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14-0401_ORRICK, HERRINGTON & SUTCLIFFE_D6_Agenda ReportTO: FROM: DATE: SUBJECT: City of San Juan Agen Karen P. Brust, Cit~ apistrano art Cindy Russell, Chief Fin nci I Officer/City TreasurerQ)f.. April1, 2014 4/1/2014 06 Consideration of an Amended and Restated Agreement for Bond Counsel Services for the Refunding of the 2002 and 2004 Water Certificates of Participation and the 2002 San Juan Basin Authority Lease Revenue Bonds (Groundwater Recovery Project)(Orrick, Herrington & Sutcliffe, LLP) RECOMMENDATION: By motion, approve the Amended and Restated Agreement for Bond Counsel Services with Orrick, Herrington & Sutcliffe, LLP for the refunding of the 2002 and 2004 Water Certificates of Participation and the 2002 San Juan Basin Authority Lease Revenue Bonds (Groundwater Recovery Project)(Orrick, Herrington & Sutcliffe, LLP). EXECUTIVE SUMMARY: The Agreement for Bond Counsel Services with Orrick, Herrington & Sutcliffe, LLP ("Orrick") dated June 4, 2013, (Attachment 2) (the "Original Agreement") is for a fixed fee of $135,000 for the refunding of the 2002 and 2004 Water Certificates of Participation and the 2002 San Juan Basin Authority Lease Revenue Bonds (Groundwater Recovery Project) (the "Refunding") and is contingent upon the issuance of and would be paid from the proceeds of the Water System Refunding bonds. The Water System Refunding was put on hold due to the judgment against the City in the Capistrano Taxpayer's Association Lawsuit (the "CTA Lawsuit") on August 28, 2013. Our contract with Orrick provided that although they incurred costs for the Water System Refunding through August 31, 2013, in the amount of $101,729, the City is not required to pay these costs until the work is complete and the bonds are refunded. Additionally, since that time, the City has required bond counsel services which are not usual for a typical refunding totaling $14,371.22. The Amendment and Restated Agreement for Bond Counsel Services (the "Amended Agreement") provides for bond counsel services since September 1, 2013, to be billed and paid on an hourly basis and upon resuming the Water System Refunding, the City and Orrick shall determine a revised fixed fee amount which will include the costs incurred to date to complete the work. City Council Agenda Report April1, 2014 Page 2 of 3 DISCUSSION/ANALYSIS: The City began the process to refund its water system obligations in June 2013. Upon receiving the final judgment on the CTA lawsuit on August 28, 2013, City staff conferred with the City's Financial Advisor, Fieldman, Rolapp and Associates and Orrick regarding the City's ability to proceed. Although, the City has appealed the decision, it was determined that due to the increased uncertainty surrounding the City's existing rates, the Water System Refunding should be put on hold at least until the City's current rate study was completed and revised rates adopted. The cost for time expended by Orrick under the Original Agreement through August 31, 2013, on the fixed fee is $101,729. The Amended Agreement provides that upon resuming the City's Water System Refunding process, the City will negotiate and determine in good faith a revised fixed fee (the "Contingent Component") which will take into account the amount of additional time expected to be required to complete the issuance of the Water System Refunding bonds and the $1 01,729 of cost incurred by Bond Counsel in providing services under the Original Agreement prior to September 1, 2013. Since September 1, 2013, the City has also incurred costs related to the City's Water System Refunding that are not typical such as: • The review of voluntary disclosure information prepared for the bond rating agencies, related to the CTA lawsuit. • Notices and information provided to customers and the public, regarding the City's ability and need to continue billing during the CTA lawsuit appeal process. • The evaluation of the need, preparation of and filing of three voluntary event notices through the Electronic Municipal Market Access (EMMA) relating to the CTA lawsuit as well as the City Council Agenda Report and action taken on November 5, 2013, and Resolution 13-12-03-01 adopted by the City Council on December 3, 2013. • Assistance with requests from the media. The Amended Agreement provides for these services and any other related services required until resuming the Water System Refunding process to be billed on an hourly basis. The current hourly rates for attorneys most likely to provide this work range from $780 to $905 per hour. From September 1, 2013, through March 24, 2014, the cost for additional bond counsel services related to the City's Water System refunding totals $14,371.22. FISCAL IMPACT: The revised fixed fee amount is not able to be determined at this time; however, City staff does expect this amount to exceed the $135,000 provided in the Original City Council Agenda Report April 1, 2014 Page 3 of 3 Agreement. The revised fixed fee or Contingency Component of the Amended Agreement would still be funded from the proceeds of the completed Water System Refunding bonds. The $14,371.22 incurred through March 24, 2014, is able to be funded from savings realized on the San Juan Basin Authority lease payment made on December 1, 2013, due to interest received on the reserve fund for Fiscal Year 2013/14 (as of November 2013). This amount along with any other amounts incurred until resuming the Water System Refunding would be paid from the City's Water Enterprise Debt Service fund on a monthly basis. ENVIRONMENTAL IMPACT: Not applicable. PRIOR CITY COUNCIL REVIEW: • On June 4, 2013, the City Council approved the Agreement for Bond Counsel Services for the refunding of the 2002 and 2004 Water Certificates of Participation and the 2002 San Juan Basin Authority Lease Revenue Bonds (Groundwater Recovery Project) (the "Water System Refunding"). COMMISSION/COMMITTEE/BOARD REVIEW AND RECOMMENDATIONS: Not applicable. NOTIFICATION: Stephen A Spitz, Partner-Orrick, Harrington & Sutcliffe, LLP ATTACHMENTS: Attachment 1 -Amended and Restated Agreement for Bond Counsel Services