Services of the San Francisco Public Utilities Commission 1 Approve Two Replacement Credit Facility Agreements for Interim Funding of Wastewater Enterprise Capital Program May 24, 2022
Charles Perl, Deputy Chief Financial Officer
2 Agenda
• Overview of Wastewater Interim Funding Program
• D
iscuss Replacement Agreement for WWE Series A-4, with TD Bank, NA for $75M
• Discuss Replacement Agreement for WWE Series A-7, with Sumitomo Mitsui Bank for $100M
3 Wastewater Interim Funding
Program Overview
• $750M authorized, five series ($675M) for Commercial Paper (CP
); one series ($75M) for Revolving Credit Line
1) Series A-1: $150M Sumitomo Mitsui Bank LOC
2) Series A-2: $150M Bank of America Letter of Credit LOC 3) Series A-4: $75M Toronto-Dominion Bank LF
4) Series A-6: $200M State Street Bank LF
5) Series A-7: $100M Sumitomo Mitsui Bank LOC
6) Series R-1: $75M US Bank Revolving Credit Agreement
• Series A-4 and Series A-7 expire July 8 and June 2, respectively • Transaction included in FY 2021-22 Capital Financing Plan 4 Series A-4 Replacement Agreement
• Competitive procurement – s ent to 18 banks, 7 responses • TD Bank, $75M Liquidity Facility
o lowest cost, responsive proposal
o 5-year term
o Annual fee 0.21%, $171,481
o Option to extend up to five additional years; maximum annual fee $250,000
o Strong short-term ratings: P-1/Moody’s & A-1+/S&P
o Lower fee
o Funded via Wastewater Enterprise capital budget
5 Series A-7 Replacement Agreement
• Same competitive procurement – s ent to 18 banks, 7
responses
• Sumitomo Mitsui Banking Corporation, $100M Letter of
Credit
o lowest cost, responsive proposal
o 5-year term
o Annual fee 0.30%, $326,631
o Option to extend up to five additional years; maximum annual fee $330,000
o Short-term ratings: P-1/Moody’s & A-1/S&P
o Lower fee
o Funded via Wastewater Enterprise capital budget
6 Approve Forms of Agreements
• Agreements include several documents being approved today as t
o form:
• TD Bank Revolving Credit and Term Loan Agreement
• TD Bank Fee Letter
• Sumitomo First Amendment to Reimbursement Agreement
• Sumitomo Fee Agreement
• Revised Offering Memorandum
7 Services of the San Francisco Public Utilities Commission Questions?
AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
APPROVAL:
COMMISSION
SECRETARY
DEPARTMENT
Financial Services
AGENDA NO.
16 MEETING DATE
May 24, 2022
Approve Two Replacement Credit Facility Agreements for Interim Funding of Wastewater Enterprise Capital Program: Regular Calendar
Project Manager: Charles Perl
Approve Two Credit Facility Agreements for the Interim Funding Program of the Wastewater Enterprise
Summary of
Proposed
Commission Action
Approve two credit facility agreements for the Interim Funding Program of the Wastewater Enterprise in the form of ( 1) Revolving Credit and Term Loan Agreement and Fee Agreement with TD Bank NA for a term of five years; and ( 2) First Amendment to Reimbursement Agreement and Letter of Credit and First Amended and Restated Fee Letter with Sumitomo Mitsui Banking Corporation (SMBC) each for a term of five years ; and authorize the General Manager to enter into these associated agreements.
Background,
Description of Scope
of Services, and
Agreement Terms:
Background:
On June 6, 2019, by Resolution No. 19- 0128, this Commission approved a Reimbursement Agreement dated July 1 , 2019, with the Toronto-Dominion Bank, in the not-to exceed principal amount of $75 million, with a term of three years; and on April 25, 2017 , by Resolution No. 17-0086, this Commission approved a Reimbursement Agreement, dated as of June 1, 2017, with Sumitomo Mitsui Banking Corporation, in the not -to-exceed principal amount of $100 million and with an initial term of five years. These two agreements are expiring and now require replacement.
The purpose of this requested action is to approve two replacement agreements: (1) the Revolving Credit and Term Loan Agreement supporting Series A-4; and (2) the First Amendment to the Sumitomo Mitsui Reimbursement Agreement supporting Series A -7 for the Interim Funding of the Wastewater Enterprise Capital Program each for a term of five years.
Execute Agreement: Approve Two Replacement Credit Facility Agreements for Interim Funding of Wastewater Enterprise Capital Program
Commission Meeting Date: May 24, 2022
2 The Wastewater Interim Funding Program, authorized by the Commission and Board of Supervisors in the total amount of $750 million, is made up of two components: (1) five series totaling $675 million that are for the issuance of commercial paper , each supported by a high- grade bank credit facility in the form of a letter of credit (“LOC”) or liquidity facility (“LF”); and (2) one series for $75 million as a direct bank loan that can be used to make draws from a high- grade bank pursuant to a revolving credit agreement (“Revolver”).
Currently, the seven series of the Wastewater Interim Funding Program are as follows:
1) Series A-1: $150M Sumitomo Mitsui LOC (Exp. 3/7/2024) 2) Series A -2: $150M Bank of America LOC (Exp.
04/24/2023)
3) Series A -4: $75M Toronto- Dominion Bank LF (Exp.
07/08/2022)
4) Series A -6: $200M State Street Bank LF (Exp.
10/14/2023)
5) Series A-7: $100M Sumitomo Mitsui LOC (Exp. 6/2/2022) 6) Series R-1: $75M US Bank Revolver (Exp. 7/19/2024)
The proposed TD Bank agreement will replace the existing Toronto- Dominion Bank Agreement expiring on July 6, 2022 , and the proposed First Amendment to the Sumitomo Mitsui Reimburs ement Agreement, will extend the existing a greement expiring on June 2, 2022.
The SFPUC currently provides most of the interim funding of the Wastewater Enterprise capital program through the issuance , from time to time, of commercial paper (CP). In today’s market, CP results in an approximate all -in borrowing rate of less than 2% . CP is determined to be the most cost -effective means to fund the encumbrance, contract certification , and cash spending requirements of the Wa stewater Enterprise capital program, including the SSIP, until long- term revenue bond or long- term State and federal loan financing takes place.
Credit Facility Procurement Process:
To renew or replace these expiring agreements, SFPUC issued a Request for Proposals (RFP) on March 7, 2022 and sent the RFP to 18 banks from a pre-qualified Bank Credit Facilities Pool. On March 16, 2022, SFPUC received proposals from seven banks.
Execute Agreement: Approve Two Replacement Credit Facility Agreements for Interim Funding of Wastewater Enterprise Capital Program
Commission Meeting Date: May 24, 2022
3 Recommended Credit Facility and Terms:
Staff recommends as the lowest cost, responsive and responsible proposals, the following:
1) Wastewater Series A -4: Liquidity Facility (LF) with TD Bank NA in the principal amount of $75 million at an
annual cost of 0.21% ($171,481), for five years with the option to extend the LF for up to five years, for a total term of up to ten years and a proposed not -to-
exceed fee of
$250,000 per year.
2) Wastewater Series A -7: Letter of Credit (LOC) with
Sumitomo Mitsui Banking Corporation in the principal
amount of $100 million at an annual cost of 0.30%
($326,631), for five years with the option to extend the credit facility for five years for a total term of up to ten years and a proposed fee of $330,000 per year.
These fees are included in the Wastewater Enterprise capital budget and are comparable to fees recently obtained from banks for other recent SFPUC agreements and are lower than the fees on the existing agreements.
TD Bank NA and Sumitomo Mitsui Banking Corporation have high- grade short-term credit ratings of P -1 (Moody’s) and A -1+ (Standard & Poor’s); and P -1 (Moody’s) and A -
1 (Standard & Poor’s),
respectively.
Description of Scope of Services:
The w ork under the agreement with TD Bank NA consists of providing a credit facility for the Wastewater Interim Funding Program in the form of a Revolving Credit and Term Loan Agreement (commonly referred to as a Liquidity Facility) to provide security to CP noteholders of the timely re
payment of principal and interest on
any issued Commercial Paper should the SFPUC be unable to do so.
The amended agreement with Sumitomo Mitsui Banking Corporation consists of providing a credit facility (Letter of C redit) for the Wastewater Interim Fu nding Program in the form of a First Amendment to the Reimbursement Agreement to provide security to CP noteholders of the timely re payment of principal and interest on any issued CP should the SFPUC be unable to do so.
Summary of
Documents
The followin g are brief summaries of each document that the Commission is being asked to approve in form:
Execute Agreement: Approve Two Replacement Credit Facility Agreements for Interim Funding of Wastewater Enterprise Capital Program
Commission Meeting Date: May 24, 2022
4 Revolving Credit and Term Loan Agreement:
This agreement, between the SFPUC and TD Bank NA, sets forth the terms pursuant to which the bank guarantees timely pay
ment of the
CP to the Issuing and Paying Agent, should the SFPUC be unable to do so. The Agreement also sets forth the terms under which the SFPUC repays TD Bank for draws on the LF.
TD Bank Fee Letter:
The Fee Letter, by and between the SFPUC and TD Bank, sets out the annual facility fee paid by the SFPUC to the bank including fees in the event of Wastewater Enterprise credit rating downgrades, and any bank charges in connection with draws upon the LF.
First Amendment to Reimbursement Agreement:
This agreement between the SFPUC and Sumitomo Mitsui Banking Corporation, which amends the original 2017 Reimbursement Agreement, sets out the terms pursuant to which the direct -pay and irrevocable Letter of Credit is issued to the Issuing and Paying Agent for the account of the Commission, as well as the terms under which the SFPUC repays Sumitomo Mitsui Banking Corporation for draws on the respective Irrevocable Letter of Credit which is i ssued by
Sumitomo Mitsui Banking Corporation in favor of the Issuing and Paying Agent. The Letter of Credit (which appears as an appendix to the Reimbursement Agreement ) is the credit facility that is drawn upon by the Issuing and Paying Agent to pay principal and interest due on maturing commercial paper, in the event the SFPUC does not.
SMBC Fee Agreement:
The Fee Agreement, by and between the SFPUC and SMBC, sets out the annual facility fee paid by the SFPUC to the bank, including fees in the event of Water Enterprise credit rating downgrades; and any bank charges in connection with draws upon the LOC.
Offering Memorandum:
This is the disclosure document that is used by the Dealers in the initial issuance or remarketing of the CP to prospective investors. It contains brief descriptions of the SFPUC, including the Wastewate r Enterprise and Wastewater Interim Funding Program; the CP Notes; TD Bank NA; Sumitomo Mitsui Banking Corporation; and the banks ’ Revolving Credit and Term Loan Agreement and Amended
Reimbursement Agreement, respectively.
Disclosure Considerations:
The Wastewater CP Program, through the Wastewater Interim Execute Agreement: Approve Two Replacement Credit Facility Agreements for Interim Funding of Wastewater Enterprise Capital Program
Commission Meeting Date: May 24, 2022
5 Funding Program, would be supported by the Revolving Credit and term Loan Agreement with TD Bank NA, and Sumitomo Mitsui Banking Corporation Letter of Credit as described in the Offering Memorandum (OM). Unlike the Official Statement in a long -term revenue bond transaction, the OM for a CP Program supported by a Liquidity Facilities or Letters of Credit does not include detailed financial and/or operating info rmation of the issuer, in this case the SFPUC and Wastewater Enterprise. Instead, CP investors rely primarily on the financial standing of the credit bank ( TD Bank NA
and Sumitomo Mitsui Banking Corporation) for the source of repayment.
The Revolving Credit and Term Loan Reimbursement Agreement with Sumitomo Mitsui Banking Corporation as amended by the First Amendment to the reimbursement Agreement, contains
representations and warranties which have been reviewed and affirmed to be appropriate for the SFPUC by staff, the City Attorney’s Office, and the SFPUC’s Note Counsel (Kutak Rock LLP). The representations and warranties include matters such as the good standing of the SFPUC ; the a uthorization of the agreements, commercial paper, and liqui dity agreements; the absence of material litigation; the fairness and accuracy of the financial statements ; and that there has been no material adverse change in the financial condition of the SFPUC.
Upon closing of this transaction, staff will post the k ey transaction documents on EMMA, the municipal bond industry’s on- line disclosure repository. There is no continuing disclosure undertaking for CP as it is exempt from the requirements of SEC Rule 15c-2-12.
Result of Inaction: A delay in this authorization could accelerate the frequency of long - term bond issuances, which could result in higher associated borrowing costs.
Budget & Costs: The Wastewater Enterprise capital budget and associated appropriations cover these associated costs.
Recommendation: SFPUC staff recommends that the Commission adopt the attached resolution.
Environmental
Review:
The proposed action is replacement of an expiring agreement that provides interim funding for the Wastewater Enterprise capital program. On November 30, 2020, the Environmental Review Officer (ERO) issued a Certificate of the City and County of San Francisco Planning Department (pursuant to Sect ion 8B.124(b) of the City Charter) under Proposition E of November 2002, granting authority for the issuance of debt to the Board of Supervisors, for the Wastewater Enterprise Capital Program. By this certification, the ERO Execute Agreement: Approve Two Replacement Credit Facility Agreements for Interim Funding of Wastewater Enterprise Capital Program
Commission Meeting Date: May 24, 2022
6 certified that the projects to b e funded through the sale of Wastewater Revenue Bonds and/or Other Forms of Indebtedness, including Commercial Paper, either already comply with the requirements of the California Environmental Quality Act (CEQA) or will undergo environmental review pursuant to the CEQA when they are defined .
This certificate supersedes previous environmental certificates issued on May 17, 2016 and June 26, 2018, which were used for the previous Reimbursement Agreements. This November 30, 2020 certificate can be found here:
https://sfpuc.sharefile.com/d-
s66908b12c6754cedb5aa4bc3c426a1f9
Attachments: 1. TD Bank NA Form of Revolving Credit and Term Loan Agreement
2. TD Bank NA form of Fee Letter
3. Sumitomo Mitsui Banking Corporation Form of First
Amendment to Reimbursement Agreement (including form of Irrevocable Letter of Credit)
4. Sumitomo Mitsui Banking Corporation Form of Amended and Restated Fee Letter
5. Offering Memorandum
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO.: ___________
WHEREAS, On November 5, 2002, the voters of the City and County of San Francisco (the “City”) approved Proposition E, codified as Article VIIIB of the Charter of the City (the “Charter”), which, among other things, authorized the Public Utilities Commission of the City and County of San Francisco (the “Commission”) to issue indebtedness, including revenue bonds, notes, commercial paper , or other forms of indebtedness, when authorized by ordinance approved by a two- thirds vote of the Board of Supervisors of the City (the “Board”), for the purpose of reconstructing, replacing, expanding, repairing or improving wastewater facilities under the jurisdiction of the Commission (the “Wastewater Enterprise”); and WHEREAS, Pursuant to Section 43.5 of the San Francisco Administrative Code (“Article V”), enacted by Ordinance No. 203- 98 adopted by the Board on June 8, 1998, and signed by the Mayor of the City on June 19, 1998, as amended by Ordinance No. 270-06, adopted on October 24, 2006 by the Board and signed by the Mayor on October 31, 2006, the Board establis hed a procedure pursuant to which the Commission may issue short -term indebtedness, including the issuance of commercial paper in anticipation of the issuance of its revenue bonds; and
WHEREAS, Under Section 8B.124 of the Charter, the Board’s authority to authorize an issuance of debt under Proposition E is subject to the provision of certain certifications of an independent engineer retained by the Public Utilities Commission and certain certifications by the San Francisco Planning Department, which certifications shall make the findings and determinations set forth in Charter Section 8B.124 (together, the “Proposition E Certificates”); and
WHEREAS, The Commission has previously authorized pursuant to Resolution No. 06-0164, approved by the Commission on September 26, 2006, and the Board has previously approved pursuant to Ordinance No. 266- 06, adopted by the Board on October 24, 2006, and signed by the Mayor on October 31, 2006, the establishment of a commercial paper program for the Wastewater Enterprise ( the “Wastewater CP Program”) and the issuance of up to $150 million in aggregate principal amount of commercial paper notes outstanding at any one time; and
WHEREAS, The Commission has authorized pursuant to Resolution No. 11-0197, approved by the Commission on December 13, 2011, and the Board has approved pursuant to Ordinance No. 91-12, adopted by the Board on May 8, 2012, and signed by the Mayor on May 14, 2012, an ordinance to authorize an increase in the Wastewater CP Program to an amount not- to-exceed $300 million of commercial paper notes outstanding at any one time from a principal amount of not -to-exceed $150 million of commercial paper notes outstanding at any one time; and
WHEREAS, The Commission has authorized pursuant to Resolution No. 14-0139, approved by the Commission on August 26, 2014, and the Board has approved pursuant to Resolution No. 378-14, adopted by the Board on September 30, 2014, and signed by the Mayor on October 9, 2014, a resolution to authorize an increase in the Wastewater CP Program to an aggregate principal amount not-to-exceed $500 million of commercial paper notes outstanding at any one time from a not-to-exceed amount of $300 million of commercial paper notes; and WHEREAS, The Commission previously determined that it would be desirable to provide an additional aggregate principal amount not -to-exceed $250 million of short -term financing for the Wastewater Enterprise and the Commission has authorized pursuant to Resolution No. 17- 0086, approved by the Commission on April 25, 2017 (“Resolution 17- 0086”), and the Board has approved pursuant to Resolution No. 193-17, adopted by the Board on May 23, 2017, and signed by the Mayor on May 26, 2017, a resolution to authorize an increase in the amount of short -term indebtedness which may be outstanding at any one time, increasing authorization to $750 million from $500 million of commercial paper notes (collectively, the “Commercial Paper Notes”) or bank notes (collectively, the “Bank Notes”); and WHEREAS, Pursuant to Article V an d Ordinance No. 266- 06, the Commission is authorized to negotiate and execute credit or liquidity facilities to support the payment of principal and/or interest, as applicable, on the Commercial Paper Notes and any additional agreements related thereto; and
WHEREAS, In connection with one series of Commercial Paper Notes designated the “Series A-4 Notes (Tax -Exempt)” (the “Series A -4 CP Notes”) and pursuant to Resolution No. 19-0128, approved by the Commission on June 25, 2019, the Commission previously ent ered into a Revolving Credit and Term Loan Agreement, dated as of July 1, 2019 (the “Existing A -4 Liquidity Facility”), by and between the Commission and The Toronto- Dominion Bank, New York Branch (the “Existing A-4 Bank”); and
WHEREAS, The Existing A-4 Liquidity Facility expires on July 8, 2022; and WHEREAS, Pursuant to Ordinance No. 266- 06, the Commission is authorized to negotiate and execute another credit facility or liquidity facility to support the Series A -4 CP Notes and any additional agreements related thereto; and WHEREAS, The Commission issued a request for bids from qualified banks to provide for a substitute liquidity facility to support the payment of principal and/or interest, as applicable, on the Series A-4 CP Notes; and
WHEREAS, After an evaluation of the responses to such request for bids, the Commission staff determined that the substitute liquidity facility, in the principal amount of $75 million, plus an amount equal to 270 days interest on such principal amount at a rate of twelve percent (12%) per annum, offered by TD Bank, N.A. (the “Substitute A -4 Bank”) was the most advantageous to the Commission; and
WHEREAS, The proposed form of the Revolving Credit and Term Loan Agreement (the “Substitute A-4 Revolving Loan Agreement”) and rel ated Fee Agreement (the “Substitute A -4 Fee Letter”) to be entered into by the Commission and the Substitute A -4 Bank have been presented to the Commission and filed with the Commission Secretary, and the Commission finds it in its best interest to enter into such agreements; and WHEREAS, The Commission will issue the Series A -4 CP Notes which will be supported by the Substitute A-4 Revolving Loan Agreement; and WHEREAS, In connection with one series of Commercial Paper Notes designated the “Series A-7 Notes (Tax-Exempt)” (the “Series A -7 CP Notes”) and pursuant to Resolution No. 17-0086, the Commission previously authorized, executed and delivered a (i) Reimbursement Agreement, dated as of June 1, 2017 (the “Existing A -7 Reimbursement Agreement”), by and between the Commission and Sumitomo Mitsui Banking Corporation, acting through it New York Branch (“Sumitomo”), and (ii) Fee Agreement, dated June 2, 2017 (the “Existing A -7 Fee Agreement”), by and between the Commission and Sumitomo; and WHEREAS, To secure the repayment of the Series A -7 CP Notes, Sumitomo issued an irrevocable transferable direct -pay letter of credit (the “Existing A -7 Letter of Credit”), which will terminate by its terms on June 2, 2022; and
WHEREAS, The Commission issued a request for bids from qualified banks to provide for a substitute letter of credit to support the payment of principal and interest on the Series A -7 CP Notes; and
WHEREAS, After an evaluation of the responses to such request for bids, the Commission staff determined th at the direct -pay letter of credit from Sumitomo, in an original stated principal amount not-to-exceed $100 million, plus an amount equal to 270 days interest on such principal amount at a rate of twelve -percent (12%) per annum, to secure the repayment of the Series A -7 CP Notes from time to time, to be implemented by the extension of the stated expiration date of the Existing A -7 Letter of Credit (the “Substitute A -7 Letter of Credit”), was the most advantageous to the Commission; and
WHEREAS, the Commission finds it appropriate and in its best interest to (i) amend the Existing A -7 Reimbursement Agreement (as amended, the “Substitute A -7 Reimbursement Agreement”), and (ii) amend the Existing A -7 Fee Agreement (as amended, the “Substitute A -7 Fee Agreement”); and
WHEREAS, although Sumitomo is the provider of the Existing A -7 Letter of Credit and will be the provider of the Substitute A -7 Letter of Credit, the Commission’s receipt of the Substitute A -7 Letter of Credit and its execution and delivery of the S ubstitute A -7 Reimbursement Agreement and Substitute A-7 Fee Agreement will be treated as new agreements and not as an amendment to the prior agreements for purposes of Charter Section 9.118(b) because the initial term of such documents will therefore commence upon their effectiveness and the term of the Existing A -7 Letter of Credit will not be considered for purposes of Charter Section 9.118(b); and
WHEREAS, In connection with the foregoing substitutions, the offering memorandum for the Commercial Paper Notes will be updated to reflect the Substitute A -4 Revolving Loan Agreement, the Substitute A -4 Bank, the Series A -4 CP Notes, the Substitute A -7 Reimbursement Agreement, the Substitute A -7 Letter of Credit, the Series A -7 CP Notes, and such other matters deemed necessary to comply with federal securities laws; and WHEREAS, The proposed form of offering memorandum (the “Offering Memorandum”) has been presented to the Commission and filed with the Commission Secretary; and WHEREAS, In order to market and re market the Commercial Paper Notes, the Commission, pursuant to Resolution 17-0086, previously authorized, executed and delivered (i) a Dealer Agreement, dated as of June 1, 2017, by and between the Commission and Citigroup Global Markets Inc., (ii) a Dealer Agreement, dated as of June 1, 2017, by and between the Commission and Goldman Sachs & Co. LLC, (iii) a Dealer Agreement, dated as of June 1, 2017, by and between the Commission and Morgan Stanley & Co. LLC, (iv) a Dealer Agreement, dated as of June 1, 2017, by and between the Commission and RBC Capital Markets, LLC, and (v) a Dealer Agreement, dated as of June 1, 2017, by and between the Commission and U.S.
Bancorp Investments, Inc., all of which expire on July 25, 2022 (collectively, the “Existing Dealer Agreements”); and
WHEREAS, Pursuant to Resolution 17- 0086 and the Existing Dealer Agreements, the Commission intends to amend the Existing Dealer Agreements to extend the terms of the Existing Dealer Agreements by entering into up to two annual extensions that together will not go beyond July 1, 2024, without obtaining additional prior Commission approval; and WHEREAS, On November 30, 2020 the Environmental Review Officer (ERO) issued a Certificate of the City and County of San Francisco Planning Department (pursuant to Section 8B.124(b) of the City Charter) under Proposition E of November 2002, granting authority for the issuance of debt to the Board of Supervisors, for the Wastewater Enterprise Capital Program, and by this certification the ERO certifie d that the projects to be funded through the sale of Wastewater Revenue Bonds and/or Other Forms of Indebtedness, including Commercial Paper, either already comply with the requirements of the California Environmental Quality Act (CEQA) or will undergo env ironmental review pursuant to the CEQA when they are defined; and
WHEREAS, The Proposition E Certificates meeting the Proposition E requirements are, or will be, on file with the Clerk of the Board in accordance with Proposition E prior to the issuance of any Commercial Paper Notes; now, therefore, be it RESOLVED By the Public Utilities Commission of the City and County of San Francisco, as follows:
Section 1. Approval of Substitute A -4 Revolving Loan Agreement and Substitute A -4 Fee Letter. The Substitute A -4 Revolving Loan Agreement and Substitute A -4 Fee Letter, in substantially the forms submitted to this Commission, are hereby approved and recommended to the Director of the City’s Office of Public Finance (the “Director”) for approval pursuant to Article V of the City’s Administrative Code. The General Manager of the Commission (the
“General Manager”) or their designee is authorized and directed to execute and deliver the Substitute A -4 Revolving Loan Agreement and Substitute A -4 Fee Letter, subject to such additions thereto or changes therein which the General Manager, upon consultation with the City Attorney and Director, shall approve, such approval to be conclusively evidenced by the execution and delivery of such Substitute A -4 Revolving Loan Agreement and Substitute A -4 Fee Letter. The performance by the City and the Commission, as applicable, of the Substitute A- 4 Revolving Loan Agreement and Substitute A -4 Fee Letter in accordance with their final approved terms is hereby approved.
Section 2. Appointment of Subst itute A -4 Bank. The General Manger is hereby authorized to appoint the Substitute A -4 Bank to provide the Substitute A -4 Revolving Loan Agreement to support the payment of up to $75,000,000 in principal amount of the Series A -4 CP Notes, or to select and appoint another financial institution if the Substitute A -4 Bank is unwilling to agree to acceptable terms of the Substitute A -4 Revolving Loan Agreement and Substitute A-4 Fee Letter that have been submitted to the Commission subject to such additions thereto or charges therein which the General Manager, upon consultation with the City Attorney and Director, have approved (such approval to be conclusively evidenced by the execution and delivery of such Substitute A -4 Revolving Loan Agreement and Substitute A- 4 Fee Letter), provided, however that the General Manager, upon consultation with the City Attorney and Director, shall determine that such agreements shall not impose any obligations materially more onerous than the agreements approved in Section 1 of this Resolution.
Section 3. Approval of Substitute A -7 Reimbursement Agreement, Substitute A -7 Letter of Credit and Substitute A -7 Fee Agreement . The Substitute A -7 Reimbursement Agreement, the Substitute A-7 Letter of Credit and Substitute A -7 Fee Agreement in substantially the forms submitted to this Commission, are hereby approved and recommended to the Director for approval pursuant to Article V of the City’s Administrative Code. The General Manager or their designee is authorized and directed to execute and deliver the Substitute A -7 Reimbursement Agreement and the Substitute A -7 Fee Agreement, subject to such additions thereto or changes therein which the General Manager, upon consultation with the City Attorney and Director, shall approve, such approval to be conclusively evidenced by the execution and delivery of such Substitute A-7 Reimbursement Agreement and the Substitute A-7 Fee Agreement.
Section 4. Limitations. Consistent with Ordinance No. 266- 06, in no event shall the Commercial Paper Notes and Bank Notes, combined exceed $750,000,000 in aggregate principal amount and in no event shall the interest rate or interest rates cause the aggregate average interest cost to exceed 12% per annum, and in no event shall the term of any bank reimbursement obligation or revolving credit and term loan agreement exceed 10 years from the date of its original execution.
Section 5. Offering Memorandum. Consistent with Ordinance No. 266- 06, the General Manager or their designee, upon consultation with the City Attorney and the Director, is hereby authorized and directed to prepare and cause the distribution of an Offering Memorandum relating to the Wastewater CP Program, in substantially the form on file with the Commission, subject to such additions thereto and changes therein, and any amendments or supplements thereto from time to time which the General Manager, upon consultation with the City Attorne y and the Director, shall approve. The General Manager (or any designee thereof) is further
authorized and directed to distribute, in connection with the sale of any Commercial Paper Notes, one or more Offering Memoranda in such form, as the General Manager, upon consultation with the City Attorney, Bond Counsel and the Director shall approve.
Section 6. Extension of Term of Substitute A -4 Revolving Loan Agreement. The General Manager or their designee is further authorized, upon consultation with the City Attorney and the Director, to execute one or more amendments to extend the term of the Substitute A-4 Revolving Loan Agreement by an additional aggregate period not -to-exceed five (5) years from the date of expiration of the Substitute A -4 Revolving Loan Agreement, provided that the annual facility fee payable to the Substitute A -4 Bank in connection with any extension to the Substitute A-4 Revolving Loan Agreement and Substitute A -4 Fee Letter shall not exceed $250,000 per year, and that there shall be no material change in the terms of such documents that would materially increase the obligations of, or the risk of loss to, the Commission and the amendments shall otherwise comply with Section 4 hereof Section 7. Extension of Term of Substitute A -7 Letter of Credit . The G eneral Manager or their designee is further authorized, upon consultation with the City Attorney and the Director, to execute one or more amendments to extend the term of the Substitute A -7 Letter of Credit by an additional aggregate period not -to-exceed f ive (5) years from the date of expiration of the Substitute A -7 Letter of Credit, provided that the annual facility fee payable to the Bank in connection with any extension of the Substitute A -7 Letter of Credit, Substitute A -7 Reimbursement Agreement and Substitute A -7 Fee Agreement shall not exceed $330,000 per year, and that there shall be no material change in the terms of the documents securing the letter of credit that would materially increase the obligations of, or the risk of loss to, the Commission and the amendments shall otherwise comply with Section 4 hereof.
Section 8. Further Actions. The General Manager or the General Manager’s designee, and upon consultation with the City Attorney and the Director, is hereby authorized and directed to execute such other agreements, certifications or documents and to take any and all necessary action in furtherance of the substitution of the Existing A -4 Liquidity Facility, the entering into the Substitute A-4 Revolving Loan Agreement and Substitute A -4 Fee Letter, the substitution of the Existing A-7 Letter of Credit, the entering into the Substitute A-7 Reimbursement Agreement and Substitute A-7 Fee Agreement and the marketing and sale of the Commercial Paper Notes.
Section 9. Delegation. The General Manager is authorized to delegate any of the responsibilities or duties set forth in this resolution to the Assistant General Manager, Business Services and Chief Financial Officer of the Commission.
Section 10. Ratification. All actions heretofore taken by the officials, employees and agents of the Commission with respect to the substitution of the Existing A -4 Liquidity Facility, the entering into the Substitute A -4 Revolving Loan Agreement and Substitute A -4 Fee Letter, the substitution of the Existing A -7 Letter of Credit and the enter ing into the Substitute A -7 Reimbursement Agreement and the Substitute A -7 Fee Agreement, are hereby approved, confirmed, and ratified.
Section 11. Effective Date. This resolution shall take effect from and after its adoption.
I hereby certify that the foregoing resolution was adopted by the Public Utilities Commission at its meeting on May 24, 2022.
Secretary, Public Utilities Commission
CHAPMAN DRAFT OF APRIL 27, 2022
1042615242-1__td_bank__n_a____sfpuc_revolving_credit___term_loan_agmt__ww_a4___2022__4863_3107_1261_v6 4295325
REVOLVING CREDIT
AND
TERM LOAN AGREEMENT
DATED AS OF JULY 1, 2022
BY AND BETWEEN
PUBLIC UTILITIES COMMISSION OF
THE CITY AND COUNTY OF SAN FRANCISCO
AND
TD BANK, N.A.
RELATING TO
$75,000,000
PUBLIC UTILITIES COMMISSION
OF THE CITY AND COUNTY OF SAN FRANCISCO
COMMERCIAL PAPER NOTES
(WASTEWATER SERIES, PROPOSITION E)
SERIES A-4 (TAX-EXEMPT)
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TABLE OF CONTENTS
ARTICLE I D EFINITIONS .................................................................................................3 Section 1.1. Certain Defined Terms ...........................................................................3 Section 1.2. Accounting Terms and Determinations ...............................................16 Section 1.3. Rules of Construction ..........................................................................16 ARTICLE II A DVANCES AND LOANS ..............................................................................16 Section 2.1. Advances. .............................................................................................16 Section 2.2. Term Loans ..........................................................................................18 Section 2.3. Interest on Overdue Amounts ..............................................................19 Section 2.4. Interest Rate Adjustment......................................................................19 Section 2.5. Prepayments of Advances and Loans ..................................................20 Section 2.6. Termination or Reduction of Commitment..........................................21 Section 2.7. Increased Costs ....................................................................................21 Section 2.8. Security ................................................................................................23 Section 2.9. Payments and Computations ................................................................23 Section 2.10. Payment on Non-Business Days ..........................................................23 Section 2.11. Book Entries.........................................................................................23 Section 2.12. Taxes ....................................................................................................23 Section 2.13. Subordina ted Wastewater Bonds No-Issuance Notice ........................25 ARTICLE III C ONDITIONS PRECEDENT ............................................................................25 Section 3.1. Conditions Precedent to Effectiveness.................................................25 Section 3.2. Conditions Precedent to Each Advance ...............................................29 Section 3.3. Conditions Precedent to Each Term Loan ...........................................29 ARTICLE IV F EES ............................................................................................................29 ARTICLE V O BLIGATIONS ABSOLUTE ............................................................................30 ARTICLE VI R EPRESENTATIONS AND WARRANTIES ........................................................31 Section 6.1. Organization, Powers, Etc. ...................................................................31 Section 6.2. Authorization, Absence of Conflicts, Etc. ...........................................31 Section 6.3. Binding Obligations; Security for Revolving Note and Term Note ............................................................................................31 Section 6.4. Governmental Consent or Approval ....................................................32 Section 6.5. Absence of Material Litigation ............................................................33 Section 6.6. Financ ial Condition ..............................................................................33 Section 6.7. Incorporation of Representations and Warranties................................33 Section 6.8. Accuracy and Completeness of Information ........................................33 Section 6.9. No Default ............................................................................................34
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Section 6.10. No Proposed Legal Changes ................................................................34 Section 6.11. Compliance with Laws, Etc .................................................................34 Section 6.12. Environmental Matters.........................................................................34 Section 6.13. Tax Status of Interest on Commercial Paper Notes .............................35 Section 6.14. Issuing and Paying Agent; Dealers ......................................................35 Section 6.15. Regulation U ........................................................................................35 Section 6.16. ERISA ..................................................................................................35 Section 6.17. Liens .....................................................................................................35 Section 6.18. Sovereign Immunity.............................................................................35 Section 6.19. City Business Days ..............................................................................36 Section 6.20. Usury ....................................................................................................36 Section 6.21. Insurance ..............................................................................................36 Section 6.22. Anti-Corruption Laws and Sanctions...................................................36 ARTICLE VII C OVENANTS ................................................................................................36 Section 7.1. Affirmative Covenants .........................................................................36 Section 7.2. Negative Covenants .............................................................................45 ARTICLE VIII E VENTS OF DEFAULT, REMEDIES ................................................................50 Section 8.1. Events of Default .................................................................................50 Section 8.2. Remedies ..............................................................................................55 Section 8.3. No Remedy Exclusive..........................................................................57 ARTICLE IX M ISCELLANEOUS ........................................................................................57 Section 9.1. Payments to the Bank...........................................................................57 Section 9.2. Liability of the Bank ............................................................................57 Section 9.3. Indemnification ....................................................................................57 Sect
ion 9.4. Costs and Expenses ..............................................................................58 Section 9.5. Participants ...........................................................................................58 Section 9.6. Successors and Assigns........................................................................58 Section 9.7. Modification or Waiver of This Agreement ........................................59 Section 9.8. No Waiver of Rights by the Bank; Cumulative Rights .......................59 Section 9.9. Notices .................................................................................................59 Section 9.10. Counterparts .........................................................................................60 Section 9.11. Certificates, Etc ....................................................................................60 Section 9.12. Term of Agreement ..............................................................................60 Section 9.13. Severability ..........................................................................................61 Section 9.14. Governing Law; Jurisdiction................................................................61 Section 9.15. Consents ...............................................................................................62 Section 9.16. Source of Funds ...................................................................................62 Section 9.17. Survival ................................................................................................62 Section 9.18. Headings ..............................................................................................62 Section 9.19. Beneficiaries ........................................................................................62 Section 9.20. Governmental Regulations...................................................................62 Section 9.21. City Requirements ...............................................................................63
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Section 9.22. Arm’s Length Transaction ...................................................................63 Section 8.14. Electronic Execution of Certain Documents........................................63 Section 8.20. MSRB Rule G-34 .................................................................................64
EXHIBIT A – FORM OF REVOLVING NOTE ................................................................ A-1 EXHIBIT B – FORM OF TERM NOTE ............................................................................ B-1 EXHIBIT C – FORM OF REQUEST FOR ADVANCE .................................................... C-1 EXHIBIT D – FORM OF REQUEST FOR EXTENSION ................................................. D-1 EXHIBIT E – FORM OF NOTICE OF TERMINATION OR REDUCTION .................... E-1 EXHIBIT F – 2022 LIST OF CITY HOLIDAYS ............................................................... F-1 EXHIBIT G – CITY REQUIREMENTS ............................................................................ G-1 EXHIBIT H-1 – FORM OF EOD NON-ISSUANCE NOTICE .......................................... H-1-1 EXHIBIT H-2 – FORM OF SUBORDINATED BONDS NON-ISSUANCE NOTICE .... H-2-1 EXHIBIT I – PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY
OF SAN FRANCISCO CERTIFICATE REGARDING
CONDITIONS PRECEDENT TO A TERM LOAN ............................ I-1 EXHIBIT J – EXAMPLES OF CERTIFICATE AND REPORT PROVIDED UNDER WASTEWATER BOND INDENTURE............................... J-1 EXHIBIT K – [RESERVED] .............................................................................................. K-1 EXHIBIT L – FORM OF COMPLIANCE CERTIFICATE................................................ L-1 EXHIBIT M – LIST OF QUALIFIED DEALERS ............................................................. M-1
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This R EVOLVING CREDIT AND TERM LOAN AGREEMENT, dated as of July 1, 2022 (this “Agreement”), is entered into by and between the P UBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO, organized and existing under the Constitution and the laws of the State of California and the Charter (as defined below) of the City and County of San Francisco (together with any successors and assigns, the “Commission” ) and TD BANK, N.A. (together with any successors and assigns, the “Bank” ). Terms used herein with initial capital letters and not otherwise defined shall have the respective meanings attributed to them in Section
1.1 of this Agreement.
W I T N E S S E T H:
WHEREAS, on November 5, 2002, the voters of the City approved Proposition E, which among other things, authorized the Commission to issue revenue bonds, including notes, commercial paper or other forms of indebtedness, when authorized by ordinance approved by a two-thirds vote of the Board of Supervisors of the City (the “Board”), for the Wastewater Enterprise (as hereinafter defined); and
W
HEREAS, Commercial Paper Notes (as hereinafter defined) are authori zed to be issued pursuant to the Charter of the City (the “Charter”), Article V of Chapter 43 of the San Francisco Administrative Code, enacted by O rdinance No. 203- 98, adopted by the Board on June 8, 1998 and signed by the Mayor on June 19, 1998 (the “203-98 Ordinance”), as amended by Ordinance No. 270-06, adopted on October 24, 2006 by the Board and signed by the Mayor on October 31, 2006 (the “270- 06 Ordinance”) to establish a procedure for the issuance of commercial paper notes, Ordinance No. 266- 06 adopted by the Board on October 24, 2006, and signed by the Mayor on October 31, 2006 (the “266-06 Ordinance”), Ordinance No. 91- 12 adopted by the Board on May 8, 2012 and signed by the Mayor on May 14, 2012 (the “91- 12 Ordinance” ), Resolution No. 378- 14, adopted by the Board on September 30, 2014 and signed by the Mayor on October 9, 2014 ( “City Resolution No. 378-14” ), Resolution No. 193- 17, adopted by the Board on May 23, 2017, and signed by the Mayor on May 26, 2017 ( “City Resolution No. 193- 17” and together with the 203- 98 Ordinance, the 270- 06 Ordinance, the 266- 06 Ordinance, the 91-12 Ordinance and City Resolution No. 378-14, referred to herein as the “City Legislation”), Resolution No. 06-0164 approved by the Commission on September 26, 2006 (the “ Resolution No. 06-0164”), Resolution No. 11-0197, approved by the Commission on December 13, 2011 (“Resolution No. 11-0197” ), Resolution No. 14-0139, approved by the Commission on August 26, 2014 (“Resolution No. 14-0139” ), Resolution No. 17-0086 approved by the Commission on April 25, 2017 (“Resolution No. 17-0086”) and Resolution No. 22-___ approved by the Commission on May 24, 2022 ( “Resolution No. 22-____)” and together with Resolution No. 06-164, Resolution No. 11-0197, Resolution No. 14-0139 and Resolution No. 17-0086, the “Resolutions”) authorized the issuance of Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Wastewater Series) in an aggregate principal amount not to exceed $750,000,000; and
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WHEREAS, the Commission is authorized to issue, sell and deliver bonds, additional bonds, refunding bonds and other evidences of indebtedness in order to effect its purposes pursuant to the Ordinance and the Resolutions, including the financing and refinancing of the Commercial Paper Notes, the Revolving Note and the Term Note (as each such term is hereinafter defined); and
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HEREAS, the Commission has authorized, executed and delivered that certain Issuing and Paying Agent Agreement, dated as of July 1, 2012 (as from time to time supplemented and amended in accordance with the terms hereof and thereof , the “Issuing and Paying Agent Agreement”), with U.S. Bank Trust Compa ny, National Association (as successor in interest to U.S. Bank National Association), as issuing and paying agent (the “Issuing and Paying Agent” ), relating to the Series A-4 Notes and separate issuing and paying agent agreement s, each with the Issuing and Paying Agent, relating to the City and County of San Francisco Commercial Paper Notes (Wastewater Series, Proposition E), Series A -1 (Tax Exempt) (the “Series A-1 Notes” ), Series A-2 (Tax Exempt) (the “Series A -2 Notes”), Series A -4 (Tax Exempt) (the “Se ries A-4 Notes”), Tax-Exempt Subseries A-6 (the “Subseries A -6 Notes”), Taxable Subseries A -6-T (the “Subseries A -6-T Notes” and together with the Subseries A -6 Notes, the “Series A -6 Notes” ) and Series A -7 (Tax Exempt) (the “Series A -7 Notes” and together with the Series A -1 Notes, the Series A -2 Notes, the Series A -4 Notes, the Series A -6 Notes, the “Commercial Paper Notes”); and
W
HEREAS, in order to provide liquidity and/or credit for the payment of maturing Commercial Paper Notes, the Commission previously entered into (i) a Reimbursement Agreement (the “Series A-1 Reimbursement Agreement” ) with Sumitomo Mitsui Banking Corporation, acting through its New York Branch (the “Series A-1 Credit Provider”) pursuant to which the Series A -1 Credit Provider issue d a letter of credit for payment of principal and interest on the Series A -1 Notes, (ii) a Reimbursement Agreement (the “Series A-2 Reimbursement Agreement” ) with Bank of America, N.A. (the “Series A -2 Credit Provider ”) pursuant to which the Series A-2 Credit Provider issued a letter of credit for payment of principal and interest on the Series A -2 Notes, (i ii) a Revolving Credit and Term Loan Agreement (the “Series A-6 Liquidity Agreement”) with State Street Bank and Trust Company (the “Series A-6 Liquidity Provider”) for payment of principal of the Series A-6 Notes, and (iv) a Reimbursement Agreement (the “Series A-7 Reimbursement Agreement” and together with the Series A -1 Reimbursement Agreement and the Series A-2 Reimbursement Agreement, the “ Reimbursement Agreements”) with Sumitomo Mitsui Banking Corporation, acting through its New York Branch (the “Series A -7 Credit Provider ” and together with the Series A -1 Credit Provider and the Series A -2 Credit Provide r, the “Credit Providers” ) pursuant to which t he Series A -7 Credit Provider issued a letter of credit for payment of principal and interest on the Series A -7 Notes; and
WHEREAS, the Commercial Paper Notes previously included a Series A -3 (Tax Exempt) (the “Series A-3 Notes”), which Series A-3 Notes were terminated on July 10, 2017 and replaced by a Revolving Credit Agreement (the “US Bank Revolving Credit Agreement” ) with U.S. Bank National Association, and repayment of obligations issued under the US Bank Revolving Credit Agreement are payable on parity with the Commercial Paper Notes; and
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WHEREAS, the Commercial Paper Notes previously included the Tax- Exempt Subseries A-5 (the “Subseries A-5 Notes”) and Taxable Subseries A-5-T (the “Subseries A-5-T Notes” and together with the Subseries A-5 Notes, the “Series A-5 Notes”); and WHEREAS, in connection with the Series A -6 Notes, the Commission approved an increase in the commitment amount under the Series A-6 Liquidity Agreement and in connection with such increase, the Commission approved the termination of the Series A-5 Notes; and WHEREAS, in order to provide liquidity for the payment of maturing Series A-4 Notes, the Commission has requested the Bank to enter into this Agreement pursuant to which the Bank would agree, subject to certain conditions, to make advances from time to time to provide funds for the payment of the Series A-4 Notes on the maturity dates thereof to the extent that proceeds of other Series A-4 Notes are not available therefor; and NOW, THEREFORE, in consideration of the mutual promises contained herein and other valuable consideration, the sufficiency of which are hereby acknowledged, the Commission and the Bank hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Certain Defined Terms . As used in this Agreement and unless otherwise expressly indicated, or unless the context clearly requires otherwise:
(a) All the agreements or instruments herein defined shall mean such agreements or instruments as the same may from time to time be supplemented or amended or the terms thereof waived or modified to the extent permitted by, and in accordance with, the terms thereof and of this Agreement.
(b) Capitalized terms not otherwise defined herein have the respective meanings assigned to such terms in the Issuing and Paying Agent Agreement. (c) The following terms shall have the following meanings (such meanings to be equally applicable to both singular and plural forms of the terms defined):
“Advance” means any advance made by the Bank pursuant to Section 2.1 hereof. “Advance Due Date” means, in respect of any Advance, the earliest to occur of (a) the one hundred eightieth (180th) day after the making of such Advance; (b) the Commitment Expiration Date; (c) the date that an Alternate Facility becomes effective; (d) the date the Commitment Period is otherwise terminated or expires; (e) the Business Day when Commercial Paper Notes or bonds are sold to fund the repayment of any Advance or (f) the date on which the Commission issues any Subordinate d Wastewater Bonds (unless the Bank otherwise waives the requirement of this clause (f) in writing); provided, however, that if any such day so determined
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is not a Business Day, the Advance Due Date shall be the next preceding day that is a Business Day.
“Agreement” means this Revolving Credit and Term Loan Agreement, as the same may be amended, supplemented, restated or otherwise modified from time to time hereafter. “Alternate Facility” has the me aning set forth in the Issuing and Paying Agent Agreement.
“Amortization End Date” means, at any time with respect to the amortization of any Term Loan, the earliest to occur of (a) the third (3rd) anniversary of the date on which the related Advance was made, (b) the date an Alternate Facility becomes effective in accordance with Section 9.02 of the Issuing and Paying Agent Agreement, (c) the date that all of the Series A -4 Notes are repaid in full and the Lien in favor thereof is defeased in accordance wi th Section 9.05 of the Issuing and Paying Agent Agreement, (d) the date the Commitment Period is otherwise terminated (other than as a result of the Commitment Period expiring as a result of the Commitment Expiration Date occurring), (e) the third ( 3rd) an niversary of the Commitment Expiration Date, (f) the date the Commitment is reduced to zero pursuant to Section 2.6 or Section 8.2 hereof , (g) the Business Day when Commercial Paper Notes or bonds are sold to fund the repayment of any Term Loan and (h) the date on which the Commission issues any Subordinated Wastewater Bonds (unless the Bank otherwise waives the requirement of this clause (h) in writing).
“Annual Budget” means the budget or budgets prepared by the Commission in substantially the form that has been previously presented to the Bank. “Annual Debt Service” has the meaning set forth in the Wastewater Bonds Indenture. “Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Commission from time to time concerning or relating to bribery or corruption. “Authorized Representative” means each of the General Manager of the San Francisco Public Utilities Commission, Assistant General Manager and Chief Financial Officer, Business Services, Deputy Chief Financial Officer, Financial Services, Debt Manager, Financial Planning, Utility Specialist, Financial Planning, Controller of the City and County of San Francisco, Director of Public Finance, and any other individual designated from time to time as a “Designated Representative” in a certificate executed by the General Manager of the San Francisco Public Utilities Commission and delivered to the Bank. “Authorizing Resolution” means the Resolution No. [________] adopted by the Commission on May 24, 2022.
“Available C ommitment” means, on any day, the sum of the Available Interest Commitment and the Available Principal Commitment on such day, means $81,657,535.
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“Available Interest Commitment” means $ 6,657,535, which amount equals 270 days’ interest on the initial amount of the Available Principal Commitment based upon an assumed rate of interest of 12% per annum and a year of 365 days and actual days elapsed and, in each case, means such related amount adjusted from time to time as follows: (a) downward by an amount that bears the same proportion to such initial amount as the amount of any reduction in the Available Principal Commitment, in accordance with clause (a), (b) or (c) of the definition herein of Available Principal Commitment, bears to the initial Available Principal Commitment and (b) upward by an amount that bears the same proportion to such initial amount as the amount of any increase in the Available Principal Commitment, in accordance with clause (b) of the definition herein of Available Principal Commitment, bears to the initial Available Principal Commitment; provided that after giving effect to such adjustment the Available Interest Commitment shall never exceed $ 6,657,535. Any adjustments to the Available Interest Commitment pursuant to clause (a) or (b) hereof shall occur simultaneously with the occurrence of the event described in such clause.
“Available Principal Commitment” means, as of the Effective Date, Seventy -Five Million Dollars ($75,000,000) and, thereafter, means such initial amount adjusted from time to time as follows: (a) downward in an amount equal to the principal amount of any Advance; (b) upward in an amount equal to the principal amount of any Advance or Term Loan that is repaid, including upon the sale of Series A-4 Notes pursuant to Section 2.5(b) hereof; (c) downward in an amount equal to any reduction thereof effected pursuant to Section 2.6 hereof; (d) downward in an amount equal to the principal amount of any Term Loan, effective upon the making of such Term Loan; and (e) downward to zero upon the expiration or termination of the Commitment in accordance with the terms hereof . Any adjustment to the Available Commitment pursuant to clause (a), (b), (c), (d) or (e) above shall occur simultaneously with the occurrence of the event described in such clause.
“Available Moneys” has the meaning set forth in the Issuing and Paying Agent Agreement.
“Available Wastewater Enterprise Revenues ” has the meaning set forth in the Issuing and Paying Agent Agreement.
“Bank” has the meaning set forth in the introductory paragraph hereto, and includes any successor or assign permitted hereby.
“Bank Rate” means, for any day, for each Advance and Term Loan, the following fluctuating interest rate per annum for such day, computed on the basis of the actual number of days elapsed and a 365-day year for the following periods, from and including the first day of the period to and excluding the last day of the period on which amounts bearing at such rate are due to be repaid in full hereunder:
Period Bank Rate
Date of Advance through day 180 following the date of the related Advance
Base Rate
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Day 181 following the date of the related Advance through the day the amount is due and payable
Base Rate plus 1.00% per annum
provided, however, that (a) upon the occurrence and during the continuation of any Event of Default, the Bank Rate shall equal the Default Rate; and (b) the Bank Rate shall be subject to the limitations set forth in Section 2.4 hereof; and provided further that, at no time shall the Bank Rate be less than the highest rate on any outstanding Series A-4 Notes. “Base Rate” means, for any day, the highest of (a) the sum of the Prime Rate in effect for such day plus 1.50% per annum, (b) the sum of 2.00% per annum plus the Federal Funds Rate for such day, and (c) 7.00% per annum (it being understood that each change in such Base Rate is to be effective for purposes of this Agreement on the day on which such change is effective for the Bank’s purposes). Each determination of the Base Rate by the Bank sha ll be conclusive and binding on the Commission and the Bank, absent manifest error. “Basic Commission Documents” means, at any time, each of Basic Documents except the City Legislation.
“Basic Documents” means, at any time, each of the following document s or agreements as in effect or as outstanding, as the case may be, at such time: (a) the Commercial Paper Notes, (b) the Resolutions, (c) the Offering Memorandum, (d) the Dealer Agreements, (e) the Issuing and Paying Agent Agreement, (f) the Revolving Not e, (g) the Term Note, (h) the Fee Letter, (i) this Agreement, (j) the City Legislation and (k) the Authorizing Resolution. “Board” has the meaning set forth in the recitals hereof. “Bond Counsel” has the meaning set forth in the Issuing and Paying Agent Agreement. “Bond Reserve Fund” has the meaning set forth in the Wastewater Bonds Indenture. “Bonds” has the meaning set forth in the Wastewater Bonds Indenture. “Business Day” means any day other than (1) a Saturday, Sunday, or day on which banking institutions in the State are authorized or obligated by law or executive order to be closed, (2) for purposes of payments and other actions relating to this Agreement, a day upon which commercial banks in the State or the State of New York are authorized or obliga ted by law or executive order to be closed, (3) a day on which the New York Stock Exchange is closed, or (4) a legal holiday of the City or any other day the City is authorized by law to be closed for official business, as provided in Section 6.19 hereof and Exhibit F, as updated by the City from time to time.
“Charter” has the meaning set forth in the Issuing and Paying Agent Agreement. “City” has the meaning set forth in the Issuing and Paying Agent Agreement. “City Legislation” has the meaning set forth in the recitals hereof.
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“Code” means the Internal Revenue Code of 1986, as amended from time to time, including regulations, rulings and judicial decisions promulgated thereunder. “Commercial Paper Notes” has the meaning set forth in the recitals hereof. “Commission” has the meaning set forth in the introductory paragraph hereof, and includes any successor or assign permitted hereby.
“Commitment” means, as of the Effective Date, $81,657,535 and, thereafter, shall mean such amount as reduced from time to time pursuant to Section 2.6 hereof or any other provision set forth herein.
“Commitment Expiration Date” means (i) July __, 2027, as such date may be extended from time to time pursuant to Section 9.12(b) hereof or (ii) such earlier date on which this Agreement terminates in accordance with its terms (including a date on which no Series A -4 Notes remain outstanding and the Bank has honored its obligations hereunder with respect thereto after the issuance of a No -Issuance Notice by the Bank in accordance with the terms of this Agreement).
“Commitment Period” means, as of any date, the period from such date to the Commitment Expiration Date or any earlier date on which the Commitment is terminated pursuant to the terms hereof.
“Dealers” means the dealer or dealers selected from time to time by the Commission (and acceptable to the Bank) to market the Series A-4 Notes pursuant to the terms of any applicable Dealer Agreement, and any permitted assigns and successors thereto. “Dealer Agreement” means each dealer agreement, by and between the Commission and a Dealer, in form and substance reasonably acceptable to the Bank, as may be amended and supplemented from time to time in accordance with the terms hereof. “Debt” means (a) all bonds, notes, debentures and other s imilar evidences of indebtedness or obligations of the Commission that are secured by or payable from Pledged Revenues senior to or on a parity with the Commercial Paper Notes, the Revolving Note and the Term Note, (b) all other indebtedness of the Commission for borrowed money, (c) obligations of the Commission as lessee under any lease of property, real or personal, that, in accordance with GAAP, would be required to be capitalized on a balance sheet of the lessee thereof, (d) obligations under Swap Contracts providing interest rate support with respect to any debt secured by or payable from Pledged Revenues senior to or on a parity with the Commercial Paper Notes, the Revolving Note and the Term Note, (e) any obligation of the Commission guaranteeing or i n effect guaranteeing any other debt, whether directly or indirectly, including, but not limited to Swap Contracts, (f) all debt of others secured by a lien on any asset of such Person, whether or not such debt is assumed by such Person, (g) 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 and (h) obligations of such Person to reimburse or repay any bank or other
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Person in respect of amounts paid or advanced under a letter of credit, credit agreement, liquidity facility or other instrument.
