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Item 09a - Refunding of 2011 & 2012 General Obligation Bonds
DATE: October 19, 2021 TO: Honorable Mayor and City Council Members FROM: Dominic Lazzaretto, City Manager Hue Quach, Administrative Services Director SUBJECT: RESOLUTION NO. 7393, PROVIDING FOR THE ISSUANCE OF GENERAL OBLIGATION REFUNDING BONDS, ELECTION OF 2006 (BOND MEASURE A), SERIES 2021 IN THE PRINCIPAL AMOUNT NOT TO EXCEED $4,985,000 AND GENERAL OBLIGATION REFUNDING BONDS, SERIES 2021 (POLICE STATION PROJECT) IN THE PRINCIPAL AMOUNT NOT TO EXCEED $3,867,000 Recommendation: Approve SUMMARY The City of Arcadia has two General Obligation Bonds outstanding, which are supported by voter-approved ad valorem property taxes: 2011 General Obligation Bonds (2011 GO Bonds) - In 2006 voters approved Measure A, a special tax bond measure used to fund the acquisition and construction of an overpass at the intersection of Santa Anita Avenue and the MTA Gold Line Foothill Extension. In December of 2011, the City issued $8 million in General Obligation Bonds. 2012 General Obligation Bonds (2012 GO Bonds) - In 1999 voters approved a special bond measure to finance the construction of a police station at the Arcadia Civic Center. In 2001, the City issued $8 million in General Obligation Bonds (2001 Bonds) to finance this project. In October of 2012, the City issued $6,135,000 in General Obligation Refunding Bonds to refinance the outstanding portion of the 2001 Bonds. The current interest rate environment presents an excellent opportunity to refinance the outstanding portion of these bonds for considerable savings. Both of these bond issues have interest rates, ranging from 2.0% to 5.0%. The 2011 GO Bonds can be refinanced Refunding of 2011 and 2012 General Obligation Bonds October 19, 2021 Page 2 of 5 on any date; however, the 2012 GO Bonds still have 9 months until they can be redeemed. Due to the size and term of the issue, the refunding bonds will be sold via private placement (as opposed to a traditional public sale), in order to minimize the overall cost of borrowing. The private placement bank, Sterling National Bank (Sterling) was selected via a competitive solicitation process. Sterling has a “locked-in” competitive interest rate (1.28%), which will result in approximately $845,000 in debt service savings for the two bond issues combined. This savings would flow to Arcadia property owners directly through lower annual property tax levies. The City itself would see no savings. The 2012 GO Bonds cannot be advance refunded (i.e., refinanced prior to the redemption date) on a tax-exempt basis. In order to refund these bonds prior to the call date, the City would need to issue taxable bonds, which carry a higher interest rate and results in lower savings. However, the City can issue a “Cinderella” bond structure and still comply with federal tax laws. A Cinderella Bond is a convertible bond that carries a taxable interest rate until the redemption date, upon which the interest rate converts to a tax-exempt rate. In the case of the 2012 GO Bonds - the Cinderella Bonds will carry a 1.71% rate until August 1, 2022 (redemption date), upon which the City can convert the bonds to a tax- exempt rate of 1.28%. Both offer significant savings over the current coupon rates. It is recommended that the City approve Resolution 7393, authorizing the issuance and sale of the refunding bonds, and approve Urban Futures, Inc. to serve as the Municipal Advisor and Stradling Yocca Carlson & Rauth, to serve as bond counsel on the transaction. BACKGROUND The current interest rate environment presents an excellent opportunity to refinance the outstanding portion of these bonds for considerable savings. Both of the General Obligation bonds carry high coupons, ranging from 2.0% to 5.0%. 2011 General Obligation Bonds (2011 GO Bonds) – The 2011 GO Bonds are currently redeemable on any date at 100%. There are $4,860,000 in bonds outstanding, with coupons ranging from 3.0% to 5.0%. The 2011 GO Bonds have a final maturity of August 1, 2031. Refunding of 2011 and 2012 General Obligation Bonds October 19, 2021 Page 3 of 5 2012 General Obligation Bonds (2012 GO Bonds) – There will be $3,725,000 in 2012 GO Bonds outstanding, with coupons ranging from 2.0% to 3.0%. The 2012 Bonds have a final maturity of August 1, 2031. The 2012 GO Bonds, however, are not redeemable until August 1, 2022. DISCUSSION The 2011 GO Bonds and 2012 GO Bonds present an opportunity for savings; however, the smaller size and required bond structure lend themselves to a private placement as opposed to a public offering. In addition to a shorter execution timeline and reduced ongoing disclosure requirements, a direct (private placement) financing with a bank provides the needed flexibility required to issue Cinderella Bonds and take advantage of the lower tax-exempt rate that would be available on or after August 1, 2022. Given the short maturity and the strength of the City’s AAA rating, the City solicited proposals from several banks through a competitive process. Staff determined that selecting a single bank for both issues would both save on staff resources and minimize the cost of issuance. The solicitation for bids was sent out to 10 banks; however, due to the more complex Cinderella structure, only 4 bids were received: Sterling Bank, Wells Fargo, JP Morgan, and First Foundation. The bank that provided the lowest total interest costs, on a present value basis, for both issues was selected. Sterling Bank provided the winning bid – they quoted a 1.28% tax-exempt rate for the 2011 GO Bonds; and a 1.71% rate converting to 1.28% for the refunding of the 2012 GO Bonds (i.e., Cinderella Bonds). Wells Fargo was the cover bid at 1.42% for the refunding of the 2011 GO Bonds and 1.83%/1.46% for the Cinderella Bonds. Sterling Bank’s bid provided nearly $28,000 in lower interest costs than Wells Fargo. Additionally, Sterling Bank provided an up-front rate lock, while Wells Fargo requires formal approval, which could result in a movement away from the quoted rate. The projected savings from refunding the 2011 GO Bonds and 2012 GO Bonds are estimated to provide approximately $845,000 in debt service savings over the next 10 years - $786,364 on a net present value basis – 8.9% of the par value refunded. It should be noted that these savings do not flow to the City directly. All savings will be experienced by the property owners in the City, whose annual bills will be slightly lower. The City should undertake this effort as part of its responsibility as a fiduciary on behalf of the rate payers. Refunding of 2011 and 2012 General Obligation Bonds October 19, 2021 Page 4 of 5 Since there is no rating agency fee nor cost for an underwriter, the total cost of issuance is expected to be much lower under a private placement than a traditional public offering. ENVIRONMENTAL ANALYSIS The proposed actions do not constitute a project under the California Environmental Quality Act (“CEQA”) per Section 15061(b)(3) of the CEQA Guidelines, and it can be seen with certainty that it will have no impact on the environment. Thus, this matter is exempt from CEQA. FISCAL IMPACT The cost of issuance associated with this refinancing would be paid from the proceeds of the sale. Payment is contingent upon the successful closing of the refunding bonds. The cost of issuance will not exceed $113,000: Urban Futures Inc. will receive a fee of $35,000 to serve as the municipal advisor and Stradling Yocca Carlson & Rauth will receive a fee of $55,000 to serve as bond counsel. Additional issuance costs include trustee and trustee legal fees ($5,000), verification agent ($1,500), City Attorney fees ($10,000) and a contingency ($6,500). The City saved approximately $30,000 by not utilizing a placement agent. Sterling Bank’s legal fees have been incorporated into the loan rate. GOOD FAITH ESTIMATES The good faith estimates set forth below are provided with respect to the Bonds in accordance with California Government Code Section 5852.1. Such good faith estimates Principal Coupon Interest Debt Service 2011 & 2012 GO Bonds Savings NPV Savings @ 1.28% 1 944,000 1.71%79,204 1,023,204 1,023,945 741 734 2 829,000 1.28%101,222 930,222 1,023,795 93,573 91,584 3 843,000 