Attachment 2 -Agreement for Bond Counsel Services (Original Agreement) Attachment 3-Amended and Restated Agreement for Bond Counsel Services (red line) AMENDED AND RESTATED AGREEMENT FOR BOND COUNSEL SERVICES THIS AMENDED AND RESTATED AGREEMENT (this "Agreement") is entered into as of April_, 2014, between the CITY OF SAN JUAN CAPISTRANO (the "Issuer") and ORRICK, HERRINGTON & SUTCLIFFE LLP ("Bond Counsel"), amends and restates the Agreement for Bond Counsel Services, entered into as of June 4, 2013, between the Issuer and Bond Counsel (the "Original Agreement"). Recitals A. Issuer desires to engage the services of bond counsel in connection with a proposed (i) issuance of revenue bonds by the San Juan Capistrano Financing Authority or the San Juan Basin Authority backed by installment payments or lease payments to be made by the Issuer or (ii) execution and delivery of certificates of participation evidencing interests in installment payments to be made by the Issuer (in either case, the "Bonds"), to be sold for the purpose of refunding all or a portion of the San Juan Capistrano Public Financing Authority Revenue Certificates of Participation, Series 2002, and/or refunding all or a portion of the San Juan Basin Authority Lease Revenue Bonds (Groundwater Recovery Project), Issue of 2002, each issued to fund certain water system capital improvement projects (the "Projects"). B. Bond Counsel possesses the necessary professional capabilities and resources to provide the legal services required by Issuer as described in this Agreement. C. Unforeseen developments have occurred subsequent to the execution and delivery of the Original Agreement rendering certain assumptions respecting the financing and the financing schedule upon which the compensation of Bond Counsel set forth the Original Agreement was established no longer correct. D. The Original Agreement states: "If any part of this assumption is incorrect, or if any unusual or unforeseen circumstances arise, and occasions substantial additional work or responsibility on the part of Bond Counsel, Bond Counsel will be entitled to seek additional compensation in such amount as the Issuer and Bond Counsel shall mutually agree to be appropriate." E. The Issuer and Bond Coup.sel desire to amend the Original Agreement as provided in this Agreement. OHSUSA:753749804.4 ATTACHMENT 1 Agreements 1. Scope of Services. Bond Counsel shall perform the following legal services: ( 1) Analysis of the validity of the Bonds under State of California law and the exclusion of interest on the Bonds from gross income under federal tax law. (2) Consultation with representatives of the Issuer, including Rutan & Tucker, LLP ("Issuer Counsel"), Fieldman, Rolapp & Associates, and others, with respect to the timing, terms, and legal structure of the proposed Bonds. (3) Preparation of documents to be adopted or entered into by the Issuer, the San Juan Capistrano Public Financing Authority or the San Juan Basin Authority required for the authorization, sale and issuance of the Bonds, .including preparation of the resolutions approving the issuance of the Bonds, any notice of sale, any indenture or trust agreement providing for the issuance of the Bonds, and any installment sale agreement or lease entered into by the Issuer backing the Bonds (the "Major Legal Documents"). ( 4) Coordination of preparation of the Preliminary Official Statement and final Official Statement for the Bonds based on information provided by the Issuer and others. (5) Preparation of the Continuing Disclosure Agreement. ( 6) Preparation of summaries of the Major Legal Documents included in the Official Statement. (7) Attendance at such meetings or hearings of the Issuer and working group meetings or conference calls as Issuer may request. (8) Preparation of final closing papers to be executed by the Issuer, the San Juan Capistrano Public Financing Authority or the San Juan Basin Authority required to effect delivery of the Bonds (including the Tax Agreement) and coordination of the Bond closing. (9) Rendering of Bond Counsel's customary form of final legal opinion to the issuer of the Bonds on the validity of the Bonds and the tax-exempt status of interest thereon. (1 0) Preparation and dissemination of closing transcripts. (11) Such legal services with respect to outstanding debt obligations payable from the revenues of the Issuer's water enterprise (other than representation in any litigation or other legal or administrative proceeding, audit or investigation) as the Issuer shall request. OHSUSA:753749804.4 2 ATTACHMENT 1 Issuer shall have and will rely on Issuer Counsel to render day-to-day and ongoing general counsel legal services. Bond Counsel shall circulate documents to and coordinate its services with Issuer Counsel to the extent requested by Issuer or Issuer Counsel. Bond Counsel shall be entitled to assume that Issuer Counsel has reviewed all documents and matters submitted to Issuer for adoption or approval or to officers of Issuer for execution prior to such adoption, approval or execution. In rendering opinions and performing legal services under this Agreement, Bond Counsel shall be entitled to rely on the accuracy and completeness of information provided and certifications made by, and opinions provided by counsel to, Issuer and other parties and consultants, without independent investigation or verification. Knowledge of attorneys and non- attorneys at Bond Counsel's firm not working directly on the Bond issue will not be imputed to Bond Counsel nor shall there be any duty on the part of Bond Counsel to make any inquiry of such other attorneys or non-attorneys. Bond Counsel services are limited to those specifically set forth above. For example, Bond Counsel services do not include representation of Issuer or any other party to the transaction in Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano or any other litigation or other legal or administrative proceeding, audit or investigation involving any of the Bonds, the Projects or any related matter. Additionally, Bond Counsel services do not include the preparation, negotiation, content or