“Debt Service” has the meaning set forth in the Wastewater Bonds Indenture. “Debt Service Reserve Debt” means any reimbursement agreement or similar arrangement to secure the repayment of advances under a liquidity, letter of credit or surety bond arrangement used to fund any debt service reserve or similar account securing Senior Debt. “Default” means any event or condition which constitutes an Event of Default or which, with the giving of notice, or the lapse of time, or both would, unless cured or waived, become an Event of Default.
“Default Rate” means the Base Rate from time to time in effect plus 2.00% per annum. “Dodd-Frank Act” means the Dodd-Frank Wall Street Reform and Consumer Protection Act and all regulations, guidelines and directions in connection therewith, as the same may be amended from time to time.
“DTC” means The Depository Trust Company, New York, New York, and any successor securities depository.
“Effective Date” has the meaning set forth in Section 3.1 hereof. “Employee Plan” means an employee benefit plan covered by Title IV of ERISA and maintained for employees of the Commission.
“Enterprise” has the meaning set forth in the Wastewater Bonds Indenture. “Environmental Laws” means any and all federal, state and local statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges or releases of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes 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 pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes or the clean-up or other remediation thereof. “EoD No-Issuance Notice” has the meaning set forth in Section 8.2(c) hereof. “Event of Default” has the meaning set forth in Section 8.1 hereof. “Excess Interest Amount” has the meaning set forth in Section 2.4 hereof. “Facility Fee” has the meaning set forth in the Fee Letter.
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“Federal Funds Rate” means, for any day, the rate of interest per annum as determined by the Bank at which overnight Federal funds are offered to the Bank for such day by major banks in the interbank market, with any change in such rate to become effective as to the Authority, on the date of any change in such rate ; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be the rate applicable to 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 quoted to the Bank on such day by three Federal funds brokers selected by the Bank. Each determination of the Federal Funds Rate by the Bank shall be conclusive and binding on the Commission absent manifest error. Notwithstanding a nything herein to the contrary, if the Federal Funds Rate as determined as provided above would be less than zero percent (0.0%), then the Federal Funds Rate shall be deemed to be zero percent (0.0%). “Fee Letter” means the Fee Letter dated July 7, 2022, regarding fees, costs and expenses, as the same may be amended, restated, modified or supplemented from time to time by written instrument signed by the Commission and the Bank and any agreement entered into in substitution thereof. The parties hereto acknowledge and agree that all references in this Agreement to “Fee Letter” are, from and after the date hereof, read to mean “Fee Letter” as defined herein.
“Fiscal Year” has the meaning set forth in the Issuing and Paying Agent Agreement. “Formula Rate” means the rate per annum at which any Advance, Term Loan or any other amount payable hereunder or under the Fee Letter would bear interest pursuant to the terms hereof if such rate were determined without regard to the limitations herein with respect to the Maximum Interest Rate.
“GAAP” means generally accepted accounting principles in the United States of America from time to time as set forth in (a) the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and (b) statements and pronouncements of the Government Accounting Standards Board, as modified by the opinions, statements and pronouncements of any similar accounting body of comparable standing having authority over accounting by governmental entities. “Governmental Authority” means the United States of America or any state or political subdivision thereof or any foreign nation or political subdivision thereof, any entity, body or authority exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government in the United States of America (or any state, municipality or political subdivision thereof) or any foreign nation or political subdivision thereof, including, without limitation, any centr al bank or other governmental or quasi -governmental authority exercising control over banks or other financial institutions, and any corporation or other entity or authority owned or controlled (through stock or capital ownership or otherwise) by any of the foregoing. “Immediate Termination Event” has the meaning set forth in Section 8.1(a) hereof. “Interest Fund” has the meaning set forth in the Wastewater Bonds Indenture.
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“Investment Policy and Guidelines” means the investment guidelines of the City as in effect on the date hereof, as such investment guidelines may be amended from time to time in accordance with the Issuing and Paying Agent Agreement, the Resolutions, and State laws, as applicable.
“Issuing and Paying Agent” has the meaning set forth in the recitals to this Agreement and include any successors and assigns.
“Issuing and Paying Agent Agreement” has the meaning set forth in the recitals to this Agreement.
“Legal Requirement” means any law (including any Environmental Law), statute, ordinance, decree, requirement, order, judgment, rule or regulation (or interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority. “Lien” means, with respect to any asset, (a) any lien, charge, claim, mor tgage, security interest, pledge or assignment of revenues of any kind in respect of such asset or (b) the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.
“Maximum Interest Rate” means the lesser of (a) the maximum non-usurious interest rate that may, under applicable federal law and applicable state law, be contracted for, charged or received under such laws and (b) 12% per annum; provided, however, that if the City or the Commission increases the maximum rate allowable at any time during the term hereof, then such increased rate shall be the Maximum Interest Rate.
“Moody’s” means Moody’s Investors Service, Inc. and its successors and assigns. “Net Revenues” has the meaning set forth in the Wastewater Bonds Indenture. “No-Issuance Notice” means an EoD No -Issuance Notice or a Subordinated Bonds No- Issuance Notice.
“Offering Memorandum” means any offering memorandum or similar disclosure document relating to the Commercial Paper Notes and the Commission as may be prepared by or on behalf of the Commission or the Dealers from time to time in connection with the offering and sale of Commercial Paper Notes.
“Operation and Maintenance Costs of the Enterprise” has the meani ng set forth in the Wastewater Bonds Indenture.
“Ordinances” has the meaning set forth in the recitals hereof. “Other Commercial Paper Notes ” means all obligations of the Commission for the payment of principal and interest on any commercial paper notes issued by or on behalf of the Commission (other than the Commercial Paper Notes) payable from or secured by a first lien on
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the Pledged Revenues after the Senior Debt, but that is authorized and issued by the Commission pursuant to an indenture, contract or other instrument. “Other Debt Documents” has the meaning set forth in Section 7.1(c)(i) hereof. “Other Taxes” has the meaning set forth in Section 2.12(b) hereof. “Parity Debt” means all obligations of the Commission for the payment of principal and interest on Debt ((i) other than (A) Debt described in clause s (b) and (g) of the “Debt ” and (B) termination payments under Swap Contracts as described in clause (d) of the definition of “Debt”, (ii) with respect to capital leases described in clause (c) of the definition of “Debt,” only those capital leases the obligations under which are secured by or payable from Pledged Revenues on basis senior to or on a parity with the Commercial Paper Notes, the Loans, the Revolving Note and the Term Note (x) which are not subject to appropriation or abatement or (y) which is rated by each Rating Agency then rating the Commercial Paper Notes at a level equal to or higher than the long-term unenhanced debt rating assigned by each such Rating Agency to any Debt of such Perso n secured by or payable from Pledged Revenues on a parity with the Loans, the Revolving Note and the Term Note and (iii) with respect to debt as described in clause (f) of the definition of “Debt”, only with respect to such debt which has been assumed by t he Commission) payable from or secured by a first lien on the Pledged Revenues after the Senior Debt, but that is authorized and issued by the Commission pursuant to an indenture, contract or other instrument; including, without limitation, the Commercial Paper Notes, the Series A -1 Reimbursement Agreement, the Series A-1 Bank Note, Series A-2 Reimbursement Agreement, the Series A-2 Bank Note, the Series A-6 Liquidity Agreement, the Series A -6 Revolving Notes, the Series A -6 Term Note, the Series A -7 Reimbursement Agreement and the Series A-7 Bank Note, the US Bank Revolving Credit Agreement and the additional credit agreements, liquidity agreements, bank notes, revolving notes and term notes that are expected to be entered into in accordance with the Ordina nce, the City Legislation and/or the Resolutions; provided, however, that the failure to pay any Debt described in clause (e) of the definition of “Debt” as a result of any set -off, recoupment, counterclaim or any other defense of the Commission shall not constitute a failure to pay Parity Debt for purposes of this Agreement. “Parity Loans” shall have the meaning assigned to such term in the Wastewater Bonds Indenture.
“Participant” means a bank which has purchased a participation from the Bank in the Bank’s rights and obligations hereunder and under the Basic Documents pursuant to a Participation Agreement.
“Participation Agreement” means any agreement entered into among the Bank and one or more other banks purchasing participations in the Bank’s rights and obligations hereunder and under the Basic Documents and named therein, pursuant to which such other bank or banks shall purchase from the Bank a participation or participations in the Bank’s rights and obligations hereunder and under the Basic Documents.
“Patriot Act” has the meaning set forth in Section 9.20 hereof.
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“Person” means an individual, a firm, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organization, including a government or political subdivision or any agency or instrumentality thereof. “Pledged Revenues” means Available Wastewater Enterprise Revenues and other amounts described in Section 6.01 of the Issuing and Paying Agent Agreement. “Prime Rate” means the rate published from time to time in The Wall Street Journal as the “U.S. Prime Rate” or, in the event The Wall Street Journal ceases to be published, goes on strike, is otherwise not published or ceases publication of “Prime Rates”, the base, reference or other rate then designat ed by the Bank, in its sole discretion, for general commercial loan reference (it being understood that such rate shall not necessarily be the best or lowest rate of interest available to the Bank’s best or most preferred prime, large commercial customers). Each determination of the Prime Rate by the Bank will be conclusive and binding on the Issuer absent manifest error. Notwithstanding anything herein to the contrary, if the Prime Rate as determined as provided above would be less than zero percent (0.0%), then the Prime Rate shall be deemed to be zero percent (0.0%).
“Proceedings” has the meaning set forth in Section 9.14(c) hereof. “Proposition E” means the measure approved by the voters of the City on November 5, 2002, which among other things, authorized the Commission to issue revenue bonds, including notes, commercial paper or other forms of indebtedness, when authorized by ordinance approved by a two-thirds vote of the Board.
“Qualified Dealer” means, initially, only Citigroup Global Markets Inc., Goldman Sachs & Co. L LC, Morgan Stanley & Co. LLC, RBC Capital Markets, LLC and US Bancorp Investments, Inc. and the other Dealers on the list set forth in Exhibit M hereto on the Effective Date, and thereafter any other Dealer approved in writing by the Bank to act as dealer for Subseries A-4 Notes, which approval shall not be unreasonably withheld or delayed. “Quarterly Date” means the last Business Day of each March, June, September or December.
“Rating Agency” means either Moody’s or S&P . “Rating Agencies” means Moody’s and S&P.
“Request for Advance” means a written request for an Advance substantially in the form of Exhibit C hereto.
“Resolution No. 06-0164” has the meaning set forth in the recitals to this Agreement. “Resolution No. 11-0197” has the meaning set forth in the recitals to this Agreement. “Resolution No. 14-0139” has the meaning set forth in the recitals to this Agreement.
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“Resolution No. 17-0086” has the meaning set forth in the recitals to this Agreement. “Resolution No. 22-____” means the Authorizing Resolution. “Resolution No. 378-14” has the meaning set forth in the recitals to this Agreement. “Resolutions” has the meaning set forth in the recitals hereof. “Revenues” has the meaning set forth in the Wastewater Bonds Indenture. “Revolving Note” has the meaning set forth in Section 2.1(d) hereof. “Sale Price” has the meaning set forth in Section 2.5(b) hereof. “Senior Debt” means the Senior Lien Wastew ater Bonds , Subordinated Wastewater Bonds, Parity Loans and any additional bonds, notes or other Debt ((i) other than (A) Debt described in clauses (b) and (g) of the “Debt” and (B) termination payments under Swap Contracts as described in clause (d) of the definition of “Debt”, (ii) with respect to capital leases described in clause (c) of the definition of “Debt,” only those capital leases the obligations under which are secured by or payable from Pledged Revenues on basis senior to or on a parity with the Commercial Paper Notes, the Loans, the Revolving Note and the Term Note (x) whic h are not subject to appropriation or abatement or (y) which is rated by each Rating Agency then rating the Commercial Paper Notes at a level equal to or higher than the long -term unenhanced debt rating assigned by each such Rating Agency to any Debt of the Commission secured by or payable from Pledged Revenues on a parity with the Loans, the Revolving Note and the Term Note and (iii) with respect to debt as described in clause (f) of the definition of “Debt”, only with respect to such debt which has been assumed by the Commission) payable from or secured by the Wastewater Enterprise Revenues, that are senior to the Lien securing the Parity Debt; provided, however, that the failure to pay any Debt described in clause (e) of the definition of “Debt” as a resu lt of any set -off, recoupment, counterclaim or any other defense of the Commission shall not constitute a failure to pay Senior Debt for purposes of this Agreement. “Senior Lien Wastew ater Bonds” means all bonds currently outstanding or hereinafter issued by the Commission with a senior pledge or first lien on the Wastewater Enterprise Revenues.
“Senior Lien Wastew ater Documents” means the Wastewater Bonds Indenture pursuant to which the Senior Lien Wastewater Bonds are issued.
“Senior State Loans” has the meaning set forth in the Wastewater Bonds Indenture. “Series A -1 Bank Note” means the bank note issued pursuant to the Series A -1 Reimbursement Agreement.
“Series A-1 Reimbursement Agreement” has the meaning set forth in the recitals.
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“Series A-1 Notes” has the meaning set forth in the recitals. “Series A -2 Bank Note” means the bank note issued pursuant to the Series A -2 Reimbursement Agreement.
“Series A-2 Notes” has the meaning set forth in the recitals. “Series A-2 Reimbursement Agreement” has the meaning set forth in the recitals. “Series A-4 Notes” has the meaning set forth in the recitals. “Series A-5 Notes” has the meaning set forth in the recitals. “Series A-6 Liquidity Agreement” has the meaning set forth in the recitals. “Series A-6 Notes” has the meaning set forth in the recitals. “Series A-6 Revolving Note” means the revolving note issued pursuant to the Series A -6 Liquidity Agreement.
“Series A-6 Term Note” means the term note issued pursuant to the Series A -6 Liquidity Agreement.
“Series A -7 Bank Note” means the bank note issued pursuant to the Series A -7 Reimbursement Agreement.
“Series A-7 Notes” has the meaning set forth in the recitals. “Series A-7 Reimbursement Agreement” has the meaning set forth in the recitals. “Sixth Supplemental Indenture” means the Sixth Supplemental Indenture, dated July 1, 2018, by and between the Commission and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association) as trustee thereunder, which amends and supplements the Wastewater Bonds Indenture.
“S&P” means S&P Global Ratings , a division of Standard & Poor’s Financial Services LLC, and its successors and assigns.
“Sanctioned Country” means, at any time, a country or territory which is the subject or target of any Sanctions.
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions -related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S.
Department of the Treasury , the U.S. Department of State, or (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person.
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“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by t he U.S. government , including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State.
“State” means the State of California.
“Subordinated Bonds No -Issuance Notice” has the meaning set forth in Section 2.13 hereof.
“Subordinated Wastewater Bonds” has the meaning set forth in the Issuing and Paying Agent Agreement.
“Subordinated Wastewater Bonds Indenture” has the meaning set forth in the Issuing and Paying Agent Agreement.
“Suspension Event” has the meaning set forth in Section 8.2(b) hereof. “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, 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, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross -currency rate swap transactions, currency options, 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.
“Swap Policy and Guidelines” means the swap guidelines of the Commission as in effect on the date hereof, as such swap guidelines may be amended from time to time in accordance with the Issuing and Paying Agent Agreement, the Resolutions, and State laws, as applicable. “Taxes” has the meaning set forth in Section 2.12(a) hereof. “Term Loan” has the meaning set forth in Section 2.2(a) hereof. “Term Loan Date” has the meaning set forth in Section 2.2(a) hereof. “Term Note” has the meaning set forth in Section 2.2(c) hereof.
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“Termination Date” has the meaning set forth in Section 8.2(b) hereof. “US Bank Revolving Credit Agreement” has the meaning set forth in the recitals. “Wastewater Bonds Indentur e” has the meaning set forth in the Issuing and Paying Agent Agreement.
“Wastewater Enterprise” has the meaning set forth in the Issuing and Paying Agent Agreement.
“Wastewater Enterprise Revenues” has the meaning ascribed to the term “Revenues” in the Wastewater Bonds Indenture.
Section 1.2. Accounting Terms and Determinations . Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared, in accordance with GAAP as in effect from time to time, applied on a basis consistent (except for changes approved by the Commission’s independent public accountants) with the most recent audited financial statements of the Commission delivered to the Bank.
Section 1.3. Rules of Construction. When used in this Agreement:
(a) the singular includes the plural and the plural includes the singular; (b) “or” is not exclusive;
(c) a reference to a law shall include any amendment or modification to such law;
(d) a reference to a person shall include its permitted successors and permitted assigns; and
(e) a reference to an agreement, instrument or document shall include such agreement, instrument or document as the same may be amended, modified or supplemented from time to time in accordance with its terms and as permitted hereby.
A
RTICLE II
ADVANCES AND LOANS
Section 2.1. Advances.
(a) Making of Advances; Use of Proceeds . Subject to the terms and conditions of this Agreement (including, without limitation, Section 3. 2 hereof), the Bank agrees to make Advances from time to time on any Business Day during the Commitment Period in amounts not to exceed at any time the Available Commitment. Each Advance shall be made solely for the
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purpose of providing funds to pay the principal of and accrued interest on the Series A-4 Notes on the respective maturity dates thereof to the extent that proceeds of other Series A-4 Notes are not available therefor.
(b) Reborrowing. Within the limits of this Section 2 .1, the Commission may borrow in the form of Advances hereunder, pay or prepay outstanding Advances and Term Loans pursuant to Section 2.5 hereof and reborrow in the form of Advances under this Section 2.1. (c) Method of Borrowing. Upon receipt of a Request for Advance by the Bank from the Issuing and Paying Agent in the form of Exhibit C hereto not later than 11:30 a.m. (New York City time) on the day of the proposed borrowing, the Bank shall, subject to the terms and conditions of this Agreement, before 2:30 p.m. (New York City time) on such date, transfer funds to the Issuing and Paying Agent in an amount equal to the amount of the requested Advance. With respect to any such Request for Advance received by the Bank from the Issuing and Paying Agent aft er 11:30 a.m. (New York City time) on any date, the Bank shall be obligated to make such Advance to the Issuing and Paying Agent by 2:30 p.m. (New York City time) on the next succeeding Business Day. Each Advance shall be made by the Bank by wire transfer of immediately available funds to the Issuing and Paying Agent at ____________. Such account may be changed only by presentation to the Bank of a notice in form satisfactory to the Bank specifying a different account with the Issuing and Paying Agent and executed by the Issuing and Paying Agent and authenticated to the Bank’s satisfaction. (d) Revolving Note. All Advances shall be evidenced by one promissory note of the Commission, designated “Public Utilities Commission of the City and County of San Francisco Liquidity Facility R evolving Bank Note, Series A-4” in substantially the form of Exhibit A hereto (the “Revolving Note” ) to be issued on the Effective Date, payable to the Bank in a principal amount up to the amount of the Commitment on the Effec tive Date and interest on outstanding advances hereunder and otherwise duly completed. All Advances made by the Bank and all payments and prepayments made on account of principal thereof shall be recorded by the Bank on the schedule (or a continuation thereof) attached to the Revolving Note, it being understood, however, that failure by the Bank to make any such endorsement shall not affect the obligations of the Commission hereunder or under the Revolving Note in respect of unpaid principal of and interest on the Advances.
(e) Scheduled Repayments of Advances. The principal of each Advance shall be repaid on the date such Advance is made; provided, that if on such date (i) no Default or Event of Default shall have occurred and be continuing and (ii) the representations and warranties of the Commission set forth in Article VI hereof and in each of the other Basic Documents shall be true and correct in all material respects and deemed made on and as of such date, such Advance shall be repaid on the Advance Due Date applicable to such Advance; provided further, that if the conditions to the making of the Term Loan set forth in Section 3.3 are satisfied on such Advance Due Date, such Advance shall be deemed to be repaid from the proceeds of a Term Loan made in accordance with Section 2.2 hereof . The Commission’s obligations to repay each Advance and to pay interest thereon as provided herein shall be evidenced and secured by the Revolving Note, and the Commission shall redeem the Revolving Note on each date on which the Commission is required to make a principal payment on a n Advance in an amount equal to the
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Advance payment due on such date and shall pay interest on the Revolving Note on each date on which the Commission is required to make an interest payment on an Advance. (f) Interest. The Commission agrees to pay interest on the unpaid principal amount of each Advance, subject to the terms of Section 2.4 hereof, from the date such Advance is made until the principal amount thereof is paid in full, at the Bank Rate or the Default Rate, as applicable; provided, however, that at all times the interest rate payable on any Advance shall be subject to the limitations set forth in Section 2.4 hereof. Interest on each Advance shall be payable in arrears on the first Business Day of each calendar month and on the related Advance Due Date or as otherwise provided pursuant to Sections 2.5 and 8.2 hereof. In addition, in the case of any prepayment of any portion of an Advance, interest on the portion so prepaid shall be payable in arrears on the date of prepayment.
Section 2.2. Term Loans.
(a) Making of Term Loans; Use of Proceeds . Subject to the fulfillment of the conditions precedent set forth in Section 3.3 hereof, the Bank agrees to make loans from time to time (each, a “Term Loan” ) on each Advance Due Date (each, a “Term Loan Date” ) in a principal amount equal to the principal amount of the Advance that is then due on each such Advance Due Date. The proceeds of each Term Loan shall be applied exclusively to the repayment of the principal of the related Advance on each Advance Due Date and the Commission shall pay all accrued interest on such Advance on the Advance Due Date. (b) Method of Borrowing. Upon receipt by the Bank of a notice signed by an Authorized Representative of the Commission requesting that the Bank make a Term Loan on a proposed Term Loan Date not earlier than five (5) Business Days after the date of such receipt, the Bank, subject to the terms and conditions of this Agreement, shall be deemed to make a Term Loan on such proposed Term Loan Date to the Commission in the principal amount specified in such notice, which shall be equal to the principal amount of the Advance maturing on such date. (c) T erm Note. All Term Loans shall be evidenced by one promissory note of the Commission, designated “Public Utilities Commission of the City and County of San Francisco Liquidity Facility Term Bank Note, Series A-4,” in substantially the form of Exhibit B he reto (the “Term Note”) to be issued on the Effective Date, payable to the Bank in a principal amount equal to the Commitment then in effect, plus all interest which accrue on any outstanding Term Loans and otherwise duly completed. All Term Loans made by the Bank and all payments and prepayments made on account of the principal of each Term Loan shall be recorded by the Bank on the schedule attached to the Term Note, it being understood, however, that failure by the Bank to make any such endorsement or any error therein shall not affect the obligations of the Commission hereunder or under the Term Note in respect of unpaid principal of and interest on the Term Loans.
(d) Scheduled Repayment of Term Loans . The principal of each Term Loan shall be repaid in installments during a period commencing on its Term Loan Date and terminating on the Amortization End Date (as in effect on such Term Loan Date). The principal installments for each Term Loan shall be due and payable on the first Quarterly Date that is at least one hundred
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eighty (180) days following the date of the related Advance, on each Quarterly Date thereafter and with the final installment being due and payable on or before the Amortization End Date and the principal amount of each said installment shall be derived by dividing the aggregate principal amount of such Term Loan by the total number of such payment dates. (e) Interest. The Commission shall pay interest on the unpaid principal amount of each Term Loan, subject to the terms of Section 2.4 hereof, from its Term Loan Date until the principal amount thereof is paid in full at the Bank Rate or the Default Rate, as applicable; provided, however, that at all times the interest rate payable on any Term Loan shall be subject to the provisions set forth in Section 2.4 hereof. Interest on each Term Loan shall be payable in arrears on the first Business Day of each calendar month and on the Amortization End Date. In addition, in the case of any prepayment of any portion of a Term Loan, interest on the portion so prepaid shall be payable on the date of such prepayment. The Commission’s obligations to repay each Term Loan and to pay interest thereon as provided herein shall be evidenced and secured by the Term Note, and the Commission shall redeem th e Term Note on each date on which the Commission is required to make a principal payment on a Term Loan in an amount equal to the Term Loan payment due on such date and shall pay interest on the Term Note on each date on which the Commission is required to make an interest payment on a Term Loan.
Section 2.3. Interest on Overdue Amounts . If there shall have occurred and be continuing an Event of Default, any amount due hereunder or under the Fee Letter (including, without limitation, fees, commissions, expenses, an Advance, a Term Loan or, to the extent permitted by law, installments of interest thereon) shall bear interest, payable on demand, and subject to the terms of Section 2.4 hereof, from the date the same becomes due until such amount is paid in full at a fluctuating rate per annum equal to the Default Rate; provided, however, that at all times the Default Rate shall be subject to the provisions set forth in Section 2.4 hereof.
Section 2.4. Interest Rate Adjustment . If the amount of interest payable in respect of any Advance or Term Loan for any interest payment period ending on any interest payment date (as provided in Section 2.1(f) hereof with respect to Advances and Section 2.2(e) hereof with respect to Term Loans) calculated at the Formula Rate is less than the Maximum Interest Rate, then interest on such Advance or Term Loan shall for such period accrue and be payable at the Formula Rate. If the amount of interest payable in respect of any Advance or Term Loan for any interest payment period ending on any interest payment date calculated at the Formula Rate exceeds the amount of interest that would be payable for such period had interest been calculated at the Maximum Interest Rate, then interest on such Advance or Term Loan shall for such period accrue and be payable in an amount calculated on the basis of the Maximum Interest Rate. The difference between (a) the amount of in terest which would have accrued and been payable on Advances or Term Loans for any interest payment periods at the Formula Rate (calculated without regard to the immediately preceding sentence) and (b) the amount of interest that did accrue and become payable as provided in the immediately preceding sentence is herein referred to as the “Excess Interest Amount.” The Bank shall calculate and notify the Commission promptly in writing of the Excess Interest Amount, as the same is determined from time to time; provided, that the failure of the Bank to so notify the Commission shall not affect the accrual of or obligation of the Commission to pay such Excess Interest Amount. If there is an Excess Interest Amount, then each Advance and Term Loan shall for the current and each subsequent
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interest period (or portion thereof) bear interest at the Maximum Interest Rate until such time as the excess of (a) the amount of interest accrued and payable thereon at such rate over (b) the amount of interest that would have a ccrued and been payable at the Formula Rate equals the Excess Interest Amount; provided, that upon termination of this Agreement, in consideration for the limitation of the rate of interest otherwise payable hereunder, the Commission shall pay, to the extent permitted by law, the Bank a fee equal to the amount of all unpaid Excess Interest Amount.
Section 2.5. Prepayments of Advances and Loans .
(a) Optional Prepayment. On any Business Day upon not less than one Business Day’s notice, the Commission may prepay or cause to be prepaid, without penalty, any Advance or Term Loan either in whole or in part in a principal amount equal to $500,000 and integral multiples of $1,000 in excess thereof by paying to the Bank (i) the principal amount of the Advance or Term Loan, or portion thereof, being prepaid plus (ii) accrued and unpaid interest on such principal amount.
(b) Mandatory Prepayment by Reason of Sales of Series A-4 Notes. Simultaneously with the sale of any Series A-4 Notes while any Advances or Term Loans are outstanding, the Commission shall be obligated (i) first, to pay the principal of Series A-4 Notes maturing on such date and (ii) second, to (A) prepay Advances or Term Loans in a principal amount equal to the principal amount of Series A-4 Notes issued on such date, and (B) pay accrued and unpaid interest on the principal amount of such Advances or Term Loans being prepaid. In order to effectuate such prepayment of Advances or Term Loans and the payment of accrued and unpaid interest thereon , prior to or simultaneously with the sale of any Series A-4 Notes, (i) the Commission shall use its best efforts to cause the Dealers to deliver to the Bank a written notice to the effect that (A) it is selling on the Business Day of such notice a specified principal amount of Series A-4 Notes in excess of the principal amount of Series A-4 Notes maturing on such date, (B) it is delivering to the Issuing and Paying Agent for the account of the Bank on such Business Day by wire transfer a specified amount of immediately available funds which is equal to the principal amount of such Series A-4 Notes in excess of the principal amount of Series A-4 Notes maturing on such date (the “Sale Price” ), and which constitutes proceeds of such sale, and (C) such specified principal amount of Series A-4 Notes in excess of the principal amount of Series A-4 Notes maturing on such date is being delivered to or upon the order of the Dealer in accordance with the Is suing and Paying Agent Agreement, and (ii) the Commission shall use its best efforts to cause the Dealers to pay to the Issuing and Paying Agent for the account of the Bank, by wire transfer of immediately available funds, the proceeds of the sale of such Series A- 4 Notes in excess of the principal amount of Series A-4 Notes maturing on such date in an amount equal to the Sale Price which shall be applied first , to the prepayment of principal of outstanding Term Loans, second, to the extent sufficient therefore and not otherwise provided for by the Commission, to the payment of interest accrued on such principal amount of Term Loans prepaid, third, to the extent sufficient therefore and not otherwise provided for by the Commission, to the payment of the principal on all outstanding Advances and fourth, to the extent sufficient therefore and not otherwise provided for by the Commission, to the payment of interest accrued on such principal amount of Advances prepaid. Effective immediately upon the receipt by the Bank of the notice referred to in clause (i) above and notification of the Federal
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funds wire transfer reference numbers with respect to the Sale Price and any transfer of funds from the Commission, the Available Commitment shall be reinstated by an amo unt equal to the principal amount of the Advances and/or Term Loans prepaid; provided, however , that at any time the Bank may, by written notice to the Commission, require that such reinstatement shall occur only upon actual receipt of payments in respect of the Advances or Term Loans to be repaid. In the event that the proceeds of any sale of Series A-4 Notes in excess of the principal amount of Series A-4 Notes maturing on such date are not received from the Dealers or are received in an amount less than the Sale Price thereof (net of any amount already provided by the Commission pursuant to this Section 2.5(b)), the Commission shall pay to the Bank, within three (3) Business Days of the Bank’s demand therefor, an amount equal to the amount of such proceeds or such deficiency.
(c) General Provisions . Term Loans and Advances shall be prepaid in the order in which made. In the case of a partial prepayment of any Term Loan or an Advance, the installments thereof shall be prepaid in the inverse order of their due dates unless otherwise specified by the Commission.
Section 2.6. Termination or Reduction of Commitment . The Available Commitment shall automatically terminate on the date on which an Alternate Facility has become effective pursuant to the Issuing and Paying Agent Agreement but subject to the provisions of Section 9.12(d) hereof. The Commission shall provide thirty (30) days’ prior written notice to the Bank of such termination by delivering to the Bank a certificate in substantially the form of Exhibit E hereto except that, in the case of any termination as provided in Section 9.12(a) hereof, the delivery of such a certificate shall not be required. The Commission may from ti me to time reduce the amounts of the Commitment and the Available Commitment by delivering to the Bank a certificate in substantially the form of Exhibit E hereto at least thirty (30) days’ prior to such reduction; provided, that the statements set forth in paragraph (b) of such certificate shall be true and correct.
Section 2.7. Increased Costs. If, after the execution and delivery of this Agreement, (1) the introduction of or any change in or in the interpretation of any law, treaty or regulation, (2) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law) or (3) the introduction of any applicable law, rule, regulation or guideline regarding capital or liquidity adequacy, or any change therein or any change in the interpretation or administration thereof by any central bank or governmental authority charged with the interpretation or administration thereof or supervision of compliance by the Bank or any Participant (or any corporation controlling any thereof), with any request, guideline or directive regarding capital or liquidity adequacy (whether or not having the force of law) of any such central bank or other authority, shall either (x) impose, modify or deem applicable any reserve, capital or liquidity ratio, special deposit, insurance premium, assessment, fee, capital requirement, liquidity ratio, tax (other than income tax) or similar requirement against loan agreements entered into, or credit extended, by the Bank similar to this Agreement, or commitments to advance funds by any Participant in connection with the commitments made by such Participant under its Participation Agreement or (y) impose on the Bank or any Participant any other condition relating, directly or indirectly, to this Agreement, the Revolving Note or the Term Note and the result of any event referred to in (x) or (y) above shall be to (A)
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increase the cost to the Bank (or any corporation controlling the Bank) of maintaining this Agreement, or to increase the cost of any Participant (or any corporation controlling such Participant) of maintaining its commitment under its Participation Agreement (as the case may be) or (B) reduce any amount (or the effe ctive return on capital or liquidity ) received or receivable by the Bank (or any corporation controlling the Bank) hereunder or under the Fee Letter or by a Participant (or any corporation controlling such Participant) under its Participation Agreement, then the Commission shall, upon written notice from the Bank (which notice shall set forth the matters described below), pay to the Bank, for the account of the Bank or such Participant, as the case may be, from time to time as specified by the Bank, such additional amounts as shall be demanded by the Bank as sufficient to compensate the Bank or such Participant, as the case may be, for such increased cost or reduction in yield or return, together with interest thereon at the Default Rate on amounts required to be paid under this Section 2.7 from the date of such notice until payment in full thereof, such amounts shall be due and payable within thirty (30) days after the Commission’s receipt of written notice thereof; provided , that interest thereon shall not begin to accrue until the thirtieth (30 th) day after such demand.
Notwithstanding the foregoing, (i) the amount that any Participant shall be entitled to receive under this Section 2.7 shall in no event exceed the amount that the Bank would have been entitled to receive under this Section 2.7 had such Participant’s funding obligations been direct obligations of the Bank and (ii) for purposes of this Section 2.7, all requests, rules, guidelines or directives in connection with the Dodd-Frank Act shall be deemed to be included in the provisions of this Section 2.7 regardless of the date enacted, adopted or issued, and all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar Institution) or any Governmental Authority with proper jurisdiction over the Bank in regard to the foregoing shall be deemed included in the provisions of this Section 2.7 regardless of the date enacted, adopted or issued.
The Bank shall provide the Commission with written notice of an increased cost or reduction in yield or return to be incurred by the Bank as a result of any event mentioned in this Section 2.7 promptly following the Bank’s final determination that such increased cost or reduction in yield or return will be the subject of the certificate described in the next succeeding sentence; provided, however, that the failure of the Bank to give any such notice shall not limit or otherwise aff ect the obligation of the Commission to pay the amount set forth in said certificate. A certificate as to such increased cost or reduction in yield or return incurred by the Bank as a result of any event mentioned in this Section 2.7, prepared in reasonable detail and in accordance with this Section 2.7, submitted by the Bank to the Commission, shall be conclusive, absent manifest error, as to the amount thereof.
The obligations of the Commission under this Section 2.7 shall survive the termination of this Agreement and the payment in full of all obligations of the Commission hereunder, under the Fee Letter and under the Revolving Note and the Term Note for a period of nine (9) months from the latest of the date of termination of this Agreement and the pay ment of all obligations hereunder (except that if the situation giving rise to such increased costs or reductions is retroactive, then the nine (9) month period referred to above will be extended to include the period of retroactive effect thereof; provided, however, that the foregoing clause shall only
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survive the termination of this Agreement and the payment of all obligations hereunder for a period of two (2) years).
Section 2.8. Security. Notwithstanding any other provision of this Agreement or any other Basic Document to the contrary, all obligations to the Bank under this Agreement, including, without limitation, the Revolving Note and the Term Note, are limited obligations of the Commission payable solely from the Pledged Revenues, as provided in the Issuing and Paying Agent Agreement.
Section 2.9. Payments and Computations . The Commission shall make or cause to be made each payment hereunder and under the Fee Letter not later than 3:00 P.M. (New York City time) on the day when due, in lawful money of the United States of America, to the Bank, by wire transfer in immediately available funds to the following account: TD Bank, N.A. , [ACCOUNT INFORMATION], Reference: The Public Utilities Commission of the City and County of San Francisco Wa stewater Series A-4 Notes, or such other account as the Bank may specify in writing from time to time to the Commission (such account being the “ Payment Office”). Any payment received after such time shall be deemed to be received on the next succeeding Business Day for purposes of calculating any interest payable in respect thereof. All computations of interest hereunder shall be made on the basis of a year of 365 days or 366 days, as applicable, for the actual number of days elapsed (including the first day but excluding the last day) and all computations of fees hereunder and under the Fee Letter shall be made on the basis of a year of 360 days for the actual number of days elapsed (including the first day but excluding the last day).
Section 2.10. Payment on Non- Business Days. Whenever any payment to be made hereunder, under the Fee Letter or under the Revolving Note or the Term Note shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of the payment of interest due hereunder.
Section 2.11. Book Entries. The Bank shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Commission resulting from Advances and Term Loans and the amounts of principal payable and paid from time to time hereunder and the amounts of principal and interest payable to the Bank hereunder and under the Revolving Note and the Term Note. The failure to record any such amount shall not, however, limit or otherwise affect the obligations of the Commission hereunder to repay all amounts owed hereunder, together with all interest accrued thereon as provided herein.
Section 2.12. Taxes.
(a) To the extent permitted by law, any and all payments by the Commission hereunder, under the Fee Letter or under the Revolving Note or the Term Note shall be made, in accordance with Section 2.9, free and clear of and without deduction for any and all taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on the overall net income of the Bank or any Participant (and franchise taxes imposed in lieu of net income taxes) by the jurisdiction of the Bank’s or Participant’s applicable lending
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office or any political subdivision thereof (all such non- excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as “Taxes ”). If the Commission shall be r equired by law to withhold or deduct any Taxes from or in respect of any sum payable hereunder, under the Fee Letter or under the Revolving Note or the Term Note, then, to the extent permitted by law, (i) the sum payable shall be increased as may be necess ary so that after making all required withholdings or deductions (including those applicable to additional sums payable under this Section 2.12) the Bank or Participant receives an amount equal to the sum it would have received had no such withholdings or deductions been made, (ii) the Commission shall make such withholdings or deductions and (iii) the Commission shall pay the full amount withheld or deducted to the relevant taxation authority or other authority in accordance with applicable law. Notwithst anding anything to the contrary contained herein, the Commission shall not be required to pay any additional amount in respect of withholding of United States Federal income taxes pursuant to this Section to the extent such withholding is required because the Bank or Participant has failed to submit any form or certificate that it is entitled to submit under applicable law to qualify for an exemption from such withholding. (b) In addition, to the extent permitted by law, the Commission agrees to pay any present or future stamp or documentary taxes, charges or similar levies that arise under the laws of the United States of America, the State of New York, the State or any other taxing jurisdiction from any payment made or received hereunder, under the Fee Letter or received under the Revolving Note or the Term Note or from the execution or delivery or otherwise with respect to this Agreement, the Revolving Note or the Term Note (hereinafter referred to as “Other Taxes”). (c) Payments by the Commission pursua nt to this Section 2.12 shall be made within thirty (30) days from the date the Bank makes written demand therefor which demand shall be accompanied by a certificate describing in reasonable detail the basis thereof, which shall be correct absent manifest error.
(d) Within thirty (30) days after the date of any payment of Taxes by the Commission, the Commission shall furnish to the Bank, at its address referred to in Section 9.9 hereof, the original or a certified copy of a receipt evidencing payment thereof. The Commission shall compensate the Bank or Participant for all losses and expenses sustained by the Bank or Participant as a result of any failure by the Commission to so furnish such copy of such receipt; provided, that the Commission shall not be obligated to pay the Bank for any losses or expenses relating to Taxes or Other Taxes arising from the Bank’s or any Participant’s gross negligence or willful misconduct.
(e) Without prejudice to the survival of any other agreement of the Commission hereunder, the agreements and obligations contained in this Section 2.12 shall survive the payment in full of principal and interest payable to the Bank hereunder and under the Revolving Note and the Term Note.
(f) Notwithstanding the foregoing, the amount that any Participant shall be entitled to receive under this Section 2.12 shall in no event exceed the amount that the Bank would have been entitled to receive under this Section 2.12 had such Participant’s funding obligations been direct obligations of the Bank.
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Section 2.13. Subordinated Wastewater Bonds No-Issuance Notice . (a) Issuance of Subordinated Wastewater Bonds. In the case the Commission issues any Subordinated Wastewater Bonds, the Bank may by written notice to the Commission and the Issuing and Paying Agent (a “ Subordinated Bonds No -Issuance Notice” ) in substantially the form of Exhibit H -2 hereto declare the Commitment to be reduced to the principal amount of Series A-4 Notes then outstanding and to be permanently reduced further on the maturity date of each such Series A-4 Note by an amount equal to the principal amount of such Series A-4 Note with the Commitment to be terminated upon the last maturity date applicable to all such Series A-4 Notes. Following receipt of a Subordinated Bonds No -Issuance Notice, the Commission shall not issue any additional Series A-4 Notes. (b) Timing of Subordinated Bonds No -Issuance Notice. A Subordinated Bonds No - Issuance Notice that is received by the Commission at or before 3:00 p.m. (New York City time) shall be effective when received. A Subordinated Bonds No-Issuance Notice that is received by the Commission after 3:00 p.m. (New York City time) shall not be effective until the opening of business on the next succeeding Business Day.
(c) Copies of Notices. Concurrently with the occurrence of a Subordinated Bonds No - Issuance Notice pursuant to clause ( a) of this Section 2.13, the Commission shall give notice to the Issuing and Paying Agent and the Dealers.
In addition, concurrently with giving such notice to the Commission and the Issuing and Paying Agent, the Bank shall provide a copy thereof to the Dealers at their respective addresses referred to in Section 9.9; provided, however, that the Bank shall not incur any liability as a result of its failure to provide a copy of such a notice in accordance with this sentence.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1. Condi tions Precedent to Effectiveness . This Agreement shall become effective on the date (the “Effective Date” ) that each of the following conditions precedent has been fulfilled to the satisfaction of the Bank and counsel to the Bank (such date being hereby designated as July 7, 2022):
(a) Opinions . The Bank shall have received (i) an opinion of the City Attorney of the City dated the Effective Date and addressed to the Bank (or on which the Bank may rely) to the effect that (A) the Commission is duly organized and validly existing as a commission of the City pursuant to the Charter with full legal power and authority to execute this Agreement, the Fee Letter and the other Basic Commission Documents to which it is a party and to issue the Commercial Paper Notes; (B) this Agreement, the Fee Letter and the other Basic Commission Documents to which it is a party are valid and binding agreements of the Commission enforceable against the Commission in accordance with their respective terms, subject to bankruptcy, insolvency, moratorium or other laws affecting creditors’ rights, to general principles of equity and to
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limitations on remedies against public agencies; (C) no authorization, approval, consent or order of any agency or body having jurisdiction over the Commission is required which has not been obtained; (D) the issuance of the Commercial Paper Notes and the execution, delivery and performance of this Agreement, the Fee Letter and the other Basic Commission Documents to which it is a party do not conflict with any material law or agreements to which the Commission is a party, or cause a default under any material documents to which the Commission is a party; and (E) no litigation is pending or threatened against the Commission threatening its existence or power, the ability to issue the Commercial Paper Notes or to enter into and perform its obligations under this Agreement, the Fee Letter and the other Basic Commission Documents to which i t is a party, or in which a final adverse decision could materially adversely affect the business, operations or financial condition of the Commission, each such opinion (or, in lieu thereof, a reliance letter) to be addressed to the Bank, dated the Effective Date and in form and substance satisfactory to the Bank; (ii) (A) an opinion of the Bond Counsel dated the Effective Date and addressed to the Bank (or on which the Bank may rely) to the effect that (1) the Commission is duly organized and validly existing as a commission of the City pursuant to the Charter with full legal power and authority to execute this Agreement, the Fee Letter and the other Basic Commission Documents and to issue the Commercial Paper Notes, the Revolving Note and the Term Note; and (2) this Agreement, the Fee Letter and the other Basic Commission Documents are valid and binding agreements of the Commission enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, moratorium or other laws affecting c reditors’ rights, to general principles of equity and to limitations on remedies against public agencies and (B) a no adverse effect opinion rendered by Bond Counsel addressed to the Bank or a reliance letter addressed to the Bank with respect to such opin ion to the effect that the substitution of an Alternate Facility will not, in and of itself, adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Commercial Paper Notes or for State of California income ta x purposes and (iii) a legal opinion from Chapman and Cutler LLP, special counsel to the Bank, addressed to the Bank, dated the Effective Date and in form and substance satisfactory to the Bank. (b) Documents . The Bank shall have received executed copies of this Agreement, the Fee Letter , the City Legislation, the Authorizing Resolution, the Resolutions, the Issuing and Paying Agent Agreement , the Dealer Agreements, and the original Revolving Note and the Term Note, including all amendments and supplements , if any, to the foregoing, certified by the Secretary of the Commission, the Clerk of the Board or any Authorized Representative, as applicable, as being in full force and effect on and as of the Effective Date.
(c) Defaults; Representations and Warranti es. On and as of the Effective Date hereof, (i) no Default or Event of Default hereunder and no default or event of default under any of the other Basic Documents shall have occurred and be continuing or would occur upon the making of any Advance or Term Loan and (ii) the representations of the Commission set forth in Article VI hereof and in each of the other Basic Documents shall be true and correct in all material respects on and as of the Effective Date with the same force and effect as if made on and as of such date.
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(d) No Litigation. No action, suit, investigation or proceeding shall be pending or, to the knowledge of the Commission, threatened (i) in connection with the Commercial Paper Notes, the other Basic Documents, the Fee Letter or this Agreement or any transactions contemplated thereby or hereby or (ii) against or affecting the Commission, the result of which could have a material adverse effect on the business, properties, operations, prospects or condition (financial or otherwise) of the C ommission or its ability to perform its obligations hereunder or under the Commercial Paper Notes or the other Basic Documents or hereunder.
(e) No Material Adverse Change . The Bank shall have received the most recent audited financial statements of the Commission and, since the date of such financial statements, (i) no material adverse change shall have occurred in the status of the business, properties, operations, prospects or condition (financial or otherwise) of the Commission or its ability to perfo rm its obligations hereunder or under the Commercial Paper Notes, this Agreement, the Fee Letter or the other Basic Documents and (ii) no law, regulation, ruling or other action (or interpretation or administration thereof) of the United States, the State of California 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 its obligations hereunder or under the Commercial Paper Notes, this Agreement, the Fee Letter or the other Basic Documents. (f) Certificate. The Bank shall have received (i) certified copies of all proceedings of the Commission authorizing the execution, delivery and performance of this Agreement, the Fee Letter, the Revolvin g Note, the Term Note and the other Basic Commission Documents and the transactions contemplated hereby and thereby, (ii) certified copies of the City Legislation and (iii) a certificate or certificates of one or more Authorized Representatives dated the E ffective Date certifying to the accuracy of the statements made in Section 3.1(c), (d) and (e) hereof and further certifying the name, incumbency and signature of each individual authorized to sign this Agreement, the Fee Letter, the Revolving Note, the Te rm Note, the other Basic Commission Documents to which the Commission is a party and the other documents or certificates to be delivered by the Commission pursuant hereto or thereto, on which the Bank may conclusively rely until a revised certificate is similarly delivered and that the conditions precedent set forth in this Section 3.1 have been satisfied.
(g) Payment of Fees. The Bank shall have received all fees and expenses due and payable to the Bank or its legal counsel pursuant to the Fee Letter shall be paid or alternative arrangements satisfactory therefor have been made with the Bank. (h) Financial Statements. The Bank shall have received the audited financial statements of the Commission for the Fiscal Year ended June 30, 2021, and internally prepared quarterly budget reports of the Commission for the most recent fiscal quarter end, and a copy of the current quarterly budgeting status report, if not previously provided.
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(i) Investment Policy and Guidelines . The Bank shall have received a cop y of the current Investment Policy and Guidelines and other permitted investments, certified as of a recent date by an Authorized Representative, which shall be satisfactory to the Bank.
(j) Swap Policy and Guidelines. The Bank shall have received a copy of the current Swap Policy and Guidelines and other permitted investments, certified as of a recent date by an Authorized Representative, which shall be satisfactory to the Bank. (k) Offering Memorandum . The Bank shall have received a copy of the Offering Memorandum.
(l) CUSIP and Rating for Revolving Note and Term Note . The Bank shall have received written confirmation that (a) a CUSIP number has been obtained from Standard and Poor’s CUSIP Services for each of the Revolving Note and the Term Note and (b) each of the Revolving Note and the Term Note (and their related CUSIP numbers) have been assigned a long- term rating of at least investment grade from any Rating Agency.
(m) Series A -4 Notes Rating. The Bank shall have received written confirmation that the Series A-4 Notes have been rated “P-1” by Moody’s and “A-1+” by S&P and that the underlying long- term credit ratings assigned to the Commission’s unenhanced Senior Lien Wastewater Bonds are rated at least “AA” by S&P and “Aa3” by Moody’s.
(n) Resolution Requirements. The Bank has received (i) a certification from an independent engineer that (A) the projects to be financed by indebtedness evidenced by such Commercial Paper Notes meet utility standards, and (B) estimated net revenue will be suffic ient to meet operating, maintenance, debt service coverage and other indenture or resolution requirements, as described in Resolution No. 193-17; and (ii) a certification from the San Francisco Planning Department that the facilities financed with such indebtedness will comply with applicable requirements of the California Environmental Quality Act, as described in Resolution No. 193-17. (o) Other Matters. The Bank shall have received such other statements, certificates, agreements, documents and informat ion with respect to the Commission and matters contemplated by this Agreement as the Bank may request.
In addition, (A) the Bank shall have made a reasonable determination that, as of the Effective Date, no law, regulation, ruling or other action of the United States of America, the State of New York, the State or any other Governmental Authority 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 Commission, the Issuing and Paying Agent, the Dealers or the Bank from fulfilling their respective obligations under this Agreement and the Basic Documents and (B) no material adverse change in the financial condition of the Commission or in the laws, rules, guidelines, or regulations (or their interpretation or administration) currently in effect and
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applicable to the parties hereto, the Commission and the transactions contemplated hereby, as reasonably determined by the Bank, shall have occurred. The execution and delivery of this Agreement by the Bank shall signify its having made such determination.
Section 3.2. Conditions Precedent to Each Advance . The obligation of the Bank to make an Advance on any date is subject to the conditions precedent that on the date of such Advance (a) the Bank shall have timely received a properly completed Request for Advance and (b) no Immediate Termination Event shall have occurred and no Suspension Event shall have occurred and be continuing. Unless the Commission shall have otherwise previously advised the Bank in writing, delivery to the Bank of a Request for Advance shall be deemed to constitute a representation and warranty by the Commission that, on the date of such Advance, no Immediate Termination Event shall have occurred and no Suspension Event shall have occurred and be continuing.
Section 3.3. Conditions Precedent to Each Term Loan. The obligation of the Bank to make a Term Loan on its Term Loan Date is subject to the fulfillment of the following conditions precedent to the satisfaction of the Bank:
(a) No Alternate Facility . There shall not have been delivered to the Commission any Alternate Facility in replacement of this Agreement. (b) Notice of Loan. The Bank shall have received from the Commission a properly presented and conforming written notice of loan requesting that the Bank make such Term Loan, which shall be dated and received by the Bank from the Commission not less than five (5) Business Days prior to the proposed Term Loan Date. (c) No Immediate Termination Event, Suspension Event, Default or Event of Default. No Immediate Termination Event, Suspension Event, Default or Event of Default shall have occurred and be continuing and the making of the Term Loan shall not result in an Immediate Termination Event, Suspension Event, Default or Event of Default and the representations and warranties of the Commission herein s hall be true and correct as if made on the Term Loan Date.
(d) Receipt of Certificate . The Bank shall have received on or before each Term Loan Date a certificate of an Authorized Representative dated such Term Loan Date as to compliance with clauses (a) and (c) of this Section 3.3 to be substantially in the form of Exhibit I hereto.
A
RTICLE IV
FEES
The Commission shall pay to the Bank the fees (including, without limitation, the Facility Fee), costs, expenses and othe r amounts described in the Fee Letter at the times specified in the Fee Letter, which is hereby incorporated by reference. All references to amounts due hereunder or under this Agreement will be deemed to include all amounts and obligations (including,
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without limitation, fees and expenses) due under the Fee Letter. All fees paid under this Agreement and the Fee Letter will be fully earned when due and nonrefundable when paid.
ARTICLE V
OBLIGATIONS ABSOLUTE
Subject to Section 2.8 hereof, the obligations of the Commission to pay the Series A-4 Notes, the Revolving Note and the Term Note and amounts payable hereunder and under the Fee Letter shall be unconditional and irrevocable, and shall survive the termination of this Agreement and shall be paid and performed strictly in accordance with the terms of this Agreement, the Fee Letter and such instruments (as the case may be) under all circumstances, including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of this Agreement, the Fee Letter, the Commercial Paper Notes or any of the Basic Documents;
(b) any amendment or waiver of or any consent to departure from the terms of this Agreement, the Fee Letter, the Commercial Paper Notes or any of the Basic Documents;
(c) the existence of any claim, set -off, defense or other right which the Commission or any other person may have at any time against the Issuing and Paying Agent, the Bank or any Participant or any other person or entity, whether in connection with this Agreement, the Fee Letter, the other Basic Documents or the transactions contemplated hereby or thereby or any unrelated transaction; (d) any demand, statement or any other document presented under this Agreement proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (e) any non-application or misapplication by the Issuing and Paying Agent, or otherwise of the proceeds of any Advance;
(f) payment by the Bank hereunder to the person entitled thereto against presentation of a Request for Advance which does not comply with the terms hereof; (g) the surrender or impairment of security for the performance or observance of any of the terms of this Agreement or any Basic Document; and (h) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into and perform this Agreement, the Commission hereby represents and warrants to the Bank, which representations and warranties shall be deemed to be repeated on and as of the date of each Advance and Term Loan, as follows:
Section 6.1. Organization, Powers, Etc. The Commission (a) is a commission of the City and County of San Francisco organized and existing under the Charter and (b) has the full legal right, power and authority to (i) issue and sell the Commercial Paper Notes in accordance with the Issuing and Paying Agent Agreement; (ii) to control its properties and to carry on its business as now conducted and as contemplated to be conducted in connection with the issuance of the Commercial Paper Notes, and the execution, delivery and performance of its obligations under this Agreement, the Fee Letter, the Revolving Note, the Term Note and the other Basic Documents to which it is a party, (iii) e xecute, deliver and perform its obligations under the Revolving Note, the Term Note, the Fee Letter, the other Basic Documents to which it is a party and this Agreement, and (iv) to provide for the security of the Commercial Paper Notes, the Revolving Note and the Term Note pursuant to the Charter and the Resolutions; and (c) has complied with all Legal Requirements in all matters related to such actions of the Commission as are contemplated by this Agreement, the Revolving Note, the Term Note, the Fee Lett er and the other Basic Documents to which it is a party.
Section 6.2. Authorization, Absence of Conflicts, Etc. The issuance of the Commercial Paper Notes and the execution, delivery and performance by the Commission of this Agreement, the Revolving Note, the Term Note, the Fee Letter and the other Basic Documents to which it is a party (a) have been duly authorized by all necessary action on the part of the Commission, (b) do not and will not conflict with, or result in a violation of, any Legal Requirements, including the Charter, or any order, writ, rule or regulation of any court or governmental agency or instrumentality binding upon or applicable to the Commission which violation would result in a material adverse impact on the Commission and (c) do not and will not conflict with, result in a violation of, or constitute a default under, any resolution, agreement or instrument to which the Commission is a party or by which the Commission or any of its property is bound.
