CHAPMAN DRAFT
JULY 2, 2024
4437117
REIMBURSEMENT AGREEMENT
dated as of _____, 2024,
among
CITY OF ANAHEIM,
ANAHEIM HOUSING AND PUBLIC IMPROVEMENTS AUTHORITY
and
BANK OF AMERICA, N.A.
relating to:
$[__________]
ANAHEIM HOUSING AND PUBLIC
IMPROVEMENTS AUTHORITY
REVENUE BONDS, SERIES 2024-A (WATER SYSTEM PROJECT)
(VARIABLE RATE DEMAND BONDS)
(SECOND LIEN QUALIFIED OBLIGATIONS)
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TABLE OF CONTENTS
SECTION HEADING PAGE
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS .......................................................1 Section 1.01. Defined Terms .......................................................................................1 Section 1.02. Other Interpretive Provisions...............................................................11 Section 1.03. Accounting Terms................................................................................12 Section 1.04. Rounding..............................................................................................12 Section 1.05. Times of Day........................................................................................12 ARTICLE II LETTER OF CREDIT......................................................................................12 Section 2.01. Issuance of the Letter of Credit............................................................12 Section 2.02. Letter of Credit Drawings ....................................................................12 Section 2.03. Reimbursement of Liquidity Drawings under the Letter of Credit; Mandatory Redemption; Interest .........................................................12 Section 2.04. Reimbursement of Drawings Other than Liquidity Drawings Creating Liquidity Advances under the Letter of Credit ....................................15 Section 2.05. Fee........................................................................................................15 Section 2.06. Method of Payment, Etc. .....................................................................15 Section 2.07. Termination of Letter of Credit; Substitute Letter of Credit................15 Section 2.08. Computation of Fees and Interest; Default Rate..................................15 Section 2.09. Payment Due on Non-Business Day to Be Made on Next Business Day.......................................................................................................16 Section 2.10. Source of Funds ...................................................................................16 Section 2.11. Evidence of Debt..................................................................................16 Section 2.12. Recapture .............................................................................................16 Section 2.13. Extension of Stated Expiration Date....................................................16 Section 2.14. Amendments upon Extension ..............................................................17 ARTICLE III TAXES AND YIELD PROTECTION .................................................................17 Section 3.01. Taxes....................................................................................................17 Section 3.02. Increased Costs ....................................................................................17 Section 3.03. Survival................................................................................................18 ARTICLE IV CONDITIONS PRECEDENT ............................................................................19 Section 4.01. Conditions Precedent to Issuance of the Letter of Credit ....................19 Section 4.02. Conditions Precedent to Liquidity Advances and Term Loan.............21 ARTICLE V REPRESENTATIONS AND WARRANTIES........................................................22 Section 5.01. Organization, Powers, Etc....................................................................22 Section 5.02. Authorization; No Contravention ........................................................22 Section 5.03. Binding Effect......................................................................................22 Section 5.04. Financial Information...........................................................................22 -ii-
Section 5.05. Litigation..............................................................................................23 Section 5.06. Employee Benefit Plans, Etc................................................................23 Section 5.07. Security ................................................................................................23 Section 5.08. Taxes....................................................................................................23 Section 5.09. Full Disclosure.....................................................................................24 Section 5.10. No Default............................................................................................24 Section 5.11. Qualified Obligations...........................................................................24 Section 5.12. No Sovereign Immunity.......................................................................24 Section 5.13. Rate Increases ......................................................................................24 Section 5.14. Insurance..............................................................................................24 Section 5.15. Pending Legislation and Decisions......................................................25 Section 5.16. Incorporation of Representations and Warranties................................25 Section 5.17. Federal Reserve Board Regulations.....................................................25 Section 5.18. Environmental Laws ............................................................................25 Section 5.19. Tax Exempt Status ...............................................................................26 Section 5.20. Compliance with Laws ........................................................................26 Section 5.21. Usury....................................................................................................26 Section 5.22. Financing Documents to Constitute a Contract and a Legal Obligation26 Section 5.23. Anti-Corruption Laws; Anti-Money Laundering Laws and Sanctions26 Section 5.24. Bank Bonds..........................................................................................26 Section 5.25. Paying Agent/Registrar; Remarketing Agent ......................................27 Section 5.26 No Public Vote or Referendum............................................................27 Section 5.27. No Existing Right to Accelerate ..........................................................27 ARTICLE VI REPRESENTATIONS AND WARRANTIES........................................................27 Section 6.01. Organization, Powers, Etc....................................................................27 Section 6.02. Authorization; No Contravention ........................................................27 Section 6.03. Binding Effect......................................................................................28 Section 6.04. Litigation..............................................................................................28 Section 6.05. No Default............................................................................................28 Section 6.06. No Sovereign Immunity.......................................................................28 Section 6.07. Anti-Corruption Laws; Anti-Money Laundering Laws and Sanctions28 ARTICLE VII COVENANTS................................................................................................29 Section 7.01. Information ..........................................................................................29 Section 7.02. Payment of Obligations; Removal of Liens.........................................30 Section 7.03. Maintenance of Property......................................................................31 Section 7.04. Conduct of Business and Maintenance of Existence ...........................31 Section 7.05. Compliance with Laws ........................................................................31 Section 7.06. Inspection of Property, Books and Records.........................................31 Section 7.07. Use of Proceeds....................................................................................31 Section 7.08. Incorporation of Covenants by Reference; No Amendments; Etc.......31 Section 7.09. ERISA Matters.....................................................................................32 Section 7.10. Further Assurances...............................................................................32 Section 7.11. Related Obligations..............................................................................32 -iii-
Section 7.12. Insurance..............................................................................................32 Section 7.13. Sovereign Immunity.............................................................................32 Section 7.14. Proceeds of Notes ................................................................................33 Section 7.15. Preservation of Lien.............................................................................33 Section 7.16. Additional Note or Collateral...............................................................33 Section 7.17. Parity Creditors and Covenants ...........................................................33 Section 7.18. Charges ................................................................................................34 Section 7.19. Investment Policy.................................................................................34 Section 7.20. Preservation of Existence, Ownership, Etc..........................................34 Section 7.21. Certain Information..............................................................................34 Section 7.22. Consolidation or Merger......................................................................34 Section 7.23. Accounting Methods and Fiscal Year..................................................34 Section 7.24. Exempt Status ......................................................................................34 Section 7.25. Impairment of Rights ...........................................................................34 Section 7.26. Investments ..........................................................................................34 Section 7.27. Swap Contracts ....................................................................................34 Section 7.28. Trustee..................................................................................................35 Section 7.29. Conversions and Redemptions.............................................................35 Section 7.30. Underlying Rating................................................................................35 Section 7.31. Selection of Bonds for Redemption or Purchase .................................35 Section 7.32. Remarketing Agent ..............................................................................35 Section 7.33. Bank Bonds..........................................................................................36 Section 7.34. Sanctions..............................................................................................36 Section 7.35. Anti-Corruption Laws..........................................................................36 ARTICLE VIII EVENTS OF DEFAULT ..................................................................................36 Section 8.01. Events of Default .................................................................................36 Section 8.02. Remedies..............................................................................................38 ARTICLE IX MISCELLANEOUS ........................................................................................39 Section 9.01. Amendments, Etc.................................................................................39 Section 9.02. Notices; Effectiveness; Electronic Communications...........................39 Section 9.03. No Waiver; Cumulative Remedies ......................................................40 Section 9.04. Expenses; Indemnity............................................................................40 Section 9.05. Obligations Absolute ...........................................................................42 Section 9.06. Payments Set Aside..............................................................................43 Section 9.07. Successors and Assigns........................................................................43 Section 9.08. Treatment of Certain Information; Confidentiality..............................44 Section 9.09. Right of Setoff......................................................................................45 Section 9.10. Counterparts; Integration; Effectiveness..............................................46 Section 9.11. Survival of Representations and Warranties........................................46 Section 9.12. Severability ..........................................................................................46 Section 9.13. Governing Law; Jurisdiction; Etc. .......................................................46 Section 9.14. Waiver of Jury Trial.............................................................................47 Section 9.15. No Advisory or Fiduciary Relationship...............................................48 -iv-
Section 9.16. Electronic Execution of Certain Documents........................................48 Section 9.17. USA Patriot Act ...................................................................................49 Section 9.18. Time of the Essence.............................................................................49 Section 9.19. Entire Agreement.................................................................................49 Section 9.20. Further Assurances...............................................................................49 Section 9.21. No Third-Party Rights..........................................................................50 Section 9.22. US QFC Stay Rules .............................................................................50 EXHIBIT A – Form of Compliance Certificate
SCHEDULE 9.02 – Notices
APPENDIX I – Form of Irrevocable Transferable Letter of Credit APPENDIX II – Form of Custody Agreement
REIMBURSEMENT AGREEMENT
This REIMBURSEMENT AGREEMENT dated as of _____, 2024 (as amended, modified or restated from time to time in accordance with its terms, this “Agreement”), is among the CITY OF ANAHEIM, a municipal corporation created and existing pursuant to the laws of the State of California (the “City”), the ANAHEIM HOUSING AND PUBLIC IMPROVEMENTS AUTHORITY (the “Authority”), a joint powers authority organized and existing under the laws of the State of California, and BANK OF AMERICA, N.A.
W I T N E S S E T H :
WHEREAS, the City desires to secure a source of funds to be devoted exclusively to the payment by the Trustee, when and as due, of the principal of or portion of the purchase price corresponding to the principal of the Bonds and interest on the Bonds, and has applied to the Bank for the issuance by the Bank of the Letter of Credit in the original stated amount of $[__________]; and
WHEREAS, the Bank has been requested by the City to provide a liquidity facility in the form of a Liquidity Drawing under the Letter of Credit.
NOW THEREFOR, the Bank has agreed to issue the Letter of Credit and to provide such liquidity facility in the following manner and subject to the following terms and conditions.
Accordingly, the City and the Bank hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Defined Terms. In addition to the terms defined in the Indenture, the following terms shall have the meanings set forth below:
“2024-A Purchase Payment Fund” has the meaning set forth in the Indenture. “Act” has the meaning set forth in Section 8.17 hereof. “Affiliate” means any other Person controlling or controlled by or under common control with the City or the Authority, as applicable. For purposes of this definition, “control,” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting rights, membership, the power to appoint members, trustees or directors, by contract or otherwise. “Agreement” has the meaning set forth in the introductory paragraph hereof. “Alternate Credit Facility” has the meaning set forth in the Indenture. -2-
“Audited Financial Statements” means the audited consolidated statement of net position of the City’s Water Utility Fund for the fiscal year ended June 30, 2023, and the related consolidated statement of revenues, expenses, and changes in net position and statement of cash flows for such fiscal year of the City’s Water Utility Fund, including the notes thereto. “Authority” has the meaning set forth in the introductory paragraph hereto. “Authorized Authority Representative” has the meaning set forth in the Indenture. “Authorized City Representative” has the meaning set forth in the Indenture. “Available Amount” has the meaning set forth in the Letter of Credit. “Bank” means Bank of America, N.A., and its successors and assigns. “Bank Bonds” has the meaning of “Liquidity Provider Bonds” as set forth in the Indenture. “Bank Rate” means the rate of interest per annum with respect to a Liquidity Advance (i) for any day commencing on the date such Liquidity Advance is made up to and including the ninetieth day (90th) next succeeding the date such Liquidity Advance was made, equal to the Base Rate from time to time in effect, and (ii) from and including the ninety-first day after such Liquidity Advance was made, and at all times thereafter, equal to the Term Loan Rate; provided, however, that immediately and automatically upon the occurrence of an Event of Default (and without any notice given with respect thereto) and during the continuance of such Event of Default, “Bank Rate” shall mean the Default Rate; provided, further, that in no event shall the Bank Rate be less than the applicable rate on any Bonds which are not Bank Bonds. “Base Rate” means, for any day, a fluctuating rate of interest per annum equal to the greatest of (i) the Prime Rate in effect at such time plus one percent (1.00%), (ii) the Federal Funds Rate in effect at such time plus two percent (2.00%), and (iii) seven percent (7.00%). “Bonds” means the $[__________] Anaheim Housing and Public Improvements Authority Revenue Bonds, Series 2024-A (Water System Project) (Variable Rate Demand Bonds) (Second Lien Qualified Obligations).
“Business Day” has the meaning set forth in the Letter of Credit. “Change in Law” means the occurrence, after the Closing Date, of any of the following:
(a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any -3-
successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.
“Charter” shall mean the charter of the City adopted by the electors of the City on June 2, 1964 and as amended from time to time.
“City” means City of Anaheim, a municipal corporation created and existing pursuant to the laws of the State of California, and any permitted successor or assign thereof hereunder. “City Bonds” means (i) Bonds owned or held by the City or held by the Trustee, or its agents, for the account of the City, or (ii) Bonds which the City has notified the Trustee, or which the Trustee knows, were purchased by another Person for the account of the City with moneys furnished by the City.
“Closing Date” has the meaning set forth in Section 4.01(a) hereof. “Code” means the Internal Revenue Code of 1986, as amended, and, where appropriate any statutory predecessor or any successor thereto.
“Collateral” has the meaning set forth in Section 2.03(f) hereof. “Compliance Certificate” means a certificate substantially in form of Exhibit A hereto. “Conversion Date” means the date on which the interest rate borne by the Bonds is converted to a rate other than the Daily Rate or Weekly Rate. “Custody Agreement” means that certain Custody Agreement dated as of the Closing Date between the Bank and the Trustee in substantially the form of Appendix II hereto, as the same may be amended, modified, supplemented or restated in accordance with the terms thereof. “Daily Rate” has the meaning set forth in the Indenture. “Debt” of any Person means, at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, Bonds or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee which are capitalized in accordance with GAAP, (v) all obligations of such Person to purchase securities (or other property) which arise out of or in connection with the sale of the same or substantially similar securities or property, (vi) all non-contingent obligations of such Person to reimburse the Bank or other Person in respect of amounts paid under a letter of credit or similar instrument, (vii) all Debt of others secured by a Lien on any asset of such Person, whether or not such Debt is assumed by such Person, (viii) all Debt of others Guaranteed by such Person, and (ix) all obligations of such Person under any Swap Contract.
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“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect. “Debt Service Fund” has the meaning set forth in the Indenture. “Default” means any event or condition that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
“Default Rate” means, for any day, a rate of interest per annum equal to the sum of the Base Rate in effect on such day plus four percent (4.00%). “Designated Jurisdiction” means any country or territory to the extent that such country or territory itself is the subject of any Sanction.
“DTC” means The Depository Trust Company.
“Environmental Claim” means any and all administrative, regulatory or judicial investigations, proceedings, actions, suits, demand letters, claims, liens, notices of noncompliance or violation, relating in any way to any Environmental Law (“claims”) or any permit issued under any such Environmental Law, including without limitation (a) any and all claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial, or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment.
“Environmental Law(s)” means any and all federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to air, water or land pollution, wetlands or the protection of the environment or to emissions, discharges or releases of Hazardous Materials into the environment, including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials or the clean up or other remediation thereof.
“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the City or any of its Affiliates directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, presence, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute.
“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the City within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).
“Event of Default” with respect to this Agreement has the meaning set forth in Section 7.01 of this Agreement and, with respect to any Related Document, has the meaning assigned therein. “Excess Interest” has the meaning set forth in Section 2.12 thereof. “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Bank on such day on such transactions as determined by the Bank. “Fee Letter” means that certain Fee Letter dated the Closing Date between the Bank and the City, as the same may be amended, modified, supplemented or restated in accordance with the terms thereof and hereof.
“Fiscal Year” means the twelve-month period from July 1 through the following June 30. “Fitch” means Fitch Ratings Inc., and any successor rating agency. “FRB” means the Board of Governors of the Federal Reserve System of the United States, together with any successors thereof.
“Generally Accepted Accounting Principles” or “GAAP” means generally accepted accounting principles in effect from time to time in the United States and applicable to entities such as the City, including, without limitation, those principles set forth in the statements and pronouncement of the Government Accounting Standards Board. “Governmental Approval” means an authorization, consent, approval, permit, license, certificate of occupancy or an exemption of, a registration or filing with, or a report to any Governmental Authority.
“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, -6-
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including, without limitation, the Financial Conduct Authority, the Prudential Regulation Authority and any supra-national bodies such as the European Union or the European Central Bank).
“Governmental Claims Act” means California Government Code §§970 et seq. “Guarantee” by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment at) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning. “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, contaminants, chemicals, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
“Indemnitee” has the meaning set forth in Section 8.04 hereof. “Indenture” means the Indenture of Trust dated as of _____, 2024, by and among the Authority, the City, and U.S. Bank Trust Company, National Association, relating to the Bonds, as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof.
“Ineligible Bonds” means Bank Bonds, City Bonds or Bonds bearing interest at a rate other than the Daily Rate or Weekly Rate.
“Installment Purchase Agreement” means the Installment Purchase Agreement dated as of _____, 2024, by and between the Authority and the City, relating to the Bonds, as the same may be amended, restated, or otherwise modified from time to time in accordance with the terms thereof and hereof.
“Interest Payment Date” has the meaning set forth in the Indenture. “Investment Policy” means the investment policy of the City as posted on the City’s website by the Treasurer of the City as of the Closing Date. -7-
“Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
“Letter of Credit” means the direct pay letter of credit supporting the Bonds issued by the Bank for the account of the City in favor of the Trustee pursuant to this Agreement in the form of Appendix I hereto with appropriate insertions, as amended from time to time. “Letter of Credit Fees” has the meaning set forth in the Fee Letter. “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, the City shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.
“Liquidity Advance” has the meaning set forth in Section 2.03(a) hereof. “Liquidity Drawing” means a drawing under the Letter of Credit to pay the purchase price and accrued interest of Bonds tendered to purchase that have not been successfully remarketing or for which the purchase price has not been received by the Trustee. “Margin Stock” has the meaning ascribed to such term in Regulation U promulgated by the FRB, as now and hereafter from time to time in effect. “Material Adverse Effect” means with respect to either System (a) a materially adverse effect upon the such System’s business, assets, liabilities, condition (financial or otherwise), results of operations or business prospects, (b) an adverse effect upon the binding nature, validity or enforceability of the Related Documents or the City’s Obligations thereunder, (c) an adverse effect on the exclusion of interest with respect to the Bonds from gross income for purposes of federal income taxation or the exemption of such interest from State personal income taxes or (d) a material adverse effect (i) on the authority or ability of the City to perform any of its obligations under any Related Document or the ability of the City to complete the transactions contemplated hereunder or thereunder or (ii) on the rights, remedies, security or interests of the Bank hereunder or under the other Related Documents or on the validity, enforceability or perfection of the pledge of or lien on the Pledged Revenues under the Indenture or on the priority of the Liens created thereby.