1.28%90,611 933,611 1,027,120 93,509 90,365 4 851,000 1.28%79,821 930,821 1,024,720 93,899 89,595 5 868,000 1.28%68,928 936,928 1,030,558 93,630 88,209 6 878,000 1.28%57,818 935,818 1,029,533 93,715 87,174 7 891,000 1.28%46,579 937,579 1,031,495 93,916 86,256 8 902,000 1.28%35,174 937,174 1,031,470 94,296 85,511 9 920,000 1.28%23,629 943,629 1,037,360 93,731 83,925 10 926,000 1.28%11,853 937,853 1,031,750 93,897 83,011 8,852,000$ 594,840$ 9,446,840$ 10,291,745$ 844,905$ 786,364$ 8.9% Refunding of 2011 and 2012 General Obligation Bonds October 19, 2021 Page 5 of 5 have been provided to the City by the City’s Municipal Advisor in consultation with Sterling: (i) The True Interest Cost of the Bonds (as defined in Government Code Section 5852.1) is expected to be approximately 1.28%; (ii) The total Finance Charge of the Bonds (as defined in Government Code Section 5852.1) is expected to be $113,000; (iii) The total proceeds expected to be received by the City from the sale of the Bonds, less the Finance Charge of the Bonds and any reserves or capitalized interest paid or funded with proceeds of the Bonds, is $8,739,000; and (iv) The City expects that the Total Payment Amount (as defined in Government Code Section 5852.1), calculated to the final maturity of the Bonds, will be $9,446,839. RECOMMENDATION It is recommended that the City Council adopt Resolution 7393, providing for the Issuance of General Obligation Refunding Bonds, Election of 2006 (Bond Measure A), Series 2021 in the principal amount not to exceed $4,985,000 and General Obligation Refunding Bonds, Series 2021 (Police Station Project) in the principal amount not to exceed $3,867,000. Attachment No. 1: Resolution 7393 Exhibit A: Measure A Supplement to Resolution Exhibit B: Police Station Supplement to Resolution Attachment No. 2: Paying Agency Agreement Attachment No. 3: Escrow Agreement – 2012 GO Bonds Stradling Yocca Carlson & Rauth Draft dated October 8, 2021 1 4832-8048-3837v3/024217-0008 PAYING AGENCY AGREEMENT This Paying Agency Agreement (the “Agreement”), entered into as of the __rd day of November, 2021 by and between the City of Arcadia (the “Issuer”) and The Bank of New York Mellon Trust Company, N.A., a national banking association having a corporate trust office in Los Angeles, California (the “Paying Agent”), WITNESSETH: WHEREAS, by a Supplement to Resolution No. ___ dated as of November 1, 2021 (the “Measure A Authorization”) the Issuer authorized the issuance of its City of Arcadia General Obligation Refunding Bonds, Election of 2006 (Bond Measure A), Series 2021 (the “2021 Measure A Bonds”) and by a Supplement to Resolution No. ___ dated as of November 1, 2021 (the “Police Station Authorization” and, together with the “Measure A Authorization,” the “Authorization”) the Issuer authorized the issuance of its City of Arcadia General Obligation Refunding Bonds, Series 2021 (Police Station Project) (the “2021 Police Station Bonds” and, together with the 2021 Measure A Bonds, the “Bonds”); and WHEREAS, said Authorization authorized the Issuer to enter into an agreement of appointment with a Bond Registrar/Transfer Agent and Paying Agent to service such Bonds. NOW, THEREFORE, the Issuer and the Paying Agent agree as follows: Section 1. Appointment and Acceptance. The Issuer hereby appoints The Bank of New York Mellon Trust Company, N.A. as Bond Registrar/Transfer Agent and Paying Agent for the Bonds pursuant to the Authorization and the Paying Agent accepts such appointment, acknowledging the duties, obligations and responsibilities of the Paying Agent as set forth pursuant to the Authorization. Section 2. Documents to be Filed with the Paying Agent. (a)The following documents shall be filed with the Paying Agent in connection with its appointment: (i) a copy of the Authorization; (ii)if not printed on the Bonds, an Opinion of Bond Counsel stating that (a) the Bonds are valid and legally binding obligations of the Issuer, payable in accordance with their terms and (b) if applicable, the interest on such Bonds is not included in gross income for federal income tax purposes; (iii)a specimen certificate in the form approved by the Issuer; and (iv)such other instruments and certificates as the Paying Agent may reasonably request. (b)The 2021 Police Station Bonds will initially be issued bearing taxable interest. The interest rate on the 2021 Police Station Bonds shall convert to the Tax-Exempt Rate on the Tax- Attachment No. 2 2 4832-8048-3837v3/024217-0008 Exempt Reissuance Date (as described in the Police Station Authorization). The following documents or copies thereof shall be filed with the Paying Agent upon such conversion: (i) the written election of the City to convert the interest rate payable with respect to the 2021 Police Station Bonds to the Tax-Exempt Rate; (ii) an opinion of Bond Counsel to the effect that the conditions precedent to the conversion of interest payable with respect to the 2021 Police Station Bonds to the Tax-Exempt Rate have been satisfied and that subject to the Issuer’s compliance with certain covenants, interest payable with respect to the 2021 Police Station Bonds is excludable from gross income of the owners thereof for federal income tax purposes, and is not included as an item of tax preference in computing the alternative minimum tax for federal income tax purposes; (iii) the new optional redemption schedule for the 2021 Police Station Bonds; and (iv) such other instruments and certificates as the Paying Agent may reasonably request. Section 3. Registration, Authentication and Delivery of Initial Bonds. If the Bonds are to be newly issued, the Issuer will, or will cause its purchaser/underwriter to: (i) deliver to the Paying Agent, not later than five (5) business days prior to the required delivery date, written notice setting forth the maturity date, principal amount and interest rate borne by the Bonds; and (ii) notify the Paying Agent in writing, not later than three (3) business days prior to the required delivery date, of the name(s) in which Bonds are to be registered, the mailing addresses of the respective registered holders and their respective taxpayer identification numbers, and the quantity, denominations, interest rates, maturity dates and CUSIP numbers, if any, of the certificates to be issued to each registered holder. The Paying Agent shall inscribe the Bonds as directed in Section 3(ii) above, authenticate the initial Bonds and deliver same in accordance with the written directions of the Issuer or its purchaser/underwriter. If delivered before the Closing, such initial Bonds shall remain subject to the control of the Paying Agent, as agent for the Issuer, until released by the Paying Agent. Section 4. Transfer or Exchange of Certificates. The Paying Agent is authorized, empowered and directed to inscribe, to countersign or authenticate as registrar, and to record and deliver new certificates for Bonds of the Issuer pursuant to requests for transfer and cancellation of other certificates theretofore outstanding, or to replace lost, destroyed, stolen or mutilated certificates, as provided in Section 6 hereof. If the transfer and/or exchange of the Bond certificate shall have been documented in the manner authorized or required by law, and if the rules, regulations, policies and procedures of the Issuer and of the Paying Agent, governing the transfer and registration of the Bonds shall have been met, then the Paying Agent shall cancel such certificate being transferred and/or exchanged and shall inscribe, authenticate, record and deliver a new certificate for the Bonds so transferred or exchanged. In the transfer of Bond certificates, the Paying Agent may require a guarantee of signature by an eligible guarantor institution participating in a recognized signature guarantee program. 