Section 6.3. Binding Obligations; Security for Revolving Note and Term Note . (a) This Agreement, the Fee Letter, the Revolving Note, the Term Note and each of the other Basic Documents to which the Commission is a party, when executed by the parties hereto and thereto, will be, valid and binding obligations of the Commission (assuming due authorization and execution by the other parties thereto) enforceable against the Commission in accordance with their respective terms, except to the extent, if any, that the enforceability thereof may be limited by (i) any applicable bankruptcy, insolvency, reorganization, moratorium or other similar law of the State or Federal government affecting the enforcement of creditors’ rights heretofore or hereafter enacted, (ii) the fact that enforcement may also be subject to the exercise of judicial discretion in appropriate cases and (iii) the limitations on legal remedies against public agencies of the State, if any.
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(b) The obligations hereunder, under the Fee Letter and under the Revolving Note and the Term Note are obligations secured by a first Lien on, and payable from, the Pledged Revenues, equally and ratably with any other series of Commercial Paper Notes, any other series or commercial paper notes secured by and payable from Pledged Revenues and any obligations under any credit or liquidity facility secured by and payable from Pledged Revenues supporting such other series of commercial paper notes secured by and payable from Pledged Revenues. (c) There is no pledge of or Lien on Wastewater Enterprise Revenues that ranks senior to the obligations hereunder, under the Fee Letter, the Revolving Note and the Term Note other than the Senior Lien Wastewater Bonds issued pursuant to the Wastewater Bonds Indenture and the Subordinated Wastewater Bonds issued pursuant to the Subordinated Wastewater Bonds Indenture.
(d) The Series A-4 Notes and the obligations of the Commission under this Agreement, the Fee Letter, the Revolving Note and the Term Note are revenue obligations, and are not secured by the taxing power of the Commission and shall be payable as to both principal and interest from, and shall be secured by a pledge (which pledge shall be effected in the manner and to the extent hereinafter provided) of, the Available Wastewater Enterprise Revenues. The Available Wastewater Enterprise Revenues constitute a trust fund for the security and payment of the interest on and principal of the Commercial Paper Notes, including the Series A -4 Notes and the obligations of the Commission under this Agreement, the Fee Letter, the Revolving Note and the Term Note and all Parity Debt secured by the Available Wastewater Enterprise Revenues. The Available Wastewater Enterprise Revenues are hereby pledged to the payment of the Series A -4 Notes and the obligations of the Commission under this Agreement, the Fee Letter, the Revolving Note and the Term Note without priority or distinction of one over the other. The pledge of Available Wastewater Enterprise Revenues herein made shall be irrevocable until all of the Series A -4 Notes and the obligations of the Commission under this Agreement, the Fee L etter, the Revolving Note and the Term Note and any Parity Debt secured by Available Wastewater Enterprise Revenues have been paid and retired and any related obligations of the Commission under this Agreement have been satisfied. The Commission will not issue Debt secured by or payable from the Wastewater Enterprise Revenues on a basis that is senior to the obligations owed to the Bank hereunder, under the Fee Letter, the Revolving Note and the Term Note other than Senior Lien Wastewater Bonds issued pursuant to the Wastewater Bonds Indenture and Subordinated Wastewater Bonds issued pursuant to the Subordinated Wastewater Bonds Indenture.
(e) No Senior State Loan remains unpaid or is otherwise outstanding.
Section 6.4. Governmental Consent or Approval . No consent, approval, permit, authorization or order of, or registration or filing with, any court or government agency, authority or other instrumentality not already obtained, given or made is required on the part of the Commission for the execution, delivery and performance by the Commission of this Agreement, the Revolving Note, the Term Note, the Fee Letter or any other Basic Document.
All consents, approvals, permits, authorizations and orders of, and registrations and filings with, any court or governmental or public agency, authority or other instrumentality required for the issuance, sale, execution, delivery and performance of this Agreement, the Fee Letter, the
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Revolving Note, the Term Note or any other Basic Document, have been or will be obtained prior to the delivery thereof.
Section 6.5. Absence of Material Litigation. There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, arbitrator, governmental or other board, body or official, pending or, to the best knowledge of the Commission, threatened against or affecting the Commission, questioning the validity or enforceability of the Charter, the Ordinance or the Resolutions, or any proceeding taken or to be taken by the Commission in connection with the execution, delivery and performance by the Commission of this Agreement, the Revolving Note, the Term Note, the Fee Letter, or any other Basic Document, or seeking to prohibit, restrain or enjoin the execution, delivery or performance by the Commission of any of the foregoing, or which, if adversely determined, could reasonably be expected to result in any material adverse change in the financial condition, operations or prospects of the Commission, or wherein an unfavorable decision, ruling or finding would in any way materially adversely affect the transactions contemplated by this Agreement or any of the other Basic Documents to which the Commission is a party.
Section 6.6. Financial Condition. The audited financial statements of the Commission, as at and for the period ended June 30, 2021 (the “2021 Audited Financial Statements”), and all other financial statements of the Commission furnished to the Bank were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved and are subject to certification by independent certified public accountants of nationally recognized standing or by independent certified public accountants otherwise acceptable to the Bank. The 2021 Audited Financial Statements were prepared by KPMG LLP. The data on which such financial statements and budget reports are based were true and correct. The audited financial statements of the Commission for fiscal year 2022 will be prepared by KPMG LLP or similar qualified independent auditing firm. The 2021 Audited Financial Statements and the budget reports present fairly the financial position of the Commission as of the date they purport to represent and the revenues, expenses and changes in fund balances and in financial position for the periods then ended. Since June 30, 2021, no material adverse change has occ urred in the business, operations or condition (financial or otherwise) of the Commission.
Section 6.7. Incorporation of Representations and Warranties . The representations and warranties of the Commission set forth in the Basic Documents to which it is a party are true and accurate in all material respects on the Effective Date, as fully as though made on the Effective Date. The Commission makes, as of the Effective Date, e ach of such representations and warranties to, and for the benefit of, the Bank, as if the same were set forth at length herein together with all applicable definitions thereto. No amendment, modification or termination of any such representations, warran ties or definitions contained in the Basic Documents to which the Commission is a party shall be effective to amend, modify or terminate the representations, warranties and definitions incorporated herein by this reference, without the prior written consent of the Bank.
Section 6.8. Accuracy and Completeness of Information. The Basic Documents and all certificates, financial statements, documents and other written information furnis hed to the Bank or on behalf of the Commission on or prior to the Effective Date in connection with the
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transactions contemplated hereby were, as of their respective dates, complete and correct in all material respects to the extent necessary to give the B ank true and accurate knowledge of the subject matter thereof and did not contain any untrue statement of a material fact. To the best knowledge of the Commission, the Offering Memorandum does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, that no representation is made with respect to information included in the Offering Memorandum concerning (i) the Bank, furnished in writing by the Bank expressly for inclusion therein, or (ii) DTC, furnished in writing by DTC expressly for inclusion therein.
Section 6.9. No Default .
(a) No Default or Event of Default under this Agreement has occurred and is continuing that is or would, with the passage of time or the giving of notice, or both, constitute a default by the Commission in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Basic Document. (b) No “event of default” shall have occurred and be continuing under any other material mortgage, indenture, contract, agreement or undertaking to which the Commission is a party or which purports to be binding on the Commission or on any of its property.
Section 6.10. No Proposed Legal Changes. There is no amendment or, to the knowledge of the Commission, proposed amendment to the Constitution of the State, any State law or the Charter or any administrative interpretation of the Constitution of the State, any State law, or the Charter, or any judicial decision interpreting any of the foregoing, the effect of which could reasonably be expected to have a material adverse effect on the Commission’s obligations under this Agreement, the Fee Letter, the Revolving Note, the Term Note or the any of the other Basic Documents to which it is a party or the ability of the Commission to perform its obligations in connection herewith or therewith. There is no public vote or referendum pending, proposed or concluded, the results of which could reasonably be expected result in a Material Adverse Effect.
Section 6.11. Compliance with Laws, Etc . The Commission is in compliance with the Investment Policy and Guidelines, the Swap Policy and Guidelines and all Legal Requirements applicable to it, non-compliance with which might have a material adverse effect on the security for the Series A-4 Notes and the obligations under this Agreement, the Fee Letter, the Revolving Note or the Term Note and the validity and enforceability of this Agreement and the other Basic Documents to which it is a party. In addition, no benefit plan maintained by the Commission for its employees is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended, and the Commission is in compliance with all Legal Requirements in respect of each such benefit plan.
Section 6.12. Environmental Matters . In the ordinary course of its business, the Commission conducts an ongoing review of Environmental Laws on the business, operations and the condition of its property, 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
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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, any related constraints on operating activities, including any periodic or permanent shutdown of any facility or reduction in the level of or change in the nature of operations conducted thereat and any actual or potential liabilities to third parties, including employees, and any related costs and expenses). On the basis of such review, the Commission does not believe that Environmental Laws are likely to have a material adverse effect on the ability of the Commission to make any payments in respect of the Series A-4 Notes, the Revolving Note, the Term Note or any of i ts obligations hereunder or under the Fee Letter.
Section 6.13. Tax Status of Interest on Commercial Paper Notes . The Commission represents to the Bank that it has not taken any action, and knows of no action that any other Person has taken, which would cause interest on the Series A -4 Notes to be includable in the gross income of the recipients thereof for Federal income tax purposes or which would cause interest on the ta x-exempt Commercial Paper Notes to be includable in the gross income of the recipients thereof for State of California income tax purposes.
Section 6.14. Issuing and Paying Agent; Dealers . The Commission represents that U.S.
Bank Trust Company, National Association has been appointed the Issuing and Paying Agent for the Commercial Paper Notes. Each Dealer is a duly appointed and acting dealer with respect to the Commercial Paper Notes under its Dealer Agreement and the Resolutions.
Section 6.15. Regulation U. The Commission is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System); and no proceeds of the Series A-4 Notes, the Advances or the Term Loans will be used to extend credit to others for the purpose of purchasing or carrying any margin stock.
Section 6.16. ERISA. The Commission does not maintain or contribute to, and has not maintained or contributed to, any Employee Plan that is subject to Title IV of ERISA.
Section 6.17. Liens. Both this Agreement and the Issuing and Paying Agent Agreement create a valid Lien on and pledge of the Pledged Revenues, subject only to the provisions of the Issuing and Paying Agent Agreement permitting the application thereof for purposes and on the terms and conditions set forth therein, the moneys and other property described in Article VI thereof to provide security for the payment of the principal of and interest on the Series A-4 Notes and the obligations of the Commission under this Agreement, the Fee Letter, the Revolving Note and the Term Note, and no filings, recordings, registrations or other actions are necessary to create or perfect such lien.
Section 6.18. Sovereign Immunity . The Commission is not entitled to immunity from legal proceedings to enforce this Agreement, the Fee Letter, the Revolving Note, the Term Note, the Series A-4 Notes or any other Basic Document (including, without limitation, immunity from service of process or immunity from jurisdiction of any court otherwise having jurisdiction) and is subject to claims and suits for damages in connection with its obligations under this
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Agreement, the Fee Letter, the Revolving Note, the Term Note, the Series A-4 Notes or any other Basic Document.
Section 6.19. City Business Days. Attached to this Agreement as Exhibit F is a complete and accurate list of the days that are legal holidays of the City for 2022, as well as any other day the City is authorized by law to be closed for official business during 2022.
Section 6.20. Usury. The terms of this Agreement and the Basic Documents, to which the Commission is a party, regarding the calculation and payment of interest and fees do not violate any applicable usury laws.
Section 6.21. Insurance . As of the Effective Date, the Commission maintains such insurance, including self-insurance, as is required by Section 7.1(l) hereof.
Section 6.22. Anti-Corruption Laws and Sanctions . The Commission has implemented and maintains in effect policies and procedures designed to ensure compliance by the Commission and its directors, officers, employees and agents with Anti -Corruption Laws and applicable Sanctions, and the Commission and its officers and employees and to the knowledge of the Commission its directors and agents, are in compliance with Anti -Corruption Laws and applicable Sanctions in all material respects. None of (a) the Commission or to the knowledge of the Commission any of its directors, officers or employees, or (b) to the knowledge of the Commission, any of its agents or any subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No transaction contemplated by this Agreement will violate Anti-Corruption Laws or applicable Sanctions.
A
RTICLE VII
COVENANTS
Section 7.1. Affirmative Covenants. As long as this Agreement is in effect, and until all amounts payable hereunder, the Fee Letter, the Revolving Note and the Term Note are indefeasibly paid in full, the Commission will perform and observe the covenants set forth below:
(a) Accounting and Reports . The Commission will maintain a standard system of accounting in accordance with GAAP consistently applied and furnish to the Bank:
(i) as soon as practicable and, in any event, within one-hundred eighty (180) days after the end of each Fiscal Year of the Commission, a balance sheet of the Commission as at the end of such Fiscal Year and statements of income, changes in fund balances and cash flows for the Fiscal Year then ended, all in reasonable detail prepared in accordance with GAAP consistently applied, accompanied by (A) a report and opinion of the Commission’s independent accountants (who shall be of nationally recognized standing or an independent certified public accountant otherwise acceptable to the Bank) which report and
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opinion shall have been prepared in accordance with generally accepted auditing standards; and (B) a compliance certificate, substantially in the form of Exhibit L hereto, signed by an Authorized Representative stating that no Event of Default or Default has occurred, or if such Event of Default or Default has occurred, specifying the nature of such Event of Default or Default, the period of its existence, the nature and status thereof and any remedial steps taken or proposed to correct such Event of Default or Default;
(ii) as soon as practicable and, in any event, within forty-five (45) days after the end of each of the first three fiscal quarters of each Fiscal Year of the Commission, a quarterly budgetary status report (substantially in the form previously provided to the Bank) in reasonable detail;
(iii) as soon as practicable but, in any event, within ten (10) days after the issuance thereof, copies of any prospectus, official statement, offering circular, placement memorandum or similar document, and any supplements thereto and updates and amendments thereof (including any filings made pursuant to Rule 15c2- 12 under the Securities Act of 1933, as amended), that the Commission makes available in connection with the offering for sale of any bonds or notes of which it is the issuer and copies of any other financial reports or other written information distributed generally to holders of bonds or notes issued by the Commission;
(iv) within ten (10) days after the publication thereof, a copy of its Annual Budget for the next Fiscal Year and such additional period as may be covered by such Budget, which Budget shall include all obligations due hereunder, under the Fee Letter and in connection with the Commercial Paper Notes, the Revolving Note and the Term Note; and
(v) with reasonable promptness, such other data regarding the financial position or business of the Commission or its property as the Bank may reasonably request from time to time.
As and to the extent that any financial statement, audit report or other filing described in Section 7.1(a) hereof has been filed in accordance with the terms thereof with any nationally recognized municipal securities information repository and with the Municipal Securities Rulemaking Board, or posted to the Commission’s website, as appropriate, and the Commission has provided written notice thereof to the Bank or notice is otherwise provided to the Bank, the requirements of Section 7.1(a) hereof with respect thereto shall be deemed satisfied. (b) Access to Records. At any reasonable time and from time to time, during normal business hours and on at least five (5) Business Days’ notice, the Commission will permit the Bank or any of its agents or representatives to visit and inspect any of the properties of the Commission and the other assets of the Commission, to examine the books of account of the Commission (and to make copies thereof and extracts therefrom), and to discuss the affairs, finances and accounts of the Commission with, and to be
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advised as to the same by, its officers, all at such reasonable times and intervals as the Bank may reasonably request.
(c) Compliance with Documents and Other Debt Documents; Operation and Maintenance of Wastewater Enterprise.
(i) The Commission will perform and comply with each covenant set forth in the Basic Documents and in any other authorizing document that shall be entered into by the Commission and created subsequent to the Effective Date with respect to the Commercial Paper Notes, the Senior Lien Wastewater Documents , the Subordinated Wastewater Bonds or any Parity Debt including, without limitation, each line of cred it, letter of credit, bond insurance policy, surety bond or other form of credit or liquidity enhancement the Commission may provide in conjunction with the issuance of any Senior Lien Wastewater Bonds , Subordinated Wastewater Bonds and Parity Debt (the foregoing documents (exclusive of the Basic Documents) being referred to herein as “Other Debt Documents”). By the terms of this Agreement, the Bank shall be a third party beneficiary of the covenants set forth in each of the Basic Documents, including each amendment and supplement to the foregoing, and in each Other Debt Document, and each such covenant, together with the related definitions of terms contained therein, is hereby incorporated by reference herein with the same effect as if it were set forth herein in its entirety. Except as otherwise set forth in paragraph (ii) below and in Section 7.2(a) hereof, the Commission will not amend, supplement or otherwise modify (or permit any of the foregoing), or request or agree to any consent or waiver under, or effect or permit the cancellation, acceleration or termination of, or release or permit the release of any collateral held under any of the Basic Documents or any Other Debt Document in any manner without the prior written consent of the Bank, and the C ommission will take, or cause to be taken, all such actions as may be reasonably requested by the Bank to strictly enforce the obligations of the other parties to any of the Basic Documents and any Other Debt Documents, as well as each of the covenants set forth therein. The Commission shall give prior written notice to the Bank of any action referred to in this subparagraph (i).
(ii) The Commission covenants that it will maintain and preserve the Wastewater Enterprise in good repair and working order at a ll times from the Wastewater Enterprise Revenues, available for such purposes, in conformity with standards customarily followed for municipal sanitary waste and storm water collection, treatment and disposal systems of like size and character. The Commission will from time to time make all necessary and proper repairs, renewals, replacements and substitutions to the properties of the Wastewater Enterprise, so that at all times business carried on in connection with the Wastewater Enterprise shall and can be properly and advantageously conducted in an efficient manner and at reasonable cost, and will operate the Wastewater Enterprise in an efficient and economical manner and shall not commit or allow any waste with respect to the Wastewater Enterprise.
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(d) Defaults. The Commission will notify the Bank of any Default or Event of Default of which the Commission has knowledge, as soon as possible and, in any event, within three (3) Business Days of acquiring knowledge thereof, setting forth the details of s uch Default or Event of Default and the action which the Commission has taken and proposes to take with respect thereto.
(e) Compliance with Laws . The Commission will comply in all material respects with all Legal Requirements binding upon or applicable to the Commission (including Environmental Laws) and material to this Agreement, the Fee Letter, the Revolving Note, the Term Note or any other Basic Documents. (f) Commercial Paper Notes. No Commercial Paper Note issued pursuant to the Resolutions shall have a maturity of greater than two hundred seventy (270) days from the date of issuance.
(g) Use of Proceeds of the Commercial Paper Notes . The Commission will use the proceeds derived from the sale of the Commercial Paper Notes only for the purposes set forth in the Resolutions and for such other purpose or purposes as may be approved by the Bank. In addition, the Commission will not use, nor permit the use of, the proceeds of the Commercial Paper Notes, Advances or Term Loans to be applied in violation of Regulation U issued by the Board of Governors of the Federal Reserve System.
(h) Litigation Notice. The Commission covenants that it will promptly give notice to the Bank of any action, suit or proceeding actually known to it at law or in equity or by or before any court, governmental instrumentality or other agency which, if adversely determined, would materially impair the ability of the Commission to perform its obligations under the Commercial Paper Notes, the Revolving Note, the Term Note, this Agreement, the Fee Letter or the other Basic Documents. (i) Investment Policy and Guidelines. The Commission shall promptly notify the Bank in writing, not less than thirty (30) days after the Commission’s formal consideration thereof, of any change proposed to the Investment Policy and Guidelines, which proposed change would increase the types of investments permitted thereby as of the Effective Date; and which notice shall also confirm compliance with State law. (j) Further Assurances. The Commission shall execute, acknowledge where appropriate, and deliver, and cause to be executed, acknowledged where appropriate, and delivered, from time to time promptly at the request of the Bank, all such instruments and documents as are usual and customary or advisable to carry out the intent and purpose of this Agreement, the Revolving Note, the Term Note and the Basic Documents. (k) Notices. The Commission will promptly furnish, or cause to be furnished, to the Bank (i) notice of the occurrence of any “event of default” under the Issuing and Paying Agent Agreement, any other Basic Document or any Senior Debt or any other document pursuant to which Wastewater Enterprise Debt is issued, incurred, enchanced
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or purchased, (ii) notice of the failure by any Dealer or the Issuing and the Paying Agent to perform any of their respective obligations under the applicable Dealer Agreement or the Issuing and Paying Agent Agreement, as applicable, (iii) copies of any communications received from any taxing authority, securities regulatory authority or Rating Agency with respect to the Commercial Paper Notes, any additional obligations, any Senior Debt, any Parity Debt or the transactions contemplated hereby, which are not restricted or prohibited from being shared under the law or the direction of a court of competent jurisdiction or other Governmental Authority or, with respect to Rating Agency reports, confidential draft Rating Agency reports, (iv) notice of any proposed substitution of this Agreement, (v) notice of any proposed amendment to the Issuing and Paying Agent Agreement or the Resolutions or any other Basic Document and copies of all such amendments promptly following the execution thereof and (vi) notice of the passage of any state or local ordinance, law or rule not of general applicability to all Persons of which the Commission has knowledge, which could reasonably be expected to have a material adverse effect on the Commission’s ability to perform its obligations under this Agreement or the other Basic Documents or which could be reasonably expected to result in a material adverse effect on the enforceability or validity of this Agreement or any of the other Basic Documents.
(l) Maintenance of Insurance . The Commission shall maintain, or cause to be maintained, at all times insurance on and with respect to its properties with responsible and reputable insurance companies; provided, however, that the Commission may maintain self -insurance on general liability, its properties not covered by the Public Entity Property Insurance Program, worker’s compensation and vehicle liability and, with the consent of the Bank, such other self -insurance as it deems prudent. Such insurance shall include casualty, liability and workers’ compensation and be in amounts and with deductibles and exclusions customary and reasonable for governmental entities of similar size and with similar operations as the Commission. The Commission shall, upon request of the Bank, furnish evidence of such insurance to the Bank. The Commission shall also procure and maintain at all times adequate fidelity insurance or bonds on all officers and employees handling or responsible for any Wastewater Enterprise Revenues or funds of the Wastewater Enterprise, such insurance or bond to be in an aggregate amount at least equal to the maximum amount of such Wastewater Enterprise Revenues or funds at any one time in the custody of all such officers and employees or in the amount of one million dollars ($1,000,000), whichever is less. The insurance described above may be provided as part of any comprehensive fidelity and other insurance and not separately for the Wastewater Enterprise.
(m) Alternate Facility.
(i) The Commission agrees to use commercially reasonable efforts to obtain an Alternate Facility to replace this Agreement (or otherwise refinance the Series A -4 Notes) in the event (A) the Bank shall decide not to extend the Commitment Expiration Date pursuant to Section 9.12(b) hereof, (B) an Event of Default has occurred and is continuing, (C) the Comm ission terminates the Commitment pursuant to Section 2.6 hereof or (D) the Bank declares all amounts
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due hereunder, the Fee Letter and under the Revolving Note and the Term Note shall immediately become due and payable. The Commission shall not cause an Alternate Facility to become effective with respect to less than all the Series A -4 Notes without the prior written consent of the Bank.
(ii) The Commission agrees that any termination of this Agreement as a result of the provision of any Alternate Facility will require, as a condition thereto, that the Commission provide funds on the date of such termination, which funds will be sufficient to pay all amounts due to the Bank hereunder and under the Fee Letter including, without limitation, the amounts due w ith respect to the Revolving Note and the Term Note together, in each case, with accrued but unpaid interest thereon. On the date of such termination, the Commission shall pay to the Bank an amount equal to the outstanding principal amount, together with any accrued but unpaid interest thereon, of any and all other obligations (other than Term Loans) due and owing hereunder and under the Fee Letter. (n) Preservation of Security . The Commission shall take any and all actions necessary or reasonably requested by the Bank to maintain the security pledged in favor of the Revolving Note and the Term Note as described in Section 6.3 hereof. (o) City Business Days. During the term of this Agreement, upon learning of any change in the legal holidays of the City or the day or days that the City is authorized by law to be closed for official business, as initially listed on Exhibit F attached hereto, the Commission shall promptly send the Bank written notice of such change(s), in the form of an updated complete list, which shall replace Exhibit F attached hereto. (p) Pledge of Available Revenues. The Series A-4 Notes and the obligations of the Commission under the Agreement, the Fee Letter, the Revolving Note and the Term Note are revenue obligations, and are not secured by the taxing power of the Commission and shall be payable as to both principal and interest from, and shall be secured by a pledge (which pledge shall be effected in the manner and to the extent hereinafter provided) of, the Available Wastewater Enterprise Revenues. The Available Wastewater Enterprise Revenues constitute a trust fund for the security and payment of the interest on and principal of the Commercial Paper Notes, including t he Series A-4 Notes and the obligations of the Commission under the Agreement, the Fee Letter, the Revolving Note and the Term Note and all Parity Debt secured by the Available Wastewater Enterprise Revenues. The Available Wastewater Enterprise Revenues are hereby pledged to the payment of t he Series A-4 Notes and the obligations of the Commission under the Agreement, the Fee Letter, the Revolving Note and the Term Note without priority or distinction of one over the other. The pledge of Available Wastewater Enterprise Revenues herein made shall be irrevocable until all of the Series A-4 Notes and the obligations of the Commission under the Agreement, the Fee Letter, the Revolving Note and the Term Note and any Parity Debt secured by Available Wastewater Enterprise Revenues have been paid and retired and any rel ated obligations of the Commission under this Agreement have been satisfied. The Commission will not issue Debt secured by or payable from the Wastewater Enterprise Revenues on a basis
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that is senior to the obligations owed to the Bank hereunder, under the Fee Letter, the Revolving Note and the Term Note other than Senior Lien Wastewater Bonds issued pursuant to the Wastewater Bonds Indenture and Subordinated Wastewater Bonds issued pursuant to the Subordinated Wastewater Bonds Indenture. (q) Available Revenues. (i) (Wastewater Enterprise Debt). The Commission covenants to establish, maintain and collect rates and charges with respect to the Wastewater Enterprise sufficient (after giving effect to the expected receipt of refinancing proceeds from the sale of Commercial Paper Notes, Senior Lien Wastewater Bonds and Subordinated Wastewater Bonds) to pay the Commercial Paper Notes, the Revolving Note, the Term Note and all other obligations payable from Wa stewater Enterprise Revenues.
(ii) (Senior Debt).
(A) To the fullest extent permitted by law, the Commission shall establish, fix and prescribe, prior to the commencement of each Fiscal Year, rates, fees and charges in connection with the sanitary waste and storm water collection, treatment and disposal services and facilities furnished by the Enterprise so as to yield Revenues at least sufficient, after making reasonable allowances for contingencies and error in the estimates to pay the following amounts:
(1) The interest on and principal of the Bonds as they become due and payable (but not including any interest moneys for the payment of which have been deposited in the Interest Fund from the proceeds of any series of Bonds or from any other source).
(2) All other payments required for compliance with the terms of the Wastewater Bonds Indenture and of any Supplemental Indenture (as defined in the Wastewater Bonds Indenture) providing for the issuance of additional series of Bonds pursuant to Article III of the Wastewater Bonds Indenture.
(3) All other payments to meet any other obligations of the Commission which are charges, liens or encumbrances upon, or payable from, the Revenues.
(4) All current Operation and Maintenance Costs of the
Enterprise (but not including such Operation and Maintenance Costs of the Enterprise as are scheduled to be paid by the Commission from moneys other than Revenues, such moneys to be clearly available for such purpose).
(B) In addition to the requirements in subsection ( A), to the fullest extent permitted by law, the Commission shall establish, fix and prescribe, prior
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to the commencement of each Fiscal Year, rates, fees and charges in connection with the sanitary waste and storm water collection, treatment and disposal services and facilities furnished by the Enterprise , which are reasonably expected to be at least sufficient to yield during such Fiscal Year Net Revenues (together with any fund balances of the Commission, which are available for Debt Service, but excluding the Bond Reserve Fund) equal to 1.25 times Annua l Debt Service payable in such Fiscal Year.
(C) The Commission may make adjustments from time to time in such rates, fees and charges and may make such classification thereof as it deems necessary, but shall not reduce such rates, fees and charges below those then in effect unless the Revenues resulting after such reduced rates are put into effect will at all times be sufficient to meet the requirements of this Section. (D) So long as the Commission has complied with its obligations described in clause (A) and clause (B) of this Section 7.1(q)(ii), the failure to yield the amount of Revenues as set forth in clause (A) of this Section 7.1(q)(ii), or the failure of Net Revenues to equal 1.25 times Annual Debt Service as set forth in clause (B) of this Section 7.1(q)(ii) at the end of a Fiscal Year, shall not constitute a default or an Event of Default hereunder so long as the Commission has complied with clause (A) and clause (B) of this Section 7.1(q)(ii) at the commencement of the succeeding Fiscal Year.
(r) Budget . The Commission shall include in each annual budget of the Commission all amounts reasonably anticipated to be necessary to pay all obligations due to the Bank hereunder and under the Fee Letter (including, without limitation, the Revolving Note and the Term Note). If the amounts so budgeted are not adequate for the payment of the obligations due hereunder and under the Fee Letter and in connection with the Revolving Note and the Term Note, the Commission will take such action as may be necessary to cause such annual budget to be amended, corrected or augmented so as to include therein the amounts required to be paid to the Bank during the course of the Fiscal Year to which such annual budget applies.
(s) Payment of Taxes, Etc. The Commission will pay and discharge, or cause to be paid and discharged, all taxes, assessments and other governmental charges which may hereafter be lawfully imposed upon the Commission on account of the Wastewater Enterprise or any portion thereof and which, if unpai d, might impair the security of the Commercial Paper Notes, when the same shall become due, but nothing herein contained shall require the Commission to pay any such tax, assessment or charge so long as it shall in good faith contest the validity thereof. The Commission will duly observe and conform with all valid material requirements of any governmental authority relative to the Wastewater Enterprise or any part thereof.
(t) Notice of Rating Change . The Commission shall use its best efforts to notify the Bank as soon as practicable of any suspension, reduction or withdrawal in the
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senior long-term rating of any debt or lease of the Commission secured by Wastewater Enterprise Revenues.
(u) Issuing and Paying Agent and Dealer.
(i) The Commission shall at all times maintain a Dealer with respect to the Series A -4 Notes. The Commission shall use its best efforts at all times to enforce the Dealer Agreement. The Commission agrees to cause the Dealer to use its best efforts to sell the Series A -4 Notes up to the maximum rate applicable to the Series A-4 Notes in order to repay maturing Series A -4 Notes. Each Dealer Agreement shall provide that the related Dealer may not resign until the earlier of (A) the appointment of a Dealer which is acceptable to the Bank and such Dealer’s acceptance of such appointment and ( B) the date which is at least sixty (60) days following the receipt by the Commission, the Issuing and Paying Agent and the Bank of prior written notice of such resignation. (ii) On and after the Effective Date, the Commission shall at all times maintain an Issuing and Paying Agent pursuant to the terms of the Issuing and Paying Agent Agreement. Any successor Issuing and Paying Agent (or any parent or affiliate of such Issuing and Paying Agent) shall have capital of not less than $500,000,000, and underlying ratings from Moody’s, S&P and Fitch of at least “A3” (or its equivalent), “A-” (or its equivalent) and “A-” (or its equivalent), respectively (unless, in each instance, the Bank in its discretion provides in writing an exception for a particular Issuing and Paying Agent under specified circumstances).
(iii) In no event shall the Commission permit any Dealer other than a Qualified Dealer to act as dealer for the Series A -4 Notes. In the event that any material adverse change shall have occurred in the status of the financial condition of any Qualified Dealer or its ability to perform its obligations under the dealer agreement to which it is a party, the Commission shall promptly disqualify, and if it desires replace, such Qualified Dealer and appoint another Qualified Dealer with respect to the Series A -4 Notes. If any Advance or Term Loan remains outstanding for a period of thirty (30) consecutive calendar days or any Dealer fails to perform its duties under the Dealer Agreement, at the written direction of the Bank, the Commission shall cause the related Dealer (that has been unable to sell rollover Series A -4 Notes or fails to perform its duties) to be replaced with a Dealer reasonably sati sfactory to the Bank within thirty (30) calendar days of the receipt of such written direction. Any successor Dealer (or any parent or affiliate of such Dealer shall have capital of not less than $500,000,000, and underlying ratings from Moody’s, S&P and Fitch of at least “A3” (or its equivalent), “A -” (or its equivalent) and “A -” (or its equivalent), respectively (unless, in each instance, the Bank in its discretion provides in writing an exception for a particular Dealer under specified circumstances).
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(v) Maintenance of Ratings on Notes . The Commission shall at all times (i) maintain at least one short term rating on the Series A -4 Notes by either Moody’s or S&P, (ii) maintain at least two ratings on long term unenhanced debt rating on Senior Debt from the Rating Agencies and (iii) cause at least one of Moody’s or S&P to maintain a long-term rating on each of the Revolving Note and the Term Note. (w) Defeasance of Series A-4 Notes. Series A -4 Notes shall not be deemed to have been paid in full, and the obligation of the Commission thereunder to have ceased, terminated and become void and completely discharged and satisfied, unless payment of the principal of, and interest on the Series A -4 Notes either (i) shall have been made or caused to be made in accordance with the terms of the Series A -4 Notes, Section 9.05 of the Issuing and Paying Agent Agreement and this Agreement or (ii) shall have been provided for by irrevocably depositing with the Issuing and Paying Agent in trust and irrevocably setting aside exclusively for such payment (A) moneys, or, if at least one day prior to the date of such deposit, there shall not have been delivered to the Commission and/or the Issuing and Paying Agent written evidence from each Rating Agency then maintaining a rating on the Series A -4 Notes, that such defeasance will not, in and of itself, result in any rating then assigned to the Series A-4 Notes being suspended, reduced or withdrawn, Available Moneys sufficient to make such payment and/or (B) noncallable obligations backed by the full faith and credit of the United States Government (“Government Obligations” ) purchased with Available Moneys, in each case, in an amount sufficient, with reinvestment in Government Obligations, to pay when due the principal amount of the Series A -4 Notes, including accrued interest thereon; provided that if payment of the principal of, and interest on the Series A -4 Notes is paid pursuant to (i) above, the Issuing and Paying Agent shall have received (x) a verification report from an independent firm of nationally recognized certified public accountants addressed to the Commission and the Issuing and Paying Agent, acceptable in form and substance to the Commission and the Issuing and Paying Agent verifying the sufficiency of the escrow established to pay the Series A -4 Notes in full on the maturity date, and (y) an opinion of Bond Counsel addressed to the Commission and the Issuing and Paying Agent acceptable in form and substance to the Commission and the Issuing and Paying Agent to the effect that the Series A -4 Notes are no longer Outstanding under the Issuing and Paying Agent Agreement, a copy of which opinion shall be provided to any Rating Agency then rating the Series A-4 Notes.
Section 7.2. Negative Covenants. As long as this Agreement is in effect, and until all amounts payable hereunder, including under the Revolving Note and the Term Note, are indefeasibly paid in full, the Commission shall not, unless the Bank shall otherwise consent in writing:
(a) Amendments. Subject to Section 7.1(c) hereof, directly or indirectly amend, supplement or terminate any of the Basic Documents or the Wastewater Bonds Indenture, except that (i) the Commission may amend or modify, or permit to b e amended or modified, any of the Basic Documents (as and to the extent the Commission’s participation is required for such purpose) in a manner (A) not relating to the duties, obligations or rights of the Bank, under this Agreement or (B) not having a
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material adverse effect on (x) the ability of the Commission to pay when due the principal of or interest on t he Series A-4 Notes and the obligations of the Commission under the Agreement, the Fee Letter, the Revolving Note and the Term Note or (y) the security, rights or remedies of the Bank hereunder or under any Basic Document, the Revolving Note or the Term Note, without the prior written consent of the Bank; and (ii) the Commission may amend the Offering Memorandum to update information relating to any entity described therein other than the Bank. The Commission agrees to deliver to the Bank copies of all such amendments, modification, supplements or other changes at least ten (10) Business Days prior to the effective date of any such amendment, modification, supplement. The Bank shall, within five (5) Business Days, inform the Commission in writing if, in its reasonable discretion, such amendments, modification, supplements or other change shall require the prior written consent of the Bank in accordance with this Section 7.2(a). Notwithstanding the foregoing, the Commission may perform ministerial duties, make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision as the Commission may deem necessary or desirable, in any case which do not materially adversely affect the security, rights or remedies of the Bank hereunder or under any Basic Document, the Revolving Note or the Term Note and, solely in connection with the issuance of additional Debt, issue Debt in strict compliance with the terms of the governing documents related thereto without the Bank’s prior written consent. (b) Merger, Disposition of Assets . Consolidate or merge with or into any person or sell, lease or ot herwise transfer all or substantially all of its assets to any person.
(c) Preservation of Corporate Existence, Etc. Take any action to terminate its existence as a body politic and corporate and a political subdivision of the State or its rights and privileges as such entity within the State.
(d) Total Outstanding. Permit the aggregate principal amount of all Series A- 4 Notes (including the Revolving Note and the Term Note) outstanding at any time to exceed $75,000,000 (except as provided in Section 7.2(f) hereof); or permit the aggregate principal amount of all Series A-4 Notes (including the Revolving Note and the Term Note) outstanding at any time to exceed the Commitment at such time. (e) Exempt Status. Take any action, omit to take any action or cause or permit another person to take any action or omit to take any action, which, if taken or omitted, would adversely affect the excludability of interest on the tax -exempt Commercial Paper Notes from the gross income of the holders thereof for purpos es of Federal income taxation.
(f) Issue Debt. Issue any Senior Debt or Parity Debt unless:
(i) such Senior Debt or Parity Debt will not exceed at any time any limitation set forth in the Constitution or other laws of the State, the Charter, the Resolutions, the City Legislation, the Wastewater Bonds Indenture or any
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supplement thereto, any other resolutions adopted by the Commission, or the Issuing and Paying Agent Agreement;
(ii) any such Senior Debt (excluding Debt Service Reserve Debt) shall be i ssued in compliance with the Wa stewater Bonds Indenture, provided, however, that any refunding Senior Debt shall be issued in compliance with the Wastewater Bonds Indenture and shall not be subject to the terms of this Section
7.2(f);
(iii) in connection with the issuance of any additional Senior Debt, the Commission will provide certificates to the Bank evidencing compliance with the requirements set forth in the Wastewater Bonds Indenture, as applicable; provided, that the Bank has reviewed the forms of certificates and reports of the Commission required under the Wastewater Bonds Indenture in connection with the issuance of such additional Senior Debt, copies of examples of which are attached hereto as Exhibit J , and has agreed that the delivery of a cop y of such certificates and reports, substantially in the form attached hereto as Exhibit J shall be sufficient to satisfy the requirements of the Wastewater Bonds Indenture; (iv) the issuance of Parity Debt will not result in the creation of a Lien on the Pledged Revenues or any of the funds and accounts pledged to secure the Series A-4 Notes or the obligations under the Agreement, the Fee Letter, the Revolving Note and the Term Note pursuant to the Basic Documents that is senior to the Lien securing the Series A-4 Notes or the obligations under the Agreement, the Fee Letter, the Revolving Note and the Term Note; and (v) any such Parity Debt shall be issued in compliance with Section 5.07 of the Issuing and Paying Agent Agreement; (vi) in connection with the issuance of any additional Parity Debt, the Commission will provide the Bank certificates demonstrating compliance with the requirements set forth in Section 5.07 of the Issuing and Paying Agent Agreement;
(vii) the Commission shall not issue any additional Senior State Loans ; and
(vii) no Default or Event of Default shall have occurred and be continuing hereunder as a result thereof.
(g) Use of Bank’s Name . Permit the use of the Bank’s name in any official statement or other offering document unless the Bank shall have approved in writing the description of the Bank contained in such document.
(h) Arbitrage Bonds; Tax-Exempt Status. Invest the proceeds of the Series A - 4 Notes in any way that would violate the Code or cause the Serie A -4 Notes t o be
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deemed “arbitrage bonds” or take any action or omit to take any action if such action or omission would adversely affect the exclusion of interest on the Series A -4 Notes from gross income of the holders thereof for Federal income tax purposes. (i) Other Facilities . In the event that the Commission shall enter into any credit agreement, standby bond purchase agreement (excluding bond purchase agreements in connection with an initial security offering), liquidity agreement or other agreement or instrument (or any amendment, supplement or modification thereto) under which any Person or Persons undertakes to make or provide funds to provide liquidity or credit support for any Parity Debt or Senior Debt (but excluding Debt Service Reserve Debt) (each, a “Bank Agreement”), which such Bank Agreement (or amendment thereto) provides such Person with more restrictive or different covenants, more restrictive or different events of default, and/or greater rights and remedies (other than pricing or interest rate increases) than are provided to the Bank in this Agreement, such provisions shall automatically be deemed incorporated into this Agreement. Upon the reasonable request of the Bank made within thirty (30) days of receipt of any notice, the Commission shall promptly enter into an amendment to this Agreement to include such more restrictive or different covenants, more restrictive or different events of default or greater rights or remedies to be effective as of the date of receipt of any notice (provided that the Bank shall have the benefit of such more restrictive or different covenants, more restrictive or different events of default or greater rights and remedies as of the date of receipt of any notice upon delivery by the Bank of written notice to the Comm ission within 30 days of receipt of any notice identifying any more restrictive or different covenants, more restrictive or different events of default or greater rights or remedies).
Notwithstanding anything to the contrary set forth in this Agreement, ( 1) the obligations of the Bank hereunder may not be immediately terminated or suspended other than as a result of an Immediate Termination Event or a Suspension Event (in each case, as such terms are defined as of the Effective Date or as amended pursuant to any amendment hereto provided that, in connection with any such amendment, (a) the then-current ratings on the Series A-4 Notes shall have been confirmed by each Rating Agency then rating the Series A -4 Notes and (b) such amendment shall only become eff ective on a date on which all Series A -4 Notes have matured (and the Commission shall (x) use its best efforts to cause any Series A -4 Notes outstanding on and after the date on which the related Bank Agreement becomes effective to be rolled only to the maturity date of the longest maturity date of any outstanding Series A -4 Notes on the date on which the related Bank Agreement becomes effective and (y) update the Offering Memorandum with respect to the related changes prior to offering Series A -4 Notes after such date with the amendments)) and (2) no additional condition precedent to the extension of Advances may be added to Section 3.2 hereof unless (a) in connection with such amendment the then-current ratings on the Series A-4 Notes have been confirmed by each Rating Agency then rating the Series A -4 Notes and (b) such amendment shall only become effective on a date on which all Series A -4 Notes have matured (and the Commission shall (x) use its best efforts to cause any Series A -4 Notes outstanding on and after the date on which the related Bank Agreement becomes effective to be rolled only to the maturity date of the longest maturity date of any outstanding Series A -4 Notes on the date on which the related Bank Agreement becomes effective and (y) update the Offering Memorandum
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with respect to the related changes prior to offering Series A -4 Notes after such date with the amendments)).
(j) Liens. Create or suffer to exist or permit any Lien on the Pledged Revenues other than the Liens permitted by the Resolutions or any other resolutions, Liens created or permitted by the Issuing and Paying Agent Agreement, or Liens that are junior and subordinate to the Lien created by the Issuing and Paying Agent Agreement under terms and conditions satisfactory to the Bank.
(k) Sovereign Immunity. A ssert the defense of any future right to sovereign immunity in a legal proceeding to enforce or collect upon the obligations of the Commission under this Agreement, the Fee Letter, the Term Note or the Revolving Note or the transactions contemplated hereby.
(l) Commitment. Permit the sum of (i) aggregate principal amount of all Series A-4 Notes outstanding, plus (ii) the aggregate principal amount of all Advances and Term Loans outstanding at any time to exceed the Commitment at such time. (m) Maintenance of Available Wastewater Revenues. A cquire, construct, operate or maintain, and shall not within the scope of its powers permit any other public or private corporation, political subdivision, district or agency or any person whatsoever to acquire, construct, operate or maintain, within the City or any part thereof, any system or utility competitive with the Wastewater Enterprise. The Commission will have in effect, or cause to have in effect, at all times an ordinance or resolution requiring all customers of the Wastewater Enterprise to pay the fees, rates and charges applicable to the services and facilities furnished by the Wastewater Enterprise. The Commission will not provide any service of the Wastewater Enterprise free of charge to any Person, except (i) for free use by the City and its agencies, (ii) to the extent that any such free use is required by the terms of any existing contract or agreement, and (iii) for incidental insignificant free use so long as such free use does not prevent the Commission from satisfying the other covenants of this Agreement, including, without limitation, Section
7.1(q) hereof.
(n) Swap Termination Payments . Permit any Lien on Pledged Revenues securing any termination payments with respect to any Swap Contract to be secured on basis senior to or on a parity with the Commercial Paper Notes, the Term Note and the Revolving Note.
(o) Use of Proceeds. (i) Use the proceeds of any credit extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose, in each case in violation of, or for a purpose which violates, or would be inconsistent with, Regulation T, U or X of the Board of Governors of the Federal Reserve System. The Commission shall not use the proceeds of the Commercial Paper Notes, the Term Note or
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the Revolving Note for any purpose other than as provided for in the Resolutions and not in contravention of applicable law.
(ii) The Commission shall not use, and shall require that its directors, officers, employees and agents shall not use, the proceeds of the any Advance, Term Loan or other credit extension (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti -Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto.
(p) Preservation of Existence, Etc. Take any action pursuant to the Charter to accomplish a merger of the Wastewater Enterprise with any other entity or enterprise, unless and until the Commission shall have provided a method for segregating the Wastewater Enterprise Revenues from the revenues of said other entity or enterprise in a manner that will, or shall otherwise, preserve the Lien upon the Available Wastewater Enterprise Revenues for the payment of the Series A-4 Notes and the Revolving Note and the Term Note provided in Section 7.1( p) hereof, and shall have obtained an opinion of counsel from a firm nationally recognized in the practice of tax- exempt financing that such merger will not, in and of itself, (i) affect the exclusion from gross income of the interest on the Series A-4 Notes, and (ii) cause the Lien or security interest created by this Agreement to be no longer valid as provided in Section 7.1(n) hereof. In the event the Commission does effect such a merger, the Commission shall provide written notice thereof to the Bank and shall deliver a copy of the aforementioned opinion to the Bank.
A
RTICLE VIII
EVENTS OF DEFAULT, REMEDIES
Section 8.1. Events of Default . Each of the following events shall constitute an “Event of Default” hereunder:
(a) Immediate Termination Events . The following Events of Def ault each shall constitute an “Immediate Termination Event” hereunder:
(i) Payments. The Commission shall (A) fail to pay any amount of interest on any Series A-4 Note, the Revolving Note, the Term Note, any Advance or any Term Loan when the same shall become due and payable in accordance with its terms and such failure shall continue for three (3) days, or (B) fail to pay principal of the Revolving Note, the Term Note, any Advance or any Term Loan when the same shall become due and payable in accordance with its terms;
(ii) Invalidity. (A) Any provision of the Charter, this Agreement, the Revolving Note, the Term Note, any Series A-4 Note, the Issuing and Paying Agent
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Agreement, the City Legislation or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A-4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues, shall at any time, and for any reason, cease to be valid and binding on the Commission, or shall be declared to be null and void, invalid or unenforceable as the result of a final nonappealable judgment by any federal or state court or as a result of any legislative or administrative action b y any Governmental Authority having jurisdiction over the Commission; or (B) an Authorized Representative of the Commission (i) publicly contests or contests in writing any provision of the Charter, this Agreement, the Revolving Note, the Term Note, any Se ries A-4 Note, the Issuing and Paying Agent Agreement , the City Legislation or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A-4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues or (ii) repudiates or otherwise denies in writing that it has any further liability or obligation under or with respect to any provision of the Charter, this Agreement, the Revolving Note, the Term Note, any Series A-4 Note, the Issuing and Paying Agent Agreement, the City Legislation or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on t he Series A-4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues; or (C) the State or the Commission shall have taken or permitted to be taken any official action, or has duly enacted any statute, which would adversely affect the enforceability of any provision of the Charter, this Agreement, the Revolving Note, the Term Note, any Series A-4 Note, the Issuing and Paying Agent Agreement , the City Legislation or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A-4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues; or (D) any Governmental Authority with jurisdiction to rule on the validity or enforceability of the Charter, this Agreement, the Revolving Note, the Term Note, any Series A-4 Note, the Issuing and Paying Agent Agreement , the City Legislation or the Resolutions shall find or rule, in a judicial or administrative proceeding, that any provision of the Charter, this Agreement, the Revolving Note, the Term Note, any Series A-4 Note, the Issuing and Paying Agent Agreement , the City Legislation or the Resolutions, as the case may be, relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A-4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues, is not valid or not binding on, or enforceable against, the Commission;
(iii) Insolvency, Etc . The Commission or the City and County of San Francisco, directly or indirectly, shall become insolvent or admit in writing its inability to pay its debts as they mature or shall declare a moratorium on the payment of its debts or apply for, consent to or acquiesce in the appointment of a trustee, custodian, liquidator or receiver for itself or any substantial part of its property, or shall take any action to authorize or effect any of the foregoing; or in the absence of any such application, consent or acquiescence, a trustee, custodian, liquidator or receiver shall be appointed for
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it or for a substantial part of its property or revenues and shall not be discharged within a period of sixty (60) days; or the State or any other governmental authority having jurisdiction over the Commission or the City and County of San Francisco imposes a debt moratorium or comparable extraordinary restriction on repayment when due and payable of the principal of or interest on all Debt of the Commission and all of the Series A -4 Notes; or all, or any substantial part, of the property of the Commission or the City and County of San Francisco shall be condemned, seized, or otherwise appropriated, or any bankruptcy, reorganization, debt arrangement or other proceeding under any bankruptcy or insolvency law or any dissolution or liquidation proceeding shall be instituted by or against the Commission or the City and County of San Francisco (or any action shall be taken to authorize or effect the institution by it of any of the foregoing) and if instituted against it, shall be consented to or acquiesced in by it, or shall not be dismissed within a period of sixty (60) days;
(iv) Cross-Default to Senior Debt or Parity Debt. The Commission shall fail to pay, when due and payable, any principal of or interest on any Senior Debt or any Parity Debt ( including, without limitation, any principal or sinking fund installments thereon but excluding Commercial Paper Notes and Other Commercial Paper Notes); (v) Cross-Default to Commercial Paper Notes. The Commission shall fail to pay, when due and payable, any interest on any Commercial Paper Notes or Other Commercial Paper Notes (other than as specified in Section 8.1(a)(i)(A) hereof); (vi) Unsatisfied Judgments. A final, nonappealable, judgment or order for the payment of money in excess of $15,000,000, individually or in the aggregate, shall be rendered against the Commission and payabl e from Pledged Revenues and such judgment or order shall continue unsatisfied and unstayed for a period of sixty (60) days; (vii) Ratings. The long- term credit ratings assigned by Moody’s and S&P (to the extent then providing a rating) to unenhanced Parity Debt, unenhanced Subordinated Wastewater Bonds or unenhanced Senior Debt shall be (A) reduced below “Baa3” (or its equivalent), and “BBB-” (or its equivalent) or (B) withdrawn or suspended for any credit related reasons; provided, that nothing herein s hall require the Commission to maintain a long-term rating on Parity Debt, so long as the only Parity Debt outstanding is the Commercial Paper Notes and related credit and liquidity facilities; or (viii) Existence. T he dissolution or termination of the existence of the Commission if a Governmental Authority does not, contemporaneously with the dissolution or termination of the existence of the Commission , assume the obligations of the Commission under this Agreement and the other Basic Documents to which i t is a party related to pay principal of or interest on the Series A-4 Notes, the Revolving Note, the Term Note, any Advance or any Term Loan and Senior Debt or any Parity Debt. (b) Representations Untrue . Any representation, warranty, certification or s tatement made by the Commission in this Agreement or in any Basic Document or in any certificate, financial statement or other document delivered pursuant to this Agreement or any Basic
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Document shall (in any such case) have been incorrect or untrue in any material respect when made or deemed to have been made.
(c) Certain Covenant Defaults . The Commission shall default in the due performance or observance of any term, covenant or agreement contained in clause (c), (d), (f), (g), (m)(ii), (u)(ii) or (u)(iii) of Section 7.1 or in Section 7.2 hereof. (d) Other Covenant Defaults. The Commission shall default in the due performance or observance of any term, covenant or agreement contained herein (other than those covered by clause (a)(i) or (c) of this Sect ion 8.1) and such default, if capable of being remedied, shall remain unremedied for thirty (30) days after the earlier to occur of (i) written notice thereof shall have been given to the Commission by the Bank or (ii) an Authorized Representative of the Commission has actual knowledge thereof.
(e) Other Invalidity. (i) Any material provision of the Charter, this Agreement, the Revolving Note, the Term Note, any Series A -4 Note, the Issuing and Paying Agent Agreement, the Resolutions, the City Legislation or the Fee Letter (other than a provision referred to in Section 8.1(a)(ii) hereof), shall be declared to be null and void, invalid or unenforceable as the result of a final nonappealable judgment by any federal or state court or as a result of any legislative or administrative action by any Governmental Authority having jurisdiction over the Commission; or (ii) an Authorized Representative of the Commission (A) contests any material provision of the Charter, this Agreement, the Revolving Note, the Term Note, any Series A -4 Note, the Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in Section 8.1(a)(ii) hereof) or (B) repudiates or otherwise denies in writing that it has any further liability or obligation under or with respect to any material provision of the Charter, this Agreement, the Revolving Note, the Term Note, any Series A -4 Note, the Issuing and Paying Agent Agreement, the Resolutions , the City Legislation or the Fee Letter (other than a provision referred to in Section 8.1(a)(ii) hereof); or (iii) the State or the Commission shall have taken or permitted to be taken any official action, or has duly enacted any statute, which would adversely affect the enforceability of any material provision of relating to the Charter, this Agreement, the Revolving Note, the Term Note, any Series A -4 Note, the Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in Section
8.1(a)(ii) hereof); (iv) any Governmental Authority with jurisdiction to rule on the validity or enforceability of the Charter, this Agreement, the Revolving Note, the Term Note, any Series A - 4 Note, the Issuing and Paying Agent Agreement, the Resolutions , the City Legislation or the Fee Le tter shall find or rule, in a judicial or administrative proceeding, that any material provision of the Charter, this Agreement, the Revolving Note, the Term Note, any Series A -4 Note, the Issuing and Paying Agent Agreement, the Resolutions, the City Legis lation or the Fee Letter (other than a provision referred to in Section 8.1(a)(ii) hereof) is not valid or not binding on, or enforceable against, the Commission or (v) a debt moratorium or comparable extraordinary restriction on repayment of debt shall have been declared or imposed (whether or not in writing) with respect to the Fee Letter, the Series A-4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan.
(f) Other Cross- Defaults. The Commission shall fail to pay when due and payable (i) any principal of or interest on any Debt (other than Senior Debt or Parity Debt) in excess of
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$10,000,000 of the Commission and such failure shall continue beyond any applicable period of grace specified in any underlying indenture, contract or instrument providing for the creation thereof or (ii) any principal on any Commercial Paper Notes or Other Commercial Paper Notes (other than the Series A-4 Notes).
(g) Basic Document Default. (i) The Commission shall default in the due performance or observan ce of any material term, covenant or agreement contained in any other Basic Document and the same shall not have been cured within any applicable cure period or (ii) any “event of default” under any other Basic Document (as defined respectively therein) has occurred.
