The Available Power Enterprise Revenues and the funds and accounts pledged under the Issuing and Paying Agent Agreement constitute a trust fund for the security and payment of the interest on and principal of the Commercial Paper Notes and the Bank Notes, as applicable, and all obligations of the Commission relating to such Commercial Paper Notes under the Issuing and Paying Agent Agreement and under the Series A -1 Reimbursement Agreement, the Series A -2 Reimbursement Agreement and the Series A -3 Reimbursement Agreement, as pr ovided under the Issuing and Paying Agent Agreement, and shall be irrevocable until all of the applicable Commercial Paper Notes and the Bank Notes secured by Available Power Enterprise Revenues have been paid and retired and any related obligations of the Commission under the Series A -1 Reimbursement Agreement, the Series A -2 Reimbursement Agreement and the Series A-3 Reimbursement Agreement have been satisfied. “Available Power Enterprise Revenues ” means all of the moneys in the Revenue Fund (as defined in the Power Bonds Indenture and comprised primarily of Power Enterprise Revenues and earnings thereon) remaining after the payments required by Subsections 5.5(c) -(e) of the Power Bonds Indenture, and all other amounts payable on parity with amounts paid under Subsection 5.5(f) of the Power Bonds Indenture pursuant to the terms thereof. “Net Revenues” or “Power Enterprise Revenues ” has the meaning ascribed to the term “Net Revenues” in the Power Bonds Indenture, which is defined as, for any Fiscal Year (or other designated twelve -month period), Revenues in such Fiscal Year (or other designated twelve -month period), less (a) Operation and Maintenance Expenses (as defined in the Power Bonds Indenture), and (b) any Priority R&R Fund Deposit (as defined in the Power Bonds Indenture) for such Fiscal Year (or other designated twelve-month period).
10 “Revenues” means all revenues, rates and charges received and accrued by the Commission for electric power and energy and other services, facilities and commodities sold, furnished or supplied by the Power Enterprise, together with income, earnings and profits therefrom (including interest earnings on the proceeds of any Bonds pending application thereof), as determined in accordance with GAAP. “Revenues” includes payments to the Power Enterprise on or with respect to loans from any Separate System maintained by the Commission. “Revenues” do not include (a) proceeds from the issuance of any obligations for borrowed money, (b) amounts loaned to the Power E nterprise, (c) Swap Agreement Receipts, (d) proceeds from taxes, (e) customer deposits while retained as such, (f) contributions in aid of construction, (g) gifts, (h) grants, (i) insurance or condemnation proceeds that are properly allocable to a capital account, (j) non- cash revenues or gains that may be required or permitted under GAAP, including mark- to- market gains and deferred revenues, (k) money received by the Commission as the proceeds of the sale of any portion of the properties of the Power Enter prise, (l) amounts by their terms not available for the payment of Operation and Maintenance Expenses or Principal and interest on the Bonds, (m) Refundable Credits; (n) revenues of any Separate System, (o) Water Enterprise revenues as defined in the document or agreement governing the then-outstanding senior lien obligations of the Water Enterprise for borrowed money, and ( p) Wastewater Enterprise revenues as defined in the document or agreement governing the then -outstanding senior lien obligations of the Wastewater Enterprise for borrowed money.
Under the Issuing and Paying Agent Agreement, the Commission has covenanted to establish, maintain and collect rates and charges with respect to the Power Enterprise sufficient (after giving effect to the expected receipt of refinancing proceeds from the sale of Commercial Paper Notes or Power Revenue Bonds) to pay the Commercial Paper Notes, the Parity Notes, the Bank Notes (as defined herein), all other amounts due and owing under the Series A-1 Reimbursement Agreement , the Series A -2 Reimbursement Agreem ent, the Series A -3 Reimbursement Agreement and all other obligations payable from the Power Enterprise.
