FISCAL AGENT AGREEMENT
by and between
THE CITY OF LAGUNA BEACH
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
as Fiscal Agent
Dated as of [January 1, 2026]
Relating to
$__________
City of Laguna Beach
Underground Utility Assessment District No. 2021-1
(West Street)
Limited Obligation Improvement Bonds
Attachment 2
18 ARTICLE I AUTHORITY AND DEFINITIONS 19
Section 1.01 Authority for this Agreement ............................................................. 19 Section 1.02 Agreement for Benefit of Bondowners .............................................. 19 Section 1.03 Definitions.......................................................................................... 19 ARTICLE II THE BONDS 24
Section 2.01 Principal Amount; Designation.......................................................... 24 Section 2.02 Terms of Bonds. ................................................................................. 24 Section 2.03 Redemption. ....................................................................................... 25 Section 2.04 Form of Bonds ................................................................................... 29 Section 2.05 Execution of Bonds ............................................................................ 29 Section 2.06 Transfer of Bonds .............................................................................. 29 Section 2.07 Exchange of Bonds ............................................................................ 30 Section 2.08 Bond Register..................................................................................... 30 Section 2.09 Temporary Bonds............................................................................... 30 Section 2.10 Bonds Mutilated, Lost, Destroyed or Stolen ...................................... 31 Section 2.11 Special Obligation .............................................................................. 31 Section 2.12 Refunding ........................................................................................... 31 ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS; IMPROVEMENT FUND; COST OF ISSUANCE FUND;
CAPITALIZED INTEREST FUND 31
Section 3.01 Issuance and Delivery of Bonds ........................................................ 31 Section 3.02 Application of Proceeds of Sale of Bonds ......................................... 32 Section 3.03 Improvement Fund. ............................................................................ 32 Section 3.04 Cost of Issuance Fund. ....................................................................... 33 Section 3.05 Capitalized Interest Fund. .................................................................. 33 Section 3.06 Book-Entry System; Delivery of the Bonds to the Depository.......... 34 ARTICLE IV ASSESSMENT REVENUES; REDEMPTION FUND; RESERVE FUND 36
Section 4.01 Pledge of Assessment Revenues; Transfers of Assessment Revenues. ........................................................................................... 36 Section 4.02 Redemption Fund. .............................................................................. 36 19 Section 4.03 Reserve Fund. .................................................................................... 38 ARTICLE V OTHER COVENANTS OF THE CITY 39
Section 5.01 Punctual Payment............................................................................... 39 Section 5.02 Special Obligation .............................................................................. 39 Section 5.03 Extension of Time for Payment ......................................................... 39 Section 5.04 Against Encumbrances....................................................................... 40 Section 5.05 Protection of Security and Rights of Owners .................................... 40 Section 5.06 Compliance with Laws, Completion of Project ................................. 40 Section 5.07 Collection of Assessment Revenues .................................................. 40 Section 5.08 Further Assurances............................................................................. 40 Section 5.09 Tax Covenants ................................................................................... 40 Section 5.10 Covenant to Foreclose........................................................................ 41 Section 5.11 Continuing Disclosure ....................................................................... 41 ARTICLE VI INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS; LIABILITY OF THE CITY 41
Section 6.01 Deposit and Investment of Moneys in Funds .................................... 41 Section 6.02 Rebate Fund; Rebate to the United States .......................................... 43 Section 6.03 Liability of City.................................................................................. 43 Section 6.04 Employment of Agents by City ......................................................... 44 Section 6.05 Books and Accounts .......................................................................... 44 ARTICLE VII THE FISCAL AGENT 44
Section 7.01 Appointment of Fiscal Agent ............................................................. 44 Section 7.02 Liability of Fiscal Agent .................................................................... 45 Section 7.03 Information ........................................................................................ 47 Section 7.04 Notice to Fiscal Agent ....................................................................... 47 Section 7.05 Compensation, Indemnification ......................................................... 48 Section 7.06 Books and Accounts .......................................................................... 48 ARTICLE VIII MODIFICATION OR AMENDMENT OF THIS AGREEMENT 48 Section 8.01 Amendments Permitted. ..................................................................... 48 Section 8.02 Owners’ Meetings .............................................................................. 49 20 Section 8.03 Procedure for Amendment with Written Consent of Owners ............ 49 Section 8.04 Disqualified Bonds............................................................................. 50 Section 8.05 Effect of Supplemental Agreement .................................................... 51 Section 8.06 Endorsement or Replacement of Bonds Issued After Amendments ...................................................................................... 51 Section 8.07 Amendatory Endorsement of Bonds .................................................. 51 Section 8.08 Execution of Supplemental Agreements ............................................ 51 ARTICLE IX MISCELLANEOUS 51
Section 9.01 Benefits of Agreement Limited to Parties ......................................... 51 Section 9.02 Successor is Deemed Included in All References to Predecessor ........................................................................................ 51 Section 9.03 Discharge of Agreement. ................................................................... 52 Section 9.04 Execution of Documents and Proof of Ownership by Owners .......... 52 Section 9.05 Waiver of Personal Liability .............................................................. 53 Section 9.06 Notices to and Demands on City and Fiscal Agent ........................... 53 Section 9.07 Partial Invalidity................................................................................. 53 Section 9.08 Unclaimed Moneys ............................................................................ 54 Section 9.09 Applicable Law and Venue ................................................................ 54 Section 9.10 Conflict with Act................................................................................ 54 Section 9.11 Conclusive Evidence of Regularity ................................................... 54 Section 9.12 Payment on Business Day .................................................................. 54 Section 9.13 Counterparts ....................................................................................... 54 21 FISCAL AGENT AGREEMENT
THIS FISCAL AGENT AGREEMENT (this “Agreement”) is dated and entered into as of [January 1, 2026], by and between the City of Laguna Beach, California (the “City”), and The Bank of New York Mellon Trust Company, N.A., a national banking association duly organized and existing under the laws of the United States, as fiscal agent (the “Fiscal Agent”).
W I T N E S S E T H:
WHEREAS, the City Council of the City (the “City Council”) has formed Underground Utility Assessment District No. 2021-1 (West Street), City of Laguna Beach, County of Orange, State of California (the “Assessment District”), and has levied an assessment on the property in the Assessment District pursuant to the provisions of the Municipal Improvement Act of 1913, Division 12 (commencing with Section 10000) of the California Streets and Highways Code, and provided for the issuance of bonds for the Assessment District pursuant to the Improvement Bond Act of 1915, Division 10 (commencing with Section 8500) of the California Streets and Highways Code (the “Bond Act”), to be secured by such assessment, to finance the design and construction of public improvements for the benefit of the property within the Assessment District; and WHEREAS, pursuant to the Bond Act, the City Council adopted its Resolution No. _______ which resolution, among other matters, authorized the issuance of the City of Laguna Beach Underground Utility Assessment District No. 2021-1 (West Street) Limited Obligation Improvement Bonds (the “Bonds”), in an aggregate principal amount of not to exceed $_______, the unpaid amount of the assessment levied on parcels of property within the Assessment District, and provided that such issuance would be in accordance with the Bond Act and this Agreement, and authorized the execution hereof; and
WHEREAS, it is in the public interest and for the benefit of the owners of the property within the Assessment District and the owners of the Bonds that the City enter into this Agreement to provide for the issuance of the Bonds, the disbursement of proceeds of the Bonds, and the administration and payment of the Bonds; and
WHEREAS, the Bonds will be secured by and paid from the assessments levied on the parcels of property within the Assessment District and the annual installments of such assessments collected with respect to such parcels; and
WHEREAS, all things necessary to cause the Bonds, when executed by the City and authenticated by the Fiscal Agent and issued as in the Bond Act, the Resolution (as hereinafter defined) and this Agreement provided, to be legal, valid and binding special obligations of the City in accordance with their terms, and all things necessary to cause the authorization, execution and delivery of this Agreement and the authorization, execution, authentication and delivery of the Bonds, subject to the terms hereof, have in all respects been duly authorized.
NOW, THEREFORE, based upon the foregoing recitals, which are incorporated herein by this reference, in consideration of the covenants and provisions herein set forth and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:
22 ARTICLE I
AUTHORITY AND DEFINITIONS
Section 1.01 Authority for this Agreement. This Agreement is entered into pursuant to the provisions of the Bond Act and the Resolution.
Section 1.02 Agreement for Benefit of Bondowners. The provisions, covenants and agreements herein set forth to be performed by or on behalf of the City shall be for the equal benefit, protection and security of the Owners (as defined below). All of the Bonds, without regard to the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof, except as expressly provided in or permitted by this Agreement. The Fiscal Agent may become the owner of any of the Bonds with the same rights it would have if it were not Fiscal Agent.
Section 1.03 Definitions. Unless the context otherwise requires, the terms defined in this Section 1.03 shall, for all purposes of this Agreement, of any Supplemental Agreement, and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement, and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof.
“Agreement” means this Agreement, as it may be amended or supplemented from time to time by any Supplemental Agreement entered into pursuant to the provisions hereof. “Annual Debt Service” means, for each Bond Year, the sum of (i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled, and (ii) the principal amount of the Outstanding Bonds scheduled to be paid. “Assessment” or “Assessments” means the assessment levied on the lots and parcels of property within the Assessment District by the adoption by the City Council of Resolution No.
25.077 on September 23, 2025 and the recording of the assessment diagram and notice of assessment for the Assessment District with the County Recorder of the County of Orange pursuant to Section 3114 of the California Streets and Highways Code. “Assessment District” means Underground Utility Assessment District No. 2021-1 (West Street), City of Laguna Beach, County of Orange, State of California. “Assessment Prepayment” means an amount received by the City from a property owner as a payment in full or a partial payment of the unpaid amount of the Assessment levied on his or her property.
“Assessment Revenues” means the revenues received by the City in each Fiscal Year from the collection of the annual installments of the unpaid Assessments, including penalties and interest on delinquent installments of the unpaid Assessments and proceeds from the sale of property for delinquent Assessment installments, but excluding the amounts of the annual assessments collected by the City for the payment of administration costs pursuant to Sections 23 8682, 8682.1 and 10204(f) of the California Streets and Highways Code and Assessment Prepayments.
“Authorized Officer” means any officer or employee of the City authorized by the City Council as evidenced by a certificate delivered to the Fiscal Agent or the City Treasurer, or by an Authorized Officer to undertake the action referenced in this Agreement as required to be undertaken by an Authorized Officer.
“Bond Counsel” means any attorney or firm of attorneys acceptable to the City and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities.
“Bond Year” means the period beginning on the Closing Date and ending on September 2, 2026 and thereafter the period beginning on each September 3 and ending on the following September 2.
“Bonds” means the Bonds at any time Outstanding under this Agreement. “Business Day” means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the State of California, the State of New York, or in the state in which the Fiscal Agent has its Principal Office are authorized or obligated by law or executive order to be closed.
“Capitalized Interest Fund” means the fund by that name established in the Interest Account in the Bond Fund by Section 3.05(A) hereof.