(h) Other Payments . The Commission shall fail to pay (i) any amount required pursuant to the Fee Letter when said amount is due and payable or (ii) any amount payable hereunder within five (5) day s after the same shall be due and after written demand by the Bank in respect thereof, other than payments described in Sections 8.1(a)(i) and 8.1(h)(i) above; (i) Taxability. A ruling, assessment, notice of deficiency or technical advice by the Internal Revenue Service shall be rendered to the effe ct that interest on the Series A-4 Notes is includable in the gross income of the holder(s) or owner(s) of such Series A-4 Notes and either (i) the Commission, after it has been notified by the Internal Revenue Service, shall not challenge such ruling, assessment, notice or advice in a court of law during the period within which such challenge is permitted or (ii) the Commission shall challenge such ruling, assessment, notice or advice and a court of law shall make a determination, not subject to appeal or review by another court of law, that such ruling, assessment, notice or advice is correctly rendered.
(j) Other Insolvency. (i) There shall be commenced against the Commission any case, proceeding or other action of a nature referred to in Section 8.1(a)(iii) above which (A) results in an order for such relief or in the appointment of a receiver or similar official or (B) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (ii) there shall be commenced against the Commission, any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets or for all or any portion of the Pledged Revenues, which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof.
(k) Ratings. The long- term credit ratings assigned by Moody’s or S&P to unenhanced Parity Debt or unenhanced Senior Debt shall be (A) reduced below “A3” (or its equivalent) or “A-” (or its equivalent) or (B) withdrawn or suspended for any credit related reasons ; provided, that nothing herein shall require the Commission to maintain a long- term rating on Parity Debt, so long as the only Parity Debt outstanding is the Commercial Paper Notes and related c redit and liquidity facilities.
(l) Cross Acceleration. The Commission (i) defaults in the observance or performance of any agreement or condition relating to any Wastewater Enterprise Debt or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of
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default or similar event occurs or condition exists, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Wastewater Enterprise Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Wastewater Enterprise Debt; or (ii) defaults in the observance or performance of any agreement or condition relating to any Debt (other than Wastewater Enterprise Debt) aggregating in excess of $10,000,000, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event occurs or condition exists, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Debt (other than Wastewater Enterprise Debt).
Section 8.2. Remedies.
(a) Immediate Termination Events . In the case any Event of Default which is an Immediate Termination Event has occurred, (i) the Commitment shall immediately and automatically terminate, without notice from the Bank, and (ii) all amounts due hereunder, the Fee Letter and under the Revolving Note and the Term Note shall immediately become due and payable; provided, that the Event of Default described in Section 8.1(a)(i)(B) will not qualify as an “Immediate Termination Event” hereunder if the failure to pay the principal of, or interest on, the Revolving Note, the Term Note, any Advance or any Term Loan is due solely to an acceleration thereof by the Bank for any reason other than the failure to pay the principal of, or interest on, the Revolving Note, the Term Note, any Advance or any Term Loan; provided, further, that the Event of Default described in Section 8.1(a)(iv) will not qualify as an “Immediate Termination Event” hereunder if the failure to pay the principal of, or interest on, such Senior Debt or Parity Debt is due solely to an acceleration thereof by a provider of credit enhancement or liquidity support with respect thereto for any reason other than the failure to pay the principal of, or interest on, such Senior Debt or Parity Debt. (b) Suspension Events. In the case of a Default described in Section 8.1(j) hereof (a “Suspension Event” ), the Commitment shall be immediately suspended without notice or demand and, thereafter, the Bank shall be under no obligation to make Advances or Term Loans hereunder until the Available Commitment is reinstated as described below. Promptly upon the occurrence of any such Suspension Event, the Bank shall notify the Commission, the Issuing and Paying Agent and the Dealer of such suspension and the effective date of such suspension in writing by facsimile, promptly confirmed by regular mail; provided, that the Bank shall incur no liability of any kind by reason of its failure to give such notice and such failure shall in no way affect the suspension of the Available Commitment or its obligation to make Advances or Term Loans pursuant to this Agreement. The Commission shall promptly direct the Issuing and Paying Agent to notify all Holders of a suspension of the obligation of the Bank t o make Advances and Term Loans as a result of the occurrence of such Suspension Event. Upon the occurrence of a Suspension Event, the Commitment shall be immediately and automatically suspended and remain suspended until the case, proceeding or other acti on referred to therein is either dismissed, discharged or bonded within sixty (60) days from the commencement of such case, proceeding or action, or the date on which the Bank’s obligations hereunder have
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terminated or expired in accordance with the terms hereof (the “Termination Date” ) occurs, whichever is first. In the event that said Suspension Event shall have been dismissed, discharged or bonded within the sixty (60) day period described therein and prior to the Termination Date, then the Available Co mmitment and the obligation of the Bank to make Advances and Term Loans shall be reinstated and the terms of this Agreement shall continue in full force and effect as if there had been no such suspension (unless the Commitment Period shall otherwise have been terminated, suspended or expired as provided in this Agreement). In the event that said Suspension Event shall not have been dismissed, discharged or bonded within said sixty (60) day period when the Termination Date occurs, then the Available Commitment and the obligation of the Bank to make Advances and Term Loans shall terminate on the Termination Date without notice or demand and, thereafter, the Bank shall be under no obligation to make such Advances and Term Loans hereunder.
(c) All Events of Default. In the case of any Event of Default, including any Immediate Termination Event or a Suspension Event that has occurred and is continuing, the Bank (i) may by written notice to the Commission declare all amounts due hereunder , under the Fee Letter or under the Revolving Note or the Term Note to be immediately due and payable, whereupon the same shall immediately become due and payable, (ii) may by written notice to the Commission and the Issuing and Paying Agent (a n “EoD No-Issuance Notice”) in subst antially the form of Exhibit H-1 hereto declare the Commitment to be reduced to the principal amount of Series A-4 Notes then outstanding and to be permanently reduced further on the maturity date of each such Series A-4 Note by an amount equal to the principal amount of such Series A-4 Note with the Commitment to be terminated upon the last maturity date applicable to all such Series A-4 Notes, (iii) may petition a court of competent jurisdiction to issue a mandamus order to the Commission to compel specific performance of the covenants of the Commission contained in the Resolutions or herein and (iv) may pursue any other rights or remedies under this Agreement, the Fee Letter, the Resolutions , any other Basic Document, applicable law or otherwise. Except as expressly provided in this Section 8.2, procurement, demand, protest and all other notices of every kind are hereby expressly waived. Following receipt of a n EoD No-Issuance Notice, the Commission shall not issue any additional Series A-4 Notes.
(d) Timing of EoD No-Issuance Notice. An EoD No-Issuance Notice that is received by the Commission at or before 3:00 p.m. (New York City time) shall be effective when received.
An EoD No -Issuance Notice that is received by Commission after 3:00 p.m. (New York City time) shall not be effective until the opening of business on the next succeeding Business Day. (e) Copies of Notices. Concurrently with the occurrence of an Immediate Termination Event pursuant to clause (a) of this Section 8.2 or an EoD No-Issuance Notice pursuant to clause (c) of this Section 8.2, the Commission shall give notice to the Issuing and Paying Agent and the Dealers.
In addition, concurrently with giving such notice to the Commission and the Issuing and Paying Agent, the Bank shall provide a copy thereof to the Dealers at their respective addresses referred to in Section 9.9; provided, however , that the Bank shall not incur any liability as a result of its failure to provide a copy of such a notice in accordance with this sentence.
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Section 8.3. No Remedy Exclusive. The rights and remedies of the Bank under this Agreement shall be cumulative and not exclusive of any rights or remedies which it would otherwise have, and no failure or delay by the Bank, in exercising any right shall operate as a waiver of it, nor shall any single or partial exercise of any power or right preclude its other or further exercise or the exercise of any other power or right.
A
RTICLE IX
MISCELLANEOUS
Section 9.1. Payments to the Bank . All payments to the Bank hereunder shall be made without setoff or counterclaim in accordance with Section 2.9.
Section 9.2. Liability of the Bank . (a) The Commission assumes all risks of the acts or omissions of the Issuing and Paying Agent and the Dealers with respect to the proceeds of any Advance or Term Loan. Neither the Bank nor any of its officers, directors, employees or agents shall be liable or responsible for (i) the use which may be made of the proceeds of any Advance or Term Loan or of any acts or omissions of the Issuing and Paying Agent, the Dealers or any transferee in connection therewith, (ii) the validity, sufficiency or genuineness of documents, or of any endorsements thereon (other than the validity as against the Bank of any agreement to which it is a party), even if such documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged, (iii) the lack of validity or enforceability of the Commercial Paper Notes, any of the Resolutions, the Issuing and Paying Agent Agreement, the other Basic Documents or any other agree ment or instrument relating thereto (other than the validity or enforceability as against the Bank of any agreement to which the Bank is a party), or (iv) any other circumstances whatsoever in making or failing to make payment under this Agreement; provided, that the Commission shall have a claim against the Bank, and the Bank shall be liable to the Commission, to the extent of any direct, as opposed to consequential, damages suffered by the Commission which the Commission proves were caused by (i) the Bank’s willful misconduct or gross negligence in determining whether a Request for Advance presented hereunder complied with the terms hereof, or (ii) the Bank’s willful or grossly negligent failure to make an Advance required to be made by it hereunder after the presentation to it by the Commission of a Request for Advance in the form set forth in Exhibit C hereto. 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 (other than actual knowledge to the contrary) to the contrary.
Section 9.3. Indemnification. To the extent permitted by law, the Commission agrees to indemnify and hold harmless the Bank and its related parties and participants from and against any and all claims, damages, losses, consequential damages, liabilities and reasonable costs or expenses (including, without limitation, reasonable attorney’s fees and expenses) whatsoever which the Bank may incur (or which may be claimed against the Bank by any person or entity whatsoever) by reason of or in connection with (i) any untrue statement or alleged untrue statement of any material fact contained or incorporated by reference in the Basic Documents, the Offering Memorandum (other than in connection with the description of the Bank provided by the Bank expressly for use therein), or in any supplement or amendment thereof, or the
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omission or alleged omission to state therein a material fact necessary to make such statements, in the light of the circumstances in which they are or were made, not misleading; (ii) the offering, placement, or resale of the Series A-4 Notes; (iii) the validity, suf ficiency or genuineness of the transaction documents or the Offering Memorandum (other than in connection with the description of the Bank contained therein); or (iv) the execution and delivery of this Agreement; provided, that the Commission shall not be required to indemnify the Bank for any losses, claims, damages, liabilities, costs and expenses (other than those described in clause (i)) to the extent that such losses, claims, damages, liabilities, costs and expenses were caused by the willful misconduct or gross negligence of the Bank.
Section 9.4. Costs and Expenses . The Commission hereby agrees to pay (a) the costs and expenses as set forth in the Fee Letter, in the amounts and at the times set fo rth therein, and (b) as and to the extent not otherwise specified in the Fee Letter, all costs and expenses paid or incurred by the Bank, including the reasonable fees and out of pocket expenses of counsel for the Bank, otherwise arising in connection with this Agreement, the Fee Letter, the Issuing and Paying Agent Agreement or the other Basic Documents including, without limitation, in connection with any transfer of or amendment to this Agreement, the Fee Letter, the Issuing and Paying Agent Agreement or the other Basic Documents, the enforcement hereof or thereof or the protection of the rights of the Bank hereunder or thereunder.
Section 9.5. Participants . The Bank shall have the right, in its sole discret ion, to grant participations from time to time (to be evidenced by one or more Participation Agreements or certificates of participation) in this Agreement, the Fee Letter, the Revolving Note and the Term Note to one or more other banking institutions; pro vided, that the grant of any such participation shall not terminate or otherwise affect any obligation of the Bank hereunder. In connection with each participation, the Bank may disclose to any proposed participant any information that the Commission or any Dealer delivers or discloses pursuant to this Agreement. The Bank shall give notice to the Commission of any banking institution that is granted a participation pursuant to this Section.
Section 9.6. Successors and Assigns .
(a) This Agreement shall be binding upon and inure to the benefit of the Commission and the Bank and their respective successors and assigns, except that neither the Commission nor, except as permitted in Section 9.5, the Bank shall have the right to assign its rights hereunder or any interest herein without (i) the prior written consent of the other and (ii) written notice from S&P , if the Commercial Paper Notes are rated by S&P , and from Moody’s, if the Commercial Paper Notes are rated by Moody’s, that such assignment will not result in a suspension, lowering or withdrawal of the rating on the Commercial Paper Notes. (b) The Bank may assign and pledge all or any portion of the obligations owing to it to any Federal Reserve Bank or the United States Treasury, including, without limitation , as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operation Circular issued by such Federal Reserve Bank; provided, that any payment in respect of such assigned obligations made by the Commission to the Bank in accordance with the terms of this Agreement shall satisfy the obligations of the Commission
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hereunder in respect of such assigned obligation to the extent of such payment. No such assignment shall release the Bank from its obligations hereunder.
Section 9.7. Modification or Waiver of This Agreement . This Agreement is intended by the parties hereto as a final expression of their agreement with respect to the subject matter hereof, and is intended as a complete and exclusive statement of the terms and conditions of that agreement. Subject to the terms and provisions of Section 7.2( i) of the Agreement with respect to amendments to certain provisions described therein, no modification or waiver of any provision of this Agreement (including this Section 9.7) shall be effective unless the same shall be in writing and signed by the Bank and the Commission. Any modification or waiver referred to in this Section 9.7 shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Commission in any case shall entitle the Commission to any other or further notice or demand in the same, similar or other circumstances.
Section 9.8. No Waiver of Rights by the Bank; Cumulative Rights . No course of dealing or failure or dela y on the part of the Bank in exercising any right, power or privilege hereunder shall preclude any other or further exercise or the exercise of any right, power or privilege. The rights of the Bank under this Agreement, the Fee Letter, the Revolving Note, the Term Note, the Resolutions, the Issuing and Paying Agent Agreement and the other Basic Documents are cumulative and not exclusive of any rights or remedies which the Bank would otherwise have.
Section 9.9. Notices. All notices and communications hereunder shall be given by hand delivery, with a receipt being obtained therefor, by United States certified or registered mail, or by fax or by e-mail or by other electronic means of communication capable of creatin g a written record of such notice and its receipt. To the extent that any electronic means of communication notice is permitted hereunder, the parties hereto shall provide appropriate e -mail addresses or facsimile numbers. Except as provided in Sections 2.1(c) and 8.2(d), notices and communications hereunder shall be effective when received and, except for Requests for Advance, which shall be sent to the address set forth in the form thereof, shall be sent by the individual or an authorized representative of the entity at the addresses specified hereinbelow:
If to the Commission:
City and County of San Francisco
Public Utilities Commission
Attention: Chief Financial Officer
525 Golden Gate Ave., 13th Floor
San Francisco, California 94102
Telephone: (415) 554-3155
Facsimile: (415) 554-3161
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If to the Issuing and Paying Agent: U.S. Bank Trust Company, National Association 100 Wall Street, 16th Fl
New York, New York 10005
Attention: Beverly A. Freeney
Telephone: (212) 951-6993
Facsimile: (212) 509-3384
If to the Dealer: At the address, telephone number
and telecopy number set forth in
each Dealer Agreement.
If to the Bank for Advances and Term
Loans:
All other matters:
TD Bank, N.A.
[ADDRESS]
Attention: ____________
Email: ____________
Facsimile: ____________
Telephone: ____________
TD Bank, N.A.
[ADDRESS]
Attention: ____________
Email: ____________
Facsimile: ____________
Telephone: ____________
Section 9.10. Counterparts . This Agreement may be executed in two (2) or more counterparts, each of which shall constitute an original but all of which, when taken together, shall constitute but one document, and shall become effective when copies hereof which, when taken together, bear the signatures of each of the parties hereto.
Section 9.11. Certificates, Etc . In connection with the execution and delivery of this Agreement, the parties hereto may rely on any certificates delivered by or on behalf of each other respective party hereto as representations and warranties as to the matters therein certified.
Section 9.12. Term of Agreement.
(a) The term of this Agreement shall be until the later of (x) the termination of the Commitment or the Commitment Expiration Date and (y) the payment in full of the principal of and interest on all amounts due hereunder and under the Revolving Note and the Term Note. (b) Upon the written request of the Commission to the Bank made not later than ninety (90) days prior to the Commitment Expiration Date, the Bank shall notify the Commission and the Issuing and Paying Agent within sixty (60) days of such request whether or not it will extend the scheduled Commitment Expiration Date for the time period requested on terms acceptable to both parties, which time periods may include, without limitation, one or more extensions each
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for a period of one year or more. If the Bank notifies the Commission and the Issuing and Paying Agent that the scheduled Commitment Expiration Date shall be so extended, the Bank shall, within thirty (30) days of its notification to the Commission and the Issuing and Paying Agent, deliver to the Commission, the Issuing and Paying Agent and the Dealers a written acknowledgement of such extension. If the Bank fails to notify the Commission and the Issuing and Paying Agent of its decision within such sixty (60) day period, the Bank shall be deemed to have rejected such request. Any such determination by the Bank shall be in its sole and absolute discretion. Any such request by the Commission for an extension of the Commitment Expiration Date shall be substantially in the form of Exhibit D hereto (or in such other form to whi ch the Bank may consent in writing) and, unless the Bank shall otherwise consent, shall include (i) a statement of the outstanding principal amount of the Commercial Paper Notes, (ii) a reasonably detailed description of any and all Defaults or Events of Default that shall have occurred and be continuing and that no Immediate Termination Event is continuing, (iii) confirmation that all representations and warranties of the Commission contained herein and in the Basic Documents are true and correct as though made on the date of such request and that no Default or Event of Default has occurred or is continuing on the date of such request, and (iv) any other pertinent information requested by the Bank.
(c) The Commission may terminate this Agreement at any time upon thirty (30) days’ written notice to the Bank so long as no Series A -4 Notes are outstanding as of the date this Agreement is terminated; provided, however, that all amounts owing under the Fee Letter with respect to such termination shall be paid in accordance with the Fee Letter. (d) Prior to any substitution of an Alternate Facility for this Agreement, the Commission will pay or cause to be paid all amounts owing to the Bank hereunder and under the Revolving Note and the Term Note.
Section 9.13. Severability. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall negotiate in good faith to replace any invalid, illegal or unenforceable provision with a valid provision, which, to the extent possible, will preserve the economic effect of the invalid, illegal or unenforceable provisions.
Section 9.14. Governing Law; Jurisdiction.
(a) Governing Law. THIS AGREEMENT 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 AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE; PROVIDED THAT THE RIGHTS AND OBLIGATIONS OF THE BANK
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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(b) Waiver of Jury Trial. In addition, to the extent permitted by applicable law, the Commission and the B ank hereby waive any right to a trial by jury in any action, suit or proceeding arising under or relating to this Agreement or any other Basic Document. If and to the extent that the foregoing waiver of the right to a jury trial is unenforceable for any reason in such forum, the Commission and the Bank hereby consent to the adjudication of any and all claims pursuant to judicial reference as provided in California Code of Civil Procedure Section 638, and the judicial referee shall be empowered to hear and determine any and all issues in such reference whether fact or law. The Commission and the Bank represent that each has reviewed this waiver and consent and each knowingly and voluntarily waives its jury trial rights and consents to judicial reference following the opportunity to consult with legal counsel of its choice on such matters. In the event of litigation, a copy of this Agreement may be filed as a written consent to a trial by the court or to judicial reference under California Code of Civil Procedure Section 638 as provided herein.
Section 9.15. Consents . Except as otherwise provided in Section 9.12, the Bank agrees to respond within thirty (30) days of its receipt of a written request from the Commission to amend or waive any provision of this Agreement in the manner specifically set forth in such request. If the Bank fails to respond within such thirty (30) day period, the Bank shall be deemed to have rejected such request. Any such determination by the Bank shall be in its sole and absolute discretion.
Section 9.16. Source of Funds . The Bank agrees that all funds provided by the Bank hereunder will be paid from funds of the Bank and not directly or indirectly from funds or collateral on deposit with or for the account of, or pledged with or for the account of, the Bank by the Commission.
Section 9.17. Survival . The obligations of the Commission under Sections 2.3, 2.4, 2.7,
2.12, 9.3 and 9.4 and Article IV hereof and in the Fee Letter shall survive the payment of the Commercial Paper Notes and the termination of the Available Commitment and this Agreement.
Section 9.18. Headings . Secti on headings in this Agreement are included herein for convenience of reference only and shall not have any effect for purposes of interpretation or construction of the terms of this Agreement.
Section 9.19. Beneficiaries. This Agreement is made solely for the benefit of the Commission, the Issuing and Paying Agent, the Bank, their successors and assigns, and no other Person (including, without limitation, any owner of a Commercial Paper Note) shall have any right, benefit or interest under or because of the existence of this Agreement.
Section 9.20. Governmental Regulations. (i) The Bank hereby notifies the Commission that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that includes the name and address of the Commission and other information that will allow the Bank to identify the Commission in accordance with the Patriot Act.
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(ii) The Commission shall (a) ensure that no person who owns a controlling interest in or otherwise controls the Commission is or shall be listed on the Specially Designated Natio nals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury or included in any Executive Orders, that prohibits or limits the Bank from making any advance or extension of c redit to the Commission or from otherwise conducting business with the Commission and (b) ensure that the proceeds of the Commercial Paper Notes shall not be used to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto. Further, the Commission shall comply, and cause any of its subsidiaries to comply, with all applicable Bank Secrecy Act (“BSA”) laws and regulations, as amended.
Section 9.21. City Requirements. The Bank hereby agrees to the City’s requirements, as provided in Exhibit G attached hereto and incorporated hereby by this reference.
Section 9.22. Arm’s Length Transaction. The transaction described in this Agreement is an arm’s length, commercial transaction between the Commission and the Bank in which: (i) the Bank is acting solely as a principal (i.e., as a lender) and for its own interest; (ii) the Bank is not acting as an advisor (whether as a municipal advisor or financial advisor or otherwise) to the Commission; (iii) the Bank has no fiduciary duty pursuant to Section 15B of the Securities Exchange Act of 1934 or otherwise to the Commission with respect to this transaction and the discussions, undertakings and procedures leading thereto (irrespective of whether the Bank or any of its affiliates has provided other services or is currently providing other services to the Commission on other matters); (iv) the only obligations the Bank has to the Commission with respect to this transaction are set forth in this Agreement; and (v) the Bank is not recommending that the Commission take an action with respect to the transaction described in this Agreement and the other Basic Documents, and before taking any action with respect to the this transaction, the Commission should discuss the information contained herein with the Commission’s own legal, accounting, tax, financial and other advisors, as the Commission deems appropriate.
Section 9.23. Electronic Execution of Certain Documents . The words “delivery,” “execute,” “execution,” “signed,” “signature,” and words of like import in any Basic Document or any other document executed in connection herewith shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Bank, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper -based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary, the Bank is under no obligation to agree to accept electronic signatures 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, upon the request of the Bank, any electronic signature shall be promptly followed by such manually executed counterpart.
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Section 9.24. MSRB Rule G -34. In the event the Commission delivers or permits, authorizes or consents to the delivery of this Agreement (including without limitation any amendments hereto and thereto) to the Dealer or any other Person for delivery to the Municipal Securities Rulemaking Commission pursuant to Rule G -34 of the Municipal Securities Rulemaking Commission ( “Rule G -34”), the Commission shall cooperate with the Bank to provide for the redaction of information permitted to be redacted under Rule G-34.
Upon reasonable written request from the Dealer or the Commission, the Bank agrees to use commercially reasonable efforts to provide copies of amendments, extensions and modifications of this Agreement that the Dealer is required to file in accordance with Rule G-34(c), other than information which is permitted to be redacted in accordance with such Rule.
Without the consent of the Bank, the Co mmission will not make available the Fee Letter for filing pursuant to Rule G-34(c).
[Remainder of page intentionally left blank; signature page follows.]
[Signature Page to Revolving Credit and Term Loan Agreement] IN WITNESS WHEREOF, the parties hereto have caused this Revolving Credit and Term Loan Agreement to be duly executed and delivered by their respective officers thereunto authorized as of the date first above written.
PUBLIC UTILITIES COMMISSION OF THE CITY AND
COUNTY OF SAN FRANCISCO
By ____________________________________
Name: Dennis J. Herrera
Title: General Manager
Approved as to Form:
DAVID CHIU
City Attorney of the City and
County of San Francisco
By: __________________________________
Name: Mark D. Blake
Title: Deputy City Attorney
Acknowledged:
ANNA VAN DEGNA
Director of Public Finance of the City
and County of San Francisco
__________________________________
[Signature Page to Revolving Credit and Term Loan Agreement]
TD BANK, N.A.
By ____________________________________
Name: ______________________________
Title: ______________________________
EXHIBIT A
FORM OF REVOLVING NOTE
PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF
SAN FRANCISCO
LIQUIDITY FACILITY REVOLVING BANK NOTE, SERIES A-4
July 7, 2022 San Francisco, California
For value received, P UBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”) promises to pay to the order of TD BANK, N.A. (the “Bank”), at its office at 31 West 52 nd Street, New York, New York, 10019, the aggregate unpaid principal amount of all Advances made by the Bank from time to time pursuant to the A greement referred to below on the dates and in the amounts provided for in the Agreement.
The Commission promises to pay interest on the unpaid principal amount of such Advances on the dates and at the rates provided for in the Revolving Credit and Term Lo an Agreement, dated as of July 1, 2022 (as amended and supplemented from time to time, the “Agreement”), by and between the Commission and the Bank. All payments of principal and interest shall be made in lawful money of the United States of America in immediately available funds. All capitalized terms used herein and not otherwise defined herein shall have the meanings specified in the Agreement.
This note is the Revolving Note referred to in the Agreement and is entitled to the benefits thereof and of the Basic Documents referred to therein. As provided in the Agreement, this Revolving Note is subject to prepayment, in whole or in part. In case an Event of Default (as defined in the Agreement) shall occur and be continuing, the principal of and accrued interest on this Revolving Note may be declared due and payable in the manner and with the effect provided in the Agreement.
The Bank agrees, by acceptance of this Revolving Note, that before disposing of this Revolving Note it will make a notation on the schedule attached hereto of all Advances evidenced hereby and all principal payments and prepayments made hereunder and of the date to which interest hereon has been paid; provided, however , that the failure to make any such notation shall not limit or otherwise affect the obligation of the Commission hereunder with respect to payments of principal of and interest on this Revolving Note.
Notwithstanding any other provision hereof or of the Agreement to the contrary, the obligations of the Commission hereunder are payable solely from the Pledged Revenues. This Revolving Note constitutes a valid and binding obligation of the Commission issued under the Issuing and Paying Agent Agreement and is secured by, and payable from, the Pledged Revenues and from the proceeds of subsequent borrowings by the Commission, including but not limited to in the form of additional or rollover Series A-4 Notes authorized thereunder.
A-2
The parties hereto, including the undersigned maker and all guarantors, endorsers and pledgers that may exist at any time with respect hereto, hereby waive presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Revolving Note and assent to the extensions of the time of payment or forbearance or other indulgence without notice.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
The Commission hereby irrevocably (i) agrees that any suit, action or other proceeding arising out of or relating to this Revolving Note may be brought in any court of competent jurisdiction located in New York, and consents to the jurisdiction of such court in any such suit, action or proceeding and (ii) waives, to the fullest extent permitted by law, any objection which it may have to the laying of venue of any such suit, action or proceeding in any such court and any claim that any such suit, action or proceeding has been brought in an inconvenient forum.
Notwithstanding the foregoing, in the event the Bank is not a party to any such action or proceeding, the foregoing provisions shall not apply.
I
N WITNESS WHEREOF, the Public Utilities Commission of the City and County of San Francisco has caused this Revolving Note to be signed in its corporate name as an instrument under seal by its duly authorized officer on the date and in the year first above written.
PUBLIC UTILITIES COMMISSION OF THE CITY AND
COUNTY OF SAN FRANCISCO
By ____________________________________
Name ________________________________
Title _________________________________
A-3
TRANSACTIONS
ON
REVOLVING NOTE
Date
Principal
Amount of
Advance
Amount of
Principal Paid
Date to
Which
Interest Paid
Notation
Made By
EXHIBIT B
FORM OF TERM NOTE
PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF
SAN FRANCISCO
TERM BANK NOTE, SERIES A-4
July 7, 2022 San Francisco, California
For value received, P UBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”) promises to pay to the order of TD BANK, N.A. (the “Bank”), at its office at 31 West 52 nd Street, New York, New York, 10019, the aggregate unpaid principal amount of all Term Loans made by the Bank from time to time pursuant to the Agreement referred to below on the dates and in the amounts provided for in the Agreement.
The Commission promises to pay interest on the unpaid principal amount of the Term Loans on the dates and at the rates provided for in the Revolving Credit and Term Loan Agreement dated as of July 1, 2022 (as amended and supplemented from time to time, the “Agreement”), by and between the Commission and the Bank. All payments of principal and interest shall be made in lawful money of the United States of America in immediately available funds. All capitalized terms used herein and not otherwise defined herein shall have the meanings specified in the Agreement.
This note is the Term Note referred to in the Agreement and is entitled to the benefits thereof and of the Basic Documents referred to therein. As provided in the Agreement, this Term Note is subject to prepayment, in whole or in part. In case an Event of Default (as defined in the Agreement) shall occur and be continuing, the principal of and accrued interest on this Term Note may be declared due and payable in the manner and with the effect provided in the Agreement.
The Bank, agrees, by acceptanc e of this Term Note, that before disposing of this Term Note it will make a notation on the schedule attached hereto of all Term Loans evidenced hereby and all principal payments and prepayments made hereunder and of the date to which interest hereon has been paid; provided, however , that the failure to make any such notation shall not limit or otherwise affect the obligation of the Commission hereunder with respect to payments of principal of and interest on this Term Note.
Notwithstanding any other provision hereof or of the Agreement to the contrary, the obligations of the Commission hereunder are payable solely from the Pledged Revenues. This Term Note constitutes a valid and binding obligation of the Commission issued under the Issuing and Paying Agent Agreement and is secured by, and payable from, the Pledged Revenues and from the proceeds of subsequent borrowings by the Commission, including, but not limited to, in the form of additional or rollover Series A-4 Notes authorized thereunder.
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The parties hereto, including the undersigned maker and all guarantors, endorsers and pledgers that may exist at any time with respect hereto, hereby waive presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptan ce, performance and enforcement of this Term Note and assent to the extensions of the time of payment or forbearance or other indulgence without notice.
THIS TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
The Commission hereby irrevocably (i) agrees that any suit, action or other proceeding arising out of or relating to this Term Note may be brought in any court of competent jurisdiction located in New York, and consents to the jurisdiction of such court in any such suit, action or proceeding and (ii) waives, to the fullest extent permitted by law, any objection which it may have to the laying of venue of any such suit, action or proceeding in any such court and any claim that any such suit, action or proceeding has been brought in an inconvenient forum.
Notwithstanding the foregoing, in the event the Bank is not a party to any such action or proceeding, the foregoing provisions shall not apply.
I
N WITNESS WHEREOF, the Public Utilities Commission of the City and County of San Francisco has caused this Term Note to be signed in its corporate name as an instrument under seal by its duly authorized officer on the date and in the year first above written.
PUBLIC UTILITIES COMMISSION OF THE CITY AND
COUNTY OF SAN FRANCISCO
By ____________________________________
Name ________________________________
Title _________________________________
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TRANSACTIONS
ON
TERM NOTE
Date
Amount of
Term Loan Made
Amount of
Principal Paid
Date to
Which
Interest Paid
Notation
Made By
EXHIBIT C
[FORM OF REQUEST FOR ADVANCE]
REQUEST FOR ADVANCE
TD Bank, N.A.
[ADDRESS]
Attention: ____________
Email: ____________
Fax: ____________
Telephone: ____________
Ladies and Gentlemen:
The undersigned, U.S.
BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Issuing and Paying Agent (the “Issuing and Paying Agent”) under the Issuing and Paying Agent Agreement, dated as of July 1, 2012, as amended from time to time between P UBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”) and the undersigned, refers to the Revolving Credit and Term Loan Agreement dated as of July 1, 2022 (as amended and supplemented from time to time, the “Agreement”), by and between the Commission and TD BANK, N.A. (the “Bank”) and hereby requests, pursuant to Section 2.1 of the Agreement, an Advance under the Agreement and in that connection sets forth below the following information relating to such Advance (the “Proposed Advance”):
1. The principal amount of the Proposed Advance is $__________;
2. The sum of the Proposed Advance, the aggregate amount of Series A-4 Notes to be Outstanding following the application of the Proposed Advance and all Advances and Term Loans outstanding does not exceed the Commitment.
3. The entire amount of the Proposed Advance shall be used solely for the payment of the principal of the Series A-4 Notes due and payable on the date of this Request and for the payment of which proceeds of Series A-4 Notes are not available.
The Proposed Advance shall be made by wire transfer of immediately available funds to the undersigned in accordance with the terms of the Agreement.
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The terms capitalized herein but not otherwise defined herein shall have the meanings assigned to them in the Agreement.
Very truly yours,
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Issuing and Paying Agent
By ____________________________________
Name ________________________________
Title _________________________________
EXHIBIT D
[FORM OF REQUEST FOR EXTENSION]
Request for Extension
[Date]
TD Bank, N.A.
[ADDRESS]
Attention: ____________
Email: ____________
Fax: ____________
Telephone: ____________
Ladies and Gentlemen:
Reference is made to the Revolving Credit and T erm Loan Agreement dated as of July 1, 2022 (as amended and supplemented from time to time, the “Agreement” ), by and between the P
UBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”) and TD BANK, N.A. (the “Bank”).
The Commission hereby requests, pursuant to Section 9.12(b) of the Agreement, that the Commitment Expiration Date be extended to __________ __, ____. Pursuant to such Section
9.12(b), we have enclosed with this request the following information:
1. The outstanding principal amount of the Series A-4 Notes, together with the aggregate principal amount of all Advances and Term Loans Outstanding as of the date hereof, is equal to $_____________;
2. A reasonably detailed description of any and all Defaults and Events of Default that have occurred and are continuing;
3. Confirmation that all representations and warranties of the Commission contained in the Agreement and the Basic Documents are true and correct as though made on the date hereof and that no Default or Event of Default has occurred and is continuing on the date hereof; and
4. Any other pertinent information previously requested by the Bank.
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The Bank is required to notify the Commission and the Issuing and Paying Agent of its decision with respect to this request within thirty (30) days of the date of receipt hereof. If the Bank fails to notify the Commission and the Issuing and Paying Agent of its decision within such thirty (30) day period, the Bank shall be deemed to have rejected such request. The terms capitalized herein but not otherwise defined herein shall have the meanings assigned to them in the Agreement.
Very truly yours,
PUBLIC UTILITIES COMMISSION OF THE CITY AND
COUNTY OF SAN FRANCISCO
By ____________________________________
Name ________________________________
Title _________________________________
EXHIBIT E
[FORM OF NOTICE OF TERMINATION OR REDUCTION]
NOTICE OF TERMINATION OR REDUCTION
[Date]
TD Bank, N.A.
[ADDRESS]
Attention: ____________
Email: ____________
Fax: ____________
Telephone: ____________
Re: Revolving Credit and Term Loan Agreement
dated as of July 1, 2022
Ladies and Gentlemen:
The P
UBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”), through its undersigned duly authorized officer, hereby certifies to TD BANK, N.A. (the “Bank”), with reference to the Revolving Credit and Term Loan Agreement, dated as of July 1, 2022 (as amended and supplemented from time to time, the “Agreement”), by and between the Commission and the Bank.
[The Commission hereby informs you that the Commitment is terminated in accordance with the Agreement.]
OR
[(a) The Commission hereby informs you that the Commitment is reduced from [insert amount as of the date of Certificate] to [insert new amount], such reduction to be effective on __________. The Available Commitment is reduced from [insert amount as of the date of Certificate] to [insert new amount], such reduction to be effective on such date.
(b) Upon the foregoing reductions, the amount of the Commitment will not be less than the sum of (i) the principal amount of all Commercial Paper Notes Outstanding and (ii) the aggregate principal amount of all unpaid Advances and Term Loans due under the Agreement.
The terms capitalized herein but not otherwise defined herein shall have the meanings assigned to them in the Agreement.
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IN WITNESS WHEREOF, the Commissio n has executed and delivered this Notice this _____ day of _________, ____.
Very truly yours,
PUBLIC UTILITIES COMMISSION OF THE CITY AND
COUNTY OF SAN FRANCISCO
By ____________________________________
Name ________________________________
Title _________________________________
EXHIBIT F
2022 LIST OF CITY HOLIDAYS
(INCLUDING DAYS CITY IS OFFICIALLY CLOSED)
[TO BE CONFIRMED]
New Years Day - January 1, 2022
Dr. Martin Luther King, Jr. Day - January 17, 2022
President's Day - February 21, 2022
Memorial Day - May 30, 2022
Juneteenth National Independence Day – June 20, 2022
Independence Day - July 4, 2022
Labor Day - September 5, 2022
Indigenous Peoples Day - October 10, 2022
Veterans Day - November 11, 2022
Thanksgiving Day and the Day After - November 45, 2022 & November 25, 2022 Christmas Day - December 26, 2022
EXHIBIT G
CITY REQUIREMENTS
(a) Tropical Hardwood and Virgin Redwood Ban. The City urges contractors not to import, purchase, obtain, or use for any purpose, any tropical hardwood, tropical hardwood wood product, virgin redwood or virgin redwood wood product. (b) Nondiscrimination: Penalties.
(i) Bank Shall Not Discriminat e. In the performance of this Agreement, the Bank agrees not to discriminate against any employee, City and County employee working with the Bank or subcontractor, applicant for employment with the Bank or subcontractor, or against any person seeking accommodations, advantages, facilities, privileges, services, or membership in all business, social, or other establishments or organizations, on the basis of the fact or perception of a person’s race, color, creed, religion, national origin, ancestry, age, height, weight, sex, sexual orientation, gender identity, domestic partner status, marital status, disability or Acquired Immune Deficiency Syndrome or HIV status, or association with members of such protected classes, or in retaliation for opposition to discrimination against such classes. (ii) Subcontracts. The Bank shall incorporate by reference in all subcontracts made in fulfillment of its obligations hereunder the provisions of Sections 12B.2(a), 12B.2(c)-(k) and 12C.3 of the San Francisco Administrative Code and shall require all subcontractors to comply with such provisions. The Bank’s failure to comply with the obligations in this subsection shall constitute a material breach of this Agreement. (iii) Non-Discrimination in Benefits . The Bank does not as of the date of this Agreement and will not during the term of this Agreement, in any of its operations in San Francisco, on real property owned by San Francisco, or where work is being performed for the City elsewher e in the United States, discriminate in the provision of bereavement leave, family medical leave, health benefits, membership or membership discounts, moving expenses, pension and retirement benefits or travel benefits, as well as any benefits other than the benefits specified above, between employees with domestic partners and employees with spouses, and/or between the domestic partners and spouses of such employees, where the domestic partnership has been registered with a governmental entity pursuant to state or local law authorizing such registration, subject to the conditions set forth in Section 12B.2(b) of the San Francisco Administrative Code. (iv) HRC Form . The Bank shall execute the “Chapter 12B Declaration:
Nondiscrimination in Contracts and Bene fits” form (Form HRC -12B-101) with supporting documentation and secure the approval of the form by the San Francisco Human Rights Commission.
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(v) Incorporation of Administrative Code Provisions by Reference. The provisions of Chapters 12B and 12C of the S an Francisco Administrative Code are incorporated in this Section by reference and made a part of this Agreement as though fully set forth herein. The Bank shall comply fully with and be bound by all of the provisions that apply to this Agreement under such Chapters of the San Francisco Administrative Code, including but not limited to the remedies provided in such Chapters. Without limiting the foregoing, the Bank understands that pursuant to Section 12B.2(h) of the San Francisco Administrative Code, a penalty of $50 for each person for each calendar day during which such person was discriminated against in violation of the provisions of this Agreement may be assessed against the Bank and/or deducted from any payments due the Bank; provided, however, that such damages shall not be set off against the payment of rental or other contract related to Commercial Paper Notes or other debt obligations of the City.
(c) Limitations on Contributions . Through execution of this Agreement, the Bank acknowledges that it is familiar with Section 1.126 of the City’s Campaign and Governmental Conduct Code, which prohibits any person who contracts with the City, including the Commission, for the rendition of personal services, for the furnishing of any material, supplies or equipment, for the sale or lease of any land or building, or for a grant, loan or loan guarantee, from making any campaign contribution to (A) an individual holding a City elective office if the contract must be approved by the individual, a board on which that individual serves, or a board on which an appointee of that individual serves, (B) a candidate for the office held by such individual, or (C) a committee controlled by such individual, at any time from the commencement of negotiations for the contract until the later of either the termination of negotiations for such contract or six months after the date the contract is approved. The Bank acknowledges that the foregoing restriction applies only if the contract or combination or series of contracts approved by the same individual or board in a fiscal year have a total anticipated or actual value of $50,000 or more. The Bank further acknowledges that the prohibition on contributions applies to each prospective party to the contract; each member of the Bank’s board of directors; the Bank’s chairperson, chief executive officer, chief financial officer and chief operating officer; any person with an ownership interest of more than 20 percent in the Bank; any subcontractor listed in the bid or contract; and any committee that is sponsored or controlled by the Bank. Additionally, the Bank acknowledges that the Bank must inform each of the persons described in the preceding sentence of the prohibitions contained in Section 1.126 of the City’s Campaign and Governmental Conduct Code.
(d) MacBride Principles - Northern Ireland. Pursuant to San Francisco Administrative Code Section 12F.5, the City urges companies doing business in Northern Ireland to move towards resolving employment inequities, and encourages such companies to abide by the MacBride Principles. The City urges San Francisco companies to do business with corporations that abide by the MacBride Principles. By signing below, the person executing this Agreement on behalf of the Bank acknowledges and agrees that he or she has read and understood this section.
(e) Conflict of Interest. Through its execution of this Agreement, the Bank hereby acknowledges that it is familiar with the provision of Section 15.103 of the City’s Charter,
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Article III, Chapter 2 o f City’s Campaign and Governmental Conduct Code, and Section 87100 et seq. and Section 1090 et seq. of the Government Code of the State of California, and certifies that it does not know of any facts which constitutes a violation of said provisions and agr ees that it will immediately notify the City if it becomes aware of any such fact during the term of this Agreement.
(f) Earned Income Credit (“EIC”) Forms . San Francisco Administrative Code section 12O requires that employers provide their employees with IRS Form W -5 (The Earned Income Credit Advance Payment Certificate) and the IRS EIC Schedule, as set forth below. Employers can locate these forms at the IRS Office, on the Internet, or anywhere that Federal Tax Forms can be found.
(i) The Bank shall provide EIC Forms to each Eligible Employee at each of the following times: (A) within thirty days following the date on which this Agreement becomes effective (unless the Bank has already provided such EIC Forms at least once during the calendar year in whi ch such effective date falls); (B) promptly after any Eligible Employee is hired by the Bank; and (C) annually between January 1 and January 31 of each calendar year during the term of this Agreement. (ii) Failure to comply with any requirement contained in the immediately preceding paragraph shall constitute a material breach by the Bank of the terms of this Agreement. If, within thirty days after the Bank receives written notice of such a breach, the Bank fails to cure such breach or, if such breach cannot reasonably be cured within such period of thirty days, the Bank fails to commence efforts to cure within such period or thereafter fails to diligently pursue such cure to completion, the City may pursue any rights or remedies available under this Agreement or under applicable law. (iii) Any subcontract entered into by the Bank shall require the subcontractor to comply, as to the subcontractor’s Eligible Employees, with each of the terms of this Section.
(iv) Capitalized terms used in this Section and not defined in this Agreement shall have the meanings assigned to such terms in Section 12O of the San Francisco Administrative Code.
(g) Local Business Enterprise Utilization; Liquidated Damages. (i) The LBE Ordinance. The Bank shall comply with all the requirements of the Disadvantaged Business Enterprise Ordinance set forth in Chapter 14B of the San Francisco Administrative Code as it now exists or as it may be amended in the future (collectively the “LBE Ordinance” ), provided such amendments do not ma terially increase the Bank’s obligations or liabilities, or materially diminish the Bank’s rights, under this Agreement. Such provisions of the LBE Ordinance are incorporated by reference and made a part of this Agreement as though fully set forth in this section. The Bank’s willful failure to comply with any applicable provisions of the LBE Ordinance is a material breach of the Bank’s obligations under this Agreement and shall entitle City,
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subject to any applicable notice and cure provisions set forth in this Agreement, to exercise any of the remedies provided for under this Agreement, under the LBE Ordinance or otherwise available at law or in equity, which remedies shall be cumulative unless this Agreement expressly provides that any remedy is exclusive. In addition, the Bank shall comply fully with all other applicable local, state and federal laws prohibiting discrimination and requiring equal opportunity in contracting, including subcontracting. (ii) Compliance and Enforcement. If the Bank willfully fails to comply with any of the provisions of the LBE Ordinance, the rules and regulations implementing the LBE Ordinance, or the provisions of this Agreement pertaining to LBE participation, the Bank shall be liable for liquidated damages in an amount equal to the Bank’s net profit on this Agreement, or 10% of the total amount of this Agreement, or $1,000, whichever is greatest. The Director of the City’s Human Rights Commission or any other public official authorized to enforce the LBE Ordinance (separatel y and collectively, the “Director of HRC”) may also impose other sanctions against the Bank authorized in the LBE Ordinance, including declaring the Bank to be irresponsible and ineligible to contract with the City for a period of up to five years or revocation of the Bank’s LBE certification. The Director of HRC will determine the sanctions to be imposed, including the amount of liquidated damages, after investigation pursuant to the San Francisco Administrative Code Section 14B.17.
By entering into this Agreement, the Bank acknowledges and agrees that any liquidated damages assessed by the Director of the HRC shall be payable to City upon demand. The Bank further acknowledges and agrees that any liquidated damages assessed may be withheld from any monies due to the Bank on any contract with City.
The Bank agrees to maintain records necessary for monitoring its compliance with the LBE Ordinance for a period of three years following termination or expiration of this Agreement, and shall make such records avai lable for audit and inspection by the Director of HRC or the Controller upon request.
(h) Drug-Free Workplace Policy. The Bank acknowledges that pursuant to the Federal Drug-Free Workplace Act of 1989, the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited on Commission or City premises. The Bank agrees that any violation of this prohibition by the Bank, its employees, agents or assigns will be deemed a material breach of this Agreement.
(i) Compliance with Americans with Disabilities Act. The Bank acknowledges that, pursuant to the Americans with Disabilities Act (“ADA”), programs, services and other activities provided by a public entity to the public, whether directly or through a contractor, must be accessible to the disabled public. The Bank shall provide the services specified in this Agreement in a manner that complies with the ADA and any and all other applicable federal, state and local disability rights legislation. The Bank agrees not to discriminate against disabled persons in the provision of services, benefits or activities provided under this Agreement and further agrees that any violation of this prohibition on the part of the Bank, its employees, agents or assigns will constitute a material breach of this Agreement.
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(j) Sunshine Ordinance . In accordance with San Francisco Administrative Code Section 67.24(e), contracts, contractors’ bids, responses to solicitations and all other records of communications between the Commission or the City and persons or firms seeking contracts, shall be open to inspection immediately after a contract has been awarded. Nothing in this provision requires the disclosure of a private person or organization’s net worth or other proprietary financial data su bmitted for qualification for a contract or other benefit until and unless that person or organization is awarded the contract or benefit. Information provided which is covered by this paragraph will be made available to the public upon request. (k) Requiring Minimum Compensation for Covered Employees. (i) The Bank agrees to comply fully with and be bound by all of the provisions of the Minimum Compensation Ordinance (“MCO”), as set forth in San Francisco Administrative Code Chapter 12P (“Chapter 12P”), including the remedies provided, and implementing guidelines and rules. The provisions of Chapter 12P are incorporated herein by reference and made a part of this Agreement as though fully set forth. The text of the MCO is available on the web at www.sfgov.org/olse/mco. A partial listing of some of the Bank’s obligations under the MCO is set forth in this Section. The Bank is required to comply with all the provisions of the MCO, irrespective of this listing of obligations in this Section.
(ii) The MCO requires the Bank to pay the Bank’s employees a minimum hourly gross compensation wage rate and to provide minimum compensated and uncompensated time off. The minimum wage rate may change from year to year and the Bank is obligated to keep informed of the th en-current requirements. Any subcontract entered into by the Bank shall require the subcontractor to comply with the requirements of the MCO and shall contain contractual obligations substantially the same as those set forth in this Section. It is the Bank’s obligation to ensure that any subcontractors of any tier under this Agreement comply with the requirements of the MCO. If any subcontractor under this Agreement fails to comply, City may pursue any of the remedies set forth in this Section against the Bank.
(iii) The Bank shall not take adverse action or otherwise discriminate against an employee or other person for the exercise or attempted exercise of rights under the MCO. Such actions, if taken within 90 days of the exercise or attempted exercise of such rights, will be rebuttably presumed to be retaliation prohibited by the MCO. (iv) The Bank shall maintain employee and payroll records as required by the MCO. If the Bank fails to do so, it shall be presumed that the Bank paid no more than the minimum wage required under State law.
(v) The City is authorized to inspect the Bank’s job sites and conduct interviews with employees and conduct audits of the Bank. (vi) The Bank’s commitment to provide the Minimum Compensation is a material element of the City’s consideration for this Agreement. The City in its sole
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discretion shall determine whether such a breach has occurred. The City and the public will suffer actual damage that will be impractical or extremely difficult to determine if the Bank fails to comply with these requirements. The Bank agrees that the sums set forth in Section 12P.6.1 of the MCO as liquidated damages are not a penalty, but are reasonable estimates of the loss that the City and the public will incur for the Bank’s noncompliance. The procedures governing the assessment of liquidated damages shall be those set forth in Section 12P.6.2 of Chapter 12P.
(vii) The Bank understands and agrees that if it fails to comply with the requirements of the MCO, the City shall have the right to pursue any rights or remedies available under Chapter 12P (including liquidated damages), under the terms of the contract, and under applicable law. If, within 30 days after receiving written notice of a breach of this Agreement for violating the MCO, the Bank fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Bank fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue any rights or remedies available under applicable law, including those set forth in Section 12P.6(c) of Chapter 12P. Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(viii) The Bank represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the MCO. (ix) The City may conduct random audits of the Bank. Random audits shall be (A) noticed in a dvance in writing; (B) limited to ascertaining whether Covered Employees are paid at least the minimum compensation required by the MCO; (C) accomplished through an examination of pertinent records at a mutually agreed upon time and location within ten days of the written notice; and (D) limited to one audit of the Bank every two years for the duration of this Agreement. Nothing in this Agreement is intended to preclude the City from investigating any report of an alleged violation of the MCO.
(l) Requiring Health Benefits for Covered Employees . Unless exempt, the Bank agrees to comply fully with and be bound by all of the provisions of the Health Care Accountability Ordinance (“HCAO”), as set forth in San Francisco Administrative Code Chapter 12Q, including the remedies provided, and implementing regulations, as the same may be amended from time to time. The provisions of Chapter 12Q are incorporated herein by reference and made a part of this Agreement as though fully set forth herein. The text of the HCAO is available on the web at http://www.sfgov.org/lwlh.htm. Capitalized terms used in this Section and not defined in this Agreement shall have the meanings assigned to such terms in Chapter 12Q. (i) For each Covered Employee, the Bank shall provide the appropriate health benefit set forth in Section 12Q.3 of the HCAO. If the Bank chooses to offer the health plan option, such health plan shall meet the minimum standards set forth by the San Francisco Health Commission.
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(ii) Notwithstanding the above, if th e Bank is a small business as defined in Section 12Q.3(d) of the HCAO, it shall have no obligation to comply with part (i) above. (iii) The Bank’s failure to comply with the HCAO shall constitute a material breach of this Agreement. The City shall notify the Bank if such a breach has occurred.
If, within 30 days after receiving City’s written notice of a breach of this Agreement for violating the HCAO, the Bank fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Bank fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, City shall have the right to pursue the remedies set forth in Section 12Q.5(f)(1 -5). Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to City.
(iv) Any subcontract entered into by the Bank shall require the subcontractor to comply with the requirements of the HCAO and shall contain contractual obligations substantially the same as those set forth in this Section. The Bank shall notify City’s Office of Contract Administration when it enters into such a subcontract and shall certify to the Office of Contract Administration that it has notified the subcontra ctor of the obligations under the HCAO and has imposed the requirements of the HCAO on subcontractor through the subcontract. The Bank shall be responsible for its subcontractors’ compliance with this Chapter. If a subcontractor fails to comply, the City may pursue the remedies set forth in this Section against the Bank based on the subcontractor’s failure to comply, provided that City has first provided the Bank with notice and an opportunity to obtain a cure of the violation. (v) The Bank shall not discharge, reduce in compensation, or otherwise discriminate against any employee for notifying City with regard to the Bank’s noncompliance or anticipated noncompliance with the requirements of the HCAO, for opposing any practice proscribed by the HCAO, for pa rticipating in proceedings related to the HCAO, or for seeking to assert or enforce any rights under the HCAO by any lawful means.
(vi) The Bank represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the HCAO. (vii) The Bank shall maintain employee and payroll records in compliance with the California Labor Code and Industrial Welfare Commission orders, including the number of hours each employee has worked on the City Contract. (viii) The Bank shall keep itself informed of the current requirements of the HCAO.
(ix) The Bank shall provide reports to the City in accordance with any reporting standards promulgated by the City under the HCAO, including reports on subcontractors and subtenants, as applicable.
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(x) The Bank shall provide City with access to records pertaining to compliance with HCAO after receiving a written request from City to do so and being provided at least ten business days to respond.
(xi) The Bank shall allow City to inspect the Bank’s job sites and have access to the Bank’s employees in order to monitor and determine compliance with HCAO. (xii) The City may conduct random audits of the Bank to ascertain its compliance with HCAO. The Bank agrees to cooperate with Ci ty when it conducts such audits.
(xiii) If the Bank is exempt from the HCAO when this Agreement is executed because its amount is less than $25,000 ($50,000 for nonprofits), but the Bank later enters into an agreement or agreements that cause the Bank’s aggregate amount of all agreements with City to reach $75,000, all the agreements shall be thereafter subject to the HCAO. This obligation arises on the effective date of the agreement that causes the cumulative amount of agreements between the Bank and the City to be equal to or greater than $75,000 in the fiscal year.
(m) Prohibition on Political Activity with City Funds . In accordance with San Francisco Administrative Code Chapter 12.G, the Bank may not participate in, support, or attempt to influence any political campaign for a candidate or for a ballot measure (collectively, “Political Activity”) in the performance of the services provided under this Agreement. The Bank agrees to comply with San Francisco Administrative Code Chapter 12.G and any implementing rules and regulations promulgated by the City’s Controller. The terms and provisions of Chapter 12.G are incorporated herein by this reference. In the event the Bank violates the provisions of this section, the City may, in addition to any other rights or remedies available hereunder, (i) terminate this Agreement, and (ii) prohibit the Bank from bidding on or receiving any new City contract for a period of two (2) years. The Controller will not consider the Bank’s use of profit as a violation of this section.
(n) Graffiti Removal. Graffiti is detrimental to the health, safety and welfare of the community in that it promotes a perception in the community that the laws protecting public and private property can be disregarded with impunity. This perception fosters a sense of disrespect of the law that results in an increase in crime; degrades the community and leads to urban blight; is detrimental to property values, business opportunities and the enjoyment of life; is inconsistent with the City’s prope rty maintenance goals and aesthetic standards; and results in additional graffiti and in other properties becoming the target of graffiti unless it is quickly removed from public and private property. Graffiti results in visual pollution and is a public nuisance. Graffiti must be abated as quickly as possible to avoid detrimental impacts on the City and its residents, and to prevent the further spread of graffiti.
