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HomeMy WebLinkAboutD-2 Staff Report - Azusa 2023 Bond RepurchaseSCHEDULED ITEM D-2 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: SERGIO GONZALEZ, CITY MANAGER FROM: TALIKA JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES DATE: OCTOBER 16, 2023 SUBJECT: CONSIDERATION OF ADOPTION OF A RESOLUTION TO AUTHORIZE OPEN MARKET BOND REPURCHASE OF A PORTION OF THE CITY OF AZUSA’S OUTSTANDING TAXABLE PENSION OBLIGATION BONDS, SERIES 2020 AND PUBLIC HEARING AMENDING THE FISCAL YEAR 2023-24 GENERAL FUND BUDGET BY $4,000,000 BACKGROUND: On September 17, 2020, the City of Azusa (the “City”) issued Taxable Pension Obligation Bonds, Series 2020 (the “2020 POBS”) in the amount of $70,075,000. The proceeds were used to refund the City’s obligation to pay its unfunded liability to CalPERS under the PERS contract dated December 20, 1948, for the benefit of the City’s employees. The City is required to make principal and interest payments each year for the outstanding 2020 POBS. On September 25, 2023, the City Council was presented with a fiscal sustainability assessment which addressed various options for best utilizing undesignated reserves of the City’s General Fund. One option presented at that meeting which the City Council asked staff to pursue is the repurchasing of a portion of the 2020 POBS on the open market. RECOMMENDATIONS: Staff recommends the City Council take the following action: 1) Adopt Resolution No. 2023-C58, Authorizing Open Market Bond Repurchase of a Portion of its Outstanding Taxable Pension Obligation Bonds, Series 2020; 2) Conduct the Public Hearing and receive testimony; and 3)Adopt Resolution No. 2023-C59, Amending the Fiscal Year 2023/24 General Fund Budget By $4,000,000. Approved City Council October 16, 2023 2020 Pension Obligation Bonds Repurchase October 16, 2023 Page 2 ANALYSIS: Recent increases in yields demanded by investors in virtually all types of bonds have produced corresponding decreases in the market prices for such bonds, and as a result many of the City’s bonds now trade at prices significantly less than the principal amount. Due to such decrease in the market prices for such bonds, the City may reduce its debt service liability from the repurchase of a portion of the 2020 POBS periodically on the open market. The City Council of the City (the “City Council”) is authorized pursuant to the Indenture of Trust dated September 1, 2020 between the City and Wilmington Trust National Association (the “Trustee”), as trustee of the 2020 POBS (the “Indenture”) to repurchase all or a portion of the outstanding of the 2020 POBS. In order to facilitate the repurchase of a portion of the 2020 POBS, the City must appoint a dealer manager to repurchase the bonds on its behalf. It is recommended that the City appoint Samuel A. Ramirez & Co., Inc. (“Ramirez & Co.”) to serve as its repurchase agent. The terms and conditions governing such repurchase by Ramirez & Co. and the obligations of the City are set forth in the Dealer Manager Bond Repurchase Agreement between Ramirez & Co., and the City, a form of which has been provided to the City Council. The City will deposit General Fund reserve monies with the Trustee for an amount not to exceed $4,000,000 for the purchase of a portion of the 2020 POBS, which amount includes any fees and costs incurred with such repurchase. Once Ramirez & Co. has repurchased a portion of the 2020 POBS on the open market and delivered them to the Trustee, the Trustee shall cancel the portion of the 2020 POBS so repurchased and thereby cancelling any debt service required to be paid in connection which such 2020 POBS. It is proposed that the City appointment Urban Futures Inc., as municipal advisor and Best, Best & Krieger LLP as special counsel in connection with this financing. FISCAL IMPACT: Approval of the open market bond repurchase of a portion of the outstanding 2020 POBs will result in reduction of principal and interest payments. The amount of the reduction is dependent on the quantity of 2020 POBS that are actually repurchased and the purchase price at which such 2020 POBS are repurchased. As mentioned above, surplus General Fund revenues not to exceed $4,000,000 will be used to repurchase such 2020 POBS thereby resulting in a reduction in the balance of General Fund reserves. The $4,000,000 investment is expected to result in over $7,000,000 in reduced debt service costs over the next 17 years. Upon City Council approval, staff will amend budget line item 10-90-000-000-7005 and report back to the City Council the final outcome of the bond repurchase. Prepared By: Reviewed and Approved: Talika M. Johnson Sergio Gonzalez Director of Administrative Services City Manager 2020 Pension Obligation Bonds Repurchase October 16, 2023 Page 3 Attachments: 1. Resolution No. 2023-C58, Authorizing Open Market Bond Repurchase of a Portion of its Outstanding Taxable Pension Obligation Bonds, Series 2020 2.Dealer Manager and Bond Purchase Agreement 3. Resolution No. 2023-C59, Amending the Fiscal Year 2023-24 General Fund budget 45635.01444\41685060.3 RESOLUTION NO. 2023-C58 RESOLUTION OF THE CITY COUNCIL OF CITY OF AZUSA AUTHORIZING OPEN MARKET BOND REPURCHASE OF A PORTION OF ITS OUTSTANDING TAXABLE PENSION OBLIGATION BONDS, SERIES 2020 WHEREAS, in order to refinance certain pension liabilities of the City of Azusa (the “City”), the City issued its Taxable Pension