“Cash Collections” means any assessments paid by property owners and collected by the City during the cash collection period which occurred prior to the issuance of the Bonds. “City Contribution and Cash Collections Account” means the account by that name established in the Improvement Fund by Section 3.03(A). “City Treasurer” means the City Treasurer of the City or their designee. “Closing Date” means the date upon which there is an exchange of the Bonds for the proceeds representing payment of the purchase price of the Bonds by the Original Purchaser. “Code” means the Internal Revenue Code of 1986, as amended. “Continuing Disclosure Certificate” means the Continuing Disclosure Certificate of the City entered into pursuant to Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, dated as of the Closing Date, as originally executed and as it may be amended from time to time in accordance with the terms thereof. “Costs of Issuance” means items of expense payable or reimbursable directly or indirectly by the City and related to the authorization, sale and issuance of the Bonds, which items of expense shall include, but not be limited to, printing costs, costs of reproducing and binding documents, including but not limited to the preliminary official statement and official statement regarding the 24 Bonds, closing costs, filing and recording fees, initial fees, expenses and charges of the Fiscal Agent, including its first annual administration fee and the fees and expenses of its counsel, expenses incurred by the City in connection with the issuance of the Bonds and the formation of the Assessment District, bond (underwriter’s) discount, legal fees and charges, including the fees of Bond Counsel and counsel to the underwriter, fees of consultants, advisors and engineers, charges for authentication, transportation and safekeeping of the Bonds and other costs, charges and fees in connection with the foregoing.
“Cost of Issuance Fund” means the fund by that name established by Section 3.04(A) hereof.
“Debt Service” means the amount of interest and principal payable on the Bonds scheduled to be paid during the period of computation, excluding amounts payable during such period which relate to principal of the Bonds which are scheduled to be retired and paid before the beginning of such period.
“Depository” means The Depository Trust Company, New York, NY, or any successor thereof, the depository for the Bonds.
“Federal Securities” means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein (as to which the Fiscal Agent is entitled to rely upon investment direction from the City as deemed certification that such investment constitutes a legal investment):
(i) Cash; and
(ii) Direct general obligations of the United States (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States), or obligations, the payment of principal of and interest on which is unconditionally guaranteed by the United States.
“Fiscal Agent” means The Bank of New York Mellon Trust Company, N.A., the fiscal agent appointed by the City, acting as an independent fiscal agent with the duties and powers as herein expressly provided, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in Section 7.01 hereof. “Fiscal Year” means the twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year, both dates inclusive.
“Improvement Fund” means the fund by that name established by Section 3.03(A) hereof. “Independent Financial Consultant” means a firm of certified public accountants, a financial consulting firm, a consulting engineering firm or an engineer which is not an employee of, or otherwise controlled by, the City.
“Information Services” means the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board at www.emma.msrb.org; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other services providing 25 information with respect to called bonds as the City may designate in an Officer’s Certificate delivered to the Fiscal Agent.
“Interest Payment Dates” means March 2 and September 2 of each year, commencing [September 2, 2026].
“Investment Earnings” means all interest earned and any gains and losses on the investment of moneys in any fund or account created by this Agreement excluding interest earned and gains and losses on the investment of moneys in the Rebate Fund. “Maximum Annual Debt Service” means the greatest amount of Annual Debt Service for any Bond Year after calculation is made through the final maturity date of any Outstanding Bonds. “Moody’s” shall mean Moody’s Investors Service, Inc., a national rating service with offices in New York, New York.
“Nominee” means CEDE & Co., the nominee of the Depository. “Officer’s Certificate” means a written certificate of the City signed by an Authorized Officer of the City.
“Original Purchaser” means the first purchaser of the Bonds from the City. “Outstanding” when used as of any particular time with reference to the Bonds, means (subject to the provisions of Section 8.04 hereof) all Bonds except:
(i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation;
(ii) Bonds called for redemption which, for the reasons specified in Section 2.03 (G) hereof, are no longer entitled to any benefit under this Agreement other than the right to receive payment of the redemption price therefor; (iii) Bonds paid or deemed to have been paid within the meaning of Section 9.03 hereof; and
(iv) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the City and authenticated by the Fiscal Agent pursuant to this Agreement or any Supplemental Agreement. “Owner” means any person who shall be the registered owner of any Outstanding Bond. “Permitted Investments” means investments authorized pursuant to the City of Laguna Beach Investment Policy for Calendar Year 2025, adopted December 10, 2024 by the City Council, as may be amended from time to time.
“Principal Office” means with respect to the payment, registration, surrender, exchange or transfer of any Bond or Bonds, the principal corporate trust office of the Fiscal Agent in Los 26 Angeles, California; or such other office or address as may be specified in writing by the Fiscal Agent provided, however, that for purposes of administering this Agreement, the principal office shall be the principal office at which the Fiscal Agent administers its corporate trust business in California which, as of the date of this Agreement, is at the address set forth in Section 9.06 hereof (as may be updated with notice from the Fiscal Agent to the City). “Proceeds,” when used with reference to the Bonds, means the aggregate principal amount of the Bonds, plus accrued interest and premium, if any, less original issue discount, if any, less underwriter’s discount.
“Project” means the public improvements within and for the Assessment District as described in the Resolution of Intention.
“Rebate Certificate” means the certificate delivered by the City upon the delivery of the Bonds relating to Section 148 of the Code, or any functionally similar replacement certificate. “Rebate Fund” means the fund by that name established by Section 6.02 hereof. “Record Date” means the fifteenth (15th) day of the month next preceding the applicable Interest Payment Date whether or not such day is a Business Day. “Redemption Fund” means the fund by that name established by Section 4.02(A) hereof. “Regulations” means the temporary and permanent regulations of the United States Department of the Treasury promulgated under the Code.
“Reserve Fund” means the fund by that name established by Section 4.03(A) hereof. “Reserve Requirement” means the amount of $______________. “Resolution” means Resolution No. ____, adopted by the City Council on, [December 9, 2025].
“Resolution of Intention” means Resolution No. 25.032 adopted by the City Council on May 20, 2025.
“Responsible Officer” means, when used with respect to the Fiscal Agent, any managing director, president, vice president, senior associate, associate or other officer of the Fiscal Agent within the Principal Office (or any successor corporate trust office) customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred at the Principal Office because of such person’s knowledge of and familiarity with the particular subject and having direct responsibility for the administration of this Agreement. “Securities Depositories” means The Depository Trust Company, 55 Water Street, 50th Floor, New York, New York, 10041-0099, Call Notification Department, Fax (212) 855-7232; and, in accordance with then current guidelines of the Securities and Exchange Commission, such 27 other securities depositories as the City may designate in an Officer’s Certificate delivered to the Fiscal Agent.
“Standard & Poor’s” shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., a national rating service with offices in New York, New York. “Supplemental Agreement” means a supplemental agreement issued pursuant to Section
8.05 hereof.
ARTICLE II
THE BONDS
Section 2.01 Principal Amount; Designation. The Bonds in the aggregate principal amount of $__________ are hereby authorized to be issued by the City for the Assessment District under and subject to the terms of the Resolution, this Agreement, the Bond Act and other applicable laws of the State of California. The Bonds shall be designated “City of Laguna Beach Underground Utility Assessment District No. 2021-1 (West Street) Limited Obligation Improvement Bonds,” and shall be secured by the Assessment Revenues.
Section 2.02 Terms of Bonds.
(A) The Bonds. The Bonds shall be issued as fully registered bonds, without coupons, in the denominations of $5,000 or any integral multiple thereof, except that one Bond may include the amount by which the total exceeds the maximum integral of $5,000, if any. The Bonds shall be lettered and numbered in a customary manner as determined by the Fiscal Agent.
The Bonds shall be dated as of the Closing Date.
(B) Maturities. The Bonds shall mature and become payable on September 2 of each year, as follows:
Maturity Dates
(September 2) Principal Amounts Interest Rates
____________________
(T) Term Bond
(C) Interest. The Bonds shall bear interest at the rates set forth in subsection (B) above payable on the Interest Payment Dates in each year. Interest shall be calculated on the 28 basis of a 360-day year composed of twelve (12) 30-day months. Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated after a Record Date and before the close of business on the next Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) it is authenticated on or before the Record Date preceding the first Interest Payment Date, in which event it shall bear interest from the Closing Date; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon or from the Closing Date, if no interest has previously been paid or made available for payment thereon. (D) Method of Payment. Interest on the Bonds is payable by check of the Fiscal Agent mailed by first class mail, postage prepaid, on each Interest Payment Date, until the principal amount of a Bond has been paid or made available for payment, to the registered Owner thereof at such registered Owner’s address as it appears on the registration books maintained by the Fiscal Agent at the close of business on the Record Date preceding the Interest Payment Date; provided that so long as any Bonds are in book-entry form, payments with respect to such Bonds shall be made by wire transfer or such other method acceptable to the Fiscal Agent to the Depository. All Bonds paid in full by the Fiscal Agent pursuant to this subsection shall be canceled by the Fiscal Agent upon surrender. Principal of, redemption premium, if any, and interest payable to any Owner of Bonds in aggregate principal amount of $1,000,000 or more will be paid, upon the written request of any such Owner in form and substance satisfactory to the Fiscal Agent, by wire transfer of immediately available funds to an account within the United States designated by such Owner on or before a Record Date.
(E) CUSIP Identification Numbers. “CUSIP” identification numbers shall be imprinted on the Bonds, but such numbers shall not constitute a part of the contract evidenced by the Bonds. In addition, failure on the part of the City or the Fiscal Agent to use such CUSIP numbers in any notice to the Owners shall not constitute an event of default or any violation of the City’s contract with the Owners and shall not impair the effectiveness of any such notice.
Section 2.03 Redemption.
(A) Optional Redemption. The Bonds are subject to redemption prior to their stated maturity dates on any Interest Payment Date on or after September 2, 20__, on a pro rata basis among maturities (and by lot within any one maturity), in integral multiples of $5,000, at the option of the City from moneys derived by the City from any source, at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption:
Redemption Dates Redemption Price
September 2, 20__ and March 20__ 103%
September 2, 20__ and March 2, 20__ 102
September 2, 20__ and March 2, 20__ 101
September 2, 20__ and any Interest
Payment Date thereafter
100
29 (B) Mandatory Redemption From Assessment Prepayments. The Bonds are subject to mandatory redemption prior to their stated maturity dates on any Interest Payment Date, as selected by the City, in integral multiples of $5,000, from moneys derived by the City from Assessment Prepayments, at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption:
Redemption Dates Redemption Price
Interest Payment Dates on or before
March 2, 20__
103%
September 2, 20__ and March 2, 20__ 102
September 2, 20__ and March 2, 20__ 101
September 2, 20__ and any Interest
Payment Date thereafter
100
In selecting Bonds for redemption pursuant to this subsection (B), the City Treasurer shall select such Bonds in such a way that the ratio of the principal amount of the Bonds in each maturity of the Bonds that will remain Outstanding to the aggregate principal amount of the Bonds that will remain Outstanding will be approximately the same as it was prior to the redemption of such Bonds, insofar as possible.
(C) Sinking Fund Redemption. The Outstanding Bonds maturing on September 2, 20++, are subject to mandatory sinking fund redemption, in part, on September 2, 20++, and on each September 2 thereafter prior to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, from sinking fund payments as follows:
Redemption Dates
(September 2) Sinking Fund Payments
The Outstanding Bonds maturing on September 2, 20++, are subject to mandatory sinking fund redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, from sinking fund payments as follows:
Redemption Dates
(September 2) Sinking Fund Payments
30 The Outstanding Bonds maturing on September 2, 20__, are subject to mandatory sinking fund redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, from sinking fund payments as follows:
Redemption Dates
(September 2) Sinking Fund Payments
The amounts in the foregoing schedule shall be reduced pro rata among redemption dates, in order to maintain substantially level Annual Debt Service, as directed in writing to the Fiscal Agent by an Authorized Officer, as a result of any prior partial redemption of the Bonds pursuant to subsection (A) or subsection (B) above. The City shall provide the Fiscal Agent with any revised schedule, if applicable.