3 4832-8048-3837v3/024217-0008 The Paying Agent shall incur no liability for the refusal in good faith to make transfers which it, in its judgment, deems improper or unauthorized. The Paying Agent may, in effecting transfers, rely upon the Uniform Commercial Code of the State of California and/or the rules of the Stock Transfer Association, Inc. In connection with any proposed transfer outside the book-entry system, the Issuer or the applicable securities depository shall provide or cause to be provided to the Paying Agent all information necessary to allow the Paying Agent to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045. Any transferor of the Bonds (to the extent not within the book-entry system) shall also provide or cause to be provided to the Paying Agent all information necessary to allow the Paying Agent to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045. The Paying Agent may rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information. Section 5. Bond Certificates. The Issuer will furnish to the Paying Agent a sufficient supply of blank Bond certificates and, from time to time, will replenish such supply upon request of the Paying Agent. Such blank Bond certificates shall be signed by officers of the Issuer, authorized by the Issuer to sign Bond certificates, and shall bear the seal of the Issuer or shall bear, to the extent permitted by law, the facsimile signature of each such officer and a facsimiles of the seal. If an officer of the Issuer, whose signature appears on any Bond certificate, ceases to be an officer of the Issuer before delivery of said Bond certificate, such signature nevertheless shall be valid and sufficient for all purposes, the same as if such officer of the Issuer had remained in office until such delivery and the Paying Agent may inscribe, authenticate, and deliver such certificate as being that of the Issuer whose signature properly shall have been inscribed on such Bond certificate prior to its issuance. Section 6. Records of Certificates; Lost or Destroyed Certificates. The Paying Agent may open and keep such books and other records, including a Bond Register, as shall be required for, or convenient in, the performance of its duties. Upon receiving written instructions from the Issuer and indemnity satisfactory to the Paying Agent and the Issuer, the Paying Agent may inscribe, authenticate and deliver, to the persons entitled thereto, new certificates in place of certificates represented to have been lost, stolen or destroyed and likewise may issue a new certificate in exchange for, and upon surrender of, an identifiable mutilated certificate. Section 7. Payments of Interest and Principal. The Paying Agent shall act as Paying Agent for the Bonds and in such capacity it shall: (i) with funds provided by Issuer, pay the interest upon the Bonds by mailing checks to the persons entitled to receive such interest, as determined by the registry of the Issuer maintained by the Paying Agent, provided that Issuer shall have deposited with the Paying Agent, on or before the day upon which interest checks are to be mailed, sufficient immediately available funds to cover payment of such interest; (ii) with funds provided by Issuer, pay the principal amount (including premium, if any) of the Bonds to the registered holders of such Bonds, upon the maturity date or earlier redemption 4 4832-8048-3837v3/024217-0008 date upon which the principal is to become payable and upon delivery to the Paying Agent of a Bond certificate with respect to which such principal payment shall have become payable, provided that the Issuer shall have deposited with the Paying Agent, on or before the payment date, sufficient immediately available funds to pay the aggregate principal amount (including premium, if any) due on all Bonds so payable; (iii) if a Bondholder shall report to the Paying Agent that any check so mailed for the payment of interest or principal has been lost and that the proceeds thereof, have not been received and if the check has not been paid then, upon provision of an indemnity satisfactory to the Paying Agent and the Issuer, stop payment upon such check, and issue and deliver to such Bondholder a new check for like amount; provided, however, that it may, at its discretion, defer the issuance of the new check for a reasonable period of time; (iv) record the fact of payment and cancel Bonds surrendered to it for payment, coincident with such payment being made to the person thereto entitled; and (v) have no liability for interest on, or investing, any funds received by it; any unclaimed funds remaining in the possession of the Paying Agent for payment of the Bonds will be escheated in accordance with applicable law and the Paying Agent’s policies and procedures. The Paying Agent shall hold funds in accounts to be established by the Paying Agent under the Authorization. The Paying Agent shall have no obligation to invest and reinvest any cash held by it hereunder in the absence of timely and specific written investment direction from the Issuer. In no event shall the Paying Agent be liable for the selection of investments or for investment losses incurred thereon. The Paying Agent may purchase or sell to itself or any affiliate, as principal or agent, investments authorized by the Issuer in writing. The Paying Agent may rely on the investment directions of the Issuer as to both the suitability and legality of the directed investments. The Issuer acknowledges that regulations of the Comptroller of the Currency grant the Issuer the right to receive brokerage confirmations of the security transactions as they occur, at no additional cost. To the extent permitted by law, the Issuer specifically waives compliance with 12 C.F.R. 12 and hereby notifies the Paying Agent that no brokerage confirmations need be sent relating to the security transactions as they occur. Section 8. Redemption Prior to Stated Maturity. If the Bonds are subject to redemption prior to their stated maturity date(s), the Paying Agent shall be governed by the redemption provisions set forth in the Authorization or as stated in the provisions as set forth on the bond form. The Paying Agent shall not be required to transfer any Bond, or portion thereof, that has been called for redemption. Payment of the principal amount (including premium, if any) of any Bond, or portion thereof, called for redemption shall be made by check payable to the registered owner, only upon presentation of the Bond, at the designated corporate trust office of the Paying Agent on or after the redemption date. Where the entire principal amount of the Bond has not been called for redemption, a new Bond of the same series, maturity and interest rate in the amount of the unredeemed portion will be issued to the registered holder or its assignee. Whether or not promptly submitted for redemption, interest on any Bond, or portion thereof, called for redemption shall cease to accrue on and after the redemption date provided that sufficient moneys therefore are on deposit with the Paying Agent. Section 9. Compensation; Indemnification. The Issuer agrees to pay the Paying Agent fees as set forth in Exhibit A attached hereto and made a part hereof, and, if applicable, to reimburse 5 4832-8048-3837v3/024217-0008 Paying Agent for its out-of-pocket expenses (including without limitation attorneys’; fees and expenses). The Issuer assumes full responsibility and, to the extent permitted by law, will indemnify the Paying Agent and its officers, directors, agents and employees and save it and them harmless from and against any and all actions or suits, whether groundless or otherwise, and from and against any and all losses, liabilities, costs and expenses (including attorneys’ fees and expenses) arising out of the agency relationship created by this Agreement, unless such losses, liabilities, costs and expenses shall have been finally adjudicated to have resulted from the willful misconduct or gross negligence of the Paying Agent, and such indemnification shall survive the Paying Agent’s resignation or removal for any reason, or the termination of this Agreement. Section 10. Instructions From the Issuer and Opinion From Counsel. At any time the Paying Agent may apply to any duly authorized representative of the Issuer for instructions, and shall have the right, but not the obligation, to consult with counsel of choice at the reasonable expense of the Issuer and shall not be liable for action taken or omitted to be taken either in accordance with such instruction or such advice of counsel, or in accordance with any opinion of counsel to the Issuer addressed to the Paying Agent. Section 11. Concerning the Paying Agent. The Paying Agent shall have only those