The Bank shall remove all graffiti from any real property owned or leased by such Bank in the City and County of San Francisco within forty eight (48) hours of the earlier of such Bank’s (i) discovery or notification of the graffiti or (ii) receipt of notification of the graffiti from the Department of Public Works. This Section is not intended to require any Bank to breach any
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lease or other agreement that it may have concerning its use of the real property. The term “graffiti” means any inscription, word, figure, marking or design that is affixed, marked, etched, scratched, drawn or painted on any building, structure, fixture or other improvement, whether permanent or temporary, including by way of example only and without limitation, signs, banners, billboards and fencing surrounding construction sites, whether public or private, without the consent of the owner of the property or the owner’s authorized agent, and which is visible from the public right -of-way. “Graffiti” shall not include: (A) any sign or banner that is authorized by, and in compliance with, the applicable requirements of the San F rancisco Public Works Code, the San Francisco Planning Code or the San Francisco Building Code; or (B) any mural or other painting or marking on the property that is protected as a work of fine art under the California Art Preservation Act (California Civil Code Sections 987 et seq.) or as a work of visual art under the Federal Visual Artists Rights Act of 1990 (17 U.S.C. Section 101 et seq.).
Any failure of the Bank to comply with this Section of this Agreement shall constitute a material breach of this Agreement.
(o) Food Service Waste Reduction Requirements. The Bank agrees to comply fully with and be bound by all of the provisions of the Food Service Waste Reduction Ordinance, as set forth in San Francisco Environment Code Chapter 16, including the remedies provided, and implementing guidelines and rules. The provisions of Chapter 16 are incorporated herein by reference and made a part of this Agreement as though fully set forth. This provision is a material term of this Agreement. By entering into this Agreement, the Bank agrees that if it breaches this provision, the City will suffer actual damages that will be impractical or extremely difficult to determine; further, the Bank agrees that the sum of one hundred dollars ($100) liquidated damages for the first breach, two hundred dollars ($200) liquidated damages for the second breach in the same year, and five hundred dollars ($500) liquidated damages for subsequent breaches in the same year is reasonable estimate of the damage that the City will incur based on the violation, established in light of the circumstances existing at the time this Agreement was made. Such amount shall not be considered a penalty, but rather agreed monetary damages sustained by the City because of such Bank’s failure to comply with this provision.
(p) Preservative-treated Wood Containing Arsenic . The Bank may not purchase preservative-treated wood products containing arsenic in the performance of this Agreement unless an exemption from the requirements of Chapter 13 of the San Francisco Environment Code is obtained from the Department of the Environment under Section 1304 of the Code. The term “preservative-treated wood containing arsenic” shall mean wood treated with a preservative that contains arsenic, elemental arsenic, or an arsenic copper combination, including, but not limited to, chromated copper arsenate preservative, ammoniacal copper zinc arsenate preservative, or ammoniacal copper arsenate preservative. The Bank may purchase preservative- treated wood products on the list of environmentally preferable alternatives prepared and adopted by the Department of the Environment. This provision does not preclude the Bank from purchasing preservative -treated wood containing arsenic for saltwater immersion. The term “saltwater immersion” shall mean a pressure- treated wood that is used for construction purposes or facilities that are partially or totally immersed in saltwater.
G-10
(q) Nondisclosure of Private Information. The Bank agrees to comply fully with and be bound by all of the provisions of Chapter 12M of the San Francisco Administrative Code (the “Nondisclosure of Private information Ordinance” ), including the remedies provided. The provisions of the Nondisclosure of Private Information Ordinance are incorporated herein by reference and made a part of this Agreement as though fully set forth. Capitalized terms used in this section and not defined in this Agreement shall have the meanings assigned to such terms in the Nondisclosure of Private Information Ordinance. Consistent with the requirements of the Nondisclosure of Private Information Ordinance, the Bank agrees to all of the following:
(i) Neither the Bank nor any of its Subcontractors shall disclose Private Information obtained from the City in the performance of this Agreement to any other Subcontractor, person, or other entity, unless one of the following is true:
(1) the disclosure is authorized by this Agreement;
(2) the Bank received advance written approval from the Contracting Department to disclose the information; or
(3) the disclosure is required by law or judicial order. (ii) Any disclosure or use of Private Information authorized by this Agreement shall be in accordance with any conditions or restrictions stated in this Agreement. Any disclosure or use of Private Information authorized by a Contracting Department shall be in accordance with any conditions or restrictions stated in the approval. (iii) Private Information shall mean any information that: (1) could be used to identify an individual, including without limitation, name, address, social security number, medical information, financial information, date and location of birth, and names of relatives; or (2) the law forbids any person from disclosing. (iv) Any failure of the Bark to comply with the Nondisclosure of Private Information Ordinance shall be a material breach of this Agreement. In such an event, in addition to any other remedies available to it under equity or law, the City may terminate this Agreement, debar the Bank, or bring a false claim action against the Bank. (r) Proprietary or Confidential Information of City . The Bank agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (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 requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercis e of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (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
G-11
Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the City and its obligations, (g) with the consent of the City or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Bank on a nonconfidential basis from a source other than the City. For the purposes of this Section, “ Information” means all information received from the City relating to the City or its business, other than any such information that is available to the Bank on a nonconfidential basis prior to disclosure by the City; 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. (s) Submitting False Claims; Monetary Penalties . Pursuant to San Francisco Administrative Code Section 21.35, any contractor, subcontractor or consultant who submits a false claim shall be liable to the City for three times the amount of damages which the City sustains because of the false claim. A contractor, subcontractor or consultant who submits a false claim shall also be liable to the City for the costs, including attorneys’ fees, of a civil action brought to recover any of those penalties or damages, and may be liable to the City for a civil penalty of up to $10,000 for each false claim. A contractor, subcontractor or consultant will be deemed to have submitted a false claim to the City if the contractor, subcontractor or consultant:
(i) knowingly presents or ca uses to be presented to an officer or employee of the City a false claim or request for payment or approval; (ii) knowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the City; (iii) conspires to defraud the City by getting a false claim allowed or paid by the City; (iv) knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the City; or (v) is a beneficiary of an inadvertent submission of a false claim to the City, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the City within a reasonable time after discovery of the false claim.
(t) Subcontracting. Except as otherwise provided in this Agreement, the Bank is prohibited from subcontracting this Agreement or any part of it unless such subcontracting is first approved by City in writing. Neither party shall, on the basis of this Agreement, contract on behalf of or in the name of the other party. An agreement made in violation of this provision shall confer no rights on any party and shall be null and void. (u) Non-Waiver of Rights . The omission by either party at any time to enforce any default or right reserved to it, or to require performance of any of the terms, covenants, or provisions hereof by the other party at the time designated, shall not be a waiver of any such default or right to which the party is entitled, nor shall it in any way affect the right of the party to enforce such provisions thereafter.
G-12
(v) City a Third Party Beneficiary . The City is hereby designated as a third party beneficiary for the purpose of enforcing all of the obligations of the Bank contained in this Exhibit G to the Agreement.
EXHIBIT H-1
FORM OF EOD NO-ISSUANCE NOTICE
Public Utilities Commission of the City and County of San Francisco 525 Golden Gate Ave., 13th Floor
San Francisco, California 94102
Attention: Chief Finance Officer
U.S. Bank Trust Company, National Association
Corporate Trust Services
100 Wall Street, Suite 1600
New York, New York 10005
Attention: Beverly A. Freeney
Re: Revolving Credit and Term Loan Agreement,
dated as of July 1, 2022
Ladies and Gentlemen:
Pursuant to Section 8.2(c) of the Revolving Credit and Term Loan Agreement dated as of July 1, 2022 (as amended and supplemented from time to time, the “Agreement” ), by and between the P UBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”), and TD BANK, N.A. (the “Bank”), the Bank hereby notifies you that:
(a) an Event of Default of the type set forth in clause ____ of Section 8.1 of the Agreement has occurred and is continuing;
(b) the Commitment is hereby reduced to the principal amount of Series A-4 Notes currently Outstanding;
(c) on the maturity date of each such Series A-4 Note, after any Advance required to pay such Series A-4 Note is made, the Commitment shall be reduced further by an amount equal to the principal amount of such Series A-4 Note; and (d) upon the last maturity date of all such Series A-4 Notes, after any Advance required to pay Series A-4 Notes maturing on such date is made, the Commitment shall be terminated.
H-1-2
The terms capitalized herein but not otherwise defined herein shall have the meanings assigned to them in the Agreement.
Very truly yours,
TD BANK, N.A.
By ____________________________________
Name ________________________________
Title _________________________________
EXHIBIT H-2
FORM OF SUBORDINATED BONDS
NO-ISSUANCE NOTICE
Public Utilities Commission of the City and County of San Francisco 525 Golden Gate Ave., 13th Floor
San Francisco, California 94102
Attention: Chief Finance Officer
U.S. Bank Trust Company, National Association
Corporate Trust Services
100 Wall Street, Suite 1600
New York, New York 10005
Attention: Beverly A. Freeney
Re: Revolving Credit and Term Loan Agreement,
dated as of July 1, 2022
Ladies and Gentlemen:
Pursuant to Section 2.13 of the Revolving Credit and Term Loan Agreement dated as of July 1, 2022 (as amended and supplemented from time to time, the “Agreement” ), by and between the P
UBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”), and TD BANK, N.A. (the “Bank”), the Bank hereby notifies you that:
(a) the Commission has issued Subordinated Wastewater Bonds; (b) the Commitment is hereby reduced to the principal amount of Series A-4 Notes currently Outstanding;
(c) on the maturity date of each such Series A-4 Note, after any Advance required to pay such Series A-4 Note is made, the Commitment shall be reduced further by an amount equal to the principal amount of such Series A-4 Note; and (d) upon the last maturity date of all such Series A-4 Notes, after any Advance required to pay Series A-4 Notes maturing on such date is made, the Commitment shall be terminated.
H-2-2
The terms capitalized herein bu t not otherwise defined herein shall have the meanings assigned to them in the Agreement.
Very truly yours,
TD BANK, N.A.
By ____________________________________
Name ________________________________
Title _________________________________
EXHIBIT I
PUBLIC UTILITIES COMMISSION OF
THE CITY AND COUNTY OF SAN FRANCISCO
CERTIFICATE REGARDING CONDITIONS PRECEDENT TO A TERM LOAN The PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”) hereby provides this Certificate, dated as of the [______, 20__], the Term Loan Date, to the Bank (as defined below), in connection with its request for a Term Loan as required by Section 3.3(d) of the Revolving Credit and Term Loan Agreement, dated as of July 1, 2022 (as amended and supplemented from time to time, the “Agreement”), by and between the Commission and TD BANK, N.A. (the “Bank”). All capitalized terms utilized herein and not defined herein shall have the meaning set forth in the Agreement.
In order to induce the Bank to make a Term Loan under the Agreement, the Commission represents and warrants, as of the date hereof as follows:
1. The undersigned is an Authorized Representative of the Commission.
2. The Commission is in compliance with Sections 3.3(a) and (c) of the Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate Regarding Conditions Precedent to a Term Loan as of the date first above written.
PUBLIC UTILITIES COMMISSION OF THE CITY AND
COUNTY OF SAN FRANCISCO
By ____________________________________
Name ________________________________
Title _________________________________
EXHIBIT J
WASTEWATER BOND INDENTURE
EXAMPLE ADDITIONAL BONDS CERTIFICATE AND EXAMPLE REPORT
FORM OF CERTIFICATE REGARDING ISSUANCE OF
WASTEWATER REVENUE BONDS:
$__________
PUBLIC UTILITIES COMMISSION
OF THE CITY AND COUNTY OF SAN FRANCISCO
WASTEWATER REVENUE BONDS
$__________
20__ SERIES __
$__________
20__ SERIES __
$__________
20__ SERIES __
CERTIFICATE REGARDING ISSUANCE OF ADDITIONAL BONDS
The Public Utilities Commission of the City and County of San Francisco Wastewater Revenue Bonds, 20__ Series __, 20__ Series __ and 20__ Series __ (collectively, the “Bonds” ) in the aggregate principal amount of $_________, have been issued pursuant to an Indenture (the “Original Indenture” ), dated as of January 1, 2003, by and between the Public Utilities Commission of the City and County of San Francisco (the “Commission” ) and U.S. Bank Trust Company, National Association, as trustee (the “Trustee” ), as supplemented and amended to date, including as supplemented by the ______ Supplemental Indenture (the “______ Supplemental Indenture”) and the ______ Supplemental Indenture (the “______ Supplemental Indenture”), each dated as o f ______ 1, 20__, each by and between the Commission and the Trustee. (The Original Indenture as amended and supplemented to date is referred to herein as the “Indenture”). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture. Pursuant to Sections 3.05(f) of the Indenture, the undersigned, on behalf of the Commission, solely in their official and not in their personal capacities, certify as follows:
(a) We have read the provisions of Sections 3.05 and 3.07 of the Indenture and the definitions of the terms used or referenced therein or relating thereto, and we have made or caused to be made such examination or investigation as is necessary to enable us to express an informed opinion as to the matters required thereby, and in our opinion this certificate satisfies the requirements of Sections 3.05 and 3.07 of the Indenture.
(b) No Event of Default has occurred and is continuing under the Indenture and no event has occurred which, but for the passage of time or the giving of notice, would constitute an Event of Default under the Indenture.
-3-
(c) The aggregate principal amount of bonds, including the Bonds, issued under the Indenture does not exceed any limitation imposed by law or by any Supplemental Indenture.
(d) Set forth in Exhibit A hereto are estimates for each of the next three Fiscal Years and for the three Fiscal Years following the Fiscal Year in which AECOM Technical Services, Inc., Consulting Engineers to the Commission (the “Consulting Engineers”), estimate the projects funded with proceeds from the Bonds will be completed (as set forth in the Certificate of the Consulting Engineers attached hereto as Exhibit B) of: (i) Revenues, (ii) Operation and Maintenance Costs of the Enterprise, (iii) Net R evenues and (iv) Annual Debt Service, which demonstrate that the estimated Net Revenues in each such Fiscal Year is at least equal to 1.25 times the Annual Debt Service for such respective Fiscal Years.
[E
ND OF CERTIFICATE REGARDING ISSUANCE OF ADDITIONAL BONDS]
[Signature page to Certificate Regarding Issuance of Additional Bonds] IN WITNESS WHEREOF, the undersigned have executed this Certificate Regarding Issuance of Additional Bonds as of this ___ day of _______, 20__.
PUBLIC UTILITIES COMMISSION OF THE CITY AND
COUNTY OF SAN FRANCISCO
By: ____________________________________
Name: _______________________________
Title: ________________________________
By: ____________________________________
Name: _______________________________
Title: ________________________________
EXHIBIT A
TO CERTIFICATE REGARDING ISSUANCE OF ADDITIONAL BONDS
ESTIMATE OF REVENUES
ANNUAL DEBT SERVICE, AND
RESULTING COVERAGE RATIO
(FISCAL YEARS 20__-__ THROUGH 20__-__)
FISCAL YEAR
ESTIMATED
REVENUES
ESTIMATED
OPERATION
AND
MAINTENANCE
COSTS
ESTIMATED
NET
REVENUES
ESTIMATED
ANNUAL
DEBT
SERVICE
COVERAGE
RATIO
ESTIMATE OF REVENUES
ANNUAL DEBT SERVICE, AND
RESULTING COVERAGE RATIO
(FISCAL YEARS 20__-__ THROUGH 20__-__)
FISCAL YEAR
ESTIMATED
REVENUES
ESTIMATED
OPERATION
AND
MAINTENANCE
COSTS
ESTIMATED
NET
REVENUES
ESTIMATED
ANNUAL
DEBT
SERVICE
COVERAGE
RATIO
EXHIBIT B
TO CERTIFICATE REGARDING ISSUANCE OF ADDITIONAL BONDS
[REPORT OF CONSULTING ENGINEER ATTACHED]
CERTIFICATE OF THE CONSULTING ENGINEERS
PURSUANT TO SECTION 3.05(F)(I) OF THE INDENTURE
This Certificate has been prepared by AECOM Technical Services, Inc. (the “Consulting Engineers”) at the request of the Public Utilities Commission of the City and County of San Francisco (the “Commission”) in connection with the issuance of the Commission’s Wastewater Revenue Bonds, 20__ Series __, 20__ Series __ and 20__ Series __ (collectively, the “Bonds” ) to comply with the requirements of Section 3.05(f)(1) of the indenture, dated January 1, 2003, as amended and supplemented, including as supplemented by that certain _______ Supplemental Indenture, dated as of _____ 1, 20__, and by that certain ______ Supplemental Indenture, dated as of _____ 1, 20__, each by and between the Commission and U.S. Bank Trus t Company, National Association (collectively, the “Indenture”),
The findings and conclusions set forth in this Certificate are based on Consulting Engineers’ consultation with certain employees of the Commission. The conclusions contained below constitute only the opinion of Consulting Engineers, and Consulting Engineers have relied on various background documents, statements and other information supplied by the Commission, its employees and other consultants, which information Consulting Engineers has assumed (without independently verifying) to be accurate and reliable.
Based upon its review as described below, Consulting Engineers conclude the following with respect to the portion of Bond proceeds being used to finance the construction of the 20__ Series __ Project, the 20__ Series __ Project and the 20__ Series __ Project (each as defined in the Indenture and, collectively, the “Project”):
1. An estimate of the completion date of the Project for which the Bonds are being issued is ________.
2. An estimate of the cost of construction of the Project being financed with the Bonds is $________.
Dated: _________, 20__
AECOM T
ECHNICAL SERVICES, INC.
By: ____________________________________
Name: _______________________________
Title: ________________________________
B-2
CERTIFICATE OF THE CONSULTING ENGINEERS
IN CONNECTION WITH SECTION 8B.124 OF THE CHARTER OF THE CITY AND
COUNTY OF SAN FRANCISCO AND THE INDENTURE OF THE SAN FRANCISCO
PUBLIC UTILITIES COMMISSION (SFPUC) AUTHORIZING THE SALE OF
WASTEWATER REVENUE BONDS AND / OR OTHER FORMS OF INDEBTEDNESS,
INCLUDING COMMERCIAL PAPER AND STATE AND FEDERAL LOANS
This Certificate has been prepared by AECOM Technical Services, Inc., (AECOM), an independent consulting firm, at the request of the San Francisco Public Utilities Commission (SFPUC) in connection with the issuance by the SFPUC of its Wastewater Revenue Bonds and/or other forms of Indebtedness, including Commercial Paper and State and Federal loans.
Proposition E requires certification by an independent consulting engineer that, among other things, “(i) the Projects to be financed with proceeds of bonds under Proposition E, including the prioritization, scheduling and cost estimates thereof, meet generally accepted utility standards.”
Section A below includes projects in the Sewer System Improvement Program (SSIP) and other portions of the Wastewater Ent erprise’s capital program, and certifies that (i) the anticipated projects to be financed by the proposed Revenue Bonds and/or Commercial Paper Notes (the “Notes” ), or State and Federal loans including the prioritization, cost estimates and scheduling, meet generally accepted utility standards.
• The findings and conclusions in this Certificate are based on AECOM’s review of the following Documents, references and data provided by the SFPUC:
• Wastewater Enterprise Capital Improvement Program Quarterly Report – (Q__, FY 20__-__), dated ________, 20__.
• Wastewater Enterprise Revenue Bonds and Other Forms of Indebtedness – FY 20__-__ and FY 20__-__ Capital Improvement Projects (Attachment A, as included with the Environmental Planning Certification date _______, 20__). • Discussions with SFPUC staff.
1. Based upon its review of the Documents and in reliance on the information presented in the Documents, references and data, and in reliance upon conversations and representations of SFPUC staff, the undersigned certifies that the Projects, including prioritization, cost estimates, and scheduling, meet generally accepted utility standards.
2. The Documents contain information about the current status of the Projects, including estimated completion dates and the cost of completion of such Projects.
B-3
While developing the Certificate, AECOM reviewed the Documents, references and data and consulted with SFPUC staff. This Certification of the CIP is based on the information provided by the SFPUC. The conclusions and observations contained herein constitute only the opinions of AECOM. The various background documents, statements, and other information supplied by the SFPUC, its employees, and other consultants have been relied upon as being accurate in the performance of these analyses; however, no assurances are given nor warranties implied by AECOM as to the accuracy of such information. AECOM makes no certification and gives no assurances except as explicitly set forth in this document.
Attachment A
Wastewater Enterprise Revenue Bonds and Other Forms of Indebtedness FY 20__-__ and FY 20__-__ Capital Improvement Projects
SECTION A: C ERTIFICATION OF [SSIP AND WF&I]
AECOM’s review of the Documents, references and data for Section A included a “programmatic approach” such that AECOM certifies that the revenue bonds and/or commercial paper proceeds or state or federal loans are intended to be used by the SFPUC to fund the capital projects included in the Wastewater Enterprise’s [SSIP] and other portions of the Wastewater Enterprise’s capital program. Projects may be moved on or off the CIP list, modified, delayed or accelerated as necessary due to scheduling, budgeting, or other constraints.
Based upon our review of the Documents, references and data provided by the SFPUC, AECOM certifies that the projects to be financed by the revenue bonds and/or commercial paper program, as identified in the Wastewater Enterprise’s [SSIP and WF&I Program] including the prioritization, cost estimates and scheduling, meet generally accepted utility standards.
Dated this ___ day of ______, 20__
AECOM TECHNICAL SERVICES, INC.
By: ____________________________________
Name: _______________________________
Title: ________________________________
SCHEDULE I
ESTIMATED COMPLETION DATE AND COST OF CONSTRUCTION OF PROJECT Reference the following:
• Attachment A for the list of projects
• Wastewater Enterprise Capital Improvement Program Quarterly Report – (Q__, FY 20__-__), dated ________, 20__ for the estimated completion date and project costs
FORM OF CERTIFICATE REGARDING ISSUANCE OF
WASTEWATER REVENUE BONDS:
$__________
PUBLIC UTILITIES COMMISSION
OF THE CITY AND COUNTY OF SAN FRANCISCO
WASTEWATER REVENUE BONDS
$__________
20__ SERIES __
$__________
20__ SERIES __
$__________
20__ SERIES __
CERTIFICATE REGARDING ISSUANCE OF ADDITIONAL BONDS
The Public Utilities Commission of the City and County of San Francisco Wastewater Revenue Bonds, 20__ Series __, 20__ Series __ and 20__ Series __ (collectively, the “Bonds” ) in the aggregate principal amount of $_________, have been issued pursuant to an Indenture (the “Original Indenture” ), dated as of January 1, 2003, by and between the Public Utilities Commission of the City and County of San Francisco (the “Commission” ) and U.S. Bank Trust Company, National Association, as trustee (the “Trustee” ), as supplemented and amended to date, including as supplemented by the ______ Supplemental Indenture (the “______ Supplemental Indenture”) and the ______ Supplemental Indenture (the “______ Supplemental Indenture”), each dated as of ______ 1, 20__, each by and between the Commission and the Trustee. (The Original Indenture as amended and supplemented to date is referred to herein as the “Indenture”). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture. Pursuant to Sections 3.05(f) of the Indenture, the undersigned, on behalf of the Commission, solely in their official and not in their personal capacities, certify as follows:
(a) We have read the provisions of Sections 3.05 and 3.07 of the Indenture and the definitions of the terms used or referenced therein or relating thereto, and we have made or caused to be made such examination or investigation as is necessary to enable us to express an informed opinion as to the matters required thereby, and in our opinion this certificate satisfies the requirements of Sections 3.05 and 3.07 of the Indenture.
(b) No Event of Default has occurred and is continuing under the Indenture and no event has occurred which, but for the passage of time or the giving of notice, would constitute an Event of Default under the Indenture. (c) The aggregate principal amount of bonds, including the Bonds, issued under the Indenture does not exceed any limitation imposed by law or by any Supplemental Indenture.
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(d) [Test in Section 3.05(f)(ii)(1)] [The Net Revenues for [the most recent Fiscal Year for which audited financial statements are available (the fiscal year ended _____, 20__)][the consecutive twelve calendar month per iod ended on [___________], 2021, which period is within the eighteen calendar month period preceding the date of the issuance of the Bonds], produced a sum equal to at least one hundred twenty-five percent (125%) of the Annual Debt Service for the current Fiscal Year (the fiscal year ending ___, 20__) (calculated as of the date of sale of, and including, the Bonds), as set forth in Exhibit A attached hereto, such calculations being made in accordance with the provisions of the Indenture.] or [Test in Secti on 3.05(f)(ii)(2)] [The Net Revenues projected by the Commission for each of the next three Fiscal Years, including any amounts projected to be received from any adopted rate increases and fund balances of the Commission which are projected to be available for the payment of Debt Service (but excluding the Bond Reserve Fund), produced a sum equal to at least one hundred twenty -five percent (125%) of the Annual Debt Service (calculated as of the date of sale of, and including, the Bonds) in each of such Fisc al Years, as set forth in Exhibit A hereto, such calculations being made in accordance with the provisions of the Indenture.] [E
ND OF CERTIFICATE REGARDING ISSUANCE OF ADDITIONAL BONDS]
[Signature page to Certificate Regarding Issuance of Additional Bonds] IN WITNESS WHEREOF, the undersigned have executed this Certificate R egarding Issuance of Additional Bonds as of this ___ day of _______, 20__.
PUBLIC UTILITIES COMMISSION OF THE CITY AND
COUNTY OF SAN FRANCISCO
By: ____________________________________
Name: _______________________________
Title: ________________________________
By: ____________________________________
Name: _______________________________
Title: ________________________________
EXHIBIT A
TO CERTIFICATE REGARDING ISSUANCE OF ADDITIONAL BONDS
[Test in Section 3.05(f)(ii)(1)]
Net Revenues for [fiscal year ended _____, 20__] or [the consecutive twelve calendar month period ended _____,
20__]
$[______]
Annual Debt Service for fiscal year ending _____, 20__ $[______] Net Revenues as a percent of Annual Debt Service [__]%
[Test in Section 3.05(f)(ii)(2)]
ESTIMATE OF REVENUES
ANNUAL DEBT SERVICE, AND
RESULTING COVERAGE RATIO
(FISCAL YEARS 20__-__ THROUGH 20__-__)
FISCAL YEAR
ESTIMATED
REVENUES
ESTIMATED
OPERATION
AND
MAINTENANCE
COSTS
ESTIMATED
NET
REVENUES
ESTIMATED
ANNUAL
DEBT
SERVICE
COVERAGE
RATIO
FORM OF CERTIFICATE REGARDING ISSUANCE OF PARITY LOANS:
PUBLIC UTILITIES COMMISSION
OF THE CITY AND COUNTY OF SAN FRANCISCO
[PROJECT NAME]
CLEAN WATER STATE REVOLVING FUND PROJECT NO. ____-___
[PROJECT NAME]
CLEAN WATER STATE REVOLVING FUND PROJECT NO. ____-___
[PROJECT NAME]
CLEAN WATER STATE REVOLVING FUND PROJECT NO. ____-___
(WASTEWATER ENTERPRISE)
CERTIFICATE REGARDING ENTERING INTO PARITY LOANS
PURSUANT TO WASTEWATER INDENTURE
The Public Utilities Commission of the City and County of San Francisco (the “Commission”) has entered into that certain Installment Sale Agreement, with an eligible start date of _______, by and between the Commission and the California State Water Resources Control Board (the “SWB” ), securing that certain state revolving loan relating to Clean Water State Revolving Fund ( “CWSRF”) Project No. ____-___ evidenced thereby; that certain Installment Sale Agreement, with an eligible start date of _______, by and between the Commission and the SWB, securing that certain state revolving loan relating to CWSRF Project No. ____-___evidenced thereby; and, that certain Installment Sale Agreement, with an eligible start date of _______, by and between the Commission and the SWB, securing that certain state revolving loan relating to CWSRF Project No. ____-___ (collectively, the “Parity State Loans”) evidenced thereby and each made by the SWB to the Commission to finance certain projects benefiting the wastewater Enterpr ise (as such term in defined in the Indenture, dated as of January 1, 2003, by and between the Commission and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), as previously supplemented and amended, and as further supplemented and amended by the Fifth Supplemental Indenture, dated as of September 14, 2017, and the Sixth Supplemental Indenture, dated as of July 1, 2018 , by and between the Commission and the Trustee (referred to herein as the “Wastewater Indenture” ). [DESCRIBE PARITY FEDERAL LOANS] Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Wastewater Indenture. Pursuant to Section 3.08 of the Wastewater Indenture, the undersigned, on behalf of the Commission, solely in their offic ial and not in their personal capacities, certify as follows:
(a) We have read the provisions of Section 3.08 of the Wastewater Indenture and the definitions of the terms used or referenced therein or relating thereto, and we
[Signature Page to Certificate Regarding Entering into Parity Loans Pursuant to Wastewater Indenture]
have made or caused to be mad e such examination or investigation as is necessary to enable us to express an informed opinion as to the matters required thereby, and in our opinion this certificate satisfies the requirements of Section 3.08 of the Wastewater Indenture.
(b) No Event of Default has occurred and is continuing under the Wastewater Indenture or any Supplemental Indenture and no event has occurred which, but for the passage of time or the giving of notice, would constitute an Event of Default under the Wastewater Indenture or any Supplemental Indenture.
(c) Set forth in Exhibit A hereto are estimates for each of the next three Fiscal Years of: (i) Revenues, (ii) Operation and Maintenance Costs of the Enterprise, (iii) Net Revenues (together with any fund balances of the Comm ission available for the payment of Debt Service, but excluding the Bond Reserve Fund, and (iv) Annual Debt Service, which demonstrate that the estimated Net Revenues (together with any fund balances of the Commission available for the payment of Debt Service, but excluding the Bond Reserve Fund) in each of such Fiscal Years is at least equal to 1.25 times the Annual Debt Service for such respective Fiscal Years.
[E
ND OF CERTIFICATE REGARDING ENTERING INTO PARITY LOANS PURSUANT TO WASTEWATER INDENTURE]
IN WITNESS WHEREOF, the undersigned have executed this Certificate of the Commission this ___ day of ______, 20__.
PUBLIC UTILITIES COMMISSION OF THE CITY AND
COUNTY OF SAN FRANCISCO
By: ____________________________________
Name: _______________________________
Title: ________________________________
By: ____________________________________
Name: _______________________________
Title: ________________________________
EXHIBIT A
ESTIMATE OF REVENUES, OPERATIONS AND MAINTENANCE COSTS, NET REVENUES (INCLUDING ANY AVAILABLE FUND BALANCE),
ANNUAL DEBT SERVICE AND DEBT SERVICE COVERAGE
(FISCAL YEARS: 20__-__ THROUGH 20__-__)
(IN $000S)
FISCAL
YEAR
ESTIMATED
REVENUES
ESTIMATED
OPERATIONS
AND
MAINTENANCE
COSTS
ESTIMATED
NET
REVENUES
(INCLUDING
ANY
AVAILABLE
FUND
BALANCE1)
ESTIMATED
ANNUAL
DEBT
SERVICE
DEBT
SERVICE
COVERAGE2
20__-__
20__-__
20__-__
1 “Any Available Fund Balance” means any fund balances of the Commission available for the payment of Debt Service (as defined in the Wastewater Indenture), but exclu ding the Bond Reserve Fund (as defined in the Indenture), as permitted by Section 3.08 of the Wastewater Indenture. Estimated Net Revenues in Fiscal Years 20__-__, 20__-__ and 20__-__ are $________, $________and $________, respectively. 2 Pursuant to Wastewater Indenture, minimum 1.25 times coverage required.
EXHIBIT K
[RESERVED]
EXHIBIT L
FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificat e (this “Certificate”) is furnished to TD BANK, N.A. (the “Bank”) pursuant to that certain Revolving Credit and Term Loan Agreement dated as of July 1, 2022 (the “Agreement”), between the Public Utilities Commission of the City and County of San Francisco (the “Commission”) and Bank. Unless otherwise defined herein, the terms used in this Certificate shall have the meanings assigned thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am an Authorized Representative of the Commission;
2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Commission during the accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or the occurrence of any event which constitutes a Default or Event of Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth below; and
4. To the best of my knowledge the financial statements required by Section 7.1(a) of the Agreement and being furnished to you concurrently with this certificate fairly represent the consolidated financial condition of the Commission in accordance with GAAP (subject to year end adjustments) as of the dates and for the periods covered thereby
Describe below the exceptions, if any, to paragraph 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Commission has taken, is taking, or proposes to take with respect to each such condition or event:
_________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________
L-2
The foregoing certifications and the financial statements delivered with this Certificate in support hereof, are made and delivered this _________ day of _______________, 20__.
PUBLIC UTILITIES COMMISSION OF THE CITY AND
COUNTY OF SAN FRANCISCO
By ____________________________________
Name: ______________________________
Title: _______________________________
EXHIBIT M
LIST OF QUALIFIED DEALERS
BANK OF AMERICA MERRILL LYNCH
BARCLAY’S CAPITAL INC.
CITIGROUP GLOBAL MARKET IN.
GOLDMAN SACHS & CO. LLC
J.P. MORGAN SECURITIES LLC
JEFFERIES LLC
LOOP CAPITAL MARKETS LLC
MORGAN STANLEY & CO. LLC
PIPER JAFFRAY & CO.
RAYMOND JAMES & ASSOCIATES, INC.
RBC CAPITAL MARKETS, LLC
SIEBERT CISNEROS SHANK & CO., L.L.C.
SMBC NIKKO SECURITIES AMERICA, INC. (SUMITOMO MITSUI BANKING
CORPORATION)
STIFEL NICOLAS & COMPANY, INC.
TD SECURITIES
U.S. BANCORP INVESTMENTS, INC. U.S. BANK MUNICIPAL PRODUCTS GROUP (A DIVISION OF U.S. BANK NATIONAL ASSOCIATION)
UBS FINANCIAL SERVICES INC.
WELLS FARGO
CHAPMAN DRAFT OF APRIL 27, 2022
1042615243-2__fee_letter__td_bank___sfpuc_ww_a4__4881_3481_8333_v6 4295325
FEE LETTER
DATED AS OF JULY 7, 2022
Reference is hereby made to the Revolving Credit and Term Loan Agreement dated as of July 1, 2022 (as amended, supplemented, restated or otherwise modified from time to time, the “Agreement”), by and between the PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”), organized and existing under the Constitution and the laws of the State of California and the Charter of the City and County of San Francisco, and TD BANK, N.A. (the “Bank”), relating to the Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (W astewater Series, Proposition E) Series A-4 (Tax - Exempt) (collectively, the “Notes”). Capitalized terms not otherwise defined herein shall have the meanings set forth in the Agreement.
The purpose of this Fee Letter is to confirm the agreement between the Bank and the Commission with respect to, among other things, certain fees payable to the Bank. This Fee Letter is the Fee Letter referenced in the Agreement, and the terms hereof are incorporated by reference into the Agreement. This Fee Letter and the Agreement are to be construed as one agreement between the Commission and the Bank , and all obligations hereunder are to be construed as obligations thereunder. All references to amounts due and payable under the Agreement will be deemed to include all amounts, fees and expenses payable under this Fee Letter.
ARTICLE I. F EES AND OTHER AGREEMENTS.
Section 1.1. Facility Fee. The Commission hereby agrees to pay or cause to be paid to the Bank , in immediately available funds, without any requirement of notice or demand, on October 3, 2022, for the period commencing on the date hereof and ending on September 30 , 2022, and in arrears on the first Business Day of each January, April, July and October occurring thereafter to the last day of the Commitment Period, and on the last day of the Commitment Period, a non-refundable Facility Fee (the “Facility Fee”) with respect to the commitment of the Bank under the Agreement on the Available Commitment (for purposes of this Section 1.1, the Available Commitment shall be deemed not to be reduced during any period for which the Bank’s obligation to purchase Notes has been suspended pursuant to Section 8.2(b) of the Agreement) for each day during each related period in respect of which such payment is to be made at the rate per annum (the “Facility Fee Rate” ) specified below based upon the then applicable Ratings (as defined below) set forth in the applicable Level in the below pricing grid for each day during each related period:
-2-
LEVEL
MOODY’S
RATING S&P RATING
FACILITY
FEE RATE
1 Aa2 or above AA or above 0.21%
2 Aa3 AA- 0.31%
3 A1 A+ 0.41%
4 A2 A 0.51%
5 A3 and below A- and below 0.61%
The term “Rating” as used above shall mean the long -term unenhanced rating assigned to any Senior Debt (without regard to any form of credit enhancement) by Moody’s and Standard & Poor’s). In the event (i) two Rating Agencies provide a Rating and there is a split Rating (i.e., one of the Rating Agency’s Ratings is at a different level than the Rating of the other Rating Agency), the Facility Fee Rate shall be based upon the lower Rating and (ii) only one Rating Agency provides a Rating, the Facility Fee Rate shall be based on such Rating. For the avoidance of doubt, Level 5 is the lowest Level and Level 1 is the highest Level for purposes of the above pricing grid. Any change in the Facility Fee Rate resulting from a change in a Rating shall be and become effective as of and on the date of the announcement of the change in such Rating. References to Ratings above are references to rating categories as presently determined by the Rating Agencies, and in the event of adoption of any new or changed rating system or “global” rating scale by any such Rating Agency, each of the Ratings from the Rating Agency in question referred to above shall be deemed to refer to the rating category under the new rating system or scale which most closely approximates the applicable rating category as currently in effect. The Commission and the Bank acknowledge that as of the date hereof the Facility Fee Rate is that specified above for Level 1 set forth in the pricing grid above. In the eve nt that (i) any Rating is suspended or withdrawn by, or otherwise unavailable for credit-related reasons from, either of Moody’s or S&P, and for so long as such Rating remains so suspended, withdrawn or otherwise unavailable, (ii) any Rating shall fall below Level 5 above, or (iii) upon the occurrence and during the continuance of any Event of Default under the Agreement, the Facility Fee Rate shall, immediately and without notice to the Commission, increase by an additional 2.00% above the Facility Fee Rate otherwise in effect . The Facility Fee shall be payable quarterly in arrears, as specified above, together with interest on the Facility Fee from the date payment is due until payment in full at the Default Rate. The Facility Fee shall be payable in immediately available funds and computed on the basis of a 360- day year and the actual number of days elapsed.
Section 1.2. Amendment, Waiver or Consent Fees. The Commission hereby agrees to pay to the Bank on the date any amendment, waiver or consent to the Agreement or this Fee Letter is entered into between the parties thereto or in connection with any amendment to any Related Document which requires a waiver from, or the consent of, the Bank, a non- refundable amendment, waiver or consent fee of $2,500 (or such other amount that is satisfactory to the Bank and the Commission), plus the reasonable fees and expenses of any legal counsel retained by the Bank in connection therewith.
-3-
ARTICLE II. M ISCELLANEOUS.
Section 2.1. Legal Fees. The Commission shall within thirty (30) days of the Closing Date pay the reasonable fees and expenses of counsel for the Bank (in an amount estimated at $40,000, but not to exceed $45,000, including disbursements) in connection with the execution and delivery of the Agreement and this Fee Letter and in connection with any other agreement executed by the Bank and the Commission on or about the date hereof.
Section 2.2. Amendments. No amendment to this Fee Letter shall become effective without the prior written consent of the Commission and the Bank.
Section 2.3. Governing Law . T HIS FEE LETTER SHALL BE DEEMED TO BE A CONTRACT
UNDER, AND FOR ALL PURPOSES SHALL BE GOVERNED BY , AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
Section 2.4. Counterparts. This Fee Letter may be executed in two or more counterparts, each of which shall constitute an original but both or all of which, when taken together, shall constitute but one instrument. This Fee Letter may be delivered by the exchange of signed signature pages by facsimile transmission or by attaching a pdf copy to an email, and any printed or copied version of any signature page so delivered will have the same force and effect as an originally signed version of such signature page.
Section 2.5. Severability. Any provision of this Fee Letter which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non- authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction.
Section 2.6. No Disclosure . Unless required by law, the Commission shall not deliver or permit, authorize or consent to the delivery of this Fee Letter to a Dealer or any other Person for delivery to the Municipal Securities Rulemaking Board unless the Bank provides its prior written consent.
Section 2.7. Representation by Legal Counsel; Joint Preparation. The parties hereto have participated jointly in the negotiation and drafting of this Fee Letter, and each of the parties was represented by its respective legal counsel during the negotiation and execution of this Fee Letter. In the event an ambiguity or question of intent or interpretation arises, this Fee Letter shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Fee Letter.
[Signature Page to Follow]
[Signature Page to Wastewater Series, Proposition E Fee Letter] IN WITNESS WHEREOF, the parties hereto have caused this Fee Letter to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first set forth above.
P
UBLIC UTILITIES COMMISSION OF THE CITY AND
COUNTY OF SAN FRANCISCO
By ____________________________________
Name: Dennis J. Herrera
Title: General Manager
Approved as to Form:
DAVID CHIU
City Attorney of the City and
County of San Francisco
By: __________________________________
Name: Mark D. Blake
Title: Deputy City Attorney
Acknowledged:
ANNA VAN DEGNA
Director of the Office of Public Finance
of the City and County of San Francisco
______________________________________
[Signature Page to Wastewater Series, Proposition E Fee Letter] TD BANK, N.A.
By: ____________________________________
Name: ______________________________
Title: ______________________________
3685193.2 041286 AGMT
AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT
Dated as of [__________], 2022
between
PUBLIC UTILITIES COMMISSION OF
THE CITY AND COUNTY OF SAN FRANCISCO
and
SUMITOMO MITSUI BANKING CORPORATION,
acting through its New York Branch
relating to
$100,000,000
PUBLIC UTILITIES COMMISSION
OF THE CITY AND COUNTY OF SAN FRANCISCO
COMMERCIAL PAPER NOTES
(WASTEWATER SERIES, PROPOSITION E)
SERIES A-7 (TAX EXEMPT)
Amending that certain Reimb ursement Agreement, dated as of June 1, 201 7, between the Public Utilities Commission of the City and County of San Francisco and Sumitomo Mitsui Banking Corporation, acting through its New York Branch
3685193.2 041286 AGMT
AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT
THIS AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT, dated as of [__________], 2022 (this “ Amendment No. 1”), is between the PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (together with its successors and assigns, the “Commission”) and SUMITOMO MITSUI BANKING CORPORATION, acting through its New York Branch (together with its successors and assigns, the “Bank”) , and amends that certain Reimbursement Agreement, dated as of June 1, 2017, between the Commission and the Bank ( the “Original Agreement” and as amended by this Amendment No. 1 and as it may be further amended and supplemented from time to time , the “Agreement”).
W I T N E S S E T H
WHEREAS, on November 5, 2002, the voters of the City approved Proposition E, which among other things, authorized the Commission to issue indebtedness, including revenue bonds, notes, commercial paper or other forms of indebtedness, when authorized by ordinance approved by a two- thirds vote of the Board of Supervisors of the City (the “Board”), for the purpose of reconstructing, replacing, expanding, repair or improving the Waste water Enterprise (as hereinafter defined); and
WHEREAS, pursuant to Section 43.5 of the San Francisco Administrative Code (“Article V”), enacted by Ordinance No. 203- 98 adopted by the Board on June 8, 1998, and signed by the Mayor of the City on June 19, 1998, as amended by Ordinance No. 270-06, adopted on October 24, 2006 by the Board and signed by the Mayor on October 31, 2006, the Board has established a procedure pursuant to which the Commission may issue short -term indebtedness, including commercial paper notes in anticipation of the issuance of its revenue bonds; and
WHEREAS, the Commission, pursuant to Resolution No. 06- 0164 adopted by the Commission on September 26, 2006 (“Resolution No. 06- 0164”), and the Board, pursuant to Ordinance No. 266-06 adopted by the Board on October 24, 2006 and signed by the Mayor on October 31, 2006 (the “266- 06 Ordinance”), authorized the issuance of Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Wastewater Series) in an aggregate principal amount not to exceed $150,000,000; and WHEREAS, the Commission is authorized to issue, sell and deliver bonds, additional bonds, refunding bonds and other evidences of indebtedness in order to effect its purposes pursuant to the Ordinance and the Resolutions, including the financing and refinancing of the Commercial Paper Notes (as defined herein) and the Bank Note (as defined in the Original Agreement); and
WHEREAS, pursuant to Resolution No. 11- 0197, adopted by the Commission on December 13, 2011 (“Resolution No. 11- 0197”), Ordinance No. 91- 12 adopted by the Board on May 8, 2012 and signed by the Mayor on May 14, 2012 (the “91- 12 Ordinance” and together 2 3685193.2 041286 AGMT
with the 266-06 Ordinance, the “Ordinance”), and Proposition E, the Commission and the Board approved an increase in the maximum aggregate principal amount of commercial paper notes issued by the Commission that can be outstanding from $150,000,000 to an amount not exceeding $300,000,000 in aggregate principal amount; and WHEREAS, pursuant to Resolution No. 14- 0139, adopted by the Commission on August 26, 2014 (“Resolution No. 14- 0139”) and Resolution No. 378- 14, adopted by the Board on September 30, 2014 and approved by the Mayor on October 9, 2014 (“Resolution No. 378-14”), the Commission and the Board approved an increase in the maximum aggregate principal amount of commercial paper notes issued by the Commission that can be outstanding from $300,000,000 to an amount not exceeding $500,000,000 in aggregate principal amount; and WHEREAS, pursuant to Resolution No. 17-0086, adopted by the Commission on April 25, 2017 (“Resolution No. 17-0086”), and Resolution No. 193-17, adopted by the Board on May 23, 2017 and approved by the Mayor on May 26, 2017 (“Resolution No. 193- 17”), the Commission and the Board approved an increase in the maximum aggregate principal amount of commercial paper notes issued by the Commission that can be outstanding from $500,000,000 to an amount not exceeding $750,000,000 in aggregate principal amount; and WHEREAS, pu rsuant to Resolution No. 17-0086, the Commission has authorized, executed and delivered that certain Issuing and Paying Agent Agreement, dated as of June 1, 2017 (the “Issuing and Paying Agent Agreement”), with U.S. Bank National Association, as issuing and paying agent (the “Issuing and Paying Agent”), pursuant to which the Commission has authorized the issuance of the Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Wastewater Series, Proposition E) Series A-7 (Tax Exempt) (the “Commercial Paper Notes”); and
WHEREAS, at the request of the Commission , the Bank issued a letter of credit in the original stated amount of $108,876,713 (representing an amount supporting the total aggregate principal amount of the Commercial Paper Notes in a principal amount $100,000,000 plus an amount equal to 270 days interest on such principal amount at the rate per annum of twelve percent (12%) computed on the basis of a 365 day year) for the payment by the Issuing and Paying Agent, when and as due, of the principal of and interest on the Commercial Paper Notes (as more particularly defined in the Original Agreement, the “Letter of Credit”); and WHEREAS, the current Stated Expiration Date of the Letter of Credit is June 2, 2022 and the Comm ission has requested the Bank to extend the Stated Expiration Date of the Letter of Credit, and the Bank is willing to extend the Stated Expiration Date of the Letter of Credit to [__________], 2027 pursuant to the Letter of Credit Amendment No. 1 (as more particularly defined herein) subject to amendment of the Original Agreement as reflected in this Amendment No. 1 and amendment of the Fee Agreement, dated June 2, 2017 (the “Original Fee Agreement”), by and between the Commission and the Bank, as reflected in the Amendment No. 1 to Fee Agreement dated [__________], 2022, by and between the Commission and the Bank (the “Amendment No. 1 to Fee Agreement”).
NOW THEREFORE, in consideration of the premises and the mutual agreements herein contained, the Commission and the Bank agree as follows:
3 3685193.2 041286 AGMT
SECTION 1. AUTHORITY AND DEFINITIONS
(a) This Amendment No. 1 is entered into pursuant to Sections 7.1 and 7.8 of the Original Agreement.
(b) This Amendment No. 1 amends the Original Agreement. (c) Capitalized terms used herein without definition shall have the meanings set forth in the Original Agreement.
(d) Subject to the satisfaction of the conditions precedent set forth in Section 3 hereof, this Amendment No. 1 shall become effective, and a letter of credit amendment substantially in the form o f Exhibit A attached hereto (the “Letter of Credit Amendment No. 1”) shall be delivered to the Issuing and Paying Agent by the Bank, upon the execution and delivery hereof and of the Amendment No. 1 to Fee Agreement , by the Commission and the Bank on [__________], 2022 (the “Extension Effective Date”).
(e) The provisions of this Amendment No. 1 shall supersede and prevail over any conflicting provisions of the Original Agreement . If there is any conflict between the terms, conditions, and provisions of this Amendment No. 1 and those of any of the other Basic Documents, the terms, conditions and provisions of this Amendment No. 1, as applicable, shall prevail. Save and except as expressly amended hereby, all of the terms and provisions of the Original Agreement continue in full force and effect and are applicable to the provisions of this Amendment No. 1 and the obligations of the parties hereunder. Reference to this specific Amendment No. 1 need not be made in any note, document, agreement, letter, certificate, the Agreement or any communication issued or made subsequent to, or with respect to, the Agreement, it being hereby agreed that any reference to the Agreement shall be sufficient to refer to the Original Agreement as hereby amended. The parties hereto expressly agree that this Amendment No. 1 shall constitute a modification of the Original Agreement and does not constitute a novation or substitution with respect to the Original Agreement.
SECTION 2. AMENDMENTS TO THE ORIGINAL AGREEMENT
(a) Section 1.1 of the Original Agreement is hereby amended by deleting the following definition in its entirety and substituting the following therefor:
“Base Rate” - means, for any day, a rate per annum equal to the greatest of (i) the sum of the Prime Rate in effect on such day plus two percent (2.0%), (ii) the sum of the Federal Funds Rate in effect on such day plus three percent (3.0%), (iii) the sum of the SIFMA Rate in effect on such day plus three percent (3.00%), and (iv) seven and one-half of one percent (7.50%).
(b) Section 1.1 of the Original Agreement is hereby amended by deleting the definition of “LIBOR Index Rate” therein.
4 3685193.2 041286 AGMT
(c) Section 1.1 of the Original Agreement is hereby amended by deleting the definition “Resolution No. 387-14” in its entirety and substituting the following therefor:
“Resolution No. 378-14” – means Resolution No. 378-14,
adopted by the Board on September 30, 2014 and approved by the Mayor on October 9, 2014.
(d) Section 1.1 of the Original Agreement is hereby amended by deleting the following definition in its entirety and substituting the following therefor:
“Resolutions” – means Resolution No. 17-0086,
Resolution No. 06- 0614, Resolution No. 378- 14, Resolution No. 11-0197, Resolution No. 14-0139 and Resolution 193-17. (e) Section 5.1(v) of the Original Agreement is hereby deleted in its entirety and the following substituted therefor:
(v) Amounts of Rates and Charges (Senior
Wastewater Bonds). The Commission covenants to establish, fix and prescribe, prior to the commencement of each Fiscal Year, rates, fees and charges with respect to the Wastewater Enterprise which are reasonably expected to be at least sufficient to yield during such Fiscal Year Net Revenues (together with any fund balances of the Commission which are available for Debt Service, but excluding the Bond Reserve Fund) equal to 1.25 times Annual Debt Service payable in such Fiscal Year.
SECTION 3. CONDITIONS PRECEDENT. The obligation of the Bank to issue and deliver the Letter of Credit Amendment No. 1 to the Issuing and Paying Agent shall be subject to the fulf illment, at or before the issuance of the Letter of Credit Ame ndment No. 1, of each of the following conditions, in form and substance satisfactory to the Bank:
(a) This Amendment No. 1 and the Amendment No. 1 to Fee Agreement shall have been duly executed and delivered by each of the respective parties thereto and shall not have been modified, amended or rescinded, shall be in full force and effect on and as of the Extension Effective Date and executed original s of each thereof shall have been delivered to the Bank.
(b) All other legal matters pertaining to the execution and delivery of this Amendment No. 1 and the Amendment No. 1 to Fee Agreement and the issuance of the Letter of Credit Amendment No. 1 shall be satisfactory to the Bank, and the Bank shall have received such other certificates, approvals or filings, opinions and documents as shall be reasonably requested by the Bank.
5 3685193.2 041286 AGMT
SECTION 4. REPRESENTATIONS AND WARRANTIES. In order to induce the Bank to issue the Letter of Credit Amendment No. 1, the Commission represents and warrants to the Bank as of the Extension Effective Date as follows:
(a) the representations of the Commission set forth in Article IV of the Agreement (including as amended by this Amendment No. 1) and in each of the other Basic Documents and in any and all documents delivered to the Bank in connection herewith are true and correct in all material respects on and as of the Extension Effective Date with the same force and effect as if made on and as of such date;
(b) no Default or Event of Default hereunder and no default or event of default under any of the other Basic Documents has occurred and is continuing or would occur upon the issuance of the Letter of Credit Amendment No. 1; (c) since June 30, 2021, no material adverse change shall have occurred in the status of the business, operations or condition (financial or otherwise) of the Commission or its ability to perform its obligations hereunder or under the Commercial Paper Notes or the other Basic Documents to which it is a party;
(d) the Commission is in complianc e with the terms and conditions of the Original Agreement and has performed or complied with all of its obligations, covenants and conditions to be performed or complied with pursuant to the Agreement on or prior to the Extension Effective Date;
(e) this Amendment No. 1 and the Amendment No. 1 to Fee Agreement have been duly authorized, executed and delivered by the Commission; and (f) all certificates, financial statements, documents and other written information furnished to the Bank by the Commission on or prior to the Extension Effective Date in connection with the transactions contemplated hereby were, as of their respective dates, complete and correct in all material respects to the extent necessary to give the Bank true and accurate knowledge of the subject m atter thereof and did not contain any untrue statement of a material fact and were provided in expectation of the Bank’s reliance thereon in issuing the Letter of Credit Amendment No. 1 and there are no facts that the Commission has not disclosed in writing to the Bank that, individually or in the aggregate, could materially impair the ability of the Commission to perform its obligations under the Commercial Paper Notes, the Bank Note, the Agreement, the Fee Agreement or the other Basic Documents.
SECTION 5. COSTS AND EXPENSES. Upon receipt of a written invoice by mail, the Commission will promptly pay the reasonable fees and expenses of domestic counsel to the Bank incurred in connection with the preparation, execution and delivery, of this Amendment No. 1, the Amend ment No. 1 to Fee Agreement and the Letter of Credit Amendment No. 1. The Commission hereby agrees that all costs and expenses incurred by the Bank in connection with the transactions contemplated herein and the satisfaction of the foregoing conditions (whether or not this transaction closes), including, without limitation, the reasonable fees and expenses of domestic counsel to the Bank, are included as obligations under the Original Fee Agreement and the Original Agreement.
6 3685193.2 041286 AGMT
SECTION 6. NO WAIVER. The Commission ack nowledges and agrees that, if and to the extent that the Bank ha s not heretofore required strict compliance with the performance by the Commission of the covenants, agreements and obligations of the Commission under the Agreement or the other Basic Documents, such action or inaction shall not constitute a waiver of, or otherwise affect in any manner, the Bank’s rights and remedies under the Agreement or the other Basic Document s, as amended hereby, including the right to require performance of such covenants, agreements and obligations strictly in accordance with the terms and provisions thereof.
SECTION 7. COUNTERPARTS. This Amendment No. 1 may be
executed in two or more counterparts, each of which shall constitute an original, but when taken together shall constitut e but one agreement and any of the parties hereto may execute this Agreement by signing any such counterpart.
SECTION 8. GOVERNING LAW . THIS AMENDMENT NO. 1
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF CALIFORNIA WITHOUT GIVING EF FECT TO CONFLICTS OF LAWS PROVISIONS; PROVIDED THAT THE BANK’S OBLIGATIONS HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PROVISIONS.
