due to a lost or stolen purse or waliet, questionable
The grantor*
credit card activity or credit report, contact the tRS identity Theft Hotline
at 1-800-808-4490 or submit Form 14039.
For more information, see Pub. 5027, Identity Theft Information for
Taxpayers.
Give name and EIN of:
Victims of identity theft who are experiencing economic harm or a
ihr: owner
systemic problem, or are seeking help in resolving tax problems that
have not been resolved through normal channels, may be ell gible for
n
Taxpayer Advocate Service (TAS) assistance. You can reach TAS by
Legal entity
calling the TAS toll-free case Intake tine at 1-877-777-4778 or TTY/TDD
The corporation
1-800-829-4059.
Protect yourself from suspicious emeiIs or phishing schemes.
Phis hing is the creation and use of email and websites designed to
The organization
mimic legitimate business amails and websites. The most common act
is sending an email to a user falsely claiming to be an established
legitimate enterprise in an attempt to scam the user Into surrendering
private information that will be used for identity thea.
The partnership
The broker or nominee
Form W-9 (Rev. 11-2017)
The IRS does not initiate contacts with taxpayers via emails. Also, the
IRS does not request personal detailed information through email or ask
taxpayers for the PIN numbers, passwords, or similar secret access
information for their credit card, bank, or other financial accounts.
If you receive an unsolicited email claiming to be from the IRS,
forward this message to phishingOrs.gov. You may a€so report misuse
of the iR5 name, Io go, or other IRS property to the Treasury Inspector
General for Tax Administration (TIGTA) at 1-800-388-4484. You can
forward suspicious emaiIs to the Federal Trade Commission at
spamOuce.gov or report them at wwtv.ftc.govlcomplainf. You can
Contact the FTC at Www.Ifc.goWidlhalf or 877-IDTH EFT (877-x438-4338).
If you have been the victim of IdemiIy (heft, see www.IrlenliryThefr.gov
and Pub. 5027.
Visit www.irs.gov/fdentityTheft to learn more about identity theft and
how to reduce your risk.
Page 6
Privacy Act Notice
SOC tIon 6 t09 of the Internal Revenue Code requires you to provide your
correct TIN to persons (includinq federal agencies) who are required to
Me information returns with the IRS to report interest, dividends, or
certain other income paid to you; mortgage interest you paid; the
acquisition or abandonment of secured property; the cancellation of
debt; or contributions you made to an IRA, Archer MSA, or HSA. The
Person collecting this form uses the information on the form to file
Information returns with the AS, reporting the above information.
Routine uses of this Information Include giving 0 to the Department of
Justice for civil and crimfnaI Iltigation and to cities, states, the District of
Columbia, and U.S. commonwealths and possessions for use in
administering their laws. The information also may be disclosed to Other
countries under a treaty, to federal and state agencies to enforce civic
and crlminai laws, or to federal law enforcement and inteNgence
agenc les to combat terrorism. You must provide your TIN whether or
not you are required to file a tax return, Under section 3406, payers
must generaity withhold a percentage of taxable interest, dividend, and
Certain other payments to a payee who does not give a TIN to I h a payer.
Curtain penalties may also apply for providing false or fraudulent
information.