“Material Debt” means Debt of the City payable from or secured by Pledged Revenues on a basis senior to or on a parity with the Bonds, or payable from or secured by Net Surplus Revenues on a parity with the 2024-A Purchase Payments arising in one or more related or unrelated transactions, in an aggregate principal amount exceeding $10,000,000,. -8-
“Maximum Interest Rate” means the maximum rate of interest on the relevant obligation permitted by applicable law.
“Moody’s” means Moody’s Investors Service, Inc., and any successor rating agency. “Net Surplus Revenues” has the meaning set forth in the Installment Purchase Agreement. “Obligations” means the Bank Bonds, the Liquidity Advances, the Term Loans, the Letter of Credit Fees, the Reimbursement Obligations and all other obligations of the City to the Bank arising under or in relation to this Agreement or any other Related Document. “OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.
“Official Statement” means the [_________], relating to the Bonds. “Outstanding” has the meaning set forth in the Indenture. “Owner” has the meaning set forth in the Indenture.
“Parity Creditor” means the obligee of any Parity Debt. “Parity Debt” means any Debt of the City (including the Bonds) currently outstanding or to be issued, secured by a lien on, and payable from, (i) any Pledged Revenues on a parity with the Bonds or (ii) any Net Surplus Revenues on a parity with the 2024-A Purchase Payments. “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. “Plan” means, with respect to the City and each subsidiary at any time, an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and either (i) is maintained by a member of the Controlled Group for employees of a member of the Controlled Group of which the City or such subsidiary is a part, (ii) is maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which a member of the Controlled Group of which the City or such subsidiary is a part is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions. “Pledged Revenues” means the Net Surplus Revenues, all of the moneys in the Second Lien Qualified Obligations Account, the 2024-A Purchase Payment Fund and Debt Service Fund, including all amounts derived from the investment of such moneys.1 1 To confirm Indenture provides for a pledge of the revenues and what is deposited in the account, not just what monies are deposited in the account.
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“Prime Rate” means on any day, the rate of interest in effect for such day as publicly announced from time to time by the Bank as its “prime rate.” The “prime rate” is a rate set by the Bank based upon various factors including the Bank’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by the Bank shall take effect at the opening of business on the day specified in the public announcement of such change.
“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, whether now owned or hereafter acquired. “Qualified Obligations” has the meaning set forth in the Installment Purchase Agreement. “Rating Agency” means any of Fitch, Moody’s or S&P, as applicable. “Ratings” means the lowest long-term unenhanced debt rating assigned to the applicable Qualified Obligations by each of Moody’s, Fitch and S&P. “Recipient” means the Bank or any other recipient of any payment to be made by or on account of any obligation of the City hereunder.
“Regulation U” means Regulation U of the FRB, as in effect from time to time. “Reimbursement Obligations” means, collectively, any and all obligations of the City to reimburse the Bank for any drawings under the Letter of Credit and all obligations to repay the Bank for any Liquidity Advance or Term Loan, including in each instance all interest accrued thereon.
“Related Documents” means this Agreement, the Letter of Credit, the Indenture, the Remarketing Agreement, the Custody Agreement, the Fee Letter, the Installment Purchase Agreement, the Bonds and any other documents related to any of the foregoing or executed in connection therewith, and any and all future renewals and extensions or restatements of, or amendments or supplements to, any of the foregoing permitted hereunder and thereunder. “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates. “Remarketing Agent” means Goldman Sachs & Co. LLC.
“Remarketing Agreement” means each Remarketing Agreement, dated as of _____, 2024, between the Remarketing Agent and the City, including any supplement thereto or amendment thereof entered into in accordance with the provisions hereof and thereof. -10-
“Sanction(s)” means any international economic sanction administered or enforced by the United States Government (including, without limitation, OFAC), the United Nations Security Council, the European Union, His Majesty’s Treasury or other relevant sanctions authority. “S&P” means S&P Global Ratings, and any successor rating agency. “State” means the State of California.
“Stated Expiration Date” has the meaning set forth in the Letter of Credit. “Swap Contract” means (a) any and all rate swap transactions, basis swaps, total return swaps, credit derivative transactions, forward rate transactions, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, cap transactions, floor transactions, collar transactions, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement. “System” means the Water System.
“Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, fines, additions to tax or penalties applicable thereto.
“Term Loan” has the meaning set forth in Section 2.03(b) hereof. “Term Loan Commencement Date” has the meaning set forth in Section 2.03(b) hereof. “Term Loan Maturity Date” means, with respect to any Term Loan, the earliest to occur of: (i) the third (3rd) anniversary of the related Term Loan Commencement Date, (ii) the third (3rd) anniversary of the Stated Expiration Date as in effect on the date on which the related Term Loan was made, (iii) the date on which an Alternate Credit Facility becomes effective with respect to the Bonds, and (iv) the date on which the Original Stated Amount is permanently reduced to zero or the Letter of Credit is otherwise terminated prior to the Stated Expiration Date, including as a result of the occurrence of an Event of Default.
“Term Loan Rate” means, for each date of determination with respect to all Term Loans made hereunder, a fluctuating rate per annum equal to the Base Rate plus 1.00%; provided, however that immediately and automatically upon the occurrence of an Event of Default (and -11-
without any notice given with respect thereto) and during the continuance of such Event of Default, the “Term Loan Rate” shall mean the Default Rate.
“Termination Date” has the meaning set forth in the Letter of Credit. “Trustee” means U.S. Bank Trust Company, National Association, its successors and assigns, and any successor trustee appointed under the Indenture. “United States” and “U.S.” means the United States of America. “Water System” shall mean the entire water system of the City and all additions to, and improvements and extensions of, said system later constructed or acquired. “Water System Surplus Revenue Fund” has the meaning set forth in the Installment Purchase Agreement.
“Weekly Rate” has the meaning set forth in the Indenture.
Section 1.02. Other Interpretive Provisions. With reference to this Agreement and each other Related Document, unless otherwise specified herein or in such other Related Document:
(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Related Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof” and “hereunder,” and words of similar import when used in any Related Document, shall be construed to refer to such Related Document in its entirety and not to any particular provision thereof, (iv) all references in a Related Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Related Document in which such references appear, (v) any reference to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such Law and any reference to any Law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
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(b) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.” (c) Section headings herein and in the other Related Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Related Document.
Section 1.03. Accounting Terms. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.
Section 1.04. Rounding. Any financial ratios required to be maintained by the City pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to [one place more] than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
Section 1.05. Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).
ARTICLE II
LETTER OF CREDIT
Section 2.01. Issuance of the Letter of Credit. Upon the terms, subject to the conditions and relying upon the representations and warranties set forth in this Agreement or incorporated herein by reference, the Bank agrees to issue the Letter of Credit (substantially in the form of Appendix I hereto). The Letter of Credit shall be in the original stated amount of $[__________], which is the sum of (i) the principal amount of the Bonds Outstanding on the Closing Date, plus (ii) interest thereon at [__]% for a period of [__] days.
Section 2.02. Letter of Credit Drawings. The Trustee is authorized to make drawings under the Letter of Credit in accordance with the terms thereof. No drawing shall be made under the Letter of Credit for the payment of principal of or interest on Ineligible Bonds. The City hereby directs the Bank to make payments under the Letter of Credit in the manner therein provided. The City hereby irrevocably approves reductions and reinstatements of the Available Amount of the Letter of Credit as provided in the Letter of Credit.
Section 2.03. Reimbursement of Liquidity Drawings under the Letter of Credit; Mandatory Redemption; Interest. (a) If the conditions precedent contained in Section 4.02 hereof are satisfied at the time of payment by the Bank of any Liquidity Drawing, each Liquidity Drawing paid under -13-
the Letter of Credit shall, at the time of drawing, constitute an advance (“Liquidity Advance”) to the City. The City promises to pay to the Bank the portion of each Liquidity Advance representing the interest component of the purchase price of the Bonds (or a pro rata portion thereof in the event of a partial remarketing or purchase of such Bonds on the date specified in (iv) below), including interest thereon, on the earlier of (i) subject to Section 2.03(b) hereof, the second (2nd) Business Day following the date such Liquidity Advance is made, (ii) the Conversion Date, (iii) the date on which the Bonds purchased in connection with such Liquidity Drawing are redeemed pursuant to the Indenture, (iv) the date on which such Bonds, or portions thereof, are remarketed by the Remarketing Agent on behalf of the City or purchased by the City or otherwise sold at the direction of the Bank, (v) the regularly scheduled Interest Payment Date for the Bonds next succeeding the date on which such Liquidity Advance was made and (vi) the date on which the Letter of Credit is replaced by an Alternate Credit Facility in accordance with the terms of Section 2.07 hereof. The City promises to pay to the Bank the portion of each Liquidity Advance representing the principal component of the purchase price of the Bonds (or a pro rata portion thereof in the event of a partial remarketing or purchase of Bonds on the date specified in (iv) below), including interest thereon, on the earlier of (i) subject to Section 2.03(b) hereof, the ninetieth (90th) day following the date such Liquidity Advance is made, (ii) the Conversion Date, (iii) the date on which the Bonds purchased in connection with such Liquidity Drawing are redeemed pursuant to the Indenture, (iv) the date on which such Bonds, or portions thereof, are remarketed or purchased by the City or otherwise sold at the direction of the Bank, or (v) the date on which the Letter of Credit is replaced by an Alternate Credit Facility in accordance with the terms of Section 2.07 hereof. The City promises to pay to the Bank interest on the unpaid principal amount of each Liquidity Advance from the date such Liquidity Advance is made until such Liquidity Advance is paid in full as provided herein, at a rate per annum equal to the Bank Rate from time to time in effect, payable in arrears. Such interest shall be payable monthly on the first Business Day of each calendar month and on the date on which such Liquidity Advance is payable in full as provided herein. Any Liquidity Advance not paid when due shall bear interest at the Default Rate. (b) If on the earlier to occur of the ninety-first (91st) cumulative day that any Liquidity Advance has been outstanding hereunder and the Termination Date of the Letter of Credit (the “Term Loan Commencement Date”) the conditions precedent set forth in Section 4.02 hereof are satisfied, any Liquidity Advance originating or outstanding on the Term Loan Commencement Date shall immediately convert into a term loan (the “Term Loan”). The principal amount of each Term Loan is payable in equal semi-annual installments, on each six (6) month anniversary of the Term Loan Commencement Date; provided that the unpaid principal amount of all outstanding Term Loans shall be payable in full on the related Term Loan Maturity Date. The City promises to pay to the Bank interest on the unpaid principal amount of each Term Loan from the date such Term Loan is made until such Term Loan is paid in full as provided herein, at a rate per annum equal to the Term Loan Rate from time to time in effect, payable in arrears. Such interest shall be payable monthly on the first (1st) Business Day of each calendar month and on the date on which such Term Loan is payable in full as provided herein. Any Term Loan not paid when due shall bear interest at the Default Rate.
(c) Any Liquidity Advance or Term Loan created pursuant to paragraph (a) or (b) above may be prepaid in whole or in part at any time without premium or penalty on any Business Day. -14-
(d) Upon the honoring by the Bank of any Liquidity Drawing under the Letter of Credit, there shall be delivered to the Trustee pursuant to the terms of the Custody Agreement, as agent for the Bank, registered in the name of the Bank, as pledgee, in duly transferable form, all Bank Bonds purchased in connection with the related Liquidity Drawing as collateral security for the Obligations. During such time as the Bonds constitute Bank Bonds, the Bank shall have all of the rights granted to an Owner under the Indenture and such additional rights as may be granted to the Bank hereunder. The obligations of the City to pay each Liquidity Advance and Term Loan may be satisfied by the payments of principal and interest on the Bonds which were delivered in respect of such Liquidity Advance, according to their terms, the terms of the Indenture, and the terms hereof. To the extent the Bank (or the Custodian on behalf of the Bank) actually receives payment in respect of principal of or interest on any Bond held by the Bank, including pursuant to subsection (e) below, the Liquidity Advance or Term Loan, as applicable, made in connection with the purchase of such Bond shall be deemed to have been reduced pro tanto, with the Bank crediting any interest payment on the Bond received by the Bank (or the Custodian on behalf of the Bank) first to the payment of interest on such Liquidity Advance or Term Loan and then to the payment of principal thereof and crediting any principal repayment received to the principal thereof. (e) The principal amount of each Term Loan, together with all accrued and unpaid interest thereon, shall be prepaid in full by the City on the earliest of (i) the occurrence of the Termination Date of the Letter of Credit for any reason other than the occurrence of the Stated Expiration Date, (ii) the Conversion Date, (iii) the date on which such Bonds are to be redeemed pursuant to the Indenture, (iv) the date on which the related Letter of Credit is replaced by a substitute letter of credit in accordance with the terms of Section 2.07 hereof or (v) the related Term Loan Maturity Date, by paying, or causing to be paid, to the Bank in immediately available funds an amount equal to the aggregate unpaid principal of and accrued interest on such Bonds. (f) As security for the Obligations, the City hereby pledges, assigns, hypothecates, transfers and delivers to the Bank all its right, title and interest to, and hereby grants to the Bank a first lien on, and security interest in, all right, title and interest of the City in and to the following (the “Collateral”):
(a) all Bank Bonds which may from time to time have been purchased with proceeds of drawings under the Letter of Credit (the “Bank Bonds”); (b) all income, earnings, profits, interest, premium or other payments in whatever form in respect of the Bank Bonds;
(c) all proceeds (cash and non-cash) arising out of the sale, exchange, collection, enforcement or other disposition of all or any portion of the Bank Bonds; as collateral security for the prompt and complete payment when due of all Obligations. The City covenants that the pledge, assignment and delivery of the Collateral hereunder will create a valid, perfected, first priority security interest in all right, title or interest of the City in or to such Collateral, and the proceeds thereof, subject to no prior Lien. Upon the occurrence of any Event of Default, in addition to the rights and remedies granted to the Bank hereunder, the Bank shall have with regard to the Collateral all rights and remedies of a secured party under the applicable -15-
Uniform Commercial Code. Bank Bonds shall be released from the pledge and security interest created hereunder and the Custody Agreement upon satisfaction of the Obligations with respect to such Bank Bonds, and reinstatement of the Letter of Credit in the amount of any drawing thereunder to satisfy the Obligations.
Section 2.04. Reimbursement of Drawings Other than Liquidity Drawings Creating Liquidity Advances under the Letter of Credit. The City agrees to immediately reimburse (or cause to be immediately reimbursed) the Bank for the full amount of any Liquidity Drawing (but only if the conditions precedent contained in Section 4.02 hereof are not satisfied on the date of payment by the Bank of such Liquidity Drawing) and all other drawings made under the Letter of Credit on the date of payment of each such drawing. If the City does not make such reimbursement on such date, the Reimbursement Obligation of the City shall bear interest at the Default Rate, payable on demand; provided, however, that in no event shall the Default Rate exceed the Maximum Interest Rate.
Section 2.05. Fees. The City hereby agrees to perform the obligations provided for in the Fee Letter, including, without limitation, the payment of any and all fees provided for therein. The terms of the Fee Letter are incorporated by reference herein.
Section 2.06. Method of Payment, Etc. All payments to be made by the City under this Agreement shall be made to the Bank not later than 2:00 p.m. on the date when due and shall be made in lawful money of the United States of America and in immediately available funds.
Section 2.07. Termination of Letter of Credit; Substitute Letter of Credit. Notwithstanding any provisions of this Agreement to the contrary, the City agrees not to terminate this Agreement or the Letter of Credit or permanently reduce the Available Amount, except upon payment of all amounts and fees due and payable hereunder and in accordance with the Fee Letter; provided, however, that any such termination of this Agreement or the Letter of Credit or the permanent reduction of the Available Amount shall be in compliance with the terms and conditions of the Indenture and the Letter of Credit. The City agrees that any termination of the Letter of Credit as a result of the provision of any Alternate Credit Facility will require, as a condition thereto, that the City or the City of any Alternate Credit Facility will provide funds on the date of such termination or provision, which funds will be sufficient to pay in full at the time of termination of such Letter of Credit all Obligations due and owing to the Bank hereunder.
Section 2.08. Computation of Fees and Interest; Default Rate. (a) All computations of fees payable under this Agreement and the Fee Letter shall be made on the basis of a three hundred sixty (360) day year and actual days elapsed. All computations of interest payable under the Agreement shall be computed on the basis of a year of 360 days and actual days elapsed. Interest and fees shall accrue during each period during which interest or fees, as applicable, is computed from and including the first day thereof to but excluding the last day thereof. Each determination by the Bank of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error. All fees payable pursuant to this Agreement and the Fee Letter shall be deemed fully earned when due and non-returnable when paid. -16-
(b) If any amount payable by the City hereunder or under the Fee Letter is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at all times equal to the Default Rate.
Section 2.09. Payment Due on Non-Business Day to Be Made on Next Business Day. If any sum becomes payable pursuant to this Agreement on a day which is not a Business Day, the date for payment thereof shall be extended, without penalty, to the next succeeding Business Day, and such extended time shall be included in the computation of interest and fees.
Section 2.10. Source of Funds. All payments made by the Bank pursuant to the Letter of Credit shall be made from funds of the Bank and not from any other Person.
Section 2.11. Evidence of Debt. The Reimbursement Obligations shall be evidenced by one or more accounts or records maintained by the Bank in the ordinary course of business. The accounts or records maintained by the Bank shall be conclusive absent manifest error of the amount of the Reimbursement Obligations owing by the City and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the City hereunder to pay any amount owing with respect to the Obligations.
Section 2.12. Recapture. If the rate of interest payable hereunder or under the Fee Letter shall exceed the Maximum Interest Rate for any period for which interest is payable, then (i) interest at the Maximum Interest Rate shall be due and payable with respect to such interest period and (ii) interest at the rate equal to the difference between (A) the rate of interest calculated in accordance with the terms hereof and of the Fee Letter (without regard to any limitation otherwise imposed by the Maximum Interest Rate) and (B) the Maximum Interest Rate (the “Excess Interest”), shall be deferred until such date as the rate of interest calculated in accordance with the terms hereof and of the Fee Letter (without regard to any limitation otherwise imposed by the Maximum Interest Rate) ceases to exceed the Maximum Interest Rate, at which time the City shall pay to the Bank, to the extent permitted by law at that time, with respect to amounts then payable to the Bank that are required to accrue interest hereunder and under the Fee Letter, such portion of the deferred Excess Interest as will cause the rate of interest then paid to the Bank to equal the Maximum Interest Rate, which payments of deferred Excess Interest shall continue to apply to such unpaid amounts hereunder and under the Fee Letter until all deferred Excess Interest is fully paid to the Bank. Upon the termination of the Letter of Credit and this Agreement, in consideration for the limitation of the rate of interest otherwise payable hereunder and under the Fee Letter, the City shall pay to the Bank a fee equal to the amount of all deferred Excess Interest.
Section 2.13. Extension of Stated Expiration Date. The Stated Expiration Date may be extended by the Bank, at its option and in its sole discretion, for an additional period acceptable to the Bank, upon the written request of the City received by the Bank no earlier than one hundred and eighty days and no later than ninety (90) days prior to the Stated Expiration Date then in effect.
