HomeMy WebLinkAboutRES NO 70-89RESOLUTION NO. 70-89 OF THE CITY COUNCIL
OF THE CITY OF BAKERSFIELD
AUTHORIZING THE REMARKETING OF
CITY OF BAKERSFIELD HOSPITAL REVENUE BONDS
(BAKERSFIELD MEMORIAL HOSPITAL), SERIES 1984,
AT A FIXED RATE OF INTEREST AND AUTHORIZING
THE ISSUANCE, SALE AND DELIVERY OF THE
CITY OF BAKERSFIELD HOSPITAL REVENUE BONDS
(BAKERSFIELD MEMORIAL HOSPITAL), SERIES 1989,
AND CERTAIN OTHER ACTIONS IN CONNECTION WITH
EACH OF THE FOREGOING TRANSACTIONS
WHEREAS, the City of Bakersfield (the "City") is a
municipal corporation and charter city duly organized and
existing under a freeholders' charter pursuant to which the
City has the right and power to make and enforce all laws and
regulations in respect to municipal affairs and certain other
matters in accordance with and more particularly provided in
Sections 3, 5 and 7 of Article XI of the Constitution of the
State of California and Section 12 of the Charter of the City
(the "Charter");
WHEREAS, the City Council of the City (the
"Council"), acting under and pursuant to the powers reserved
to the City under Sections 3, 5 and 7 of Article XI of the
Constitution of the State of California and Section 12 of the
Charter, has established by the adoption of the City of
Bakersfield Health Facilities Financing Law (the "Law") a
procedure for the authorization, issuance and sale of revenue
bonds by the City for the purpose, inter alia, of providing
financing for health facilities as specified therein;
WHEREAS, at the request of Bakersfield Memorial
Hospital (previously known as Greater Bakersfield Memorial
Hospital Association) (the "Corporation"), the City has
previously issued its City of Bakersfield Hospital Revenue
Bonds (Greater Bakersfield Memorial Hospital), Series 1984
(the "Series 1984 Bonds") in accordance with the Law;
WHEREAS, the interest rate on the Series 1984 Bonds
was initially a variable rate of interest and the Corporation
has now determined to convert the interest rate on the Series
1984 Bonds to a fixed rate of interest and to remarket the
Series 1984 Bonds;
WHEREAS, in connection with the conversion of the
interest rate and the remarketing of the Series 1984 Bonds it
is necessary and convenient to amend and restate the
provisions of the indenture, originally dated as of
December 1, 1984 and amended and restated as of June 1, 1989,
in relation to the Series 1984 Bonds (the "Amended and
Restated Indenture"), and to amend and restate the loan
agreement, originally dated as of December 1, 1984 and amended
and restated as of June 1, 1989, in relation to the Series
1984 Bonds (the "Amended and Restated Loan Agreement");
WHEREAS, in addition the City has determined to
issue a series of revenue bonds, designated as the "City of
Bakersfield Hospital Revenue Bonds (Bakersfield Memorial
Hospital), Series 1989" (the "Series 1989 Bonds"), in an
aggregate principal amount of twenty million dollars
($20,000,000) for the purpose of providing moneys to make a
loan to the Corporation to assist in financing and refinancing
the construction, furnishing and equipping of certain
improvements (the "Project") to the Corporation's existing
health facility in the City;
WHEREAS, assisting in the foregoing promotes the
purposes of the Law, is in the public interest, serves a
public purpose, promotes the health, welfare and safety of the
citizens of the City, and constitutes a municipal affair; and
WHEREAS, all acts, conditions and things required by
the Law and by all other laws of the State of California to
exist, to have happened or to have been performed precedent to
and in connection with the conversion and remarketing of the
Series 1984 Bonds and the issuance, sale and delivery of the
Series 1989 Bonds exist, have happened and have been performed
in regular and due time, form and manner as required by the
Law and the City is now duly authorized and empowered pursuant
to each and every requirement of law, to approve the
conversion and remarketing of the Series 1984 Bonds and to
issue the Series 1989 Bonds for the purpose, in the manner and
upon the terms herein provided;
NOW, THEREFORE, BE IT RESOLVED by the City Council
of the City of Bakersfield, as follows:
Section 1. The issuance, sale and delivery of the
Series 1989 Bonds in a principal amount of not to exceed
twenty million dollars ($20,000,000) and the conversion of the
interest rate and remarketing of the Series 1984 Bonds in a
principal amount of thirty-five million dollars ($35,000,000)
are hereby authorized.
Section 2. The Council does hereby find and declare
that the above recitals are true and correct and that the
conversion of the interest rate on, and the remarketing of,
the Series 1984 Bonds and the issuance, sale and delivery of
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471862
the Series 1989 Bonds are each a municipal affair and proper
public purpose.
Section 3. The proposed form of Amended and
Restated Indenture relating to the Series 1984 Bonds,
presented at this [neeting, is hereby approved, and the Mayor,
City Manager or Finance Director are hereby authorized and
directed, for and in the name and on behalf of the City, to
execute, acknowledge and deliver to the trustee thereunder an
Amended and Restated Indenture in substantially said form,
with such changes therein as the officers executing the same,
with the advice of the City Attorney, may approve, such
approval to be conclusively evidenced by the execution and
delivery thereof. The date, maturity date, interest rate or
rates, place or places of payment, terms of redemption and
other terms of the Series 1984 Bonds following conversion to a
fixed rate of interest shall be as provided in the Amended and
Restated Indenture, as finally executed.
Section 4. The proposed form of Amended and
Restated Loan Agreement relating to the Series 1984 Bonds,
presented at this meeting is hereby approved, and the Mayor,
City Manager or Finance Director are hereby authorized and
directed, for and in the name and on behalf of the City, to
execute, acknowledge and deliver an Amended and Restated Loan
Agreement in substantially said form, with such changes
therein as the officers executing the same, with the advice of
the City Attorney, may approve, such approval to be
conclusively evidenced by the execution and delivery thereof.
Section 5. The proposed form of Indenture relating
to the Series 1989 Bonds, dated as of June 1, 1989 (the
"Indenture"), between the City and Bankers Trust Company of
California, as trustee (the "Trustee"), presented at this
meeting, is hereby approved, and the Mayor, City Manager or
Finance Director are hereby authorized and directed, for and
in the name and on behalf of the City, to execute, acknowledge
and deliver to the Trustee said Indenture in substantially
said form, with such changes therein as the officers executing
the same, with the advice of the City Attorney, may approve,
such approval to be conclusively evidenced by the execution
and delivery thereof. The date, maturity date, interest rate
or rates, privileges, manner of execution, place or places of
payment, terms of redemption and other ternis of the Series
1989 Bonds shall be as provided in said Indenture, as finally
executed.
Section 6. The proposed form of Loan Agreement
relating to the Series 1989 Bonds, dated as of June 1, 1989
(the "Loan Agreement"), presented at this meeting, is hereby
approved, and the Mayor, City Manager or Finance Director are
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471862
hereby authorized and directed, for and in the name and on
behalf of the City, to execute, acknowledge and deliver said
Loan Agreement in substantially said form, with such changes
therein as the officers executing the same, with the advice of
the City Attorney, may approve, such approval to be
conclusively evidenced by the execution and delivery thereof.
Section 7. Bankers Trust Company of California
hereby appointed as trustee for the City and the holders of
the Series 1984 Bonds and the Series 1989 Bonds, with the
duties and powers of such trustee as set forth in the Amended
and Restated Indenture and the Indenture, respectively.
Section 8. The Mayor, or the Mayor's designated
representative, is hereby authorized and directed to execute,
for and in the name and on behalf of the City and under its
seal, the Series 1989 Bonds in an aggregate principal amount
not to exceed twenty million dollars ($20,000,000) in
accordance with the terms of the Indenture and to execute for
and in the same and on behalf of the City and under its seal,
the Series 1984 Bonds following their conversion to a fixed
rate of interest, in an aggregate principal amount of
thirty-five million dollars ($35,000,000) in accordance with
the terms of the Amended and Restated Indenture.
Section 9. The proposed form of Bond Purchase
Contract relating to the remarketing of the Series 1984 Bonds
and the sale of the Series 1989 Bonds, among Smith Barney,
Harris Upham & Co. Incorporated (the "Underwriter") and the
City, as presented to this meeting, is hereby approved, and
the Mayor, City Manager or Finance Director are hereby
authorized and directed, for and in the name and on behalf of
the City, to execute, acknowledge and deliver said Bond
Purchase Contract in substantially said form, with such
changes therein as the officers executing the same, with the
advice of the City Attorney, may approve, such approval to be
conclusively evidenced by the execution and delivery thereof.
Section 10. The proposed form of Official Statement
relating to the remarketing of the Series 1984 Bonds and the
sale of the Series 1989 Bonds, as presented to this meeting is
hereby approved, and the Mayor, City Manager or Finance
Director, is hereby authorized and directed, for and on behalf
of the City, to execute said Official Statement in
substantially said form, with such changes therein as the
officers executing the same, with the advice of the City
Attorney. may approve, such approval to be conclusively
evidenced by the execution and delivery thereof.
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Section 11. The Underwriter is hereby authorized to.
distribute said Official Statement, with such changes therein
as may be approved or required by the City Attorney, to the
purchasers of the Series 1984 Bonds and Series 1989 Bonds and
to distribute the Official Statement in preliminary form to
potential purchasers of the Series 1984 Bonds and the Series
1989 Bonds.
Section 12. The Series 1984 Bonds and Series 1989
Bonds, when executed pursuant to this resolution, shall be
delivered to the Trustee for authentication. The Trustee is
hereby requested and directed to authenticate said bonds by
executing the Trustee's certificate of authentication
appearing thereon, and to deliver said bonds, when duly
executed and authenticated, to the purchaser or purchasers
thereof, in accordance with written instructions executed on
behalf of the City by the Mayor, City Manager or Finance
Director, which instructions said officers ate hereby
authorized and directed, in the name and on behalf of the
City, to execute and deliver to the Trustee. Said
instructions shall provide for the delivery of said bonds to
the purchaser or purchasers thereof upon payment of the
purchase price thereof.
Section 13. The officers of the City are hereby
authorized and directed, jointly and severally, to do any and
all things and to execute and deliver any and all documents
which they may deem necessary or advisable in order to
consummate the conversion and remarketing of the Series 1984
Bonds and the issuance, sale and delivery of the Series 1989
Bonds and otherwise to effectuate the purposes of this
resolution.
Section 14. This resolution shall take effect
immediately upon its passage.
I HEREBY CERTIFY that the foregoing Resolution was
passed and adopted by the Council of the City of Bakersfield
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471862
at a regular meeting thereof held on the 31th day of
, 1989, by the following vote:
AYES: ANTHONY, DEMOND, SMITH, RATTY, PETERSON, ~CDERMOTT, SALVAGGIO
NOES: None
ABSENT: None
ABSTAINING: None
CITY CLERK of the City Council of
the City of Bakersfield
APPROVED THIS 31th day of May , 1989
MAYOR of the City of Bakersfield
APPROVED as to form:
1 y ttA~~akersfleld
6
471862
EXHIBIT C
[Letterhead of Orrick, Merring~:on & Surelille]
[To be supplied.]