validity of any agreements relating to the Projects other than the Major Legal Documents or any legal advice relating to the Projects or to water rights. Bond Counsel services also do not include any responsibility for compliance with federal or state securities laws, environmental, land use, real estate, insurance or similar laws or matters or (except as required for tax exemption of the Bonds) any tax laws, or for title to, recording, filing or perfection of security interests in real or personal property. Bond Counsel services do not include any financial advice or analysis or data or mathematical verification. Bond Counsel will not be responsible for the services performed or acts or omissions of any other transaction participant. Also, Bond Counsel services will not extend past the date of issuance of the Bonds and will not, for example, include services related to rebate or other post issuance tax compliance or continuing disclosure (although Bond Counsel may be available for separate engagement to provide either or both such services pursuant to separate contract) or otherwise related to the Bonds, Bond proceeds or the Project after issuance of the Bonds. 2. Fees and Expenses. A. Fees. Bond Counsel will be paid fees for the foregoing services determined as follows: Bond Counsel will be paid for time expended from September 1, 2013 to the date on which the preparation of the Major Documents is resumed (the "Resumption Date") based on the amount of time expended by Bond Counsel's attorneys and other professionals at their hourly rates from time to time in effect (the "Hourly Component"). The current standard hourly rates for the attorneys most likely to provide such work are: Stephen A. Spitz ($780), Richard J. Moore ($775), Angela M. Trout ($650), Elaine Greenberg ($905), John Knox ($895), John Wang ($770) and Jeff Higgins ($660). OHSUSA:753749804.4 3 ATTACHMENT 1 For legal services rendered from and after the Resumption Date, Bond Counsel will be paid such fee as Bond Counsel and the Issuer shall determine, in good faith, to be fair and appropriate (the "Contingent Component"). The determination of the Contingent Component shall take into account the amount of additional time expected to be required to be expended to complete the issuance of the Bonds and the $1 01,729 of time expended and disbursements incurred by Bond Counsel in providing services under the Original Agreement prior to September 1, 2013. B. Expenses. In addition to the fees provided above, Issuer will pay Bond Counsel for costs and expenses (direct and indirect) incurred on or after September 1, 2013 in connection with the services, including (without limitation) filing and publication, document reproduction and delivery, travel, long distance telephone, telecopy, word processing, computer research, secretarial overtime, closing transcripts and other similar expenses. Any filing, publication or printing costs required in connection with the Bonds shall be paid directly by Issuer, but if paid by the Bond Counsel on behalf of Issuer, shall be reimbursed to Bond Counsel on demand. C. Payment. Bond Counsel shall be entitled to bill fees included in the Hourly Component (together with expenses) on a monthly basis. Invoices for the Hourly Component shall be payable by the Issuer upon receipt and payment shall not be contingent upon the issuance of any Bonds. The Contingent Component shall be payable by the Issuer upon the issuance of any Bonds and shall be entirely contingent upon the issuance of Bonds. 3. Termination of Agreement, Legal Services and Other Obligations. This Agreement and all legal services to be rendered under it may be terminated at any time by written notice from either party, with or without cause. In that event, all finished and unfinished documents prepared for adoption or execution by Issuer, shall, at the option oflssuer, become its property and shall be delivered to it or to any party it may designate; provided that Bond Counsel shall have no liability whatsoever for any subsequent use of such documents. In the event of termination by Issuer, Bond Counsel shall be paid for all unpaid portions of the Hourly Component upon such termination and shall be paid the Contingent Component upon the issuance of any Bonds, unless the termination is made for cause, in which event compensation, if any, shall be adjusted in the light of the particular facts and circumstances involved in the termination. If not sooner terminated as aforesaid, this Agreement and all legal services to be rendered under it shall terminate upon issuance of the Bonds; provided that Issuer shall remain liable for any unpaid compensation or reimbursement due under Section 2 of this Agreement. Upon termination, Bond Counsel shall have no future duty of any kind to or with respect to the Bonds or the Issuer. This Agreement shall not be the basis of any breach of contract claim that would have the effect of extending the statute of limitations pertaining to legal malpractice to the statute of limitations pertaining to breach of contract. Except as state above, Bond Counsel retains the right to discard any files and materials. It is Bond Counsel's current policy (subject to change) to discard all files and materials after issuance of the Bonds (except the closing transcript until after the Bonds are paid or defeased) or following cessation of work on the financing without issuance of Bonds. 