If the Bank, in its sole discretion, elects to extend the Stated Expiration Date, the Bank shall deliver to the Trustee a Notice of Extension in the form of Exhibit [__] to the Letter of Credit (herein referred to as a “Notice of Extension”) within thirty (30) days following the receipt of such written request designating the date to which the Stated Expiration Date is being extended. Failure to deliver a Notice of Extension by the Bank within such thirty (30) day period shall be deemed to -17-
be a decision by the Bank not to extend the Stated Expiration Date. Subject to the last sentence of this Section, such extension of the Stated Expiration Date shall be effective, immediately upon receipt of such Notice of Extension and thereafter all references in this Agreement to the Stated Expiration Date shall be deemed to be references to the date designated as such in the most recent Notice of Extension delivered to the Trustee. Any date to which the Stated Expiration Date has been extended in accordance with this Section 2.13 may be further extended in like manner.
Section 2.14. Amendments upon Extension. Upon any extension of the Stated Expiration Date pursuant to Section 2.13 hereof, the Bank and the City reserve the right to renegotiate any provision hereof; provided, however, any amendments reflecting such renegotiation shall be subject to the provisions of Section 8.01 hereof.
ARTICLE III
TAXES AND YIELD PROTECTION
Section 3.01. Taxes. If any payments to the Bank under this Agreement are made from outside the United States, the Authority will not deduct any foreign taxes from any payments it makes to the Bank. If any such taxes are imposed on any payments made by the Authority or the City, as applicable, (including payments under this paragraph), the Authority or the City, as applicable, will pay the taxes and will also pay to the Bank, at the time interest is paid, any additional amount which the Bank specifies as necessary to preserve the after-tax yield the Bank would have received if such taxes had not been imposed. As soon as practicable after any payment of taxes by the City or the Authority, as applicable, to a Governmental Authority, as provided in this Section 3.01, the City, will deliver to the Bank the original or a certificate copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return reporting such payment or other evidence of such payment reasonably satisfactory to the Bank. The City or the Authority, as applicable, will confirm that it has paid the taxes by giving the Bank official tax receipts (or notarized copies) within thirty (30) days after the due date.
Section 3.02. Increased Costs.
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, the Bank; (ii) subject any Recipient to any taxes on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on the Bank any other condition, cost or expense affecting this Agreement, the Fee Letter or the Letter of Credit or any participation therein; -18-
and the result of any of the foregoing shall be to increase the cost to the Bank of participating in, issuing or maintaining the Letter of Credit, or to reduce the amount of any sum received or receivable by the Bank hereunder (whether of principal, interest or any other amount) then, upon request of the Bank, the City will pay to the Bank such additional amount or amounts as will compensate the Bank for such additional costs incurred or reduction suffered. (b) Capital Requirements. If the Bank determines that any Change in Law affecting the Bank or the Bank’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on the Bank’s capital or liquidity or on the capital or liquidity of the Bank’s holding company, if any, as a consequence of this Agreement, the Fee Letter or the Letter of Credit issued by the Bank, to a level below that which the Bank or the Bank’s holding company could have achieved but for such Change in Law (taking into consideration the Bank’s policies and the policies of the Bank’s holding company with respect to capital adequacy), then from time to time the City will pay to the Bank such additional amount or amounts as will compensate the Bank or the Bank’s holding company for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of the Bank setting forth the amount or amounts necessary to compensate the Bank or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the City shall be conclusive absent manifest error. The City shall pay the Bank the amount shown as due on any such certificate within sixty (60) after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of the Bank to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of the Bank’s right to demand such compensation; provided that the City shall not be required to compensate the Bank pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that the Bank, notifies the City of the Change in Law giving rise to such increased costs or reductions and of the Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine (9) month period referred to above shall be extended to include the period of retroactive effect thereof).
Section 3.03. Survival. All of the City’s obligations under this Article III shall survive termination of this Agreement, the cancellation of the Letter of Credit and the repayment, satisfaction or discharge of all other Obligations.
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ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Issuance of the Letter of Credit. As conditions precedent to the obligation of the Bank to issue the Letter of Credit:
(a) the City and the Authority shall provide to the Bank on the date of the issuance of the Letter of Credit (the “Closing Date”), in form and substance satisfactory to the Bank and its counsel:
(i) a written opinion of counsel to the City and the Authority, dated the Closing Date, with respect to matters as the Bank may reasonably request; (ii) the written opinions of Norton Rose Fulbright US LLP, bond counsel to the Authority, dated the Closing Date, covering such matters as the Bank may reasonably request;
(iii) a certificate, signed by a duly authorized officer of the City, dated the Closing Date, stating that on the Closing Date:
(1) the representations and warranties of the City contained in Article V hereof are correct on and as of the Closing Date as though made on such date;
(2) no Event of Default has occurred and is continuing, or would result from the issuance of the Letter of Credit or the execution, delivery and performance of this Agreement, and no event has occurred and is continuing which would constitute an Event of Default but for the requirement that notice be given or time elapse or both; and (3) all conditions precedent to the issuance of the Letter of Credit set forth in this Article IV have been satisfied. (iv) a certificate, signed by a duly authorized officer of the Authority, dated the Closing Date, stating that on the Closing Date:
(1) the representations and warranties of the Authority contained in Article V hereof are correct on and as of the Closing Date as though made on such date;
(2) no Event of Default has occurred and is continuing, or would result from the issuance of the Letter of Credit or the execution, delivery and performance of this Agreement, and no event has occurred and is continuing which would constitute an Event of Default but for the requirement that notice be given or time elapse or both; and -20-
(3) all conditions precedent to the issuance of the Letter of Credit set forth in this Article IV have been satisfied. (v) executed originals of this Agreement and certified copies of the other Related Documents executed or adopted prior to the Closing Date; (vi) evidence of due authorization, execution and delivery by the parties thereto of the Related Documents, which Related Documents shall be in form and substance satisfactory to the Bank and its special counsel; (vii) (a) a copy of resolutions of the city council of the City, certified as of the date of the Letter of Credit by a Clerk of the City authorizing, among other things, the execution, delivery and performance by the City of this Agreement and the other Related Documents or amendments thereto to which the City is a party required to be delivered on the Closing Date and authorizing the City to obtain the issuance of the Letter of Credit and (b) a copy of resolutions of the board of the Authority, certified as of the date of the Letter of Credit by the [________]of the Authority authorizing, among other things, the execution, delivery and performance by the Authority of this Agreement and the other Related Documents or amendments thereto to which the Authority is a party required to be delivered on the Closing Date and acknowledging the City’s authorization to obtain the issuance of the Letter of Credit;
(viii) true and correct copies of all Governmental Approvals necessary for the City and the Authority to enter into this Agreement and the transactions contemplated by this Agreement;
(ix) (a) a certificate of an Authorized City Representative certifying the name, title, office and true signatures of the officers of the City authorized to sign this Agreement and (b) a certificate of an Authorized Authority Representative certifying the name, title, office and true signatures of the officers of the Authority authorized to sign this Agreement;
(x) written evidence satisfactory to the Bank that a CUSIP number has been obtained and reserved from Standard & Poor’s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc., for Bank Bonds; (xi) the Bank shall have received satisfactory evidence that Fitch shall have assigned a rating to Bank Bonds of at least [“______”] [______]; (xii) evidence satisfactory to the Bank that the outstanding Bonds have been assigned long-term ratings of “[__]” by S&P and “[__]” by Fitch , respectively; and
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(xiii) a copy of the City’s investment policy, guidelines and permitted investments, each in form and substance satisfactory to the Bank; (xiv) the Bank shall have determined (in its sole discretion) that no material adverse change in the ratings, financial condition, business, assets, liabilities or prospects of the City shall have occurred since June 30, 2023, except as disclosed in writing by the City to the Bank prior to the Closing Date or as disclosed in the offering documents or material adverse event notices, which would be reasonably likely to result in a Material Adverse Effect; (xv) (a) the Bank shall have received copies of the audited financial statements for the City for the fiscal year ended June 30, 2023 and (b) [describe Authority financials to be delivered at closing];
(xvi) such other documents, certificates and opinions as the Bank or its special counsel may reasonably request;
(b) the Bank shall have received from the City the fees payable pursuant to the Fee Letter;
(c) no law, regulation, ruling or other action of the United States, the State or the State of New York or any political subdivision or authority therein or thereof shall be in effect or shall have occurred, the effect of which would be to prevent the Bank from fulfilling their respective obligations under this Agreement; and (d) all legal requirements provided herein incident to the execution, delivery and performance of the Related Documents, and the transactions contemplated thereby, shall be reasonably satisfactory to the Bank and its special counsel.
Section 4.02. Conditions Precedent to Liquidity Advances and Term Loan. Following any payment by the Bank under the Letter of Credit pursuant to a Liquidity Drawing, a Liquidity Advance and the related Term Loan shall be made available to the City only if on the date of payment of such Liquidity Drawing by the Bank or on the Term Loan Commencement Date, as applicable, the following statements shall be true:
(a) the representations and warranties of the City and the Authority contained in Article V of this Agreement and in the other Related Documents are correct in all material respects on and as of the date of such payment as though made on and as of such date; and
(b) no event has occurred and is continuing, or would result from such payment, which constitutes a Default or Event of Default.
Unless the City shall have previously advised the Bank in writing that one or both of the above statements is no longer true, the City shall be deemed to have represented and warranted on the date of such payment that both of the above statements are true and correct. -22-
ARTICLE V
CITY REPRESENTATIONS AND WARRANTIES
The City represents and warrants as of the Closing Date (and such representations and warranties shall also be deemed to be remade at the time of each drawing under the Letter of Credit) to the Bank as follows:
Section 5.01. Organization, Powers, Etc. The City is a municipal corporation duly organized and existing under a Charter duly and regularly adopted pursuant to the provisions of the laws and Constitution of the State of California and possesses all material governmental licenses, authorization, consents and approvals required to operate the System, to carry on its business related thereto as now conducted, to borrow under this Agreement and to cause the Authority to issue the Bonds under the Indenture and in accordance with this Agreement.
Section 5.02. Authorization; No Contravention. Each of the Related Documents, which the City is party to, has been duly adopted and is in full force and effect. The execution, delivery and performance by the City of this Agreement and the other Related Documents are within the City’s powers, have been duly authorized by all necessary action, require no action by or in respect of, or filing with, any governmental body, agency or official (other than action by the City, which has been taken) and do not contravene, or constitute a default under, any provision of applicable law (including, without limitation, the Charter) or regulation or of the administrative code of the City or of any indenture, mortgage, deed of trust, lease, other agreement, judgment, injunction, order, decree or other instrument binding upon the City or the Related Documents or any of its assets or result in the creation or imposition of any Lien on any asset of the City.
Section 5.03. Binding Effect. This Agreement and each of the other Related Document constitute valid and binding agreements of the City and will constitute a valid and binding obligation of the City, enforceable against the City in accordance with their respective terms, except as such enforceability may be limited by the City’s bankruptcy, insolvency, reorganization, moratorium or other laws or equitable principles relating to or limiting creditors’ rights generally and by limitations on remedies available against public agencies such as the City in the State.
Section 5.04. Financial Information. (a) The statement of net position of the City’s Water Utility Fund as of June 30, 2023, and the related statement of revenues, expenses, and changes in net position as well as the statement of cash flows for the fiscal year then ended, reported on by KPMG LLP (or the City’s then independent certified public accountants), a copy of which has been delivered to the Bank, fairly present, in conformity with generally accepted accounting principles applicable to governmental entities in the State consistently applied throughout the period covered thereby, the financial position of the City’s Water Utility Fund as of such date and its results of operations and cash flows for such fiscal year. (b) The unaudited statements of revenues, expenses, and changes in net position of the System for the fiscal quarter ended December 31, 2023, a copy of which has been delivered to the Bank, fairly present, in conformity with generally accepted accounting principles applied on a basis consistent with the financial statements referred to in subsection (a) of this Section, the -23-
results of operations of the System for such three-month period (subject to normal year-end adjustments).
(c) Since June 30, 2023, there has been no material adverse change in the business, financial position, results of operations or prospects of the City as they relate to the System.
Section 5.05. Litigation. Except as previously disclosed in writing by the City directly to the Bank, there is no action, suit or proceeding pending against, or to the knowledge of the City threatened against or affecting, the City, or the Water System, or relating to any Related Document, the Charter, this Agreement or the Bonds before any court or arbitrator or any governmental body, agency or official in which, if adversely determined, could materially adversely affect the business, financial position or results of operations of the City, or the Water System, or which in any manner draws into question the validity or enforceability of this Agreement, the Bonds, the Charter or any other Related Document, or any such action or proceeding affecting the existence of the City, the titles of their respective officers to their respective offices or the Systems, or seeking to prohibit, restrain or enjoin issuance of the Bonds, the ability of any of the City to set rates or pledge revenues, as applicable, for payment of the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, this Agreement or any other Related Document to which the City is a party or contesting the exclusion of interest on the Bonds from gross income for federal income tax purposes, or contesting the powers of the City or any member of the City for the issuance of the Bonds or the execution, delivery and performance of this Agreement and the Related Documents to which the City is a party.
Section 5.06. Employee Benefit Plans, Etc. The City has no funding deficiency with respect to any employee benefit plan and is otherwise in compliance with terms of any such plan in which the City or any of its employees participates. The City is not subject to ERISA and maintains no Plans.
Section 5.07. Security. The Indenture creates, for the benefit of the owners of the Bonds, and the Obligations, the legally valid, binding and irrevocable Lien on and pledge of the Pledged Revenues. There is no lien on the Pledged Revenues other than the lien created by the Indenture.
The Indenture does not permit the issuance or incurrence of any Debt secured by the Pledged Revenues to rank senior to the Bonds and the Obligations. The payment of the Bonds and the Obligations ranks on a parity with the payment of the principal and purchase price of and interest on all Parity Debt and is not subordinate to any payment secured by a lien on the Pledged Revenues or any other claim, and is prior as against all other Persons having claims of any kind in tort, contract or otherwise, whether or not such Persons have notice of such lien. No filing, registration, recording or publication of the Indenture or any other instrument is required to establish the pledge provided for thereunder or to perfect, protect or maintain the Lien created thereby on the Pledged Revenues to secure the Bonds and the Obligations.
Section 5.08. Taxes. The City has timely filed or caused to be filed all tax returns, if any, which are required to be filed, has correctly stated the facts regarding any tax liability of the City on such returns and has paid all taxes, if any, shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees and other charges imposed on it or any of its property by any governmental body, agency or authority (other than -24-
those the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which appropriate reserves in accordance with GAAP have been provided on the books of the City); and no tax liens have been filed and, to the best knowledge of the City, no claims are being actively asserted with respect to any such taxes, fees or other charges (other than those the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which appropriate reserves in accordance with GAAP have been provided on the books of the City).
Section 5.09. Full Disclosure. All information heretofore furnished (including pursuant to any representation or warranty) by the City or its counsel to the Bank for purposes of or in connection with this Agreement or any other Related Document or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by the City to the Bank will be, true and accurate in all material respects on the date as of which such information is stated or certified.
Section 5.10. No Default. The City is not in default in the performance, observance or fulfillment of any of its material obligations, covenants or conditions contained in this Agreement.
The City is not presently in default under any material agreement to which it is a party which could reasonably be expected to have a Material Adverse Effect and no petition by or against the City has at any time been filed under the United States Bankruptcy Code or any similar federal or State statute. No payment default has occurred and is continuing under any Debt related to the System. The City is not in violation of any material term of its Charter or by-laws or any material term of any bond indenture or agreement to which it is a party or by which any of its property or assets is bound.
Section 5.11. Second Lien Qualified Obligations. The City has not issued, incurred, assumed or guaranteed any Debt which is outstanding and is both (i) payable from Net Surplus Revenues in the Second Lien Qualified Obligations Account of the Water System Surplus Revenue Fund, and (ii) senior, as to the priority of payment or security, to the Qualified Obligations.
Section 5.12. No Sovereign Immunity. Under the laws of the State of California, the City, the System, and the Pledged Revenues are not exempt or immune from, whether on the basis of sovereign immunity or any similar legal or equitable principle, doctrine or rule of law and whether now or at any time hereafter arising, (1) jurisdiction, (2) liability, suit or other legal or equitable remedy for the amounts due and payable under the Bonds, this Agreement or any of the other Related Documents or the performance of any of its other obligations hereunder or thereunder, or (3) enforcement of any judgment, order or decree to which the City, the System or the Pledged Revenues may be made subject, except in each case as provided in the Government Claims Act.
Section 5.13. Rate Increases. An increase by the City of rates, fees, rentals or other charges for the use of the product, services and facilities of the Water System requires no action or approval by or in respect of any governmental body, agency or official (other than the City).
Section 5.14. Insurance. With respect to the System, the City currently maintains insurance of such type and in such amounts or in excess of such amounts as are customarily carried -25-
by, and insures against such risks as are customarily insured against by, entities of like type, size and character to the City.
Section 5.15. Pending Legislation and Decisions. There is no amendment, or to the knowledge of the City, proposed amendment to the Constitution of the State or any State law or any administrative interpretation of the Constitution of the State or any State law, or any legislation that has passed either house of the legislature of the State, or any published judicial decision interpreting any of the foregoing, the effect of which will materially adversely affect the issuance of the Bonds, the security for the Bonds or the City’s obligations hereunder or under any of the other Related Documents, the creation, organization, or existence of the City or the titles to office of any officers executing this Agreement or any other Related Documents to which the City is a party or the City’s ability to repay when due its obligations under this Agreement, the Bonds, any obligations hereunder and the other Related Documents.
Section 5.16. Incorporation of Representations and Warranties. The City hereby makes to the Bank the same representations and warranties made by the City in each Related Document to which it is a party, which representations and warranties, together with the related definitions of terms contained therein, are incorporated herein by this reference with the same effect as if each and every such representation and warranty and definition were set forth herein in its entirety. No amendment to or waiver of such representations, warranties or definitions made pursuant to the relevant Related Documents shall be effective to amend such representations and warranties and definitions as incorporated by reference herein without the prior written consent of the Bank.
Section 5.17. Federal Reserve Board Regulations. The City will not use any part of the proceeds of the Bonds or the funds advanced under the Letter of Credit and has not incurred any indebtedness to be reduced, retired or purchased by the City out of such proceeds, for the purpose of purchasing or carrying any Margin Stock or violating Regulation T, U or X of the FRB, and the City does not own and will not acquire any such Margin Stock.