EXHIBIT C-1
[Letterhead of Orrick, Herrington & Sutcliffe]
[To be supplied.]
EXiTBIT D
[Letterhead of Kutak Rock & Campbell]
, 1989
Smith Barney, Harris & Co.
.Incorporated
31st Floor
350 california Street
San Francisco, CA 94104
CITY OF BAKERSFIELD
HOSPZTAL REVENU[ BONDS
(GREATER BAKERSFZ~LD M~MORIAL HOSPITAL}
Ser~e~ 1984
$20,000,000
CITY OF BAKE~SKI~LD
HOSPITAL R~'ViNUE BONDS
(BAKERSFIELD MEMORIAL HOSPITAL)
Series 1989
Dear Ladies and Gentlemen:
This letter is being delivered to you pursuant to the
Bond Purchase Agreement dated , 1989 (the "Bond
Purchase Agreement") between the City of Bakersfield, State
of California (the "City") and Smith Barney, Harris & Co.
Incorporated (the "Underwriter") relating to the Conversion
of the above-referenced Series 1984 Bonds to a fixed rate of
interest and issuance and sale of the above-referenced Series
1989 Bonds (collectively, the "Bonds"). The terms defined in
the Bond Purchase Agreement are used in this letter with the
meanings assigned to th~m in the Bond Purchase Agreement.
We have acted as your counsel in coru~ection wi~h =he
conversion to a fixed rate of interest of the Series 1984
Bonds and issuance and sale of the Series 1989 Bonds to you,
and in that capacity have examined an executed counterpart of
the Bond Purchase Agreement, Loan Aqreements, the Master
Indenture and the Indentu~ee. We have a!$o e~amined the
originals or copies, certified or otherwise ~.dentified to our
satisfaction, of ~uch other documents, cotpod=ate records ~d
5295b
Smith Barney, Harris & Co.
Incorporated
· 1989
Page 2
other instruments as we have dp~m~d necessary or advisable
for purposes of this letter.
In connection with the preparation of the Preliminary
Official Statement dated June , 1989 a~d the final O£fi-
¢ial Statement dated , 1989 (collectively, The
"official Statement"), we hav~ generally reviewed information
furnished to us by, and have participated in conferences
wit_h, representatives of ~he City, ~akersfield Memorial
Hospital, their respeetiv~ counsel, independent certified
public accountants, the feasibility consulkant, your repre-
sentatives and Orrick, Herrington & Sutcliffe, Bond Counsel.
We have also reviewed other records relating to the
conversion of the Seri~s 1984 Bonds to a fixed interest and
delivery of the Ser~es 1984 Bonds, and the authorization,
issuance and sale of the S~riem 1989 Bonds and have relied
upon certificates of officials of the City and Bakersfield
Memorial Hospital and upon written opinions ~nd letters
received from the City and Bakersfield Memorial Hospital, and
their respective attorneys and independent uerti£1ed public
&ccounta/~ts.
We have considered the information contaln~d in the
Official Statement and, based upon our review and discussions
~nd in reliance upon the accutec!7 of the information con-
tained in the aforementioned certificates, written opinions
and letters· nothing ha~ come to our attention which leads us
to believe t_hat the Official Statement contains any untrue
statement of a material fact or omits to state a material
fact necessary in order to make th~ statements made therein,
in light of the circumstances under which they were made, not
misleading. We express no opinion as to the financial state--
ments included as Attachment 1 to Exhibit A 'to the Official
Statement or to the Financial Feasibility Study included as
~hibit C to the Official Statement, cud we express no
opinion as to any other financial or statistical data
included in the Official Statement or the Exhibits thereto.
Fur~ermore, we are of
of the Series 1984 Bonds to
the Series 1984 Bond~ offer,
the opinion that the oonversion
a fixed interest and delivery of
sale and deliver7f of the Series
529Sb
Smith Barney, Harris & Co.
Incorporated
, 1~89
Page 3
1989 Bonds under the circumstances contemplated do not
require registration of the Hond~ under the Securities Act of
1933, as a~ended, and do not require qualification of the
Trust Agreement under the Trust Indenture Act of 1939.
Very truly yours,
5295b
EXHIBIT E
[Letterhead of.Musick Peeler & Garrett,
Counsel to the Corporation]
1989
Smith Barney, Harris Upham
Co. Incorporated
315= Floor
350 California Street
San Francisco, CA 94104
Bakersfield Memorial Hospital
420 $4th Street
Ba/~ersfield, CA 93303
$35,000,000
CITY OF BAKERSFIELD
HOSPITAL RE%~K_NUE BONDS
(GREATER BAKE~SFI£LB M~MORIAL HOSPITAL)
Series 19~
$20,000,000
C~T'Y OF 8AKE~SFIE~D
HOSPITAL RSVSNUE BONOS
(BAKERSFIELD MEMORIAL HOSPITAL)
Series 1989
Dear Ladies and Gentlemen:
We are counsel to the Board of Directors (the "Board")
of Bakersfield Memorial Mo~pital (the "Corporation") and have
acted as s~ch in connection with the transactions provided
for by the documents referred to herein in connection with
the conversion to a fixed rate of interest and remarketing of
the above-referenced Series 1984 Bonds and ~he issuance and
sale of the above-referenced Series 1989 Bonds, which, in the
case of the Series 1984 Bonds, are being converted to a fixed
rate of ~nterest and remarketed and, in the case of the
Series 19~9 Bonds, ~old pursuant to a Bond Purchase Agreement
dated , 1989 (the "Bond Purchase Agreement")
between Smith Barney, Martie Upham & Co. Incorporated (the
"Underwriter") and the City of Bakersfield, Sta~e of
California (the "City"). Any capitalized term used herein
and not defined shall have the meaning assigned to it in the
Bond Purchase Agreement.
In this connection, w~ have reviewed ~ud examined cer-
tain proceedings and documents with respect 'to the Bonds, and
such records. certificates and other documents as we have
considered necessary or appropriate for the purposes of this
52gOb
opinion, including the Law, the krticles ~ld Bylaws of the
Corporation, resolutions adopted by the Board of Directors of
the Corporation, the Loan Agreements, the Indentures, the
Master Indenture, the . Bond Purchase Agreement, the
Preliminary Official Statement dated J~ne , 1989, arid the
final Official Statement dated , 1989 with respect
to the Bonds (collectively, the "Official Statement") and a
closing certificate of the Corporation. Based on ouch review
and such other considerations of law ~nd fact as we believe
to be relevmnt, we are of the opinion that:
1. The Corporation is a nonprofit public benefit
corporation, duly organized and existing under the laws
and Constitution of the State of Cali£ornia. The
Corporation is authorized by the laws of the State of
California, including particularly the Law, to enter
into and perform its obligations ~nder the Loam
Agreements, the Master Indenture, the Notes and the
Indenturem and has full power and authority to con-
summate all transactions contemplated by the Loan
Agreements, the Master Indenture, the Notes, the
Indentures, the Inducement Letter, and any and all other
agreements relating thereto, to which the Corporation is
a party.
2. The Corporation has duly authorized all action
necessary to be taken by it or on its behalf for (i) the
execution and delivery of the Loan Agreements, the
~aster Indenture, the Notes, the Indentures and the
Inducement Letter; (ii) the approval of the distribution
of the Official Statement; a~d (iii) the carrying out,
'giving effect to and consummation of the transactions
contemplated thereby.
3. The Loan Agreements, the ~aster Indenture, the
Notes, the Indentures and the Inducement Letter have
been duly and validly authorized, executed and delivered
by the Corporation and the same are in full force and
effect as of the date hereof ~u~d are the valid
legally binding obligations' of the Corporation,
enforceable against the Corporation in accordance with
their respective terms, except to the extent the
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally.
4. The execution and delivery by the Corporation
of the Loan Agreements, the Master Indenture, the Notes,
~-2
5290b
the Indentures and the Inducement Letter and the
performance of its obligations thereunder do not and
will not result in a violation of any provision of, or
in default under. the Articles or Bylaws of the
Corporation, or, to the best of our knowledge after
diligent inquiry and review of the Corporarich's
records, any agreement or other
Corporation is a party or by which it or its properties
are bound.
S. All actions necessary to be taken by the
Corporation have been taken, and no additional approval,
authorization, consent or other order of the Corporation
or any other p~blic board or body is legally required %o
allow the Corporation to enter into and perform its
obligations under the Lo~n Agreements, the Master
Indenture, the Notes, the Indentures and the Inducement
Letter or to conduct the business of the Corporation as
presently being conducted and as described in the
Official Statement.
6. 'To =he best of our knowledge, the Corporation
is not in violation of any provision of, or in default
under, its bylaws or any agreement or other ~nstrument,
violation of or default under which would materially and
adversely affect the business, properties, asse~$, lia-
bilities or conditions (financial or other) of the
Corporation.
7. To t. he best of our know/edge, there are no
legal or governmental actions, proceedings, inquiries or
investigations pending or threatened by governmental
authorities or to which the Corporation is a party or of
which any property of the Corporation is subject, except
as described in the Official statement, which, ~f deter-
mined adversely to the Corporation, would individually
or in the aggregate (i) have a material adverse effect
on the financial position or results of opera%ions of
the Corporation, considered as a whole, (ii) mate-
rially and adversely affect the validity or the
enforceability of the Loan Agreements, the Master
Indenture, the Notes, the Indentures or the Inducement
Letter, (iii) otherwise materially or mdversel7 affect
the ability of the Corporation to comply with its
obligations under the Loan Agreements, the Master
Indenture, the Notes, the Indentures and the Inducement
Letter, or materiall~ and adversely affect the transac-
tions contemplated by the Official Statement to be
engaged in by the Corporation.
E-3
5290b
8. Based upon our experience as counsel for the
Corporation and on our review of and participation in
the draft~_ng of the Official Statement, and after
diligent inquiry, we have no reason to believe that the
official Statement contains any untrue statement of a
material fact or omits. to state any material fact
necessary in ordsr to make the statements made therein,
in ligb~ of the circumstances under which they were
made, not misleading.
9. The Trustee has a valid perfected security
interest in the Gross Revenues and such security inter-
est is prior in right to all other perfected security
interests of record and is entitled to all remedies
provided to a secured party under the Uniform Commercial
Code as adopted by the State of California.
10. The Corporation ~s fully qualified by all
necessary permits, licenses and certifications,
including, without limitation, licensing ~nd certifica-
tion of existing hospital facilities, to conduct its
business as ~t is presently being conducted.
We hereby consent to the references made to us ~n the
Official Statement.