duties as are specifically provided herein, which shall be deemed purely ministerial in nature, and shall have the right to perform any of its duties hereunder through agents, attorneys, custodians or nominees. The Paying Agent shall not be answerable for other than its gross negligence or willful misconduct. The Paying Agent shall have no responsibility for the form of inscription of ownership upon any Bond certificate which has been made in accordance with directions of the Issuer, the Issuer’s purchaser/underwriter, a broker or a holder of a Bond. The Paying Agent shall be protected in acting upon any paper or document believed by it to be genuine and to have been signed by the proper person or persons and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Issuer. The Paying Agent shall also be protected in recognizing Bond certificates which it reasonably believes to bear the proper manual or facsimile signatures on behalf of the Issuer. The Paying Agent shall have the right, but not the obligation, to consult with counsel of choice and shall not be liable for action taken or omitted to be taken by Paying Agent either in accordance with the advice of such counsel or in accordance with any opinion of counsel to the Issuer addressed and delivered to the Paying Agent. The Paying Agent shall not be under any obligation to prosecute any action or suit in respect of the agency relationship which, in its sole judgment, may involve it in expense or liability. In any action or suit the Issuer shall, as often as requested, reimburse the Paying Agent for any expense or liability growing out of such action or suit by or against the Paying Agent in its agency capacity; provided, however, that no such reimbursement shall be made for any expense or liability arising as a result of Paying Agent’s gross negligence or willful misconduct. No provision of this Agreement shall require the Paying Agent to risk or expend its own funds. The Paying Agent shall not be responsible or liable for any failure or delay in the performance of its obligation under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; earthquakes; fire; flood; wars; terrorism; military disturbances; sabotage; epidemic; riots; interruptions; loss or malfunctions of utilities, computer (hardware or software) or communications services; accidents; labor disputes; acts of civil or military authority or governmental action; it being understood that Paying Agent shall use commercially reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as reasonably practicable under the circumstances. 6 4832-8048-3837v3/024217-0008 Anything in this Agreement to the contrary notwithstanding, in no event shall the Paying Agent be liable for special, punitive, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Paying Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. The Paying 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 Issuer shall provide to the Paying 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 Issuer whenever a person is to be added or deleted from the listing. If the Issuer elects to give the Paying Agent Instructions using Electronic Means and the Paying Agent in its discretion elects to act upon such Instructions, the Paying Agent’s understanding of such Instructions shall be deemed controlling. The Issuer understands and agrees that the Paying Agent cannot determine the identity of the actual sender of such Instructions and that the Paying Agent shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Paying Agent have been sent by such Authorized Officer. The Issuer shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Paying Agent and that the Issuer 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 Issuer. The Paying Agent shall not be liable for any losses, costs or expenses arising directly or indirectly from the Paying Agent’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The Issuer agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Paying Agent, including without limitation the risk of the Paying 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 Paying Agent and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Issuer; (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 Paying Agent immediately upon learning of any compromise or unauthorized use of the security procedures. “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 Paying Agent, or another method or system specified by the Paying Agent as available for use in connection with its services hereunder. Any banking association or corporation into which the Paying Agent may be merged, converted or with which the Paying Agent may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Paying Agent shall be a party, or any banking association or corporation to which all or substantially all of the corporate trust business of the Paying Agent shall be transferred, shall succeed to all the Paying Agent's rights, obligations and immunities hereunder without the execution or filing of any paper or any further act on the part of the parties hereto, anything herein to the contrary notwithstanding. Section 12. Notices. Until changed by notice in writing, communications between the parties shall be delivered to: 7 4832-8048-3837v3/024217-0008 If to Issuer: City of Arcadia 240 West Huntington Drive Arcadia, California 91007 Attn: Administrative Services Director If to the Paying Agent: The Bank of New York Mellon Trust Company, N.A. 400 South Hope Street, Suite 500 Los Angeles, California 90071 Attn: Corporate Trust– City of Arcadia, CA Section 13. Destruction of Instruments, Records and Papers. The Paying Agent may retain in its files records, instruments, and papers maintained by it in relation to its agency as long as the Paying Agent shall consider that such retention is necessary. The Paying Agent shall destroy or dispose of canceled Bonds in accordance with its customary procedures, unless contrary instructions are received from the Issuer. Section 14. Resignation or Removal of Paying Agent. Any time, other than on a day during the forty-five (45) day period preceding any payment date for Issuer’s Bonds, the Paying Agent may resign by giving at least forty-five (45) days’ prior written notice to Issuer; and the Paying Agent’s agency shall be terminated and its duties shall cease upon expiration of such forty- five (45) days or such lesser period of time as shall be mutually agreeable to Paying Agent and Issuer. At any time, following at least forty-five (45) days’ prior notice (or such lesser period of time as shall be mutually agreeable to the Paying Agent and the Issuer) the Paying Agent may be removed from its agency. Such removal shall become effective upon the expiration of the forty-five (45) day or agreed lesser time period, and upon payment to the Paying Agent of all amounts payable to it in connection with its agency. In such event, the Paying Agent shall deliver to the Issuer, or to the Issuer’s designated representative, all Bonds and cash belonging to the Issuer and, at the Issuer’s expense, shall furnish to the Issuer, or to the Issuer’s designated representative, reasonably detailed information regarding the status of the Issuer’s outstanding Bonds and copies of other pertinent records then in the Paying Agent’s possession, reasonably requested by the Issuer. Section 15. Effectiveness and Term. If the Bonds already are outstanding as of the date of the execution and delivery of this Agreement, this Agreement is effective as of the date hereof and shall continue until terminated as provided herein. If the Bonds are to be newly issued, then this Agreement shall become effective as of the date that the Bonds are delivered to the original purchaser(s) thereof, and shall continue until terminated. If said Bonds are not delivered to original purchaser(s), this Agreement shall be null, void and of no effect. This Agreement shall remain in effect and the agency established by the Agreement shall continue until (i) terminated by mutual agreement of Issuer and Paying Agent, (ii) the resignation or removal of Paying Agent pursuant to Section 14 hereof, or (iii) after all Bonds have been retired by payment or otherwise, or funds have been deposited for their retirement, and any remaining funds have either been returned to the Issuer or escheated to the State. Section 16. Conflicts Between Documents. In the event of any conflict between any provision of this Agreement and the Authorization, the terms of the Authorization shall govern. 