Section 5.18. Environmental Laws. In the ordinary course of its business, the City conducts an ongoing review of the effect of Environmental Laws on the business, operations and properties of the City relating to the System, in the course of which it identifies and evaluates associated liabilities and costs (including, without limitation, any capital or operating expenditures required for clean up or closure of properties presently or previously owned or operated, any capital or operating expenditures required to achieve or maintain compliance with environmental protection standards imposed by law or as a condition of any license, permit or contract, and related constraints on operating activities, and any actual or potential liabilities to third parties, including employees, and any related costs and expenses). The City and its assets and property relating to the Systems (1) has not become subject to any Environmental Liability nor does the City know of any basis for any Environmental Liability (other than the obligation to fund decommissioning costs relating to the City’s interest in the Systems), (2) has not received notice of any Environmental Claim or of any failure or alleged failure to comply with applicable federal, state or local health and safety statutes or regulations, except for notices of Environmental Claims or of failures or alleged failures to comply that, singly or in the aggregate, have not had and cannot have a Material Adverse Effect, and (3) to the best knowledge of the City, is in compliance with all Environmental -26-
Laws and has obtained and maintains or complies with any permit, license or other approval required under any Environmental Law.
Section 5.19. Tax Exempt Status. The City has not taken any action or omitted to take any action, and knows of no action taken or omitted to be taken by any other person or entity, which action, if taken or omitted, would cause interest on the Bonds to be subject to federal income taxes or to personal income taxes levied by the State.
Section 5.20. Compliance with Laws. The City is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the operation of the System and its ownership interest in the System except such noncompliance as would not, in the aggregate, have a Material Adverse Effect.
Section 5.21. Usury. There is no limitation under California law on the rate of interest payable by the City with respect to Bonds held by the Bank or the obligations to the Bank hereunder.
Section 5.22. Related Documents to Constitute a Contract and a Legal Obligation. The provisions of this Agreement and the other Related Documents constitute a contract between the City and the Bank and the Bondowners, as applicable, and a separate legal obligation of City, and, in each case, such provisions are enforceable by mandamus and any other appropriate suit, action or proceedings at law or in equity in any court of competent jurisdiction.
Section 5.23. Anti-Corruption Laws; Anti-Money Laundering Laws and Sanctions. (a) Sanctions Concerns. To the knowledge of the City, neither the City nor any officer or employee thereof, is an individual or entity that is, or is owned or controlled by any individual or entity that is (i) currently the subject or target of any Sanctions, (ii) included on OFAC’s List of Specially Designated Nationals, HMT’s Consolidated List of Financial Sanctions Targets and the Investment Ban List, or any similar list enforced by any other relevant sanctions authority or (iii) located, organized or resident in a Designated Jurisdiction.
(b) Anti-Corruption Laws. To the knowledge of the City, the City has conducted its business in compliance with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010 and other similar anti-corruption legislation in other jurisdictions, and have instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.
Section 5.24. Bank Bonds. The Bonds purchased pursuant to Article Two will be transferred to or held for the benefit of the Bank free and clear of all liens, security interests or claims of any Person other than the Bank, except for consensual liens or other security interests as may be created by the Bank.
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Section 5.25. Paying Agent/Registrar; Remarketing Agent. U.S. Bank Trust Company, National Association (or a successor or assign approved in writing by the Bank, provided that written approval shall not be required in circumstances of succession or assignment due to merger, consolidation or other similar action) is the duly appointed and acting Trustee and [_________________] (or their respective successors or assigns approved in writing by the Bank, provided that written approval shall not be required in circumstances of succession or assignment due to merger, consolidation or other similar action) is the duly appointed and acting Remarketing Agent.
Section 5.26. No Public Vote or Referendum. Except as disclosed in the Official Statement, there is no public vote or referendum pending, proposed or concluded, the results of which could reasonably be expected to result in a Material Adverse Effect.
Section 5.27. No Existing Right to Accelerate. As of the Closing Date, no Person, including, without limitation, any credit facility provider or Bank, either of which provides credit enhancement or liquidity support to any Parity Debt, or any holder of Parity Debt, has a right under any indenture, or supplemental indenture relating to any such Parity Debt or under any other document or agreement relating to any Parity Debt, to direct the trustee to cause a mandatory acceleration of such Parity Debt, or to otherwise declare the principal of and interest on any Parity Debt to be immediately due and payable, prior to its maturity.
ARTICLE VI
AUTHORITY REPRESENTATIONS AND WARRANTIES
The Authority represents and warrants as of the Closing Date (and such representations and warranties shall also be deemed to be remade at the time of each drawing under the Letter of Credit) to the Bank as follows:
Section 6.01. Organization, Powers, Etc. The Authority is a joint powers authority organized and existing under the laws of the State of California and possesses all material governmental licenses, authorization, consents and approvals required to issue the Bonds under the Indenture and in accordance with this Agreement.
Section 6.02. Authorization; No Contravention. Each of the Related Documents, which the Authority is party to, has been duly adopted and is in full force and effect. The execution, delivery and performance by the Authority of this Agreement and the other Related Documents are within the Authority’s powers, have been duly authorized by all necessary action, require no action by or in respect of, or filing with, any governmental body, agency or official (other than action by the Authority, which has been taken) and do not contravene, or constitute a default under, any provision of applicable law (including, without limitation, the [Charter]2) or regulation or of the administrative code of the Authority or of any indenture, mortgage, deed of trust, lease, other 2 To be confirmed.
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agreement, judgment, injunction, order, decree or other instrument binding upon the Authority or the Related Documents or any of its assets.
Section 6.03. Binding Effect. This Agreement and each of the other Related Document constitute valid and binding agreements of the Authority and will constitute a valid and binding obligation of the Authority, enforceable against the Authority in accordance with their respective terms, except as such enforceability may be limited by the Authority’s bankruptcy, insolvency, reorganization, moratorium or other laws or equitable principles relating to or limiting creditors’ rights generally and by limitations on remedies available against public agencies such as the Authority in the State.
Section 6.04. Litigation. Except as previously disclosed in writing by the Authority directly to the Bank, there is no action, suit or proceeding pending against, or to the knowledge of the Authority threatened against or affecting, the Authority, or relating to any Related Document, the Charter, this Agreement or the Bonds before any court or arbitrator or any governmental body, agency or official in which, if adversely determined, which in any manner draws into question the validity or enforceability of this Agreement, the Bonds, the Charter or any other Related Document, or any such action or proceeding affecting the existence of the Authority, the titles of their respective officers to their respective offices, or seeking to prohibit, restrain or enjoin issuance of the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, this Agreement or any other Related Document to which the Authority is a party or contesting the exclusion of interest on the Bonds from gross income for federal income tax purposes, or contesting the powers of the Authority or any member of the Authority for the issuance of the Bonds or the execution, delivery and performance of this Agreement and the Related Documents to which the Authority is a party.
Section 6.05. No Default. The Authority is not in default in the performance, observance or fulfillment of any of its material obligations, covenants or conditions contained in this Agreement.
Section 6.06. No Sovereign Immunity. Under the laws of the State of California, the Authority is not exempt or immune from, whether on the basis of sovereign immunity or any similar legal or equitable principle, doctrine or rule of law and whether now or at any time hereafter arising, (1) jurisdiction, (2) liability, suit or other legal or equitable remedy for the amounts due and payable under the Bonds, this Agreement or any of the other Related Documents or the performance of any of its other obligations hereunder or thereunder, or (3) enforcement of any judgment, order or decree to which the Authority may be made subject, except in each case as provided in the Government Claims Act.
Section 6.07. Anti-Corruption Laws; Anti-Money Laundering Laws and Sanctions. (a) Sanctions Concerns. To the knowledge of the Authority, neither the Authority nor any officer or employee thereof, is an individual or entity that is, or is owned or controlled by any individual or entity that is (i) currently the subject or target of any Sanctions, (ii) included on OFAC’s List of Specially Designated Nationals, HMT’s Consolidated List of Financial Sanctions -29-
Targets and the Investment Ban List, or any similar list enforced by any other relevant sanctions authority or (iii) located, organized or resident in a Designated Jurisdiction. (b) Anti-Corruption Laws. To the knowledge of the Authority, the Authority has conducted its business in compliance with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010 and other similar anti-corruption legislation in other jurisdictions, and have instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.
ARTICLE VII
COVENANTS
The City covenants and agrees with the Bank that it will do the following so long as any amounts may be drawn under the Letter of Credit, and thereafter, so long as any Obligations remain unpaid or unfulfilled under this Agreement, unless the Bank shall otherwise consent in writing:
Section 7.01. Information. The City will deliver to the Bank:
(a) as soon as available and in any event within 180 days after the end of each fiscal year of the City, the statements of net position of the City’s Water Utility Fund as of the end of such fiscal year and the related statements of revenues, expenses, and changes in net position as well as statements of cash flow for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by independent public accountants of nationally recognized standing without qualification as to the scope of the audit performed or any material weakness noted in the City’s system of internal controls;
(b) simultaneously with the delivery of each set of financial statements referred to in clause (a) above, a statement of the firm of independent public accountants which reported on such statements whether anything has come to their attention to cause them to believe that any Default existed on the date of such statements; provided, however, that (i) such statement shall be required only to the extent that such accountants are permitted to deliver such statement under the then-current recommendations of the American Institute of Certified Public Accountants (the “AICPA”) and (ii) such statements may be limited only to those matters permitted under the then-current recommendations of the AICPA;
(c) promptly and in any event within five Business Days after any officer of the City obtains knowledge of any Default, if such Default is then continuing, a certificate of an Authorized Person of the City setting forth the details thereof and the action which the City is taking or proposes to take with respect thereto; (d) as soon as available but in any event within 30 Business Days after approval of the City, copies of the City’s annual budget;
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(e) promptly and in any event within ten Business Days after any officer obtains knowledge of any litigation and any other action, suit, proceeding, inquiry or investigation reasonably related to the System that is commenced or threatened (A) against the City or any Affiliate of the City and that seeks damages in excess of $5,000,000, (B) which seeks injunctive relief, (C) which is asserted or instituted against any Plan, its fiduciaries or its assets for which the City has actual knowledge or against the City in connection with any Plan which could reasonably be expected to have a Material Adverse Effect, (D) which alleges criminal misconduct by the City or any Affiliate of the City or any officer, employee or agent of the City or any Affiliate of the City, or (E) which alleges the violation of any law regarding, or seeks remedies in connection with, any Environmental Liabilities that singly or in the aggregate could reasonably be expected to exceed $10,000,000; (f) Promptly after the occurrence or receipt thereof, as applicable, (A) any criminal investigation or proceeding by a Governmental Authority involving the City, any Affiliate of the City or any officer or managerial employee of the City or any Affiliate of the City in each case that could reasonably be expected to have a Material Adverse Effect on the System; (B) written notice of a communication from any labor union of an intent to strike the City or any of its Affiliates at a future date (in each case that could reasonably be expected to have a Material Adverse Effect on the System) with such notice to include a description of the action or actions that the City or its Affiliates propose to take with respect thereto; and (C) the proposal of a bill or other legislation or the filing of any initiative or referendum which challenges the validity or enforceability of any of the Related Documents or the Charter, or otherwise could annul, amend, modify or replace the Charter or which could lead to a material diminution or reallocation of the Pledged Revenues, Net Surplus Revenues or any portion thereof;
(g) promptly after the adoption thereof, copies of any amendments of or supplements to the Charter of the City and copies of any amendments to the Related Documents; and
(h) from time to time such additional information regarding the financial position or business of the City or the System as the Bank may reasonably request.
Section 7.02. Payment of Obligations; Removal of Liens. (a) The City will (a) pay and discharge, at or before maturity, all its material obligations and liabilities of the System in accordance with the terms thereof, including, without limitation, tax liabilities, except where the same may be contested in good faith by appropriate proceedings, and will maintain, in accordance with GAAP appropriate reserves for the accrual of any of the same and (b) promptly discharge or cause to be discharged all Liens, encumbrances and charges on property and assets of the System, other than, in each case, those diligently contested by the City in good faith. (b) The City shall not fund any repayment of the credit with proceeds, or provide as collateral any property, that to its knowledge is directly or indirectly derived from any transaction or activity that is prohibited by Sanctions, or that to its knowledge could otherwise cause the Bank or any other party to this agreement to be in violation of Sanctions. -31-
Section 7.03. Maintenance of Property. The City will keep all property for the System useful and necessary in its business in good working order and condition, ordinary wear and tear excepted.
Section 7.04. Conduct of Business and Maintenance of Existence. The City will continue to engage in business of the same general type as now conducted by the City with respect to the System, and will preserve, renew and keep in full force and effect its existence and its rights, privileges and franchises necessary or desirable in the normal conduct of business with respect to the System.
Section 7.05. Compliance with Laws. The City will comply in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities (including, without limitation, environmental laws) for the System, except where the necessity of compliance therewith is contested in good faith by appropriate proceedings.
Section 7.06. Inspection of Property, Books and Records. The City will keep proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to the business and activities of the System; and will permit representatives of the Bank to visit and inspect any of its properties, to examine and make abstracts from any of its books and records and to discuss its affairs, finances and accounts with its officers, employees and independent public accountants, all at such reasonable times and as often as may reasonably be desired.
Section 7.07. Use of Proceeds. The proceeds of the Bonds and the Letter of Credit will not be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of buying or carrying any “margin stock” within the meaning of Regulation U.
Section 7.08. Incorporation of Covenants by Reference; No Amendments; Etc. (a)(i) The City agrees that it will perform and observe each and every covenant and agreement required to be performed or observed by it in each of the Related Documents, which provisions, as well as related defined terms contained therein, (1) are hereby incorporated by reference herein with the same effect as if each and every such provision were set forth herein in its entirety, and (2) shall survive and be binding upon the City notwithstanding any termination or expiration thereof. (ii) To the extent that any provision incorporated by reference herein pursuant to paragraph (i) above permits the City or the holders of one or more bonds or other securities issued under the applicable Related Document or one or more holders of a series of bonds or other securities issued under the applicable Related Document or any Person acting on behalf of any such holder or holders to waive compliance with such provision or requires that a document, opinion or other instrument or any event or condition relating to such incorporated provision be acceptable or satisfactory to the City or the holders of one or more bonds or other securities issued under the applicable Related Document or one or more holders of a series of bonds or other securities issued under the applicable Related Document or any Person acting on behalf of any such holder or holders, for purposes of this Agreement, such provision shall be complied with unless it is waived by the Bank and such document, opinion or other instrument shall be acceptable or satisfactory only if it is acceptable or satisfactory to the Bank. No amendment or supplement -32-
to or termination or expiration of such covenants and agreements or defined terms made pursuant to any such Related Document shall be effective to amend, supplement or terminate such covenants and agreements and defined terms as incorporated by reference herein without the consent of the Bank.
(b) Without limiting the generality of the foregoing, the City will not amend, modify, waive or terminate, or consent to any amendment to or modification, waiver or termination of, any provision of any of the Related Documents which would in any respect adversely affect the rights, remedies, security or interests of the Bank under this Agreement or any of the Related Documents without the prior written consent of the Bank.
Section 7.09. ERISA Matters. The City will not adopt, or incur any material obligation or liability under or in respect of, any employee benefit plan, within the meaning of Section 3(3) of ERISA, that is subject to Title I or Title IV of ERISA.
Section 7.10. Further Assurances. The City shall, upon the request of the Bank, from time to time, execute and deliver and, if necessary, file, register and record such further financing statements, amendments, confirmation statements and other documents and instruments and take such further action as may be reasonably necessary to effectuate the provisions of this Agreement and the Related Documents. Except to the extent it is exempt therefrom, the City will pay or cause to be paid all filing, registration and recording fees incident to such filing, registration and recording, and all expenses incident to the preparation, execution and acknowledgment of such instruments of further assurance, and all federal or state fees and other similar fees, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Agreement, the Related Documents and such instruments of further assurance. The City, to the extent permitted by law, at all times shall defend, preserve and protect the pledge of the Pledged Revenues and the Net Surplus Revenues, and other moneys, securities, rights and interests pledged under the Indenture against all claims and demands of all persons whomsoever.
Section 7.11. Related Obligations. The City shall promptly pay all amounts payable by it hereunder and under the Related Documents according to the terms hereof or thereof and shall duly perform each of its obligations under this Agreement and the other Related Documents to which it is a party; which provisions, as well as related defined terms contained therein, are hereby incorporated by reference herein with the same effect as if each and every such provision were set forth herein in its entirety without giving effect to any amendment or supplement of the Related Documents to which the Bank has not given its express written consent.
Section 7.12. Insurance. The City will at all times maintain insurance with respect to its business operations and properties relating to the System against such risks, in such amounts, with such companies and with such deductibles as is customary for business operations and properties of like size, location and character to those of the System.
Section 7.13. Sovereign Immunity. To the fullest extent permitted by applicable law, the City irrevocably agrees that it will not claim any immunity on the grounds of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction or order for specific performance, or (iv) enforcement of any judgment to which it or its revenues might -33-
otherwise be entitled in any proceedings in the courts of any jurisdiction and irrevocably waives, to the fullest extent permitted by applicable law, with respect to itself and its revenues (irrespective of their use or intended use), all such immunity, except to the extent provided in the Governmental Claims Act. To the extent that the City has or hereafter may acquire under any applicable law any right to immunity from setoff or legal proceedings on the grounds of sovereignty or otherwise, the City, to the extent permitted by law, hereby irrevocably waives such rights to immunity for itself and agrees not to invoke any defense of immunity in respect of its obligations arising under or related to this Agreement.
Section 7.14. Proceeds of Bonds. The proceeds of the Bonds and Letter of Credit will be used by the City solely for the purposes described herein, in the Indenture and Installment Purchase Agreement, as applicable.
Section 7.15. Preservation of Lien. The City shall take all necessary action to maintain, perfect and preserve the pledge of, lien on and security interest in the Pledged Revenues securing the Bonds and in the Net Surplus Revenues securing payment of the 2024-A Purchase Payments and the payment and performance of the City’s obligations hereunder.
Section 7.16. Additional Note or Collateral. If at any time the City shall seek to restrain or preclude payment of a Term Loan or any court shall extend the term of this Agreement or take any other action which has a similar effect, then, in each case, the City shall provide the Bank with other collateral of a type and value satisfactory to the Bank as security for the obligations of the City hereunder.
Section 7.17. Parity Creditors and Covenants. In the event that the City has any outstanding, or hereafter shall enter into any to any credit agreement, bond purchase agreement, liquidity agreement or other agreement or instrument (or any amendment, supplement or modification thereto) under which, directly or indirectly, any Person or Persons undertakes to directly purchase or to make or provide credit enhancement or liquidity in support of any Parity Debt or providing for incurrence of or relating to any Parity Debt (each a “Relevant Agreement”), which provides to the related Parity Creditor (a) any preference or priority with respect to the Pledged Revenues or the Net Surplus Revenues or the allocation of the Pledged Revenues or the Net Surplus Revenues as compared to the pledge and allocation to, in favor, or for the benefit, of the Bank, (b) any additional or more restrictive covenants (including without limitation financial covenants) as compared to those made in favor of the Bank as set forth in the Related Documents or this Agreement or (c) different or additional events of default and/or greater rights and remedies (collectively, the “Parity Provisions”), then such Parity Provisions shall automatically be deemed to be incorporated into this Agreement for the duration of this Agreement and the Bank shall have the benefits of such Parity Provisions as if it were specifically set forth in this Agreement. Upon request of the Bank, the City shall promptly enter into an amendment to this Agreement to include the Parity Provision(s) (provided that the Bank shall maintain the benefit of such Parity Provision(s) even if the City fails to provide such amendment). The City agrees to disclose promptly to the Bank each Relevant Agreement including without limitation each standby bond purchase agreement, credit agreement, reimbursement agreement, bond purchase agreement, continuing covenant agreement, or other agreement or instrument (or amendment, supplement or -34-
modification thereto) under which, directly or indirectly any person or persons undertake to make or provide funds to purchase any Parity Debt issued by the City.