4. Nature of Engagement; Client Relationships With Other Parties. The role of bond counsel, generally, is to prepare or review the proceedings for issuance of the bonds, OHSUSA:753749804.4 4 ATTACHMENT 1 notes or other evidence of indebtedness and to provide an expert legal opinion with respect to the validity thereof and other subjects (usually including the tax status of interest thereon) addressed by the opinion. Consistent with the historical origin and unique role of bond counsel, and reliance thereon by the public finance market, Bond Counsel's role as bond counsel under this Agreement is to provide opinions and related legal services that represent an objective judgment · on the matters addressed rather than the partisan position of an advocate. In performing its services as bond counsel in connection with the Bonds, Bond Counsel will act as special counsel to Issuer (as such and not any particular body, board, office or official) with respect to issuance of the Bonds; i.e., Bond Counsel will assist Issuer Counsel in representing Issuer but only with respect to validity of the Bonds and the Major Legal Documents as to the Issuer and tax status of interest on the Bonds, and in a manner not inconsistent with the role of Bond Counsel described in the first sentence of this section. Issuer acknowledges that Bond Counsel regularly performs legal services for many private and public entities in connection with a wide variety of matters. For example, Bond Counsel has represented, is representing or may in the future represent other public entities, underwriters, trustees, rating agencies, insurers, credit enhancement providers, lenders, contractors, suppliers, financial and other consultants/advisors, accountants, investment and swap providers/brokers, providers/brokers of derivative products and others who may have a role or interest in the Bond financing or the Projects or that may be involved with or adverse to Issuer in this or some other matter. Bond Counsel agrees not to represent any such entity in connection with the Bond financing, during the term of this Agreement, without the consent oflssuer. Given the special, limited role of bond counsel described above, Issuer acknowledges and agrees that no conflict of interest exists or would exist, and waives any actual or potential conflict of interest that might be deemed to arise, now or in the future, from this Agreement or any such other relationship that Bond Counsel may have had, have or enter into, and Issuer specifically consents to any and all such relationships. 5. Limitation of Rights to Parties. Nothing in this Agreement or in any ofthe documents contemplated hereby, expressed or implied, is intended or shall be construed to give any person other than Issuer and Bond Counsel any legal or equitable right or claim under or in respect of this Agreement, and this Agreement shall inure to the sole and exclusive benefit of Issuer and Bond Counsel. 6. Counterparts. This Agreement may be executed in any number of counterparts and each counterpart shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same Agreement. 7. Insurance. Bond Counsel advises that it does maintain errors and omissions insurance coverage applicable to the services to be rendered under this Agreement. OHSUSA:753749804.4 5 ATTACHMENT 1 Issuer and Bond Counsel have executed this Agreement by their duly authorized representatives as of the date provided above. CITY OF SAN JUAN CAPISTRANO Sam Allevato, Mayor ORRICK, HERRINGTON & SUTCLIFFE LLP Partner ATTEST: Maria Morris, City Clerk STOFORM: ttorney OHSUSA:753749804.4 6 ATTACHMENT 1 AGREEMENT FOR BOND COUNSEL SERVICES THIS AGREEMENT is entered into as of Jtme 4~ 2013, between the CITY OF SAN JUAN CAPISTRANO (the "Issuer") and ORRICK, HERRINGTON & SUTCLIFFE LLP (''Bond Cotmsel"), as follows: Recitals A. Issuer desires to engage the services of bond cotmsel in connection with a proposed (i) issuance of revenue bonds by the San Juan Capistrano Financing Authority or the San Juan Basin Avthority backed by 'installment payments or lease payments to be made by the Issuer or (ii) execution and delivery of certificates of participation evidencing interests in installment payments to be made by the Issuer (in either case, the "Bonds"), to be sold at competitive sale for the purpose of refunding all or a portion of the S;:m Juan Capistrano Public Financing Authority Revenue Certificates of Participation, Series 2002 (the "Water System Refunding"), and/or refunding all or a portion of the San Juan Basin Authority Lease Revenue Bonds (Grotmdwater Recovery Project), Issue of2002 (the"SJBA Refunding"), each issued to ftmd certain water system capital improvement projects (the "Projects"). · B. Bond Counsei possesses the necessary professional capabilities and resources to provide the legal services required by Issuer as described in this Agreement. Agreements l. Scope of Services. Bond Counsel shall perform the following legal services: (I) Analysis of the validity of the Bonds tmder State of California law and the exclusion of interest on the Bonds from gross income under federal tax law. (2) Consultation with representatives of the Issuer, including Rutan & Tucker, LLP ("Issuer Counsel"), Fieldman, Rolapp & Associates, and others, with respect to the timing, tenns, and legal structure of the proposed Bonds. (3) Preparation of documents to be adopted or entered into by the Issuer, the San Juan Capistrano Public Financing Authority or the San Juan Basin Authority required for the authorization, sale and issuance of the Bonds, including preparation ofthe resolutions approving the issuance of the Bonds, the notice of sale, any indenture or trust agreement providing for the issuance of the Bonds, and any installment sale agreement or lease entered into by the Issuer backing the Bonds (the "Major Legal Documents"). (4) Coordination of preparation of the Preliminary Official Statement and final Official Statement for the Bonds based on information provided by the Issuer and others. O!ISUSA:753749804.l ATTACHMENT 2 (5) Preparation ofthe Continuing Disclosure Agreement. (6) Preparation of summaries of the Major Legal Documents included in the Official Statement. (7) Attendance at such meetings or hearings of the Issuer ru1d working group meetings or conference calls as Issuer may request. (8) Preparation of final closing papers to be executed by the Issuer, the San Juan Capistrano Public Financing Authority or the San Juan Basin Authority requited to effect delivery of the Bonds (including the Tax Agreement) and coordination of the Bond closing. (9) Rendering of Bond Counsel's customary form of final legal opinion to the issuer of the Bonds on the validity of the Bonds and the tax-exempt status of interest thereon. (1 0) Preparation and dissemination of closing transcripts. Issuer shall have and will rely on Issuer