8 4832-8048-3837v3/024217-0008 Section 17. Jury Trial Waiver. Each party hereto hereby agrees not to elect a trial by jury of any issue triable of right by jury, and waives any right to trial by jury fully to the extent that any such right shall now or hereafter exist with regard to this Agreement, or any claim, counterclaim or other action arising in connection herewith. This waiver of right to trial by jury is given knowingly and voluntarily by each party, and is intended to encompass individually each instance and each issue as to which the right to a trial by jury would otherwise accrue. Section 18. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. IN WITNESS WHEREOF, the parties hereto have caused these presents to be signed by their duly authorized officers as of the date first above written. CITY OF ARCADIA By: Dominic Lazzaretto City Manager THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. By: Authorized Officer A-1 4832-8048-3837v3/024217-0008 EXHIBIT A FEE SCHEDULE [TO COME] Stradling Yocca Carlson & Rauth Draft dated October 11, 2021 4818-5065-9836v4/024217-0008 ESCROW AGREEMENT RELATING TO THE DEFEASANCE OF CITY OF ARCADIA General Obligation Refunding Bonds, Series 2012 (Police Station Project) (Bank Qualified) THIS ESCROW AGREEMENT, dated as of November 1, 2021, by and between the City of Arcadia (the “City”), and The Bank of New York Mellon Trust Company, N.A., acting in its capacity as escrow agent (the “Escrow Agent”) pursuant to this Escrow Agreement (the “Agreement”); W I T N E S S E T H: WHEREAS, pursuant to the provisions of Resolution No. 6848 and that certain Supplement to Resolution No. 6848 dated as of November 1, 2012 (the “Refunded Bonds Resolution”), the City previously issued its $6,135,000 General Obligation Bonds, Series 2012 (Police Station Project) (Bank Qualified) currently outstanding in the principal amount of $3,725,000 (the “Refunded Bonds”). The Bank of New York Mellon Trust Company, N.A., is acting as Paying Agent for the Refunded Bonds (the “Paying Agent”); WHEREAS, the City did, pursuant to Resolution No. ____ adopted by the City Council of the City on October 19, 2021 (together with the Supplement thereto dated as of November 1, 2021 (collectively, the “Resolution”), determine that it is in the City’s best interest to issue its General Obligation Refunding Bonds, Series 2021 (Police Station Project) (the “Bonds”) to provide proceeds to refund all of the outstanding Refunded Bonds; and WHEREAS, in order to accomplish such refinancing it is necessary and desirable for the City to secure payment of debt service on the Refunded Bonds to redeem and retire the Refunded Bonds; and WHEREAS, the City will provide funds necessary to secure payment of debt service on the Refunded Bonds through August 1, 2022 and redeem and retire the Refunded Bonds on such date by authorizing the preparation and issuance of the Bonds, to be issued on November 23, 2021; and WHEREAS, the City has determined that it is in its best interests and desirable for the Bonds to be issued and for a portion of the proceeds of the Bonds to be applied to the advance refunding of the Refunded Bonds in accordance with the terms of this Agreement; NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the City and the Escrow Agent agree as follows: SECTION 1. Deposit of Moneys. (a)As used herein, the term “Investment Securities” means the Investment Securities set forth in Schedule A hereto. The City hereby deposits with the Escrow Agent $_____________ (representing $____________ proceeds of the Bonds and $__________ from tax receipts allocated to the City for the Refunded Bonds), to be held in irrevocable escrow by the Escrow Agent separate and apart from other funds of the City and the Escrow Agent in a fund hereby created and established and to be known as the “Escrow Fund” and to be applied solely as provided in this Agreement. Such moneys are at least equal to an amount sufficient to purchase the principal Attachment No. 3 2 4818-5065-9836v4/024217-0008 amount of Investment Securities set forth in Schedule A hereto, which, together with all interest due or to become due on such Investment Securities, and $___ to be held as cash, will be sufficient: (i) to pay the interest and principal due on the Refunded Bonds on each scheduled payment date through and including August 1, 2022, and (ii) to redeem the Refunded Bonds maturing on or after August 1, 2023 at a redemption price equal to the principal amount thereof, without premium, on August 1, 2022, the first optional redemption date for such bonds. (b) The Escrow Agent hereby acknowledges receipt of the written opinion of Causey Demgen & Moore P.C., Denver, Colorado, dated November 23, 2021 relating to the Investment Securities (the “Verification Report”), and the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, dated November 23, 2021, and relating to this Agreement. (c) Notwithstanding any provision in the legal documents pertaining to the Refunding Bonds, the City hereby directs the Escrow Agent to redeem the Refunded Bonds on August 1, 2022 at a redemption price equal to the principal amount to be redeemed, without premium. SECTION 2. Use and Investment of Moneys. The Escrow Agent acknowledges receipt of the moneys described in Section 1 and agrees: (a) immediately to invest $______________ of the moneys described in Section 1(a) hereof in the Investment Securities set forth in Schedule A hereto and to deposit all of such Investment Securities in the Escrow Fund and to hold $___ uninvested as cash; and (b) to make the payments required under Section 3(a) hereof at the times set forth in Section 3(a) hereof. SECTION 3. Payment of Refunded Bonds. (a) Payment. As the principal of the Investment Securities set forth in Schedule A hereof and the investment income and earnings thereon are paid, the Escrow Agent shall pay the interest and principal on the Refunded Bonds due on and prior to August 1, 2022, and to redeem on August 1, 2022 the outstanding principal of the remaining outstanding Refunded Bonds maturing on and after August 1, 2023. (b) Unclaimed Moneys. Any moneys which remain unclaimed for two years after the date such moneys have become due and payable hereunder shall be repaid by the Escrow Agent (without liability for interest thereof) to the City and deposited by the City in the Debt Service Fund relating to the Bonds. Any moneys remaining in the Escrow Fund established hereunder after August 1, 2022 (aside from unclaimed monies of the Refunded Bonds) that are in excess of the amount needed to pay owners of the Refunded Bonds payments of principal and interest and redemption premium, if any, with respect to the Refunded Bonds or to pay any amounts owed to the Escrow Agent shall be immediately transferred by the Escrow Agent to the City and deposited by the City in the Debt Service Fund relating to the Bonds. (c) Priority of Payments. The holders of the Refunded Bonds shall have a first lien on the moneys and Investment Securities in the Escrow Fund which are allowable and sufficient to pay the Refunded Bonds until such moneys and Investment Securities are used and applied as 3 4818-5065-9836v4/024217-0008 provided in this Agreement, as verified by the Verification Report. Any cash or securities held in the Escrow Fund are irrevocably pledged only to the holders of the Refunded Bonds. (d) Termination of Obligation. Upon deposit of the moneys set forth in Section 1 hereof with the Escrow Agent pursuant to the provisions of Section 1 hereof and the simultaneous purchase of the Investment Securities as provided in Section 2 hereof, all obligations of the City with respect to the Refunded Bonds shall cease and terminate, except only the obligation to make payments therefor from the moneys provided for hereunder. SECTION 4. Performance of Duties. The Escrow Agent agrees to perform only the duties expressly set forth herein and no implied duties, covenants or obligations shall be read into this Agreement against the Escrow Agent. SECTION 5. Reinvestment. Upon written