Section 7.18. Charges. The City covenants and agrees that it shall take any and all action necessary such that Net Surplus Revenues in each Fiscal Year shall equal an amount at least sufficient to satisfy the respective provisions of Section 5.3 of the Installment Purchase Agreement.
Section 7.19. Investment Policy. The City shall provide the Bank with a copy of any amendment to its Investment Policy following the adoption of any such amendment. In no event shall the City make any investment of funds of either System by (i) increasing or compounding the dollar amount of funds available for investment by obtaining loans or purchasing securities on margin or (ii) materially deviating from the Investment Policy in effect on the Closing Date, without the prior written consent of the Bank.
Section 7.20. Preservation of Existence, Ownership, Etc. The City shall not, with respect to the System, dissolve nor shall it sell, lease, assign, transfer or otherwise dispose of all or substantially all of the System’s assets (including, without limitation, by sale and leaseback).
Section 7.21. Certain Information. The City shall not include in an offering document any information concerning the Bank that is not supplied in writing, or otherwise approved, by the Bank expressly for inclusion therein.
Section 7.22. Consolidation or Merger. The City shall not consolidate with or merge into another Person or permit one or more other Persons to consolidate with or merge into it or acquire all or substantially all of the property and assets of any other Person.
Section 7.23. Accounting Methods and Fiscal Year. With respect to the System, the City will not adopt, permit or consent to any change in accounting practices other than as required by GAAP and will not adopt, permit or consent to any change in its Fiscal Year without six months prior written notice to the Bank.
Section 7.24. Exempt Status. The City shall not take any action or omit to take any action that, if taken or omitted, would adversely affect the excludability of interest on the Bonds from the gross income of the holders thereof for purposes of Federal income taxation under the Code.
Section 7.25. Impairment of Rights. The City shall not take or permit any action, under the Bonds or any other Related Documents or under any Parity Debt otherwise inconsistent with or impairing the rights, remedies, security or interests of the Bank under this Agreement including, without limitation, the obligation of the City to pay any obligations owed to the Bank.
Section 7.26. Investments. The City will not make any investment, nor enter into any agreements for the purpose of effecting any investment, which is not permitted pursuant to the Charter, its organizational documents or the other Related Documents.
Section 7.27. Swap Contracts. The City will not enter into any Swap Contract with respect to any Pledged Revenues or Net Surplus Revenues wherein any termination payments or -35-
settlement amounts are senior to or on parity with the payment of the Bonds or the obligations hereunder, in each case, without the prior written consent of the Bank, which shall not be unreasonably withheld.
Section 7.28. Trustee. The City will not, without the prior written consent of the Bank (which consent shall not be unreasonably withheld) remove, or seek to remove, the Trustee. The City shall at all times maintain a Trustee pursuant to the terms of the Indenture that is acceptable to the Bank.
Section 7.29. Conversions and Redemptions. (a) The City shall provide thirty (30) days written notice to the Bank prior to any Conversion Date. (b) The City shall provide thirty (30) days written notice to the Bank prior to the date of any proposed optional redemption or purchase in lieu of redemption of Bonds pursuant to Section 2.08 of the Indenture.
Section 7.30. Underlying Rating. The City shall at all times maintain a rating on its long-term unenhanced Parity Debt from at least two Rating Agencies. The City covenants and agrees that it shall not at any time withdraw any long-term unenhanced rating on its Parity Debt from any of Fitch, Moody’s or S&P if the effect of such withdrawal would be to cure a Default or an Event of Default under this Agreement. Further, such rating shall not be older than twenty-four (24) months or shall not be considered current based on the Rating Agencies’ definition of current ratings.
Section 7.31. Selection of Bonds for Redemption or Purchase. Permit the redemption (pursuant to the terms of the Indenture) of any and all Bank Bonds prior to selecting, or causing to be selected, for redemption any Bonds that are not Bank Bonds. The City shall not declare, instruct the Paying Agent/Registrar to declare or permit an optional redemption of the Bonds pursuant to the Indenture unless such optional redemption will be funded from sources other than moneys provided by the Bank under this Agreement.
Section 7.32. Remarketing Agent. (a) Will cause the Remarketing Agent to use its best efforts to remarket all Bonds up to the Maximum Interest Rate (as defined in the Indenture) that are tendered for purchase and will not direct the Remarketing Agent to cease its attempts to remarket Bonds tendered for purchase for any reason (including without limitation that any interest rate charged hereunder may be less than the interest rate that would be required to be paid to any potential purchaser of such Bonds in order that the Bonds may be sold at a purchase price equal to the par value thereof plus accrued interest thereon).
(b) If the Remarketing Agent fails to remarket Bonds for thirty (30) consecutive days, the City will replace the Remarketing Agent upon the written direction of the Bank, with a successor Remarketing Agent acceptable to the Bank.
(c) Any remarketing agreement entered into by the City after the Closing Date and in relation to the Bonds shall provide that the remarketing agent will resign only upon providing sixty (60) days prior written notice of the Bank.
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Section 7.33. Bank Bonds. Upon the request of the Bank, cause a Rating Agency or Rating Agencies acceptable to the Bank to issue a rating on the Bank Bonds (and their related CUSIP numbers) of at least investment grade which action shall be at the sole expense of the City.
Section 7.34. Sanctions. The City will not directly or indirectly, knowingly use any proceeds from the issuance of the Bonds, or lend, contribute or otherwise make available such proceeds to any Person, to fund any activities of or business with any Person, or in any Designated Jurisdiction, that, at the time of such funding, is the subject of Sanctions, or in any other manner that will result in a violation by any Person of Sanctions.
Section 7.35. Anti-Corruption Laws. The City will not directly or indirectly, knowingly use any proceeds from the issuance of the Bonds for any purpose which would breach the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010 and other similar anti- corruption legislation in other jurisdictions to which the City and its officers, employees and agents are directly subject.
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01. Events of Default. If one or more of the following events (“Events of Default”) shall have occurred and be continuing, they shall each constitute an Event of Default:
(a) the City shall fail to pay the principal of or interest on any Reimbursement Obligation or Bank Bond when due (whether by scheduled maturity, required prepayment, redemption or otherwise);
(b) the City shall fail to pay any Obligation (other than the obligation to pay the principal of or interest on any Reimbursement Obligation or Bank Bond) when due and such failure shall continue for three (3) Business Days; (c) the City shall fail to observe or perform any covenant contained (or incorporated by reference) in Sections 6.01(c) through (i), 6.02, 6.04, 6.07, 6.08 (after giving effect to any grace period contained therein), 6.09, 6.11 (after giving effect to any grace period contained therein), 6.13, 6.14, 6.15, 6.18, 6.20, 6.21, 6.22, 6.24, 6.25, 6.27,
6.28, Section 6.34, or Section 6.35;
(d) the City shall default in the due performance or observance of any other term, covenant or agreement contained in this Agreement (other than those covered by clause (a) or (b) above) or any other Related Document (other than those covered by clause (b) above) and such default shall remain unremedied for a period of thirty (30) days after the occurrence thereof;
(e) any representation, warranty, certification or statement made by the City (or incorporated by reference) in this Agreement or any Related Document or in any -37-
certificate, financial statement or other document delivered pursuant to this Agreement or any Related Document shall prove to have been incorrect in any material respect when made (or deemed made);
(f) the City shall fail to make any payment in respect of any Material Debt when due or within any applicable grace period; or, as to the System, any event or condition shall occur which results in any Material Debt being immediately due and payable; (g) any event or condition shall occur which enables (or, with the giving of notice or lapse of time or both, would enable) the holder of Material Debt or any Person acting on such holder’s behalf to accelerate or permit the acceleration of the maturity thereof;
(h) the City shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any action to authorize any of the foregoing;
(i) an involuntary case or other proceeding shall be commenced against the City seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the City under the federal bankruptcy laws or applicable state law as now or hereafter in effect;
(j) (i) a judgment or order for the payment of money in excess of $10,000,000 which is payable from the Pledged Revenues or Net Surplus Revenues shall be rendered against the City and such judgment or order shall continue unsatisfied and unstayed for a period of 60 days, or (ii) the City shall have failed to promptly lift any execution, garnishment, or attachment pursuant to a judgment or order which could reasonably be expected to impair the City’s ability to carry on its System related business; (k) (i) any provision of this Agreement or any Related Document related to Installment Purchase Agreement (A) payment of principal of or interest on any Reimbursement Obligation or Bank Bond or (B) the validity or enforceability of the pledge of the Pledged Revenues or Net Surplus Revenues or any other pledge or security interest created by the Indenture or the Installment Purchase Agreement shall at any time for any reason cease to be valid and binding on the City as a result of any legislative or administrative action by a Governmental Authority with competent jurisdiction, or shall be -38-
declared, in a final nonappealable judgment by any court of competent jurisdiction, to be null and void, invalid or unenforceable;
(ii) the validity or enforceability of any material provision of this Agreement or any Related Document as to the System related to (A) payment of principal of or interest on any Reimbursement Obligation or Bank Bond, or (B) the validity or enforceability of the pledge of the Pledged Revenues or Net Surplus Revenues or any other pledge or security interest created by the Indenture or the Installment Purchase Agreement shall be publicly contested by the City; or revenue of this Agreement or any other Related Document, other than a provision described in clause (i) above, shall at any time for any reason cease to be valid and binding on the City, or shall be declared to be null and void as a result of a final non-appealable judgment by a court of competent jurisdiction or by any Governmental Authority having jurisdiction, or the validity or enforceability thereof shall be contested by the City;
(l) there shall occur a termination, winding up, liquidation or dissolution of the City or the consolidation or merger of the City with or into any Person; (m) a moratorium shall have been declared or announced (whether or not in writing) by the City or any Governmental Authority with respect to any Debt of the System; (n) the powers of the City shall be limited in any way or the Related Documents shall be modified or amended in any way without the prior written consent of the Bank, in either case, which prevents the City from fixing, charging or collecting rates and charges for the use and services of the System in an amount sufficient to pay its Debts as they become due;
(o) any of S&P, Fitch or Moody’s (but only to the extent that such Rating Agency is then rating the Bonds) shall have (i) assigned any Debt secured by a lien on Pledged Revenues, or any Debt secured by Net Surplus Revenues on a parity with the 2024-A Purchase Payments, a rating below BBB- (S&P and Fitch) or Baa3 (Moody’s), or (ii) suspended or withdrawn ratings for credit-related reasons of any other Debt secured by a lien on Pledged Revenues, or any Debt secured by Net Surplus Revenues on a parity with the 2024-A Purchase Payments; or
(p) any “event of default” under any Related Document (as defined respectively therein) shall have occurred.
Section 8.02. Remedies. Upon the occurrence and during the continuance of any Event of Default hereunder, the Bank, shall, with notice thereof to the Trustee, exercise any one or more of the following rights and remedies, in addition to any other remedies herein or by law provided:
(a) by notice to the City and the Trustee, declare all Obligations to be, and such amounts shall thereupon become, immediately and automatically due and payable without further presentment, demand, protest or other notice of any kind, all of which are hereby waived by the City and the Trustee, provided that upon the occurrence of an Event of -39-
Default under Section 8.01(g) or 8.01(h) hereof such acceleration shall automatically occur (unless such automatic acceleration is waived by the Bank in writing); (b) give written notice of the occurrence of an Event of Default to the Trustee, directing the Paying Agent/Registrar to cause a mandatory tender of the Bonds, thereby causing the Letter of Credit to expire 15 days thereafter; (c) direct the Trustee to exercise its rights under the Indenture and the Related Documents; and
(d) pursue any other action available at law or in equity; provided, however, that the failure of the Bank to give notice of the exercise of any such right or remedy shall not affect the validity or enforceability thereof.
The City agrees to pay to the Bank, all expenses incurred or paid by the Bank, including reasonable attorneys’ fees and court costs, in connection with any default by the City hereunder or in connection with the enforcement of any of the terms hereof.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Amendments, Etc.. No amendment or waiver of any provision of this Agreement or any other Related Document, and no consent to any departure by the City therefrom, shall be effective unless in writing signed by the Bank and the City, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
Section 9.02. Notices; Effectiveness; Electronic Communications. (a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by fax transmission or e-mail transmission as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, to the address, fax number, e-mail address or telephone number specified for the City or the Bank on Schedule 9.02 hereof. Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by fax transmission shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient).
Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (c). -40-
(b) Electronic Communications. Notices and other communications to the Bank hereunder may be delivered or furnished by electronic communication (including e-mail, FPML messaging and Internet or intranet websites) pursuant to procedures approved by the Bank. The Bank or the City, in its discretion, agrees to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it provided that the approval of such procedures may be limited to particular notices or communications. (c) Unless the Bank otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e- mail or other written acknowledgement), and (ii) notices and other communications posted to an Internet or intranet website shall be deemed received by the intended recipient upon the sender’s receipt of an acknowledgement by the intended recipient (such as by the “return receipt requested” function, as available, return email address or other written acknowledgement) indicating that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii), if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient. (d) Change of Address, Etc. Each of the City and the Bank may change its address, fax number or telephone number or e-mail address for notices and other communications hereunder by notice to the other parties hereto.
(e) Reliance by Bank. The Bank shall be entitled to rely and act upon any notices (including, without limitation, telephonic or electronic notices) purportedly given by or on behalf of the City even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The City shall indemnify the Bank and the Related Parties from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the City. All telephonic notices to and other telephonic communications with the Bank may be recorded by the Bank, and each of the parties hereto hereby consents to such recording.
Section 9.03. No Waiver; Cumulative Remedies. No failure by the Bank to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Related Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under any other Related Document preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Related Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Section 9.04. Expenses; Indemnity. (a) The City shall pay (i) all reasonable out-of-pocket expenses incurred by the Bank and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Bank), in connection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other Related Documents or any -41-
amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Bank in connection with the issuance, amendment, renewal or extension of its Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the Bank (including the fees, charges and disbursements of any counsel for the Bank), and shall pay all fees and time charges for attorneys who may be employees of the Bank, in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Related Documents, including its rights under this Section, or (B) in connection with the Liquidity Advances or Term Loans made or the Letter of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Liquidity Advances or Term Loans or the Letter of Credit. (b) Indemnification by the City. The City shall indemnify the Bank and each Related Party of the Bank (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all reasonable fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the City) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Related Document, the Official Statement or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or the administration of this Agreement and the other Related Documents (including in respect of any matters addressed in Section 3.01), (ii) any Liquidity Advance, Term Loan or the Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Bank to honor a demand for payment under its Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), or (iii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the City, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. (c) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Law, the City shall not assert, and hereby waives, and acknowledges that no other Person shall have, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Related Document, the Official Statement or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Liquidity Advance, Term Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other -42-
information transmission systems in connection with this Agreement or the other Related Documents, the Official Statement or the transactions contemplated hereby or thereby. (d) No Liability of the Bank. The City agrees that the Bank shall have no liability or responsibility for the acts or omissions of the Trustee or the Remarketing Agent in respect of the use of this Agreement or any Drawings funded by the Bank under the Letter of Credit. The Bank shall have no responsibility for, nor incur any liability in respect of, any act, or any failure to act, by the Trustee or the Remarketing Agent which results in the failure of the Trustee to effect a Drawing to or to comply with the applicable provisions of the Indenture or any other Related Document. Neither the Bank nor any of its officers or directors shall be liable or responsible for:
(a) the use which may be made of the Letter of Credit or for any acts or omissions of the Trustee, any agent of the Trustee and any transferee beneficiary in connection therewith; (b) the validity or genuineness of documents, or of any endorsement(s) thereon, even if such documents should in fact prove to be in any or all respects invalid, fraudulent or forged; (c) payment by the Bank against presentation of documents which do not comply with the terms of the Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under the Letter of Credit; except only that the City shall have a claim against the Bank and the Bank shall be liable to the City to the extent of any direct, as distinguished from consequential or punitive (the right to receive consequential or punitive damages being hereby waived), damages suffered by the City when the City proves such were caused by the Bank’s gross negligence or willful failure to make payment under the Letter of Credit in accordance with its terms as determined by a court of competent jurisdiction in a final, non-appealable judgment thereof. In furtherance and not in limitation of the foregoing, the Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary. The Bank is hereby expressly authorized and directed to honor any demand for payment which is made under the Letter of Credit without regard to, and without any duty on its part to inquire into the existence of, any disputes or controversies between or among the City, the Trustee, any transferee beneficiary of the Letter of Credit or any other Person or the respective rights, duties or liabilities of any of them, or whether any facts or occurrences represented in any of the documents presented under the Letter of Credit are true and correct. (e) Payments. All amounts due under this Section shall be payable not later than ten (10) Business Days after demand therefor.
(f) Survival. The agreements in this Section and the indemnity provisions of Section 9.02(e) shall survive the termination of this Agreement, the cancellation of the Letter of Credit and the repayment, satisfaction or discharge of all the other Obligations.
Section 9.05. Obligations Absolute. The payment obligations of the City under this Agreement shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of the Letter of Credit or any of the other Related Documents;
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(ii) any amendment or waiver of or any consent to departure from all or any of the Related Documents (unless consented to in writing by the Bank); (iii) the existence of any claim, set-off, defense (other than the defense of payment) or other right which the City may have at any time against the Trustee or any other beneficiary, or any transferee, of the Letter of Credit (or any persons or entities for whom the Trustee, any such beneficiary or any such transferee may be acting), the Bank, or any other person or entity, whether in connection with this Agreement, the transactions contemplated herein or in the Related Documents, or any unrelated transaction; (iv) any statement or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or
(v) payment by the Bank under the Letter of Credit against presentation of a draft or certificate which does not comply with the terms of the Letter of Credit.
Section 9.06. Payments Set Aside. To the extent that any payment by or on behalf of the City is made to the Bank, or the Bank exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Bank in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.
Section 9.07. Successors and Assigns.
(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the City may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Bank. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of the Bank) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Participations. The Bank may at any time, without the consent of, or notice to, the City, sell participations to any Person (other than a natural person or the City or any of the City’s Affiliates) (each, a “Participant”) in all or a portion of the Bank’s rights and/or obligations under this Agreement; provided that (i) the Bank’s obligations under this Agreement shall remain unchanged, (ii) the Bank shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the City shall continue to deal solely and directly with the Bank in connection with the Bank’s rights and obligations under this Agreement. -44-
Any agreement or instrument pursuant to which the Bank sells such a participation shall provide that the Bank shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that the Bank will not, without the consent of the Participant, agree to any amendment, waiver or other modification that affects such Participant. The City agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.02 and 9.04 to the same extent as if it were the Bank hereunder.