Obligation Bonds, Series 2020 (the “2020 POBS”) which were issued on September 30, 2020; and WHEREAS, the City is obligated to make certain annual debt service payments on such outstanding 2020 POBS; and WHEREAS, recent increases in yields demanded by investors in virtually all types of bonds have produced corresponding decreases in the market prices for such bonds, and as a result thereof many of the City’s bonds now trade at prices significantly less than the principal amount; and WHEREAS, due to such decrease in the market prices for such bonds, the City may achieve savings from the repurchase of a portion of the 2020 POBS periodically on the open market; and WHEREAS, the City Council of the City (the “City Council”) deems it advisable and in the best interests of the City to authorize the repurchase a portion of the outstanding of the 2020 POBS on the open market (“Bond Repurchase Program”) from time to time; and WHEREAS, the City shall utilize legally available monies in the City’s general fund (“Surplus Cash”) to purchase a portion of the outstanding 2020 POBS on the open market and deliver them to the Wilmington Trust National Association, as trustee of the 2020 POBS, to be cancelled; and WHEREAS, the use of Surplus Cash to purchase on the open market and cancel a portion of the outstanding 2020 POBS will reduce both the principal amount of the City’s bonds outstanding and the annual amount of bond interest payable by the City; and WHEREAS, the City Council desires Samuel A. Ramirez & Co., Inc. (“Ramirez & Co.”) to serve as its repurchase agent in connection with the open market purchase of a portion of the 2020 POBS; and WHEREAS, on October 12, 2023, the City posted a notice on the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (“EMMA”) website a notice that informs current holders of the outstanding 2020 POBS of its intention to consider the repurchase of a portion of the 2020 POBS; and WHEREAS, the City Council hereby authorizes the Bond Repurchase Program to reduce debt service on the outstanding 2020 POBS provided that any repurchase under the Bond Attachment 1 2 Repurchase Program will provide significant public benefits in the form of reductions in the amounts of both the principal and interest payable on the City’s bonds as set forth in this resolution; NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY THE CITY COUNCIL OF THE CITY OF AZUSA AS FOLLOWS: Section 1. The above recitals, and each of them, are true and correct and all actions taken by the City related to the Bond Repurchase Program, including the posting of the notice on EMMA are hereby accepted and ratified. Section 2. The Bond Repurchase Program as described herein is hereby approved; and, in connection therewith, the City Manager of the City (the “City Manager”) or the Director of Administrative Services (the “Director of Administrative Services,” collectively with the City Manager, the “Authorized Officers”) are each hereby authorized to utilize Surplus Cash to purchase outstanding bonds of the 2020 POBS from time to time provided that: (a) the amount of Surplus Cash so used shall not exceed a total of $4,000,000, inclusive of any fees and costs of such repurchase; (b) the present value of the debt service savings generated by such repurchase is greater than zero, with such savings calculated net of all fees and expenses incurred in connected therewith (in the case of a future available par redemption, the present value calculation shall incorporate the defeased debt service from the call date to the final maturity date); (c) the total amount of 2020 POBS purchased pursuant to the Bond Repurchase Program shall not exceeds 20% of the outstanding principal amount of the 2020 POBS. Section 3. The form of the Dealer Manager and Bond Repurchase Agreement by and between the City and Ramirez & Co., as repurchase agent (the “Agreement”) presented herewith is approved as to form. Each Authorized Officer, acting on behalf of the City, is hereby authorized and directed to execute and deliver the final form of the Agreement, with such additions thereto or changes therein as such Authorized Officer may deem necessary and advisable. The approval of such additions or changes shall be conclusively evidenced by the execution and delivery of such documents or instruments by an Authorized Officer, following consultation with and review by Best Best & Krieger LLP. Section 4. All compensation payable to Ramirez & Co. for its services as Repurchase Agent shall be included in the proposed purchase price of the bonds presented for purchase; provided, however, that in no event shall Ramirez & Co.’s compensation exceed 1.00% of the principal amount of any 2020 POBS so purchased. Section 5. The following professionals are hereby appointed to serve the City in connection with the Bond Repurchase Program: • Urban Futures, Inc. is hereby engaged as municipal advisor; and • Best Best & Krieger LLP is hereby engaged as special counsel. 