direction of the City, the Escrow Agent may reinvest any uninvested amounts held as cash under this Agreement in noncallable nonprepayable obligations which are direct obligations issued by the United States Treasury or obligations which are unconditionally guaranteed as to full and timely payment by the United States of America provided (i) the amounts of and dates on which the anticipated transfers from the Escrow Fund to the Paying Agent for the payment of the principal of, redemption price of, and interest on the Refunded Bonds will not be diminished or postponed thereby, (ii) the Escrow Agent shall receive the unqualified opinion of nationally recognized municipal bond counsel to the effect that such reinvestment will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or the Refunded Bonds, (iii) the Escrow Agent shall receive from a firm of independent certified public accountants a certification that, immediately after such reinvestment, the principal of and interest on obligations in the Escrow Fund will, together with other cash on deposit in the Escrow Fund available for such purposes, be sufficient without reinvestment to pay, when due, the principal or redemption price of and interest on the Refunded Bonds; and (iv) the Escrow Agent shall receive an opinion of nationally recognized bond counsel that such reinvestment is permissible under this Agreement. SECTION 6. Indemnity. The City hereby assumes liability for, and hereby agrees (whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect, save and keep harmless the Escrow Agent and its respective successors, assigns, agents, employees and servants, from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including reasonable legal fees and disbursements) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against, the Escrow Agent at any time (whether or not also indemnified against the same by the City or any other person under any other agreement or instrument, but without double indemnity) in any way relating to or arising out of the execution, delivery and performance of its Agreement, the establishment hereunder of the Escrow Fund, the acceptance of the funds and securities deposited therein, the purchase of the Investment Securities, the retention of the Investment Securities or the proceeds thereof and any payment, transfer or other application of moneys or securities by the Escrow Agent in accordance with the provisions of this Agreement; provided, however, that the City shall not be required to indemnify the Escrow Agent against the Escrow Agent’s own negligence or willful misconduct or the negligence or willful misconduct of the Escrow Agent’s respective successors, assigns, agents and employees or the breach by the Escrow Agent of the terms of this Agreement. In no event shall the City or the Escrow Agent be liable to any person by reason of the transactions contemplated hereby other than to each other as set forth in this section. The indemnities contained 4 4818-5065-9836v4/024217-0008 in this section shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent. SECTION 7. Responsibilities of the Escrow Agent. The Escrow Agent and its respective successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in tort, contract or otherwise, in connection with the execution and delivery of this Agreement, the establishment of the Escrow Fund, the acceptance of the moneys or securities deposited therein, the purchase of the Investment Securities, the retention of the Investment Securities or the proceeds thereof, the sufficiency of the Investment Securities to accomplish the refunding and defeasance of the Refunded Bonds or any payment, transfer or other application of moneys or obligations by the Escrow Agent in accordance with the provisions of this Agreement or by reason of any non-negligent act, non-negligent omission or non-negligent error of the Escrow Agent made in good faith in the conduct of its duties. The recitals of fact contained in the “whereas” clauses herein shall be taken as the statements of the City and the Escrow Agent assumes no responsibility for the correctness thereof. The Escrow Agent makes no representation as to the sufficiency of the Investment Securities to accomplish the refunding and defeasance of the Refunded Bonds or to the validity of this Agreement as to the City and, except as otherwise provided herein, the Escrow Agent shall incur no liability with respect thereto. The Escrow Agent shall not be liable in connection with the performance of its duties under this Agreement except for its own negligence, willful misconduct or default, and the duties and obligations of the Escrow Agent shall be determined by the express provisions of this Agreement. The Escrow Agent may consult with counsel, who may or may not be counsel to the City, and in reliance upon the written opinion of such counsel shall have full and complete authorization and protection with respect to any action taken, suffered or omitted by it in good faith in accordance therewith. Whenever the Escrow Agent shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering, or omitting any action under this Agreement, such matter may be deemed to be conclusively established by a certificate signed by an authorized officer of the City. None of the provisions of this Agreement shall require the Trustee to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, in the performance of any of its duties hereunder. The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they occur, the City specifically waives receipt of such confirmations to the extent permitted by law. The Escrow Agent will furnish the City periodic cash transaction statements which include detail for all investment transactions made by the Escrow Agent hereunder. The Escrow 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 (“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 Escrow Agent, or another method or system specified by the Escrow Agent as available for use in connection with its services hereunder); provided, however, that the City shall provide to the Escrow 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 Escrow Agent Instructions using Electronic Means and the Escrow Agent in its discretion elects to act upon such Instructions, the Escrow Agent’s understanding of such Instructions shall be deemed controlling. The City understands and agrees that the Escrow Agent cannot determine the identity of the actual sender of such Instructions 5 4818-5065-9836v4/024217-0008 and that the Escrow Agent shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Escrow Agent have been sent by such Authorized Officer. The City shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Escrow 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 Escrow Agent shall not be liable for any losses, costs or expenses arising directly or indirectly from the Escrow 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 Escrow Agent, including without limitation the risk of the Escrow 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 Escrow 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 Escrow Agent immediately upon learning of any compromise or unauthorized use of the security procedures. If the Escrow Agent learns that the Department of the Treasury or the Bureau of Public Debt will not, for any reason, accept a subscription of Securities that is to be submitted pursuant to this Agreement, the Escrow Agent shall promptly request alternative written investment instructions from the City with respect to escrowed funds which were to be invested in securities. The Escrow Agent shall follow such instructions and, upon the maturity of any such alternative investment, the Escrow Agent shall hold funds uninvested and without liability for interest until receipt of further written instructions from the City. In the absence of investment instructions from the City, the Escrow Agent shall not be responsible for the investment of such funds or interest thereon. The Escrow Agent may conclusively rely upon the City’s selection of an alternative investment as a determination of the alternative investment's legality and suitability and shall not be liable for any losses related to the alternative investments or for compliance with any yield restriction