(c) Limitations upon Participant Rights. A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.02 than the Bank would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the City’s prior written consent. (d) Certain Pledges. In addition to the rights of the Bank set forth above, the Bank may at any time pledge or grant a security interest in all or any portion of its rights or interest under this Agreement and the Related Documents to secure obligations of the Bank or an Affiliate of the Bank, including any pledge or assignment to secure obligations to a Federal Reserve Bank or to any state or local governmental entity or with respect to public deposits; provided that no such pledge or assignment shall release the Bank from any of its obligations hereunder or substitute any such pledgee or assignee for the Bank as a party hereto.
Section 9.08. Treatment of Certain Information; Confidentiality (a) Each of the City and the Bank agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates, its auditors and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Related Document or any action or proceeding relating to this Agreement or any other Related Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or participant in, or any prospective assignee of or participant in, any of its rights and obligations under this Agreement or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the City and its obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in connection with rating the City or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) with the consent of the City or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Bank or any of its Affiliates on a nonconfidential basis from a source other than the City. For purposes of this Section, “Information” means all information received from the City relating to the City or any of their respective businesses, other than any such information that is available to the Bank or the Trustee on a nonconfidential basis prior to disclosure by the City, -45-
provided that, in the case of information received from the City after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. In addition, the Bank may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers the Bank in connection with the administration of this Agreement, the other Related Documents and the Letter of Credit. (b) Except as otherwise provided below in this paragraph, the City agrees that it will not issue any press release or similar public disclosure using the name of the Bank or its Affiliates nor will the City make any public disclosure of this Agreement or any part hereof or any statement or description of the content of this Agreement or any part hereof, without the prior written consent of the Bank. The City may, after consultation with the Bank, file (or cause to be filed) with the Municipal Securities Rulemaking Board under its Electronic Municipal Market Access (EMMA) system or otherwise a copy of this Agreement and agreements between the Bank and the City related to this Agreement, in each case redacted in a manner satisfactory to the Bank to prevent disclosure of any signatures, account information, information regarding pricing, or other proprietary or other confidential information regarding the transactions contemplated hereby, or a summary of this Agreement and such related agreements (in each case as so redacted). The City shall be permitted to include in such redacted copies of this Agreement (or summaries thereof) such information as shall be necessary to comply with requirements of applicable law (including federal or state securities laws and the regulations promulgated thereunder) and the requirements of its continuing disclosure agreements to the extent that such disclosure is required to cause the underwriting, issuance, sale or remarketing of bonds or other obligations issued by the City to be in compliance with applicable law. The City may include any such redacted copies of this Agreement and related agreements (or summaries thereof) in any official statement, offering circular or other disclosure document prepared in connection with any issuance of Debt by the City.
Section 9.09. Right of Setoff. If an Event of Default shall have occurred and be continuing, the Bank and its Affiliates are hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by the Bank or any such Affiliate to or for the credit or the account of the City against any and all of the obligations of the City now or hereafter existing under this Agreement or any other Related Document to the Bank or its Affiliates, irrespective of whether or not the Bank or its Affiliates shall have made any demand under this Agreement or any other Related Document and although such obligations of the City may be contingent or unmatured, secured or unsecured, or are owed to a branch, office or Affiliate of the Bank different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness. The rights of the Bank and its Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that the Bank or its Affiliates may have. The Bank agrees to notify the City promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application. -46-
Section 9.10. Counterparts; Integration; Effectiveness. This Agreement and each of the other Related Documents may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Related Documents, and any separate letter agreements with respect to fees payable to the Bank, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Bank and when the Bank shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement or any other Related Document, or any certificate delivered thereunder, by fax transmission or e-mail transmission (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement or such other Related Document or certificate. Without limiting the foregoing, to the extent a manually executed counterpart is not specifically required to be delivered under the terms of any Related Document, upon the request of any party, such fax transmission or e-mail transmission shall be promptly followed by such manually executed counterpart.
Section 9.11. Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Related Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Bank, regardless of any investigation made by the Bank or on its behalf and notwithstanding that the Bank may have had notice or knowledge of any Default at the time of any issuance of the Letter of Credit, or the making of any Liquidity Advance or Term Loan hereunder, and shall continue in full force and effect as long as any Liquidity Advance or Term Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or the Letter of Credit shall remain outstanding.
Section 9.12. Severability. If any provision of this Agreement or the other Related Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Related Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
Section 9.13. Governing Law; Jurisdiction; Etc.
(a) GOVERNING LAW. THIS AGREEMENT AND THE OTHER RELATED DOCUMENTS (EXCEPT,
AS TO ANY OTHER RELATED DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND ANY CLAIMS,
CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE)
BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER RELATED
DOCUMENT (EXCEPT, AS TO ANY OTHER RELATED DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) -47-
AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA. (b) SUBMISSION TO JURISDICTION. THE CITY AND THE AUTHORITY IRREVOCABLY AND
UNCONDITIONALLY AGREE THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING
OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR
OTHERWISE, AGAINST THE BANK OR ANY RELATED PARTY OF THE BANK IN ANY WAY RELATING TO
THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT OR THE TRANSACTIONS RELATING HERETO
OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF CALIFORNIA SITTING IN LOS
ANGELES COUNTY AND OF THE UNITED STATES DISTRICT COURT SITTING IN LOS ANGELES,
CALIFORNIA, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH CALIFORNIA STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES
THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
(c) WAIVER OF VENUE. THE CITY AND THE AUTHORITY EACH IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
Section 9.14. Waiver of Jury Trial. (a) EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND
THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
RELATED DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
(b) If any action or proceeding is filed in a court of the State of California by or against any party hereto in connection with any of the transactions contemplated by this Agreement or any other Related Document, (a) the court shall, and is hereby directed to, make a general reference pursuant to California Code of Civil Procedure Section 638 to a referee (who shall be a single active or retired judge) to hear and determine all of the issues in such action or proceeding (whether of fact or of law) and to report a statement of decision, provided that at the option of any party to -48-
such proceeding, any such issues pertaining to a “provisional remedy” as defined in California Code of Civil Procedure Section 1281.8 shall be heard and determined by the court, and (b) without limiting the generality of Section 9.04, the City shall be solely responsible to pay all fees and expenses of any referee appointed in such action or proceeding.
Section 9.15. No Advisory or Fiduciary Relationship. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Related Document), the City acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (a) (i) the services regarding this Agreement provided by the Bank and any Affiliate thereof are arm’s-length commercial transactions between the City, on the one hand, and the Bank and its Affiliates, on the other hand, (ii) the City has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) the City is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Related Documents; (b) (i) the Bank and its Affiliates each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary pursuant to Section 15B of the Securities Exchange Act of 1934, for the City, or any other Person and (ii) neither the Bank nor any of its Affiliates has any obligation to the City with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Related Documents; and (c) the Bank and its Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the City, and neither the Bank nor any of its Affiliates has any obligation to disclose any of such interests to the City. To the fullest extent permitted by law, the City, hereby waives and releases any claims that it may have against the Bank or any of its Affiliates with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transactions contemplated hereby.
Section 9.16. Electronic Execution of Certain Documents. This Agreement and any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization related to this Agreement (each a “Communication”), including Communications required to be in writing, may, if agreed by the Bank, be in the form of an Electronic Record and may be executed using Electronic Signatures, including, without limitation, facsimile and/or .pdf. The City agrees that any Electronic Signature (including, without limitation, facsimile or .pdf) on or associated with any Communication shall be valid and binding on the City to the same extent as a manual, original signature, and that any Communication entered into by Electronic Signature, will constitute the legal, valid and binding obligation of the City enforceable against the City in accordance with the terms thereof to the same extent as if a manually executed original signature was delivered to the Bank. Any Communication may be executed in as many counterparts as necessary or convenient, including both paper and electronic counterparts, but all such counterparts are one and the same Communication. For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by the Bank of a manually signed paper Communication which has been converted into electronic form (such as scanned into PDF format), or an electronically signed Communication converted into another format, for transmission, delivery and/or retention. The Bank may, at its option, create one or more copies of any Communication in the form of an imaged Electronic Record (“Electronic Copy”), which shall be deemed created in the ordinary course of the Bank’s business, and destroy -49-
the original paper document. All Communications in the form of an Electronic Record, including an Electronic Copy, shall be considered an original for all purposes, and shall have the same legal effect, validity and enforceability as a paper record. Notwithstanding anything contained herein to the contrary, the Bank is under no obligation to accept an Electronic Signature in any form or in any format unless expressly agreed to by the Bank pursuant to procedures approved by it; provided, further, without limiting the foregoing, (a) to the extent the Bank has agreed to accept such Electronic Signature, the Bank shall be entitled to rely on any such Electronic Signature without further verification and (b) upon the request of the Bank any Electronic Signature shall be promptly followed by a manually executed, original counterpart. For purposes hereof, “Electronic Record” and “Electronic Signature” shall have the meanings assigned to them, respectively, by 15 USC §7006, as it may be amended from time to time.
Section 9.17. USA Patriot Act. The Bank hereby notifies the City that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the City, which information includes the name and address of the City and other information that will allow the Bank to identify the City in accordance with the Act. The City agrees to, promptly following a request by the Bank, provide all such other documentation and information reasonably requested by Bank for purposes of compliance with applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the Act.
Section 9.18. Time of the Essence. Time is of the essence of the Related Documents.
Section 9.19. Entire Agreement. THIS AGREEMENT AND THE OTHER RELATED DOCUMENTS
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
Section 9.20. Further Assurances. From time to time upon the request of either party hereto, the other shall promptly and duly execute, acknowledge and deliver any and all such further instruments and documents as the requesting party may in its reasonable discretion deem necessary or desirable to confirm this Agreement, and the other Related Documents, to carry out the purpose and intent hereof and thereof or to enable the requesting party to enforce any of its rights hereunder or thereunder. At any time, and from time to time, upon request by the Bank, the City will, at the City’s expense, correct any defect, error or omission which may be discovered in the form or content of any of the Related Documents. Upon any failure by the City to do so, the Bank or the Trustee may make, execute and record any and all such instruments, certificates and other documents for and in the name of the City, all at the sole expense of the City, and the City hereby appoints the Bank and the Trustee the agent and attorney-in-fact of the City to do so, this appointment being coupled with an interest and being irrevocable. In addition, at any time, and from time to time, upon request by the Bank or the Trustee, the City will, at the City's expense, provide any and all further instruments, certificates and other documents as may, in the opinion of the Bank or the Trustee, be necessary or desirable in order to verify the City’s identity and background in a manner satisfactory to the Bank or the Trustee, as the case may be. -50-
Section 9.21. No Third-Party Rights. Nothing in this Agreement, whether express or implied, shall be construed to give to any Person other than the parties hereto any legal or equitable right, remedy or claim under or in respect of this Agreement, which is intended for the sole and exclusive benefit of the parties hereto.
Section 9.22. US QFC Stay Rules .
(a) Recognition of U.S. Resolution Regimes. In the event that any party that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of this Agreement (and any interest and obligation in or under this Agreement and any property securing this Agreement) from such Covered Entity will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement (and any such interest, obligation and property) were governed by the laws of the United States or a state of the United States. In the event that any party that is a Covered Entity or a BHC Act Affiliate of such party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights against such party with respect to this Agreement are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States. The requirements of this paragraph (a) apply notwithstanding the provisions of paragraph (b). (b) Limitation on the Exercise of Certain Rights Related to Affiliate Insolvency Proceedings. Notwithstanding anything to the contrary in this Agreement or any related agreement, but subject to the requirements of paragraph (a), no party to this Agreement shall be permitted to exercise any Default Right against a party that is a Covered Entity with respect to this Agreement that is related, directly or indirectly, to a BHC Act Affiliate of such Covered Entity becoming subject to Insolvency Proceedings, except to the extent the exercise of such Default Right would be permitted under 12 C.F.R. § 252.84, 12 C.F.R. § 47.5, or 12 C.F.R. § 382.4, as applicable. After a BHC Act Affiliate of a party that is a Covered Entity has become subject to Insolvency Proceedings, any party that seeks to exercise a Default Right against such Covered Entity with respect to this Agreement shall have the burden of proof, by clear and convincing evidence, that the exercise of such Default Right is permitted hereunder. “BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party. “Covered Entity” means any of the following:
(a) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(b) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
(c) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
-51-
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable. “Insolvency Proceeding” means a receivership, insolvency, liquidation, resolution, or similar proceeding.
“U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder. [SIGNATURES BEGIN ON THE FOLLOWING PAGE]
Signature Page to Reimbursement Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the Closing Date.
CITY OF ANAHEIM
By:____________________________________
Its: _________________________________
ANAHEIM HOUSING AND PUBLIC IMPROVEMENTS
AUTHORITY
By:____________________________________
Its: _________________________________
BANK OF AMERICA, N.A.
By:____________________________________
Its: _________________________________
EXHIBIT A
FORM OF COMPLIANCE CERTIFICATE
Financial Statement Date: ___________, ____
To: Bank of America, N.A.,
Ladies and Gentlemen:
Reference is made to that certain Reimbursement Agreement, dated as of ________, ___ (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement”; the terms defined therein being used herein as therein defined), among the City of Anaheim (the “City”) and Bank of America, N.A. (the “Bank”).
The undersigned City Representative hereby certifies as of the date hereof that he/she is the _____________________________ of the City, and that, as such, he/she is authorized to execute and deliver this Certificate to the Bank on the behalf of the City, and that:
[Use following paragraph 1 for fiscal year-end financial statements]
1. Attached hereto as Schedule 1 are the year-end audited financial statements required by Section 6.05(a) of the Agreement for the fiscal year of the City ended as of the above date, together with the report and opinion of an independent certified public accountant required by such section.
[Use following paragraph 1 for fiscal quarter-end financial statements]
1. Attached hereto as Schedule 1 are the quarter-end unaudited financial statements required by Section 6.05(b) of the Agreement for the fiscal year of the City ended as of the above date, which includes the balance sheet as of the end of the quarter and a student of income and expenses.
2. The undersigned has reviewed and is familiar with the terms of the Agreement and has made, or has caused to be made under his/her supervision, a review of the transactions and condition (financial or otherwise) of the City during the accounting period covered by the attached financial statements.
3. A review of the activities of the City during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period the City performed and observed all its Obligations under the Related Documents, and -2-
[select one:]
[to the best knowledge of the undersigned during such fiscal period, the City performed and observed each covenant and condition of the Related Documents applicable to it, and no Default or Event of Default has occurred and is continuing.] --or--
[the following covenants or conditions have not been performed or observed and the following is a list of each such Default or Event of Default and its nature and status:]
4. The representations and warranties of the City contained in Article V of the Agreement are true and correct on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Certificate, the representations and warranties contained in Section 5.06 of the Agreement shall be deemed to refer to the most recent statements furnished pursuant to Section 6.05 of the Agreement, including the statements in connection with which this Certificate is delivered.
Delivery of an executed counterpart of a signature page of this Certificate by fax transmission or other electronic mail transmission (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of _____________, _____.
[CITY]
By:____________________________________
Name: ______________________________
Title: _______________________________
SCHEDULE 9.02
Bank:
Bank of America, N.A.
[Address]
Attention: ____________________
Telephone: ____________________
Facsimile: ____________________
and, with respect to the Letter of Credit:
Bank of America, N.A.
Trade Operations
1000 West Temple Street, 7th Floor
CA4-702-02-25
Los Angeles, California 90012-1514
Attention: [_________]
Telephone (213) 580-8369
Facsimile: (213) 457-8841
City:
[Address]
Attention: ____________________
Telephone: ____________________
Facsimile: ____________________
Trustee:
[Address]
Attention: ____________________
Telephone: ____________________
Facsimile: ____________________
Remarketing Agent:
[Address]
Attention: ____________________
Telephone: ____________________
Facsimile: ____________________
APPENDIX I
IRREVOCABLE TRANSFERABLE LETTER OF CREDIT
BANK OF AMERICA, N.A.
1 FLEET WAY
PA6-580-02-30
SCRANTON, PENNSYLVANIA 18507
_________, 20__
**U.S. $___________
No. ___________
U.S. Bank Trust Company, National Association
as Trustee (the “Trustee”)
______________________
______________________
______________________
Attention: _____________
Ladies and Gentlemen:
We hereby establish in your favor as Trustee under that certain Indenture dated as of _____, 2024 (as amended, supplemented, restated or otherwise modified from time to time, the “Trust Indenture”), between City of Anaheim (the “City”) and the Trustee for the benefit of the holder of the Bonds (as hereinafter defined) our Irrevocable Transferable Letter of Credit No. __________ (as amended, supplemented, restated or otherwise modified from time to time, this “Letter of Credit”) for the account of the City, whereby we hereby irrevocably authorize you to draw on us from time to time, from and after the date hereof to and including the earliest to occur of our close of business on: (i) _________, 2027, (as extended from time to time, the “Stated Expiration Date”), (ii) the earlier of (A) the date which is [five (5)] days following the date on which all of the Bonds bear interest at a rate other than the Weekly Rate or Daily Rate, as such date is specified in a certificate in the form of Annex A hereto (the “Conversion Date”) hereto and (B) the date on which the Bank honors a drawing under the Letter of Credit on or after the Conversion Date, (iii) the date of receipt from you of a certificate in the form set forth as Annex B hereto, (iv) the date on which an [Acceleration Drawing] or a Stated Maturity Drawing is honored by us and (v) the date which is [five (5)] days (or if such day is not a Business Day, on the next succeeding Business Day) following receipt by you of a written notice from us in the form of Annex L hereto, specifying the occurrence of an Event of Default under the Reimbursement Agreement dated as of _________, 2024 (as amended, supplemented, restated or otherwise modified from time to time, the “Reimbursement Agreement”), between the City and Bank of America, N.A. (the “Bank”), directing you to cause a [mandatory [tender][redemption]][acceleration] of the Bonds (the earliest of the foregoing dates herein referred to as the “Termination Date”), a maximum aggregate amount not exceeding -2-
$__________ (the “Original Stated Amount”) to pay the unpaid principal amount of, or a portion of the purchase price corresponding to the principal of, and accrued interest on, the Anaheim Housing and Public Improvements Authority Revenue Bonds, Series 2024-A (Water System Project) (Variable Rate Demand Bonds) (Second Lien Qualified Obligations) (the “Bonds”), in accordance with the terms hereof (said $__________ having been calculated to be equal to (A) $__________, the original aggregate principal amount of the Bonds, plus (B) $__________ which is ___ days’ accrued interest on said principal amount of the Bonds at the rate of ___% per annum (the “Cap Interest Rate”) and assuming a year of 365 days. This credit is available to you against presentation of the following documents (the “Payment Documents”) presented to the Bank:
A certificate (with all blanks appropriately completed) (i) in the form attached as Annex C hereto to pay accrued interest on the Bonds (an “Interest Drawing”), (ii) in the form attached as Annex D hereto to pay the principal amount of and accrued interest on the Bonds in respect of any redemption of the Bonds (a “Redemption Drawing”), (iii) in the form attached as Annex E hereto to pay the purchase price and accrued interest of Bonds tendered for purchase that have not been successfully remarketed or for which the purchase price has not been received by the Trustee (a “Liquidity Drawing”); (iv) [in the form attached as Annex F hereto to pay the principal of and interest on the Bonds the payment of which has been accelerated pursuant to the terms of the Trust Indenture (an “Acceleration Drawing”);] or (v) in the form attached as Annex G hereto to pay the principal of and interest on the Bonds maturing on ____________ (a “Stated Maturity Drawing”), each certificate to state therein that it is given by your duly authorized officer and dated the date such certificate is presented hereunder. No Drawings shall be made under this Letter of Credit for (i) Bonds bearing interest at a rate other than the Weekly Rate or Daily Rate (“Converted Bonds”), (ii) Bonds purchased with the proceeds of a Liquidity Drawing and registered in the name of the Bank or its nominee (the “Purchased Bonds”) or (iii) Bonds owned by or on behalf of the City (“Issuer Bonds” and, together with the Converted Bonds and the Purchased Bonds, collectively referred to herein as the “Ineligible Bonds”).