Respectfully yours,
5Z90b
~mith Bar~ey, Harris Upham
& CO. Incorporated
Bakersfield Memorial Mospitat
· 1989
Page 4
have made inquiries of officials of =he Hospital who
have primary responsibility for financial and accounting
matters as to whether:
(a) there was any change at
1989 in the long-ter~ debt of the Hospital othe~
than oecasioned by scheduled repayments of such
indebtedness, or any d~crease in net current asse~s
as compared with the amounts shown in the April S0,
1989 incomplete unaudited financial statements
furnished to us by the Hospital, or
(b) at 1989, there was any
decrease in the balances of the general funds as
compared with the amounts shown in the April 30,
1989 incomplete unaudited financial statements
furnished to us by the Hospital.
On the basis of these inquiries and o=~ reading of the
minutes described in 3. above· nothing has come to our
attention that caused us to believe that there was any
such change or decrease, except in all instances
changes which the Official Statement discloses have
occurred or may occur.
(6) Our audits of the fina~oia! statements fo: the
periods referred to in the first paragraph of this
letter were made for the purpose of expressing an
opinion on such financial statements taken as a whole
and not for the purpose of expressing an opinion on
balances of individual accounts or ~ummarles of selected
transactions such as those enumerated below and, accord-
ingly. we express no opinion thereon.
(7) However, for purposes of ~his letter, we have
also read the info~naticn included in the Official
Statement under the captions listed below and performed
the following additional procedures. The procedures,
which were applied as indicated w~th respect to ~he
items enumerated below, consisted of:
Smith Barney, Harris Upham
& Co. Incorporated
Bakersfield Memorial Hospital
, 1989
Page 5
Document/CaPtion Paragraph
Official Statement:
Procedures and Findings
[To be completed.]
(8) It should be understood that we make no
representation as to qu@stions of legal interpretation
or as to the sufficiency for your purposes of the
procedures enumerated in the preceding ]paragraph; also,
such procedures would not necessarily reveal any mate-
rial misstatement of the ~mounts listed above. Further,
we addressed ourselves solely to the data as set forth
in the Official Statement and make no representation as
to the adequacy of disclosure or as to whether any
material facts have been omitted.
(9) The letter is solely for the information of,
and assistance to, the Underwriter in conducting and
documenting its inveztigatlon of the affairs of the
Hospital in connection with the offering of the securi-
ties covered by the Official Statement, sad is not to be
used, circulated, quoted or otherwise referred to for
any other purpose, including but not limited =o the
purchase or sale of securities, nor is it to be referred
to in whole or in part in the Official Statement or in
an~ other document, except that reference may be made to
it in the underwriting agreement or in the closing
documents pertaining to the offering of the securities
covered by the Official Statement.
very truly yours,
5Z87b
EXHIBIT B
[Letterhead of City Attorney for the City]
1989
Smith Barney, Harris Uph~u & Co.
Incorporated
31st Floor
350 California Street
San Francisco, CA 94104
Bskersfield Memorial Hospital
420 34th Street
Ba~ersfield, CA 93303
$35,0D0,000
CZTY OF BAKERSFIELD
HOSPITAL R£VENUE aON~$
(G~AT~R BAKERSFIELD MEMORIAL HOSPITAL
Series 1984
$20,000,000
CIF{ OF BAKERSFIELD
HOSPITAL R~V~NUE BONDS
(BAKERSFIELD MEMORIAL HOSPITAL)
Series 1989
Dear Ladies and Gentlemen:
I am the City Attorney for the City of Bakersfield,
State of California (the "City") and have acted as such in
connection with the conversion of the above-referenced Series
1984 Bonds to a fixed rate of interest and issuance and sale
of tho above-referenced Series 1989 Bonds (collectively, the
"Bonds), which Bonds are being 'delivered and sold pursuant to
a Bond Purchase Agreement dated , 1989 (the "Bond
Purchase Agreement") between Smith Barney, Harris Upham & Co.
Incorporated (the "Underwriter") ~nd the City. Any capi-
talized term used herein and not defined shall have the
meaning assiqned to it in the ~ond Purchase Agreement.
In this connection, I have reviewed and examined cer-
tain proceedings and documents with respect to the Bonds, and
such records, certificates and other documents as we have
considered necessary or appropriate for the purposes o~ this
opinion, including the Law, the Bond Resolution, the Loan
Agreements, the Indentures, the Bond Purchase Agreement, the
Proliminar~ Official Statement dated June 1989, and the
final Official Statement dated , 1~89 with respect
tO the conversion to a fixed rate of in%eros% and remarketing
of the Series 1984 Bonds and the issuance and offering of the
Series 1989 Bonds (collectively, the "Official Statement")
and a closing certificate of the City. Based on such review
and such other considerations of law and fact as we believe
to be relevant, we are of the opinion that:
1. The City is a municipal corporation and
Charter City of the Scare of California, duly organized
under the laws and Constitution of the State of
California. The City is authorized by the laws of the
State of California, including particularly the Law, to
convert the interest rate to a fixed rate a~d cause to
be delivered the Series 1984 Bonds ~Lnd tO issue, sell
and deliver the Series 1989 Bonds for, among other pur-
poses, the purposes expressed in the Loan Agreements and
the Indentures and to enter ~nto and perform its obliga-
tions under the Loan Agreements ~nd the Indentures and
the Bond Purchase Agreement.
2. Th~ City has full power arid authority to
¢ons%/r~aa=e all transactions contemplated by the Bonds,
the Loan Agreements~ the Indentures, the Bond Purchase
Agreement and any and all other agreements relating
thereto, to which the City is a party.
3. The City has duly authorized all action
necessary to be taken by it or on its behalf for (i) the
conversion of the interest rate on the Series 1984 Bonds
to a fixed rate and to cause the purchase of such Series
1984 Bonds from their current owners a~d deliver the
Series 1984 Bonds for remarketing at a fixed rate of
interest, (ii) the issuance and dellv~ry o£ the Series
1989 Bonds upon the terms set forth in the 1989 Inden-
ture; (ili) the execution and deliver}, of the Inden-
· tures, the Loan Agreement~ and the Bond ~urchase
Agreement; (iv) the a~proval of the distribution o~ the
Official Statement; and (v) the carrying out, giving
effect to and consummation of the transactions con-
templated thereby.
4. The Indentures, the Loan Agreements and the
Bond Purchase Agreement have been duly and validly
authorized, executed and delivered by the City and th~
same are in full force and effect as of the date hereof
and are the valid and legally binding obligations of the
city, enforcea]31e against the City in accordance with
their respective terms, except to the extent the
enforceability thereof may h~ limited by b~nkruptcy,
insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally.
5. The execution and delivery by the City of t-he
Loan Agreements, the Indenture and the Bond Purchase
Agreement ~nd the performance of it~ obligations
ther~u.nder do not ~nd wall not result in a violation Of
~ny provision of, or in default under, California
statutes organizing and governing the City or, to the
best of our knowledge after diligent inquiry and review
of the City's records, any agreement or oliher instrument
to which the Issuer is a party or by which it or its
properties are bound.
6. All actions necessary to be taken by the City
Council of the City have been taken, and no additional
approval, authorization, consent or other order of the
City or any public board or body is legally required to
allow the City to enter into and perform its obligations
u~der the Loan Agreements, the Indentures and the Bond
!~urchase Agreement as described in the Official
Statement.
7. The City is not in violation of any provi-
sion of, or in default under, California statutes
organizing and governing the City.
8. To the best of my knowledge,. there are no
legal or governmental actions, proceedings, inquiries or
investigations pending or threatened by governmental
authorities or to which the.City is a party or of which
any property of the C~ty is subject, except as described
in the Official ~tatement, which, if determined
adversely to the City, would individually or in the
aggregate (i) materially and adversely affect the
validit~ or the enforceability of the Loan Agreements,
the Indentures or the Bond Purchase Agreement, (ii)
otherwise materially or adversely affect the ability of
the City to comply with its obligation~ under the Lo~n
Agreements, the Indentures or the Bond Purchase Agree-
ment, or materially ~d adversely affect the
transactions contemplated by the Official Statement to
be engaged in by the City.
9. Based upon my experience as counsel for the
City and on my review of and participation in the
drafting of the Official Statement, amd after diligent
inquiry, we have no reason to believe that the ~nforma-
tlon regarding the City under the caption "T~ CITY" in
the Official Statement contains any u~tz-u~ statement of
a material fact or omits to state ~n~f material fact
necessary in order to make th~ statements made therein,
in light of the circumstances under which they were
made, not misleading.
~0. TO the best of my .knowledge, the city has not
been notified of a~y listing or proposed listing by the
Internal Revenue $ervioe to the effect that it is a bond
issuer whose arbitrag~ c~rtifications may not be relied
upon.
we hereby consent to the references mad.e to me in the
Official Statement.
R~sp~ctfully yours,
B-4
Exhibit A--1
[Letterhead of Coopers a Lybrand]
· 1989
(Date of Bond Closing)
Smith Barney, Harris Upham &
Co. Incorporated
Slst Floor
S50 California Street
San Francisco, CA 94104
Bakersfield Memorial Hospital
420 34th street
Bakersfield, CA 93303
Dear Ladies and Gentlemen:
we refer to our letter of , 1989 relating to
the Preliminary Official Statement and in connection with the
remarketing of $35,000,000 City of Bakersf~e!d Hospital
Revenue Bonds (~reater Bakersfield Memorial Hospital) Series
1984 and the $20,000,000 city of Bakersfield Hospital Revenue
Bonds (Bakersfield Memorial Hospital) Series 1989. We
reaffirm as of t_he .date hereof-(and as though made On the
date hereof) all statements made in that letter, except that,
for the purposes of this letter:
1. The Official Statement to which this le%~er
relates is the final Official Statement dated
, 1989.
2. The reading of minutes described in para-
graph S of that letter has be~n carried out through
1989 [to within five days of closing].
3. The procedures and inquiries covered in para-
graph 3 of that letter were carried out to
1989 (our work did not extend to the period from
1989 to 1989, inclusive).
4. The period covered in paragraphs 4(a) and (b)
of that letter is changed to the period from 1,
1989 to , 1989; officials of the Corpora%ion
have advised us that no financial statements as of any
date or for any period subsequent to , 1989
were available.
5295b
5. The references made to , 1989 i~
paragraph of that letter were ch~uged to
, 1989.
6. The
changed to
respectively.
references made to , 1989 ~d
1989 in paragraph of that letter are
1989 and 1989,
This letter is solely for the information of, and
assistance to, the underwriters in conducting and documenting
their investigation of the affairs of the Corporation in
connection with the offering of the securities covered by the
Official Statement, and is not to be used, circulated, quoted
or otherwise referred to within or without the underwriting
~roup for any other purpose, including but not limited to the
registration, purchase or sale of securities, nor is it to be
filed with or referred to in whole or in part in the Official
Statement or any other document, except that reference may be
made to it in the underwriting agreement or in any list of
closing documents pertaining to the offering of the securi-
ties covered by the Official Statement.