applicable thereto. The Escrow 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. The Escrow Agent shall have the right to rely on opinions, certificates and other documentation. SECTION 8. Substitution of Investment Securities. At the written request of the City and upon compliance with the conditions hereinafter set forth, the Escrow Agent shall have the power to sell, transfer, request the redemption or otherwise dispose of some or all of the Investment Securities in the Escrow Fund and to substitute noncallable nonprepayable obligations (the “Substitute Investment Securities”) constituting direct obligations issued by the United States Treasury or obligations which are unconditionally guaranteed as to full and timely payment by the United States of America. The foregoing may be effected only if: (i) the substitution of Substitute Investment Securities for the Investment Securities (or Substitute Investment Securities) occurs simultaneously; (ii) the amounts of and dates on which the anticipated transfers from the Escrow Fund to the Paying Agent for the payment of the principal of and/or redemption price of and/or interest on the Refunded 6 4818-5065-9836v4/024217-0008 Bonds will not be diminished or postponed thereby; (iii) the Escrow Agent shall receive the unqualified opinion of nationally recognized municipal bond counsel to the effect that such disposition and substitution would not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Refunded Bonds or the Bonds, and that the conditions of this Section 8 as to the disposition and substitution have been satisfied and that the substitution is permitted by this Agreement; and (iv) the Escrow Agent shall receive from a firm of independent certified public accountants a certification that, immediately after such transaction, the principal of and interest on the Substitute Investment Securities in the Escrow Fund will, together with other cash on deposit in the Escrow Fund available for such purpose, be sufficient without reinvestment to pay, when due, the principal or redemption price of and interest on the Refunded Bonds. Any cash from the sale of Investment Securities (including U.S. Treasury Securities) received from the disposition and substitution of Substitute Investment Securities pursuant to this Section 8 to the extent such cash will not be required, in accordance with this Agreement, and as demonstrated in the certification described in (iv) above, at any time for the payment when due of the principal or redemption price of or interest on the Refunded Bonds shall be paid to the City as received by the Escrow Agent free and clear of any trust, lien, pledge or assignment securing such Bonds or otherwise existing under this Agreement. Any other substitution of securities in the Escrow Fund not described in the previous sentence must satisfy the requirements of this Section 8. In no event shall the Escrow Agent invest or reinvest moneys held under this Agreement in mutual funds or unit investment trusts. SECTION 9. Irrevocable Instructions to Provide Notice. The forms of the notice required to be mailed pursuant to the Resolution are substantially in the forms attached hereto as Exhibits A and B. The City hereby irrevocably instructs the Escrow Agent and Paying Agent to provide a notice of redemption and a notice of defeasance of the Refunded Bonds via mail, facsimile or electronic mail, in accordance with the Resolution to the owners of the Refunded Bonds, as required to provide for the defeasance of the Refunded Bonds in accordance with this Agreement, and to file such notices with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System, maintained on the Internet at http://emma.msrb.org/ at such times that such notices are provided pursuant to the Resolution. SECTION 10. Amendments. This Agreement is made for the benefit of the City and the holders from time to time of the Refunded Bonds and it shall not be repealed, revoked, altered or amended without the written consent of all such holders, the Escrow Agent and the City; provided, however, but only after the receipt by the Escrow Agent of an opinion of nationally recognized bond counsel that the exclusion from gross income of interest on the Bonds and the Refunded Bonds will not be adversely affected for federal income tax purposes, that the City and the Escrow Agent may, without the consent of, or notice to, such holders, amend this Agreement or enter into such agreements supplemental to this Agreement as shall not adversely affect the rights of such holders and as shall not be inconsistent with the terms and provisions of this Agreement for any one or more of the following purposes: (i) to cure any ambiguity or formal defect or omission in this Agreement; (ii) to grant to, or confer upon, the Escrow Agent for the benefit of the holders of the Refunded Bonds any additional rights, remedies, powers or authority that may lawfully be granted to, or conferred upon, such holders or the Escrow Agent; and (iii) to include under this Agreement additional funds, securities or properties. The Escrow Agent shall be entitled to rely conclusively upon an unqualified opinion of nationally recognized municipal bond attorneys with respect to compliance with this Section 10, including the extent, if any, to which any change, modification, addition or elimination affects the rights of the holders of the Refunded Bonds or that any instrument executed hereunder complies with the conditions and provisions of this Section 10. In the event of 7 4818-5065-9836v4/024217-0008 any conflict with respect to the provisions of this Agreement, this Agreement shall prevail and be binding. SECTION 11. Term. This Agreement shall commence upon its execution and delivery and shall terminate on the later to occur of either (i) the date upon which the Refunded Bonds have been paid in accordance with this Agreement or (ii) the date upon which no unclaimed moneys remain on deposit with the Escrow Agent pursuant to Section 3(b) of this Agreement. SECTION 12. Compensation. The Escrow Agent shall receive its reasonable fees and expenses as previously agreed to; provided, however, that under no circumstances shall the Escrow Agent be entitled to any lien nor will it assert a lien whatsoever on any moneys or obligations in the Escrow Fund for the payment of fees and expenses for services rendered by the Escrow Agent under this Agreement. SECTION 13. Resignation or Removal of Escrow Agent. (a) The Escrow Agent may resign by giving notice in writing to the City, a copy of which shall be sent to DTC. The Escrow Agent may be removed (1) by (i) filing with the City an instrument or instruments executed by the holders of at least 51% in aggregate principal amount of the Refunded Bonds then remaining unpaid, (ii) sending notice at least 60 days prior to the effective date of said removal to DTC, and (iii) the delivery of a copy of the instruments filed with the City to the Escrow Agent or (2) by a court of competent jurisdiction for failure to act in accordance with the provisions of this Agreement upon application by the City or the holders of 5% in aggregate principal amount of the Refunded Bonds then remaining unpaid. (b) If the position of Escrow Agent becomes vacant due to resignation or removal of the Escrow Agent or any other reason, a successor Escrow Agent may be appointed by the City. The holders of a majority in principal amount of the Refunded Bonds then remaining unpaid may, by an instrument or instruments filed with the City, appoint a successor Escrow Agent who shall supersede any Escrow Agent theretofore appointed by the City. If no successor Escrow Agent is appointed by the City or the holders of such Refunded Bonds then remaining unpaid, within 45 days after any such resignation or removal, the holder of any such Refunded Bond or any retiring Escrow Agent may apply to a court of competent jurisdiction for the appointment of a successor Escrow Agent. The responsibilities of the Escrow Agent under this Escrow Agreement will not be discharged until a new Escrow Agent is appointed and until the cash and investments held under this Escrow Agreement are transferred to the new Escrow Agent. SECTION 14. Severability. If any one or more of the covenants or agreements provided in this Agreement on the part of the City or the Escrow Agent to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenants or agreements shall be null and void and shall be deemed separate from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Agreement. SECTION 15. Counterparts. This Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. SECTION 16. Governing Law. This Agreement shall be construed under the laws of the State of California. 