(D) Purchase of Bonds. In lieu of payment at maturity or redemption under this Section 2.03, moneys in the Redemption Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding Bonds, upon the filing with the Fiscal Agent of an Officer’s Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer’s Certificate may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase. The Fiscal Agent shall be absolutely protected and shall incur no liability in relying on such an Officer’s Certificate. In such event, the City shall, as may be appropriate, provide to the Fiscal Agent a revised maturity schedule or a revised mandatory sinking fund schedule for the Bonds, or both.
(E) Notice to Fiscal Agent. An Authorized Officer shall give the Fiscal Agent written notice of the City’s intention to redeem Bonds not less than thirty (30) days prior to the applicable redemption date. Such written notice shall specify whether Bonds are to be redeemed pursuant to subsection (A) or subsection (B) above and shall specify the principal amounts and the maturities of the Bonds to be redeemed. The provisions of this subsection (E) shall not apply to the redemption of the Bonds pursuant to Section 2.03(C) hereof. (F) Redemption Procedure by Fiscal Agent. Subject to its receipt of timely notice from an Authorized Officer pursuant to Section 2.03 (E), the Fiscal Agent shall cause notice of any redemption to be (a) mailed by first class mail, postage prepaid, or (b) electronically delivered at least thirty (30) days but not more than sixty (60) days prior to the date fixed for redemption, to the Securities Depositories and to one or more Information Services selected by an Authorized Officer, and to the respective registered Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books maintained by the Fiscal Agent at its Principal Office; but such mailing shall not be a condition precedent to such 31 redemption and failure to mail or to receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of such Bonds.
Such notice shall state the date of such notice, the date of issue of the Bonds, the place or places of redemption, the redemption date, the redemption price and, if less than all of the then Outstanding Bonds are to be called for redemption, shall designate the CUSIP numbers and Bond numbers of the Bonds to be redeemed, by giving the individual CUSIP number and Bond number of each Bond to be redeemed, or shall state that all Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more maturities have been called for redemption, shall state as to any Bond called for redemption in part the portion of the principal of the Bond to be redeemed, shall require that such Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state that further interest on such Bonds will not accrue from and after the redemption date. The cost of the mailing of any such redemption notice shall be paid by the City. Such notice may state that no representation is made as to the accuracy or correctness of the CUSIP numbers printed thereon or on the Bonds.
Redemption notices may be conditional. The City has the right to rescind any notice of redemption of the Bonds by providing written notice to the Fiscal Agent prior to the date fixed for redemption, in which case such redemption shall be cancelled and annulled and such cancellation shall not constitute an event of default. Any notice of redemption shall be cancelled and annulled if for any reason funds will not or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption and such cancellation shall not constitute an Event of Default. The City and the Fiscal Agent shall have no liability to the Owners of the Bonds or any other party related to or arising from such rescission or cancellation of redemption. The Fiscal Agent shall deliver the rescission notice in the same manner as the notice of redemption was delivered.
Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer.
In the event of an optional redemption pursuant to Section 2.03 (A) hereof or a mandatory redemption pursuant to Section 2.03(B) or a purchase of Bonds pursuant to Section
2.03(D) hereof, the City shall transfer or cause to be transferred to the Fiscal Agent for deposit in the Redemption Fund moneys in an amount equal to the redemption price of the Bonds being redeemed or the purchase price of the Bonds being purchased on or before the fifteenth (15th) day of the month preceding the Interest Payment Date upon which such Bonds are to be redeemed or the date upon which the Bonds are to be purchased, as the case may be.
Whenever provision is made in this Agreement for the redemption of less than all of the Bonds, the Fiscal Agent shall select the Bonds for redemption in such a way that the ratio of Outstanding Bonds shall be approximately the same in each maturity of the Bonds insofar as possible, and shall select Bonds for redemption within each maturity of the Bonds by lot, subject to the procedures of the Depositary.
32 Upon surrender of Bonds redeemed in part only, the City shall execute and the Fiscal Agent shall authenticate and deliver to the Owner, at the expense of the City, a new Bond or Bonds, of the same maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds.
(G) Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the redemption prices of the Bonds called for redemption, together with accrued interest to the date of redemption, shall have been deposited in the Redemption Fund, such Bonds shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price, and interest shall cease to accrue on the Bonds to be redeemed on the redemption date specified in the notice of redemption.
All Bonds redeemed and purchased by the Fiscal Agent pursuant to this Section
2.03 shall be canceled by the Fiscal Agent.
Section 2.04 Form of Bonds. The Bonds, including the Fiscal Agent’s certificate of authentication and the assignment to appear thereon shall be substantially in the forms, respectively, set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions as permitted or required by this Agreement.
Section 2.05 Execution of Bonds. The Bonds shall be executed by the facsimile signatures of the City Treasurer and the City Clerk of the City, who are in office on the date of this Agreement or at any time thereafter. If any officer whose signature appears on any Bond ceases to be such officer before delivery of the Bond to the Owner, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Bond to the Owner.
Any Bond may be signed and attested by such persons as at the actual date of the execution of such Bond shall be the proper officers of the City notwithstanding that on the nominal date of such Bond any such person shall not have been such officer of the City.
Only such Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit A hereto, executed and dated by the Fiscal Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Agreement, and such certificate of authentication of the Fiscal Agent shall be conclusive evidence that such Bonds have been duly authenticated, registered and delivered hereunder, and are entitled to the benefits of this Agreement.
Section 2.06 Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to the provisions of Section 2.08 hereof, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Fiscal Agent. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting transfer of a Bond any tax or other governmental charge required to be paid with respect to such transfer. Prior to any transfer of the Bonds outside the book-entry system (including, but not limited to, the initial transfer outside the book-entry system) the transferor shall provide or cause to be provided to the Fiscal Agent all 33 information necessary to allow the Fiscal Agent to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045, as amended. The Fiscal Agent shall conclusively rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.
Whenever any Bond or Bonds shall be surrendered for transfer, the City shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds of like aggregate principal amount.
No transfers of Bonds shall be required to be made (i) during the fifteen (15) days preceding the date established by the Fiscal Agent for selection of Bonds for redemption, or (ii) with respect to Bonds which have been selected for redemption.
Section 2.07 Exchange of Bonds. Bonds may be exchanged at the Principal Office of the Fiscal Agent only for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity and interest rate. The cost for any services rendered or any expense incurred by the Fiscal Agent in connection with any such exchange shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting exchange of a Bond any tax or other governmental charge required to be paid with respect to such exchange.
Whenever any Bond or Bonds shall be surrendered for exchange, the City shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds of like aggregate principal amount.
No exchanges of Bonds shall be required to be made (i) during the fifteen (15) days preceding the date established by the Fiscal Agent for selection of Bonds for redemption, or (ii) with respect to Bonds which have been selected for redemption.
Section 2.08 Bond Register. The Fiscal Agent shall keep, or cause to be kept, at its Principal Office sufficient books for the registration and transfer of the Bonds which books shall show the series, number, CUSIP identification number, date of issuance, amount, rate of interest and Owner of each Bond and shall at all times be open to inspection by the City during regular business hours upon reasonable notice; and, upon presentation for such purpose, the Fiscal Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the ownership of the Bonds as hereinbefore provided. The ownership of the Bonds shall be proved by the Bond Register.
Section 2.09 Temporary Bonds. The Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the City, and may contain such reference to any of the provisions of this Agreement as may be appropriate.
Every temporary Bond shall be executed by the City upon the same conditions and in substantially the same manner as the definitive Bonds. If the City issues temporary Bonds, it will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds shall be surrendered, for cancellation, in exchange for the definitive Bonds at the Principal Office of the Fiscal Agent or at such other location as the Fiscal Agent shall designate, and the Fiscal Agent shall authenticate 34 and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Agreement as definitive Bonds authenticated and delivered hereunder.
Section 2.10 Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the City, at the expense of the Owner of said Bond, shall execute, and the Fiscal Agent shall authenticate and deliver, a replacement Bond of like tenor and principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall be canceled and destroyed by the Fiscal Agent. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Fiscal Agent and, if such evidence be satisfactory to it and indemnity satisfactory to it shall be given, the City, at the expense of the Owner, shall execute, and the Fiscal Agent shall authenticate and deliver, a replacement Bond of like tenor and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen. The City or Fiscal Agent may require payment of a sum not exceeding the actual cost of preparing each replacement Bond delivered under this Section 2.10 and of the expenses which may be incurred by the City and the Fiscal Agent for the preparation, execution, authentication and delivery thereof.
Any Bond delivered under the provisions of this Section 2.10 in replacement of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation of the City whether or not the Bond so alleged to be lost, destroyed or stolen is at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Agreement with all other Bonds issued pursuant to this Agreement.
Section 2.11 Special Obligation. All obligations of the City under this Agreement and the Bonds shall be special obligations of the City, payable solely from the Assessment Revenues.
Neither the faith and credit nor the taxing power of the City (except to the limited extent set forth herein) or the State of California or any political subdivision thereof is pledged to the payment of the Bonds.
Pursuant to Section 8769 of the California Streets and Highways Code, the City Council of the City has determined in the Resolution of Intention that the City will not obligate itself to advance funds from the City treasury to cure any deficiency in the Redemption Fund.
Section 2.12 Refunding. The Bonds are subject to refunding pursuant to the procedures of the Refunding Act of 1984 for 1915 Improvement Bond Act Bonds, Division 11.5 (commencing with Section 9500) of the California Streets and Highways Code or as otherwise permitted by law.
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS;
IMPROVEMENT FUND; COST OF ISSUANCE FUND; CAPITALIZED INTEREST FUND Section 3.01 Issuance and Delivery of Bonds. At any time after the execution of this Agreement, the City may issue the Bonds in the aggregate principal amount set forth in Section
2.01 hereof and deliver the Bonds to the Original Purchaser. The Authorized Officers of the City are hereby authorized and directed to deliver any and all documents and instruments necessary to cause the issuance of the Bonds in accordance with the provisions of the Bond Act, the Resolution 35 and this Agreement, to authorize the payment of Costs of Issuance and costs of the Project by the Fiscal Agent from the proceeds of Bonds, and to do and cause to be done any and all acts and things necessary or convenient for delivery of the Bonds to the Original Purchaser.
Section 3.02 Application of Proceeds of Sale of Bonds. The Proceeds of the sale of the Bonds to the Original Purchaser shall be paid as follows:
(A) to the Fiscal Agent, who shall forthwith set aside, pay over and deposit such Proceeds on the Closing Date as follows:
(1) $_________ shall be deposited in the Improvement Fund; (2) $_________ shall be deposited in the Capitalized Interest Fund; and (3) $_________ shall be deposited in the Costs of Issuance Fund. (4) $_________ shall be deposited in the Reserve Fund, which will satisfy the Reserve Fund Requirements as of the Closing Date.
The Fiscal Agent may create additional accounts and subaccounts in any of the funds created under this Fiscal Agent Agreement as the Fiscal Agent may deem appropriate for the purpose of fulfilling its obligations hereunder.
Section 3.03 Improvement Fund.