The Commission has also covenanted not to issue any additional Parity Notes, bonds, notes or other obligations for borrowed money payable from revenues of the Power Enterprise unless the Commission certifies that:
(i) actual revenues of the Power Enterprise for the most recently completed fiscal year , or (ii) projected revenues for the next three fiscal years following the issuance of such Parity Notes, additional bonds, notes , additional Series of Commercial Paper Notes, or other indebtedness are or will be sufficient to satisfy the rate covenant described above, assuming the issuance of such Parity Notes, bonds, notes , additional Series of Commercial Paper Notes, or other indebtedness and repayment, if any, from the proceeds thereof of maturing Commercial Paper Notes, the Bank Notes and all other amounts due and owing under the Series A-1 Reimbursement Agreement, the Series A-2 Reimbursement Agreement and the Series A-3 Reimbursement Agreement pursuant to the terms of such financing.
The Commercial Paper Notes are also payable from the proceeds of refunding Commercial Paper Notes or refunding bonds or other obligations which may be authorized and issued from time to time for such purpose.
Notwithstanding the foregoing, as set forth in the Issuing and Paying Agent Agreement, (i) proceeds of the Series A- 1 Notes may be used to refinance Series A-2 Notes or Subseries A-3 Notes (Tax-Exempt), (ii) proceeds of the Series A-2 Notes may be used to refinance Series A -1 Notes or Subseries A -3 Notes (Tax-Exempt), (iii) proceeds of the Subseries A-3 Notes (Tax-Exempt) may be used to refinance Series A-1 Notes or Series A-2 Notes, and (iv) proceeds of the Subseries A-3-T Notes (Taxable) may be used to refinance the Series A-1 Notes, Series A-2 Notes or Subseries A-3 Notes. Notwithstanding the foregoing or anything to the contrary in the Issuing and Paying Agent Agreement, proceeds of the Series A -1 Notes, the Series A -2 Notes and the Subseries A -3 Notes may not be used to finance or refinance any portion of the Cost of Taxable Power Enterprise Projects (as such term is defined in the Issuing and Paying Agent Agreement) and administrative costs funded with proceeds of the Subseries A -3-T Notes, unless the Commission receives an opinion of b ond counsel that such use of proceeds will not adversely affect the exclusion from gross income for federal tax purposes of interest on the Series A-1 Notes, the Series A-2 Notes and the Subseries A-3 Notes.
SERIES A-1 LETTER OF CREDIT AND SERIES A-1 REIMBURSEMENT AGREEMENT Payments of principal and interest on the Series A-1 Notes will be made from drawings under the Series A-1 Letter of Credit. The following description is a summary of certain provisions of the Series A -1 Letter of Credit and the Series A -1 Reimbursement Agreement . Such summary does not purport to be a complete description or restatement of the material provisions of the Series A-1 Letter of Credit or the Series A-1 Reimbursement Agreement.
Investors should obtain and review copies of the Series A -1 Letter of Credit and the Series A -1 Reimbursement
11 Agreement in order to understand all of the terms of those documents . All capitalized terms appearing under this heading “SERIES A -1 LETTER OF CREDIT AND SERIES A -1 REIMBURSEMENT AGREEMENT” shall have the meanings assigned to them in the Series A-1 Reimbursement Agreement.
TIMELY PAYMENT OF PRINCIPAL OF AND/OR INTEREST ON MATURING SERIES A -1
NOTES IS DEPENDENT UPON THE AVAILABILITY OF PROCEEDS OF DRAWS UNDER THE SERIES A-1 LETTER OF CREDIT.