Counsel to render day~to-day and ongoing general counsel legal services. Bond Counsel shall circulate documents to and coordinate its services with Issuer Counsel to the extent requested by Issuer or Issuer Counsel. Bond Counsel shall be entitled to assume that Issuer Counsel has reviewed all documents and matters submitted to Issuer for adoption or approval or to officers of Issuer for execution prior to such adoption, approval or execution. In rendering opinions and performing legal services under this Agreement, Bond Counsel shall be entitled to rely on the accuracy and completeness of information provided and· certit!cations made by, and opinions provided by counsel to, Issuer and other parties and consultants, without independent investigation or verification. Knowledge of attorneys and non- attorneys at Bond Counsel's firm not working directly on the Bond issue will not be imputed to Bond Counsel nor shall there be any duty on the part of Bond Counsel to make any inquiry of such other attorneys or non-attorneys. Bond Counsel services are limited to those specifically set forth above. For example, Bond Cmmsel services do not include representation of Issuer or any other party to the transaction in any litigation or other legal or administrative proceeding, audit or investigation involving any of the Bonds, the Projects or any related matter. Additionally, Bond Counsel services do not include the preparation, negotiation, content or validity of any agreements relating to the Projects other than the Major Legal Documents or any legal advice relating to the Projects or to water rights. Bond Counsel services also do not include any responsibility for compliance with federal or state securities laws, environmental, land use, real estate, insurance or similar laws or matters or (except as required for tax exemption of the Bonds) any tax laws, or for title to, recording, filing or perfection of security interests in real or personal property. Bond Counsel services do not include any financial advice or analysis or data or mathematical verification. Bond Counsel will not be responsible for the services performed or acts or omissions of any other transaction participant. Also, Bond Counsel services will not extend past the date of issuance of the Bonds and will not, for example, include services related to rebate or OHSUSA:7537498041 2 ATTACHMENT 2 other post issuance tax compliance or continuing disclosure (although Bond Counsel may be available for separate engagement to provide either or both such services pursuant to separate contract) or otherwise related to the Bonds, Bond proceeds or the Project after issuance of the Bonds. 2. Fees and Expenses. A. Fees. Bond Counsel will be paid a fixe·d fee for the foregoing services of $85,000 if the Issuer proceeds with the Water System Refunding only and $135,000 if the Issuer proceeds with · both the Water System Refunding and the SJBA Refunding. The fixed fee is based, in part, upon the assumption that the terms, structure, size and schedule of the financing will conform to the description in Recital A of this Agreement, the scope of services will conform to the description thereofcontained in Section 1 of this Agreement, the Water System Refunding and the SJBA Refunding will proceed on approximately the same schedule, the transaction will not have an extraordinary amount of problems/issues, Bond Counsel will not be required to make more than two out of town trips and will be required to attend no more than the usual number of meetings and conference calls, Bond Counsel will not be required to generate an inordinate amount of drafts of the Major Legal Documents, the structure of the transaction will not materially change (particularly after preparation of the Major Legal Documents has commenced), and the Bonds will not be issued not later than December 31, 2013. If any part of this assumption is incorrect, or if any unusual or unforeseen circumstances arise, and occasions substantial additional work or responsibility on the part of Bond Cotmsel, Bond Counsel will be entitled to seek additional compensation in such. amount as the Issuer and Bond Counsel shall mutually agree to be appropriate. B. Expenses. Bond Counsel will not charge for expenses customarily incurred by Bond Counsel in performing the bond counsel services described in Section 1 of this Agreement. Any filing, publication or printing costs required in conn.ection with the Bonds shall be paid directly by Issuer, but if paid by the Bond Counsel on behalf of Issuer, shall be reimbursed to Bond Counsel on demand. C. Payment. Fees shall be payable by Issuer upon the issuance of the Bonds. Payment of all fees hereunder shall be entirely contingent upon issuance of the Bonds. 3. Termination of Agreement, Legal Services and Other Obligations. This Agreement and all legal services to be rendered under it may be terminated at any time by written notice from either party, with or without cause. In that event, all finished and unfinished documents prepared for adoption or execution by Issuer, shall, at the option of Issuer, become its property and shall be delivered to it or to any party it may designate; provided that Bond Counsel shall have no liability whatsoever for any subsequent use of such documents. In the event of termination by Issuer, Bond Counsel shail be paid for all satisfactory work at its usual hourly rates, unless the termination is made for cause, in which event compensation, if any, shall be adjusted in the light of the particular facts and circumstances involved in the termination. If not sooner terminated as aforesaid, this Agreement and all legal services to be rendered under it shall OHSUSA:753749804.l 3 ATTACHMENT 2 terminate upon issuance of the Bonds;· provided that Issuer shall remain liable for any unpaid compensation or reimbursement due under Section 2 of this Agreement. Upon termination, Bond Counsel shall have no future duty of any kind to or with respect to the Bonds or the Issuer. This Agreement shall not be the basis of any breach of contract claim that would have the effect of extending the statute of limitations pertaining to legal malpractice to the statute of limitations pertaining to breach of contract. Except as state above, Bond Counsel retains the right to discard any files and materials. It is Bond Counsel's current policy (subject to change) to discard all files and materials after issuance of the Bonds (except the closing transcript until after the Bonds are paid or defeased) or following cessation of work on the financing without issuance of Bonds. 