SECTION 9. SEVERABILITY. Any provision of this Amendment No. 1 which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction, and all other remaining provisions hereof will be construed to render them enforceable to the fullest extent permitted by law. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 10. ENTIRE AGREEMENT. This Amendment No. 1
represents the final agreement between the parties hereto with respect to the subject matter hereof and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties hereto as to such subject matter . Taken together with the Original Agreement and the Original Fee Agreement and the other instruments and documents delivered in compliance herewith, this Amendment No. 1 and the Amendment No. 1 to Fee Agreement are a complete memorandum of the agreement of the Commission and the Bank.
SECTION 11. HEADINGS. The section and subsection headings used herein have been inserted for convenience of reference only and do not constitute matters to be considered in interpreting this Amendment No. 1.
[The remainder of this page intentionally left blank]
S-1 3685193.2 041286 AGMT
IN WITNESS WHEREOF, the Commission and the Bank have duly executed this Amendment No. 1 to Reimbursement Agreement as of the date first above written.
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By:
Name: Dennis J. Herrera
Title: General Manager
Approved as to Form:
DAVID CHIU
City Attorney of the City and
County of San Francisco
By:
Name: Mark D. Blake
Title: Deputy City Attorney
Acknowledged:
ANNA VAN DEGNA
Director of Public Finance of the City
and County of San Francisco
By:
Name: Anna Van Degna
Title: Director of Public Finance of the
City and County of San Francisco
S-2 3685193.2 041286 AGMT
SUMITOMO MITSUI BANKING
CORPORATION, acting through its New York
Branch
By:
Name:
Title:
Exhibit A-1 3685193.2 041286 AGMT
Exhibit A
Form of Letter of Credit Amendment No. 1
ANNEX G
TO
SUMITOMO MITSUI BANKING CORPORATION,
ACTING THROUGH ITS NEW YORK BRANCH
IRREVOCABLE TRANSFERABLE DIRECT-PAY
LETTER OF CREDIT NO. LG/MIS/NY-113969
NOTICE OF EXTENSION OF STATED EXPIRATION DATE
[__________], 2022
U.S. Bank National Association,
as Issuing and Paying Agent
100 Wall Street, Suite 1600
New York, New York 10005
Attention: MMI Operations
We hereby notify you with reference to Irrevocable Transferable Direct -Pay Letter of Credit No. LG/MIS/NY-113969 (the “Letter of Credit”; terms used he rein and not otherwise defined herein being used herein as therein defined) issued by us in your favor, as follows:
1. The Stated Expiration Date of the Letter of Cre dit has been extended to [__________], 2027.
2. This Notice is an amendment to and must b e attached to the Letter of Credit and made a part thereof.
All other terms and conditions of the Letter of Credit remain unchanged.
Very truly yours,
SUMITOMO MITSUI BANKING
CORPORATION, acting through its New
York Branch
By:
Name:
Title:
3685194.2 041286 AGMT
AMENDMENT NO. 1 TO FEE AGREEMENT
[__________], 2022
$100,000,000
not to exceed aggregate principal amount of
Public Utilities Commission
of the City and County of San Francisco
Commercial Paper Notes
(Wastewater Series, Proposition E)
Series A-7 (Tax Exempt)
Reference is hereby made to that certain Reimbursement Agreement, dated as of June 1, 2017, between the Public Utilities Commission of the City and County of San Francisco (together with any successors and permitted assigns, the “Commission”) and Sumitomo Mitsui Banking Corporation, acting through its New York Branch (the “Bank”), as amended by that certain Amendment No. 1 to Reimbursement Agreement, dated as of [__________], 2022, between the Commission and the Bank (as so amended and as it may be further amended or supplemented from time to time, the “ Reimbursement Agreement”), relating to the above - captioned commercial paper notes (the “Commercial Paper Notes ”). This Amendment No. 1 to Fee Agreement (this “Amendment No. 1”) amends that certain Fee Agreement, dated June 2, 2017, between the Commission and the Bank (the “Original Fee Agreement” and as amended by this Amendment No. 1 and as it may be further amended and supplemented from time to time, the “Fee Agreement”).
1. Authority and Definitions.
(a) This Amendment No. 1 is entered into in compliance with the provisions of the Original Fee Agreement.
(b) This Amendment No. 1 amends the Original Fee Agreement. (c) Capitalized terms used herein without definition shall have the meanings set forth in the Original Fee Agreement.
(d) This Amendment No. 1 shall become effective upon the execution and delivery hereof by the Commission and the Bank on [__________], 2022 (the “Extension Effective Date”).
(e) The provisions of this Amendment No. 1 shall supersede and prevail over any conflicting provisions of the Original Fee Agreement. If there is any conflict between the terms, conditions and provisions of this Amendment No. 1 and those of any of the Financing Documents, the terms, conditions and provisions of this Amendment No. 1, as applicable, shall prevail. Save and except as expressly amended hereby, all of the terms and provisions of the Original Fee Agreement continue in full force and effect and are applicable to the provisions of this Amendment No. 1 and the obligations of the parties hereunder. Reference to this specific 2 3685194.2 041286 AGMT
Amendment No. 1 need not be made in any note, document, agreement, letter, certificate, the Fee Agreement or any communication issued or made subsequent to, or with respect to, the Fee Agreement, it being hereby agreed that any reference to the Fee Agreement shall be sufficient to refer to the Original Fee Agreement as hereby amended. The parties hereto expressly agree that this Amendment No. 1 shall constitute a modification of the Original Fee Agreement and does not constitute a novation or substitution with respect to the Original Fee Agreement. (f) The terms of the Original Fee Agreement, as amended by this Amendment No. 1, are incorporated by reference into the Agreement as if fully set forth therein.
2. Amendments to the Original Fee Agreement.
(a) Section (a) of the Original Fee Agreement is hereby deleted in its entirety and the following substituted therefor:
(a) Facility Fee. The facility fees for the period commencing with and including the Closing Date and ending on and including [__________], 2022 shall be as set forth in the Original Fee Agreement and shall be payable on July 1, 2022 for the period from April 1, 2022 and ending on and including [__________], 2022. The Commission agrees to pay to the Ban k on July 1, 2022 for the period commencing on [__________], 2022 and ending on June 30, 2022, and on the first Business Day of each April, July, October and January to occur thereafter, and on the Termination Date (each, a “Quarterly Payment Date”) , a non- refundable facility fee (the “Facility Fee”), which shall be fully earned when due and nonrefundable when paid, based on the Rating (as defined below) corresponding to the Level set forth in the pricing matrix below, computed i n arrears (on the basis of a 365 day year for the actual number of days elapsed per quarter) on the average daily Stated Amount of the Letter of Credit (without regard to temporary reductions thereof) at the rates per annum specified below in Column A prior to the issuance of any Subordinated Wastewater Bonds and in Column B on and after the issuance of any Subordinated Wastewater Bonds (the “Facility Fee Rate”) from time to time in effect during each related period:
Level S&P Rating
Moody’s
Rating
A
Facility Fee
Rate1
B
Facility Fee
Rate2
Level 1 AA- or above Aa3 or above 0.30% 0.45%
Level 2 A+ A1 0.45% 0.60%
Level 3 A A2 0.65% 0.80%
Level 4 A- A3 1.00% 1.15%
Level 5 BBB+ Baa1 1.50% 1.65%
Level 6 BBB Baa2 2.25% 2.40%
1 Prior to issuance of any Subordinated Wastewater Bonds 2 On and after issuance of any Subordinated Wastewater Bonds 3 3685194.2 041286 AGMT
The following paragraph applies to each of the pricing matr ices above.
The term “Rating” as used above shall mean the long term unenhanced credit ratings assigned by any Rating Agency to any Senior Debt; provided, however, that if the long term unenhanced credit ratings assigned by any Rating Agency to any Senior Debt appear in more than one rating level, the term “Rating” as used above shall mean the lowest of the long term unenhanced credit ratings assigned by any Rating Agency to any Senior Debt. The Commission acknowledges, and the Bank agrees, that as of [__ ________], 2022 the Facility Fee Rate is that specified above for Level 1. Any change in the Facility Fee Rate resulting from a change in a Rating shall be and become effective as of and on the date of the announcement of the change in such Rating. Refer ences to ratings above are references to rating categories as now determined by the Rating Agencies, and, in the event of adoption of any new or changed rating system by any such Rating Agency, including, without limitation, any recalibration or realignment of the long term unenhanced credit ratings assigned by any Rating Agency to any Senior Debt in connection with the adoption of a “global” rating scale, each of the ratings from the Rating Agency in question referred to above shall be deemed to refer to the rating category under the new rating system which most closely approximates the applicable rating category as currently in effect. In the event that either (i) any long term unenhanced credit ratings assigned by any Rating Agency to any Senior Debt is suspended, withdrawn or otherwise unavailable from any Rating Agency, or reduced below “ Baa2” (or its equivalent) by Moody’s or “ BBB” (or its equivalent) by S&P, or (ii) upon the occurrence and during the continuance of an Event of Default, then the Facili ty Fee Rate otherwise in effect shall be immediately and without notice equal 3.00% per annum . The Facility Fees shall be payable in arrears as provided in the first sentence of this Paragraph (a), together with interest on the Facility Fees from the date payment is due until payment in full at the Default Rate, payable on demand and calculated as provided in such sentence.
(b) Paragraph (d) of the Original Fee Agreement is hereby deleted in its entirety and the following substituted therefor:
(d) Termination Fee. The termination fee for the period commencing with and including the Closing Date and ending on and including [__________], 2022 shall be as s et forth in the Original Fee Agreement . If the Letter of Credit terminates by its terms or is replaced, or the Stated Amount of the Letter of Credit is permanently reduced to zero, prior to the 24-month anniversary of [__________], 2022, the Commission shall pay to the Bank, upon such termination, replacement or reduction, a termination fee equal to the Facility Fee (based on an Stated Amount equal to the Original Stated Amount) for the full first 24 months following [__________], 2022 at the Facility Fee Rate in effect as of the date of such termination, replacement or reduction, less the aggregate amount of Fac ility Fee theretofore paid, and shall also pay to the Bank, upon such termination, replacement or reduction, all other fees, expenses and other obligations payable hereunder, including, without limitation, all principal and accrued interest owing on the Bank Note; provided, however, that the 4 3685194.2 041286 AGMT
Commission shall not be required to pay any termination fee to the Bank (i) if such termination, replacement or reduction is a result of any of the short -term credit ratings of the Bank being downgraded by Moody’s to “P2” or below or by S&P to “A -2” or below, respectively, or (ii) if such termination, replacement or reduction is a result of additional amounts becoming due pursuant to Section 2.14 of the Reimbursement Agreement. All payments from the Commission to the Bank referred to in this paragraph (d) shall be made with immediately available funds.
(c) Paragraph (g) of the Original Fee Agreement is hereby deleted in its entirety and the following substituted therefor:
(g) Payment Account. “ Payment Account” shall mean th e following account of the Bank (or at such other place as the Bank may specify by written notice to the Commission and the Trustee):
Sumitomo Mitsui Banking Corp., New York
ABA Number: 0260-0967-4
Account Name: SMBC Loan Operations New York
Account Number: 423001
Re: San Francisco Public Utilities Commission, LG/MIS/NY-113969 Contact: (212) 224-4310
(d) Paragraph (h) of the Original Fee Agreement is hereby deleted in its entirety and the following substituted therefor:
(h) Notices. A ll notices and other c ommunications to the Bank provided for under the Reimbursement Agreement shall be in writing (including required copies) and sent by receipted hand delivery (including Federal Express or other receipted courier service), telecopy, facsimile transmission, or regular mail, to the following addresses (or to such other address(es) of which the Bank shall notify the parties to the Reimbursement Agreement):
if to the Bank with respect
to draws under the Letter of
Credit, to:
Sumitomo Mitsui Banking Corporation,
New York Branch
277 Park Avenue, 6th Floor
New York, New York 10172
Attention: Trade Credit Services Department
Telephone: (212) 224-4310
Facsimile: (212) 224-4566
Email: [email protected]
5 3685194.2 041286 AGMT
if to the Bank with respect
to administrative matters,
to:
Sumitomo Mitsui Banking Corporation,
New York Branch
277 Park Avenue, 4th Floor
New York, New York 10172
Attention: General Manager - Public and Infrastructure Finance Group
Telephone: (212) 224-4859
Facsimile: (212) 224-5227
Email: [email protected]
With a copy to:
Sumitomo Mitsui Banking Corporation,
New York Branch
277 Park Avenue, 6th Floor
New York, New York 10172
Attention: Trade Credit Services Department
Telephone: (212) 224-4310
Facsimile: (212) 224-4566
Email: [email protected]
3. Miscellaneous.
(a) Any provision of this Amendment No. 1 which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction, and all other remaining provisions hereof will be construed to render them enforceable to the fullest extent permitted by law. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. (b) THIS AMENDMENT NO. 1 SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PROVISIONS; PROVIDED THAT THE BANK’S OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PROVISIONS.
(c) This Amendment No. 1 may be executed in two or more counterparts, each of which shall constitute an original, but when taken together shall constitute but one agreement and any of the parties hereto may execute this Amendment No. 1 by signing any such counterpart.
(d) This Amendment No. 1 represents the final agreement between the parties hereto with respect to the subject matter hereof and may not be contradicted by evidence of 6 3685194.2 041286 AGMT
prior, contemporaneous, or subsequent oral agreements of the parties hereto as to such subject matter.
(e) This Amendment No. 1 and the Original Fee Agreement shall be construed as one agreement between the Commission and the Bank and shall be governed by the provisions of the Original Fee Agreement.
[The remainder of this page intentionally left blank]
S-1 3685194.2 041286 AGMT
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to Fee Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By:
Name: Dennis J. Herrera
Title: General Manager
Approved as to Form:
DAVID CHIU
City Attorney of the City and
County of San Francisco
By:
Name: Mark D. Blake
Title: Deputy City Attorney
Acknowledged:
ANNA VAN DEGNA
Director of Public Finance of the City
and County of San Francisco
By:
Name: Anna Van Degna
Title: Director of Public Finance of the
City and County of San Francisco
S-2 3685194.2 041286 AGMT
SUMITOMO MITSUI BANKING
CORPORATION, acting through its New York
Branch, as the Bank
By:
Name:
Title:
OFFERING MEMORANDUM
DATED JUNE [__], 2022
Ratings: See “RATINGS” herein
$675,000,000
Public Utilities Commission
of the City and County of San Francisco
Commercial Paper Notes
(Wastewater Series, Proposition E)
$150,000,000
Series A-1 (Tax Exempt)
Supported by a letter of credit issued by Sumitomo Mitsui Banking Corporation, acting through its New York Branch
$150,000,000
Series A-2 (Tax Exempt)
Supported by a letter of credit issued by Bank of America, N.A $75,000,000
Series A-4 (Tax Exempt)
Supported by a revolving credit and term loan agreement with The Toronto-Dominion Bank, New York Branch
$200,000,000*
Series A-6
Tax-Exempt Subseries A-6
Taxable Subseries A-6-T
Supported by a revolving credit and term loan agreement with State Street Bank and Trust Company
$100,000,000
Series A-7 (Tax Exempt)
Supported by a letter of credit issued by Sumitomo Mitsui Banking Corporation,
acting through its New York Branch
This Offering Memorandum describes five series (each, a “Series”) of Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Wastewater Series, Proposition E) (collectively, the “Commercial Paper Notes”) offered hereby. The Commercial Paper Notes are payable from and secured by a pledge of Available Wastewater Enterprise Revenues (as defined herein ). The Commercial Paper Notes are special obligations of the Public Utilities Commission of the City and County of San Francisco (the “Commission”) and are payable on a subordinated basis to the Commission’s outstanding Wastewater Revenue Bonds, SRF Loans, WIFIA Loans and Subordinated Wastewater Bonds. See “THE COMMISSION AND THE WASTEWATER ENTERPRISE—Senior and Parity Indebtedness” herein.
The payment of each Series of Commercial Paper Notes will be additionally supported by a letter of credit or dedicated liquidity facility provided by a banking institution as specified above and as further described herein and in Appendix A – “SUMMARIES OF BANK FACILITIES” and Appendix B – “THE BANKS” herein.
Timely payment of the Commercial Paper Notes is dependent upon the availability of the funds under the applicable Letter of Credit (as defined herein) or the applicable Liquidity Facility (as defined herein). If for any reason a Bank fails to honor its respective Letter of Credit or Liquidity Facility, the Commission makes no representation, and no assurance can be given, that the Commission would have sufficient funds on hand and available to make the corresponding payment of principal and interest on the applicable Commercial Paper Notes. Prospective investors should therefore base their investment decisions, insofar as it relates to the creditworthiness of a Series of Commercial Paper Notes, solely on the credit of the applicable Bank, rather than the Commission.
THE GENERAL FUND OF THE CITY AND COUNTY OF SAN FRANCISCO IS NOT LIABLE, AND THE CREDIT OR THE TAXING
POWER OF THE CITY AND COUNTY OF SAN FRANCISCO IS NOT PLEDGED, FOR THE PAYMENT OF THE COMMERCIAL PAPER NOTES OR THE INTEREST THEREON.
The Commercial Paper Notes have not been registered under the Securities Act of 1933, as amended (the “Act”), in reliance upon an exemption from registration contained in the Act.
DEALERS FOR ALL SERIES:
Citigroup Goldman Sachs & Co. LLC Morgan Stanley
RBC Capital Markets US Bancorp
* In connection with the Series A-6 Notes, the Commission approved an increase in the commitment amount, from $100,000,000 to $200,000,000, under the State Street A-6 Liquidity Facility (as defined herein), which became effective on October 15, 2019. In connection with such increase, the Commission approved the termination of the Series A-5 Notes (as defined herein), which became effective on October 14, 2019.
TABLE OF CONTENTS
Page
i
INTRODUCTION ....................................................................................................................................... 1 THE COMMISSION AND THE WASTEWATER ENTERPRISE ........................................................... 3 The Commission ............................................................................................................................. 3 The Wastewater Enterprise ............................................................................................................. 3 Senior and Parity Indebtedness ....................................................................................................... 4 Investment Policy ........................................................................................................................... 6 Wastewater Enterprise Financial and Operating Data .................................................................... 6 THE COMMERCIAL PAPER NOTES ...................................................................................................... 6 Authorization and Certain Terms of the Commercial Paper Notes ................................................ 6 Security for the Commercial Paper Notes....................................................................................... 7 Description of the Bank Facilities ................................................................................................... 7 Pledge of Available Wastewater Enterprise Revenues ................................................................... 9 RATINGS .................................................................................................................................................. 10 ABSENCE OF LITIGATION ................................................................................................................... 11 THE DEALERS ......................................................................................................................................... 11 TAX MATTERS ........................................................................................................................................ 12 Tax-Exempt Notes ........................................................................................................................ 12 Information Reporting and Backup Withholding ......................................................................... 12 State Tax Exemption ..................................................................................................................... 13 Future Developments .................................................................................................................... 13 Taxable Notes ............................................................................................................................... 13 LEGAL MATTERS ................................................................................................................................... 13 ADDITIONAL INFORMATION .............................................................................................................. 13
APPENDIX A SUMMARIES OF BANK FACILITIES
APPENDIX B THE BANKS
APPENDIX C BOOK-ENTRY SYSTEM FOR COMMERCIAL PAPER NOTES
APPENDIX D FORM OF OPINION OF BOND COUNSEL
[TO BE DISCUSSED WITH NRF] In the opinion of Norton Rose Fulbright US LLP, San Francisco, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions and assuming compliance with certain covenants in the documents pertaining to the Tax -Exempt Notes a nd requirements of the Internal Revenue Code of 1986, as amended, as described herein, interest on the Tax- Exempt Notes is not includable in the gross income of the owners of the Tax- Exempt Notes for federal income tax purposes. In the further opinion of Bond Counsel, interest on the Tax- Exempt Notes is not treated as an item of tax preference for purposes of the federal alternative minimum tax. In the further opinion of Bond Counsel, interest on the Commercial Paper Notes is exempt from personal income t axes imposed by the State of California. See “TAX MATTERS” herein.
OFFERING MEMORANDUM
$675,000,000
Public Utilities Commission
of the City and County of San Francisco
Commercial Paper Notes
(Wastewater Series, Proposition E)
$150,000,000
Series A-1 (Tax Exempt)
Supported by a letter of credit issued by Sumitomo
Mitsui Banking Corporation, acting through its New
York Branch
$150,000,000
Series A-2 (Tax Exempt)
Supported by a letter of credit issued by Bank of
America, N.A
$75,000,000
Series A-4 (Tax Exempt)
Supported by a revolving credit and term loan agreement with The Toronto-Dominion Bank, New York Branch
$200,000,000*
Series A-6
Tax-Exempt Subseries A-6
Taxable Subseries A-6-T
Supported by a revolving credit and term loan
agreement
with State Street Bank and Trust Company
$100,000,000
Series A-7 (Tax Exempt)
Supported by a letter of credit issued by Sumitomo
Mitsui Banking Corporation, acting through its New
York Branch
INTRODUCTION
The purpose of this Offering Memorandum is to provide certain general information in connection with the issuance and sale from time to time by the Public Utilities Commission of the City and County of San Francisco (the “Commission”) of five series (each, a “Series”) of Commercial Paper Notes (Wastewater Series, Proposition E) for its Wastewater Enterprise (collectively, the “Commercial Paper Notes”) . The
* In connection with the Series A-6 Notes, the Commission approved an increase in the commitment amount, from $100,000,000 to $200,000,000, under the State Street A -6 Liquidity Facility (as defined herein), which became effective on October 15, 2019.
In connection with such increase, the Commission approved the termination of the Series A -5 Notes (as defined herein), which became effective on October 14, 2019.
2 Commercial Paper Notes are payable from and secured by a pledge of Available Wastewater Enterprise Revenues (as defined herein). The payment of each Series of Commercial Paper Notes will be additionally supported by a letter of credit or dedicated liquidity facility (each, a “Bank Facility”) provided by a banking institution (each, a “Bank”) as described below under the caption the “Bank Facilities” and as further described in Appendix A – “SUMMARIES OF BANK FACILITIES” and Appendix B – “THE BANKS” herein.
The Commercial Paper Notes consist of the following Series *: (i) Series A -1 (Tax-Exempt) (the
“Series A-1 Notes”), (ii) Series A-2 (Tax Exempt) (the “Series A-2 Notes”), (iii) Series A-4 (Tax Exempt) (the “Series A-4 Notes”), (iv) Series A-6 (the “Series A-6 Notes”), consisting of Tax-Exempt Subseries A- 6 (the “Subseries A-6 Notes”) and Taxable Subseries A-6-T (the “Subseries A-6-T Notes”) and (v) Series A-7 (Tax Exempt) (the “Series A -7 Notes”). The Subseries A -6-T Notes are referred to herein as the “Taxable Notes.” The Commercial Paper Notes, excluding the Taxable Notes, are referred to herein collectively as the “Tax-Exempt Notes.”
Capitalized terms used herein and not defined shall have the respective meanings given such terms in the Indenture, dated as of January 1, 2003 (as amended by the First Amendment to Indenture, dated as of May 1, 2010, by the Fifth Supplemental Indenture dated as of September 14, 2017, and by the Sixth Supplemental Indenture dated as of August 1, 2018, and as supplemented by the First Supplemental Indenture, dated as of May 1, 2010, the Second Supplemental Indenture, dated as of January 1, 2013, the Third Supplemental Indenture, dated as of February 1, 2013, the Fourth Supplemental Indenture dated as of May 1, 2016, the Seventh Supplemental Indenture dated as of August 1, 2018, the Eighth Supplemental Indenture dated as of August 1, 2018, and the Ninth Supplemental Indenture dated as of July 27, 2018, and as the same may be subsequently supplemented, amended and modified from time to time (collectively, the “Wastewater Bonds Indenture”), between the Commission and U.S. Bank National Association, as trustee thereunder, providing for the issuance from time to time of the Commission’s Wastewater Revenue Bonds, designated as the “Wastewater Revenue Bonds,” and other obligations as provided therein, as the same may be supplemented, amended and modified from time to time. The Commercial Paper Notes are payable on a subordinated basis to the Wastewater Revenue Bonds.
The Commercial Paper Notes are issued pursuant to the Charter of the City (the “Charter”), Proposition E, adopted by the voters of the City in November 2002, and various ordinances and resolutions of the City and the Commission.
The Commission may issue and have outstanding at any one time an aggregate principal amount of $675,000,000 of Commercial Paper Notes, provided that the aggregate principal amount of any Series may not exceed the principal amount set forth on the cover of this Offering Memorandum.
The general fund of the City and County of San Francisco (the “City”) is not liable, and neither the credit nor the taxing power of the City is pledged for the payment of the Commercial Paper Notes or the interest thereon.
* The Commercial Paper Notes previously included a Series A -3 (Tax Exempt) (the “Series A -3 Notes”). The Series A-3 Notes were terminated on July 10, 2017, and have since been replaced by the Revolving Obligations available under the U.S. Bank Revolving Credit Agreement, as described below in “THE COMMISSION AND THE WASTEWATER ENTERPRISE—Senior and Parity Indebtedness.” The Commercial Paper Notes previously included a Series A-5 (the “Series A-5 Notes”), consisting of Tax-Exempt Subseries A-5 (the “Subseries A-5 Notes”) and Taxable Subseries A-5-T (the “Subseries A-5-T Notes”). The Series A-5 Notes were terminated on October 14, 2019. In connection with such termination, the Commission approved an increase in the commitment amount under the State Street A -6 Liquidity Facility (as defined herein), from $100,000,000 to $200,000,000, to maintain and support the Commission’s commercial paper program. Such increase became effective on October 15, 2019.
3 The information in this Offering Memorandum has been obtained from the Commission, the Banks (as defined herein) and other sources believed to be reliable. The references herein to the I ssuance Authorizations, the Issuing and Paying Agent Agreements and the Bank Facilities (all as hereinafter defined) do not purport to be complete or definitive, do not constitute summaries thereof, and are qualified in their entirety by reference to the provisions thereof. The information and expressions of opinion in this Offering Memorandum are subject to change without notice after the date hereof and future use of this Offering Memorandum shall not otherwise create any implication that there has been no change in the matters referred to in this Offering Memorandum since the date hereof. The information contained herein will not typically be distributed or updated upon each new sale of Commercial Paper Notes, although the information will be distributed from time to time.
The Commercial Paper Notes are exempt from registration under Section 3(a)(2) of the Securities Act of 1933, as amended.
THE COMMISSION AND THE WASTEWATER ENTERPRISE
The Commission
The Commission, which consists of five members appointed by the Mayor of the City (the “Mayor”), is a department of the City responsible for the maintenance, operation and development of the Water Enterprise, the Wastewater Enterprise and the Hetch Hetchy Water and Power Enterprise (the “Power Enterprise”). The Water Enterprise provides retail drinking water to the City and wholesale water to customers in three other Bay Area counties. The Wastewater Enterprise, formerly known as the Clean Water Enterprise, consists of a sanitary waste and storm water collection, treatment and disposal system for the City. The Power Enterprise consists of water supply facilities and a hydroelectric generating system, and provides power to City agencies, the Modesto Irrigation District, the Turlock Irrigation District and certain other customers. Each of the Commission’s enterprises is operated and managed as a separate financial entity and separate enterprise funds are maintained for each enterprise. No revenues from either the Water Enterprise or the Power Enterprise have been pledged for payment of the Wastewater Enterprise Commercial Paper Notes and no such revenues shall be available for the repayment thereof.
The Commission operates and maintains dams and reservoirs, power generation and transmission facilities, water transmission facilities, water and wastewater treatment plants, water distribution facilities, wastewater collection facilities and power distribution facilities. The Commission’s facilities extend from the Hetch Hetchy watershed in the Sierra Nevada, across the Central Valley, over and around the southern end of San Francisco Bay and north along the San Francisco Peninsula to the City.
The Wastewater Enterprise
The Wastewater Enterprise operates a combined sewer system that serves residential, commercial and industrial users, making up a “daytime population equivalent” of approximately 1,060,000 with sanitary waste/stormwater collection, treatment and disposal services. The combined sewer system consists of three water pollution control plants, 993 miles of underground pipes and effluent outfalls to the San Francisco Bay and Pacific Ocean. The combined sewer system reduces pollution in the San Francisco Bay and Pacific Ocean by treating urban runoff that would otherwise flow to the Bay and Ocean. The Wastewater Enterprise treats and discharges approximately 148 million gallons per day of treated wastewater during dry weather and, with additional facilities and increased operations, the Wastewater Enterprise can treat approximately 465 million gallons of combined flow per day during wet weather.
San Francisco’s combined sewer system has served the City for more than 100 years with the bulk of the investment occurring 10 to 50 years ago. Since then, and typical for the industry, the system has
4 operated well but aging infrastructure, outdated equipment/technology, new developments and deferred maintenance due to funding constraints, highlight the need for major capital improvements throughout the collection and treatment systems. In response, a Sewer System Improvement Program (“SSIP”), which is a compilation of capital improvement projects, has been developed and will be implemented over approximately the next 20 years. The SSIP has a scope, budget and schedule based on the Commission’s endorsed levels of service. In 2012 the Commission authorized Commission staff to move forward with planning and development of a proposed Phase 1 set of SSIP projects, representing $2.7 billion of the total estimated cost of approximately $6.9 billion. On March 22, 2016, the Commission approved the “March 2016 SSIP Baseline Scope, Budget, and Schedule .” The overall SSIP budget remained at approximately $6.9 billion, however, the budget for SSIP Phase 1 increased from $2.7 billion to $2.910 billion. On April 24, 2018 the Commission approved revisions to the 2016 SSIP Baseline Scope, Schedule and Budget for Phase 1 projects as the “2018 Revised Baseline Scope, Schedule and Budget for the SSIP Phase 1 Projects” (the “2018 SSIP Baseline”). The budget for Phase 1 of SSIP increased from $2.910 billion to $2.979 billion.
Four projects were also initiated in 2018 from later phases of SSIP with a baseline budget of $430 million, primarily for flood resilience. On December 22, 2020 the Commission approved revisions to the 2018 SSIP Baseline Scope, Schedule and Budget for SSIP projects as the “2020 Revised Baseline Scope, Schedule and Budget for the SSIP.” The budget for Phase 1 of SSIP increased from $2.979 billion to $3.655 billion.
The budget for the four projects initiated in the 2018 Baseline increased from $430 million to $513 million.
In addition, 31 projects were also initiated in 2020 from later phases of SSIP with a baseline budget of $684 million. The total budget for projects in the SSIP 2020 baseline is now $4.852 billion. Pursuant to the 2020 Re-Baseline (as defined and further described herein), the SFPUC is in the process of revising the original three-phase implementation approach over a 20-year period to implementing Phase 1 projects and initiating projects originally identified for the second and third phases of the SSIP as part of its rolling 10-year capital plan. New SSIP projects are now expected to be initiated based on priority and schedule through the SFPUC’s budget process. The total SSIP cost is now projected to be approximately $8.145 billion as of the approved 2023 Capital Plan.
The expected completion date for the Phase 1 Projects is August 2027, and the expected completion date for the 35 Other SSIP Projects is December 2029. As of December 31, 2021, approximately 48.0% of Phase 1 Projects and approximately 2.2% of Other SSIP Projects had been completed. .Proceeds of the Commercial Paper Notes will be used to finance or refinance costs of the Wastewater Enterprise’s capital program, including the SSIP.
Senior and Parity Indebtedness
As of May 1, 2022, the Wastewater Enterprise had $ 2,048,445,000 in outstanding aggregate principal amount of Wastewater Revenue Bonds and Notes ; seven State Revolving Fund loans (“SRF Loans”) entered into with the State Water Resources Control Board in the aggregate principal amount of $400,511,103; and two loans entered into with the United States Environmental Protection Agency pursuant to the federal 2014 Water Infrastructure Finance and Innovation Act (“WIFIA Loan s”), the first of such WIFIA Loans was originally dated July 27, 2018 in the amount of $699,242,023 and was subsequently re- executed on June 12, 2020 (to capture lower borrowing costs) , and will fund approximately 49% of the costs of the BDFP , and the second of such WIFIA Loans, dated June 12, 2020 in the amount of $513,861,981, will fund approximately 49% of the costs of the SEP New Headworks project and increased scope of the BDFP. Both the SRF Loans and the WIFIA Loans are authorized on parity with the senior lien Wastewater Revenue Bonds. The SRF loan program moneys are disbursed on a cost -incurred basis pursuant to disbursement requests submitted by the Commission. Furthermore, SRF loans amortize over a 30-year term commencing one year following completion of the respective project. As February 28, 2022, $310,210,266 of SRF loan disbursements had been requested and received by the Commission. As of May 1, 2022, no disbursements under the WIFIA loans had been requested and received by the Commission.
The Commission did not issue any additional senior lien parity debt in fiscal year 2021-22. In addition, in
5 fiscal year 20 22-23, the Commission expect s to issue $546 million (preliminary and subject to change) Wastewater Revenue Bonds . The Commercial Paper Notes are secured on a subordinate basis to the Wastewater Revenue Bonds, the SRF Loans, the WIFIA Loan s and the Subordinated Wastewater Bonds.
The Wastewater Revenue Bonds and the WIFIA Loans have unenhanced ratings of Aa2 by Moody’s Investors Service and AA by S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, as of April 19, 2022.
As of May 1, 2022, the Commission had $298,870,000 of Commercial Paper Notes outstanding.
The C ommission has reserved the right to authorize and issue obligations or securities of the Commission secured in whole or in part by a lien on Wastewater Enterprise Revenues (as defined herein) subordinate (the “Subordinated Wastewater Bonds”) to the senior lien of the Wastewater Bonds Indenture (including, other obligations on parity with the lien of the Wastewater Bonds Indenture), but that would have a lien senior to the lien of the Commercial Paper Notes. As of May 1, 2022, the Commission did not have any outstanding Subordinated Wastewater Bonds. Pursuant to the terms of the Toronto-Dominion A- 4 Liquidity Facility and the State Street A -6 Liquidity Facility, in the event the Commission issue s Subordinated Wastewater Bonds, and after the respective banks have provided notice to the Commission and the Issuing and Paying Agent, the respective commitments under the Toronto-Dominion A-4 Liquidity Facility and the State Street A-6 Liquidity Facility will be reduced to the principal amount of the Series A- 4 Notes and Series A -6 Notes, respectively, then outstanding. Upon the maturity date of such Series A -4 Notes and Series A -6 Notes, such commitments will be permanently reduced further and upon the final maturity of the such Series A-4 Notes and Series A-6 Notes, the commitments under the Toronto-Dominion A-4 Liquidity Facility and the State Street A -6 Liquidity Facility , respectively, will be terminated.
Following receipt of such notice, the Commission will not issue any additional Series A-4 Notes or Series A-6 Notes while the Toronto- Dominion A-4 Liquidity Facility or the State Street A -6 Liquidity Facility, respectively, are in effect.
The Commercial Paper Notes previously included a Series A -3 (Tax Exempt) in the aggregate principal amount not to exceed $75,000,000 (the “Series A -3 Notes”) . The Series A -3 Notes were terminated on July 10, 2017. Following such termination, the Commission entered into a revolving credit agreement (the “Revolving Credit Agreement”) with U.S. Bank National Association (“ U.S. Bank”), designated as Series R-1, pursuant to which the Commission is permitted to borrow from U.S. Bank up to $75,000,000 prior to July 18, 2024 . Repayment obligations under the Revolving Credit Agreement are payable on parity with the CP Notes . Under the Revolving Credit Agreement, upon a failure by the Commission to perform or observe its covenants, a default in other specified indebtedness of the Commission, or other specified events of default, U.S. Bank could terminate its commitment and declare all amounts then outstanding to be immediately due and payable.
The Commercial Paper Notes previously included a Series A-5 (the “Series A-5 Notes”), consisting of Tax-Exempt Subseries A-5 (the “Subseries A -5 Notes”) and Taxable Subseries A -5-T (the “Subseries A-5-T Notes”). The Series A -5 Notes were terminated on October 14, 2019. In connection with such termination, the Commission approved an increase in the commitment amount under the State Street A -6 Liquidity Facility (as defined herein) with State Street (as defined herein) to maintain and support the Commission’s commercial paper program. Such increase in the commitment amount of the State Street A- 6 Liquidity Facility became effective on October 15, 2019.
Subject to the rate covenant and additional bonds test discussed under the caption “THE COMMERCIAL PAPER NOTES—Limited Obligation of Commercial Paper Notes,” there is no limitation in the Charter, the Issuance Authorizations or the Issuing and Paying Agent Agreements (defined below) on Commission issuing indebtedness senior to the Commercial Paper Notes . The Commission can, with majority voter approval or a two-thirds vote of the Board, authorize additional Wastewater Revenue Bonds
6 and Subordinated Wastewater Revenue Bonds the payment of which will be prior to the payment of the Commercial Paper Notes. The Commission can also authorize entering into additional parity SRF loans with the State Water Resources Control Board. The Commission also can authorize additional indebtedness on a parity with the Commercial Paper Notes without notice to, or consent of, any holder of the Commercial Paper Notes.
See Appendix A – “SUMMARIES OF BANK FACILITIES.”
Investment Policy
The Commission’s funds are invested through the City’s office of the Treasurer pursuant to the City’s investment policy. The investment policy of the City is reviewed annually and is subject to change.
A copy of the City’s Annual Statement of Investment Policy can be found at https://sftreasurer.org/banking- investments/investments.
Wastewater Enterprise Financial and Operating Data
Pursuant to continuing disclosure undertakings of the Commission in connection with certain outstanding Wastewater Revenue Bonds, the Commission is obligated to file with the Municipal Securities Rulemaking Board (“MSRB”) through the Electronic Municipal Market Access (“EMMA”) website certain financial information and operating data not later than nine months after the end of its fiscal year (presently June 30), and to provide notices of the occurrence of certain listed events under securities laws. The Commission may provide supplemental information in its annual continuing disclosure report filings, and may from time to time provide voluntary notices, in its sole discretion, to provide information that may be material to investors. Additionally, the Commission provided COVID -19 information in its Preliminary official statement prepared in connection with the issuance of the 2022AB Bonds, dated [May 6], 2022 (the “Series 202 2AB Preliminary Official Statement”) and the effects that COVID -19 has had on the Commission and the Wastewater Enterprise as the date of the Series 202 2AB Official St atement. The Commission may provide supplemental information in its annual continuing disclosure report filings and may from time to time provide voluntary notices, in its sole discretion, to provide information to investors.
See “ADDITIONAL INFORMATION.”
THE COMMERCIAL PAPER NOTES
Authorization and Certain Terms of the Commercial Paper Notes The Commission’s commercial paper program for its Wastewater Enterprise, including the Commercial Paper Notes offered hereby, are authorized to be issued pursuant to the Charter; Article V of Chapter 43 the San Francisco Administrative Code, enacted by Ordinance No. 203- 98 (the “Procedural Ordinance”), adopted on June 8, 1998 by the Board and signed by the Mayor on June 19, 1998, as amended by Ordinance 270-06 adopted on October 24, 2006 by the Board and signed by the Mayor on October 31, 2006, to establish a procedure for the Commission to issue short -term indebtedness, and various other ordinances and resolutions of the Board and resolutions of the Commiss ion (collectively with the Procedural Ordinance, the “Issuance Authorizations”). As of the date of this Offering Memorandum, the Board and the Commission have authorized commercial paper and short-term indebtedness authorization in an aggregate principal amount not to exceed $750,000,000. Pursuant to such Issuance Authorizations, in addition to the Commercial Paper Notes offered hereunder, the Commission has entered into a Revolving Credit Agreement with U.S. Bank, pursuant to which the bank has agreed to make certain advances to the Commission, from time to time, in an aggregate principal amount not to exceed $75,000,000 at any one time outstanding, and the Commission has delivered to such bank its revolving obligations tax-exempt note and its revolving obligations taxable note (the “Revolving Obligations”) evidencing the obligation of the
7 Commission to repay to such bank the advances made under the Revolving Credit Agreement, which Revolving Obligations are on a parity with the Commercial Paper Notes. Se e also “THE COMMISSION AND THE WASTEWATER ENTERPRISE—Senior and Parity Indebtedness” above. The Revolving Obligations are not offered pursuant to this Offering Memorandum. Only the Commercial Paper Notes, in the aggregate principal amount not to exceed $675,000,000, are offered pursuant to this Offering Memorandum.
Each Series of Commercial Paper Notes is issued pursuant to a separate Issuing and Paying Agent Agreement by and between the Commission and U.S. Bank National Association, as issuing and paying agent (the “Issuing and Paying Agent”). The Commercial Paper Notes are dated the date of their original issuance, issued in book-entry form only in denominations of $100,000, and in integral multiples of $1,000 in excess of $100,000, and bear interest at separately stated interest rates not to exceed 12% per annum.
The Commercial Paper Notes are fully registered notes registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company (“DTC”), New York, New York.
Beneficial ownership interests in the Commercial Paper Notes are available in book -entry form only, and purchasers of the Commercial Paper Notes will not receive certificates representing their interests in the Commercial Paper Notes purchased . While held in book- entry form, all payments of principal of and interest on the Commercial Paper Notes will be made by wire transfer to DTC or its nominee as the sole registered owner of the Commercial Paper Notes. Payments to the beneficial owners are the responsibility of DTC and its participants . See APPENDIX C – “BOOK-ENTRY SYSTEM FOR COMMERCIAL PAPER NOTES.”
Each Commercial Paper Note (i) will bear interest payable at maturity at an annual rate calculated on the basis of a year consisting of 365 days (or 360 days in the case of the Taxable Notes) and the actual number of days elapsed, and (ii) will mature not more than 270 days after its issuance date, but in no event later than the Business Day immediately preceding the Termination Date of the applicable Letter of Credit or Liquidity Facility.
Each Commercial Paper Note (i) will be sold at a price of not less than 100% of the principal amount thereof, and (ii) will mature on a Business Day. The Commercial Paper Notes will not be subject to redemption prior to maturity. Payments of principal of and interest on maturing Commercial Paper Notes will be made by the Issuing and Paying Agent directly to DTC.
Security for the Commercial Paper Notes
The Commercial Paper Notes will be payable solely from the proceeds of Commercial Paper Notes, Available Wastewater Enterprise Revenues or amounts drawn pursuant to the related Bank Facility, as provided in the Issuing and Paying Agent Agreements.
THE GENERAL FUND OF THE CITY AND COUNTY OF SAN FRANCISCO IS NOT
LIABLE, AND NEITHER THE CREDIT NOR THE TAXING POWER OF THE CITY AND COUNTY OF SAN FRANCISCO IS PLEDGED, FOR THE PAYMENT OF THE COMMERCIAL PAPER NOTES.
Description of the Bank Facilities
The payment of each Series of Commercial Paper Notes will be supported by an irrevocable, direct pay letter of credit (each, a “Letter of Credit” and collectively, the “Letters of Credit”) pursuant to the terms of the related Reimbursement Agreement (each, a Reimbursement Agreement” and collectively, the “Reimbursement Agreements”) or by a dedi cated liquidity facility (each, a “Liquidity Facility” and
8 together, the “Liquidity Facilities”) provided by a banking institution (each a “Bank”) as summarized below. A Letter of Credit or a Liquidity Facility is referred to herein as a “Bank Facility.” Series
Aggregate
Principal Amount
Authorized Bank Facility Bank
Stated Expiration
Date/Commitment
Expiration Date
Series A-1 $150,000,000 Letter of Credit Sumitomo Mitsui Banking Corporation,
acting through its
New York Branch
March 7, 2024
Series A-2 $150,000,000 Letter of Credit Bank of America, N.A.
April 24, 2023
Series A-4 $75,000,000 Revolving Credit
and Term Loan
Agreement
The Toronto-
Dominion Bank,
New York Branch
July 8, 2022
Series A-6* $200,000,000 Revolving Credit
and Term Loan
Agreement
State Street Bank and
Trust Company
October 13, 2023
Series A-7 $100,000,000 Letter of Credit Sumitomo Mitsui Banking Corporation,
acting through its
New York Branch
[_______], 2027
Each Letter of Credit is sized to provide sufficient funds for the payment of principal and interest on the related Series of Commercial Paper Notes, whether at maturity or earlier acceleration upon an event of default. Each Letter of Credit is irrevocable.
Each Liquidity Facility is sized to provide sufficient funds for the payment of principal on the related Series of Commercial Paper Notes, whether at maturity or earlier acceleration upon an event of default.
Timely payment of the Commercial Paper Notes is dependent upon the availability of the funds under the applicable Letter of Credit or the applicable Liquidity Facility. Under certain circumstances, the Liquidity Facilities are subject to immediate termination or suspension without notice or payment.
See Appendix A – “SUMMARIES OF BANK FACILITIES—BANK FACILITY FOR THE SERIES A- 4 COMMERCIAL PAPER NOTES—TORONTO-DOMINION A-4 LIQUIDITY FACILITY” AND “— BANK FACILITY FOR THE SERIES A- 6 COMMERCIAL PAPER NOTES —STATE STREET A -6 LIQUIDITY FACILITY.”
If for any reason a Bank fails to honor its respective Letter of Credit or Liquidity Facility, the Commission makes no representation, and no assurance can be given, that the Commission would have
* In connection with the Series A -6 Notes, the Commission approved an increase in the current commitment amount, from $100,000,000 to $200,000,000, under the State Street A-6 Liquidity Facility (as defined herein), which became effective on October 15, 2019. In connection with such increase, the Commission approved the termination of the Series A-5 Notes (as defined herein), which became effective on October 14, 2019.
9 sufficient funds on hand and available to make the corresponding payment of principal and interest on the applicable Commercial Paper Notes.
Each Bank Facility is described in greater detail in Appendix A hereto.
Information concerning each Bank providing a Bank Facility is provided in Appendix B hereto.
The information in Appendix B has been furnished by the respective Banks for use in this Offering Memorandum. Such information has not been independently confirmed or verified by the Commission.
No representation is made herein by the Commission as to the accuracy or adequacy of such information subsequent to the date hereof, or that the information contained and incorporated herein by reference is correct. The Commission has assumed no obligation to update such information in the future, or to advise of any adverse change in the financial condition of the Banks. Investors are advised to obtain and carefully review any financial reports and other information published after the date hereof about the Banks prior to making a decision to purchase the Commercial Paper Notes.
Pledge of Available Wastewater Enterprise Revenues
To the extent not paid from the proceeds of a draw upon the related Bank Facility or the proceeds of remarketed Commercial Paper Notes, the Commercial Paper Notes will be payable solely from Available Wastewater Enterprise Revenues.
“Available Wastewater Enterprise Revenues,” means all of the moneys in the Revenue Fund (as defined in the Wastewater Bonds Indenture and comprised primarily of Wastewater Enterprise Revenues and earnings thereon) remaining after (a) the payments required by the provisions of the Wastewater Bonds Indenture relating to operation and maintenance expenses, certain pension charges and other payments required with respect to Commission employees, and payments on Wastewater Bonds and all other amounts payable on a parity with such Wastewater Bonds under the Wastewater Bonds Indenture pursuant to the terms thereof and (b) all amounts required to be paid under any other indenture or resolution of the Commission for principal, interest, reserve fund and any other debt service requirements on other Wastewater Bonds and Subordinate Wastewater Bonds of the Commission as the same become due and payable.
“Wastewater Enterprise Revenues” has the meaning ascribed to the term “Net Revenues” in the Wastewater Bonds Indenture, which is defined as all of the Revenues less all Operation and Maint enance Costs of the Enterprise.
“Revenues” is defined as all gross revenues of the Wastewater Enterprise, including all charges received and all other income and receipts derived by the Commission from the operation of the Wastewater Enterprise, or arising from the Wastewater Enterprise, including connection and installation charges, but excluding:
(a) any money received by or for the account of the Commission from the levy or collection of taxes,
(b) moneys received from the State and the United States of America and required to be deposited in restricted funds,
(c) refundable deposits made to establish credit,
(d) advances and contributions made to the Commission to be applied to construction,
10 (e) moneys received constituting casualty insurance proceeds with respect to all or any part of the Enterprise (which shall be received and disposed of pursuant to the Wastewater Bonds Indenture) and moneys received constituting other insurance proceeds,
(f) moneys received from the sale or disposition of all or any part of the Enterprise (which shall be received and disposed of pursuant to the Wastewater Bonds Indenture), (g) moneys received upon the taking by or under the threat of eminent domain of all or any part of the Wastewater Enterprise (which moneys shall be received and disposed of pursuant to the Wastewater Bonds Indenture),
(h) proceeds from Bonds issued by the Commission or proceeds from loans or other indebtedness obtained by the Commission, and
(i) moneys or securities received by the Commission as gifts or grants, the use of which is restricted by the donor or grantor.
The term “Revenues” also includes (i) all interest or other income (excluding profits or losses from the sale or dispositio n of Permitted Investments or other securities owned by or on behalf of the Commission) derived from the deposit or investment of any moneys in any fund or account established under the Wastewater Bonds Indenture (excluding any Rebate Fund and any escrow fund pledged for the payment of defeased bonds) or in any fund or account of the Wastewater Enterprise and legally available to pay Debt Service on the Wastewater Bonds, and (ii) any other moneys, proceeds and other amounts that the Commission determines should be “Revenues” under the Wastewater Bonds Indenture.
Under each Issuing and Paying Agent Agreement, the Commission covenants to establish, maintain and collect rates and charges with respect to the Wastewater Enterprise sufficient (after giving effect to the expected receipt of refinancing proceeds from the sale of Commercial Paper Notes or Wastewater Revenue Bonds) to pay the Commercial Paper Notes, the Bank Notes and all other obligations payable from the Wastewater Enterprise. The Commission also covenants not to issue any additional bonds, notes or other obligations for borrowed money payable from or secured by the revenues of the Wastewater Enterprise unless the Commission certifies that either (i) actual revenues for the most recently completed fiscal year or (ii) projected revenues for the next three fiscal years following the issuance of such additional bonds, notes or other indebtedness, are or will be sufficient to satisfy the rate covenant defined above, assuming the issuance of such additional bonds, notes or other indebtedness to pay any maturing Commercial Paper Notes.
RATINGS
[TO BE CONFIRMED]
[Moody’s has assigned a rating of “P-1” to each of the Notes.
S&P has assigned a rating of “A-1” to each of the Series A-1 Notes, the Series A-2 Notes and the Series A-7 Notes. S&P has assigned a rating of “A-1+” to each of the Series A-4 Notes and the Series A- 6 Notes.]
Each of such ratings is based on the understanding that the Bank Facilities have been or will be issued by the Banks. Such ratings reflect only the views of such organizations and an explanation of the significance of such ratings may be obtained only from the agencies at the following addresses: Moody’s Investors Service, Inc., 7 World Trade Center, New York, New York 10007 and S&P Global Ratings, a
11 Standard & Poor’s Financial Services LLC business, 55 Water Street, New York, New York 10004. The Commission furnished to such rating agencies certain information and materials regarding the Commercial Paper Notes and the Wastewater Enterprise. In addition, each Bank furnished certain information to such rating agencies regarding such Bank and its respective Bank Facility. There is no assurance the rating on any Series of Commercial Paper Notes will continue for any given period or that it will not be revised downward or withdrawn entirely by the rating agencies, if in the judgment of such rating agencies, circumstances so warrant and, therefore, any prospective purchaser should confirm the rating prior to purchasing any Series of Commercial Paper Notes. Any such change in or withdrawal of any such rating could have an adverse effect on the market for or market price of such Series of Commercial Paper Notes.
The above rat ings are not recommendations to buy, sell or hold any Series of Com mercial Paper Notes.
The Commission has not undertaken to provide notice to the holders of the Commercial Paper Notes of any change in the ratings on any Series of Commercial Paper Notes.
The ratings on the Commercial Paper Notes may be adversely affected by a downgrade of the credit rating(s) of the related Bank. Although the Commission has covenanted to maintain a Bank Facility for the Commercial Paper Notes, it is not obligated to replace any Bank in the event of a downgrade of such Bank’s rating(s). The Commission has not covenanted to provide notice to holders of the Commercial Paper Notes of any downgrade of the credit ratings of any Bank.
ABSENCE OF LITIGATION
[TO BE CONFIRMED] There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body pending or, to the best of the knowledge of the Commission after reasonable investigation, threatened in any way (i) seeking to restrain or enjoin the issuance, sale or delivery of any of the Commercial Paper Notes or (ii) challenging the validity of the Commercial Paper Notes.
THE DEALERS
The Commission has appointed Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, RBC Capital Markets, LLC and U.S. Bancorp Investments, Inc., each as a non-exclusive dealer with respect to the offering and sale from time to time of the Commercial Paper Notes. “US Bancorp” is the marketing name of U.S. Bancorp and its subsidiaries, including U.S. Bancorp Investments, Inc. (“USBII”), which is serving as a dealer for the Commercial Paper Notes, and U.S. Bank National Association, which is serving as issuing and paying agent for the Commercial Paper Notes.
Each Dealer and its respective affiliates t ogether comprise a full service financial institution engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. Each Dealer and its respective affiliates may have, from time to time, performed and may in the future perform, various investment banking services for Commission for which they received or will receive customary fees and expenses. In the ord inary course of their various business activities, each Dealer and its respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities and financial instruments which may i nclude bank loans and/or credit default swaps) for its own account and for the accounts of its customers and may at any time hold long and short positions in such securities and instruments . Such investment securities activities may involve securities and instruments of the Commission.
No Dealer is acting as a financial or municipal advisor to the Commission in connection with the remarketing of the Commercial Paper Notes.
12 TAX MATTERS
[TO BE DISCUSSED WITH NRF]
Tax-Exempt Notes
In the opinion of Norton Rose Fulbright US LLP, San Francisco, California, Bond Counsel ("Bond Counsel"), under existing statutes, regulations, rulings and judicial decisions and assuming compliance by the Commission with certain covenants in the Issuing and Paying Agent Agreements, the Tax Certificate executed in connection with the issuance of the Tax Exempt Notes, and requirements of the Internal Revenue Code of 1986, as amended, regarding the use, expenditure and investment of proceeds of the Commercial Paper Notes and the timely payment of certain investment earnings to the United States, interest on the Tax Exempt Notes is not includable in the gross income of the owners of the Tax Exempt Notes for federal income tax purposes. Failure to comply with such covenants and requirements may cause interest on the Tax Exempt Notes to be included in federal gross income retroactive to the date of issuance of the Tax Exempt Notes.
In the further opinion of Bond Counsel, interest on the Tax Exempt Notes is not treated as an item of tax preference for purposes of the federal alternative minimum tax.
Ownership of, or the receipt of interest on, tax-exempt obligations may result in collateral income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, certain foreign corporations doing business in the United States, certain S corporations with excess passive income, individual receipts of Social Security or Railroad Retirement benefits, and taxpayers that may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations and taxpayers who may be eligible for the earned income tax credit. Bond Counsel expressed no opinion as to any collateral tax consequences and, accordingly, prospective purchasers of the Commercial Paper Notes should consult their tax advisors as to the applicability of any collateral tax consequences.
Certain requirements and procedures contained or referred to in the Issuing and Paying Agent Agreements and other relevant documents may be changed, and certain actions may be taken, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax- exempt obligations. Bond Counsel expresses no opinion as to the effect of any change to any document pertaining to the Commercial Paper Notes or of any action taken or not taken where such change is made or action is taken or not taken without Bond Counsel's approval, or in reliance upon the advice of counsel other than Bond Counsel with respect to the exclusion from gross income of interest on the Tax -Exempt Notes for federal income tax purposes.