Very truly yours,
5295b
Statement (or any EXhibits thereto) as originally cir-
cu!ated, or has the effect that the Official Statement
(or any Exhibits thereto) as originally circulated,
contains an untrue, incorrect or misleading statement of
a material fact or omits to state a material fact neces-
sary to be ~ta%ed therein in order to make the state-
ments.made therein, in light of the circumstances under
which they were made, not misleading;
(e) Additional material restrictions not in force
as of the date hereof shall have been imposed uDon
trading in securities generally by any governmental
authority or by any national securities exchange;
(f) The Yew York stock ~xOhange or other national
securities exchange, or any governmental authority,
shall impose, as to the Bonds, or obligations of the
general character of the Bonds. any material restric-
tions not now in force, or increase materially those now
in force, with respect to the extension of credit by, or
the charge to the net capital requirements of, the
Underwriter;
(g) A general banking moratorium shall have been
established by federal, New York
authorities; or California
(h) A default has occurred with respect to the
obligations of, or proceedings have been instituted
under, the federal b~n_kruptcy laws or any similar state
laws by or against any state of the United States or any
city located in the United States having a population in
excess of one million persons or any entity issuing
obligations on behalf of such a city or state which, in
the Underwriter's opinion, materially adversely affects
the market price of the Bonds; or
(i) A war involving the United States shall have
been declared, or any conflict involving the armed
forces of the United States shall have escalated, or any
o~_her national ~r gency relating to the effective
operation of gover~ent qr the fin~c~co~it sha
have occ~red, which, ~n t~
~e ob~igation~ of the City here~d
. er are~,~s~jeet to the
un=erwriter s perform~ce of its oblzg~ions heresder.
SECTION 6. REPRESENTATIONS AND A~R~.EMIENTS TO SURvIvE
DELi-v~.
~!~ representations, warranties, covenants, agreements
and Indemnities of the City shall remain operative and in
full force and effect, regardless of any investigations made
by or on the Underwriter's behalf, and shall survive delivery
of the Bonds to the Underwriter.
SECTION 7. PAYMENT OF EXPENSEs.
All expenses and costs to effect the remarksting,
authorization, preparation, issuance,. delivery and sale of
the Bondm (including, without limitation, the fees and dis-
bursements of Orrick, Herrington & Sutcliffe, as bond
counsel, Arthur J. Saalfield, City Attorney for the City, and
Mumick, Peeler & Garrett, as counsel to the Corporation,
accountant's fees and expenses, the fees and expenses associ-
ated with the Financial Feasibility Study, the fees of t_he
Trustee and any paying agent fees, the fees of the rating
agencies and expenses related to the obtaining of ratingm on
the Bonds, the fees and disbursements of Kutak Rock &
Campbell in connection w~th the qu/alification of the Bends
for male under the securities or "Blue Sky" laws of the
various jurisdictions and the preparation of "Blue sky"
Memoranda, Remarksting Fee and the expenses ~=d costs for the
preparation, printing, photocopying, execution and delivery
of the Bonds, the Official Statement, the Loan Agreements,
the Master Indenture, the Indentures, this Bond Purchase
Agreement and all other agreements and documents contemplated
hereby) mhall be uaid out of the proceeds of the Bonds to the
extent permitted,-in the opinion of Bond Cour. sel, by federal
tax law, or, if the Bonds are not delivered to and sold by
the City to the Underwriter, and to the
extent not permitted
to be'paid from bond proceedings, shall be (except for the
Remarksting Fee) paid by the Corporation.
SECTIO~ 8. USE OF OFFICIAL STATrA~ENT.
The City hereby ratifies and confirms the Underwriter's
authority to use the Preliminary Official Statement; and the
City authorizes the use of, and has made available, the
Official Statement for the use by %he Underwriter in connec-
tion with the remarksting and sale of the Bonds.
SECTION 9. NOTICE.
Any notice or other communication to be given to the
City under this Bond Purchase Agreement may be given by
mailing or delivering the same in writing to~.i"the City of
--14-
5~86b
Bakersfield, Bakersfield, California ; any notice or
other communication to be given to~ the Underwriter under this
Bond Purchase Agreement may be given by delivering the same
in writing to Smith Barney, Harris Upham & Co. Incorporated,
350 California Street, San Francisco, California 94104; and
any notice or other communication to 'be given to the
Corporation under this Bond Purchase Agreement may be given
by delivering the same in writing .to Bakersfield Memorial
Hospital, 420 S4th Street, Bakersfield, California 93303.
SECTION 10. A~PLICABLE LAW; NONASSiGNABILITY..
This Bond Purchase Agreement shall be governed by the
laws of the S~ate of California. This Bond Purchase
Aqreement sh=ll not be assigned by the City.
SECTION 11. ~D[~CUTION OF COUlqTERPAllTS.
This Bond Purchase Agreement may he executed in several
counterparts, each of which ~ha!l be regarded as an original
and all of which shall constitute one and t_he same document.
Attest:
CITYOF ~AK~RSFIELD,
STATE OF CALIFORNIA
~y
Secretary
By
[Insert Title]
SMITM BARNEY, FJlltRIS U!~HAM &
CO. INCORPORATED
Vice President
This Bond Purchase
Agreement is hereby
approved byBakersfield
Memorial Hospital
BAKERSFIELD M~/~ORIAL HOSPITAL
By
Chairman, Board
Directors
5~86b
MATuEITIES, INTEREST RATES AND I~ED~_DTi0~
PROVISIONS OF THE SERIES 1984 BONDS
AND THE SERIES 1989 BONDS
[To be completed,]
-16-
528&b
~XHIBIT A
[Letterhead of Coopers & Lybrand]
, 1989
[Dated within five days of execution
of Bond Purchase Aqreement]
Smith Barney, Harris Upham
& Co. Incorporated
31St F1OO~
350 California Street
San Francisco, CA 94104
Bakersfield Memorial Hospital
420 34th Street
Bakersfield, CA 93303
Dear Ladies and Gentlemen:
This letter is written at the request of Bskers£ield
Memorial ~ospital (the "Hospital") relating to the remarke%-
ing of the $$5,000,000 1984 series bonds and the sale of
$20,000,000 1989 series bonds.
We have audited the balance sheets of the Mospital as of
June-3.0, 1988 a/ld 1987, and the related statements of revenue
and expense, changes in fund balances and chan~e~ in £inan-
cial position of general funds for each year in the three-
year period ended June 30, 1988r included in the Mospltal's
official Statement ("official Statement") relating to the
~ond$; our report with respect thereto is also included in
the O£ficial Statement. In connection with the Official
Statement;
(1) We are independent certified public account-
ants w~th respect to the Hospital within the meaning o£
Rule 101 o£ the Code o~ Professional ~thlcs of the
American Institute of Certified Public Acco~l~tal~ts.
5ZS7b
Smith Barney, Harris Upham
& Co. Incorporated
Bakersfield Memorial Hospital
, 1989
Page 2
(2) We have not audited any financial statements
of the ~uspital as of ~ny da=e or for any period sub-
sequent to June 30, 1988; although we have made am audit
for the years ended Jttne 30, 1988, 1987 and 1986, the
purpose (and therefore the scope) of such audit was to
enable us to express our o~inion on the financial
statements as of June 30, 1988, 1987 alld 1986, ~d for
~he years ~hen ended, but n~t on the ~in~ci~l ~ate-
ments for any interim period within or s~se~ent
such years. ~er~for~, w~ ar~ ~1~ to ~d do not
e~ress ~y opinion on the fin~cial position or results
of operations as of ~y ~nterim period .within ~e
ended J~e 30, 1988, 1987 and 1986, or a~ of ~y date or
for ~y period s~se~ent to J~e 30, 1988.
(3) For th~ purposes of this letter, we have read
the 1988 and 1989 minutes of the Board of Directors of
the Hospital as set forth in the minute books at
April ~0, 1989, officials of the Hospital having advised
us that the minutes of all such meetings for the period
were set forth therein, and have carried out other
procedures to April $0, 1989 (our work d!id not extend to
the period from April 30, 1989
1989, inclusive), as follows: with respect to the
period from July 1, 1988 to April 30, 1989, we have:
(a) read the incomplete unaudited financial
statements (incomplete in that relevant footnotes
and a statement of changes in financial position
are not available) of the Hospital as of April 30,
1989, furnished to us by the Hospital, officials of
the Hospital who have primary responsibility for
financial and accounting matters having advised us
that no such financial statements as of any date or
for any period subsequent to April 30, 1989, were
available; and
(h) made inquiries of officials of the
Hospital who have primary responsibility for
financial and accounting matters as to whether the
tinaudited financial statements referred to in 3(a)
above are fairly presented in conformity with
Smith Sarney, Harris Upham
& Co. Incorporated
Bakersfield Memorial Hospital
1989
generally accepted accounting principles applied on
a basis substantially consistent with that of the
audited financial statements included in the
O££icial Statements.
The foregoing procedures do not constitute an audit made
in accordance with generally accepted aud~tlng stand-
ard~. Further, such procedures would not necessarily
reveal matters of significance with respect to the
comments in the following paragraph. Accordingly, we
made no representations as to the sufficiency of the
foregoing procedures for your purposes.
(A) Nothing has come to our attention as a result
of the foregoing procedures, however, that caused us to
believe that except as disclosed in the Official
Statement:
(a) at April 30, 1989 there wag any change in
the long-term debt of the Hospital, other than as
occasioned by s~heduled repayments of such indebt-
edness, or any decrease in net current assets as
compared with the amounts shown in the June 30,
1988 audited financial statements included in the
Official Statement; or
(b) at April 30, 1989 there was any
i==F2L%ak'~ %%~%%~,~J~%~5~%~%~~ fl~%~~
Statement.
(5) As mentioned under 3(a) above, officials of
the Hospital who have primary responsibility for finan-
cial and accounting matters have advised us that no
statements as of any date or for any period ~ub~quent
to April 30, 1989 are available; accordingly, the pro-
cedures carried out by us with respect to changes in
financial statement items after April 30, 1989 have, of
necessity, been even more limited than those with
respect to th~ period referred to in 3(a) above. We
$Z$7b
of the City, threatened against or affecting it (or, to
its knowledge, any basis therefor) wherein an
vorable decision, ruling or finding would adversely
affect the transactions contemplated by this Bond PUr-
chase Agreement or would adversely affect the validity
of the Bonds, the Pond Resolution, the Loan Agreements,
the Indentures, this Bond Purchase Agreement or any
agreement or instrument to which the City is a party and
which is used or contemplated for use in the consumma-
tion of the transactions contemplated hereby or by the
O~{icial Statement.