(A) Establishment of Improvement Fund. There is hereby established, as a separate account to be held by the Fiscal Agent, the “Underground Utility Assessment District No. 2021-1 (West Street) Improvement Fund,” to the credit of which a deposit shall be made as required by paragraph (A) of Section 3.02 hereof. There is hereby established as a separate account within the Improvement Fund the “Underground Utility Assessment District No. 2021-1 (West Street) City Contribution and Cash Collections Account” to the credit of which the City Treasurer shall transfer to the Fiscal Agent from designated City moneys the amount of $1,415,072, which constitutes the City’s contribution to the Project, and $_________, which constitutes the Cash Collections. Moneys in the Improvement Fund and the City Contribution and Cash Collections Account shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds, shall be disbursed, except as otherwise provided in subsection (D) of this Section 3.03, for the payment or reimbursement of the costs of the design, acquisition and construction of the Project and, pending such disbursement, shall be subject to a lien in favor of the Owners of the Bonds. (B) Procedure for Disbursement. Disbursements from the Improvement Fund shall be made by the Fiscal Agent upon receipt of an Officer’s Certificate which shall:
(1) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made and the person to which the disbursement is to be paid; and (2) certify that no portion of the amount then being requested to be disbursed was set forth in any Officer’s Certificate previously filed with the Fiscal Agent 36 requesting disbursement, and that the amount being requested is an appropriate disbursement from the Improvement Fund.
(C) Investment. Moneys in the Improvement Fund shall be invested and deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained by the Fiscal Agent in the Improvement Fund to be used for the purposes of such fund. (D) Closing of Fund. Upon the filing of an Officer’s Certificate stating that the Project has been completed and that all costs of the Project have been paid or are not required to be paid from the Improvement Fund, and further stating that moneys on deposit in the Improvement Fund are not needed to complete the Project or reimburse the cost thereof, amounts remaining in the Improvement Fund, if any, shall be applied by the City Treasurer as provided for in Section 10427.1 of the California Streets and Highways Code. (E) Officer’s Certificate. Upon receipt of an Officer’s Certificate delivered pursuant to this Section 3.03, the Fiscal Agent is authorized to act thereon without further inquiry and shall not be responsible for the accuracy of the statements made in such Officer’s Certificate or the application of the funds disbursed pursuant thereto, and shall be absolutely protected and incur no liability in relying on such Officer’s Certificate.
Section 3.04 Cost of Issuance Fund.
(A) Establishment of Cost of Issuance Fund. There is hereby established, as a separate account to be held by the Fiscal Agent, the “Underground Utility Assessment District No. 2021-1 (West Street) Cost of Issuance Fund” to the credit of which a deposit shall be made as required by paragraph (A) of Section 3.02 hereof. Moneys in the Cost of Issuance Fund shall be held by the Fiscal Agent and shall be disbursed as provided in subsection (B) of this Section for the payment or reimbursement of Costs of Issuance.
(B) Disbursement. Amounts in the Cost of Issuance Fund shall be disbursed to pay Costs of Issuance, as set forth in a requisition containing respective amounts to be paid to the designated payees, signed by an Authorized Officer and delivered to the Fiscal Agent concurrently with the delivery of the Bonds. The Fiscal Agent shall, to the extent of the moneys on deposit in the Cost of Issuance Fund, pay all Costs of Issuance upon receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee in such requisition, or upon receipt of an Officer’s Certificate requesting payment of a Cost of Issuance not listed on the initial requisition delivered to the Fiscal Agent on the Closing Date. The Fiscal Agent shall maintain the Cost of Issuance Fund for a period of ninety (90) days after the Closing Date and shall then transfer and deposit any moneys remaining therein, including any Investment Earnings thereon, to the Improvement Fund for payment or reimbursement of costs of the Project, and the Fiscal Agent shall close the Cost of Issuance Fund. (C) Investment. Moneys in the Cost of Issuance Fund shall be invested and deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained by the Fiscal Agent in the Cost of Issuance Fund to be used for the purposes of such fund.
Section 3.05 Capitalized Interest Fund.
37 (A) Establishment of Capitalized Interest Fund. There is hereby established, as a separate account to be held by the Fiscal Agent, the "Underground Utility Assessment District No. 2021-1 (West Street) Capitalized Interest Fund" to the credit of which a deposit shall be made as required by paragraph (A) of Section 3.02 hereof. Moneys in the Capitalized Interest Fund shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds, shall be disbursed for the payment of the interest on the Bonds as provided in subsection (B) and, pending such disbursement, shall be subject to a lien in favor of the Owners of the Bonds. (B) Disbursement. No later than _________, 20__, the Fiscal Agent shall transfer moneys from the Capitalized Interest Fund to the Redemption Fund the amount which is necessary to cause the amount on deposit in the Redemption Fund to be equal to the amount of interest which is due and payable on the Outstanding Bonds on _________, 20__. (C) Closing of Funds. The amount, if any, on deposit in the Capitalized Interest Account on ________, 20__, shall be transferred by the Fiscal Agent and deposited into the Redemption Fund and the Capitalized Interest Fund shall be closed by the Fiscal Agent. (D) Investment. Moneys in the Cost of Issuance Fund shall be invested and deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained by the Fiscal Agent in the Capitalized Interest Fund to be used for the purposes of such fund.
Section 3.06 Book-Entry System; Delivery of the Bonds to the Depository. (A) Book-Entry System; Limited Obligation of the City and the Fiscal Agent.
Notwithstanding any other provision of this Agreement, the Bonds shall be initially delivered to the Depository in the form of a separate single fully registered Bond (which may be typewritten) for each of the maturities of the Bonds. Upon such initial delivery, the ownership of each such Bond shall be registered in the registration books kept by the Fiscal Agent in the name of the Nominee, as nominee of the Depository. Except as provided in subsection (C) below, all of the Outstanding Bonds shall be registered in the registration books kept by the Fiscal Agent in the name of the Nominee.
With respect to Bonds registered in the registration books kept by the Fiscal Agent in the name of the Nominee, the City and the Fiscal Agent shall have no responsibility or obligation to any Participant of the Depository or to any person, corporation or firm on behalf of which the Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the City and the Fiscal Agent shall have no responsibility or obligation with respect to (1) the accuracy of the records of the Depository, the Nominee or any Participant with respect to any ownership interest in the Bonds, (2) the delivery to any Participant or any other person, other than an Owner as shown in the registration books kept by the Fiscal Agent, of any notice with respect to the Bonds, (3) the selection by the Depository and its Participants of the beneficial interest in the Bonds to be redeemed in the event the Bonds are redeemed in part, or (4) the payment to any Participant or any other persons, other than an Owner as shown in the registration books kept by the Fiscal Agent, of any amount with respect to principal of, premium, if any, or interest due with respect to the Bonds. The City and the Fiscal Agent may treat and consider the person in whose name each Bond is registered in the registration books kept by the Fiscal Agent as the holder and absolute owner of such Bond for the purpose of payment of principal, premium, if any, and interest 38 with respect to such Bond, for the purpose of giving notices with respect to such Bond, for the purpose of registering transfers with respect to such Bond and for all other purposes whatsoever.
The Fiscal Agent shall pay all principal of, premium, if any, and interest due with respect to the Bonds only to or upon the order of the Owners thereof, as shown in the registration books kept by the Fiscal Agent, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to satisfy and discharge fully the City’s obligations with respect to payment of principal, premium, if any, and interest due with respect to the Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the registration books kept by the Fiscal Agent, shall receive a Bond evidencing the obligation of the City to make payments of principal, premium, if any, and interest pursuant to this Agreement. Upon delivery by the Depository to the Fiscal Agent and the City of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Agreement shall refer to such new nominee of the Depository.
(B) Representation Letter. In order to qualify the Bonds for the Depository’s book-entry system, an authorized representative of the Fiscal Agent is hereby authorized to execute from time to time and deliver to such Depository a representation letter in the standard form prescribed by the Depository (the “Representation Letter”). The execution and delivery of the Representation Letter shall not in any way limit the provisions of subsection (A) above or impose upon the City or the Fiscal Agent any obligation whatsoever with respect to persons having interests in the Bonds other than the Owners, as shown on the registration books kept by the Fiscal Agent. The Fiscal Agent agrees, to the extent not inconsistent with the provisions hereof, to take all action necessary to continuously comply with all representations made by it in the Representation Letter. In addition to the execution and delivery of the Representation Letter, the City Clerk, the City Treasurer, the City Manager, the Assistant City Manager, the Authorized Officers and all other officers of the City, are hereby authorized to take any other actions, not inconsistent with this Agreement, to qualify the Bonds for the Depository’s book-entry program. (C) Transfers Outside Book-Entry System. In the event (1) the Depository determines not to continue to act as securities depository for the Bonds or (2) the City determines that the Depository shall no longer so act, then the Fiscal Agent shall discontinue the book-entry system with the Depository. If the City fails to identify another qualified securities depository to replace the Depository then the Bonds shall no longer be restricted to being registered in the registration books kept by the Fiscal Agent in the name of the Nominee, but shall be registered in whatever name or names persons transferring or exchanging Bonds shall designate, in accordance with the provisions of this Agreement.
(D) Payments to the Nominee. Notwithstanding any other provisions of this Agreement, so long as any Bond is registered in the name of the Nominee, all payments with respect to principal, premium, if any, and interest due with respect to such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the Representation Letter or as otherwise instructed by the Depository.
39 ARTICLE IV
ASSESSMENT REVENUES; REDEMPTION FUND; RESERVE FUND
Section 4.01 Pledge of Assessment Revenues; Transfers of Assessment Revenues. (A) Pledge of Assessment Revenues. The Bonds shall be secured by a pledge (which pledge shall be effected in the manner and to the extent herein provided) of all of the Assessment Revenues and all moneys deposited in the Redemption Fund, all moneys deposited in the Reserve Fund and, until disbursed as provided in subsections (B) and (D) of Section 3.03 hereof, all moneys deposited in the Improvement Fund. The Assessment Revenues and all moneys deposited into such funds (except as otherwise provided herein with respect to moneys disbursed from the Improvement Fund) are hereby dedicated in their entirety to the payment of the principal of the Bonds, and interest and any premium on, the Bonds, as provided herein and in the Bond Act, until all of the Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose in accordance with Section 9.03 hereof. (B) Transfers of Assessment Revenues. On or before the fifteenth (15th) Business Day preceding each Interest Payment Date, the City Treasurer shall transfer to the Fiscal Agent for deposit in the Redemption Fund an amount of the Assessment Revenues which the Fiscal Agent has advised the City Treasurer will be needed to pay Debt Service on the Bonds on such Interest Payment Date. Upon receipt of each such transfer of Assessment Revenues, the Fiscal Agent shall deposit the amount thereof in the Redemption Fund for the payment of Debt Service on the Bonds on the Interest Payment Date for which the transfer is made.
Section 4.02 Redemption Fund.
(A) Deposits. There is hereby established, as a separate account to be held by the Fiscal Agent, the “Underground Utility Assessment District No. 2021-1 (West Street) Redemption Fund” to the credit of which deposits shall be made as required by paragraph (A) of Section 4.01(B), Section 4.03(B) and Section 4.03(D) hereof and any other provision of this Agreement or Bond Act. Moneys in the Redemption Fund shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds, shall be disbursed for the payment of the principal of, and interest and any premium on, the Bonds as provided below, and, pending such disbursement, shall be subject to a lien in favor of the Owners of the Bonds.
The Fiscal Agent shall deposit to the Redemption Fund all moneys transferred from the Reserve Fund pursuant to Section 4.03(B) and Section 4.03(D) hereof. (B) Disbursements. On each Interest Payment Date, the Fiscal Agent shall withdraw from the Redemption Fund and pay to the Owners of the Bonds the principal of and interest and any premium then due and payable on the Bonds on the Interest Payment Date.
In the event that amounts on deposit in the Redemption Fund are insufficient for the purpose set forth in the preceding paragraph, the Fiscal Agent shall transfer from the Reserve Fund, to the extent of any funds therein, to the Redemption Fund the amount of such insufficiency.