Information Reporting and Backup Withholding
Interest paid on tax-exempt obligations is subject to information reporting in a manner similar to interest paid on taxable obligations. While this reporting requirement does not, by itself, affect the excludability of interest from gross income for federal inco me tax purposes, the reporting requirement causes the payment of interest with respect to the Tax -Exempt Notes to be subject to backup withholding if such interest is paid to beneficial owners that (a) are not "exempt recipients," and (b) either fail to provide certain identifying information (such as the beneficial owner's taxpayer identification number) in the required manner or have been identified by the IRS as having failed to report all interest and dividends required to be shown on their income tax returns. Generally, individuals are not exempt recipients, whereas corporations and certain other entities are exempt recipients. Amounts withheld under the backup
13 withholding rules from a payment to a beneficial owner are allowed as a refund or credit against such beneficial owner's federal income tax liability so long as the required information is furnished to the IRS.
State Tax Exemption
In the further opinion of Bond Counsel, interest on the Tax-Exempt Notes is exempt from personal income taxes imposed by the State of California.
Future Developments
Future or pending legislative proposals, if enacted, regulations, rulings or court decisions may cause interest on the Tax- Exempt Notes to be subject, directly or indirectly, to federal income taxation or m ay cause interest on the Commercial Paper Notes to be subject, directly or indirectly, to State or local income taxation, or may otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. Legislation or regulatory actions and future or pending proposals may also affect the economic value of the federal or State tax exemption or the market value of the Commercial Paper Notes.
Prospective purchasers of the Commercial Paper Notes should consult their tax advisors regarding pending or proposed federal or State tax legislation, regulations, rulings or litigation, as to which Bond Counsel expresses no opinion.
Taxable Notes
Interest on the Taxable Notes is not excluded from gross income for federal income tax purposes, but, in the opinion of Bond Counsel, the interest on the Taxable Notes is exempt from personal income taxes imposed by the State of California.
The form of opinion of Bond Counsel is attached hereto as Appendix D.
LEGAL MATTERS
Norton Rose Fulbright US LLP, San Francisco, California, Bond Counsel, has rendered the legal opinion described in “TAX MATTERS” above, the form of which is set forth in Appendix D hereto. Bond Counsel is not passing upon and undertakes no responsibility for the accuracy, completeness or fairness of the information contained in this Offering Memorandum. Upon the issuance of each Bank Facility, outside counsel to the Bank delivered opinions relating to such Bank Facility.
ADDITIONAL INFORMATION
Information herein concerning the Commission is limited. No attempt has been made to summarize the Issuing and Paying Agent Agreements or the Bank Facilities. The descriptions of and reference to such documents contained herein do not purport to be complete, and such references to and descriptions of such documents and all other documents and other items described herein are qualified in their entirety by reference to each such document and item.
Pursuant to continuing disclosure undertakings of the Commission in connection with certain outstanding Wastewater Revenue Bonds, the Commission is obligated to provide certain annual financial information and operating data (each, an “Annual Report”) not later than nine months after the end of its fiscal year (presently June 30), and to provide notices of the occurrence of certain listed events under securities laws. The Commission will file each Annual Report with the MSRB through the EMMA website.
The Commission will also file any notices of listed events (“Event Notice”) with the MSRB through the EMMA website.
14 The information and opinions herein and in any reports or filings pursuant to the Commission’s continuing disclosure undertakings described above, including any Annual Report or Event Notice, are subject to change without notice, and neither the delivery thereof nor the delivery of this Offering Memorandum shall, under any circumstances, create any implication that there has been no change in the affairs of the Commission or other matters described therein or herein.
Copies of the Issuance Authorizations, the Bank Facilities (portions of which may be in redacted form) and the Issuing and Paying Agent Agreements may be obtained from the Dealers, and may also be obtained from the Commission at the following address:
City and County of San Francisco
Public Utilities Commission
Attention: Chief Financial Officer
525 Golden Gate Ave., 13th Floor
San Francisco, California 94102
Tel: (415) 554-3155
Fax. (415) 554-3161
No dealer or other person has been authorized by the Comm ission to give any information or to make any representations other than those contained in this Offering Memorandum, and if given or made, such other information or representations must not be relied upon as having been authorized by the Commission.
The Dealers have provided the following sentence for inclusion in this Offering Memorandum .
The Dealers have reviewed the information in this Offering Memorandum in accordance with, and as part of, their responsibility to investors under the federal securities law as applied to the facts and circumstances of this transaction, but the Dealers do not guarantee the accuracy or completeness of such information.
A-i
APPENDIX A
SUMMARIES OF BANK FACILITIES
TABLE OF CONTENTS
Page
BANK FACILITY FOR THE SERIES A-1 COMMERCIAL PAPER NOTES ...................................... A-1 BANK FACILITY FOR THE SERIES A-2 COMMERCIAL PAPER NOTES ...................................... A-6 BANK FACILITY FOR THE SERIES A-4 COMMERCIAL PAPER NOTES .................................... A-11 BANK FACILITY FOR THE SERIES A-6 COMMERCIAL PAPER NOTES .................................... A-18 BANK FACILITY FOR THE SERIES A-7 COMMERCIAL PAPER NOTES .................................... A-25
A-1
BANK FACILITY FOR THE SERIES A-1 COMMERCIAL PAPER NOTES
SMBC A-1 LETTER OF CREDIT
AND SMBC A-1 REIMBURSEMENT AGREEMENT
The Commission has entered into a reimbursement agreement (the “SMBC A-1 Reimbursement Agreement”) with SMBC Mitsui Banking Corporation, acting through its New York Branch (“ SMBC”), pursuant to which SMBC has issued an irrevocable direct -pay letter of credit (the “SMBC A- 1 Letter of Credit”) for the account of the Commission supporting the payment of principal of and interest due thereon at maturity or upon acceleration of Series A-1 Notes. The Series A-1 Notes are issued pursuant to the terms of the Amended and Restated Issuing and Paying Agent Agreement, dated as of March 1, 2017, as amended and restated as of April 25, 2017 (the “Series A-1 Issuing and Paying Agent Agreement”), by and between U.S. Bank National Association, as issuing and paying agent (the “Series A-1 Issuing and Paying Agent”), and the Commission.
The following description is a summary of certain provisions of the SMBC A-1 Letter of Credit and SMBC A-1 Reimbursement Agreement. Such summary does not purport to be a complete description or restatement of the material provisions of the SMBC A-1 Letter of Credit and SMBC A-1 Reimbursement Agreement. Investors should obtain and review copies of the SMBC A-1 Letter of Credit and SMBC A-1 Reimbursement Agreement in order to understand all of the terms of those documents. All capitalized terms appearing under this heading “ SMBC A- 1 LETTER OF CREDIT AND SMBC A- 1 REIMBURSEMENT AGREEMENT” not otherwise defined herein shall have the meanings assigned to them in the related document.
SMBC A-1 Letter of Credit
The SMBC A-1 Letter of Credit is an irrevocable transferable obligation of SMBC Mitsui Banking Corporation, acting through its New York Branch and supports the Series A -1 Notes. The SMBC A-1 Letter of Credit will be issued in an amount equal to the maximum principal amount of the Series A-1 Notes plus 270 days’ interest thereon at the rate of 12% per annum calculat ed on the basis of a year of 365 days (the “Stated Amount”). The Series A-1 Issuing and Paying Agent is authorized to draw on the SMBC A-1 Letter of Credit in an aggregate amount not to exceed the Stated Amount of the SMBC A-1 Letter of Credit and in accordance with the terms and conditions and subject to the reductions and reinstatements in amount as set forth in the SMBC A-1 Letter of Credit, in one or more Drawings (as defined in the SMBC A-1 Letter of Credit), payable as set forth in the SMBC A- 1 Letter of Credit on any Business Day (as defined in the SMBC A-1 Letter of Credit), by presentation of the appropriate certifications, (i) for the payment at maturity of the principal of and interest at maturity on Series A -1 Notes, (ii) for the payment at matu rity of the principal of and interest to maturity on Series A-1 Notes that otherwise mature on or after the date that the Series A-1 Issuing and Paying Agent receives the Final Drawing Notice (as defined in the SMBC A-1 Letter of Credit) from SMBC, or (iii) for (x) the payment of the principal of and interest due upon acceleration of certain of the Series A-1 Notes (each an “Acceleration Drawing”) or (y) the payment of the principal of and interest due upon acceleration of all outstanding Series A -1 Notes (the “Final Acceleration Drawing”), in each case an aggregate amount not exceeding the Stated Amount of the SMBC A-1 Letter of Credit.
Upon SMBC honoring any Drawing, the Stated Amount and the amount available to be drawn under the SMBC A-1 Letter of Credit for subsequent Drawings will be automatically decreased by an amount equal to the amount of such Drawing. In connection therewith, the Stated Amount and the amounts from time to time available to be drawn under the SMBC A-1 Letter of Credit (except in th e case of the Final Acceleration Drawing or a Drawing resulting from the delivery of the Final Drawing Notice) will be increased when and to the extent, but only when and to the extent, (i) (A) of transfer by the Series A -1 Issuing and Paying Agent to SMBC on the date such Drawing is honored of proceeds of Series A-1 Notes
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issued on such date or (B) the Series A -1 Issuing and Paying Agent receives written notice from SMBC that SMBC has been reimbursed by or on behalf of the Commission for any amount drawn under the SMBC A-1 Letter of Credit, and (ii) that the Series A-1 Issuing and Paying Agent has not received from SMBC a No-Issuance Notice (as defined in the SMBC A- 1 Letter of Credit) . Upon SMBC honoring the Final Acceleration Drawing, the Stated Amount shall be permanently reduced to zero and the Stated Amount shall no longer be reinstated.
The SMBC A-1 Letter of Credit will expire at 4:00 p.m., New York City time, on the date (the earliest of such dates to occur is referred to as the “Termination Date”) which is the earliest of (i) March 7, 2024 (the “Stated Expiration Date”) or such later date as is specified by SMBC in a written notice to the Series A-1 Issuing and Paying Agent, (ii) the later of (a) the date on which SMBC receives written notice from the Series A-1 Issuing and Paying Agent that an Alternate Facility as is specified in such notice (as defined in the Series A -1 Issuing and Paying Agent Agreement) has been substituted for the SMB C A-1 Letter of Credit in accordance with the Series A-1 Issuing and Paying Agent Agreement and (b) the effective date of such Alternate Facility (after SMBC honors any properly presented and conforming Drawing on or prior to such date), (iii) the date on which SMBC receives written notice from the Series A -1 Issuing and Paying Agent that there are no longer any Series A -1 Notes Outstanding within the meaning of the Series A-1 Issuing and Paying Agent Agreement nor does the Commission intend to issue any additional Series A-1 Notes under the Series A-1 Issuing and Paying Agent Agreement and that the Series A- 1 Issuing and Paying Agent elects to terminate the SMBC A-1 Letter of Credit, (iv) the earlier of (a) the fifteenth (15th) calendar day after the date on which the Series A-1 Issuing and Paying Agent receives the Final Drawing Notice, and (b) the date on which the Drawing resulting from the delivery of the Final Drawing Notice is honored under the SMBC A-1 Letter of Credit, and (v) the date on which the F inal Acceleration Drawing is honored under the SMBC A-1 Letter of Credit.
SMBC A-1 Reimbursement Agreement Events of Default
If any of the following events shall occur, each such event shall be an “Event of Default” under the SMBC A-1 Reimbursement Agreement:
(a) the Commission shall fail to pay, or cause to be paid, as and when due, (i) any Reimbursement Obligation (as defined in the SMBC A-1 Reimbursement Agreement), or (ii) any Obligation (as defined in the SMBC A-1 Reimbursement Agreement) (other than a Reimbursement Obligation) and, in such case, such failure shall continue for three (3) Business Days; (b) any representation or warranty made by or on behalf of the Commission in the SMBC A-1 Reimbursement Agreement or in any other Basic Document (as defined in the SMBC A-1 Reimbursement Agreement) or in any certificate or statement delivered thereunder shall be incorrect or untrue in any material respect when made or deemed to have been made or delivered; (c) the Commission shall default in the due performance or observance of certain covenants set forth in the SMBC A-1 Reimbursement Agreement; (d) the Commission shall default in the due performance or observance of any other term, covenant or agreement contained in the SMBC A-1 Reimbursement Agreement or any other Basic Document and such default shall remain unremedied for a period of thirty (30) days after the occurrence thereof;
(e) the Commission shall (i) have entered involuntarily against it an order for relief under the United States Bankruptcy Code, as amended, (ii) become insolvent or shall not pay, or be unable to pay, or admit in writing its inability to pay, its debts generally as they become due,
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(iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property (as defined in the SMBC A-1 Reimbursement Agreement), (v) institute any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, marshalling of assets, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any corporate action in furtherance of any matter described in parts (i) through (v) above, or (vii) fail to contest in good faith any appointment or proceeding described in paragraph (f) below;
(f) a custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for the Commission or any substantial part of its Property, or a proceeding described in clause (e)(v) above shall be instituted aga inst the Commission and such proceeding continues undischarged or any such proceeding continues undismissed or unstayed for a period of thirty (30) or more days;
(g) a debt moratorium, debt restructuring, debt adjustment or comparable restriction is imposed on the repayment when due and payable of the principal of or interest on any Debt (as defined in the SMBC A-1 Reimbursement Agreement) of the Commission by the Commission or any governmental authority with appropriate jurisdiction; (h) any material provision of the SMBC A-1 Reimbursement Agreement or any other Basic Document shall at any time for any reason cease to be valid and binding on the Commission for any reason or shall be declared by any court or other Governmental Authority with competent jurisdiction to be null and void, invalid, or unenforceable, or the validity or enforceability thereof shall be publicly contested by the Commission or by a Governmental Authority with competent jurisdiction, or the Commission shall deny that it has any further liability under the SMBC A- 1 Reimbursement Agreement or any other Basic Document;
(i) dissolution or termination of the existence of the Commission; (j) the Commission shall (i) default on the payment of the principal of or interest on any Wastewater Enterprise Debt (as defined in the SMBC A-1 Reimbursement Agreement), beyond the period of grace, if any, provided in the instrument or agreement under which such Wastewater Enterprise Debt was created or incurred; or (ii) default in the observance or performan ce of any agreement or condition relating to any Wastewater Enterprise Debt or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event shall occur or condition exist, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Wastewater Enterprise Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Wastewater Enterprise Debt; (k) the Commission shall (i) default on the payment of the principal of or interest on any Debt (other than Wastewater Enterprise Debt) aggregating in excess of $10,000,000, beyond the period of grace, if any, provided in the instrument or agreement under which such Debt (other than Wastewater Enterprise Debt) was created or incurred; or (ii) default in the observance or performance of any agreement or condition relating to any Debt (other than Wastewater Enterprise Debt) aggregating in excess of $10,000,000, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event shall
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occur or condition exist, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Debt to become immediately due and payable in full as the result of the acceleration, mandat ory redemption or mandatory tender of such Wastewater Enterprise Debt;
(l) any final, unappealable judgment or judgments, writ or writs or warrant or warrants of attachment, or any similar process or processes, in an aggregate amount not less than $10,000,000 shall be entered or filed against the Commission or against any of its Property and remain unpaid, unvacated, unbonded or unstayed for a period of thirty (30) days; (m) any “event of default” under any Basic Document (as defined respectively therein) shall have occurred;
(n) a ruling, assessment, notice of deficiency or technical advice by the Internal Revenue Service shall be rendered to the effect that interest on the Series A -1 Notes is includable in the gross income of the holder(s) or owner(s) of s uch Series A -1 Notes and either (i) the Commission, after it has been notified by the Internal Revenue Service, shall not challenge such ruling, assessment, notice or advice in a court of law during the period within which such challenge is permitted or (ii) the Commission shall challenge such ruling, assessment, notice or advice and a court of law shall make a determination, not subject to appeal or review by another court of law, that such ruling, assessment, notice or advice is correctly rendered; (o) any of Moody’s or S&P shall have downgraded its long- term unenhanced rating of any Senior Debt (as defined in the SMBC A-1 Reimbursement Agreement) of the Commission to below “Baa2” (or its equivalent), or “BBB” (or its equivalent), respectively, or suspende d or withdrawn its rating of the same; or
(p) the passage of any Law (as defined in the SMBC A-1 Reimbursement Agreement) has occurred which could reasonably be expected to have a material adverse effect on the Commission’s ability to perform its obligations under the SMBC A-1 Reimbursement Agreement or the other Basic Documents or to result in a material adverse effect on the enforceability or validity of the SMBC A- 1 Reimbursement Agreement or any of the other Basic Documents; provided that the Event of Default set forth in this paragraph (p) shall be null and void and of no further force and effect from and after the date any other Reimbursement Agreement between the Commission and Bank of America, N.A., as provider of a letter of credit supporting any Commercial Paper Notes is terminated or a similar event of default is no longer provided therein.
SMBC A-1 Reimbursement Agreement Remedies
Upon the occurrence of any Event of Default under the SMBC A- 1 Reimbursement Agreement, SMBC may exercise any one or more of the following rights and remedies in addition to any other remedies provided in the SMBC A-1 Reimbursement Agreement or by law:
(a) declare all Obligations to be immediately due and payable, whereupon the same shall be immediately due and payable without any further notice of any kind, which notice is waived by the Commission; provided, however, that in the case of an Event of Default described in paragraph (e), (f) or (g) above under the subcaption “SMBC A- 1 LETTER OF CREDI T AND SMBC A-1 REIMBURSEMENT AGREEMENT—SMBC A-1 Reimbursement Agreement Events of Default,” such acceleration shall automatically occur (unless such automatic acceleration is waived by SMBC in writing); or
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(b) issue a No-Issuance Notice (the effect of which shall be as provided in the SMBC A-1 Reimbursement Agreement), reduce the Stated Amount of the SMBC A-1 Letter of Credit to the amount of the then outstanding Series A-1 Notes supported by the SMBC A-1 Letter of Credit plus a corresponding amount of interest coverage, reduce the Stated Amount of the SMBC A- 1 Letter of Credit as the then outstanding Series A-1 Notes are paid, and/or terminate the SMBC A- 1 Letter of Credit when no Series A-1 Notes remain outstanding; or (c) issue the Final Drawing Notice (the effect of which shall be to cause the Termination Date of the SMBC A-1 Letter of Credit to occur on the fifteenth (15) calendar day after the date of receipt thereof by the Series A-1 Issuing and Paying Agent); or (d) pursue any rights and remedies it may have under the Basic Documents; or (e) pursue any other action available at law or in equity. [Remainder of page left blank intentionally.]
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BANK FACILITY FOR THE SERIES A-2 COMMERCIAL PAPER NOTES
BANK OF AMERICA A-2 LETTER OF CREDIT
AND BANK OF AMERICA A-2 REIMBURSEMENT AGREEMENT
The Commission has entered into a reimbursement agreement (the Bank of America A -2 Reimbursement Agreement”) with Bank of America, N.A. (“Bank of America”), pursuant to which Bank of America will issue an irrevocable direct-pay letter of credit (the “Bank of America A-2 Letter of Credit”) for the account of the Commission supporting the payment of principal of and interest due thereon at maturity or upon acceleration of Series A-2 Notes. The Series A-2 Notes are issued pursuant to the terms of the Issuing and Paying Agent Agreement, dated as of June 1, 2017 (the “Series A-2 Issuing and Paying Agent Agreement”), by and between U.S. Bank National Association, as issuing and paying agent (the “Series A-2 Issuing and Paying Agent”), and the Commission.
The following description is a summary of certain provisions of the Bank of America A -2 Letter of Credit and the Bank of America A-2 Reimbursement Agreement. Such summary does not purport to be a complete description or restatement of the material provisions of the Bank of America A-2 Letter of Credit or the Bank of America A-2 Reimbursement Agreement. Investors should obtain and review copies of the Bank of America A-2 Letter of Credit and the Bank of America A -2 Reimbursement Agreement in order to understand all of the terms of those documents. All capitalized terms appearing under this heading “BANK OF AMERICA A- 2 LETTER OF CREDIT AND BANK OF AMERICA A-2 REIMBURSEMENT AGREEMENT” shall have the meanings assigned to them in th e Bank of America A-2 Reimbursement Agreement.
Bank of America A-2 Letter of Credit
The Bank of America A -2 Letter of Credit is an irrevocable transferable obligation of Bank of America and supports the payment of principal of and interest on maturing Seri es A-2 Notes only . The Bank of America A-2 Letter of Credit may not be drawn on for any other purpose. The Bank of America A-2 Letter of Credit will be issued in an amount equal to the maximum principal amount of $150,000,000 of the Series A-2 Notes plus 270 days’ interest thereon at the rate of 12% per annum calculated on the basis of a year of 365 days (the “Stated Amount”). The Series A -2 Issuing and Paying Agent is authorized to draw on the Bank of America A-2 Letter of Credit in an aggregate amount not to exceed the Stated Amount of the Bank of America A-2 Letter of Credit and in accordance with the terms and conditions and, subject to the reductions and reinstatements as described therein, in amounts as set forth in the Bank of America A-2 Letter of Credit, in one or more Drawings (as defined in the Bank of America A -2 Letter of Credit), payable as set forth in the Bank of America A -2 Letter of Credit on any Business Day (as defined in the Bank of America A-2 Letter of Credit), by presentation of the appropriate certifications, (i) for the payment at maturity of the principal of and interest on Series A -2 Notes or (ii) for the payment at maturity of the principal of and interest to maturity on Series A-2 Notes that otherwise mature on or after the date that the Series A-2 Issuing and Paying Agent receives a Final Drawing Notice (as defined in the Bank of America A-2 Letter of Credit) from Bank of America.
Upon Bank of America honoring any Drawing, the Stated Amount and the amount available to be drawn under the Bank of America A-2 Letter of Credit by the Series A-2 Issuing and Paying Agent pursuant to any subsequent Drawing shall be automatically decreased by an amount equal to the amount of such Drawing. In connection therewith, the Stated Amount shall be increased when and to the extent, but only when and to the extent (i) (A) of transfer by the Series A-2 Issuing and Paying Agent to Bank of America on the date such Drawing is honored of proceeds of Series A -2 Notes issued on such date or (B) the Series A-2 Issuing and Paying Agent receives written notice from Bank of America that Bank of America has been reimbursed by or on behalf of the Commission for any amount drawn under the Bank of America
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A-2 Letter of Credit by any Drawing, and (ii) that the Series A-2 Issuing and Paying Agent has not received a No-Issuance Notice (as defined in the Bank of America A-2 Letter of Credit) from Bank of America.
The Bank of America A-2 Letter of Credit shall expire at the close of business of Bank of America, on the date (the earliest of such date to occur referred to as the “Termination Date”) which is the earliest of (i) April 24, 2023 (unless extended pursuant to the terms of the Bank of America A -2 Letter of Credit), (ii) the later of the date on which Bank of America receives written notice from the Series A-2 Issuing and Paying Agent that an Alternate Facility (as defined in the Series A-2 Issuing and Paying Agent Agreement) has been substituted for the Bank of America A-2 Letter of Credit in accordance with the Series A-2 Issuing and Paying Agent Agreement and the effective date of any such Alternate Facility (after Bank of America honors any properly presented and conforming Drawing on such date), (iii) the date on which Bank of America receives written notice from the Series A-2 Issuing and Paying Agent that there are no longer any Series A-2 Notes Outstanding within the meaning of the Series A-2 Issuing and Paying Agent Agreement and that the Series A -2 Issuing and Paying Agent elects to terminate the Bank o f America A-2 Letter of Credit, and (iv) the earlier of (a) the fifteenth (15th) calendar day after the date on which the Series A -2 Issuing and Paying Agent receives the Final Drawing Notice, and (b) the date on which the Drawing resulting from the delivery of the Final Drawing Notice is honored under the Bank of America A -2 Letter of Credit.
Bank of America A-2 Reimbursement Agreement Events of Default If any of the following events occurs, each such event will be an “Event of Default” under the Bank of America A-2 Reimbursement Agreement:
(a) the Commission fails to pay, or cause to be paid, as and when due, (i) any Reimbursement Obligation (as defined in the Bank of America A -2 Reimbursement Agreement), or (ii) any Obligation (as defined in the Bank of A merica A-2 Reimbursement Agreement) (other than a Reimbursement Obligation) under the Bank of America A-2 Reimbursement Agreement or under the Fee Agreement (as defined in the Bank of America A-2 Reimbursement Agreement) and, in such case, such failure continues for five (5) Business Days (as defined in the Bank of America A-2 Reimbursement Agreement);
(b) any representation or warranty made by or on behalf of the Commission in the Bank of America A-2 Reimbursement Agreement or in any other Basic Document ( as defined in the Bank of America A-2 Reimbursement Agreement) or in any certificate or statement delivered thereunder is incorrect or untrue in any material respect when made or deemed to have been made or delivered;
(c) the Commission defaults in the due performance or observance of certain no cure period covenants set forth in the Bank of America A-2 Reimbursement Agreement; (d) the Commission defaults in the due performance or observance of any other term, covenant or agreement contained in the Bank of America A-2 Reimbursement Agreement or any other Basic Document and such default remains unremedied for a period of thirty (30) days after the occurrence thereof;
(e) the Commission or the City and County of San Francisco, directly or indirectly, (i) has entered involuntarily against it an order for relief under the United States Bankruptcy Code, as amended, (ii) becomes insolvent or does not pay, or is unable to pay, or admits in writing its inability to pay, its debts generally as they become due, (iii) makes an assignment for the benefit of creditors, (iv) applies for, seeks, consents to, or acquiesces in, the appointment of a receiver,
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custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property (as defined in the Bank of America A-2 Reimbursement Agreement), (v) institutes any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, marshalling of assets, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fails to file an answer or other pleading denying the ma terial allegations of any such proceeding filed against it, (vi) takes any corporate action in furtherance of any matter described in clauses (i) through (v) above, or (vii) fails to contest in good faith any appointment or proceeding described in paragraph (f) below; (f) a custodian, receiver, trustee, examiner, liquidator or similar official is appointed for the Commission or the City and County of San Francisco or any substantial part of its Property, or a proceeding described in clause (v) of paragraph (e) above is instituted against the Commission or the City and County of San Francisco and such proceeding continues undischarged, undismissed and unstayed for a period of thirty (30) days;
(g) a debt moratorium, debt restructuring, debt adjustment or comparable restriction is imposed on the repayment when due and payable of the principal of or interest on any Debt (as defined in the Bank of America A -2 Reimbursement Agreement) of the Commission by the Commission or any Governmental Authority (as defined in the Bank of America A -2 Reimbursement Agreement) with appropriate jurisdiction; (h) any material provision of the Bank of America A -2 Reimbursement Agreement, the Charter or any other Basic Document at any time for any reason ceases to be valid and binding on the Commission as a result of any legislative or administrative action by a Governmental Authority with competent jurisdiction or shall be declared in a final non appealable judgment by any court with competent jurisdiction to be null and void, invalid, or unenforceable, or the validity or enforceability thereof is publicly contested by the Commission, or the Commission publicly contests the validity or enforceability of any obligation to pay Wastewater Enterprise Debt, including, without limitation, the Wastewater Bonds Indenture, or any Authorized Representative publicly repudiates or otherwise denies in writing that it has any further liability or obligation under or with respect to any provision of the Bank of America A -2 Reimbursement Agreement, th e Charter, any other Basic Document or any operative document related to Wastewater Enterprise Debt (as defined in the Bank of America A -2 Reimbursement Agreement), including, without limitation, the Wastewater Bonds Indenture (as defined in the Bank of Am erica A -2 Reimbursement Agreement);
(i) dissolution or termination of the existence of the Commission; (j) the Commission (i) defaults on the payment of the principal of or interest on any Wastewater Enterprise Debt, beyond the period of grace, if any, provided in the instrument or agreement under which such Wastewater Enterprise Debt was created or incurred; or (ii) defaults in the observance or performance of any agreement or condition relating to any Wastewater Enterprise Debt, including, without limitation, any Bank Agreement, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event occurs or condition exists, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Wastewater Enterprise Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Wastewater Enterprise Debt;
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(k) the Commission (i) defaults on the payment of the principal of or interest on any Debt (other than Wastewater Enterprise Debt) aggregating in excess of $10,000,000 beyond the period of grace, if any, provided in the instrument or agreement under which such Debt (other than Wastewater Enterprise Debt) was created or incurred; or (ii) defaults in the observance or performance of any agreement or condition relating to any Debt (other than Wastewater Enterprise Debt) aggregating in excess of $10,000,000, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event occurs or condition exists, the effect of which default, event of default or similar eve nt or condition is to permit (determined without regard to whether any notice is required) any such Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Debt (other than Wastewater Enterprise Debt); (l) any final, nonappealable judgment or judgments, writ or writs or warrant or warrants of attachment, or any similar process or processes, in an aggregate amount not less than $10,000,000 are entered or filed against the Commission or against any of its Property and remain unpaid, unvacated, unbonded and unstayed for a period of sixty (60) days; (m) (i) the Commission shall default in the due performance or observance of any material term, covenant or agreement contained in any ot her Basic Document and the same shall not have been cured within any applicable cure period or (ii) any “event of default” under any other Basic Document (as defined respectively therein) has occurred; (n) a ruling, assessment, notice of deficiency or tech nical advice by the Internal Revenue Service is rendered to the effect that interest on the Series A-2 Notes is includable in the gross income of the holder(s) or owner(s) of such Series A-2 Notes and either (i) the Commission, after it has been notified b y the Internal Revenue Service, does not challenge such ruling, assessment, notice or advice in a court of law during the period within which such challenge is permitted or (ii) the Commission challenges such ruling, assessment, notice or advice and a cour t of law makes a determination, not subject to appeal or review by another court of law, that such ruling, assessment, notice or advice is correctly rendered; (o) any of Fitch, Moody’s and S&P (i) downgrades its long term rating of any Senior Debt (as defined in the Bank of America A -2 Reimbursement Agreement) of the Commission to below “ BBB+” (or its equivalent), “ Baa1” (or its equivalent), or “ BBB+” (or its equivalent) respectively, or (ii) suspends or withdraws its rating of the same; or (p) the passage of any Law (as defined in the Bank of America A -2 Reimbursement Agreement) has occurred which could reasonably be expected to have a material adverse effect on the Commission’s ability to perform its obligations under the Bank of America A-2 Reimbursement Agreement or the other Basic Documents or to result in a material adverse effect on the enforceability or validity of the Bank of America A -2 Reimbursement Agreement or any of the other Basic Documents.
Bank of America A-2 Reimbursement Agreement Remedies
Upon the occurrence of any Event of Default under the Bank of America A -2 Reimbursement Agreement, Bank of America may exercise any one or more of the following rights and remedies in addition to any other remedies provided in the Bank of America A-2 Reimbursement Agreement or by law provided:
(a) declare all Obligations to be immediately due and payable, whereupon the same are immediately due and payable without any further notice of any kind, which notice is waived by
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the Commission; provided, however, that in the case of an Event of Default described in paragraph (e), (f) or (g) above under the subcaption “BANK OF AMERICA A-2 LETTER OF CREDIT AND BANK OF AMERICA A- 2 REIMBURSEMENT AGREEMENT—Bank of America A -2 Reimbursement Agreement Events of Default,” such acceleration will automatically occur (unless such automatic acceleration is waived by Bank of America in writing); or (b) issue a No Issuance Notice (the effect of which will be as provided in the Bank of America A-2 Reimbursement Agreement), reduce the Stated Amount of the Bank of America A-2 Letter of Credit to the amount of the then outstanding Series A -2 Notes supported by the Bank of America A-2 Letter of Credit plus a corresponding amount of interest coverage, reduce the Stated Amount of the Bank of America A-2 Letter of Credit as the then outstanding Series A-2 Notes are paid and terminate the Bank of America A -2 Letter of Credit when no Series A -2 Notes remain outstanding; or
(c) issue the Final Drawing Notice (the effect of which will be to cause the Termination Date of the Bank of America A -2 Letter of Credit to occur on the fifteenth (15) calendar day after the date of receipt thereof by the Series A-2 Issuing and Paying Agent); or (d) pursue any rights and remedies it may have under the Basic Documents; or (e) pursue any other action available at law or in equity. [Remainder of page left blank intentionally.]
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BANK FACILITY FOR THE SERIES A-4 COMMERCIAL PAPER NOTES
TORONTO-DOMINION A-4 LIQUIDITY FACILITY
The Commission has entered into a dedicated liquidity facility (the “Toronto -Dominion A -4 Liquidity Facility”) with The Toronto- Dominion Bank, New York Branch (“Toronto- Dominion”) to provide back-up liquidity to pay principal of maturing Series A-4 Notes. The Series A-4 Notes are issued pursuant to the terms of the Issuing and Paying Agent Agreement, dated as of July 1, 2012 (the “Series A- 4 Issuing and Paying Agent Agreement”), by and between U.S. Bank National Association, as issuing and paying agent (the “Series A-4 Issuing and Paying Agent”), and the Commission.
The following description is a summary of certain provisions of the Toronto- Dominion A -4 Liquidity Facility. Such summary does not purport to be a complete description or restatement of the material provisions of the Toronto-Dominion A-4 Liquidity Facility. Investors should obtain and review a copy of the Toronto- Dominion A -4 Liquidity Facility in order to understand all of the terms of such document. All capitalized terms appearing under this heading “TORONTO-DOMINION A-4 LIQUIDITY FACILITY” shall have the meanings assigned to them in the Toronto-Dominion A-4 Liquidity Facility.
The Commission has entered into the Toronto- Dominion A-4 Liquidity Facility with Toronto- Dominion. The Toronto-Dominion A-4 Liquidity Facility can be drawn upon by the Commission, subject to compliance with certain conditions as specified in the Toronto- Dominion A-4 Liquidity Facility, in an amount up to the Commitment of $75,000,000 solely to fund the payment by the Commission of the principal of any maturing Series A -4 Notes at the stated maturity thereof. The Toronto -Dominion A-4 Liquidity Facility may not be drawn on for any other purpose.
All interest payments on outstanding Series A -4 Notes will be paid from Available Wastewater Enterprise Revenues of the Commission. The stated Commitment Expiration Date of the Toronto- Dominion A-4 Liquidity Facility is July 8, 2022, unless sooner terminated or later extended pursuant to its terms. In the event the Commission issues Subordinated Wastewater Bonds, and after Toronto-Dominion has provided notice to the Commission and the Issuing and Paying Agent, the commitment under the Toronto-Dominion A-4 Liquidity Facility will be reduced to the principal amount of the Series A-4 Notes then outstanding. Upon the maturity date of such Series A -4 Notes, the commitment will be permanently reduced further and upon the final maturity of such Series A-4 Notes, the commitment under the Toronto- Dominion A-4 Liquidity Facility will be terminated. Following receipt of su ch notice, the Commission will not issue any additional Series A -4 Notes while the Toronto- Dominion A-4 Liquidity Facility is in effect.
Immediate Termination Events
The following constitute Immediate Termination Events under the Toronto- Dominion A -4 Liquidity Facility:
Payments. The Commission (A) fails to pay any amount of interest on any Series A-4 Note when the same becomes due and payable in accordance with its terms, or (B) fails to pay principal of, or interest on, the Revolving Note, the Term Note, any Advance or any Term Loan when the same becomes due and payable in accordance with its terms;
Invalidity. (A) Any provision of the Charter, the Toronto- Dominion A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A -4 Notes, the Term Note, the Revolving Note, any Advance or any
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Term Loan or (y) the lien on or pledge of the Pledged Revenues, at any time, and for any reason, ceases to be valid and binding on the Commission, or is declared to be null and void, invalid or unenforceable as the result of a final nonappealable judgment by any federal or state court or as a result of any legislative or administrative action by any Governmental Authority having jurisdiction over the Commission; or (B) an Authorized Representative of the Commission (i) publicly contests or contests in writing any provision of the Charter, the Toronto-Dominion A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A-4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues or (ii) repudiates or otherwise denies in writing that it has any further liability or obligation under or with respect to any provision of the Charter, the Toronto- Dominion A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A-4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues; or (C) the State or the Commission has taken or permitted to be taken any official action, or has duly enacted any statute, which would adversely affect the enforceability of any provision of the Charter, the Toronto-Dominion A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A -4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues; or (D) any Governmental Authority with jurisdiction to rule on the validity or enforceability of the Charter, the Toronto- Dominion A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement or the Resolutions finds or rules, in a judicial or administrative proceeding, that any provision of the Charter, the Toronto- Dominion A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement or the Resolutions, as the case may be, relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A -4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues, is not valid or not binding on, or enforceable against, the Commission;
Insolvency, Etc. The Commission or the City and County of San Francisco, directly or indirectly, becomes insolvent or admits in writing its inability to pay its debts as they mature or declares a moratorium on the payment of its debts or apply for, consent to or acquiesce in the appointment of a trustee, custodian, liquidator or receiver for itself or any substantial part of its property, or takes any action to authorize or effect any of the foregoing; or in the absence of any such application, consent or acquiescence, a trustee, custodian, liquidator or receiver is appointed for it or for a substantial part of its property or revenues and is not discharged within a period of sixty (60) days; or the State or any other governmental authority having jurisdiction over the Commission or the City and County of San Francisco imposes a debt moratorium or comparable extraordinary restriction on repayment when due and payable of the principal of or interest on all Debt of the Commission and all of the Series A -4 Notes; or all, or any substantial part, of the property of the Commission or the City and County of San Francisco is condemned, seized, or otherwise appropriated, or any bankruptcy, reorganization, debt arrangement or other proceeding under any bankruptcy or insolvency law or any dissolution or liquidation proceeding is instituted by or against the Commission or the City and County of San Francisco (or any action is taken to authorize or effect the institution by it of any of the foregoing) and if instituted against it, shall be consented to or acquiesced in by it, or shall not be dismissed within a period of sixty (60) days; Cross-Default to Senior Debt or Parity Debt. The Commission fails to pay, when due and payable, any principal of or interest on any Senior Debt or any Parity Debt (including, without limitation, any
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principal or sinking fund installments thereon but excluding Commercial Paper Notes and Other Commercial Paper Notes;
Cross-Default to Commercial Paper Notes. The Commission fails to pay, when due and payable, any interest on any Commercial Paper Notes or Other Commercial Paper Notes (other than as specified in clause (A) of “TORONTO-DOMINION A-4 LIQUIDITY FACILITY—Immediate Termination Events”); Unsatisfied Judgments. A final, nonappealable, judgment or order for the payment of money in excess of $15,000,000 is rendered against the Commission and payable from Pledged Revenues and such judgment or order continues unsatisfied and unstayed for a period of sixty (60) days; or Ratings. The long-term credit ratings assigned by Moody’s and Standard & Poor’s to unenhanced Parity Debt, unenhanced Subordinated Wastewater Bonds or unenhanced Senior Debt is (A) reduced below “Baa3” (or its equivalent) and “BBB -” (or its equivalent) or (B) withdrawn or suspended for any credit related reasons; provided, that nothing in the Toronto- Dominion A -4 Liquidity Facility requires the Commission to maintain a long-term rating on Parity Debt, so long as the only Parity Debt outstanding is the Commercial Paper Notes and related credit and liquidity facilities.
Other Events of Default
The following, together with the Immediate Termination Events and the Suspension Events, constitute Events of Default under the Toronto-Dominion A-4 Liquidity Facility:
Representations Untrue. Any representation, warranty, certification or statement made by the Commission in the Toronto -Dominion A -4 Liquidity Facility or in any Basic Document or in any certificate, financial statement or other document delivered pursuant to the Toronto- Dominion A -4 Liquidity Facility or any Basic Document was (in any such case) incorrect or untrue in any material respect when made or deemed to have been made.
Certain Covenant Defaults. The Commission defaults in the due performance or observance of any term, covenan t or agreement contained in certain clauses of the Toronto -Dominion A -4 Liquidity Facility.
Other Covenant Defaults. The Commission defaults in the due performance or observance of any term, covenant or agreement contained in the Toronto -Dominion A-4 Liquidity Facility (other than those covered as set forth under “TORONTO -DOMINION A- 4 LIQUIDITY FACILITY—Immediate Termination Events—Payments” or “Other Events of Default —Certain Covenant Defaults” above) and such default, if capable of being remedied, remains unremedied for thirty (30) days after the earlier to occur of (i) written notice thereof has given to the Commission by Toronto- Dominion or (ii) an Authorized Representative of the Commission has actual knowledge thereof.
Other Invalidity. (i) Any material provision of the Charter, the Toronto- Dominion A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “ TORONTO- DOMINION A-4 LIQUIDITY FACILITY—Immediate Termination Events —Invalidity”), is declared to be null and void, invalid or unenforceable as the result of a final nonappealable judgment by any federal or state court or as a result of any legislative or administrative action by any Governmental Authority having jurisdiction over the Commission; or (ii) an Authorized Representative of the Commission (A) contests any material provision of the Charter, the Toronto- Dominion A-4 Liquidity Facility, the Revolvi ng Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “TORONTO -DOMINION A -4 LIQUIDITY
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FACILITY—Immediate Termination Events—Invalidity”) or (B) repudiates or otherwise denies in writing that it has any further liability or obligation under or with respect to any material provision of the Charter, the Toronto-Dominion A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A- 4 Note, the Series A -4 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “TORONTO-DOMINION A-4 LIQUIDITY FACILITY—Immediate Termination Events—Invalidity”); or (iii) the State or the Commission has taken or permitted to be taken any official action, or has duly enacted any statute, which would adversely affect the enforceability of any material provision of relating to the Charter, the Toronto-Dominion A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “TORONTO -DOMINION A -4 LIQUIDITY FACILITY—Immediate Termination Events —Invalidity”); (iv) any Governmental Authority with jurisdiction to rule on the validity or enforceability of the Charter, the Toronto- Dominion A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter finds or rules, in a judicial or administrative proceeding, that any material provision of the Charter, the Toronto- Dominion A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “TORONTO -DOMINION A -4 LIQUIDITY FACILITY—Immediate Termination Events —Invalidity” is not valid or not binding on, or enforceable against, the Commission or (v) a debt moratorium or comparable extraordinary restriction on repayment of debt has been declared or imposed (whether or not in writing) with respect to the Fee Letter, the Series A- 4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan.
Other Cross-Defaults. The Commission fails to pay when due and payable (i) any principal of or interest on any Debt (other than Senior Debt or Parity Debt) in excess of $10,000,000 of the Commission and such failure continues beyond any applicable period of grace specified in any underlying indenture, contract or instrument providing for the creation thereof or (ii) any principal on any Commercial Paper Notes or Other Commercial Paper Notes (other than the Series A-4 Notes).
Basic Document Default. (i) The Commission defaults in the due performance or observance of any material term, covenant or agreement contained in any other Basic Document and the same is not cured within any applicable cure period or (ii) any “event of default” under any other Basic Document (as defined respectively therein) has occurred.
Other Payments. The Commission fails to pay (i) any amount required pursuant to the Fee Letter when said amount is due and payable or (ii) any amount payable under the Toronto-Dominion A-4 Liquidity Facility within five (5) Business Days after the same is due and after written demand by Toronto-Dominion in respect thereof, other than payments described in “TORONTO -DOMINION A- 4 LIQUIDITY FACILITY—Immediate Termination Events—Payments” and clause (i) of this paragraph.
Taxability. A ruling, assessment, notice of deficiency or technical advice by the Internal Revenue Service is rendered to the effect that interest on the Series A -4 Notes is includable in the gross income of the holder(s) or owner(s) of such Series A-4 Notes and either (i) the Commission, after it has been notified by the Internal Revenue Service, does not challenge such ruling, assessment, notice or advice in a court of law during the period within which such challenge is permitted or (ii) the Commission challenges such ruling, assessment, notice or advice and a court of law shall make a determination, not subject to appeal or review by another court of law, that such ruling, assessment, notice or advice is correctly rendered.
Other Insolvency. (i) There is commenced against the Commission any case, proceeding or other action of a nature referred to in “TORONTO -DOMINION A- 4 LIQUIDITY FACILITY —Immediate Termination Events —Insolvency, Etc.” above which (A) results in an order for such relief or in the appointment of a receiver or similar official or (B) remains undismissed, undischarged or unbonded for a
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period of sixty (60) days; or (ii) there is commenced against the Commission, any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets or for all or any portion of the Pledged Revenues, which results in the entry of an order for any such relief which shall not have been vacated, discharg ed, or stayed or bonded pending appeal within sixty (60) days from the entry thereof.
Ratings. The long-term credit ratings assigned by Moody’s or Standard & Poor’s to unenhanced Parity Debt or unenhanced Senior Debt shall be (i) reduced below “A3” (or it s equivalent) or “A-” (or its equivalent)” or (ii) withdrawn or suspended for any credit related reasons; provided, that nothing in the Toronto-Dominion A-4 Liquidity Facility shall require the Commission to maintain a long -term rating on Parity Debt, so long as the only Parity Debt outstanding is the Commercial Paper Notes and related credit and liquidity facilities.
Cross Acceleration . The Commission (i) defaults in the observance or performance of any agreement or condition relating to any Wastewater Enterprise Debt or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event occurs or condition exists, the effect of which default, event of default or similar event or condit ion is to permit (determined without regard to whether any notice is required) any such Wastewater Enterprise Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Wastewater Enterprise Debt; or (ii) defaults in the observance or performance of any agreement or condition relating to any Debt (other than Wastewater Enterprise Debt) aggregating in excess of $10,000,000, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event occurs or condition exists, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Debt (other than Wastewater Enterprise Debt).
Remedies
(a) Immediate Termination Events . In the case any E vent of Default which is an Immediate Termination Event has occurred, (i) the Commitment will immediately and automatically terminate, without notice from Toronto-Dominion, and (ii) all amounts due under the Toronto-Dominion A-4 Liquidity Facility, the Fee Letter and under the Revolving Note and the Term Note will immediately become due and payable; provided, that the Event of Default described in clause (B) of “TORONTO-DOMINION A-4 LIQUIDITY FACILITY—Immediate Termination Events—Payments.” will not qualify as an “Immediate Termination Event” under the Toronto - Dominion A-4 Liquidity Facility if the failure to pay the principal of, or interest on, the Revolving Note, the Term Note, any Advance or any Term Loan is due solely to an acceleration thereof by Toronto-Dominion for any reason other than the failure to pay the principal of, or interest on, the Revolving Note, the Term Note, any Advance or any Term Loan; provided, further, that the Event of Default described in TORONTO -DOMINION A- 4 LIQUIDITY FACILITY —Immediate Termination Events —Cross-Default to Senior Debt or Parity Debt.” will not qualify as an “Immediate Termination Event” under the Toronto-Dominion A-4 Liquidity Facility if the failure to pay the principal of, or interest on, such Senior Debt or Pa rity Debt is due solely to an acceleration thereof by a provider of credit enhancement or liquidity support with respect thereto for any reason other than the failure to pay the principal of, or interest on, such Senior Debt or Parity Debt.
(b) Suspension Events. In the case of a Default described in “TORONTO - DOMINION A- 4 LIQUIDITY FACILITY —Other Events of Default —Other Insolvency.” (a “Suspension Event”), the Commitment will be immediately suspended without notice or demand
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and, thereafter, Toronto-Dominion will be under no obligation to make Advances or Term Loans under the Toronto-Dominion A-4 Liquidity Facility until the Available Commitment is reinstated as described in the Toronto- Dominion A-4 Liquidity Facility. Promptly upon the occurrence of any such Suspension Event, Toronto-Dominion will notify the Commission, the Series A-4 Issuing and Paying Agent and the Dealer of such suspension and the effective date of such suspension in writing by facsimile, promptly confirmed by regular mail; provided, that Toronto-Dominion will incur no liability of any kind by reason of its failure to give such notice and such failure will in no way affect the suspension of the Available Commitment or its obligation to make Advances or Term Loans pursuant to the Toront o-Dominion A -4 Liquidity Facility. The Commission will promptly direct the Series A -4 Issuing and Paying Agent to notify all Holders of a suspension of the obligation of Toronto -Dominion to make Advances and Term Loans as a result of the occurrence of such Suspension Event. Upon the occurrence of a Suspension Event, the Commitment will immediately and automatically suspended and remain suspended until the case, proceeding or other action referred to therein is either dismissed, discharged or bonded within sixty (60) days from the commencement of such case, proceeding or action, or the date on which Toronto-Dominion’s obligations under the Toronto -Dominion A -4 Liquidity Facility have terminated or expired in accordance with the terms hereof (the “Termination Date”) occurs, whichever is first. In the event that said Suspension Event has been dismissed, discharged or bonded within the sixty (60) day period described therein and prior to the Termination Date, then the Available Commitment and the obligation of Toronto-Dominion to make Advances and Term Loans will be reinstated and the terms of the Toronto- Dominion A -4 Liquidity Facility will continue in full force and effect as if there had been no such suspension (unless the Commitment Period will otherwise ha ve been terminated, suspended or expired as provided in the Toronto- Dominion A -4 Liquidity Facility). In the event that said Suspension Event is not dismissed, discharged or bonded within said sixty (60) day period when the Termination Date occurs, then the Available Commitment and the obligation of Toronto- Dominion to make Advances and Term Loans will terminate on the Termination Date without notice or demand and, thereafter, Toronto- Dominion will be under no obligation to make such Advances and Term Loans under the Toronto- Dominion A-4 Liquidity Facility.
(c) All Events of Default. In the case of any Event of Default, including any Immediate Termination Event or a Suspension Event that has occurred and is continuing, Toronto- Dominion (i) may by written notice to the Commission declare all amounts due under the Toronto-Dominion A-4 Liquidity Facility, under the Fee Letter or under the Revolving Note or the Term Note to be immediately due and payable, whereupon the same will immediately become due and payable, (ii) may by written notice to the Commission and the Series A -4 Issuing and Paying Agent (a “No- Issuance Notice”) in substantially the form of Exhibit H to the Toronto- Dominion A-4 Liquidity Facility declare the Commitment to be reduced to the principa l amount of Series A -4 Notes then outstanding and to be permanently reduced further on the maturity date of each such Series A -4 Notes by an amount equal to the principal amount of such Series A-4 Notes with the Commitment to be terminated upon the last maturity date applicable to all such Series A -4 Notes, (iii) may petition a court of competent jurisdiction to issue a mandamus order to the Commission to compel specific performance of the covenants of the Commission contained in the Resolutions or herein and (iv) may pursue any other rights or remedies under the Toronto- Dominion A -4 Liquidity Facility, the Fee Letter, the Resolutions, any other Basic Document, applicable law or otherwise.
Except as expressly provided in the Toronto- Dominion A -4 Liquidity Facility, procurement, demand, protest and all other notices of every kind are expressly waived in the Toronto-Dominion A-4 Liquidity Facility. Following receipt of a No-Issuance Notice, the Commission shall not issue any additional Series A-4 Notes.
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(d) Timing of No -Issuance Notice . A No -Issuance Notice that is received by the Commission at or before 3:00 p.m. (New York City time) will be effective when received. A No- Issuance Notice that is received by Commission after 3:00 p.m. (New York City time) will not be effective until the opening of business on the next succeeding Business Day. (e) Copies of Notices. Concurrently with the occurrence of an Immediate Termination Event pursuant to the Toronto-Dominion A-4 Liquidity Facility or a No-Issuance Notice pursuant to the Toronto-Dominion A-4 Liquidity Facility, the Commission will give notice to the Series A- 4 Issuing and Paying Agent and the Dealers.
In addition, concurrently with giving such notice to the Commission and the Series A-4 Issuing and Paying Agent, Toronto-Dominion will provide a copy thereof to the Dealers at their respective addresses referred to in the Toronto -Dominion A-4 Liquidity Facility; provided, however, that Toronto- Dominion will not incur any liability as a result of its failure to provide a copy of such a notice in accordance with this sentence.
Related Covenants
Under the related Series A-4 Issuing and Paying Agent Agreement, the Commission covenants to maintain in effect the Toronto- Dominion A -4 Liquidity Facility or an Alternate Facility meeting the requirements of such Series A -4 Issuing and Paying Agent Agreement at all times that Series A -4 Notes are Outstanding thereunder. The Commission further covenants that if it is unable to obtain a commitment for an Alternate Facility at least 90 days prior to the Commitment Expiration Date, it shall use its best efforts, to the extent permitted by law, to endeavor to refinance such outstanding Series A-4 Notes or Bank Notes, as the case may be.
The Commission shall deliver written no tice of a proposed Alternate Facility to the Series A -4 Issuing and Paying Agent, Toronto-Dominion, the City and each Dealer not less than 45 days prior to the substitution date. The Series A-4 Issuing and Paying Agent shall deliver written notice of such substitution to the registered Holders of Series A-4 Notes at least 30 days prior to the substitution date. [Remainder of page left blank intentionally.]
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BANK FACILITY FOR THE SERIES A-6 COMMERCIAL PAPER NOTES
STATE STREET A-6 LIQUIDITY FACILITY
The Commission has entered into a dedicated liquidity facility (the “State Street A -6 Liquidity Facility”) with State Street Bank and Trust Company (“State Street”) to provide back -up liquidity to pay principal of maturing Subseries A-6 Notes and maturing Subseries A-6-T Notes. The Series A-6 Notes are issued pursuant to the terms of the Issuing and Paying Agent Agreement, dated as of October 1, 2014, and as amended and supplemented by the First Supplement to Issuing and Paying Agent Agreement, da ted as of October 15, 2019 * (together, the “Series A-6 Issuing and Paying Agent Agreement”), by and between U.S. Bank National Association, as issuing and paying agent (the “Series A-6 Issuing and Paying Agent”), and the Commission.
The following descript ion is a summary of certain provisions of the State Street A -6 Liquidity Facility. Such summary does not purport to be a complete description or restatement of the material provisions of the State Street A-6 Liquidity Facility. Investors should obtain and review a copy of the State Street A-6 Liquidity Facility in order to understand all of the terms of such document. All capitalized terms appearing under this heading “STATE STREET A -6 LIQUIDITY FACILITY” shall have the meanings assigned to them in the State Street A-6 Liquidity Facility.
The Commission has entered into the State Street A -6 Liquidity Facility with State Street. The State Street A -6 Liquidity Facility can be drawn upon by the Commission, subject to compliance with certain conditions as specified in the State Street A-6 Liquidity Facility, in an amount up to the Commitment of $200,000,000* solely to fund the payment by the Commission of the principal of any maturing Series A- 6 Notes at the stated maturity thereof. The State Street A-6 Liquidity Facility may not be drawn on for any other purpose.
All interest payments on outstanding Series A -6 Notes will be paid from Available Wastewater Enterprise Revenues of the Commission. The stated Commitment Expiration Date of the State Street A-6 Liquidity Facility is October 13, 2023*, unless sooner terminated or later extended pursuant to its terms. In the event the Commission issues Subordinated Wastewater Bonds, and after State Street has provided notice to the Commission and the Issuing and Paying Agent, the commitment under the State Street A-6 Liquidity Facility will be reduced to the principal amount of the Series A-6 Notes then outstanding. Upon the maturity date of such Series A -6 Notes, the commitment will be permanently reduced further and upon the final maturity of such Series A-6 Notes, the commitment under the State Street A-6 Liquidity Facility will be terminated. Following receipt of such notice, the Commission will not issue any additional Series A-6 Notes while the State Street A-6 Liquidity Facility is in effect.
Immediate Termination Events
The following constitute Immediate Termination Events under the State Street A -6 Liquidity Facility:
Payments. The Commission (A) fails to pay any amount of interest on any Series A-6 Note when the same becomes due and payable in accordance with its terms, or (B) fails to pay principal of, or interest on, the Revolving Note, the Term Note, any Advance or any Term Loan when the same becom es due and payable in accordance with its terms;
* In connection with the Series A-6 Notes, the Commission approved an increase in the co mmitment amount, from $100,000,000 to $200,000,000, and an extension of the term of such commitment, under the State Street A -6 Liquidity Facility. Such increase and extension became effective on October 15, 2019.