3 Section 6. Each Authorized Officer hereby authorized and directed, jointly and severally, to execute and sign any and all approvals, certificates, statements, requests, requisitions and orders of the City in connection with the implementation of the Bond Repurchase Program and the purchase and cancelation of bonds pursuant thereto; and any action specifically authorized or directed by this Resolution to be undertaken by either of such officers may be undertaken by the other with the same force and effect as if it had been undertaken by the officer specifically authorized or directed to do so. 4 Section 7. This Resolution shall take effect from and after its adoption. PASSED AND ADOPTED by the City Council of the City of Azusa at a regular meeting held on the 16th day of October, 2023. _____________________________ Robert Gonzales Mayor ATTEST: ______________________________ Jeffrey Lawrence Cornejo, Jr. City Clerk 5 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF AZUSA ) I HEREBY CERTIFY that the foregoing Resolution No. ________ was duly adopted by the City Council of Azusa at a regular meeting thereof, held on the 16th day of October, 2023, by the following vote of Council: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ______________________________ Jeffrey Lawrence Cornejo, Jr. City Clerk APPROVED AS TO FORM: ______________________________ Best Best & Krieger, LLP City Attorney 45635.01444\41683472.3 1 DEALER MANAGER AND BOND REPURCHASE AGREEMENT October __, 2023 Sergio Gonzalez City Manager City of Azusa 213 E. Foothill Blvd. Azusa, CA 91702 Mr. Gonzalez: The City of Azusa (the “City”) plans to repurchase certain of the City’s outstanding bonds described in Exhibit A hereto (the “Target Bonds”) on the open secondary market (the “Repurchase”). The City plans to repurchase for cash the Target Bonds and cancel the purchased bonds upon receipt. The City desires to engage Samuel A. Ramirez & Co., Inc. (“Ramirez & Co.”) as its agent for the repurchase of the Target Bonds. This dealer manager agreement (this “Agreement”) will confirm the understanding between the City and Ramirez & Co. pursuant to which the City has retained Ramirez & Co. to act as the exclusive dealer manager (the “Dealer Manager”), on the terms and subject to the conditions set forth herein, in connection with the proposed Repurchase. SECTION 1. Engagement. Subject to the terms and conditions set forth herein: (a)The City hereby retains the Dealer Manager, and subject to the terms and conditions hereof, the Dealer Manager agrees to act, as the exclusive dealer manager to the City in connection with the Repurchase until the date on which the City purchases the Target Bonds from the Dealer Manager (the “Settlement Date”) or earlier termination of this Agreement pursuant to Section 3 hereof. As more particularly described herein (and subject to the limitations described in Sections 1(b) and 1(c), the Dealer Manager will advise the City and its legal and financial advisors with respect to the terms and timing of the Repurchase. (b)The City acknowledges that the Dealer Manager has been retained solely to provide the services set forth in this Agreement. The City also acknowledges and agrees that the Dealer Manager shall each act as an independent contractor, on an arms-length basis under this Agreement with duties solely to the City and that nothing contained herein or the nature of the Dealer Manager’s services hereunder is intended to create or shall be construed as creating an agency or fiduciary relationship between the Dealer Manager (or any of its affiliates) and the City (or its security holders, directors, officers, employees or creditors) or any other person. The City further acknowledges that (i) the Dealer Manager shall not be deemed to act as a partner, joint venturer or agent of, or a member of a syndicate with, the City, and the City shall not be deemed to act as the agent of the Dealer Manager, and (ii) no securities broker, dealer, bank, trust company or nominee shall be deemed to act as the agent of the Dealer Manager or as the agent of the City, and the Dealer Manager shall not be deemed to act as the agent of any securities broker, dealer, bank, trust company or nominee. In connection with the transactions contemplated hereby and the process leading to such transactions, the Dealer Manager is and has been acting solely as a principal and Attachment 2 45635.01444\41683472.3 2 not the agent or fiduciary of the City or its security holders, directors, officers, employees, creditors or any other person. The City acknowledges and agrees that none of the Dealer Manager, their respective affiliates and their respective officers, directors, employees, agents and controlling persons shall have any liability in tort, contract or otherwise to the City for any act or omission on the part of any securities broker, dealer, bank, trust company or nominee or any other person other than the Dealer Manager. (c) Accordingly, the City expressly disclaims any agency or fiduciary relationship with the Dealer Manager hereunder. The City understands that the Dealer Manager and their respective affiliates are not providing (nor is the City relying on the Dealer Manager or their respective affiliates for) tax, regulatory, legal or accounting advice. The rights and obligations the City may have to the Dealer Manager or their respective affiliates under any credit or other agreement are separate from the City’s rights and obligations under this Agreement and will not be affected in any way by this Agreement. The Dealer Manager may, to the extent it deems appropriate, retain the services of any of its affiliates to assist the Dealer Manager in providing its services hereunder and share with any such affiliates any information made available by or on behalf of the City. In connection with the Repurchase, the City has consulted its own municipal, legal, accounting, tax, financial