(f) The City will not knowingly take or omit to
take any action, which action or omission will in any
way cause the proceeds from the sale of the Bunds to be
applied in a m~er other than as provided in the Inden-
tures or which would cause the interest on the Bonds to
be includable in gross income for federal income tax
purposes.
(g) The execution and delivery of this Bond Pur-
chase Agreement, and the performance by '~he City of its
obligations under the Loan Agreements and the Inden-
tures, do not and will not violate any court order or
consent decree by which the City is bound and such
actions do not and will not constitute a breach of or a
default under any agreement, indenture, mortgage, lease,
note or other obligation or instrument to which the City
is a party or any existing law to which the City is
subject, and no approval or other action by any other
governmental authority or agency is required in
connection therewith which has not been previously
obtained or accomplished.
(h) The City agrees that, if during such time as
the Official Statement is used in connection with the
conversion of the rate of interest on the Series 1984
Bonds to a fixed rate, the remarketing of the Series
1984 Bonds and the offering and sale of the Series 1989
Bonds, any event kno%~n to =he City relating to or
affecting the City shall occur which might materially
affect the correctness or completeness of any statement
of a material fact contained in the Official Statement,
the City will promptly notify the Underwriter in writing
of the circumstances and details o~ such event.
(1) The City agrees to reasonably cooperate with
the Underwriter and its counsel in order to qualify the
Bonds for offering and Sale ~nder the securities or
"Blue SkT" laws of such jurisdictions of the United
State~ as the Underwriter may request.
(j) The Ci:y has not been notified of any list-
ing or proposed listing by the In~ernal Revenue Service
to the effect that ~t ~s a bond zssuer whose arbitrage
certifications may not be relied upon.
(k) Any certificate authorized by resolution of
t_he Cit~ signed by any authorized officer or official of
the City, as the case may be, and delivered to the
Underwriter shall be deemed a representation by the City
to the Underwriter as to the statements made therein.
(1) The City agrees to indemnify and hold harm-
less the Underwriter, any member, officer or employee of
the Underwriter and each person, if any, who controls
the Underwriter within the meaning of Section 15 of the
Securities Act'of 1933, as amended, and each and all and
any of them from and against any and all losses, claims,
damages or liabilities, and (except as otherwise pro-
vided in paragraph (m) below) to reimburse each such
entity or person for any legal or other expenses reason-
ably incurred by them in defending any action, to the
extent that such losses, claims, damages, liabilities or
actions were caused by or based upon any untrue state-
ment or alleged untrue statement of a material fact
contained in the Official statement or any amendment or
supplement thereto or the omission or alleged omission
to state therein a material fact necessary in order to
make the statements made therein, in light of the cir-
cumstances under which they were made, ]~ot m~sleading,
so long as such information has been supplied by or is a
....description of matters relating to the City.
(m) In case any action shall be brought against
the Underwriter. any member, officer or employee of the
Underwriter or any person who controls the Underwriter
within the meaning of Section 15 of t. he Securities Act
of 1933, as amended (collectively, the "IRdemnified
Parties"), and in respect of which the City is required
to indemnify an~ Indemnified Party pursuant to the
provisions of paragraph (l) above, such Indemnified
Party shall promptly notify the City in writing and the
City shall assume the defense thereof, including the
employment of counsel and the payment of all expenses.
Any such Indemnified ~arty shall have the right to
employ separate counsel 'in any such action and partici-
pate in the defense thereof. but the fees and expenses
of such counsel shall be at the expense of such Indem-
ni£ied Party, unless the employment of such counsel has
been specifically authorized by the City. The Ci%-y
shall not be liable for any settlement of any such
action effected without its consent, but if settled with
the consent of the City, or if there be a final judgment
for the plaintiff in any such action, the City agrees to
indemnify and hold harmless any such Indemnified Party
from and against any loss or liability by reason of such
settlement or judgment.
S~CTIO~ 2. PURCHASE, SALE AND DELi%~Ky OF TH~ BONDs.
On the basis Of, and in reliance upon, the representa-
tions, warranties, covenant s and agreements of the City
contained herein and of the Corporation contained in the
Inducement Letter and in the other documents and agreements
referred to herein and subject to the terms and conditions
herein set forth, at the Closing Time (hereinafter defined),
the City agrees to cause to he sold by the current owners to
the Underwriter the Series 1984 Bonds at 100% of the prin-
cipal amount thereof and to cause to be paid to the Under-
writer a remarketing fee (the "Remarksting Fee") equal to
$ (equal to the principal amount of the Series
1984 Bonds converted to a fixed rate of interest multiplied
bl; a remarketing fee equal to % of such Series 1984 Bonds)
and the Underwriter agrees to purchase from the City and the
City agrees to sell to the Underwriter the Series 1989 Bonds
at a price of $ (equal to the principal amount of
the Bonds less an ~lnderwriting discount of $ ) (the
"Purchase Price"), plus accrued interest from the date of the
Bonds to the Closing Date (hereinafter defined).
The Bonds shall be issued %%nder and secured as provided
in the Indentures, and the Bonds shall have t-he aturltles
and interest rates and be s~bject to redemption as set forth
in the Indentures and the final Official Statement and as set
forth on Schedule I attached hereto.
At a.m., time, on
1989 or at such other time or such other date as shall have
been mutually agreed u~on b!7 the city, the Corporation a~d
the Underwriter, the City will deliver the series 1984 Bo~ds
in fixed-rate form and the Series 1989 Bonds a-~d pay the
Remarketing Fee to the Underwriter, or cause the Remarketing
Fee and the Bonds to be delivered and paid, to the Under-
writer, in definitive form duly executed and authenticated by
the Trustee together with the other documents relating to the
Bonds; and the Underwriter will accept such delivery and pay
-7-
the l~urchase Price of the Series 1989 Bonds plus accrued
interest from the date of the Bonds to the Closing Date by
wire transfer or other direct =ransfer of immediately avail-
able f~nds payable to the Trustee for the account of t_he City
in an amount equal to t_he l~/rchase Price, plus accrued inter-
est. The date of such payment ~d delivery of the Bonds is
herein referred to as the "Closing Date" and =.he hour of such
payment and delivery of the Bonds is herein referred to as
the "Closing Time."
SECTION 3. CONDITIONS TO TH]E UNDERWRIT=R'S OBLIGATIONS,
The Underwriter's obligations herelnader shall be subject
to t_he due performance by the cit~ and the Corporation of
their obligations and agreements to be performed hereunder
and under that certain Inducement Letter from the Cornoration
to the City and the Underwriter (the "Inducement Letter") at
or prior to the Closing Time and to the accuracy of and
compliance with the representations, warranties and covenants
of the City and the Corporation contained herein and in the
Inducement Letter as of the date hereof and as of the Closing
Time, and the Underwriter's obligations hereunder are also
subject to the following conditions:
(a) A letter shall hav~ been delivered to the
Underwriter, dated as of the date hereof, from Coopers &
Lybrand, certified p~blio accountants, containing cer-
tain statements relating to the operations of the
Corporation, in s~bstantially the form and substance as
attached hereto as Rxhiblt A.
(b) The Bonds, the Master Indenture, the Loan
Agreements and the Indentures shall have been duly
authorized, executed and delivered in the form mutually
~greed upon by the City, =he Corporation, the Under-
writer and the Trustee.
(c) At the Closing Time, the Underwriter shall
receive:
(1) ~he opinions dated as of the Closing Date
of (a) Arthur J. Saalfield, City Attorney for the
City, (b) Orrick, Herrington a~d Sutcliffe, as Bond
Co~znsel, (c) Kutak Rock & Campbell, as Counsel to
the Underwriter, and (d) Musick, Peeler & Barrett,
as Counsel to the Corporation, all s%lbsta~tially in
form ~ad substance as attached hereto in Exhibits
B, C, C-i, D and E, respectively;
-8-
(2) A letter from Coopers & Lybrand in which
consent is given to the use of its auditor' s
reports 011 the financial statements of the Corl~ora-
tion in the Official Statement ~nd to the refer-
ences made 1;o the firm in the Official Statement;
(3) A letter from Ernst & Whim/e}, in which
consent is given to the use of the financial
feasibility study in the Official Statement and to
the references made to the firm in the Official
St at ement;
(4) Evidence, satisfactory to the Under-
writer, that the Inducement Letter, in form and
substance submitted to and apDroved by the
Corporation, the Underwriter and the City, has
been duly authorized, executed and delivered and
has not been amended, modffied or rescinded and is
in full force and effect as of the Closing Time.
(5) A certificate, in form and substance
satisfactory to the Underwriter and its counsel, of
the of the City or any
duly authorized officer or official of the City
satisfactory to the Underwriter and its counsel,
dated as of the Closing Date, to the effect that:
(i) each of the City's representations, warran-
ties and covenants contained herein are true and
correct as of the Closing Time; (il) the City has
authorized, by all action necessary under the Law
and the laws of the State, the adoption of the Bond
Resolution and the execution, delivery and due
performance of the Bonds, the Loan Agreements and
the Indentures; (iii) no litigatioR is pending, or
to his knowledge threatened, to restrain or enjoin
the remarksting of the Series 1984 Bonds or the
issuance or sale of the Series 1989 Bond~ or in any
way affecting any authority for or't~e validity of
the Bond Resolution, the Bonds, the Loan Agree-
ments, the Indentures or this Bond Purchase Agree-
ment: and (iv) the Bonds, the Loan Agreements and
the Indentures, as executed by the City, are in the
form or in sub~ta~tially the form approved for such
execution by appropriate proceedings of the City;
(6) A certificate, Satisfactory i~ form and
substance to the Underwriter and its counsel, of
the Chairman of the Board, President and Senior
Vice President-Financial Services of the Corpora-
tion (or such other officers or officials of the
-9-
Corporation as the Underwriter and its counsel may
approve), dated as of the Closing Data, to the
effect that (i) since June 30. 1988 there has not
bson any material adverse change in the properties,
financial position or results of operations of the
Corporation, whether or not arising from transac-
tions in the ordinary course of business, other
than as set forth in the Official Statement; a~d
since such date the Corporation has no~ entered
into any transaction or incurred ~n~ liabi!it-~
material as to the Corporation, except as set forth
in the Official Statement; (ii) there are not
.pending or, to their knowledge, threatened legal or
administrative proceedings which are not disclosed
in the official Statement. and which are material
as to the CorDoration, or to which the Corporation
is a party. or of which property of the Corporation
is the subject, or which will materially and
adversely affect the transactions contemplated
hereby or by the Official statement or which will
materially and adversely affect the validity or
enforceability of the Bonds, the Bond Resolution,
the Loan Agreements, the Master Indenture, the
Indentures or this Bond Purchase Agreement~
the information contained in the Official Statement
r.lating to the Corporation is true
all material respects and does not contain any
untrue or incorrect statement of a material fact
and does not omit to state a material fact neces-
sary in order to make the statements made therein,
in light of the circumstances under which they were
made, not misleading; (iv) each of the Corpora-
rich's representations, warranties and covenants
contained herein and in the Inducement Letter are
true and correct as of the Closing Time; and (v)
the Corporation has duly authorized, by all neces-
sary action, the execution. delivery and due
performance of the Inducement Letter. the Loan
Agreements, the Master Indenture, the Indentures
and all other documents necessary in connection
therewith:
(?) A letter from Coopers & Lybrand,
certified public accountants, dated the Closing
Date, in substantially the form and substance as
attached hereto as Exhibit A-l;
(8) ~vidence satisfactory to the Underwriter
that the Bonds have received an "rating
~10-
from Standard & Poor's Corporation and
from ~oody's Investors Service and that such
ratings are in effect at the Closing Time;
(9) The series 1984 Bonds have been suc-
cessfully converted to a fixed interest rate;
(10) The Underwriter shall have received the
Ramarketing Fee;
(11) Evidence that Federal Reporting Form 8038
has been executed by the City and filed with the
Internal Revenu~ Service; and
(12) Such additional certificates and other
documents as the Underwriter may reasonably request
to evidence Performance of or compliance with the
provisions of this Bond Purchase Agreement a~d the
transactions contemplated hereby and by the Offi-
cial Statement, all such certificates and other
documents to be satisfactory in form and substance
to t_he Underwriter ~nd its counsel.
