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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 2 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 3 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. 4 471862 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 5 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--