Series A-1 Letter of Credit
The Series A-1 Letter of Credit is an irrevocable transferable obligation of the Series A-1 Bank and supports the payment of principal of and interest on maturing Series A-1 Notes only. The Series A-1 Letter of Credit may not be drawn on for any other purpose . The Series A-1 Letter of Credit was issued in an amount equal to the maximum principal amount of $125,000,000 of the Series A-1 Notes plus 270 days’ interest thereon at the rate of 12% per annum calculated on the basis of a year of 365 days (the “St ated Amount”). The Issuing and Paying Agent is authorized to draw on the Series A -1 Letter of Credit in an aggregate amount not to exceed the Stated Amount of the Series A -1 Letter of Credit and in accordance with the terms and conditions and, subject to the reductions a nd reinstatements as described therein, in amounts as set forth in the Series A -1 Letter of Credit, in one or more Drawings (as defined in the Series A-1 Letter of Credit), payable as set forth in the Series A-1 Letter of Credit on any Business Day (as defined in the Series A-1 Letter of Credit), by presentation of the appropriate certifications, (i) for the payment at maturity of the principal of and interest on Series A -1 Notes or (ii) for the payment at maturity of the principal of and interest to maturity on Series A-1 Notes that otherwise mature on or after the date that the Issuing and Paying Agent receives a Final Drawing Notice (as defined in the Series A-1 Letter of Credit) from the Series A-1 Bank.
Upon the Series A-1 Bank honoring any Drawing, the Stated Amount and the amount available to be drawn under the Series A -1 Letter of Credit by the Issuing and Paying Agent pursuant to any subsequent Drawing shall be automatically decreased by an amount equ al 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 Issuing and Paying Agent to the Series A-1 Bank on the date such Drawing is honored of proceeds of Series A-1 Notes issued on such date or (B) the Issuing and Paying Agent receives written notice from the Series A-1 Bank that the Series A-1 Bank has been reimbursed by or on behalf of the Commission for any amount drawn under the Series A -1 Letter of Credit by any Drawing, and (ii) that the Issuing and Paying Agent has not received a No -Issuance Notice (as defined in the Series A-1 Letter of Credit) from the Series A-1 Bank.
The Series A-1 Letter of Credit shall expire at the close of business of the Series A -1 Bank, on the date (the earliest of such date to occur referred to as the “Termination Date”) which is the earliest of (i) March 6 , 2026 (unless extended pursuant to the terms of the Series A -1 Letter of Credit), (ii) the later of the date on which the Series A -1 Bank receives written notice from the Issuing and Paying Agent that an Alternate Facility (as defined in the Issuing and Paying Agent Agreement) has been substituted for the Series A-1 Letter of Credit in accordance with the Issuing and Paying Agent Agreement and the effective date of any such Alternate Facility (after the Series A -1 Bank honors any properly presented and conforming Drawing on such date), (iii) the date on which the Series A -1 Bank receives written notice from the Issuing and Paying Agent that there are no longer any Series A -1 Notes Outstanding within the meaning of the Issuing and Paying Agent Agreement and that the Issuing and Paying Agent elects to terminate the Series A-1 Letter of Credit, (iv) the earlier of (a) the fifteenth (15th) calendar day after the date on which the 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, and (v) the earlier of (a) the third (3rd) Business Day (as defined in the Series A-1 Letter of Credit) after the date on which the Commission receives an Acceleration Notice (as defined herein), and (b) the date on which the Drawing resulting from the delivery of the Acceleration Notice is honored under the Series A-1 Letter of Credit.
Pursuant to the Issuing and Paying Agent Agreement, no Series A-1 Notes may be outstanding at the time of any substitution of an Alternate Facility for the Series A-1 Letter of Credit.