(d) The City and the Corporation shall have
obtained and presented evidence to the Underwriter that,
except as disclosed in the Official Statement, all
necessary approvals, whether legal or administrative,
have been obtained ~rom applicable federal, state and
local entities and agencies for the construction
financed, in part, with proceeds of the Series 1984
Bonds and reimbursed, in part, with the proceeds of the
Series 1989 Sonds.
SECTION 4. THE UNDERWRIT~R'S RIGHT TO CANCEL,
The Underwriter shall have the right to cancel its
obligation to purchase th~ Bond~ hereunder by notifying the
City in writing or by telegram of its election so to do
between the date hereof and the Closing Time, if at any time
hereafter and prior to the Clo~ing Time:
(a) A tentative decision with respect to legi$1a-
tio~ shall be reached by a co~ittee of the House of
Representatives or the Senate of the Congress of the
United States or legislation shall be favorably reported
by such a committee or be introduced, by amendment or
otherwise, in, or be enacted by, the House of Repre-
sentatives or the Senate, or be recommended to the
Congress of the United States for passage by the Presi-
dent of t_he United States, or a decision ~ a court
established under A:tic!e III of the Constitution of the
United States, or the Tax Court of the United States,
shall be rendered or a ruling, regulation or order of
the Treasury Department of the United States or the
Internal Revenue Service shall . be nlade or proposed
having the purpose or effect of Imposing federal income
taxation upon or including as gro.~s income for federal
income taxation purposes, or any other event shall have
occurred which results in the imposition of federal
income taxation upon or including as gross income for
federal income taxation purposes, revenues or other
income of the general character to be derived by the
City (or by a~y similar body) or interest received on
obligations of the general Character of the Bonds, or
the Bonds, which, in. the Underwriter's opinion, mate-
rially adversely affects the market price of the BOnds;
(b) Any legislation, ordinance, rule or regulation
shall be introduced in, or be e~acted by, any governmen-
tal body, department or agency in the State, or a deci-
sion by any court of competent jurisdiction within the
$t.at.e shall be rendered which, in the Underwriter's
opinion, materially adversely affects the market price
of the ~onds~
(c) Legislation sha/1 be. introduced, hy amendment
or otherwise, in, or be enacted by =he House o£ Repre-'
sentatives or the Senate of the. Congress of the United
States, or a decision by a court of the United States
shall be rendered, or a stop order, ruling, regulation
or official statement by, or on behalf of, the Securi-
ties and Exchange Commission or other governmental
agency having jurisdiction of the subjec~ matter shall
be made or proposed, to the effect that =he issuance,
'offering or sale of obligations of the general character
of the Bonds, or the BOnds, as Contemplated hereby or by
the Official Statement, is or would be in violation of
any provision of the Securities Act of 1933, as amended
and as then i11 effect, or the Securities Exchange Act of
1934, as amended and as then in effect, or the Trust
Indenture Act of 1939, as amended and as then in effect,
or with the purpose or effect of otherwise prohibiting
the i~suance, offering or sale of obligations of
general character of the Bonds, or the Bonds, as contem-
plated hereby or by the Official Statement;
(d) Any event shall have occurred, or informatio~
become known, which, in the Underwrlter's opinion, raakes
Untrue, incorrect or misleading in any material respect
any statement or information contained in the official
-12-
$35,000,000
CITY OF BAKERSFIELD
HOSPITAL REVE~U,.' BONDS
( GREATW_R BAKERSFIELD
M~M01{IAL ~{OSPITAL)
SERLEs 1984
$20,000,000
CITY OF BAKERSFIELD
DRAFT
KR&C
5-25-89
HOSPITAL RE%q~U~ BONDS
(BAkerSFIELD MEMORIAL HOSPITAL)
S~IES 1989
BOND PURCHASE
· 1989
On the basis of the representations, warranties and
covenants contained in the Inducement Letter (hereinafter
defined) and in this Bond Purchase Agreement and upon the
terms and conditions containad herein, the undersigned, Smith
Barney, Bartie Upham & Co, Incorporated (the "Un- · ,.
uerwr~ter ),
hereby offers to purchase (i) all of the outstanding City of
Bakersfield Hospital Revenue ~onds (Greater Bakersfield
Memorial Hospital) Series 1984 (the "Series 1984 Bonds") from
the owners thereof which are presently outstanding in the
aggregate principal amount of $35,000,000 and which are
converted to a fixed rate of interest on, 1989
(the "Conversion Date") pursuant to the provisions of an
Indenture dated as of December 1, 1984, as amended and
restated by the Amended a~d Restated Indenture dated as of
June 1, 1989 (cotlectively,'the "1984 Indenture") between the
City of ~akersfield, California (the "city") and Bankers
Trust Company of California, N,A., Sa~ Francisco, California
(the "Trustee") and (ii) $20,000,000 aggregate .principal
amount of City of Bakersfield Hospital Revenue Bonds
(Bakersfield Memorial Hospital) Series 1989 (the "Series 1989
Bonds") to be issued by the City· a municipal corporation and
Charter City of the State of California (the "State"), %under
and pursuant to an I~dsnture dated as of June 1, 1989 (the
"1989 Indenture") between the City and the Trustee and
pursuant to a resolution duly adopted by the City Council of
the City (the "City Council") on May 31, 1989 (the "Bond
Resolution"). The Series 1984 Bonds and the Series 1989
Bonds are collectively referred to herein as the "Bonds," and
the 1984 Indenture and the 1989 Indenture are collectively
referred to herein as the "Indentures." All other terms used
in this BOnd Purchase Agreement and not defined shall have
the definitions given such terms in the Indentures, unless
the context requires otherwise.
The 1984 Bonds have been issued and will be converted to
a fixed rate of interest under the powers vested in the City
p~rsuant to the State constitution and Section 12 of its City
5286b
Charter, pursuant to which the City Council adopted the
Health Facilities Financing Law, Ordinance NO, 2871,
Constituting Chapter 360 of the City's Municipal Code
(collectively, the "Law"), and the Series 1989 Bonds are to
be issued by the City pursuant to and in accordance with the
Law.
The Bonds are payable, except to the extent payable from
proceeds of the Bonds and investment income thereon, or
proceeds of insurance and condemnation awards, solely and
only from ReVenues which consist primarily of payments made
by Bakersfield Memorial Hospital (formerly, Greater
Bakersfield Memorial Hospital Association), a California
nonprofit public benefit corporation (the "corporation")
which owns and operates a 290-bed community-based hospital
located in Bakersfield, California, under, in the case of the
Series 1984 Bonds, the Loan Agreement dated as of December 1,
1984, as amended and restated by the Amended and Re~tated
Loan Agreement dated as of June 1, 1989 (collectively, t_he
"1984 Loan Agreement") between the Corporation and the City
and, in the case Of the Series 1989 Bonds, the Loan Agreement
dated as of June 1, 1989 (the "1989 Loan Agreement") between
the Corporation and the City and from payments made by the
Corporation as the sole member of the Obligated Group on, in
the case of the Series 1984 Bonds, Obligation No. 1 dated as
of June 1, 1989 ("Obligation No. 1") and, in the case of the
Series 1989 Bonds, Obligation NO. 2 dated as of June 1, 1989
("Obligation No. 2") issued by the Corporatioa pursuant to
the terms of the ~aster Indenture of Trust dated as of
June 1, 1989 between the Corporation and , as
Master Trustee, and the Supplemental Master Indentures for
Obligation No. 1 and Obligation No. 2, each dated as of
June 1, 1989, between the Corporation and the Master Trustee
(collectively, the "Master Indenture"). The 1984 Loan
Agre~msnt and the 1989 Loan Agreement are collectively
referred to herein as the "Loan Agreements."
The proceeds derived from the remarksting of the Series
1984 Bonds will be paid to the current owners as the purchase
price upon t_he ocRversion of the Series 1984 Bonds to a fixed
rate of interest. The net proceeds of %he Series 1989 Bonds,
together wfth a contrfbution from the Corporation, are being
used to provide funds (i) to reimburse the Corporation for
certain prior capital expenditures, (ii) to fund two separate
Bond Reserve Accounts securing the Series 1984 Bonds and the
Series 1989 Bonds, respectively, and (iii) to pay certain
costs of issuance o£ the Bonds.
--2--
It is expressly understood a~d the parties hereby agree
that under the provisions of the Law, and as provided in the
Bonds and the Indentures, the Bonds, together with interest
thereon, are limited obligations of the City and, in the case
of the series 1984 Bonds, are not a lien or charge upon the
general ftlnds or property of the City. The City shall not be
obligated to pay the principal of the Bonds, redemption
premium, if any, or the interest thereon,. except from
revenues received by the City as described herein, and
neither the faith and credit nor the taxing power of the City
is pledged to the patient of the principal of, redemption
premium, if any, or intere=t on the Bonds.
The Bonds are secured under the provisions of, in the
case of the Series 1984 Bonds, the 1984 Indenture and, in the
case of the Series 1989 Bonds, the 1989 Indenture and will be
payable from paTments made hy the Corporation, in the case of
the Series 1984 Bonds, under the 1984 Loan Agreement and, in
case of the Series 1989 Bonds, the 1989 Loan Agreement and
from payments made by the Corporation as the sole member of
the Obligated Group on, in the case of the Series 1984 Bonds,
Obligation No. 1 and, in the case of the Series 1989 Bonds,
Obligation No. 2. Obligation No. 1 and Obligation No. 2 are
being issued by the Corporation under and pursuant to the
terms of the Ma~ter Indenttnre which will be executed by the
Corporation and the Master Trustee in con~ection with the
conversion of the Series 1984 Bonds to a fixed interest rate
a~d the issuance of the Series 1989 Bonds. Obligation No. 1
a~d Obligation No. 2 and all other Obligations issued ~knder
the Master Indenture will be secured, to the extent permitted
by law, by a pledge and grant to the Master Trustee of a
security interest in the Gross Revenue ~und and all of t_he
Sross Revenues of the Corporation and each future Obligated
Group Member, if any.