and other advisors, as applicable, to the extent it has deemed appropriate. The Dealer Manager understands that the City has retained Urban Futures, Inc. (the “Municipal Advisor”) to act as its SEC independent registered municipal advisor in connection with the Repurchase. The City acknowledges that the Dealer Manager is entering into this Agreement in reliance on the participation by an independent registered municipal advisor exemption provided under SEC Rule 15Ba1-1(d)(3)(vi) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Dealer Manager is acting solely as a Municipal Dealer and not as an Underwriter, as defined in MSRB-G-17 (the “2012 Interpretive Notice”). (d) The City acknowledges that the Dealer Manager and their respective affiliates are engaged in a broad range of securities activities and financial services. In the ordinary course of the Dealer Manager’s business, the Dealer Manager or its respective affiliates (i) may at any time hold long or short positions, and may trade or otherwise effect transactions, for the Dealer Manager’s own account or the accounts of its customers, in debt securities of the City, including but not limited to, the Target Bonds, and (ii) may at any time be providing or arranging financing and other financial services to companies or entities that may be involved in a competing transaction. (e) The Dealer Manager agrees, in accordance with their customary practice and consistent with industry practice and in accordance with the terms of Resolution No. [__] of the City (the “Authorizing Resolution”), to perform those services in connection with the Repurchase as are customarily performed by dealer managers in connection with similar transactions of a like nature, including, without limitation, using all reasonable efforts to solicit bids of Target Bonds, communicating generally regarding the Repurchase with securities brokers, dealers, banks, trust companies and nominees and other holders of the Target Bonds, and participating in meetings with, furnishing information to, and assisting the City in negotiating with Bondowners of the Target Bonds. (f) The Dealer Manager shall utilize its own funds to repurchase all or a portion of the Target Bonds in an amount not to exceed [_____]. The purchase price shall not exceed ___% of 45635.01444\41683472.3 3 the principal amount of the Target Bonds. The Dealer Manager shall submit to the City an invoice which shows the principal amount of the Target Bonds purchased and the purchase price of the Target Bonds (the “Repurchase Price”) repurchased by the Dealer Manager (the “Repurchased Bonds”). Upon receipt of such invoice, the City shall work with the Municipal Advisor to calculate the Purchase Price pursuant to Section 2(b) below. The City shall instruct Wilmington Trust National Association, as trustee for the Target Bonds (the “Bond Trustee”) to purchase the Repurchased Bonds and pay the Purchase Price to the Dealer Manager. The Dealer Manager shall cause to be transferred the Repurchased Bonds to the Bond Trustee. Upon receipt of the Repurchased Bonds, the Bond Trustee shall notify the City via electronic mail. The City shall then instruct the Bond Trustee to pay the Purchase Price and cancel the Repurchased Bonds. (g) The City has posted or will post on the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (“EMMA”) site (a) a notice of the potential Repurchase, in substantially the form set forth in Exhibit “B” hereto, prior to the date on which the Target Bonds are offered for repurchase (the “Repurchase Date”) and (b) a notice of cancellation of the Target Bonds which were repurchased by the City, in substantially the form set forth in Exhibit “C” hereto, within 10 days of the date on which the City cancels such bonds. (h) The City agrees to advise the Dealer Manager promptly of the occurrence of (i) any event which, in the reasonable judgment of the City or its counsel, could cause or require the City to withdraw, rescind or modify the Repurchase; (ii) any proposal by the City or requirement to make, amend or supplement the Authorizing Resolution, (iii) any material developments in connection with the Authorizing Resolution, including, without limitation, the commencement of any lawsuit concerning or related to the Repurchase, (iv) the issuance by any agency of any comment or order or the taking of any other action concerning the Repurchase, and (v) any other information relating to the Repurchase or this Agreement that the Dealer Manager may from time to time reasonably request. SECTION 2. Compensation and Purchase Price. (a) The City shall pay to the Dealer Manager, as compensation for services as Dealer Manager, a fee of $10.00 for each $1,000 principal amount of the Repurchased Bonds (the “Dealer Manager Compensation”). The Dealer Manager shall only be entitled to such fee following its acquisition of the Repurchased Bonds which shall be in compliance with the terms and conditions set forth in this Agreement and the Authorizing Resolution. The Dealer Manager shall submit an invoice for payment of the Dealer Manager Compensation to the City concurrently with the transfer for the Repurchased Bonds. (b) The City shall pay a total purchase price for the Repurchased Bonds in an amount equal to the Repurchase Price plus the Dealer Manager Compensation (the “Purchase Price”). (c) The Municipal Advisor and Bond Counsel shall submit invoices in connection with the Repurchase to the City. Upon receipt of invoices from the Municipal Advisor and Bond Counsel, the City shall provide written instructions to the Bond Trustee to pay such costs in connection with the Repurchase. 