4. Nature of Engagement; Client Relationships With Other Parties. The role of bond counsel, generally, is to prepare or review the proceedings for issuance ofthe bonds, notes or other evidence of indebtedness and to provide an expert legal opinion with respect to the validity thereof and other subjects (usually including the tax status of interestthereon) addressed by the opinion. Consistent with the historical origin and unique role of bond counsel, and reliance thereon by the public finance market, Bond Counsel's role as bond counsel under this Agree.ment is to provide opinions and related legal services that represent an objective judgment on the matters addressed rather than the partisan position of an advocate. In performing its services as bond counsel in connection with the Bonds, Bond Counsel will act as special counsel to Issuer (as such and not any particular body, board, office or official) with respect to issuance of the Bonds; i.e., Bond Counsel will assist Issuer Counsel in representing Issuer but only with respect to validity of the Bonds and the Major Legal Documents as to the Issuer and tax status of interest on the Bonds, and in a manner not inconsistent with the role ofBond Counsel described in the first sentence of this section. Issuer acknowledges that Bond Counsel regularly performs legal services for many private and public entities in connection with a wide variety of matters. For example, Bond Counsel has represented, is representing or may in the future represent other public entities, underwriters, trustees, rating agencies, insurers, credit enhancement providers, lenders, contractors, suppliers, financial and other consultants/advisors, accountants, investment and swap providers/brokers, providers/brokers of derivative products and others who may have a role or interest in the Bond financing or the Projects or that may be involved with or adverse to Issuer in this or some other matter. Bond Counsel agrees not to represent any such entity in connection with the Bond financing, during the term of this Agreement, without the consent of Issuer. Given the. special, limited role of bond cotmsel described above, Issuer acknowledges and agrees that no conflict of interest exists or would exist, and waives any actual or potential conflict of interest that might be deemed to arise, now or in the future, from this Agreement or any such other relationship that Bond Counsel may have had, have or enter into, and Issuer specifically consents to any and all such relationships. 5. Limitation of Rights to Parties. Nothing in this Agreement or in any of the documents contemplated hereby, expressed or implied, is intended or .shall be construed to give any person other than Issuer and Bond Counsel any legal or equitable right or claim under or in respect of this Agreement, and this Agreement shall inure to the sole and exclusive benefit of Issuer and Bond Counsel. OHS1.JSA:753749804.1 4 ATTACHMENT 2 6. Countetparts. This Agreement may beexecuted in any number of counterparts and each counterpart shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same Agreement. Issuer and Bond Counsel have executed this Agreement by their duly authorized representatives as of the date provided above. 7. h12J!Ial1CS:. Bond Counsel advises that it does maintain errors and omissions insurance coverage applicable to the services to be rendered tmder this Agreement. crry;. OF SAN JUAN CAPISTRANO 1 ORRICK, HERRINGTON & SUTCLIFFE LLP S TO FORM: OHSUS/\:753749804.1 5 ATTACHMENT 2 OHSDRAFT 3114/14 AMENDED AND RESTATED AGREEMENT FOR BOND COUNSEL SERVICES THIS AMENDEDANDRESTATED AGREEMENT (this "A~reement") is entered into as of Ju.ne4,2013,April .2014. between the CITY OF SAN JUAN CAPISTRANO (the "Issuer") and ORRICK, HERRINGTON & SUTCLIFFE LLP ("Bond Counsel''), asfoUo\vs:amendsandrestatestheAgreementforBondCounselServices.entered into as of June 4. 2013. between the Issuer and Bond Cmmsel (the "Original Agreement"). Recitals A. Issuer desires to engage the services of bond counsel in connection with a proposed (i) issuance of revenue bonds by the San Juan Capistrano Financing Authority or the San Juan Basin Authority backed by installment payments or lease payments to be made by the Issuer or (ii) execution and delivery of certificates of participation evidencing interests in ,installment payments to be made by the Issuer (in either case, the "Bonds"), to be sold at t'Bi'fl£~l+¥l~+e for the purpose of refunding all or a portion of the San Juan Capistrano Public Financing Authority Revenue Certificates of Participation, Series ~m":+~f---\11H±I:1~¥Stem -K:eftlflflt!thf-+.,r,:~k and/or refunding all or a portion of the San Juan Basin Authority Lease Revenue Bonds (Groundwater Recovery Project), Issue of2002(the"SJBA,Refunding"),2002. each issued to fund certain water system capital improvement projects (the "Projects"). B. Bond Counsel possesses the necessary professional capabilities and resources to provide the legal services required by Issuer as described in this Agreement. C. U nforeseendevelopmentsha veoccurredsubselJUenttotheexecutionand deliveryoftheOriginalAgreementrenderingcertainassumptionsrespectingthefinancingand the financingscheduleuponwhichthecornpensationotBondCotmselsetforththeOriginal Agreement wasestablishednolongerconect. D. TheOriginalAgreernentstates: E. ThelssuerandBondCounseldesiretoarnendtheOriginalAgreernentas providedinthisAgreernent. OHSUSA:+0J-74~;I-753749804.4 ATTACHMENT 3 Agreements 1. ScopeofServices. Bond Counsel shall perform the following legal services: ( 1) Analysis of the validity of the Bonds under State of California law and the exclusion of interest on the Bonds from gross income under federal