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Invalidity. (A) Any provision of the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A -6 Note, the Series A -6 Issuing and Paying Agent Agreement or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A-6 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues, at any time, and for any reason, ceases to be valid and binding on the Commission, or is declared to be null and void, invalid or unenforceable as the result of a final nonappealable judgment by any federal or state court or as a result of any legislative or administrative action by any Governmental Authority having jurisdiction over the Commission; or (B) an Authorized Representative of the Commission (i) publicly contests or contests in writing any provision of the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A-6 Note, the Series A-6 Issuing and Paying Agent Agreement or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A-6 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues or (ii) publicly repudiates or otherwise denies in writing that it has any further liability or obligation under or with respect to any provision of the Charter, the State Street A -6 Liquidity Facility, the Revolving Note, the Term Note, any Series A-6 Note, the Series A-6 Issuing and Paying Agent Agreement or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A -6 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues; or (C) the State or the Commission has taken or permitted to be taken any official action, or has duly enacted any statute, which would adversely affect the enforceability of any provision of the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A -6 Note, the Series A -6 Issuing and Paying Agent Agreement or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A-6 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues; or (D) any Governmental Authority with jurisdiction to rule on the validity or enforceability of the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A-6 Note, the Series A-6 Issuing and Paying Agent Agreement or the Resolutions finds or rules, in a judicial or administrative proceeding, that any provision of the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A-6 Note, the Series A-6 Issuing and Paying Agent Agreement or the Resolutions, as the case may be, relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A -6 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues, is not valid or not binding on, or enforceable against, the Commission; Insolvency, Etc. The Commission or the City and County of San Francisco, directly or indirectly, becomes insolvent or admits in writing its inability to pay its debts as they mature or declares a moratorium on the payment of its debts or apply for, consent to or acquiesce in the appointment of a trustee, custodian, liquidator or r eceiver for itself or any substantial part of its property, or takes any action to authorize or effect any of the foregoing; or in the absence of any such application, consent or acquiescence, a trustee, custodian, liquidator or receiver is appointed for it or for a substantial part of its property or revenues and is not discharged within a period of sixty (60) days; or the State or any other governmental authority having jurisdiction over the Commission or the City and County of San Francisco imposes a deb t moratorium or comparable extraordinary restriction on repayment when due and payable of the principal of or interest on all Debt of the Commission and all of the Series A -6 Notes; or all, or any substantial part, of the property of the Commission or the City and County of San Francisco is condemned, seized, or otherwise appropriated, or any bankruptcy, reorganization, debt arrangement or other proceeding under any bankruptcy or insolvency law or any dissolution or liquidation proceeding is instituted by or against the Commission or the City and County of San Francisco (or any action is taken to authorize or effect the institution by it of any of the foregoing) and if instituted against it, shall be consented to or acquiesced in by it, or shall not be dismissed within a period of sixty (60) days;
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Cross-Default to Senior Debt or Parity Debt. The Commission fails to pay, when due and payable, any principal of or interest on any Senior Debt or any Parity Debt (including, without limitation, any principal or si nking fund installments thereon but excluding Commercial Paper Notes and Other Commercial Paper Notes;
Cross-Default to Commercial Paper Notes. The Commission fails to pay, when due and payable, any interest on any Commercial Paper Notes or Other Commercial Paper Notes (other than as specified in clause (A) of “STATE STREET A-6 LIQUIDITY FACILITY—Immediate Termination Events”); Unsatisfied Judgments. A final, nonappealable, judgment or order for the payment of money in excess of $10,000,000 is rendered against the Commission and payable from Pledged Revenues and such judgment or order continues unsatisfied and unstayed for a period of sixty (60) days; or Ratings. The long-term credit ratings assigned by Moody’s and Standard & Poor’s to unenhanced Parity Debt, unenhanced Subordinated Wastewater Bonds or unenhanced Senior Debt is (A) reduced below “Baa3” (or its equivalent) and “BBB -” (or its equivalent) or (B) withdrawn or suspended for any credit related reasons; provided, that nothing in the State Street A- 6 Liquidity Facility requires the Commission to maintain a long-term rating on Parity Debt, so long as the only Parity Debt outstanding is the Commercial Paper Notes and related credit and liquidity facilities.
Other Events of Default
The following, together with the Immediate Termination Events and the Suspension Events, constitute Events of Default under the State Street A-6 Liquidity Facility:
Representations Untrue. Any representation, warranty, certification or statement made by the Commission in the State Street A -6 Liquidity Facility or in any Basic Document or in any certificate, financial statement or other document delivered pursuant to the State Street A -6 Liquidity Facility or any Basic Document was (in any such case) incorrect or untrue in any material respect when made or deemed to have been made.
Certain Covenant Defaults. The Commission defaults in the due performance or observance of any term, covenant or agreement contained in certain clauses of the State Street A-6 Liquidity Facility.
Other Covenant Defaults. The Commission defaults in the due performance or observance of any term, covenant or agreement contained in the State Street A-6 Liquidity Facility (other than those covered as set forth under “STATE STREET A -6 LIQU IDITY FACILITY—Immediate Termination Events — Payments” or “Other Events of Default —Certain Covenant Defaults” above) and such default, if capable of being remedied, remains unremedied for thirty (30) days after the earlier to occur of (i) written notice thereof has given to the Commission by State Street or (ii) an Authorized Representative of the Commission has actual knowledge thereof.
Other Invalidity. (i) Any material provision of the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A -6 Note, the Series A -6 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “STATE STREET A-6 LIQUIDITY FACILITY—Immediate Termination Events —Invalidity”), is declared to be null and void, invalid or unenforceable as the result of a final nonappealable judgment by any federal or state court or as a result of any legislative or administrative action by any Governmental Authority having jurisdiction over the Commission; or (i i) an Authorized Representative of the Commission (A) contests any material provision of the Charter, the State Street A -6 Liquidity Facility, the Revolving Note, the Term Note, any Series A-6 Note, the Series A -6 Issuing and Paying Agent Agreement, the Re solutions or the Fee Letter
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(other than a provision referred to in “STATE STREET A -6 LIQUIDITY FACILITY —Immediate Termination Events—Invalidity”) or (B) repudiates or otherwise denies in writing that it has any further liability or obligation under or with respect to any material provision of the Charter, the State Street A -6 Liquidity Facility, the Revolving Note, the Term Note, any Series A -6 Note, the Series A -6 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “STATE STREET A-6 LIQUIDITY FACILITY—Immediate Termination Events—Invalidity”); or (iii) the State or the Commission has taken or permitted to be taken any official action, or has duly enacted any statute, which would adversely affect the e nforceability of any material provision of relating to the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A-6 Note, the Series A-6 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “STATE STREET A -6 LIQUIDITY FACILITY —Immediate Termin ation Events —Invalidity”); (iv) any Governmental Authority with jurisdiction to rule on the validity or enforceability of the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A-6 Note, the Series A-6 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter finds or rules, in a judicial or administrative proceeding, that any material provision of the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A -6 Note, the Series A -6 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “STATE STREET A-6 LIQUIDITY FACILITY—Immediate Termination Events—Invalidity” is not valid or not binding on, or enforceable against, the Commission or (v) a debt moratorium or comparable extraordinary restriction on repayment of debt has been declared or imposed (whether or not in writing) with respect to the Fee Letter, the Series A-6 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan.
Other Cross-Defaults. The Commission fails to pay when due and payable (i) any principal of or interest on any Debt (other than Senior Debt or Parity Debt) in excess of $10,000,000 of the Commission and such failure continues beyond any applicable period of grace specified in any underlying indenture, contract or instrument providing for the creation thereof or (ii) any principal on any Commer cial Paper Notes or Other Commercial Paper Notes (other than the Subseries A-6 Notes or Subseries A-6-T Notes).
Basic Document Default. (i) The Commission defaults in the due performance or observance of any material term, covenant or agreement contained in any other Basic Document and the same is not cured within any applicable cure period or (ii) any “event of default” under any other Basic Document (as defined respectively therein) has occurred.
Other Payments. The Commission fails to pay (i) any amount required pursuant to the Fee Letter when said amount is due and payable or (ii) any amount payable under the State Street A -6 Liquidity Facility within five (5) Business Days after the same is due and after written demand by State Street in respect thereof, other than payments described in “STATE STREET A -6 LIQUIDITY FACILITY — Immediate Termination Events—Payments” and clause (i) of this paragraph.
Taxability. A ruling, assessment, notice of deficiency or technical advice by the Internal Revenue Service is rendered to the effect that interest on the Series A -6 Notes is includable in the gross income of the holder(s) or owner(s) of such Series A-6 Notes and either (i) the Commission, after it has been notified by the Internal Revenue Service, does not challenge such ruling, assessment, notice or advice in a court of law during the period within which such challenge is permitted or (ii) the Commission challenges such ruling, assessment, notice or advice and a court of law shall make a determination, not subject to appeal or review by another court of law, that such ruling, assessment, notice or advice is correctly rendered.
Other Insolvency. (i) There is commenced against the Commission any case, proceeding or other action of a nature referred to in “STATE STREET A-6 LIQUIDITY FACILITY—Immediate Termination Events—Insolvency, Etc.” above which (A) results in an order for such relief or in the appointment of a receiver or similar official or (B) remains undismissed, undischarged or unbonded for a period of sixty (60)
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days; or (ii) there is commenced against the Commission, any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets or for all or any portion of the Pledged Revenues, which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof.
Ratings. The long-term credit ratings assigned by Moody’s or Standard & Poor’s to unenhanced Parity Debt or unenhanced Senior Debt shall be (i) reduced below “Baa2” (or its equivalent) or “BBB” (or its equivalent)” or (ii) withdrawn or suspended for any credit related reasons; provided, that nothing in the State Street A-6 Liquidity Facility shall require the Commission to maintain a long- term rating on Parity Debt, so long as the only Parity Debt outstanding is the Commercial Paper Notes and related credit and liquidity facilities.
Cross Acceleration . The Commission (i) defaults in the observance or performance of any agreement or condition relating to any Wastewater Enterprise Debt or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, e vent of default or similar event occurs or condition exists, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Wastewater Enterprise Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Wastewater Enterprise Debt; or (ii) defaults in the observance or performance of any agreement or condition relating to any Debt (othe r than Wastewater Enterprise Debt) aggregating in excess of $10,000,000, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event occurs or condition exists, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Debt (other than Wastewater Enterprise Debt).
Remedies
(a) Immediate Termination Events . In the case any Event of Default which is an Immediate Termination Event has occurred, (i) the Commitment will immediately and automatically terminate, without notice from State Street, and (ii) all amounts due under the State Street A-6 Liquidity Facility, the Fee Letter and under the Revolving Note and the Term Note will immediately become due and payable; provided, that the Event of Default described in clause (B) of “STATE STREET A-6 LIQUIDITY FACILITY—Immediate Termination Events—Payments.” will not qualify as an “Immediate Termination Event” under the State Street A-6 Liquidity Facility if the failure to pay the principal of, or interest on, the Revolving Note, the Term Note, any Advance or any Term Loan is due solely to an acceleration thereof by State Street for any reason other than the failure to pay the principal of, or interest on, the Revolving Note, the Term Note, any Advance or any Term Loan; provided, further, that the Event of Default described in STATE STREET A-6 LIQUIDITY FACILITY—Immediate Termination Events—Cross-Default to Senior Debt or Parity Debt.” will not qualify as an “Immediate Termination Event” under the State Street A-6 Liquidity Facility if the failure to pay the principal of, or interest on, such Senior Debt or Parity Debt is due solely to an acceleration thereof by a provider of credit enhancement or liquidity support with respect thereto for any reason other than the failure to pay the principal of, or interest on, such Senior Debt or Parity Debt.
(b) Suspension Events. In the case of a Default described in “STATE STREET A -6 LIQUIDITY FACILITY—Other Events of Default—Other Insolvency.” (a “Suspension Event”), the Commitment will be immediately suspended without notice or demand and, thereafter, State Street will be under no obligation to make Advances or Term Loans under the State Street A -6
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Liquidity Facility until the Available Commitment is reinstated as described in the State Street A- 6 Liquidity Facility. Promptly upon the occurrence of any such Suspension Event, State Street will notify the Commission, the Series A-6 Issuing and Paying Agent and the Dealer of such suspension and the effective date of such suspension in writing by facsimile, promptly confirmed by regular mail; provided, that State Street will incur no liability of any kind by reason of its failure to give such notice and such failure will in no way affect the suspension of the Available Commitment or its obligation to make Advances pursuant to the State Street A -6 Liquidity Facility . The Commission will promptly direct the Series A-6 Issuing and Paying Agent to notify all Holders of a suspension of the obligation of State Street to make Advances and Term Loans as a result of the occurrence of such Suspension Event . Upon the occurrence of a Suspension Event, the Commitment will immediately and automatically suspended and remain suspended until the case, proceeding or other action referred to therein is either dismissed, discharged or bonded within sixty (60) days from the commencement of such case, proceeding or action, or the date on which State Street’s obligations under the State Street A -6 Liquidity Facility have terminated or expired in accordance with the terms hereof (the “Termination Date”) occurs, whichever is first. In the event that said Suspension Event has been dismissed, discharged or bonded within the sixty (60) day period described therein and prior to the Te rmination Date, then the Available Commitment and the obligation of State Street to make Advances and Term Loans will be reinstated and the terms of the State Street A-6 Liquidity Facility will continue in full force and effect as if there had been no such suspension (unless the Commitment Period will otherwise have been terminated, suspended or expired as provided in the State Street A-6 Liquidity Facility). In the event that said Suspension Event is not dismissed, discharged or bonded within said sixty (60) day period when the Termination Date occurs, then the Available Commitment and the obligation of State Street to make Advances and Term Loans will terminate on the Termination Date without notice or demand and, thereafter, State Street will be under no obligation to make such Advances and Term Loans under the State Street A-6 Liquidity Facility.
(c) All Events of Default. In the case of any Event of Default, including any Immediate Termination Event or a Suspension Event that has occurred and is continuing, State Street (i) may by written notice to the Commission declare all amounts due under the State Street A -6 Liquidity Facility, under the Fee Letter or under the Revolving Note or the Term Note to be immediately due and payable, whereupon the same will immediately become due and payable, (ii) may by written notice to the Commission and the Series A -6 Issuing and Paying Agent (a “No-Issuance Notice”) in substantially the form of Exhibit H to the State Street A -6 Liquidity Facility declare the Commitment to be reduced to the principal amount of Series A-6 Notes then outstanding and to be permanently reduced further on the maturity date of each such Series A-6 Notes by an amount equal to the principal amount of such Series A-6 Notes with the Commitment to be terminated upon the last maturity date applicable to all such Series A -6 Notes, (iii) may petition a court of competent jurisdiction to issue a mandamus order to the Commission to compel specific performance of the covenants of the Commission contained in the Resolutions or herein and (iv) may pursue any other rights or remedies under the State Street A-6 Liquidity Facility, the Fee Letter, the Resolutions, any other Basic Document, applicable law or otherwise. Except as expressly provided in the State Street A-6 Liquidity Facility, procurement, demand, protest and all other notices of every kind are expressly waived in the State Street A -6 Liquidity Facility. Following receipt of a No- Issuance Notice, the Commission shall not issue any additional Series A-6 Notes. (d) Timing of No -Issuance Notice . A No -Issuance Notice that is received by the Commission at or before 3:00 p.m. (New York City time) will be effective when received. A No- Issuance Notice that is received by Commission after 3:00 p.m. (New York City time) will not be effective until the opening of business on the next succeeding Business Day.
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(e) Copies of Notices. Concurrently with the occurrence of an Immediate Termination Event pursuant to the State Street A -6 Liquidity Facility or a N o-Issuance Notice pursuant to the State Street A-6 Liquidity Facility, the Commission will give notice to the Series A-6 Issuing and Paying Agent and the Dealers.
In addition, concurrently with giving such notice to the Commission and the Series A-6 Issuing and Paying Agent, State Street will provide a copy thereof to the Dealers at their respective addresses referred to in the State Street A-6 Liquidity Facility; provided, however, that State Street will not incur any liability as a result of its failure to provide a copy of such a notice in accordance with this sentence.
Related Covenants
Under the related Series A-6 Issuing and Paying Agent Agreement, the Commission covenants to maintain in effect the State Street A-6 Liquidity Facility or an Alternate Facility meeting the requirements of such Series A-6 Issuing and Paying Agent Agreement at all times that Series A-6 Notes are Outstanding thereunder. The Commission will further covenant that if it is unable to obtain a binding commitment for an Alternate Facility at least 90 days prior to the Commitment Expiration Date, it shall use its best efforts, to the extent permitted by law, to endeavor to refinance such outstanding Series A-6 Notes or Bank Notes, as the case may be.
The Commission shall deliver wri tten notice of a proposed Alternate Facility to the Series A -6 Issuing and Paying Agent, State Street, the City and each Dealer not less than 45 days prior to the substitution date. The Series A-6 Issuing and Paying Agent shall deliver written notice of such substitution to the registered Holders of Series A-6 Notes at least 30 days prior to the substitution date. [Remainder of page left blank intentionally.]
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BANK FACILITY FOR THE SERIES A-7 COMMERCIAL PAPER NOTES
SMBC A-7 LETTER OF CREDIT
AND SMBC A-7 REIMBURSEMENT AGREEMENT
[TO BE REVIEWED]
The Commission has entered into a reimbursement agreement (the “SMBC A-7 Reimbursement Agreement”) with SMBC, pursuant to which SMBC will issue an irrevocable direct-pay letter of credit (the “SMBC A-7 Letter of Credit”) for the account of the Commission supporting the payment of principal of and interest due thereon at maturity or upon acceleration of Series A -7 Notes. The Series A -7 Notes are issued pursuant to the terms of the Issuing and Paying Agent Agreement, dated as of June 1, 2017[, as amended] (the “Series A-7 Issuing and Paying Agent Agreement”), by and between U.S. Bank National Association, as issuing and paying agent (the “Series A-7 Issuing and Paying Agent”), and the Commission.
The following description is a summary of certain provisions of the SMBC A-7 Letter of Credit and SMBC A-7 Reimbursement Agreement. Such summary does not purport to be a complete description or restatement of the material provisions of the SMBC A-7 Letter of Credit and SMBC A-7 Reimbursement Agreement. Investors should obtain and review copies of the SMBC A-7 Letter of Credit and SMBC A-7 Reimbursement Agreement in order to understand all of the terms of those documents. All capitalized terms appearing under this heading “ SMBC A- 7 LETTER OF CREDIT AND SMBC A- 7 REIMBURSEMENT AGREEMENT” not otherwise defined herein shall have the meanings assigned to them in the related document.
SMBC A-7 Letter of Credit
The SMBC A-7 Letter of Credit is an irrevocable transferable obligation of SMBC Mitsui Banking Corporation, acting through its New York Branch and supports the Series A -7 Notes. The SMBC A-7 Letter of Credit will be issued in an amount equal to the maximum principal amount of the Series A-7 Notes plus 270 days’ interest thereon at the rate of 12% per annum calculated on the basis of a year of 365 days (the “Stated Amount”). The Series A-7 Issuing and Paying Agent is authorized to dr aw on SMBC in an aggregate amount not to exceed the Stated Amount of the SMBC A-7 Letter of Credit and in accordance with the terms and conditions and subject to the reductions and reinstatements in amount as set forth in the SMBC A-7 Letter of Credit, in one or more Drawings (as defined in the SMBC A-7 Letter of Credit), payable as set forth in the SMBC A-7 Letter of Credit on any Business Day (as defined in the SMBC A-7 Letter of Credit), by presentation of the appropriate certifications, (i) for the paym ent at maturity of the principal of and interest at maturity on Series A-7 Notes, (ii) for the payment at maturity of the principal of and interest to maturity on Series A-7 Notes that otherwise mature on or after the date that the Series A -7 Issuing and Paying Agent receives the Final Drawing Notice (as defined in the SMBC A-7 Letter of Credit) from SMBC, or (iii) for (x) the payment of the principal of and interest due upon acceleration of certain of the Series A-7 Notes (each an “Acceleration Drawing”) or (y) the payment of the principal of and interest due upon acceleration of all outstanding Series A-7 Notes (the “Final Acceleration Drawing”), in each case an aggregate amount not exceeding the Stated Amount of the SMBC A-7 Letter of Credit.
Upon SMBC honoring any Drawing, the Stated Amount and the amount available to be drawn under the SMBC A-7 Letter of Credit for subsequent Drawings will be automatically decreased by an amount equal to the amount of such Drawing. In connection therewith, the Stated Amount and the amounts from time to time available to be drawn under the SMBC A-7 Letter of Credit (except in the case of the Final Acceleration Drawing or a Drawing resulting from the delivery of the Final Drawing Notice) will be increased when and to the e xtent, but only when and to the extent, (i) (A) of transfer by the Series A -7 Issuing and Paying Agent to SMBC on the date such Drawing is honored of proceeds of Series A-7 Notes
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issued on such date or (B) the Series A -7 Issuing and Paying Agent receives w ritten notice from SMBC that SMBC has been reimbursed by or on behalf of the Commission for any amount drawn under the SMBC A-7 Letter of Credit, and (ii) that the Series A-7 Issuing and Paying Agent has not received from SMBC a No-Issuance Notice (as defined in the SMBC A- 7 Letter of Credit) . Upon SMBC honoring the Final Acceleration Drawing, the Stated Amount shall be permanently reduced to zero and the Stated Amount shall no longer be reinstated.
The SMBC A-7 Letter of Credit will expire at 4:00 p.m., New York City time, on the date (the earliest of such dates to occur is referred to as the “Termination Date”) which is the earliest of (i) [_________], 2027 (the “Stated Expiration Date”) or such later date as is specified by SMBC in a written notice to the Series A -7 Issuing and Paying Agent, (ii) the later of (a) the date on which SMBC receives written notice from the Series A-7 Issuing and Paying Agent that an Alternate Facility as is specified in such notice (as defined in the Series A-7 Issuing and Paying Agent Agreement) has been substituted for the SMBC A-7 Letter of Credit in accordance with the Series A -7 Issuing and Paying Agent Agreement and (b) the effective date of such Alternate Facility (after SMBC honors any properly presented and conforming Drawing on or prior to such date), (iii) the date on which SMBC receives written notice from the Series A- 7 Issuing and Paying Agent that there are no longer any Series A-7 Notes Outstanding within the meaning of the Series A -7 Issuing and Paying Agent Agreement nor does the Commission intend to issue any additional Series A-7 Notes under the Series A-7 Issuing and Paying Agent Agreement and that the Series A-7 Issuing and Paying Agent elects to terminate the SMBC A-7 Letter of Credit, (iv) the earlier of (a) the fifteenth (15th) calendar day after the date on which the Series A-7 Issuing and Paying Agent receives the Final Drawing Notice, and (b) the date on which the Drawing resulting from the delivery of the Final Drawing Notice is honored under the SMBC A-7 Letter of Credit, and (v) the date on which the Final Acceleration Drawing is honored under the SMBC A-7 Letter of Credit.
SMBC A-7 Reimbursement Agreement Events of Default
If any of the following events shall occur, each such event shall be an “Event of Default” under the SMBC A-7 Reimbursement Agreement:
(a) the Commission shall fail to pay, or cause to be paid, as and when due, (i) any Reimbursement Obligation (as defined in the SMBC A-7 Reimbursement Agreement), or (ii) any Obligation (as defined in the SMBC A-7 Reimbursement Agreement) (other than a Reimbursement Obligation) and, in such case, such failure shall continue for three (3) Business Days; (b) any representation or warranty made by or on behalf of the Commission in the SMBC A-7 Reimbursement Agreement or in any other Basic Document (as defined in the SMBC A-7 Reimbursement Agreement) or in any certificate or statement delivered thereunder shall be incorrect or untrue in any material respect when made or deemed to have been made or delivered; (c) the Commission shall default in the due performance or observance of certain covenants set forth in the SMBC A-7 Reimbursement Agreement; (d) the Commission shall default in the due performance or observance of any other term, covenant or agreement contained in the SMBC A-7 Reimbursement Agreement or any other Basic Document and such default shall remain unremedied for a period of thirty (30) days after the occurrence thereof;
(e) the Commission shall (i) have entered involuntarily aga inst it an order for relief under the United States Bankruptcy Code, as amended, (ii) become insolvent or shall not pay, or be unable to pay, or admit in writing its inability to pay, its debts generally as they become due,
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(iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property (as defined in the SMBC A-7 Reimbursement Agreement), (v) institute any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, marshalling of assets, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any corporate action in furtherance of any matter described in parts (i) through (v) above, or (vii) fail to contest in good faith any appointment or proceeding described in paragraph (f) below;
(f) a custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for the Commission or any substantial part of its Property, or a proceeding described in clause (e)(v) above shall be instituted against the Commission and such proceeding continues undischarged or any such proceeding continues undismissed or unstayed for a period of thirty (30) or more days;
(g) a debt moratorium, debt restructuring, debt adjustment or comparable restriction is imposed on the repayment when due and payable of the principal of or interest on any Debt (as defined in the SMBC A-7 Reimbursement Agreement) of the Commission by the Commission or any governmental authority with appropriate jurisdiction; (h) any material provision of the SMBC A-7 Reimbursement Agreement or any other Basic Document shall at any time for any reason cease to be valid and binding on the Commission for any reason or shall be declared by any court or other Governmental Authority with competent jurisdiction to be null and void, invalid, or unenforceable, or the validity or enforceability thereof shall be publicly contested by the Commission or by a Governmental Authority with competent jurisdiction, or the Commission shall deny that it has any further liability under the SMBC A- 7 Reimbursement Agreement or any other Basic Document;
(i) dissolution or termination of the existence of the Commission; (j) the Commission shall (i) default on the payment of the principal of or interest on any Wastewater Enterprise Debt (as defined in the SMBC A-7 Reimbursement Agreement), beyond the period of grace, if any, provided in the instrument or agreement under which such Wastewater Enterprise Debt was created or incurred; or (ii) default in the observance or performance of any agreement or condition relating to any Wastewater Enterprise Debt or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event shall occur or condition exist, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Wastewater Enterprise Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Wastewater Enterprise Debt; (k) the Commission shall (i) default on the payment of the principal of or interest on any Debt (other than Wastewater Enterprise Debt) aggregating in excess of $10,000,000, beyond the period of grace, if any, provided in the instrument or agreement under which such Debt (other than Wastewater Enterprise Debt) was created or incurred; or (ii) default in the observance or performance of any agreement or condition relating to any Debt (other than Wastewater Enterprise Debt) aggregating in excess of $10,000,000, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event shall
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occur or condition exist, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Wastewater Enterprise Debt;
(l) any final, unappealable judgment or judgments, writ or writs or warrant or warrants of attachment, or any similar process or processes, in an aggregate amount not less than $10,000,000 shall be entered or filed against the Commission or against any of its Property and remain unpaid, unvacated, unbonded or unstayed for a period of thirty (30) days; (m) any “event of default” under any Basic Document (as defined respectively therein) shall have occurred;
(n) a ruling, assessment, notice of deficiency or technical advice by the Internal Revenue Service shall be rendered to the effect that interest on the Series A -7 Notes is includable in the gross income of the holder(s) or owner(s) of such Series A -7 Notes and either (i) the Commission, after it has been notified by the Internal Revenue Service, shall not challenge such ruling, assessment, notice or advice in a court of law during the period within which such challenge is permitted or (ii) the Commission shall challenge such ruling, assessment, notice or advice and a court of law shall make a determination, not subject to appeal or review by another court of law, that such ruling, assessment, notice or advice is correctly rendered; or (o) any of Moody’s or S&P shall have downgraded its long- term unenhanced rating of any Senior Debt (as defined in the SMBC A-7 Reimbursement Agreement) of the Commission to below “Baa2” (or its equivalent), or “BBB” (or its equivalent), respectively, or suspended or withdrawn its rating of the same; or
(p) the passage of any Law (as defined in the SMBC A-7 Reimbursement Agreement) has occ urred which could reasonably be expected to have a material adverse effect on the Commission’s ability to perform its obligations under the SMBC A-7 Reimbursement Agreement or the other Basic Documents or to result in a material adverse effect on the enfor ceability or validity of the SMBC A- 7 Reimbursement Agreement or any of the other Basic Documents; provided that the Event of Default set forth in this paragraph (p) shall be null and void and of no further force and effect from and after the date any Reim bursement Agreement between the Commission and Bank of America, N.A., as provider of a letter of credit supporting any Commercial Paper Notes is terminated or a similar event of default is no longer provided therein.
SMBC A-7 Reimbursement Agreement Remedies
Upon the occurrence of any Event of Default under the SMBC A- 7 Reimbursement Agreement, SMBC may exercise any one or more of the following rights and remedies in addition to any other remedies provided in the SMBC A-7 Reimbursement Agreement or by law:
(a) declare all Obligations to be immediately due and payable, whereupon the same shall be immediately due and payable without any further notice of any kind, which notice is waived by the Commission; provided, however, that in the case of an Event of Default described in paragraph (e), (f) or (g) above under the subcaption “SMBC A- 7 LETTER OF CREDIT AND SMBC A-7 REIMBURSEMENT AGREEMENT—SMBC A-7 Reimbursement Agreement Events of Default,” such acceleration shall automatically occur (unless such automatic acceleration is waived by SMBC in writing); or
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(b) issue a No-Issuance Notice (the effect of which shall be as provided in the SMBC A-7 Reimbursement Agreement), reduce the Stated Amount of the SMBC A-7 Letter of Credit to the amount of the then outstanding Series A-7 Notes supported by the SMBC A-7 Letter of Credit plus a corresponding amount of interest coverage, reduce the Stated Amount of the SMBC A- 7 Letter of Credit as the then outstanding Series A -7 Notes are paid, and terminate the SMBC A-7 Letter of Credit when no Series A-7 Notes remain outstanding; or (c) issue the Final Drawing Notice (the effect of which shall be to cause the Termination Date of the SMBC A-7 Letter of Credit to occur on the fifteenth (15) calendar day after the date of receipt thereof by the Series A-7 Issuing and Paying Agent); or (d) pursue any rights and remedies it may have under the Basic Documents; or (e) pursue any other action available at law or in equity.
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B-i
APPENDIX B
THE BANKS
TABLE OF CONTENTS
Page
SUMITOMO MITSUI BANKING CORPORATION, ACTING THROUGH ITS NEW YORK BRANCH .................................................................................................................................... B-2 BANK OF AMERICA, N.A. .................................................................................................................... B-3 THE TORONTO-DOMINION BANK, NEW YORK BRANCH. .......................................................... B-5 STATE STREET BANK AND TRUST COMPANY .............................................................................. B-6
B-1
The following information has been furnished by the Banks for use in this Offering Memorandum.
Such information has not been independently confirmed or verified by the Commission. No representation is made herein by the Commission as to the accuracy or adequacy of such information subsequent to the date hereof, or that the information contained and incorporated herein by reference is correct . The Commission has assumed no obligation to update such information in the future, or to advise of any adverse change in the financial condition of the Banks. Investors are advised to obtain and carefully review any financial reports and other information published after the date hereof about the Banks prior to making a decision to purchase the Commercial Paper Notes.
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Sumitomo Mitsui Banking Corporation, acting through its New York Branch [CHECK FOR SMBC UPDATES PRIOR TO DATED DATE]
Sumitomo Mitsui Banking Corporation (Kabushiki Kaisha Mitsui Sumitomo Ginko) (“SMBC”) is a joint stock corporation with limited liability (Kabushiki Kaisha) under the laws of Japan. The registered head office of SMBC is located at 1-1-2, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-0005, Japan.
SMBC was established in April 2001 through the merger of two leading banks, The Sakura Bank, Limited and The Sumitomo Bank, Limited. In December 2002, Sumitomo Mitsui Financial Group, Inc. (“SMFG”) was established through a stock transfer as a holding company under which SMBC became a wholly-owned subsidiary. SMFG reported ¥241,341,831 million (US$2.16 trillion) in consolidated total assets as of September 30, 2021.
SMBC is one of the world’s leading commercial banks and provides an extensive range of banking services to its customers in Japan and overseas. In Japan, SMBC accepts deposits, makes loans and extends guarantees to corporations, individuals, governments and governmenta l entities. It also offers financing solutions such as syndicated lending, structured finance and project finance. SMBC also underwrites and deals in bonds issued by or under the guarantee of the Japanese government and local government authorities, and acts in various administrative and advisory capacities for certain types of corporate and government bonds. Internationally, SMBC operates through a network of branches, representative offices, subsidiaries and affiliates to provide many financing products, including syndicated lending and project finance.
The New York Branch of SMBC is licensed by the New York State Department of Financial Services to conduct branch banking business at 277 Park Avenue, New York, New York, and is subject to examination by the New York State Department of Financial Services and the Federal Reserve Bank of New York.
Financial and Other Information
Audited consolidated financial statements for SMFG and its consolidated subsidiaries for the fiscal year 2020 ended March 31, 2021, as well as other corporate data, financial information and analyses, are available in English on SMFG’s website at www.smfg.co.jp/english. The information on SMFG’s website does not form part of this Offering Memorandum and is not incorporated herein by reference. SMBC does not accept any responsibility for any information contained in this Offering Memorandum other than the information relating to SMBC, acting through its New York Branch.
The delivery of this Offering Memorandum shall not create any implication that there has been no change in the affairs of SMBC since the date hereof, or that the information contained or referred to herein is correct as of any time subsequent to its date.
.
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Bank of America, N.A.
[CHECK FOR BANA UPDATES PRIOR TO DATED DATE]
Bank of America, N.A. (“Bank of America”) is a national banking association organized under the laws of the United States, with its principal executive offices located in Charlotte, North Carolina. Bank of America is a wholly-owned indirect subsidiary of Bank of America Corporation (the “Corporation”) and is engaged in a general consumer banking, commercial banking and trust business, offering a wide range of commercial, corporate, international, financial market, retail and fiduciary banking services. As of September 30, 2021, Bank of America had consolidated assets of $2.401 trillion, consolidated deposits of $2.033 trillion and stockholder’s equity of $228.382 billion based on regulatory accounting principles.
The Corporation is a bank holding company and a financial holding company, with its principal executive offices located in Charlotte, North Carolina. Additional information regarding the Corporation is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2020, together with its subsequent periodic and current reports filed with the Securities and Exchange Commission (the “SEC”).
The SEC maintains a website at www.sec.gov which contains the filings that the Corporation files with the SEC s uch as reports, proxy statements and other documentation. The reports, proxy statements and other information the Corporation files with the SEC are also available at its website, www.bankofamerica.com.
The information concerning the Corporation and Bank of America is furnished solely to provide limited introductory information and does not purport to be comprehensive. Such information is qualified in its entirety by the detailed information appearing in the referenced documents and financial statements referenced therein.
Bank of America will provide copies of the most recent Bank of America Corporation Annual Report on Form 10- K, any subsequent reports on Form 10- Q, and any required reports on Form 8- K (in each case, as filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended), and the publicly available portions of the most recent quarterly Call Report of the Bank delivered to the Comptroller of the Currency, without charge, to each person to whom this document is delivered, on the written request of such person. Written requests should be directed to:
Bank of America Corporation
Office of the Corporate Secretary/Shareholder Relations One Bank of America Center
150 N College St., NC1-028-28-03
Charlotte, North Carolina 28255
PAYMENTS OF PRINCIPAL AND INTEREST ON THE SERIES A-2 NOTES WILL BE MADE FROM DRAWINGS UNDER THE BANK OF AMERICA A-2 LETTER OF CREDIT. PAYMENTS OF THE PURCHASE PRICE OF THE SERIES A-2 NOTES WILL BE MADE FROM DRAWINGS UNDER THE BANK OF AMERICA A- 2 LETTER OF CREDIT IF REMARKETING PROCEEDS ARE NOT AVAILABLE. ALTHOUGH THE BANK OF AMERICA A- 2 LETTER OF CREDIT IS A BINDING OBLIGATION OF THE BANK, THE SERIES A-2 NOTES ARE NOT DEPOSITS OR OBLIGATIONS
OF THE CORPORATION OR ANY OF ITS AFFILIATED BANKS AND ARE NOT GUARANTEED BY ANY OF THESE ENTITIES. THE SERIES A-2 NOTES ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY AND ARE
SUBJECT TO CERTAIN INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
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The delivery of this information shall not create any implication that there has been no change in the affairs of the Corporation or Bank of America since the date of the most recent filings referenced herein, or that the information contained or refer red to under this caption is correct as of any time subsequent to the referenced date.
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The Toronto-Dominion Bank, New York Branch
[TO BE UPDATED WITH UPDATED BANK DISCLOSURE]
The Toronto- Dominion Bank (“TD”) and its subsidiaries are collectively known as TD Bank Group. TD is a Schedule 1 chartered bank subject to the provisions of the Bank Act (Canada), and its head office is located in Toronto, Ontario. TD is duly licensed to operate its New York branch located at 1 Vanderbilt Avenue, New York, NY 10017.
TD offers a full range of financial products and services to more than 26 million customers worldwide through three key business lines operating in a number of locations in financial centres around the globe: Canadian Retail; U.S. Retail; and Wholesale Banking. TD had CDN$1.7 trillion in assets on July 31, 2020. TD also ranks among the world’s leading online financial services firms, with approximately 13 million active online and mobile customers. TD trades on the Toronto and New York stock exchanges under the symbol “TD”.
TD is “a foreign private issuer” that files certain reports and other public information (“SEC Filings”) with the SEC. Copies of SEC Filings can be obtained from TD by contacting Sh areholder Relations, The Toronto- Dominion Bank, P.O. Box 1, Toronto- Dominion Centre, Toronto, Ontario M5K 1A2 (telephone: 416-944-6367 or 1-866-756-8936) or at the SEC’s website at www.sec.gov.
The delivery of the information contained under this caption “—The Toronto-Dominion Bank, New York Branch” shall not create any implication that there has been no change in the affairs of TD Bank Group since the date hereof or that the information contained or referred to under this caption “ —The Toronto-Dominion Bank, New York Branch” is correct as of any time subsequent to its date. The information of TD Bank Group contained under this caption “—The Toronto-Dominion Bank, New York Branch” is furnished solely to provide limited introductory information and does not purport to be comprehensive.
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State Street Bank and Trust Company
[TO BE UPDATED WITH UPDATED BANK DISCLOSURE]
State Street Bank and Trust Company (the “Bank”) is a wholly- owned subsidiary of State Street Corporation (the “Corporation”). The Corporation (NYSE: STT) through its subsidiaries, including the Bank, provides a broad range of financial products and services to institutional investors worldwide. With $38.79 trillion in assets under custody and administration and $3.4 trillion in assets under management as of December 31, 2020, the Corporation operates in more than 100 geographic markets worldwide. As of December 31, 2020, the Corporation had consolidated total assets of $314 .71 billion, consolidated total deposits of $239.80 billion, total investment securities of $ 111.28 billion, total loans, net of unearned income and allowance for losses, of $27.80 billion, and total shareholders’ equity of $26.20 billion.
The Bank’s Consolidated Reports of Condition and Income for A Bank With Domestic and Foreign Offices Only -- FFIEC 031 (the “Call Reports”) through December 31, 2020 have been submitted through the Federal Financial Institutions Examination Council and provided to the Board of Governors of the Federal Reserve System, the primary U.S. federal banking agency responsible for regulating the Corporation and the Bank. Publicly available portions of those Call Reports, and future Call Reports so submitted by the Bank, are available on the Federa l Deposit Insurance Corporation’s website at www.fdic.gov. The Call Reports are prepared in conformity with regulatory instructions that do not in all cases follow U.S. generally accepted accounting principles.
Additional financial and other information related to the Corporation and the Bank, including the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020 and additional annual, quarterly and current reports subsequently filed or furnished by the Corporation with the U.S. Securit ies and Exchange Commission (the “SEC”), can be accessed free of charge on the SEC’s website at www.sec.gov.
Any statement contained in any document referred to above shall be deemed to be modified or superseded for purposes of this Offering Memorandum to the extent that a statement contained herein or in any subsequently submitted, filed or furnished document modifies or supersedes such statement. The delivery hereof shall not create any implication that there has been no change in the affairs of the Bank or the Corporation since the date hereof, or that information contained or referred to in this Appendix is correct as of any time subsequent to this date. The information concerning the Corporation, the Bank or any of their respective affiliates is furnished solely to provide limited introductory information and does not purport to be comprehensive. Such information is qualified in its entirety by the detailed information appearing in the documents and financial statements referenced herein.
A copy of any or all of the publicly available portions of the documents referred to above, other than exhibits to such documents, may be obtained without charge to each person to whom a copy of this Offering Memorandum has been delivered, on the written request of any such person. Written requests for such copies should be directed to Investor Relations, State Street Corporation, One Lincoln Street, Boston, Massachusetts 02111, telephone number 617-786-3000.
The State Street Series A-6 Liquidity Agreement is an obligation solely of the Bank and is not an obligation of, or otherwise guaranteed by, the Corporation or any of its affiliates (other than the Bank).
Neither the Corporation nor any of its affiliates (other than the Bank) is required to make payments under the State Street Series A -6 Liquidity Agreement. None of the Bank, the Corporation or any of their respective affiliates makes any representation as to, or is responsible for the suitability of the Series A -6 Notes for any investor, the feasibility or performance of any project or compliance with any securities or tax laws or regulations. The Series A-6 Notes are not direct obligations of, or guaranteed by, the Bank, the
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Corporation or any of their respective affiliates, except to the extent provided by in the State Street Series A-6 Liquidity Agreement.
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APPENDIX C
BOOK-ENTRY SYSTEM FOR COMMERCIAL PAPER NOTES
General
One master Commercial Paper Note for each of the following has been registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), New York, NY: (i) in the aggregate principal amount not exceeding the $150,000,000 available to se cure the Commercial Paper Notes (Wastewater Series, Proposition E) Series A -1 (Tax Exempt) under the SMBC A-1 Letter of Credit has been registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), New York, NY; (ii) in the aggregate principal amount not exceeding the $150,000,000 available to secure the Commercial Paper Notes (Wastewater Series, Proposition E) Series A -2 (Tax Exempt) under the Bank of America A-2 Letter of Credit. One master Commercial Paper Note; (iii) in the aggregate principal amount not exceeding the $75,000,000 available to secure the Commercial Paper Notes (Wastewater Series, Proposition E) Series A -4 (Tax Exempt) under the Toronto-Dominion A-4 Liquidity Facility; (iv) in the aggregate principal amount not exceeding the $200,000,000 * available to secure the Commercial Paper
Notes (Wastewater Series, Proposition E) Series A-6, consisting of Tax-Exempt Subseries A-6 and Taxable Subseries A-6-T under the State St reet A-6 Liquidity Facility; and (v ) in the aggregate principal amount not exceeding the $100,000,000 available to secure the Commercial Paper Notes (Wastewate r Series, Proposition E) Series A-7 (Tax Exempt) under the SMBC A-7 Letter of Credit. DTC will act as securities depository for the Commercial Paper Notes.
Book-Entry System
DTC will act as securities depository for the Commercial Paper Notes. The Commercial Paper Notes will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or su ch other name as may be requested by an authorized representative of DTC . One fully- registered security certificate will be issued for the Commercial Paper Notes, in the aggregate principal amount of the Commercial Paper Notes, and will be deposited with DTC.
DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates.
Direct P articipants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”) . DTCC is t he holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC
* In connection with the Series A -6 N otes, the Commission approved an increase in the current commitment amount, from $100,000,000 to $200,000,000, and an extension of the term of such commitment, under the State Street A -6 Liquidity Facility, which became effective on October 15, 2019. In connection with such increase and extension, the Commission approved the termination of the Series A-5 Notes (as defined herein), which become effective on October 14, 2019.
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system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s rating: AA+.
The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission .
More information about DTC can be found at www.dtcc.com and www.dtc.org.
Purchases of the Commercial Paper Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for the Commercial Paper Notes on DTC’s records. The ownership interest of each actual purchaser of each Commercial Paper Note (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase . Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Commercial Paper Notes are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Commercial Paper Notes, except in the event that use of the book-entry system for the Commercial Paper Notes is discontinued.
To facilitate subsequent transfers, all Commercial Paper Notes deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such o ther name as may be requested by an authorized representative of DTC. The deposit of the Commercial Paper Notes with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Commercial Paper Notes; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Commercial Paper Notes are credited, which may or may not be the Beneficial Owners. The D irect and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Commercial Paper Notes may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Commercial Paper Notes. For example, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Commercial Paper Notes unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its u sual procedures, DTC mails an Omnibus Proxy to the issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Commercial Paper Notes are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Payments of principal of and interest on the Commercial Paper Notes will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC . DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Commission or the Issuing and Paying Agent, on payable date in accordance with their respective holdings shown on DTC’s recor ds. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsib ility of such Participant and not of DTC (nor its nominee), the Issuing and Paying Agent, or the Commission, subject to any statutory
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or regulatory requirements as may be in effect from time to time . Payment of principal of and interest evidenced by the Commercial Paper Notes to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Commission or the Issuing and Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
NEITHER THE COMMISSION NOR THE ISSUING AND PAYING AGENT WILL HAVE
ANY RESPONSIBILITY OR OBLIGATION TO DTC PAR TICIPANTS, INDIRECT PARTICIPANTS
OR BENEFICIAL OWNERS WITH RESPECT TO THE PAYMENTS OR THE PROVIDING OF NOTICE TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS.
Neither the Commission nor the Issuing and Paying Agent can give any assurances that DTC, DTC Participants, Indirect Participants or others will distribute payments of principal of and interest on the Commercial Paper Notes paid to DTC or its nominee, as the registered Owner, or any redemption or other notice, to the Beneficial Owners or that they will do so on a timely basis or that DTC will serve and act in a manner described in this Offering Memorandum.
Discontinuation of the Book-Entry Only System
DTC may discontinue providing its services as securities depository with respect to the Commercial Paper Notes at any time by giving reasonable notice to the Commission or the Issuing and Paying Agent .
Under such circumstances, in the event that a successor securities depository is not obtained, Commercial Paper Note certificates will be p rinted and delivered as described in the Issuing and Paying Agent Agreement.
The Commission may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Commercial Paper Note certificates will be printed and delivered as described in the Issuing and Paying Agent Agreement.
SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE COMMERCIAL PAPER
NOTES, AS NOMINEE OF DTC, REFERENCES HEREIN TO THE OWNERS OR HOLDERS OF THE COMMERCIAL PAPER NOTES (OTHER THAN UNDER THE CAPTION “TAX MATTERS” HEREIN) SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE COMMERCIAL PAPER NOTES.
NEITHER THE COMMISSION, THE ISSUING AND PAYING AGENT, NOR THE DEALERS
WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC DIRECT PARTICIPANTS,
INDIRECT PARTICIPANTS, OR TO ANY BENEFICIAL OWNER WITH RESPECT TO (I) THE
ACCURACY OF ANY RECORDS MAINTAINED BY DTC, ANY DTC DIRECT PARTICIPANT, OR INDIRECT PARTICIPANT; (II) THE DELIVERY OF ANY NOTI CE THAT IS PERMITTED OR
REQUIRED TO BE GIVEN TO THE OWNERS OF THE COMMERCIAL PAPER NOTES UNDER THE ISSUING AND PAYING AGENT AGREEMENT; (III) THE PAYMENT BY DTC OR ANY DTC
DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE PRINCIPAL OR INTEREST DUE WITH RESPECT TO THE COMMERCIAL PAPER NOTES; (IV) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS THE REGISTERED OWNER OF COMMERCIAL PAPER NOTES; OR (V) ANY OTHER MATTER.
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APPENDIX D
FORM OF OPINION OF BOND COUNSEL
[TO BE DISCUSSED]
March 9, 2021
Public Utilities Commission
of the City and County of San Francisco
San Francisco, California
Not to Exceed $675,000,000
Public Utilities Commission
of the City and County of San Francisco
Commercial Paper Notes
(Wastewater Series, Proposition E)
$150,000,000
Series A-1 (Tax Exempt)
$75,000,000
Series A-4 (Tax Exempt)
$150,000,000
Series A-2 (Tax Exempt)
$200,000,000
Series A-6
Tax-Exempt Subseries A-6
Taxable Subseries A-6-T
$100,000,000
Series A-7 (Tax Exempt)
Ladies and Gentlemen:
We have acted as bond counsel to the Public Utilities Commission of the City and County of San Francisco (the “Commission”) in connection with the issuance of the Commission’s Commercial Paper Notes (Wastewater Series, Proposition E), Tax Exempt Series A-1, A-2, A-4, A-6 (Tax-Exempt Subseries A-6) and A-7 (the “Series A-1 Notes,” the “Series A-2 Notes,” the “Series A-4 Notes” and the “Subseries A-6 Notes,” respectively, and collectively, the “Tax Exempt CP Notes”), and Taxable Subseries A-6-T (the “Taxable CP Notes” and, together with the Tax Exempt CP Notes, the “CP Notes,” and each as a “Series” or “Subseries” as applicable. The CP Notes are being issued pursuant to the Charter of the City and County of San Francisco (the “City”), Article V of Chapter 43 of the San Francisco Administrative Code, enacted by Ordinance No. 203-98, adopted by the Board of Supervisors of the City (the “Board”) on June 8, 1998, and signed by the Mayor of the City (the “Mayor”) on June 19, 1998, as amended by Ordinance 270- 06 adopted by the Board on October 24, 2006, and signed by the Mayor of the City on October 31, 2006, to establish a procedure for the Commission to issue commercial paper notes, (as amended, the “Procedural Ordinance”), and various other ordinances and resolutions of the Board and the Commission (collectively with the Procedural Ordinance, the “Issuance Authorizations”). Each Series of Notes is issued pursuant to an Issuing and Paying Agent Agreement (each an “Issuing and Paying Agent Agreement” and collectively, the “Issuing and Paying Agent Agreements”), by and between the Commission and U.S. Bank National Association (in such capacity, the “Issuing and Paying Agent”), (i) dated as of March 1, 2017, as amended and restated as of April 25, 2017, in the case of the Series A- 1 Notes, (ii) dated as of June 1, 2017, in the
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case of the Series A-2 Notes, (iii) dated as of July 1, 2012, in the case of the Series A-4 Notes, (iv) dated as of October 1, 2014, in the case of the Series A -6 Notes and supplemented on October 15, 2019, and (v) dated as of June 1, 2017, in the case of the Series A-7 Notes. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Issuing and Paying Agent Agreements.
Pursuant to each Issuing and Paying Agent Agreement, the Commission has pledged Available Wastewater Enterprise Revenues for the payment of principal of and interest on the Notes. Additionally, the payment of the principal of and (in some cases) interest on each Series of Notes is supported by a letter of credit or dedicated liquidity facility (each such letter of credit or agreement providing such dedicated liquidity facility, a “Bank Facility”) issued or provided by a bank or other financial institution (each, a “Bank”).
In our capacity as bond counsel, we have reviewed the Charter of the City, the Issuance Authorizations, the Issuing and Paying Agent Agreements, the Bank Facilities and agreements related thereto, certifications of the City, the Commission, the Banks and others, opinions of the City Attorney and of counsel for the Banks and such other documents, opinions and instruments as we have deemed necessary to render the opinions set forth herein. Our services as bond counsel were limited to such examination and to rendering the opinions set forth herein.
We have assumed the genuineness of all documents and signatures presented to us. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in the documents. Furthermore, we have assumed compliance with all covenants and agreements contained in the Issuing and Paying Agent Agreements, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Tax Exempt CP Notes to be included in gross income for federal income tax purposes.
Certain requirements and procedures contained or referred to in each Issuing and Paying Agent Agreement and other relevant documents may be changed and certain actions may be taken or not taken under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of nationally recognized bond counsel. We express no opinion as to the effect of any change to any document pertaining to the Tax Exempt CP Notes of any Series or Subseries or of any action taken or not taken where such change is made or action is taken or not taken without our approval or in reliance u pon the advice of counsel other than our firm with respect to the exclusion from gross income of the interest on the Tax Exempt CP Notes of such Series or Subseries for federal income tax purposes.
Our opinion in item 2 below is subject to the limitations on the imposition of fees and charges by the Commission relating to the Wastewater Enterprise under Articles XIIIC and XIIID of the California Constitution and to bankruptcy, insolvency, reorganization, arrangement, moratorium and other similar laws affecting creditors’ rights generally, to the application of general equitable principles (regardless of whether considered in a proceeding in equity or at law), to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against public agencies in the State of California. In addition, we express no opinion with respect to any indemnification, contribution, penalty, choice of forum or waiver provisions contained in the Issuing and Paying Agent Agreements.
Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:
1. Each Series of the CP Notes has been duly authorized by the Commission in accordance with the laws of the State of California and the Issuance Authorizations.
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2. Each Issuing and Paying Agent Agreement has been duly authorized, executed and delivered by the Commission and, assuming due authorization, execution and delivery by the Issuing and Paying Agent, constitutes a valid, legal and binding obligation of the Commission enforceable against the Commission in accordance with its terms. Each Issuing and Paying Agent Agreement creates a valid pledge, to secure the payment of the principal of and interest on the CP Notes of the related Series, of the Available Wastewater Enterprise Revenues, as and to the extent set forth in such Issuing and Paying Agent Agreement and subject to the provisions of such Issuing and Paying Agent Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein.
3. Each Series of CP Notes has been duly executed by the Commission and authenticated by the Paying Agent, and when issued and delivered against payment therefor in accordance with the terms of the related Issuing and Paying Agent Agreement, will constitute the valid, legal and binding limited obligations of the Commission, payable from and secured by a pledge of Available Wastewater Enterprise Revenues. Each Series of CP Notes will also be payable from the proceeds of refu nding Notes of such Series or drawings or amounts available under the related Bank Facility as provided in the Issuing and Paying Agent Agreement. The general fund of the City is not liable, and the credit or taxing power of the City is not pledged, for the payment of the CP Notes or the interest thereon.
4. Under existing statutes, regulations, rulings and judicial decisions and assuming continuing compliance by the Commission with certain covenants in the related Issuing and Paying Agent Agreement, the Tax Certificate executed in connection with the issuance of the Tax Exempt CP Notes and requirements of the Internal Code of 1986 regarding the use, expenditure and investment of proceeds of the Tax Exempt CP Notes and the timely payment of certain investme nt earnings to the United States, interest on the Tax Exempt CP Notes is not included in gross income of the owners of the Tax Exempt CP Notes for purposes of federal income taxation. Failure to comply with such covenants and requirements may cause interest on the Tax Exempt CP Notes to be included in federal gross income retroactive to the date of issuance of the Tax Exempt CP Notes.
5. Interest on the Tax Exempt CP Notes is not treated as an item of tax preference for purposes of the federal alternative minimum tax.
6. Interest on the CP Notes is exempt from personal income tax imposed by the State of California.
Other than as described herein, we have neither addressed nor are we opining on the tax consequences to any person of the investment in, or the receipt or accrual of interest on, the CP Notes.
The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions. Such opinions may be adversely affected by actions taken or events occurring, including a change in law, regulation or ruling (or in the application or official interpretation of any law, regulation or ruling) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions are taken or such events occur, and we have no obligation to update this opinion in light of any such actions or events.
Unless otherwise notified by us, you may continue to rely on this opinion to the extent that (i) there is no change in applicable state or federal law; (ii) the representations and warranties of the parties contained in the related Issuing and Paying Agent Agreement and Bank Facility and agreements related thereto, and in certain certificates delivered by authorized officers of the Commission, remain true and accurate; (iii) no amendment has been made to the related Issuing and Paying Agent Agreement or Bank Facility or the CP Notes; and (iv) no litigation affecting the issuance or legality is pending or threatened at the time of the
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delivery of any such CP Notes. We undertake no obligation to determine, at any time, whether the conditions described in (i) through (iv) of the preceding sentence have been met.
This opinion is limited to the laws of the State of California and the laws of the United States.
Respectfully submitted,