All drawings shall be made by presentation of each Payment Document at Bank of America, N.A., Scranton, at telecopier number [(800) 755-8743], Attention: Standby Letter of Credit Department, without further need of documentation, including the original of this Letter of Credit, it being understood that each Payment Document so submitted is to be the sole operative instrument of drawing. You shall use your best efforts to give telephonic notice of a drawing to the Bank at [(800) 370-7519 OPT 1] on the Business Day preceding the day of such drawing (but such notice shall not be a condition to drawing hereunder and you shall have no liability for not doing so).
-3-
We agree to honor and pay the amount of any Interest, Redemption, Liquidity Acceleration or Stated Maturity Drawing if presented in compliance with all of the terms of this Letter of Credit.
If any such drawing, other than a Liquidity Drawing, is presented prior to 3:00 P.M., New York time, on a Business Day, payment shall be made, in immediately available funds, by 12:00 P.M., New York time, on the following Business Day. If any such Drawing, other than a Liquidity Drawing, is presented at or after 3:00 P.M., New York time, on a Business Day, payment shall be made, in immediately available funds, by 12:00 P.M., New York time, on the second following Business Day. If a Liquidity Drawing is presented by 11:15 A.M., New York time, on a Business Day, payment shall be made, in immediately available funds, by 3:00 P.M., New York time, on the same Business Day. If a Liquidity Drawing is presented at or after 11:15 A.M., New York time, on any Business Day, payment shall be made, in immediately available funds, by 3:00 P.M., New York time, on the following Business Day. Payments made hereunder shall be made by wire transfer of immediately available funds to [Trustee] [ABA Number ______, Account Number _______, Attention: ___________, re: __________]. [“Business Day” shall mean any day other than (a) a Saturday or Sunday, (b) a day on which banks located in the cities in which the designated office of the Trustee or the Bank (initially, [Los Angeles, California] [Scranton, Pennsylvania]) is located are required or authorized to close, or (c) a day on which the New York Stock Exchange is closed.]
The Available Amount (as hereinafter defined) of this Letter of Credit will be reduced automatically by the amount of any drawing hereunder; provided, however, that the amount of any Interest Drawing hereunder, shall be automatically reinstated effective at [11:00 A.M.], New York time, [five (5)] Business Days from the date such drawing is honored by us unless you receive notice from us in the form of Annex L hereto on the [fourth (4th)] Business Day after the date we honor such drawing; provided that in no event shall such reinstated amount exceed the amount equal to the outstanding principal amount of Bonds at such time plus ___ days’ accrued interest on such principal amount of Bonds at the Cap Interest Rate and assuming a year of [365] days.
After payment by the Bank of a Liquidity Drawing, the obligation of the Bank to honor drawings under this Letter of Credit will be automatically reduced by an amount equal to the amount set forth in the certificate in the form of Annex E relating to such Liquidity Drawing. In addition, in the event of the remarketing of the Bonds (or portions thereof) previously purchased with the proceeds of a Liquidity Drawing, the Bank’s obligation to honor drawings hereunder will be automatically reinstated in the amount indicated in a certificate in the form of Annex K attached hereto concurrently upon receipt by the Bank of such certificate and our receipt of funds. The Available Amount under this Letter of Credit will be reduced automatically upon our receipt of Annex H to the amount stated in paragraph 2 therein.
The “Available Amount” shall mean the Original Stated Amount (i) less the amount of all prior reductions pursuant to Interest Drawings, Redemption Drawings or Liquidity Drawings, (ii) less the amount of any reduction thereof pursuant to a reduction certificate in the form of Annex H hereto, (iii) plus the amount of all reinstatements as above provided.
Prior to the Termination Date, we may extend the Stated Expiration Date from time to time at the request of the [Issuer] [Company] [Corporation] by delivering to you an amendment to this Letter of Credit in the form of Annex J hereto designating the date to which the Stated Expiration Date is being extended, and thereafter all references in this Letter of Credit to the Stated -4-
Expiration Date shall be deemed to be references to the date designated as such in such notice.
Any date to which the Stated Expiration Date has been extended as herein provided may be extended in a like manner.
Upon the Termination Date this Letter of Credit shall automatically terminate.
This Letter of Credit is transferable to any transferee whom has succeeded you as Trustee under the Trust Indenture, and may be successively transferred in its entirety. Transfer of the available balance under this Letter of Credit to such transferee shall be effected by the presentation to us of a Transfer Request in the form of Annex I attached hereto signed by the transferor and acknowledged by the transferee (each a “Transfer”) together with the original Letter of Credit.
Other than the provisions for communication by facsimile copy, communications with respect to this Letter of Credit shall be addressed to us at Bank of America, N.A., 1 Fleet Way, PA6-580-02-30, Scranton, Pennsylvania 18507, Attention: Standby Letter of Credit Department, specifically referring to the number of this Letter of Credit.
To the extent not inconsistent with the express terms hereof, this Letter of Credit shall be governed by, and construed in accordance with, the terms of the International Standby Practices 1998, International Chamber of Commerce-Publication No. 590 (“ISP98”). As to matters not governed by the ISP98, this Letter of Credit shall be governed by and construed in accordance with Article 5 of the Uniform Commercial Code of the State of New York, without regard to conflict of laws.
All payments made by us hereunder shall be made from our funds and not with the funds of any other person.
This Letter of Credit sets forth in full the terms of our undertaking, and such undertaking shall not in any way be modified or amended by reference to any other document whatsoever. -5-
BANK OF AMERICA, N.A.
By:
Name: _____________________________
Title: ______________________________
-6-
ANNEX A
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT
NO. ___________
NOTICE OF CONVERSION DATE
[Date]
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter of Credit No. ___________ dated ___________, 20__ (as amended, the “Letter of Credit”), which has been established by you for the account of the City of Anaheim, in favor of the Trustee.
The undersigned hereby certifies and confirms that on [insert date] (the “Conversion Date”) the interest mode on all the Bonds has been converted to bear interest at a rate other than the Weekly Rate or Daily Rate, and, accordingly, said Letter of Credit shall terminate on __________, 20__, which is [5] days after such Conversion Date in accordance with its terms.
All defined terms used herein which are not otherwise defined herein shall have the same meaning as in the Letter of Credit.
______________________________________
As Trustee
By ___________________________________
[Title of Authorized Officer]
-7-
ANNEX B
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT
NO. ___________
NOTICE OF TERMINATION
[Date]
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter of Credit No. ___________ dated ___________, 20__ (as amended, the “Letter of Credit”), which has been established by you for the account of the City of Anaheim, in favor of the Trustee.
The undersigned hereby certifies and confirms that [(i) no Bonds (as defined in the Letter of Credit) remain Outstanding within the meaning of the Trust Indenture, (ii) all Drawings required to be made under the Trust Indenture and available under the Letter of Credit have been made and honored or (iii) a [Alternate Credit Facility]* (as defined in the Trust Indenture) has been issued to replace the Letter of Credit pursuant to the Trust Indenture] and, accordingly, the Letter of Credit shall be terminated in accordance with its terms.
All defined terms used herein which are not otherwise defined shall have the same meaning as in the Letter of Credit.
_______________________________________
as Trustee
By ___________________________________
[Title of Authorized Officer]
* To use defined term from the Trust Indenture.
-8-
ANNEX C
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT
NO. ___________
INTEREST DRAWING CERTIFICATE
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
The undersigned individual, a duly authorized officer of __________________ (the “Beneficiary”), hereby certifies on behalf of the Beneficiary as follows with respect to (i) that certain Irrevocable Transferable Letter of Credit No. ___________ dated ________, 20__ (as amended, the “Letter of Credit”), issued by Bank of America, N.A. (the “Bank”) in favor of the Beneficiary; (ii) those certain Bonds (as defined in the Letter of Credit); and (iii) that certain Trust Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee (as defined in the Letter of Credit) under the Trust Indenture.
2. The Beneficiary is entitled to make this Drawing in the amount of $_____________ under the Letter of Credit pursuant to the Trust Indenture with respect to the payment of interest due on all Bonds Outstanding on the Interest Payment Date (as defined in the Trust Indenture) occurring on [insert applicable date], other than Ineligible Bonds (as defined in the Letter of Credit).
3. The amount of the drawing is equal to the amount required to be drawn by the Trustee pursuant to Section ___ of the Trust Indenture.
4. The amount of the drawing made by this Certificate was computed in compliance with the terms of the Trust Indenture and, when added to the amount of any other drawing under the Letter of Credit made simultaneously herewith, does not exceed the Available Amount (as defined in the Letter of Credit).
5. Payment by the Bank pursuant to this drawing shall be made to the Trustee in accordance with the instructions set forth in the Letter of Credit. -9-
IN WITNESS WHEREOF, this Certificate has been executed this ____ day of ____________________, 20___.
_______________________________________
as Trustee
By ___________________________________
[Title of Authorized Officer]
-10-
ANNEX D
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT
NO. ___________
REDEMPTION DRAWING
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
The undersigned individual, a duly authorized officer of ____________________ _____________________ (the “Beneficiary”), hereby certifies on behalf of the Beneficiary as follows with respect to (i) that certain Irrevocable Transferable Letter of Credit No. ___________ dated _________, 20__ (as amended, the “Letter of Credit”), issued by Bank of America, N.A. (the “Bank”) in favor of the Beneficiary; (ii) those certain Bonds (as defined in the Letter of Credit); and (iii) that certain Trust Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee (as defined in the Letter of Credit) under the Trust Indenture.
2. The Beneficiary is entitled to make this drawing in the amount of $____________ under the Letter of Credit pursuant to Section __ of the Trust Indenture.
3. (a) The amount of this drawing is equal to (i) the principal amount of Bonds to be redeemed by the City (as defined in the Letter of Credit) pursuant to Section [____(_)] [____(_)]* of the Trust Indenture on [insert applicable date] (the “Redemption Date”) other than Ineligible Bonds (as defined in the Letter of Credit), plus (ii) interest on such Bonds accrued from the immediately preceding Interest Payment Date (as defined in the Trust Indenture) to the Redemption Date, provided that in the event the Redemption Date coincides with an Interest Payment Date this drawing does not include any accrued interest on such Bonds. (b) Of the amount stated in paragraph 2 above:
(i) $______________ is demanded in respect of the principal amount of the Bonds referred to in subparagraph (a) above; and
* Include all redemption sections in the Trust Indenture relating to variable rate bonds. -11-
(ii) [$0.00 is demanded in respect of accrued interest on such date (the Redemption Date coincides with an Interest Payment Date)] [$_____________ is demanded in respect of accrued interest on such Bonds (the Redemption Date is not an Interest Payment Date)].
4. Payment by the Bank pursuant to this drawing shall be made to the Trustee in accordance with the instructions set forth in the Letter of Credit.
5. The amount of the drawing made by this Certificate was computed in compliance with the terms and conditions of the Trust Indenture and, when added to the amount of any other drawing under the Letter of Credit made simultaneously herewith, does not exceed the Available Amount (as defined in the Letter of Credit).
6. Upon payment of the amount drawn hereunder, the Bank is hereby directed to permanently reduce the Available Amount by $[insert amount of reduction] and the Available Amount shall thereupon equal $[insert new Available Amount]. The Available Amount has been reduced by an amount equal to the principal of Bonds paid with this drawing and an amount equal to __ days’ interest thereon at the Cap Interest Rate (as defined in the Letter of Credit).
7. Of the amount of the reduction stated in paragraph 6 above:
(i) $____________ is attributable to the principal amount of Bonds redeemed; and
(ii) $___________ is attributable to interest on such Bonds (i.e., __ days’ interest thereon at the Cap Interest Rate.
8. The amount of the reduction in the Available Amount has been computed in accordance with the provisions of the Letter of Credit.
9. Following the reduction, the Available Amount shall be at least equal to the aggregate principal amount of the Bonds Outstanding (to the extent such Bonds are not Ineligible Bonds (as defined in the Letter of Credit)), plus __ days’ interest thereon at the Cap Interest Rate.
10. In the case of a redemption pursuant to Section ___ of the Trust Indenture, the Trustee, prior to giving notice of redemption to the owners of the Bonds, received written evidence from the Bank that the Bank has consented to such redemption. -12-
IN WITNESS WHEREOF, this Certificate has been executed this ____ day of _______________, ______.
_______________________________________
as Trustee
By ___________________________________
[Title of Authorized Officer]
-13-
ANNEX E
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT
NO. ___________
LIQUIDITY DRAWING CERTIFICATE
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
The undersigned individual, a duly authorized officer of ___________ (the “Beneficiary”) hereby certifies as follows with respect to (i) that certain Irrevocable Transferable Letter of Credit No. ___________ dated _________, 20__ (as amended, the “Letter of Credit”), issued by Bank of America, N.A. (the “Bank”) in favor of the Beneficiary; (ii) those certain Bonds (as defined in the Letter of Credit); and (iii) that certain Trust Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Trust Indenture.
2. The Beneficiary is entitled to make this drawing under the Letter of Credit in the amount of $_____________ with respect to the payment of the purchase price of Bonds tendered for purchase in accordance with Section __ of the Trust Indenture and to be purchased on [insert applicable date] (the “Purchase Date”) which Bonds have not been successfully remarketed as provided in the Trust Indenture or the purchase price of which has not been received by the Trustee by [11:00 A.M.], New York time, on said Purchase Date.
3. (a) The amount of the drawing is equal to (i) the principal amount of Bonds to be purchased pursuant to the Trust Indenture on the Purchase Date other than Ineligible Bonds (as defined in the Letter of Credit), plus (ii) interest on such Bonds accrued from the immediately preceding Interest Payment Date (as defined in the Trust Indenture) (or if none, the date of issuance of the Bonds) to the Purchase Date, provided that in the event the Purchase Date coincides with an Interest Payment Date this drawing does not include any accrued interest on such Bonds. (b) Of the amount stated in paragraph 2 above:
(i) $_________________ is demanded in respect of the principal portion of the purchase price of the Bonds referred to in paragraph 2 above; and -14-
(ii) [$0.00 is demanded in respect of accrued interest on such date (the Purchase Date coincides with an Interest Payment Date)] [$_______________________ is demanded in respect of payment of the interest portion of the purchase price of such Bonds (the Purchase Date is not an Interest Payment Date)]3.
4. The amount of the drawing made by this Certificate was computed in compliance with the terms and conditions of the Trust Indenture and, when added to the amount of any other drawing under the Letter of Credit made simultaneously herewith, does not exceed the Available Amount (as defined in the Letter of Credit).
5. Upon payment of the amount drawn hereunder, the Bank is hereby directed to reduce the Available Amount of the Letter of Credit by $[insert amount of reduction] and the Available Amount shall, after giving effect to such reduction, equal $[insert new Available Amount].
6. Of the amount of such reduction stated in paragraph 5 above:
(i) $___________ is attributable to the principal amount of Bonds tendered; and
(ii) $___________ is attributable to interest on such Bonds (i.e., __ days’ interest at the Cap Interest Rate (as defined in the Letter of Credit)).
7. The Beneficiary will register or cause to be registered in the name of the Bank (or its nominee at the written direction of the Bank), upon payment of the amount drawn hereunder, Bonds in the principal amount of the Bonds being purchased with the amounts drawn hereunder and will deliver such Bonds in accordance with the Trust Indenture.
8. Payment by the Bank pursuant to this drawing shall be made to the Trustee in accordance with the instructions set forth in the Letter of Credit.
IN WITNESS WHEREOF, this Certificate has been executed this _____ day of _____________________, _____.
_______________________________________
as Trustee
By ___________________________________
[Title of Authorized Officer]
3 Delete as appropriate.
-15-
ANNEX F
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT
NO. ___________
ACCELERATION DRAWING CERTIFICATE
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
The undersigned individual, a duly authorized officer of ___________ (the “Beneficiary”), hereby certifies on behalf of the Beneficiary as follows with respect to (i) that certain Irrevocable Transferable Letter of Credit No. __________ dated __________, 20__ (as amended, the “Letter of Credit”), issued by Bank of America, N.A. (the “Bank”) in favor of the Beneficiary; (ii) those certain Bonds (as defined in the Letter of Credit); and (iii) that certain Trust Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Trust Indenture.
2. An Event of Default has occurred under subsection [insert subsection] of Section [___] of the Trust Indenture and the Trustee has declared the principal of and accrued interest on all Bonds then outstanding immediately due and payable. The Beneficiary is entitled to make this drawing in the amount of $_____________ under the Letter of Credit pursuant to Section [___] of the Trust Indenture in order to pay the principal of and interest accrued on the Bonds due to an acceleration thereof in accordance with Section [___] of the Trust Indenture.
3. (a) The amount of this drawing is equal to (i) the principal amount of Bonds outstanding on [insert date of acceleration] (the “Acceleration Date”) other than Ineligible Bonds (as defined in the Letter of Credit), plus (ii) interest on such Bonds accrued from the immediately preceding Interest Payment Date (as defined in the Trust Indenture) to the Acceleration Date. (b) Of the amount stated in paragraph 2 above:
(i) $____________ is demanded in respect of the principal portion of the Bonds referred to in subparagraph (a) above; and
(ii) [$0.00 is demanded in respect of accrued interest on such date (the Acceleration Date coincides with an Interest Payment Date)] -16-
[$__________________ is demanded in respect of accrued interest on such Bonds (the Acceleration Date is not an Interest Payment Date)]4.
4. The amount of this drawing made by this Certificate was computed in compliance with the terms and conditions of the Trust Indenture and, when added to the amount of any drawing under the Letter of Credit made simultaneously herewith, does not exceed the Available Amount (as defined in the Letter of Credit).