8 4818-5065-9836v4/024217-0008 SECTION 17. Holidays. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Agreement, shall be a legal holiday or a day on which banking institutions in the city in which is located the principal office of the Escrow Agent are authorized by law to remain closed, such payment may be made or act performed or right exercised on the next succeeding day not a legal holiday or a day on which such banking institutions are authorized by law to remain closed, with the same force and effect as if done on the nominal date provided in this Agreement, and no interest shall accrue for the period after such nominal date. SECTION 18. Assignment. This Agreement shall not be assigned by the Escrow Agent or any successor thereto without the prior written consent of the City, except as set forth in Section 20 hereof. SECTION 19. Notice to Rating Agencies. In the event that this Agreement or any provision hereof is severed, amended or revoked, the Escrow Agent, upon written instructions from the City, shall provide written notice in the form provided by the City of such severance, amendment or revocation to the rating agencies then rating the Refunded Bonds. SECTION 20. Reorganization of Escrow Agent. Notwithstanding anything to the contrary contained in this Agreement, any company into which the Escrow 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 the Escrow Agent is a party, or any company to which the Escrow Agent may sell or transfer all or substantially all of its corporate trust business shall be the successor to the Escrow Agent without execution or filing of any paper or any paper or further act, if such company is eligible to serve as Escrow Agent. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] S-1 4818-5065-9836v4/024217-0008 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the day and year first above written. CITY OF ARCADIA By: _______________________________________ City Manager APPROVED AS TO FORM: Stephen P. Deitsch, City Attorney THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Escrow Agent By: Authorized Officer A-1 4818-5065-9836v4/024217-0008 SCHEDULE A INVESTMENT SECURITIES Type of Investment Principal Coupon Rate Maturity Date A-1 4818-5065-9836v4/024217-0008 EXHIBIT A NOTICE OF REDEMPTION CITY OF ARCADIA GENERAL OBLIGATION BONDS SERIES 2012 (POLICE STATION PROJECT) (BANK QUALIFIED) Year (August 1) Principal Amount Interest Rate CUSIP † 2023 340,000 2.000 039015CH3 2024 350,000 2.000 039015CJ9 2025 355,000 2.000 039015CK6 2026 365,000 2.250 039015CL4 2027 375,000 2.250 039015CM2 2028 385,000 2.500 039015CN0 2029 395,000 3.000 039015CP5 2030 410,000 3.000 039015CQ3 2031 420,000 3.000 039015CR1 Notice is hereby given to the holders of the outstanding General Obligation Bonds Series 2012 (Police Station Project) (Bank Qualified) maturing on and after August 1, 2023 (the “Refunded Bonds”), that such Refunded Bonds have been called for redemption prior to maturity on August 1, 2022 (the “Redemption Date”) in accordance with their terms at a redemption price equal to the principal amount thereof, without premium (the “Redemption Price”). The source of the funds to be used for such redemption is the principal of and interest on investment securities heretofore deposited with The Bank of New York Mellon Trust Company, N.A., as Escrow Agent and Paying Agent, together with moneys, if any, heretofore deposited with the Escrow Agent. Interest on the Refunded Bonds and the Redemption Price shall become due and payable on the Redemption Date and after the Redemption Date interest on such Refunded Bonds shall cease to accrue and be payable. To receive payment on the Redemption Date, owners of the Refunded Bonds should present and to surrender said 2012 Bonds on the Redemption Date at the address of the Paying Agent set forth below: † CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright© CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. Neither the Escrow Agent/Paying Agent nor the City or their agents or counsel assume responsibility for the accuracy of such numbers. A-2 4818-5065-9836v4/024217-0008 Express Delivery Only First Class/Registered/Certified By Hand Only The Bank of New York Mellon Global Corporate Trust 2001 Bryan Street, 10th Floor Dallas, Texas 75201 The Bank of New York Mellon Global Corporate Trust P.O. Box 2320 Dallas, Texas 75221-2320 The Bank of New York Mellon Global Corporate Trust 2001 Bryan Street, 10th Floor Dallas, Texas 75201 Additional information regarding the foregoing actions may be obtained from The Bank of New York Mellon Trust Company, N.A., Corporate Trust Department, Bondholder Relations, telephone number (800) 254-2826. Withholding of 24% of gross redemption proceeds of any payment made within in the United States may be required by U.S. federal tax law, unless the Paying Agent has the correct taxpayer identification number (social security number or employer identification number) or exemption certificate of the payee. If the owner of any Refunded Bond fails to deliver such Refunded Bond to the Paying Agent on the Redemption Date, such Refunded Bond shall nevertheless be deemed redeemed on the Redemption Date and the owner of such Refunded Bond shall have no rights in respect thereof except to receive payment of the Redemption Price from funds held by the Escrow Agent for such payment. Dated this ____ day of _______, 2022. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Escrow Agent and Paying Agent B-1 4818-5065-9836v4/024217-0008 EXHIBIT B NOTICE OF DEFEASANCE CITY OF ARCADIA GENERAL OBLIGATION BONDS SERIES 2012 (POLICE STATION PROJECT) (BANK QUALIFIED) Year (August 1) Principal Amount Interest Rate CUSIP † 2022 $330,000 3.000% 039015CG5 2023 340,000 2.000 039015CH3 2024 350,000 2.000 039015CJ9 2025 355,000 2.000 039015CK6 2026 365,000 2.250 039015CL4 2027 375,000 2.250 039015CM2 2028 385,000 2.500 039015CN0 2029 395,000 3.000 039015CP5 2030 410,000 3.000 039015CQ3 2031 420,000 3.000 039015CR1 Notice is hereby given to the holders of the outstanding bonds maturing on and after August 1, 2022 designated City of Arcadia, General Obligation Bonds, Series 2012 (Police Station Project) (Bank Qualified) (the “Refunded Bonds”) (i) that there has been deposited with The Bank of New York Mellon Trust Company, N.A., as Escrow Agent, moneys and investment securities as permitted by the Escrow Agreement, dated as of November 1, 2021, between City of Arcadia and The Bank of New York Mellon Trust Company, N.A., as Escrow Agent (the “Agreement”), the principal of and the interest on which when due will provide moneys (as evidenced by a verification report provided to the Escrow Agent) which, together with such other moneys deposited with the Escrow Agent, shall be sufficient and available (a) to pay on and prior to August 1, 2022 the interest and principal due with respect to the Refunded Bonds scheduled to be paid on and prior to August 1, 2022 and (b) to redeem on August 1, 2022 the Refunded Bonds maturing on or after August 1, 2023 at a redemption price (expressed as a percentage of the principal amount of the Refunded Bonds to be prepaid) equal to 100%; (ii) that the Escrow Agent has been irrevocably instructed to prepay on August 1, 2022 such Refunded Bonds; and (iii) that the Refunded Bonds are deemed to be paid in accordance with Resolution No. 6848 and that certain Supplement to Resolution No. 6848 dated as of November 1, 2012 pursuant to which the Refunded Bonds were issued. Dated this day 23rd of November 2021. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Escrow agent and Paying Agent † CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright© CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. Neither the Escrow Agent/Paying Agent nor the City or their agents or counsel assume responsibility for the accuracy of such numbers.