45635.01444\41683472.3 4 SECTION 3. Termination; Withdrawal. (a) Subject to Section 7 hereof, this Agreement shall terminate upon the earliest to occur of (i) the termination, withdrawal or cancellation of the Repurchase, (ii) the satisfaction of all obligations in Sections 1 and 2 hereof, (iii) the withdrawal by the Dealer Manager pursuant to Section 3(c) hereof, and (iv) the date that is six months from the date hereof. (b) Subject to Section 7 hereof, this Agreement may be terminated by the City, at any time upon notice to the Dealer Manager, if (i) at any time prior to the Repurchase Date, the Authorizing Resolution is terminated or withdrawn by the City for any reason, or (ii) the Dealer Manager does not comply in any material respect with any covenant in Section 1 in the reasonable opinion of the City. (c) Subject to Section 7 hereof, this Agreement shall be subject to termination in the absolute discretion of the Dealer Manager without any liability or penalty to the Dealer Manager at any time upon notice to the City, if (i) at any time prior to the Repurchase Date, the Repurchase is terminated or withdrawn by the City for any reason other than as provided in Section 3(b)(ii) above, or any stop order, restraining order, injunction or denial of an application for approval has been issued and not thereafter stayed or vacated, or any proceeding, litigation or investigation has been initiated, with respect to or otherwise affecting the Repurchase or the Authorizing Resolution or any other action or transaction contemplated by the Authorizing Resolution or this Agreement, which the Dealer Manager believes renders it inadvisable for the Dealer Manager to continue to act hereunder, then in any such case the Dealer Manager shall be entitled to withdraw as Dealer Manager without any liability, or (ii) the City shall have breached in any material respects any representation, warranty or covenant contained herein (including, but not limited to, the conditions set forth in Section 4 hereof). SECTION 4. Representations and Warranties by the City. The City represents and warrants to the Dealer Manager, as of the date hereof, that: (a) The City is a public agency duly organized and existing under the laws of the State of California and has the power and authority to own its properties and to carry on its businesses as now being conducted and as currently contemplated to be conducted hereafter. (b) The City has full legal right, power and authority to execute and deliver this Agreement, and to perform all its obligations hereunder and to make and consummate the Repurchase in accordance with its terms. (c) The City has taken all necessary official action to authorize the making and consummation of the Repurchase and the execution, delivery, and performance by the City of this Agreement; and this Agreement has been duly executed and delivered by the City and, assuming due authorization, execution and delivery by the Dealer Manager, this Agreement constitutes a legal, valid and binding contractual obligation of the City, enforceable against the City in accordance with its terms, except as the City’s obligations hereunder and the enforceability of this Agreement may be subject to judicial discretion in accordance with general principles of equity, the valid exercise of the sovereign police powers of the State of California and of the constitutional 45635.01444\41683472.3 5 powers of the United States and valid bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors’ rights. (d) The making and consummation of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) conflict with, or result in the acceleration of any obligation under or in a breach of, or constitute a default under, any of the provisions of the Indenture or any indenture, agreement or undertaking to which the City is a party or by which it is bound or to which any of its property or assets is subject, (ii) result in any violation of laws of the State of California, or (iii) contravene any federal or state law, rule or regulation applicable to the City, or any order applicable to the City of any court or of any other governmental agency or instrumentality having jurisdiction over it or any of its property. (e) There are no legal or governmental actions, suits or proceedings pending or, to the best of the City’s knowledge, threatened against or affecting the City or which has as the subject thereof any property owned or leased by, the City and any such action, suit or proceeding, if determined adversely to the City, would adversely affect the making or consummation of this Agreement, the acquisition and/or cancellation of Target Bonds or the other transactions contemplated by this Agreement or the Authorizing Resolution. (f) No consent, approval, authorization order of, or registration, qualification or filing with, any court or regulatory agency or other governmental agency or instrumentality is required in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. (g) The City has or will have available funds, and is authorized to use such funds under applicable law, to pay the Purchase Price of the Repurchased Bonds. SECTION 5. Conditions to Obligations of Dealer Manager. The obligation of the Dealer