If, after such a transfer from the Reserve Fund, there are insufficient funds in the Redemption Fund to make the payments provided for in the first paragraph of this Section 4.02(B), 40 the City Treasurer shall instruct the Fiscal Agent in writing to apply the available funds to the payment of the principal of and interest on the Bonds in the manner and in the priorities provided in Section 8775 of the California Streets and Highways Code, as it existed on the Closing Date or as it may thereafter be amended. The City Treasurer shall specify in such written instructions how the available funds shall be utilized to pay interest on and principal of the Bonds and the Fiscal Agent may conclusively rely upon such written instructions, and shall not have any responsibility or liability as a result of its reliance upon any such written instructions. When funds become available for the payment of the portion of the principal of any Bond which was not paid upon its maturity date, the Fiscal Agent shall provide notice to the Owner of such Bond as provided in Section 8776 of the California Streets and Highways Code.
On September 3 of each year, beginning on September 3, 2026, the amount on deposit in the Redemption Fund shall not exceed the greater of (i) one year’s earnings on such amount, or (ii) one-twelfth (1/12th) of Annual Debt Service for the then current Bond Year. If on September 3 of any year the amount on deposit in the Redemption Fund exceeds the maximum amount allowable pursuant to the preceding sentence and if on such September 3 the City shall have delivered to the Fiscal Agent an Officer’s Certificate containing the information required below in this paragraph, the excess shall be transferred by the Fiscal Agent as directed by such Officer’s Certificate to the Reserve Fund to the extent that the amount on deposit therein is less than the Reserve Requirement, and any such excess remaining thereafter shall be paid by the Fiscal Agent to the City as directed by such Officer’s Certificate. On September 3 of each year, after any such excess amount has been transferred as hereinabove provided, the amount on deposit in the Redemption Fund shall not exceed the greater of (i) one year’s earnings thereon, or (ii) one-twelfth (1/12th) of Annual Debt Service for the then current Bond Year. An Officer’s Certificate delivered by the City to Fiscal Agent pursuant to this paragraph shall (1) specify the dollar amount of the excess determined pursuant to the first sentence of this paragraph, (2) specify the dollar amount of such excess which the Fiscal Agent is to transfer to the Reserve Fund, and (3) specify the dollar amount of such excess which the Fiscal Agent is to pay to the City. Upon receipt of such an Officer’s Certificate, the Fiscal Agent is authorized to act thereon without further inquiry, shall not be responsible for the accuracy of the statements contained therein, and shall be absolutely protected and incur no liability in relying on such Officer’s Certificate.
Amounts in the Redemption Fund shall also be withdrawn and deposited in the Rebate Fund as provided in Section 6.02 hereof.
(C) Investment. Moneys in the Redemption Fund shall be invested and deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained in the Redemption Fund, except to the extent they are required to be deposited by the Fiscal Agent in the Rebate Fund in accordance with Section 6.02 hereof.
(D) Deficiency. Upon making a transfer from the Reserve Fund to the Redemption Fund, pursuant to subsection (B) of this Section 4.02 or Section 4.03(B) hereof, the Fiscal Agent shall report such fact to the City. As provided in the form of the Bonds attached hereto as Exhibit A, the City Council has determined in the Resolution of Intention that the City will not obligate itself to advance funds from the City Treasury to cure any deficiency which may occur in the Redemption Fund.
41 (E) Determination of Ultimate Loss. Notwithstanding the provisions of subsection (B) of this Section 4.02, if the Treasurer determines, pursuant to Section 8770 of the California Streets and Highways Code, that there is a danger of an ultimate loss accruing to the Bond Owners, for any reason, the provisions of that section and Sections 8771, 8772 and 8773 of the California Streets and Highways Code shall govern with respect to the procedures which shall be followed in paying the principal of and interest on the Outstanding Bonds.
Section 4.03 Reserve Fund.
(A) Establishment of Reserve Fund. There is hereby established, as a separate account to be held by the Fiscal Agent, the “Underground Utility Assessment District No. 2021-1 (West Street) Reserve Fund” (the “Reserve Fund”) to the credit of which a deposit shall be made as required by Section 3.02(B) hereof, which deposit is equal to the Reserve Requirement as of the Closing Date, and to which deposits shall be made as provided in Section 4.02(B) hereof. Moneys in the Reserve Fund shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds as a reserve for the payment of the principal of and interest and any premium on the Bonds and shall be subject to a lien in favor of the Owners of the Bonds. (B) Use of Fund. Except as otherwise provided in this Section, all amounts deposited in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Redemption Fund in the event of any deficiency at any time in the Redemption Fund of the amount then required for payment of the principal of, and interest and any premium on the Bonds or, in accordance with the provisions of subsection (E) of this Section
4.03, or for the purpose of redeeming Bonds.
Amounts transferred from the Reserve Fund to the Redemption Fund pursuant to this subsection shall be restored by the City from the collection of delinquent installments on the Assessments levied on parcels for which such installments are delinquent, and penalties and interest thereon, whether by judicial foreclosure proceedings or otherwise, as soon as is reasonably possible following the receipt by the City of such delinquent installments, penalties and interest. (C) Transfer Due to Deficiency in Redemption Fund. Whenever transfer is made from the Reserve Fund to the Redemption Fund due to a deficiency in the Redemption Fund, the Fiscal Agent shall provide written notice thereof to the City. (D) Transfers on Payment of Assessments. Whenever an Assessment levied on a lot or parcel of property within the Assessment District is paid off, the Fiscal Agent shall, upon receiving an Officer’s Certificate regarding such Assessment, transfer from the Reserve Fund to the Redemption Fund an amount equal to the reduction in such Assessment determined pursuant to Section 8881 of the California Streets and Highways Code, which amount shall be specified in the Officer’s Certificate. Upon receipt of such an Officer’s Certificate, the Fiscal Agent is authorized to act thereon without further inquiry, shall not be responsible for the accuracy of the statements contained therein, and shall be absolutely protected and incur no liability in relying on such Officer’s Certificate.
(E) Transfer of Excess of Reserve Requirement. Whenever, on any September 3, the amount in the Reserve Fund, less Investment Earnings resulting from the investment of the 42 funds therein which pursuant to Section 6.02 hereof must be rebated to the United States (the “Rebate Amount”), exceeds the then applicable Reserve Requirement, as calculated on such date by the City and provided in writing to the Fiscal Agent, the Fiscal Agent shall provide written notice to the City of the amount of the excess and shall, subject to the requirements of Section
6.02 hereof and upon receiving an Officer’s Certificate from an Authorized Officer, transfer an amount equal to the excess from the Reserve Fund to the Redemption Fund to be used for the payment of Debt Service on the next succeeding Interest Payment Date in accordance with Section
4.02 hereof. Upon receipt of such an Officer’s Certificate, the Fiscal Agent is authorized to act thereon without further inquiry, shall not be responsible for the accuracy of statements contained therein, and shall be absolutely protected and incur no liability in relying on such Officer’s Certificate.
(F) Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent shall, upon receiving an Officer’s Certificate from an Authorized Officer, transfer the amount in the Reserve Fund to the Redemption Fund to be applied, on the next succeeding Interest Payment Date to the payment and redemption, in accordance with Section
2.03 and Section 4.02 hereof, as applicable, of all of the Outstanding Bonds. In the event that the amount so transferred from the Reserve Fund to the Redemption Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund shall be transferred by the Fiscal Agent to the City to be applied as provided in Section 8885 of the California Streets and Highways Code. Upon receipt of such an Officer’s Certificate, the Fiscal Agent is authorized to act thereon without further inquiry, shall not be responsible for the accuracy of the statements contained therein, and shall be absolutely protected and incur no liability in relying on such Officer’s Certificate.
(G) Investment. Moneys in the Reserve Fund shall, except as provided in subsection (D) above, be invested and deposited in accordance with Section 6.01 hereof.
ARTICLE V
OTHER COVENANTS OF THE CITY
Section 5.01 Punctual Payment. The City will punctually pay or cause to be paid the principal of and interest and any premium on the Bonds when and as due in strict conformity with the terms of this Agreement and any Supplemental Agreement to the extent that the Assessment Revenues are available therefor, and it will faithfully observe and perform all of the conditions, covenants and requirements of this Agreement and all Supplemental Agreements and of the Bonds.
Section 5.02 Special Obligation. The Bonds are special obligations of the City and are payable solely from and secured solely by the Assessment Revenues and the amounts in the Redemption Fund, the Reserve Fund and the Improvement Fund.
Section 5.03 Extension of Time for Payment. In order to prevent any accumulation of claims for interest after maturity, the City shall not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding 43 said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the City,such claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of this Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded.
Section 5.04 Against Encumbrances. The City shall not encumber, pledge or place any charge or lien upon any of the Assessment Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien herein created for the benefit of the Bonds, except as permitted by this Agreement.
Section 5.05 Protection of Security and Rights of Owners. The City will preserve and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Bonds by the City, the Bonds shall be incontestable by the City.
Section 5.06 Compliance with Laws, Completion of Project. The City will comply with all applicable provisions of the laws of the State of California in completing the construction and acquisition of the Project.
Section 5.07 Collection of Assessment Revenues. The City shall comply with all requirements of the Bond Act so as to assure the timely collection of Assessment Revenues, including without limitation, the enforcement of the payment or collection of delinquent Assessments.
Section 5.08 Further Assurances. The City will adopt, make, execute and deliver any and all such further ordinances, resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement, and for better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided in this Agreement.
Section 5.09 Tax Covenants. The City hereby covenants that:
(A) It will not take any action or omit to take any action, which action or omission, if reasonably expected on the date of the initial issuance and delivery of the Bonds, would have caused any of the Bonds to be “arbitrage bonds” within the meaning of Section 103(b) and Section 148 of the Code;
(B) It will not take any action or omit to take any action, which action or omission, if reasonably expected on the date of initial issuance and delivery of the Bonds, would result in loss of exclusion from gross income for purposes of federal income taxation under Section 103(a) of the Code of interest paid with respect to the Bonds; (C) It will not take any action or omit to take any action, which action or omission, if reasonably expected on the date of initial issuance and delivery of the Bonds, would have caused any of the Bonds to be “private activity bonds” within the meaning of Section 141 of the Code;
44 (D) It will comply with the Rebate Certificate as a source of guidance for achieving compliance with the Code; and
(E) In order to maintain the exclusion from gross income for purposes of federal income taxation of interest paid with respect to the Bonds, it will comply with each applicable requirement of Section 103 and Sections 141 through 150 of the Code.
The covenants of the City contained in this Section 5.09 shall survive the payment, redemption or defeasance of Bonds pursuant to Section 9.03 hereof.
Section 5.10 Covenant to Foreclose. The City hereby covenants with and for the benefit of the Owners of the Bonds that it will order, and cause to be commenced, upon default of any Assessment installments due (except under circumstances to be specified in the resolution of issuance of the Bonds), it will cause judicial foreclosure proceedings against properties with delinquent Assessment installments to be brought within one-hundred fifty (150) days of such default, as permitted by Section 8830(d) of the California Streets and Highways Code. [Notwithstanding the foregoing, the City may elect, in its sole discretion, to defer foreclosure proceedings against properties that are determined pursuant to this Section 5.10 to be delinquent in the payment of any Assessment installments within one-hundred fifty (150) days ofsuch default, as permitted by Section 8830(d) of the California Streets and Highways Code, if the City has received funds equal to the delinquent Assessment installments for each parcel of property from any source, including, but not limited to, funds appropriated by the City for such purpose, and such funds are sufficient to make timely payment of scheduled payment of principal and interest on the Bonds, together with any penalties and fees that otherwise would have been paid or required to be paid from the delinquent Assessment installments.]