5. Payment by the Bank pursuant to this drawing shall be made to the Trustee in accordance with the instructions set forth in the Letter of Credit.
IN WITNESS WHEREOF, this Certificate has been executed this ____ day of ______________________, 20___.
_______________________________________
as Trustee
By ___________________________________
[Title of Authorized Officer]
4 Delete as appropriate.
-17-
ANNEX G
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT
NO. ___________
STATED MATURITY DRAWING CERTIFICATE
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
The undersigned individual, a duly authorized officer of _______________ (the “Beneficiary”), hereby certifies on behalf of the Beneficiary as follows with respect to (i) that certain Irrevocable Transferable Letter of Credit No. ___________ dated _________, 20__ (as amended, the “Letter of Credit”), issued by Bank of America, N.A. (the “Bank”) in favor of the Beneficiary; (ii) those certain Bonds (as defined in the Letter of Credit); and (iii) that certain Trust Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Trust Indenture.
2. The Beneficiary is entitled to make this drawing in the amount of $___________ under the Letter of Credit pursuant to Section __ of the Trust Indenture.
3. (a) The amount of this drawing is equal to the principal of and interest on the Bonds Outstanding on _________, 20__, the maturity date thereof as specified in Section __ of the Trust Indenture, other than Ineligible Bonds (as defined in the Letter of Credit). (b) Of the amount stated in paragraph (2) above:
(i) $_____________ is demanded in respect of the principal portion of the Bonds referred to in subparagraph (2) above; and
(ii) [$0.00 is demanded in respect of accrued interest on such date (the maturity date coincides with an Interest Payment Date)] [$_____________ is -18-
demanded in respect of payment of the interest portion of such Bonds (the maturity date is not an Interest Payment Date)]5.
4. The amount of this Drawing made by this Certificate was computed in compliance with the terms and conditions of the Trust Indenture and, when added to the amount of any other drawing under the Letter of Credit made simultaneously herewith, does not exceed the Available Amount (as defined in the Letter of Credit).
5. Payment by the Bank pursuant to this drawing shall be made to the Trustee in accordance with the instructions set forth in the Letter of Credit.
IN WITNESS WHEREOF, this Certificate has been executed this _____ day of ___________, _______.
_______________________________________
as Trustee
By ___________________________________
[Title of Authorized Officer]
5 Delete as appropriate.
-19-
ANNEX H
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT
NO. ___________
REDUCTION CERTIFICATE
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
The undersigned hereby certifies with respect to (i) that certain Irrevocable Transferable Letter of Credit No. ___________ dated _________, 20__ (as amended, the “Letter of Credit”), issued by Bank of America, N.A. (the “Bank”) in favor of the Beneficiary; (ii) those certain Bonds (as defined in the Letter of Credit); and (iii) that certain Trust Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Trust Indenture.
2. Upon receipt by the Bank of this Certificate, the Available Amount (as defined in the Letter of Credit) shall be reduced by $__________ and the Available Amount shall thereupon equal $______________. $__________________ of the new Available Amount is attributable to interest and $________________ of the new Available Amount is attributable to principal.
3. The amount of the reduction in the Available Amount has been computed in accordance with the provisions of the Letter of Credit.
4. Following the reduction, the Available Amount shall be at least equal to the aggregate principal amount of the Bonds Outstanding (other than Ineligible Bonds (as defined in the Letter of Credit)) plus $________ which is at least __ days’ accrued interest on said principal amount of the Bonds at the Cap Interest Rate (as defined in the Letter of Credit) and assuming a year of [365] days.
-20-
IN WITNESS WHEREOF, this Certificate has been executed this _______ day of ___________________, ____.
_______________________________________
as Trustee
By ___________________________________
[Title of Authorized Officer]
-21-
ANNEX I
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT
NO. ___________
TRANSFER CERTIFICATE
[Date]
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Re: _____________ Irrevocable Transferable Letter of Credit No. ___________ dated _________, 20__
We, the undersigned “Transferor”, hereby irrevocably transfer all of our rights to draw under the above referenced Letter of Credit (as amended, the “Letter of Credit”) in its entirety to:
NAME OF TRANSFEREE
__________________________________________________________ (Print Name and complete address of the Transferee)
“Transferee”
ADDRESS OF TRANSFEREE
__________________________________________________________
__________________________________________________________
CITY/STATE/COUNTRY ZIP
__________________________________________________________ (the “Transferee”) all rights of the Transferor with respect to the above-referenced Letter of Credit, including the right to draw under said Letter of Credit in the amount of the full unutilized balance thereof. Said Transferee has succeeded the Transferor as Trustee under that certain [Trust Indenture] dated as of _________, 20__ (the “Trust Indenture”) between [Name of Issuer] and Transferor with respect to the [Describe Bonds] issued by the City.
By virtue of this transfer, the Transferee shall have the sole rights as beneficiary of said Letter of Credit, including sole rights relating to any past or future amendments thereof, whether increases or extensions or otherwise. All amendments are to be advised directly to the Transferee without necessity of any consent of or notice to the Transferor. -22-
By its signature below, the Transferee acknowledges that it has duly succeeded the Transferor as Trustee under the Trust Indenture, and agrees to be bound by the terms of the Trust Indenture as if it were the original Trustee thereunder.
The Letter of Credit is returned herewith, and we ask you to endorse the transfer on the reverse thereof and to forward it directly to the Transferee with your customary notice of transfer.
Very truly yours,
[Insert Name of Trustee],
as Trustee
By:
[Insert name and title of authorized officer]
SIGNATURE OF THE ABOVE OFFICER,
DULY AUTHORIZED TO ACT ON
BEHALF OF [insert name of
Trustee], AUTHENTICATED BY:
By:
Name:
Title:
Acknowledged by
[insert name of Transferee]
as Transferee and successor Trustee
By:______________________________
Name:
Title:
SIGNATURE OF THE ABOVE OFFICER
DULY AUTHORIZED TO ACT ON BEHALF
OF [insert name of Transferee], AUTHENTICATED BY:
By:___________________________
Name:
Title:
-23-
ANNEX J
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT
NO. ___________
NOTICE OF EXTENSION
______________, ____
[TRUSTEE]
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter of Credit No. ___________ dated _________, 20__ (as amended, the “Letter of Credit”), established by us in your favor as Beneficiary. We hereby notify you that, in accordance with the terms of the Letter of Credit, the Stated Expiration Date (as defined in the Letter of Credit) has been extended to ____________________.
This letter shall be attached to the Letter of Credit and made a part thereof.
BANK OF AMERICA, N.A.
By: ___________________________________
Name: ______________________________
Title: _______________________________
-24-
ANNEX K
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT
NO. ___________
NOTICE OF REMARKETING
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
The undersigned, a duly authorized officer of _________________________ [insert name of Trustee] (the “Trustee”), hereby notifies Bank of America, N.A. (the “Bank”), with reference to that certain Irrevocable Transferable Letter of Credit No. ___________ dated _________, 20__ (as amended, the “Letter of Credit”; terms defined therein and not otherwise defined herein shall have the meanings set forth in the Letter of Credit) issued by the Bank in favor of the Trustee as follows:
1. _________________________ is the Remarketing Agent under the Trust Indenture for the holders of the Bonds.
2. The Trustee has paid the amount of $________________ to the Bank today on behalf of the City, which is a payment made to reimburse the Bank, pursuant to the Reimbursement Agreement, for amounts (or portions thereof) drawn under the Letter of Credit pursuant to a Liquidity Drawing.
3. Of the amount referred to in paragraph 2, $_______________ represents the aggregate principal amount of Purchased Bonds resold or to be resold on behalf of the City.
4. Of the amount referred to in paragraph 2, $____________ represents accrued and unpaid interest on such Purchased Bonds.
-25-
IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of this ______ day of _____________,____.
[INSERT NAME OF TRUSTEE],
as Trustee
By: ___________________________________
Name: ______________________________
Title: _______________________________
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ANNEX L
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT
NO. ___________
NOTICE OF [MANDATORY [TENDER][REDEMPTION]][ACCELERATION] [DATE]
_____________________________, as Trustee
_____________________________
_____________________________
_____________________________
Attention: ___________________
Ladies and Gentlemen:
The undersigned, a duly authorized officer of Bank of America, N.A. (the “Bank”), hereby advises you, with reference to Irrevocable Transferable Letter of Credit No. ____________, dated ___________, 20__ (as amended, the “Letter of Credit”; any capitalized term used herein and not defined shall have its respective meaning as set forth in the Letter of Credit) issued by the Bank in your favor, that:
[Insert one of the following paragraphs as appropriate] [An “Event of Default” has occurred under the Reimbursement Agreement and the Bank has elected to direct the Trustee to cause a [mandatory [tender][redemption]][acceleration] of the Bonds pursuant to the Trust Indenture, whereby the Letter of Credit will terminate _________ (__) days following the receipt by the Trustee of this Notice of ___________ [insert date that is 5 days from beneficiary’s receipt of this notice or, if such day is not a Business Day, the next succeeding Business Day].] [An “Event of Default” has occurred under the Reimbursement Agreement and, as a result thereof, the amount of the Interest Drawing will not be reinstated and the Bank has elected to direct the Trustee to cause a [mandatory [tender][redemption]][acceleration] of the Bonds pursuant to the Trust Indenture, whereby the Letter of Credit will terminate __________ (__) days following the receipt by the Trustee of this Notice of [___________ [insert date that is 5 days from beneficiary’s receipt of this notice or, if such day is not a Business Day, the next succeeding Business Day].]
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BANK OF AMERICA, N.A.
By: ___________________________________
Name: ______________________________
Title: _______________________________
APPENDIX II
FORM OF
CUSTODY AGREEMENT
THIS CUSTODY AGREEMENT (this “Agreement”), dated as of [_________], 2024, is made between BANK OF AMERICA, N.A. (the “Bank”), and [______________], as bond trustee (the “Custody Agent”).
(1) City of Anaheim (the “City”) and the Bank are parties to the Reimbursement Agreement dated as of [__________], 2024 (as amended, modified, restated or supplemented from time to time, the “Reimbursement Agreement”).
(2) Pursuant to the terms and conditions set forth in the Reimbursement Agreement, the Bank has agreed to issue its irrevocable direct pay Letter of Credit (as defined in the Reimbursement Agreement), for the account of the City relating to the [____________] (the “Bonds”) executed and delivered under the [Trust Indenture], dated as of [_________], 2024 (the “Indenture”), between the City and [___________] (the “Bond Trustee”) (all other terms used herein which are defined in the Reimbursement Agreement and not defined herein shall have the same meanings assigned to them in the Reimbursement Agreement, unless the context otherwise requires).
(3) Pursuant to the terms and conditions set forth in the Reimbursement Agreement, in the event that the Letter of Credit is drawn upon to pay the purchase price of Bonds tendered in accordance with the Indenture, such Bonds will be delivered to, owned by and registered in the name of the Bank (the “Bank Bonds”), until such time as the Bank Bonds are remarketed or cancelled and the Bank is reimbursed for all amounts due under the Reimbursement Agreement; and
(4) The Bank hereby wishes to appoint the Custody Agent as its agent to take possession of and hold the Bank Bonds on behalf of and for the benefit of the Bank, on the terms and under the conditions set forth in this Custodian Agreement, and the Custody Agent is willing to do so; NOW, THEREFORE, in consideration of the mutual covenants recited herein, and for other good and valuable consideration, the receipt of which is hereby acknowledged, it is hereby agreed as follows:
1. So long as the Bonds are issued in book-entry form and held by the Bond Trustee as custodian of DTC as part of DTC’s fast automated transfer program (“FAST Eligible Bonds”), concurrently with the Bond Trustee’s receipt of the purchase price for each purchase of Bonds by the Bank under the Letter of Credit, the Bond Trustee, as a participant of DTC (or any other successor securities depository) or an eligible transfer agent, shall make a direct registration electronic book-entry (A) crediting the DTC account designated by such Bank as its account in which to hold Bank Bonds purchased by it (each, the “Bank Book-Entry Account”) by the principal amount of the Bonds purchased under the Letter of Credit by the Bank using the Bank Bond CUSIP number for such Bonds set forth below; and (B) debiting the book-entry account of DTC for the -2-
Bonds (thereby reducing the principal balance of the global certificate representing the Bonds) (the “DTC Book-Entry Account”) by the principal amount of the Bonds purchased under the Letter of Credit by the Bank. The CUSIP number for Bonds that are Bank Bonds is [______]. So long as the Bonds are FAST Eligible Bonds, upon a remarketing of Bank Bonds in accordance with the terms of the Reimbursement Agreement and the Bond Trustee’s receipt from the Remarketing Agent and/or the Obligated Group Agent of the remarketing proceeds thereof, the Bond Trustee, as a participant of DTC (or any other successor securities depository) or an eligible transfer agent, shall make a direct registration electronic book-entry in its records (A) debiting the Bank Book- Entry Account of the Bank by the principal amount of the Bonds so remarketed; and (B) crediting the DTC Book-Entry Account for such Bonds (thereby increasing the principal balance of the global certificate representing such Bonds) by the principal amount of the Bonds so remarketed.
The Bond Trustee acknowledges that it is familiar with the procedures and requirements set forth in a notice from The Depository Trust Company, dated June 16, 2020, respecting “Variable Rate Demand Obligation (“VRDO”) Failed Remarketings and the Issuance of Bank Bonds”, and agrees that, with respect to any and all Bank Bonds, it will follow the procedures and requirements set forth in such notice, as the same may be amended from time to time. To the extent that, following any amendment of such notice, the procedures and requirements therein should become inconsistent with any aspect of the provisions in the preceding clause (i), the Bond Trustee, the Obligated Group Agent and the Bank shall promptly negotiate in good faith and agree upon amendments of the preceding clause (i) so as to eliminate such inconsistency.
2. If the Bonds are no longer FAST Eligible Bonds, concurrently with the receipt of the purchase price for each purchase of Bonds by the Bank under the Letter of Credit, the Bond Trustee shall cause each Bank Bond to be registered in the name of the Bank and shall be held by the Bond Trustee as the agent, bailee and custodian (in such capacity, the “Custody Agent”) of the Bank for the exclusive benefit of the Bank. The Custody Agent acknowledges and agrees that it is acting and will act with respect to Bank Bonds at the direction of the Bank for the exclusive benefit of the Bank and is not and shall not at any time be subject in any manner or to any extent to the direction or control of the Obligated Group Agent or any other Person with respect to the Bonds.
The Custody Agent agrees to act in strict accordance with the Reimbursement Agreement and this Agreement and in accordance with any lawful written instructions delivered to the Custody Agent from time to time pursuant hereto by the Bank. Under no circumstances shall the Custody Agent deliver possession of the Bonds to, or cause Bonds to be registered in the name of, the Obligated Group Agent, the Remarketing Agent or any Person other than the Bank except in accordance with the express terms of this Agreement or otherwise upon the written instructions of the Bank. If, while the Reimbursement Agreement is in effect, the Custody Agent shall become entitled to receive or shall receive any payment in respect of any Bank Bonds held for the Bank, the Custody Agent agrees to accept the same as the Bank’s agent and to hold the same in trust on behalf of the Bank and to deliver the same forthwith to the Bank’s Payment Account. Upon the remarketing of any Bank Bonds and the Bond Trustee’s receipt from the Remarketing Agent and/or the Obligated Group Agent of the remarketing proceeds thereof, the Custody Agent shall release Bank Bonds in a principal amount equal to the principal amount so remarketed to the Remarketing Agent for such Bonds or the Obligated Group Agent, as the case may be, in accordance with the terms of the Bond Indenture. The Custody Agent may rely and shall be protected in acting upon any document believed by it to be genuine and to have been signed or presented by the proper party or parties.
The Custody Agent shall not be liable for any error in judgment made in good faith by its -3-
responsible officers, employees and agents unless the Custody Agent, its responsible officers, employees or agents were negligent or engaged in willful misconduct. Anything herein to the contrary notwithstanding, the Custody Agent shall have no liability hereunder for any act or omission except as shall result from its gross negligence or willful misconduct. Except as provided above, without the prior written consent of the Bank for whom the Custody Agent is holding Bank Bonds, the Custody Agent agrees that it will not sell, assign, transfer, exchange or otherwise dispose of, or grant any option with respect to, Bank Bonds, and will not create, incur or permit to exist any pledge, lien, mortgage, hypothecation, security interest, charge, option or any other encumbrance or take any other action with respect to the Bank Bonds, or any interest therein, or any proceeds thereof. The Custody Agent shall deliver to the Bank for whom the Custody Agent is holding Bank Bonds at the Bank’s request such information as may be in the possession of the Custody Agent with respect to such Bank Bonds. If the Custody Agent is holding Bank Bonds, the Custody Agent, at its own expense, shall maintain and keep in full force and effect: fidelity insurance; theft of documents insurance; forgery insurance; and errors and omissions insurance (which may be maintained by self-insurance). All such insurance shall be in amounts, with standard coverage and subject to deductibles that are customary for insurance typically maintained by a bank or other financial institution acting as custodian.
3. This Agreement cannot be amended or modified except in a writing signed by the Custody Agent and the Bank.
4. This Agreement shall inure to the benefit of and shall be binding upon the Custody Agent and the Bank, and their respective successors and assigns.
5. Beyond its duties as to the custody of the Bank Bonds expressly provided herein, the Custody Agent shall not have any duty to the Bank as to any Bank Bonds in the Custody Agent’s possession or control, or in the possession or control of any of the Custody Agent’s agents or nominees, or as to any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. In performing its duties under this Agreement, the Custody Agent shall not be liable to the Bank except for gross negligence or willful misconduct in the performance of its obligations hereunder.
6. The Bank shall indemnify and hold harmless the Custody Agent against any and all liability arising out of the Custody Agent’s performance of its obligations hereunder, except due to negligence or misconduct of the Custody Agent.
7. The Custody Agent agrees to maintain the Agreement without charge to the Bank, so long as it acts as Bond Trustee with respect to the Bonds.
8. This Custodian Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.
9. It shall not be necessary that all parties execute and deliver the same counterpart of this Agreement. This Agreement shall therefore become effective when each party has executed a counterpart hereof and delivered the same to the other parties. All such counterparts, collectively, shall be deemed a single agreement.
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10. The Bank acknowledges that the Custody Agent is acting as Bond Trustee under the Bond Indenture for the holders of the Bonds. The Bank agrees that nothing contained in this Custodian Agreement shall be construed to require the Custody Agent to do any act or omit to do any act contrary to the duties of the Bond Trustee under the Bond Indenture for the holders of the Bonds.
11. The Custody Agent shall be afforded the same rights and protections hereunder as accorded to it in its role as Bond Trustee under the Bond Indenture for the holders of the Bonds. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW] -5-
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands by their authorized representatives, all as of the date above first written.
THE BANK
BANK OF AMERICA, N.A.
By: ___________________________________
Name: _____________________________
Title: ______________________________
THE CUSTODY AGENT
[NAME OF CUSTODY AGENT]
By: ___________________________________
Name: _____________________________
Title: ______________________________