Manager to act as a Dealer Manager hereunder shall at all times be subject, in its discretion, to the conditions that: (a) All representations and warranties of the City contained herein shall be true and correct as of the Repurchase Date and Settlement Date. (b) The City shall have performed all of its obligations hereunder required as of the Repurchase Date to have been performed by it. SECTION 6. Indemnification. Indemnification. The Dealer Manager shall defend, indemnify and hold the City, its officials, officers, employees, volunteers and agents free and harmless from any and all claims, demands, causes of action, costs, expenses, liability, loss, damage or injury, in law or equity, to property or persons, including wrongful death, in any manner arising out of or incident to any alleged negligent acts or omissions, or willful misconduct of Dealer Manager, its officials, officers, employees, agents, consultants and contractors arising out of or in connection with the performance of the Services, the Project or this Agreement, including without limitation the payment of all consequential damages and attorney’s fees and other related costs and expenses. Dealer Manager shall defend, at Dealer Manager’s own cost, expense and risk, any and all such aforesaid suits, actions or other legal proceedings of every kind that may be brought 45635.01444\41683472.3 6 or instituted against the City, its directors, officials, officers, employees, agents or volunteers. Dealer Manager shall pay and satisfy any judgment, award or decree that may be rendered against the City or its directors, officials, officers, employees, agents or volunteers, in any such suit, action or other legal proceeding. Dealer Manager shall reimburse the City and its directors, officials, officers, employees, agents and/or volunteers, for any and all legal expenses and costs incurred by each of them in connection therewith or in enforcing the indemnity herein provided. Dealer Manager’s obligation to indemnify shall not be restricted to insurance proceeds, if any, received by the City, its directors, officials, officers, employees, agents or volunteers. This section shall survive any expiration or termination of this Agreement. SECTION 7. Survival. This Section 7 and Sections 2, 6, 8, 9, 10, 11 and 12 hereof and Annex A hereto and the representations and warranties of the City set forth in Section 4 hereof shall survive any failure by the City to commence, or termination, expiration or cancellation of this Agreement, any completion of the engagement provided for by this Agreement or any investigation made on behalf of the City or the Dealer Manager and shall survive the termination of the Repurchase. SECTION 8. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PROVISIONS. SECTION 9. Submission to Jurisdiction. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE AGAINST THE ANOTHER PARTY IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF CALIFORNIA SITTING IN LOS ANGELES COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE CENTRAL DISTRICT OF CALIFORNIA, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH CALIFORNIA STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. SECTION 10. Waiver of Venue. EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT IN ANY COURT REFERRED TO IN SECTION 9 OF THIS AGREEMENT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED 45635.01444\41683472.3 7 BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. SECTION 11. Service of Process. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 13 OF THIS AGREEMENT. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. SECTION 12. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO DEALER MANAGER, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (b) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER RELATED DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 13. Notices. Except as otherwise expressly provided in this Agreement, whenever notice is required by the provisions of this Agreement to be given, such notice shall be in writing addressed as follows and effective when received: If to the City: City of Azusa 213 E. Foothill Blvd. Azusa, CA 91702 Email: Attention: City Manager If to Dealer Manager: Samuel A. Ramirez & Co., Inc. 61 Broadway, 29th Floor New York, NY 10006 Email: compliance@ramirezco.com; michael.mejia@ramirezco.com Attention: Michael Mejia 45635.01444\41683472.3 8 SECTION 14. Miscellaneous. (a) This Agreement contains the entire agreement between the parties relating to the subject matter hereof and supersedes all oral statements and prior writings with respect thereto. This Agreement may not be amended or modified except by a writing executed by each of the parties hereto. Section headings herein are for convenience only and are not a part of this Agreement. (b) This Agreement is solely for the benefit of the City and the Dealer Manager, and their respective successors, heirs and assigns, and no other person shall acquire or have any rights under or by virtue of this Agreement. (c) The Dealer Manager may share any information or matters relating to the City, the Repurchase and the transactions contemplated hereby with their respective affiliates and such affiliates may likewise share information relating to the City with the Dealer Manager. (d) If any term, provision, covenant or restriction contained in this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable or against public policy, the remainder of the terms, provisions, covenants, and restrictions contained herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated. The City and the Dealer Manager shall endeavor in good faith negotiations to replace the invalid, void or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, void or unenforceable provisions. (e) This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which, taken together, will constitute one and the same instrument. (Signature page follows) 45635.01444\41683472.3 S-1 If the foregoing correctly sets forth our understanding, please indicate your acceptance of the terms hereof by signing in the appropriate space below and returning to the Dealer Manager the enclosed duplicate originals hereof, whereupon this letter shall become a binding agreement between us. Very truly yours, SAMUEL A. RAMIREZ & CO., INC. By: Name: Title: Accepted and agreed to as of the date first written above: CITY OF AZUSA By: Name: Title: [Signature Page to Dealer Manager Agreement] 45635.01444\41683472.3 A-1 EXHIBIT A $70,075,000 CITY OF AZUSA TAXABLE PENSION OBLIGATION BONDS, SERIES 2020 LIST OF TARGETED BONDS Maturity Date (August 1) Principal Amount Interest Rate Yield CUSIP®(1) 45635.01444\41683472.3 B-1 EXHIBIT B NOTICE OF POTENTIAL REPURCHASE OF BONDS $70,075,000 CITY OF AZUSA TAXABLE PENSION OBLIGATION BONDS, SERIES 2020 TO CONSIDER SECONDARY MARKET PURCHASES OF BONDS Notice is hereby given by the City of Azusa (the “Issuer”) to the holders of certain bonds as follows: On September 30, 2020, the Issuer issued its Taxable Pension Obligation Bonds, Series 2020 (the “2020 POBS”). The Issuer, upon authorization from the City Council of the Issuer, may from time to time seek to purchase certain maturities of outstanding 2020 POBS pursuant to one or more secondary market purchases (the “Target Bonds”) from legally available funds of the Issuer through open market purchases. The Issuer will consider opportunities, including, without limitation, any based on discussions it may initiate, for the purchase of Target Bonds in open market transactions, in privately negotiated transactions or otherwise based on then-current market conditions. Any such purchases are expected to occur at prices that are less than par. The purchases may have an impact on the market prices for any outstanding Target Bonds which are not so purchased. The Issuer intends to cancel any Target Bonds so purchased. There is no assurance that the Issuer, or any party on behalf of the Issuer, will purchase any Target Bonds, or if Target Bonds are purchased, which Target Bonds will be purchased or at what price or prices Target Bonds will be purchased, or over what period of time such purchases may be conducted. Samuel A. Ramirez & Co., Inc. is expected to serve as the Issuer’s agent in connection with the proposed purchases of the Target Bonds. The Target Bonds are further described as follows: Maturity Schedule SERIAL BONDS Maturity Date (August 1) Principal Amount Interest Rate Yield CUSIP®(1) 2024 $2,950,000 1.672% 1.672% 055022AD9 2025 3,005,000 1.822 1.822 055022AE7 2026 3,065,000 2.068 2.068 055022AF4 2027 3,130,000 2.268 2.268 055022AG2 2028 3,205,000 2.435 2.435 055022AH0 2029 3,285,000 2.535 2.535 055022AJ6 2030 3,370,000 2.635 2.635 055022AK3 2031 3,465,000 2.785 2.785 055022AL1 2032 3,565,000 2.885 2.885 055022AM9 2033 3,670,000 2.985 2.985 055022AN7 2034 3,785,000 3.085 3.085 055022AP2 2035 3,905,000 3.135 3.135 055022AQ0 $21,725,000 3.620% Term Bond due August 1, 2040 Yield 3.620% CUSIP®(1): 055022AR8 45635.01444\41683472.3 B-2 ANY PROPOSED PURCHASE OF TARGET BONDS BY THE ISSUER, AND THE SIZE AND TIMING OF ANY SUCH TRANSACTIONS, ARE SUBJECT TO, AMONG OTHER THINGS, A VARIETY OF KEY FACTORS, INCLUDING, WITHOUT LIMITATION, APPROVAL BY THE GOVERNING BODY OF THE ISSUER, MARKET CONDITIONS, THE AVAILABILITY OF ATTRACTIVE FINANCING ARRANGEMENTS TO FUND ANY SUCH PURCHASES, AND OTHER FACTORS WHICH CANNOT BE PREDICTED. THE ISSUER RESERVES THE RIGHT TO DECLINE TO PROCEED WITH ANY PURCHASE OF TARGET BONDS AND TO SUSPEND OR TERMINATE ITS PURCHASES OF THE TARGET BONDS AT ANY TIME AND FOR ANY REASON WHATSOEVER, WITHOUT NOTICE. This notice is being provided to the Municipal Securities Rulemaking Boards Electronic Municipal Market Access System for general information purposes only. This notice should not be viewed as a formal notification to holders of the Target Bonds and does not constitute an offer to buy, or the solicitation of an offer to sell, any of the Target Bonds. Neither the Issuer, Samuel A. Ramirez & Co., Inc., Best Best & Krieger, LLP nor any of their respective affiliates makes any recommendation to any holder as to whether to sell or hold any Target Bonds. The Issuer has not authorized any person to make any such recommendation. Dated: October _________, 2023 CITY OF AZUSA 45635.01444\41683472.3 C-1 EXHIBIT C NOTICE OF CANCELLATION OF BONDS NOTICE OF BOND REPURCHASES $70,075,000 CITY OF AZUSA TAXABLE PENSION OBLIGATION BONDS, SERIES 2020 DATED _________, 2023 On _______, 20__, the City of Azusa (the “Issuer”) repurchased and cancelled $__________ principal amount of the Issuer’s Taxable Pension Obligation Bonds, Series 2020 (the “Repurchased Series 2020 Bonds”) as further described below. The aggregate costs of repurchasing the Repurchased Series 2020 Bonds was $_________, or approximately ____% of the principal amount thereof. The cost of repurchasing