Section 5.11 Continuing Disclosure. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate.
ARTICLE VI
INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS;
LIABILITY OF THE CITY
Section 6.01 Deposit and Investment of Moneys in Funds. Subject in all respects to the provisions of Section 6.02 hereof, moneys in any fund or account created or established by this Agreement and held by the Fiscal Agent shall be invested by the Fiscal Agent, as applicable, in Permitted Investments, as directed pursuant to an Officer’s Certificate filed with the Fiscal Agent at least two (2) Business Days in advance of the making of such investments.. Unless otherwise directed in writing by the City Treasurer, all funds in the Reserve Fund shall be held uninvested.
If after being directed for investment and such directed investment terminates, closes, or is otherwise unavailable, the Fiscal Agent shall hold such funds uninvested until it receives a new Officer’s Certificate with written investment directive from the City Treasurer. The Fiscal Agent shall not invest any cash held hereunder in the absence of timely and specific written direction in the form of an Officer’s Certificate from the City Treasurer. The Fiscal Agent shall have no obligation to pay additional interest or maximize investment income on any funds held by it.
Neither the City nor the Owners of the Bonds shall have any claim of any kind against the Fiscal Agent in connection with investments properly made pursuant to this Section 6.01. Obligations 45 purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account, subject, however, to the requirements of this Agreement for transfer of Investment Earnings in funds and accounts.
The Fiscal Agent and its affiliates may act as sponsor, advisor, depository, principal or agent in the holding, acquisition or disposition of any investment. The Fiscal Agent shall not incur any liability for losses arising from any investments made pursuant to this Section 6.01. For purposes of determining the amount on deposit in any fund or account held hereunder, all Permitted Investments or investments credited to such fund or account shall be valued at the cost thereof (excluding accrued interest and brokerage commissions, if any). Ratings of Permitted Investments referred to herein shall be determined at the time of purchase of such Permitted Investments and without regard to rating subcategories. The Fiscal Agent shall have no responsibility to monitor the ratings of Permitted Investments after the initial purchase of such Permitted Investments or the responsibility to validate the ratings of Permitted Investments prior to the initial purchase.
The Fiscal Agent shall be entitled to rely conclusively upon the written instructions of the City directing investments in Permitted Investments as to the fact that each such investment is permitted by the laws of the State, and shall not be required to make further investigation with respect thereto. The Fiscal Agent shall not have any responsibility for determining the legality or suitability of any Permitted Investments and may rely on any Officer’s Certificate or other direction as to the legality or suitability of any Permitted Investment. With respect to any restrictions contained in the definition of Permitted Investments which embody legal conclusions (e.g., the existence, validity and perfection of security interests in collateral), the Fiscal Agent shall be entitled to rely conclusively on an opinion of counsel obtained at the City’s expense.
Subject in all respects to the provisions of Section 6.02 hereof, investments in any and all funds and accounts may be commingled in a single fund for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent hereunder, provided that the Fiscal Agent shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in this Agreement.
The Fiscal Agent shall sell or present for redemption any investment security whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited, and the Fiscal Agent shall not be liable or responsible for any loss resulting from the acquisition or disposition of any such investment security in accordance herewith.
The City acknowledges that notwithstanding regulations of the Comptroller of the Currency or other applicable regulatory entity may grant the City the right to receive brokerage confirmations of securities transactions as they occur, the City agrees that the Fiscal Agent shall not send such confirmations to the City to the extent permitted by law. The Fiscal Agent shall furnish the City periodic cash transaction statements which include detail for all investment transactions made by the Fiscal Agent hereunder. The City Treasurer shall prepare the same on the behalf of the City of funds directly managed by the City Treasurer, if any. 46 The Fiscal Agent may make any investments hereunder through its own bond or investment department or trust investment department, or those of its parent or any affiliate.
Section 6.02 Rebate Fund; Rebate to the United States. There is hereby created, to be held by the Fiscal Agent, as a separate fund distinct from all other funds and accounts held by the Fiscal Agent under this Agreement, the Rebate Fund. The Fiscal Agent shall, in accordance with written directions received from an Authorized Officer, deposit into the Rebate Fund moneys transferred by the City Treasurer to the Fiscal Agent pursuant to the Rebate Certificate or moneys transferred by the Fiscal Agent from the Reserve Fund. The Rebate Fund shall be held either uninvested or invested only in Federal Securities at the direction of the City. Moneys on deposit in the Rebate Fund shall be applied only to payments made to the United States, to the extent such payments are required by the Rebate Certificate. The Fiscal Agent shall, upon written request and direction of the City, make such payments to the United States.
The Fiscal Agent’s sole responsibilities under this Section 6.02 are to follow the written instructions of the City pertaining hereto. The Fiscal Agent shall have no responsibility to independently make any calculation or determination or to review the City’s calculations hereunder. The Fiscal Agent may rely conclusively upon the City’s determinations, calculations and certifications required by this Section. The City shall be responsible for any fees and expenses incurred by the Fiscal Agent pursuant to this Section 6.02.
The Fiscal Agent shall, upon written request and direction from the City Treasurer, transfer to or upon the order of the City Treasurer any moneys on deposit in the Rebate Fund in excess of the amount, if any, required to be maintained or held therein in accordance with the Rebate Certificate. Upon receipt of such a written request and direction the Fiscal Agent is authorized to act thereon without further inquiry, shall not be responsible for the accuracy thereof, and shall be absolutely protected and incur no liability in relying thereon.
Section 6.03 Liability of City. The City shall not incur any responsibility in respect of the Bonds or this Agreement other than in connection with the duties or obligations explicitly herein or in the Bonds assigned to or imposed upon it. The City shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct.
The City shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements of the Fiscal Agent herein or in any of the documents executed by the Fiscal Agent in connection with the Bonds. The Fiscal Agent has no liability regarding the use of the proceeds from the purchase of the Bonds deposited in funds held by the City.
In the absence of bad faith, the City may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the City and conforming to the requirements of this Agreement. The City shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts.
No provision of this Agreement shall require the City to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Assessment Revenues) in the performance of any of its obligations hereunder, or in the exercise of and of its 47 rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
The City may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, Bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The City may consult with counsel, who may be counsel to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.
Section 6.04 Employment of Agents by City. In order to perform its duties and obligations hereunder, the City may employ such persons or entities as it deems necessary or advisable. The City shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities.
Section 6.05 Books and Accounts. The City Treasurer shall keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City, in which complete and correct entries shall be made of all transactions made by it to the expenditure of amounts disbursed from the City Contribution and Cash Collections Account. Such books of record and accounts shall, upon reasonable notice, at all times during business hours be subject to the inspection of the Owners of not less than ten percent (10%) of the aggregate principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.
ARTICLE VII
THE FISCAL AGENT
Section 7.01 Appointment of Fiscal Agent. The Bank of New York Mellon Trust Company, N.A. is hereby appointed Fiscal Agent, registrar and paying agent for the Bonds. The Fiscal Agent undertakes to perform such duties, and only such duties, as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Fiscal Agent.
Any company into which the Fiscal Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Fiscal Agent may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under the following paragraph of this Section 7.01, shall be the successor to the Fiscal Agent without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.
The City may remove the Fiscal Agent initially appointed upon thirty (30) days prior notice, and any successor thereto, and may appoint a successor or successors thereto, but any such successor shall be a bank or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least $75,000,000, and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, 48 pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section 7.01, the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
The Fiscal Agent may at any time resign by giving written notice to the City and by giving to the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the City shall promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent shall become effective upon acceptance of appointment by the successor Fiscal Agent.
If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing provisions of this Section 7.01 within forty-five (45) days after the Fiscal Agent shall have given to the City written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its inability to act, the Fiscal Agent, at the expense of the City, or any Owner may apply to any federal or state court to appoint a successor Fiscal Agent. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Fiscal Agent.
Section 7.02 Liability of Fiscal Agent. The recitals of facts, covenants and agreements herein and in the Bonds contained shall be taken as statements, covenants and agreements of the City and the Fiscal Agent assumes no responsibility nor shall have any liability for the correctness of the same, nor makes any representations as to the validity or sufficiency of this Agreement or of the Bonds, nor shall the Fiscal Agent incur any responsibility or shall have any liability in respect thereof, other than in connection with the express duties or obligations herein or in the Bonds assigned to or imposed upon it. The Fiscal Agent shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Fiscal Agent assumes no responsibility or liability for any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds.
In the absence of willful misconduct, the Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates, written directions, opinions, solutions, orders, notices, requests, consents, waivers, statements, affidavits or other paper, documents or electronic communications or information furnished to the Fiscal Agent and conforming to the requirements of this Agreement. Except as provided above in this paragraph, the Fiscal Agent shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding in accordance with the terms of this Agreement, upon any resolution, order, notice, request, consent or waiver, opinion, certificate, statement, affidavit, facsimile transmission, electronic mail or other paper or document which it shall in good faith reasonably believe to be genuine and to have been adopted or signed by the proper person or to have been prepared and furnished pursuant to any provision of this Agreement, and the Fiscal Agent shall not be under any duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument.
The Fiscal Agent shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements of the City herein or in any of the documents executed by the City in connection with the Bonds. 49 The Fiscal Agent shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Fiscal Agent unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts.
No provision of this Agreement shall require the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers unless indemnity and security satisfactory to the Fiscal Agent shall have been provided to the Fiscal Agent.
The Fiscal Agent shall not be responsible for accounting for, or paying to, any party to this Agreement, including, but not limited to the City and the Owners, any returns on or benefit from funds held for payment of unredeemed Bonds or outstanding checks and no calculation of the same shall affect, or result in any offset against, fees due to the Fiscal Agent under this Agreement.
The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of the Owners pursuant to this Agreement unless such Owners shall have offered to the Fiscal Agent reasonable security or indemnity satisfactory to the Fiscal Agent against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
The Fiscal Agent may become the owner of the Bonds with the same rights it would have if it were not the Fiscal Agent.
The Fiscal Agent shall not be concerned with or accountable to anyone for the subsequent use or application of any moneys which shall be released or withdrawn in accordance with the provisions hereof.
The permissive right of the Fiscal Agent to do things enumerated in this Agreement shall not be construed as a duty and it shall not be liable for other than its negligence or willful misconduct.
In no event shall the Fiscal Agent be liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including but not limited to lost profits) even if the Fiscal Agent has been advised of the likelihood of such damages and regardless of the form of such action, other than for actions involving negligence or willful misconduct by the Fiscal Agent.
The Fiscal Agent shall have no responsibility with respect to the payment of Debt Service by the City or with respect to the observance or performance by the City of the other conditions, covenants and terms contained herein, or with respect to the investment of any moneys in any fund or account established, held or maintained by the City pursuant to this Fiscal Agent Agreement or otherwise.
All indemnification and releases from liability granted herein to the Fiscal Agent shall extend to the agents, consultants, directors, officers and employees of the Fiscal Agent (including legal counsel). The Fiscal Agent may exercise any of its trusts or powers or perform its duties through attorneys, agents or receivers.