tax law. (2) Consultation with representatives of the Issuer, including Rutan & Tucker, LLP ("Issuer Counsel"), Fieldman, Rolapp & Associates, and others, with respect to the timing, terms, and legal structure of the proposed Bonds. (3) Preparation of documents to be adopted or entered into by the Issuer, the San Juan Capistrano Public Financing Authority or the San Juan Basin Authority required for the authorization, sale and issuance of the Bonds, including preparation of the resolutions approving the issuance of the Bonds, theany notice of sale, any indenture or trust agreement providing for the issuance of the Bonds, and any installment sale agreement or lease entered into by the Issuer backing the Bonds (the "Major Legal Documents"). ( 4) Coordination of preparation of the Preliminary Official Statement and final Official Statement for the Bonds based on information provided by the Issuer and others. (5) Preparation of the Continuing Disclosure Agreement. ( 6) Preparation of summaries of the Major Legal Documents included in the Official Statement. (7) Attendance at such meetings or hearings of the Issuer and working group meetings or conference calls as Issuer may request. (8) Preparation of final closing papers to be executed by the Issuer, the San Juan Capistrano Public Financing Authority or the San Juan Basin Authority required to effect delivery of the Bonds (including the Tax Agreement) and coordination of the Bond closing. (9) Rendering of Bond Counsel's customary form of final legal opinion to the issuer of the Bonds on the validity of the Bonds and the tax -exempt status of interest thereon. (1 0) Preparation and dissemination of closing transcripts. LJ1l Suchlegalserviceswithrespecttooutstandingdebtobligationspayable fromtherevenuesoftheissuer'swaterenterprise(otherthanremesentationinany litigationor otherlegaloradministrativeproceeding.auditorinvestigation)astheissuer shallreguest. 2 QH\WSA)5U49801 '1 ATTACHMENT 3 Issuer shall have and will rely on Issuer Counsel to render day-to-day and ongoing general counsel legal services. Bond Counsel shall circulate documents to and coordinate its services with Issuer Counsel to the extent requested by Issuer or Issuer Counsel. Bond Counsel shall be entitled to assume that Issuer Counsel has reviewed all documents and matters submitted to Issuer for adoption or approval or to officers of Issuer for execution prior to such adoption, approval or execution. In rendering opinions and performing legal services under this Agreement, Bond Counsel shall be entitled to rely on the accuracy and completeness of information provided and certifications made by, and opinions provided by counsel to, Issuer and other parties and consultants, without independent investigation or verification. Knowledge of attorneys and non-attorneys at Bond Counsel's firm not working directly on the Bond issue will not be imputed to Bond Counsel nor shall there be any duty on the part of Bond Counsel to make any inquiry of such other attorneys or non-attorneys. Bond Counsel services are limited to those specifically set forth above. For example, Bond Counsel services do not include representation of Issuer or any other party to the transaction in a:ttyCa,pistrano Taxpayers Association. Inc. v. City of San Juan Capistrano or any other litigation or other legal or administrative proceeding, audit or investigation involving any of the Bonds, the Projects or any related matter. Additionally, Bond Counsel services do not include the preparation, negotiation, content or validity of any agreements relating to the Projects other than the Major Legal Documents or any legal advice relating to the Projects or to water rights. Bond Counsel services also do not include any responsibility for compliance with federal or state securities laws, environmental, land use, real estate, insurance or similar laws or matters or (except as required for tax exemption of the Bonds) any tax laws, or for title to, recording, filing or perfection of security interests in real or personal property. Bond Counsel services do not include any financial advice or analysis or data or mathematical verification. Bond Counsel will not be responsible for the services performed or acts or omissions of any other transaction participant. Also, Bond Counsel services will not extend past the date of issuance of the Bonds and will not, for example, include services related to rebate or other post issuance tax compliance or continuing disclosure (although Bond Counsel may be available for separate engagement to provide either or both such services pursuant to separate contract) or otherwise related to the Bonds, Bond proceeds or the Project after issuance of the Bonds. 2. FeesandExpenses. A. Fees. 3 OH$USA 753749804 4 ATTACHMENT 3 H+SH·~toa:Htt:H::H:H1rtf1::c,~H:iffiHt'ch'+AT±l+Hl~+H'liH·I.·¥flff'*~'~ ~~Documents is resumed (the "Resumption Date") based on the amount of time expcndedbyBondCounsel'sattomeysandother professionalsattheirhourlyratesfromtimeto time in effect (the "Hourly Component"). The current standard hourl)( raJ:es for the attorneys mostlikelytoprovidesuchworkare: StephenA. Spitz($ 780),RichardJ.Moore($77 5).Angela M. Trout ($6 5 Q).E laineGreenberg($ 905).1 ohnKnox( $ 895).1 ohn Wang($ 770 )andJ eff Higgins($660). ForlegalservicesrenderedfromandaftertheResumptionDate.BondCounsel willbe paidsuchfeeasBondCounselandthelssuershalldetermine.ingoodfaith. tobefairand appropriate (the "Contingent CQJTiponent"). The determination ofthe Contingent CQmponent shalltakeinto accounttheamountofadditionaltimeexpectedtobereguiredtobeexpendedto cornpletetheissuanceof theBondsandthe$1 01, 729oftimeexpendedanddisbursements incurredbyBondCounselinproviding servicesundertheOriginalAgreementprimiQ September 1 .2013. B. t1'1:t:!tr€ffH1€Bil:lfl::feft**"'flt~:tetii€H~EI:Hl~et+e&t-ei:tl'HM~~rte1tt.UJ.W~f!UQ indirect)incurredo nor afterSeptember 1.20 13 inconnectionwiththeservices.including ( withoutlimitation)filingand publication.documentreproductionanddelivety.travel.long distancetelephone.telecopy.word processing.computerresearch,secretarialQvertime,closing transcriptsandothersimilarexpenses. Any filing, publication or printing costs required in connection with the Bonds shall be paid directly by Issuer, but if paid by the Bond Counsel on behalf oflssuer, shall be reimbursed to Bond Counsel on demand. C. Payment. FeenshallbepayablebyBondCounselshallbeentitledtobill fees includedintheHourlyComponent(togetherwithexpenses)onamonthlybasis. InvQices forthe ITourlyComponentshallbepayablebythe Issuer upon receiptandpaymentshallnotbe contingent upon the issuance of theBonds. Paymentofall feeshereunderanyBonds. The Contingent Componentshallbepa)(ablebythelssuerupontheissuanceofanyBondsand shall be entirely contingent upon the issuance ofifl.e Bonds. 