the Repurchased Series 2020 Bonds was paid for by cash. The Repurchased Series 2020 Bonds consist of the following: Original Principal Repurchased Interest CUSIP Maturity Year Amount Principal Amount Rate (Base: _____) The Repurchased Series 2019 Bonds were cancelled by the paying agent for the Repurchased Series 2019 Bonds on ______, 20__. After such cancellation, the Issuer’s Taxable Pension Obligation Bonds, Series 2020 described below remain outstanding: Maturity Year Original Principal Principal Amount Amount Outstanding Interest Rate CUSIP (Base: ____) The Issuer shall not be responsible for the selection or use of the CUSIP identification numbers shown above or printed on any of the Repurchased Series 2020 Bonds. Said CUSIP identification numbers are included solely for the convenience of the owners of the Repurchased Series 2020 Bonds. 45635.01444\41683472.3 C-2 Dated: _______, 20__ THE CITY OF AZUSA ************************ The information contained in this notice has been submitted by the Issuer to voluntarily report certain events. Nothing contained in this notice is, or should be construed as, a representation by the Issuer that the information included in this notice constitutes any or all information that may be material to a decision to invest in, hold or dispose of any of the securities of the Issuer. In addition, nothing contained in this notice, nor the furnishing of this notice with EMMA in and of itself, shall obligate the Issuer to provide additional or updated information to holders of any securities. RESOLUTION NO. 2023-C59 A RESOLUTION OF THE CITY COUNCIL OF CITY OF AZUSA AMENDING THE FISCAL YEAR 2023/24 GENERAL FUND BUDGET BY $4,000,000 TO REPURCHASE A PORTION OF THE CITY OF AZUSA PENSION OBLIGATION BONDS, SERIES 2020 WHEREAS, in order to refinance certain pension liabilities of the City of Azusa (the “City”), the City issued its Taxable Pension Obligation Bonds, Series 2020 (the “2020 POBS”) which were issued on September 30, 2020; and WHEREAS, the City is obligated to make certain annual debt service payments on such outstanding 2020 POBS; and WHEREAS, recent increases in yields demanded by investors in virtually all types of bonds have produced corresponding decreases in the market prices for such bonds, and as a result thereof many of the City’s bonds now trade at prices significantly less than the principal amount; and WHEREAS, due to such decrease in the market prices for such bonds, the City may achieve savings from the repurchase of a portion of the 2020 POBS periodically on the open market; and WHEREAS, the City Council of the City (the “City Council”) deems it advisable and in the best interests of the City to authorize the repurchase a portion of the outstanding of the 2020 POBS on the open market (“Bond Repurchase Program”) from time to time; and WHEREAS, the City shall utilize legally available monies in the City’s general fund (“Surplus Cash”) to purchase a portion of the outstanding 2020 POBS on the open market and deliver them to the Wilmington Trust National Association, as trustee of the 2020 POBS, to be cancelled; and WHEREAS, the use of Surplus Cash to purchase on the open market and cancel a portion of the outstanding 2020 POBS will reduce both the principal amount of the City’s bonds outstanding and the annual amount of bond interest payable by the City; and WHEREAS, the City Council hereby authorizes the Bond Repurchase Program to reduce debt service on the outstanding 2020 POBS provided that any repurchase under the Bond Repurchase Program will provide significant public benefits in the form of reductions in the amounts of both the principal and interest payable on the City’s bonds as set forth in this resolution; WHEREAS, Azusa Municipal Code Section 2-450 requires that during the fiscal year after adoption of the budget, amendments exceeding $1,000,000 may be approved by the City Council following a public hearing held by the City Council on the proposed and shall be formalized by the adoption of a resolution; Attachment 3 2 WHEREAS, a public hearing for this matter was conducted at a regular meeting og the City of Azusa City Council on the 16th day of October, 2023; and WHEREAS, an amendment in the amount of $4,000,000 to the Genreal Fund Operating expense budget will be adequate repurchase a portion of the 2020 Pension Obligation Bonds. NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY THE CITY COUNCIL OF THE CITY OF AZUSA AS FOLLOWS: Section 1. That the General Fund Fiscal Year 2023-2024 Operating Budget is hereby amended in the amount of $4,000,000 in the expense account number 10-90-000-000-7005. Section 2. This Resolution shall take effect from and after its adoption. PASSED AND ADOPTED by the City Council of the City of Azusa at a regular meeting held on the 16th day of October, 2023. _____________________________ Robert Gonzales Mayor ATTEST: ______________________________ Jeffrey Lawrence Cornejo, Jr. City Clerk 3 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF AZUSA ) I HEREBY CERTIFY that the foregoing Resolution No. ________ was duly adopted by the City Council of Azusa at a regular meeting thereof, held on the 16th day of October, 2023, by the following vote of Council: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ______________________________ Jeffrey Lawrence Cornejo, Jr. City Clerk APPROVED AS TO FORM: ______________________________ Best Best & Krieger, LLP City Attorney