50 The Fiscal Agent shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Agreement and delivered using Electronic Means; provided, however, that the City shall provide to the Fiscal Agent an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the City whenever a person is to be added or deleted from the listing. If the City elects to give the Fiscal Agent Instructions using Electronic Means and the Fiscal Agent in its discretion elects to act upon such Instructions, the Fiscal Agent’s understanding of such Instructions shall be deemed controlling. The City understands and agrees that the Fiscal Agent cannot determine the identity of the actual sender of such Instructions and that the Fiscal Agent shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Fiscal Agent have been sent by such Authorized Officer. The City shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Fiscal Agent and that the City and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the City. The Fiscal Agent shall not be liable for any losses, costs or expenses arising directly or indirectly from the Fiscal Agent’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The City agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Fiscal Agent, including without limitation the risk of the Fiscal Agent acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Fiscal Agent and that there may be more secure methods of transmitting Instructions than the method(s) selected by the City; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Fiscal Agent immediately upon learning of any compromise or unauthorized use of the security procedures.
The Fiscal Agent may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees appointed with due care, and shall not be responsible for any willful misconduct or negligence on the part of any agent, attorney, custodian or nominee so appointed.
Section 7.03 Information. The Fiscal Agent shall provide to the City such information relating to the Bonds and the funds and accounts maintained by the Fiscal Agent hereunder as the City shall reasonably request, including, but not limited to, quarterly (or other frequency agreed to by the City and the Fiscal Agent) statements reporting funds held and transactions by the Fiscal Agent.
Section 7.04 Notice to Fiscal Agent. The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, written direction, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Fiscal Agent may consult with counsel, who may be counsel to the City, with regard to legal questions, and the written opinion of such counsel shall be full and complete authorization and protection in respect 51 of any action taken or suffered by the Fiscal Agent hereunder in good faith and in accordance therewith.
Whenever in the administration of its duties under this Agreement the Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent, be deemed to be conclusively proved and established by a certificate of the City, and such certificate shall be full warranty to the Fiscal Agent for any action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.
Section 7.05 Compensation, Indemnification. In addition to any written fee agreement, the City shall pay to the Fiscal Agent from time to time reasonable compensation for all services rendered as Fiscal Agent under this Agreement, and also all reasonable expenses, charges, fees and other disbursements, including those of its attorneys, agents and employees, incurred in and about the performance of its powers and duties under this Agreement, and the Fiscal Agent shall have a first-priority lien therefor on any funds at any time held by it under this Agreement, and the Fiscal Agent shall pay and reimburse all expenses, charges, fees and other disbursements, including those of its attorneys, agents and employees, incurred in connection therewith from the funds held by it under this Agreement. The City further agrees, to the extent permitted by applicable law, to indemnify and save the Fiscal Agent, its officers, employees, directors and agents, harmless against any liabilities, losses, costs, expenses (including legal fees and expenses), suits, claims, judgments or damages which it may incur in the exercise and performance of its powers and duties hereunder or the enforcement of this Section which are not due to its negligence or willful misconduct. The obligation of the City under this Section 7.05 shall survive resignation or removal of the Fiscal Agent under this Agreement and payment of the Bonds and discharge of this Agreement.
Section 7.06 Books and Accounts. The Fiscal Agent shall keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent, in which complete and correct entries shall be made of all transactions made by it to the expenditure of amounts disbursed from the Redemption Fund and the Reserve Fund. Such books of record and accounts shall, upon reasonable notice, at all times during business hours be subject to the inspection of the City and the Owners of not less than ten percent (10%) of the aggregate principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.
ARTICLE VIII
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01 Amendments Permitted.
(A) This Agreement and the rights and obligations of the City and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting of the Owners, or with the written consent, without a meeting, of 52 the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 8.04 hereof. No such modification or amendment shall (i) extend the maturity of any Bond or the time for paying interest thereon, or otherwise alter or impair the obligation of the City to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation of any pledge of or lien upon the Assessment Revenues, or the moneys on deposit in the Redemption Fund, the Reserve Fund, the Capitalized Interest Fund or the Improvement Fund, superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Bond Act, the laws of the State of California or this Agreement), or (iii) reduce the percentage of Bonds required for the amendment hereof, or (iv) reduce the principal amount of or redemption premium on any Bond or reduce the interest rate thereon. Any such amendment may not modify any of the rights or obligations of the Fiscal Agent without its written consent. The City shall provide to the Fiscal Agent an opinion of counsel that any such Supplemental Agreement entered into by the City and the Fiscal Agent complies with the provisions of this Section 8.01 and the Fiscal Agent may conclusively rely on such opinion. (B) This Agreement and the rights and obligations of the City and the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes:
(1) to add to the covenants and agreements of the City in this Agreement contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the City; (2) to make modifications not adversely affecting any Outstanding series of Bonds in any material respect;
(3) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provisions of this Agreement, or in regard to questions arising under this Agreement, as the City and the Fiscal Agent may deem necessary or desirable and not inconsistent with this Agreement, and which shall not adversely affect the rights of the Owners;
(4) to make such additions, deletions or modifications as may be necessary or desirable to assure compliance with Section 148 of the Code relating to required rebate of moneys to the United States or otherwise as may be necessary to assure exclusion from gross income for federal income tax purposes of interest on the Bonds or to conform with the Regulations.
Section 8.02 Owners’ Meetings. The City may at any time call a meeting of the Owners.
In such event the City is authorized to fix the time and place of any such meeting and to provide for the giving of notice thereof and to fix and adopt rules and regulations for the conduct of the meeting.
Section 8.03 Procedure for Amendment with Written Consent of Owners. The City may at any time adopt a Supplemental Agreement amending the provisions of the Bonds or of this 53 Agreement or any Supplemental Agreement, to the extent that such amendment is permitted by Section 8.01(A) hereof, to take effect when and as provided in this Section 8.03. A copy of the Supplemental Agreement, together with a request to Owners for their consent thereto, shall be mailed by first class mail, postage prepaid, or sent by electronic mail (if applicable) by the Fiscal Agent to each Owner of Bonds Outstanding, but failure to mail copies of the Supplemental Agreement and request shall not affect the validity of the Supplemental Agreement when assented to as in this Section provided.
Such a Supplemental Agreement shall not become effective unless there shall be filed with the Fiscal Agent the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 8.04) and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 9.04 hereof. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Fiscal Agent prior to the date when the notice hereinafter in this Section provided for has been mailed.
After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Agreement, the City shall mail a notice to the Owners in the manner hereinbefore provided in this Section for the mailing of the Supplemental Agreement, stating in substance that the Supplemental Agreement has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of the Supplemental Agreement or consents thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent. A record, consisting of the papers required by this Section 8.03 to be filed with the Fiscal Agent, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Agreement shall become effective upon the filing with the Fiscal Agent of the proof of mailing of such notice, and the Supplemental Agreement shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in this Article VIII) upon the City and the Owners of all Bonds then Outstanding at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty (60)-day period.
Section 8.04 Disqualified Bonds. Bonds owned or held for the account of the City, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Bonds provided for in this Article VIII, and shall not be entitled to vote upon, consent to, or participate in any action provided for in this Article VIII; except that in determining whether the Fiscal Agent shall be protected in relying upon any vote or consent of an Owner, only Bonds which the Fiscal Agent actually knows to be owned or held for the account of the City shall be disregarded unless all Bonds are so owned or held, in which case such Bonds shall be considered Outstanding for the purpose of such determination.
54 Section 8.05 Effect of Supplemental Agreement. From and after the time any Supplemental Agreement becomes effective pursuant to this Article VIII, this Agreement shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Agreement of the City and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Agreement shall be deemed to be part of the terms and conditions of this Agreement for any and all purposes.
Section 8.06 Endorsement or Replacement of Bonds Issued After Amendments. The City may determine that Bonds issued and delivered after the effective date of any action taken as provided in this Article VIII shall bear a notation, by endorsement or otherwise, in form approved by the City, as to such action. In that case, upon demand of the Owner of any Bond Outstanding at such effective date and upon presentation of his or her Bond for that purpose at the Principal Office of the Fiscal Agent or at such other office as the City may select and designate for that purpose, a suitable notation shall be made on such Bond. The City may determine that new Bonds, so modified as in the opinion of the City is necessary to conform to such action, shall be prepared, executed and delivered. In that case, upon demand of the Owner of any Bonds then Outstanding, such new Bonds shall be exchanged at the Principal Office of the Fiscal Agent without cost to any Owner, for like Bonds then Outstanding, upon surrender of such Bonds.
Section 8.07 Amendatory Endorsement of Bonds. The provisions of this Article VIII shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him or her, provided that due notation thereof is made on such Bonds.
Section 8.08 Execution of Supplemental Agreements. In executing, or accepting the additional trusts created by, any Supplemental Agreement permitted by this Article or the modification thereby of the trusts created by this Agreement, the Fiscal Agent shall be entitled to receive, and shall be fully protected in relying upon, an opinion of counsel stating that the execution of such Supplemental Agreement is authorized or permitted by this Agreement and complies with the terms hereof. The Fiscal Agent may, but shall not be obligated to, enter into any such Supplemental Agreement which affects the Fiscal Agent's own rights, duties or immunities under this Agreement or otherwise.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Benefits of Agreement Limited to Parties. Nothing in this Agreement, expressed or implied, is intended to give to any person other than the City, the Fiscal Agent and the Owners, any right, remedy or claim under or by reason of this Agreement. Any covenants, stipulations, promises or agreements in this Agreement contained by and on behalf of the City shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent.
Section 9.02 Successor is Deemed Included in All References to Predecessor. Whenever in this Agreement or any Supplemental Agreement either the City or the Fiscal Agent is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Agreement contained by or on behalf of the City or the Fiscal 55 Agent shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.
Section 9.03 Discharge of Agreement.
If the City shall pay and discharge the entire indebtedness on all Bonds in any one or more of the following ways:
(A) by well and truly paying or causing to be paid the principal of and interest and any premium on all Bonds, as and when the same become due and payable; (B) by depositing with the Fiscal Agent, in trust, at or before maturity, an amount of money which, together with the amounts then on deposit in the Redemption Fund and the Reserve Fund, is fully sufficient to pay all Bonds, including all principal, interest and redemption premiums, if any; or
(C) by irrevocably depositing with the Fiscal Agent, in trust, cash or noncallable Federal Securities in such amount as the City shall determine, as confirmed by an Independent Financial Consultant, will, together with the interest to accrue thereon and amounts then on deposit in the Redemption Fund and Reserve Fund, be fully sufficient to pay and discharge the indebtedness on all Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; and if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in this Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the giving of such notice, then, at the election of the City, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Assessment Revenues and other funds provided for in this Agreement and all other obligations of the City under this Agreement with respect to all Bonds shall cease and terminate, except the obligation of the City to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon, the obligation of the City to pay all amounts owing to the Fiscal Agent pursuant to Section 7.05 hereof, and the obligations of the City pursuant to the covenants contained in Section 5.09 hereof; and thereafter Assessment Revenues shall not be payable to the Fiscal Agent. Notice of such election shall be filed with the Fiscal Agent. The satisfaction and discharge of this Agreement shall be without prejudice to the rights of the Fiscal Agent to charge and be reimbursed by the City for the expenses which it shall thereafter incur in connection herewith.
Any funds held by the Fiscal Agent to pay and discharge the indebtedness on all Bonds, upon payment of all fees and expenses of the Fiscal Agent, which are not required forsuch purpose, shall be paid over to the City.
Section 9.04 Execution of Documents and Proof of Ownership by Owners. Any request, declaration or other instrument which this Agreement may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed in writing.
Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such a request, declaration or other instrument, or of a writing appointing such an attorney, may be proved by the certificate of any notary public or other officer authorized 56 to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such a notary public or other officer.