SECTION 1. REPi~ESENTATIONS, WARRANTIES, COVENANTS
AND AGR~mm~T$.
By execution hereof, the city hereby warrants, cove-
nants and represents to, and agrees with, the Underwriter
that:
(a) The City i~ a municipal corporation and a
Charter City of the State, duly organized and existing
under the laws of the State. The City is authorized by
the provisions of the Law to issue, sell and deliver the
Series 1989 Bonds for the purposes specified above, to
convert the interest on the series 1984 Bonds to a fixed
rate of interest and is authorized to enter into and
-3--
perform its obligations under the Indentures, the Loan
Aqreement~ and this BOnd Purchase Agreement.
(b) The City has full power and authority to
consummate all transactions contemplated by this Bond
Purchase Agreement, the Bonds, the Indentures, the Loan
Agreements and the ~ond Resolution and any and all other
agreements relating thereto, to which The City is a
party.
(c) The information relating to the City under the
caption "THE CITY" in the Preliminary Official Statement
relating to the Bonds dated Jtu~e 1989' and the final
official Statement relating to the Bonds (collectively
referred to herein as the "Official Statement") do not
contain, and as of the Closing Time (hereinafter
defined) will not Contain, any Untrue s%atement of a
material fact or omit to state a material fact n~cessary
in order to make the statements made therein, in light
of the circumstances Under which they were made, not
misleading, and the Underwriter is authorized to use the
same in elfcoting sales of the Bonds and the Under-
writer's use of the preliminary Official Statement in
connection with the remarketing and the Series 1984
Bonds and the sale of the Series 1989 Bonds is hereby
varified and approved.
(d) The City has duly authorized all action
necessary under the Law or otherwise to be taken by i=
or on its behalf for: (i) the conversion of the rate of
interest on the Series 1984 Bonds to a fixed interest
rate of interest and the mandatory tender and remarket-
ing of the Series 1984 Bonds on the Conversion Date upon
the terms set forth herein and in the 1984 Indenture,
..the Law and in the Official Statement, (ii) the issuance
and delivery of the Series 1989 Bonds upon the terms set
forth in the Law, the 1989 IndeRture and the Official
Statement; (iii) the execution and delivery by it of the
Indentures, the Loan Agreements and this Bond Purchase
Agreement; (iv) the approval of the use and distribution
of the Official Statement; and (v) the adoption of the
Bond Resolution. Copies of the Loan Agreements and the
Indentures executed by the appropriate officers or offi-
cials of the Cit17 will be delivered to the Underwriter
by the City at the Closing Time.
(e) There is no action, suit, proceeding, inquiry
or investigation at law or in equity or before or by any
court, public board or body pending or, to the knowledge
- '[
OMAHA 0FFiC~ COMMUNICATION
KUFAK RCk & C4A4PBELL
ATLANTA
4400 Georgia-Padflc Center
1~3 Peachtree Street, N,E.
Atlanta, Georgia 30.]03
2400 ARCO Tower
70~' 17th Street
D~nver, ~01o~a~o ~202
30~297-2400
N~ Yo~
350 Park Avenue
New York, New York 10022
2~-7~2-08~
O~
~e Omaha B~ng
1~50 F~am S~eet
Omaha, Neb~$~ 68102
WASHINGTON, D.C.
1101 Connect cut Avenue, N.¼
Wa~hington, D.C. 20036
202-g2g-2400
.COMMU~ICATION CENTER USE ONLY
I~ YOU EXPERIENCE ANY P~OBkEMS IN ~£CEIVING TH~S~ PA~ES, PLEASE CALL THE COMMUNISTIONS CENTER OPE~TO~ AS
SOON ~ POSSIBLE AT (402)246-6000, ~TENSZON 380, ~ANK YOU.
We have the following ~acsimile e~i~ment in: our office;
SH~ F0-3100 ~L~CODI~--OR0~(~)(~)(3) (402)34~-1148
~OX 295 TELECOPI~R--~RO~(])(2)(~) (402)346-1148
/F~--GRO~ (3) O~Y (402)346-7920
C0~ I~D ~...
COMMENTS:
DRAFT
I(R&C
5-25-89
, 1989
City of Bakersfield
State o£ California
Smith Barney, Harris
Upham & Co. Incorporated
31St Floor
S50 California Street
San Francisco, CA 94104
Dear Ladies and Gentlemen:
This Inducement Letter is given by the undersigned
~a~.er~£ie!d Memorial Hospital (the "Corporation") in order to
induce the City of Bakersfield, State of California
"City") and Smith Barney, Harris Upham & Co. Incorporated
(the "Underwriter") to enter into a Bond Purchase Agreement
(the "Bond Purchase Agreement"), dated a~ of the date hereof,
re~ating to the conversion of the variable rate of inteTest
to a fixed rate of interest, purchase and remarksting by the
Underwriter of $35,000,000 aggregate principal amount of
outstanding Hospital Revenue Bonds (Greater Bakersfield
Memorial Hospital) Series 1984 (the "Series 1984 Bonds") and
~he purchase by the Underwriter and sale by the City of
$20,000,000 aggregate principal amount of the City'$ Hospital
Revenue Bonds (Baker~£ieId Memorial Hospital) Series 1989
(the "Series 1989 Bonds") (the Series 1984 Bonds a~d the
Series 1989 Bonds are collectively referred to herein as the
"Bonds"). Terms used herein and not'defined shall have the
meanings assigned thereto in the Bond Purchase Agreement.
The Series 1984 Bonds have been issued and will be
converted to a fiEed rate of interest under the powers ve~ted
in the CiTy pursuant to the State Constitution and Section 12
of its city Charter, pursuant to which the City Council
adopted the Health Facilities Financing Law, Ordinance
No. 2871, constituting Chmpter 360 of the City's Municipal
Code (collectively, the "Law") and an Indenture dated as of
5Z92b
December 1, 1984, as amended and restated by the Amended and
Restated Indenture dated as of June 1, 1989 (collectively,
the "198~ Indenture") between the city and Bankers Trust
Company of California, N.A., San Francisco, California (the
"Trustee"). The Series 19~9 Bonds are to be issued by the
City pursuant to and in accordance with the Law and an Inden-
ture dated as of June 1, 1989 (the "1989 Indenture") between
the City and the Trustee. The 1984 Indenture and the 1989
Indenture are collectively referred to herein as the
"I~dentures."
THE BONDS AR~ LIMITED OBLIGATIONS OF THE CITY AND ARE
NOT A LIEN ORCHARG~UPON T~E GENERAL ~UNDS OR PROPERTYOF
THE CITY. TME-CITY SHALL NOT BE OBLIGATED TO PAY TM~ PRIN-
CIPAL OF TH~ BONDs, REDEMioTiON PREMIUM, IF ANY, OR TEE INTER-
EST TMEREON, EXCEPT FROM REVE/FO~S ~(/EI~D ~y T}{E CITYAS
DESCRIBED h~EIN, AND NEIT}fER THE FAITH Ab-D CREDIT NOR THE
TAXING POWER OF THE CITY IS PT.W~GED TO TR-E PAYMENT OF THE
PRINCIPAL OF, R~n~EM~TION 9Pd~MILrM, IF ANY, OR IbT~FJEST ON THE
BONDs,
The Bonds are payable, except to the extent payable from
proceeds of the Bonds and investment incom~ thereon, or
proceeds of insurance and condemnation awards, solely and
only from Revenues which consist primarily of payments'made
by Bakersfield Memorial Hospital (f~rmerly, Greater
Bakersfield Memorial Hospital Association), a California
nonprofit p~blic benefit corporation (the "Corporation")
which o~ns and operates a 290-bed community-based hospital
located in Bakersfield, California, under, in the case of the
Series 1984 ~onds, the Loan Agreement da~ed as of December 1,
1984, as amended and restated by the Amended and Restated
Loan Agreement dated as of June 1, 1989 (collectively, the
"1984 Loan Agreement") between the Corporation and the. City
and, in the case of the Series 1989 Bonds, the Loan Agreement
dated as of J%~e 1, 1989 (the "1989 Loan Agreement") between
the Corporation and the City and from payments made bythe
Corporation as the sole member of the Obligated Group on, in
the case of the Series 1984 ~onds, Obligation No. 1 dated as
of June 1, 1989 ("Obligation No. 1") and, in the case of the
Series 1989 Bonds, Obligation No. 2 dated as of June 1, 1989
("Obligation No. 2") issued by the Corporation pursuant to
the terms of the MaSter Indenture o£ Trust dated as of
June 1, 1989 between the Corporation and , as
Master Trustee, and the Supplemental Master Indentures for
Obligation No. 1 and Obligation No. 2, each ~ated as of
June'l, 1989 between the Corporation and the Master Trustee
(collectively, the "Master Indenture"). The 1984 Loan Agree-
ment and the 1989 Loan Agreement ~re collectively referred ~o
herein as the "Loan Agreements."
-2-
5Zg2b
The proceeds derived from the remarketing of the Series
1984 Bonds will be paid To the current owners as the purchase
price Upon the conversion of the Series 1984 Bonds to a fixed
rate of interest. The net uroceeds o£ the Series 1989 Bonds,
together with a ¢ontributio~ from ~_he Corporation, 'are being
used to provide funds (i) to reimburse the Corporation for
certain prior capital expenditures, (i~) to fund two separate
Bond Reserve Accounts securing the Series 1984 ~ond~ and the
Series 1989 Bonds, respectively, and (iii) to ~ay certain
costs of issuance of the Bonds.