3. TerminationofAgreement,LegalServicesandOtherObligations. This Agreement and all legal services to be rendered under it may be terminated at any time by written notice from either party, with or without cause. In that event, all finished and unfinished 4 QH.W,SA}5l719l!04 ·I ATTACHMENT 3 documents prepared for adoption or execution by Issuer, shall, at the option of Issuer, become its property and shall be delivered to it or to any party it may designate; provided that Bond Counsel shall have no liability whatsoever for any subsequent use of such documents. In the event of termination by Issuer, Bond Counsel shall be paid for all sa:t+Eftiaef&Pyrwt'H':lfatt1~sttalflli'lt!:FW fatesunpaidportionsoftheHourlyComponentuponsuchterminationandshallbepaidthe Contingent ComponentupontheissuanceofanyBonds, unless the termination is made for cause, in which event compensation, if any, shall be adjusted in the light of the particular facts and circumstances involved in the termination. If not sooner terminated as aforesaid, this Agreement and all legal services to be rendered under it shall terminate upon issuance of the Bonds; provided that Issuer shall remain liable for any unpaid compensation or reimbursement due under Section 2 of this Agreement. Upon termination, Bond Counsel shall have no future duty of any kind to or with respect to the Bonds or the Issuer. This Agreement shall not be the basis of any breach of contract claim that would have the effect of extending the statute of limitations pertaining to legal malpractice to the statute of limitations pertaining to breach of contract. Except as state above, Bond Counsel retains the right to discard any files and materials. It is Bond Counsel's current policy (subject to change) to discard all files and materials after issuance of the Bonds (except the closing transcript until after the Bonds are paid or defeased) or following cessation ofwork on the financing without issuance of Bonds. 4. NatureofEngagement;ClientRelationshipsWithOtherParties. The role of bond counsel, generally, is to prepare or review the proceedings for issuance of the bonds, notes or other evidence of indebtedness and to provide an expert legal opinion with respect to the validity thereof and other subjects (usually including the tax status of interest thereon) addressed by the opinion. Consistent with the historical origin and unique role of bond counsel, and reliance thereon by the public finance market, Bond Counsel's role as bond counsel under this Agreement is to provide opinions and related legal services that represent an objective judgment on the matters addressed rather than the partisan position of an advocate. In performing its services as bond counsel in connection with the Bonds, Bond Counsel will act as special counsel to Issuer (as such and not any particular body, board, office or official) with respect to issuance of the Bonds; i.e., Hand Counsel will assist Issuer Counsel in representing Issuer but only with respect to validity of the Bonds and the Major Legal Documents as to the Issuer and tax status of interest on the Bonds, and in a manner not inconsistent with the role of Bond Counsel described in the first sentence of this section. Issuer acknowledges that Bond Counsel regularly performs legal services for many private and public entities in connection with a wide variety of matters. For example, Bond Counsel has represented, is representing or may in the future represent other public entities, underwriters, trustees, rating agencies, insurers, credit enhancement providers, lenders, contractors, suppliers, financial and other consultants/advisors, accountants, investment and swap providers/brokers, providers/brokers of derivative products and others who may have a role or interest in the Bond financing or the Projects or that may be involved with or adverse to Issuer in this or some other matter. Bond Counsel agrees not to represent any such entity in connection with the Bond financing, during the term of this Agreement, without the consent of Issuer. Given the special, limited role of bond counsel described above, Issuer acknowledges and agrees that no conflict of interest exists or would exist, and waives any actual or potential conflict of interest that might be deemed to arise, now or in the future, from this Agreement or any such other 5 ATTACHMENT 3 relationship that Bond Counsel may have had, have or enter into, and Issuer specifically consents to any and all such relationships. 5. LimitationofRightstoParties. Nothing in this Agreement or in any of the documents contemplated hereby, expressed or implied, is intended or shall be construed to give any person other than Issuer and Bond Counsel any legal or equitable right or claim under or in respect of this Agreement, and this Agreement shall inure to the sole and exclusive benefit of Issuer and Bond Counsel. 6. Counterparts. This Agreement may be executed in any number of counterparts and each counterpart shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same Agreement. 7. Insurance. Bond Counsel advises that it does maintain errors and omissions insurance coverage applicable to the services to be rendered under this Agreement. 6 OHS\J§A ]53 719804 'I ATIACHMENT3 CITY OF SAN JUAN CAPISTRANO Sam Allevato, Mayor ORRICK, HERRINGTON & SUTCLIFFE LLP By __________________________ _ Partner ATTEST: Maria Morris, City Clerk APPROVED AS TO FORM: Hans Van Ligten, City Attorney 7 OHSUS!\)53742&011 ATTACHMENT 3