Except as otherwise herein expressly provided, the ownership of registered Bonds and the amount, maturity, number and date of holding the same shall be proved by the registration books maintained by the Fiscal Agent pursuant to Section 2.08 hereof.
Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the City or the Fiscal Agent in good faith and in accordance therewith.
Section 9.05 Waiver of Personal Liability. No member, officer, agent or employee of the City shall be individually or personally liable for the payment of the principal of, or interest or any premium on, the Bonds; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law.
Section 9.06 Notices to and Demands on City and Fiscal Agent. Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the Fiscal Agent to or on the City may be given or served by being deposited postage prepaid (first class, registered or certified) in a post office letter box addressed (until another address is filed by the City with the Fiscal Agent) as follows:
City of Laguna Beach
505 Forest Avenue
Laguna Beach, CA 92651
Attn: City Treasurer
Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the City to or on the Fiscal Agent may be given or served by being deposited postage prepaid (first class, registered or certified) in a post office letter box addressed (until another address is filed by the Fiscal Agent with the City) as follows:
The Bank of New York Mellon Trust Company, N.A.
333 South Hope Street, Suite 2525
Los Angeles, CA 90071
Attn: Corporate Trust
Electronic Means" shall mean the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Fiscal Agent, or another method or system specified by the Fiscal Agent as available for use in connection with its services hereunder.
Section 9.07 Partial Invalidity. If any section, paragraph, sentence, clause or phrase of this Agreement shall for any reason be held by a court of competent jurisdiction to be illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Agreement. The City hereby declares that it would have executed and delivered this Agreement 57 and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more sections, paragraphs, sentences, clauses or phrases of this Agreement may be held illegal, invalid or unenforceable.
Section 9.08 Unclaimed Moneys. Anything contained herein to the contrary notwithstanding, and subject to the escheat laws of the State, any moneys held by the Fiscal Agent in trust for the payment and discharge of the principal of, and the interest and any premium on, the Bonds which remains unclaimed for two (2) years after the date when the payment of such principal, interest and premium have become payable, if such moneys were held by the Fiscal Agent at such date, shall be paid (without liability for interest) by the Fiscal Agent to the City as its absolute property free from any trust, and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Owners of such Bonds shall look only to the City for the payment of the principal of, and interest and any premium on, their Bonds.
Section 9.09 Applicable Law and Venue. This Agreement shall be governed by and enforced in accordance with the laws of the State of California applicable to contracts made and performed in the State of California. Venue shall be exclusively in the County of Orange.
Section 9.10 Conflict with Act. In the event of a conflict between any provision of this Agreement with any provision of the Bond Act as in effect on the Closing Date, the provision of the Bond Act shall prevail over the conflicting provision of this Agreement.
Section 9.11 Conclusive Evidence of Regularity. Bonds issued pursuant to this Agreement shall constitute conclusive evidence of the regularity of all proceedings under the Act relative to their issuance.
Section 9.12 Payment on Business Day. In any case where the date of the payment of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption is other than a Business Day, the payment of interest or principal (and premium, if any) need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required, and no interest shall accrue for the period from and after such date.
Section 9.13 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.
58 IN WITNESS WHEREOF, the City has caused this Agreement to be executed in its name and attested, and the Fiscal Agent, in acknowledgment of its acceptance of the trusts created hereunder, has caused this Agreement to be executed in its name, all as of __________ __, 20__.
CITY OF LAGUNA BEACH
By:
City Treasurer
ATTEST:
By:_____________________________
City Clerk
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Fiscal Agent
By: _______________________________
Authorized Officer
-Signature pageFiscal Agent Agreement
59 EXHIBIT “A”
[FORM OF BOND]
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY (AS DEFINED IN THE AGREEMENT) TO THE FISCAL AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND AUTHENTICATED AND DELIVERED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF ORANGE
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1
(WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BOND
Registered
Number
Registered
Amount
Interest Rate Maturity Date
Original
Issue Date CUSIP NO.
_____, 2026
Registered Owner: CEDE & CO.
Principal Sum:
Under and by virtue of the Improvement Bond Act of 1915, Division 10 (commencing with Section 8500) of the Streets and Highways Code of the State of California (the “Act”), the City of Laguna Beach (the “City”), will, out of the redemption fund for the payment of the Bonds issued upon the unpaid portion of assessments made for the construction and acquisition of certain public improvements in and for Underground Utility Assessment District No. 2021-1 (West Street), City of Laguna Beach, County of Orange, State of California (the “Assessment District”), which improvements and the Assessment District are more fully described in proceedings taken pursuant to Resolution No. ______, the Resolution of Intention for the Assessment District, adopted by the City Council of the City on [December 9, 2025], pay to the registered owner identified above, or registered assigns, on the maturity date specified above the principal sum specified above in lawful money of the United States, and in like manner will pay interest from the interest payment date next preceding the date on which this Bond is authenticated, unless this Bond is authenticated after a Record Date (as hereinafter defined) and before the close of business on the next interest payment 60 date, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated on or before the Record Date preceding the first interest payment date, in which event it shall bear interest from the original issue date specified above, until payment of such principal sum shall have been discharged, at the rate of interest per annum specified above, payable semiannually on March 2 and September 2 in each year commencing on [September 2, 2026].
Both the principal hereof and redemption premium hereon are payable at the principal corporate trust office of The Bank of New York Mellon Trust Company, N.A., the Fiscal Agent (the “Fiscal Agent”) in Los Angeles, California or such other office as shall be designated by the Fiscal Agent as its principal corporate trust office for such purpose, and the interest hereon is payable by check mailed to the owner hereof at the owner’s address as it appears on the records of the Fiscal Agent, or at such address as may have been filed with the Fiscal Agent for that purpose, as of the fifteenth (15th) day of the month preceding each interest payment date (the “Record Date”). Principal of, redemption premium, if any, and interest payable to any Owner of Bonds in aggregate principal amount of $1,000,000 or more will be paid, upon the written request of any such Owner in form and substance satisfactory to the Fiscal Agent, by wire transfer of immediately available funds to an account within the United States designated by such Owner on or before a Record Date. Interest on the Bonds will be calculated on the basis of a 360-day year composed of twelve (12) 30-day months.
This Bond will continue to bear interest after maturity at the rate above specified, provided it is presented at maturity and payment thereof is refused upon the sole ground that there are not sufficient moneys in said redemption fund with which to pay the same. If it is not presented at maturity, and there are sufficient moneys in said redemption fund with which to pay the same, interest on this Bond will run until maturity.
Pursuant to Section 8769 of the Streets and Highways Code of the State of California, the City Council of the City has determined that the City will not obligate itself to advance funds from the City treasury to cure any deficiency in the redemption fund.
This Bond is one of several annual series of bonds of like date, tenor and effect, but differing in amounts, maturities and interest rates, issued by the City pursuant to the Act and a Fiscal Agent Agreement dated as of [January 1, 2026] by and between the City and the Fiscal Agent (the “Fiscal Agent Agreement”) in the aggregate principal amount of $__________ (the “Bonds”) for the purpose of providing means for paying for the construction of the improvements which are to be constructed within and for the Assessment District, as described in said proceedings, and is secured by the moneys in said redemption fund and by the unpaid portion of the assessments levied on parcels of property within the Assessment District for the payment of said improvements, and, including principal and interest, is payable exclusively out of said fund.
Reference is hereby made to the Act and the Fiscal Agent Agreement, and all amendments thereto, for a description of the rights, duties and obligations of the City and the owners of the Bonds, the terms upon which the Bonds are issued and the terms and conditions on which the Bonds will be deemed to be paid, at or prior to maturity or redemption of the Bonds, to all the provisions of which agreement the owner of this Bond, by acceptance hereof, assents and agrees.
The Bonds are issuable only as fully registered Bonds in denominations of $5,000, or any integral multiple thereof, except that one Bond may include the amount by which the total exceeds the maximum integral of $5,000, if any.
61 This Bond is transferable by the registered owner hereof, in person or by the owner’s attorney duly authorized in writing, at the office of the Fiscal Agent, subject to the terms and conditions provided in the Fiscal Agent Agreement, including the payment of certain charges, if any, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond or Bonds, of any authorized denomination or denominations, of the same maturity, for the same aggregate principal amount, will be issued to the transferee in exchange for this Bond.
Bonds shall be registered only in the name of an individual (including joint owners), a corporation, a partnership or a trust.
The Fiscal Agent shall not be required to make any exchange or registration of transfer of Bonds during the fifteen (15) days preceding the date established by the Fiscal Agent for the selection of Bonds for redemption, or with respect to any Bonds which have been selected for redemption.
The Fiscal Agent may treat the owner hereof as the absolute owner for all purposes, and the Fiscal Agent shall not be affected by any notice to the contrary.
The Bonds are subject to redemption prior to their stated maturity dates on any Interest Payment Date on or after September 2, 20__, on a pro rata basis among maturities (and by lot within any one maturity), in integral multiples of $5,000, at the option of the City from moneys derived by the City from any source, at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption:
Redemption Dates Redemption Price
September 2, 20__ and March 2, 20__ 103%
September 2, 20__ and March 2, 20__ 102
September 2, 20__ and March 2, 20__ 101
September 2, 20__ and any Interest Payment Date thereafter 100 The Bonds are also subject to mandatory redemption prior to their stated maturity dates on any Interest Payment Date, as selected by the City, in integral multiples of $5,000, from moneys derived by the City from Assessment Prepayments, at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption:
Redemption Dates Redemption Price
Interest Payment Dates on or before March 2, 20__ 103%
September 2, 20__ and March 2, 20__ 102
September 2, 20__ and March 2, 20__ 101
September 2, 20__ and any Interest Payment Date thereafter 100 The Bonds maturing on September 2, 20__, are subject to mandatory sinking fund redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot; the Bonds maturing on September 2, 20__, are subject to mandatory sinking fund redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot; the Bonds maturing on September 2, 20__, are subject to mandatory sinking fund 62 redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot; the Bonds maturing on September 2, 20__, are subject to mandatory sinking fund redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot; and the Bonds maturing on September 2, 20__, are subject to mandatory sinking fund redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot; each at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, from sinking fund payments as provided in the Fiscal Agent Agreement.
This Bond issubject to refunding pursuant to the procedures of Division 11.5 (commencing with Section 9500) of the Streets and Highways Code of the State of California.
This Bond shall not be entitled to any benefit under the Act or the Fiscal Agent Agreement, or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed shall have been dated and signed by or on behalf of the Fiscal Agent.
IN WITNESS WHEREOF, the City of Laguna Beach, California, has caused this Bond to be signed in facsimile by its City Treasurer and City Clerk, and has caused its official seal to be reproduced in facsimile hereon all as of the ___ day of ______, 2026.
CITY OF LAGUNA BEACH, CALIFORNIA
City Treasurer
ATTEST:
CITY OF LAGUNA BEACH, CALIFORNIA
City Clerk
63 CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-defined Fiscal Agent Agreement.
Dated:___________, 20___ THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., Fiscal Agent
By:
Authorized Signatory
64 ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within-registered Bond and hereby irrevocably constitute(s) and appoints(s) attorney, to transfer the same on the registration books of the Fiscal Agent with full power of substitution in the premises.
Dated:
Note: The signature(s) on this Assignment
must correspond with the fact of the within
registered Bond in every particular without
alteration or enlargement or any change
whatsoever.
Signature Guaranteed:
Note: Signature(s) must be guaranteed
by an eligible guarantor institution
65