The Bonds are secured under the provisions of, in the
case of the Series 1984 Bonds, the 1984 Indenture and, in the
case of the Series 1989 Bonds, the 1989 Indenture and will be
payable from payment~ made by the Corporation under the 1984
Loan Agre~r~ent and, !n case of the serie~ 1989 Bonds, the
1989 Loan Agreement and from paymeats made by the Corporation
as the sole member of the Obligated Group on, in the case of
the Serie~ 1984 Bonds, Obligation No. 1 and, in the case of
the Series 1989 Bonds, Obligation No. 2. Obligation ~o. 1
and ObligaTion No. 2 are being issued by the Corporation
under and pursuant to the terms of the Master Indenture which
will be executed by the Corporation and the Master Trustee in
connection wi~h the conversion of the Series 1954 Be~d$ to a
fixed interest rate and the issuance of the Series 1989
Bonds. Obligation No. I ~nd Obligation No. 2 and all other
Obligations ~ssued under the Master Indenture will be
sec%Lred, to the extent permitted by law, by a pledge and
grant to t-he Master Trustee of a security interest in the
Gross Revenue Fu_~d and all of the Gross Revenues o£ the
CorDoratlon ~nd each future Obligated Group Member, if any_
With full realization and appreciation of the fact that
the investment value of the Bonds and the ability of the
Underwriter =c remarker and resell the Bonds depends prin-
cipally upon the credit standing of the Corporation, and, in
consideration of the foregoing and the execution a~d delivery
of the Bond Purchase Agreement, the Corporation hereby repre-
sents, warrants and covenants to the Underwriter and the
City, as of the date of this Inducement Letter, as follows:
(a) The Corporation is a nonprofit pW3~!i¢ benefit
corporation duly organized and existing under the laws
of the State of California, and is a tax-exempt organi-
zation under Section 501(e)(2) (the Internal Revenue
Code of 1986, as amended, and exempt from federal income
t~Yatlon ~3ader Section 501(a) of the Internal Revenue
Code).
-3-
,~292b
(b) The Prelim/nary Official Statement relating to
the Bonds dated June , 1989 and the final Official
Statement relating to the Bonds (collectively referred
to herein as the "Official Statement") do not contain
az~ %L~true statement of a material fact or omit to s~a~e
a material fact necessary in order to make the 8tate-
ment~ made therein, in light of the circumstances under
which they were made, not misleading.
(c) The Corporation will not knowingly take or
omit to take any action, which action or omission will
in any way cause the proceeds from the sale of the Bonds
to be applied in a manner other than as provided in the
Loan Agreements or the Indentures or which would cause
the interest on t_he Bonds to be inciudab!e in gross
income for federal income tax purposes.
(d) There is no action, suit, proceeding, inquiry
or investigation at law or in equity, or before or by
any ceurt, public board or body, pending or, To the best
knowledge and information of the Corporation, threatened
against or affecting the Corporation and, to the best
knowledge and information of the Corporation, there is
no basis for a~y such action, suit, proceeding, inquiry
or i~vestigation wherein an unfavorable decision, ruling
or finding would adversely affect the transactions
contemplated by the Official ~tatement or the Bond
~urehase Agreement or the validity and enforceability of
the Bonds, the resolution of the City Council of the
City adopted on May 31, 1989 relating to the Bonds (the
"Bond Resolution"), the Loan Agreements, tlhe Maste:
Indenture, the Notes or this Inducement Letter.
(e) The Corporation has taken all necessary action
to authorize, execute and deliver the Loan Agreements,
the Master Indenture, the Notes, the Indentures, this
Inducement Letter and any and all other agreements
re~ating thereto to which the Corporation ~s a party;
and the Loan Agreements, the Master Indenture, the
Notes, t_he Indentures, this Inducement Letter and any
and all other agreements relating thereto to which the
Corporation is a party, when executed and delivered by
the Corporation, will be legal, valid and binding obli-
gations of the Corporation enforceable in accordance
with their respective terms.
(f) The Corporation has no reason to believe that
the Financial Feasibility Study of Ernst & Whinney as
set forth in ]~chlbit C to the official Statement (the
"Financial Feasibility Study") does not ~airly present
-4-
529;~b
the prospects for the financial performance of the
Corporation i~ f~t~re years. The documents and informa-
tion furnished by the Corporation to Ernst & whinmey in
connection with the preparation of the Financial F~asi-
bility Study were oomphere and accurate at the time of
the s~bm/sslon thereof, and there is no fact which the
Corporation has not disclosed to Ernst & Whinney which
the Corporation has reason to believe would materially
affect t_he assumptions, findings, projections or con-
clusions stated in the Financial Feasibility Study.
(g) The execution ~u/d delivery of this Inducement
Letter, ~nd the performance by the Corporation of
obligations under the Loan Agreements, the Master Inden-
ture, the Notes, the Indentures and this Inducement
Letter, do not amd will not violate the Articles of
Incorporation or Bylaws of the Corporation, or any court
order or consent de~reebywhioh the Corporation is
bound and such actions do not and will not constitute
breach of or a default under any agreement, indenture,
mortgage, lease, note or other obligation or instr%~nent
to which the Corporation is a party or aml~ existing law
to which the Corporation is subject and no approval or
other action by any governmental authority or agency
required in connection therewith which has not been
previously obtained or accomplished.
(h) The Corporation agrees that if during such
time as the Official Statement is used in connection
with the offering and sale of th~ Bonds a~y event known
to ~he Corporation relating to or affecting the Corpora-
tion or the properriss of the Corporation shall occur
which might materially affect the correctness or com-
pleteness of an~ statement of a material fact contained
=n the Official Statement, the Corporation will promptly
notify the U~derwriter and the City in writing of the
circumstances and details of such event.
(i) The Corporation agrees to indemnify and hold
harmless th~ Under%triter and the City, any member,
officer or ~mployee of the Underwriter or the City and
each person, if any, who controls the Underwriter or the
City within the meaning of Section 15 of the Securities
Act of 1933, as amended, and each and all and any of
them from and against any and all losses, claims, dam-
ages or liabilities, and (except as otherwise provided
in paragraph (j) below) to reimburse each such entity or
person for any legal or other expenses reasonably
incurred by th~m in defending ~ny action, to the extent
that such lo~ses, claims, damages, liabilities or
-5-
5292b
actions were caused by or based upon any untrue state-
ment or alleged ~ntrue statement of a material fact
contelned in the Official Statement or any amendment o:
supplement thereto or t~e omis~ion or alleged omissiom
to sta~e therein a material fact necessary- fn order to
make the statements made ~herein, in light Of the cir-
ctlmstances under which they were made, not misleadlnS,
description of matters relating to the Corporation or
its properties.
(j) In case any action shall be brought against
the Underwriter or the Cit~, a~y member, officer or
employee of the Underwriter or the Cit~ or an~ person
who controls the Underwriter or the city within the
memning of ~eotion 15 of the Securities Act of 1933, as
amended (oollective!y, the "Indemnified Parties"), and
in respect of which the Corporation is r~qulred to
inde~if~ ~y Inde~ifted Party pursuit to ths provi-
sions of paragraph (i) above, ~ueh Inde~ified Party
Corporation shall R~s~e the def~n~e thereof, including
th~ amplogit of co~sel ~d ~e pa~ent of all
e~ense~. ~y such Inde~ified P~rty shall have the
right to ~mplo~ smp~rate co~$~l in ~y such action ~d
participate in the defense thereof, but the fees and
~mnzm~ of much uo~mml mhall bm at ~e m~enm~ of much
Inde~ified Party, ~!ess the ~plo~t of such co~sel
has been specific~11~ authorized by ~ Corporation.
The Corporation shall not be 1i~1e for ~y settlement
of ~y Such action elfmeted without its consent, but if
settled with the consent of the Corporation, or if there
be a final jud~mnt for the plaintiff in ~y such
action, the Corporation a~ees to inde~ify ~d hold
hapless ~y Such Inde~ified Party from ~d against ~y
loss or li~tlity by reamon of such settlement or
jud~ent.
(k) The Underwriter agrees that with rompoct to
action taken by ~he Underwriter or ~he failure of The
Under%z~tter to take &orion, aS described below, the
Underwriter will indemnify a~d hold harmless the Corpo-
ration amd t_he city, any member, officer or employee of
the Corporation or the City and eaah person, if any, who
controls t~e Corporation or the City within the meaning
of Section ~5 of the Securities Act of 1933, as amended,
and each and all and a~y of r_hem from and against any
and all losses, claims, damages or liabilities ca~$ed by
any viola:ion by the Underwriter of the "'Blue Sky" law~
of a state in which the Bonds have been advertised,
529Zb
offered or sold and which losses, damages or liabilities
do not result directly or indirectly from any action
taken by the Corporation or the City or from any omis-
sion by ~he Corporation or the City to take action which
has been requested by an Underwriter~ and in case any
such action be brought against the Corporation or the
City, any member, officer or employee of the Corporation
or the City, or any person controlling the Corporation or
the City. wzthin the me~ning of g~ction 15 of the Secu-
rities Act of 1933, as amended, and in respect of which
the Underwriter is required to indemnify such parties
under the terms of this subparagraph (k), such party
shall promptly notify the Underwriter in writing and the
Underwriter shall assume the defense thereof, including
the employment of counsel ~nd the payment of all
expenses. Any such indemnified party shall have the
right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such
indemnified party, unless the employment of such counsel
has been specifically authorized.by the Underwriter.
The Underwriter shall not be liable for any settlement
of any such action effected without its consent, but if
settled w~th the consent of the Underwriter, or if there
be a final judgment for the plaintiff in any such
action, the Underwriter will indemuify and hold harmless
any such indemnified party from and against any loss or
liability by reason of such settlement or jud~nent.
(1) The Corporation acknowledges and accepts the
terms and conditions of the Bond Purchase Agreement as
they relate to the Corporation and its participation in
the transactions contemplated thereby and, subject to
the terms and conditions of the Bond Purchase Agreement,
agrees to pay the expenses contemplated to be paid by
the Corporation pursuant to Section 7 of the Bond Pur-
chase Agreement.
(m) The Corporation agrees to reasonably cooperate
with the Underwriter and its co%u~sel in order to qualify
the Bonds for offering and sale under the securities or
"Blue Sky" laws of such jurisdictions of the United
States am the Underwriter may request.
No person other than the Underwriter and the City and
the persons referred to in paragraphs (i) and (k) hereof and
their respective successors a~d as$igas shall have any rights
under or by virtue of this Inducement Letter. The terms
"successors" and "assigns" shall not include any purchaser of
Bonds from the Underwriter merely because of such purchase.
--7--
The representations, warranties, covenants and indemni-
ties contained in this Inducement Letter shall sub-vive any
termination of the Bond Purchase Agreement or the closing
under the Bond Purchase Agreement and the sale or resale by
the Underwriter of the Bonds and any ~nvestigacion made by or
on behalf o£ t_he Corporation or the Underwriter of any mat-
ters described in or related to the transactions contemplated
by this I~ducement Letter, the Bond Purchase Agreement. the
Official Statement, the Loan Agreements, the MaSter Indenture
or the Indentures.
This Inducement Letter shall be governed by, and
strued in accordance with, the laws of the State of
Cali£ornia.
oon-
This Inducement Letter may be executed in several.coun-
terparts, each of which shall be regarded as an original and
all of which shall constitute one and the same agreement.
Very truly yours,
BAY~I~SFIELD MEMORIAL EOSPITAL
Accepted as of the date
first above written:
CITY OF BAKERSFIELD,
STATE OF CALIFORNIA
Chairman, Board of Directors
Attest:
[Insert Title]
Secretary
SMIT~ BARNEY, HD/~RIS
UPHAM & CO. INCOP, PORAT~D,
Underwriter
5292b --8--