12 Series A-1 Reimbursement Agreement Events of Default If any of the following events occurs, each such event will be an “Event of Default” under the Series A -1 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 Series A -1 Reimbursement Agreement), or (ii) any Obligation (as defined in the Series A-1 Reimbursement Agreement) (other than a Reimburs ement Obligation) under the Series A -1 Reimbursement Agreement or under the Fee Agreement (as defined in the Series A -1 Reimbursement Agreement) and, in such case, such failure continues for five (5) Business Days (as defined in the Series A-1 Reimbursement Agreement);
(b) any representation or warranty made by or on behalf of the Commission in the Series A -1 Reimbursement Agreement or in any other Basic Document (as defined in the Series A -1 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 covenants set forth in the Series A-1 Reimbursement Agreement;
(d) the Commission defaults in the due performance or observance of any other term, covenant or agreement contained in the Series A-1 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, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property (as defined in the Series A-1 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 material 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) under the “SERIES A -1 LETTER OF CREDIT AND SERIES A-1 REIMBURSEMENT AGREEMENT—Series A-1 Reimbursement Agreement Events of Default”;
(f) a custodian, receiver, trustee, examiner, liquidator or similar official is appointed for the Commission or the City or any substantial part of its Property, or a proceeding described in clause (v) of paragraph (e) under the “SERIES A -1 LETTER OF CREDIT AN D SERIES A -1 REIMBURSEMENT AGREEMENT —Series A-1 Reimbursement Agreement Events of Default,” 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 Series A-1 Reimbursement Agreement) of the Commission by the Commission or any Governmental Authority with appropriate jurisdiction;
(h) any material provision of the Series A -1 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
13 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 cont ests the validity or enforceability of any obligation to pay Power Enterprise Debt (as defined in the Series A -1 Reimbursement Agreement), including, without limitation, the Power 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 Series A-1 Reimbursement Agreement, the Charter, any other Basic Document or any operative document related to Power Enterprise Debt, including, without limitation, the Power Bonds Indenture; (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 Power Enterprise Debt, beyond the period of grace, if any, provided in the instrument or agreement under which such Power Enterprise Debt was created or incurred; or (ii) defaults in the observance or performance of any agreement or condition relating to any Power 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 Power Enterprise Debt t o become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Power Enterprise Debt; (k) the Commission (i) defaults on the payment of the principal of or interest on any Debt (other than Power 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 Power 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 Power 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 Power 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 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;
(n) 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-1 Notes is includable in the gross income of the holder(s) or owner(s) of such Series A -1 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 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 or S&P (i) downgrades its long- term rating of any Senior Debt (as defined in the Series A-1 Reimbursement Agreement) of the Commission to below “BBB+” (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 Series A -1 Reimbursement Agreement) has occurred which could reasonably be expected to have a material adverse effect on the Commission’s ability
14 to perform its obligations under the Series A-1 Reimbursement Agreement or the other Basic Documents or to result in a material adverse effect on the enforceability or validity of the Series A -1 Reimbursement Agreement or any of the other Basic Documents.
Series A-1 Reimbursement Agreement Remedies
Upon the occurrence of any Event of Default under the Series A-1 Reimbursement Agreement, the Series A-1 Bank may exercise any one or more of the following rights and remedies in addition to any other remedies provided in the Series A-1 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 the Commission; provided, however, that in the case of an Event of Default described in paragraph (e), (f) or (g) above under the subcaption “LETTERS OF CREDIT AND REIMBURSEMENT AGREEMENTS — Series A-1 Reimbursement Agreement Events of Default,” such acceleration will automatically occur (unless such automatic acceleration is waived by the Series A-1 Bank in writing); or (b) issue a No Issuance Notice (the effect of which will be as provided in the Series A -1 Reimbursement Agreement), reduce the Stated Amount of the Series A -1 Letter of Credit to the amount of the then outstanding Series A-1 Notes supported by the Series A -1 Letter of Credit plus a corresponding amount of interest coverage and/or terminate the Stated Amount as the then outstanding Series A-1 Notes are paid; or
(c) issue the Final Drawing Notice (the effect of which will be to cause the Termination Date of the Series A-1 Letter of Credit to occur on the fifteenth (15) calendar day after the date of receipt thereof by the 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.
Upon the occurrence of an “event of default” under the Issuing and Paying Agent Agreement, the Series A-1 Bank may by notice to the Commission and the Issuing and Paying Agent (such notice, the “Acceleration Notice”), declare the principal of all outstanding Series A -1 Notes, and the interest accrued thereon, to be due and payable immediately, whereupon the same shall become and shall be immediately due and payable and instruct the Issuing and Paying Agent to submit a Drawing under the Series A-1 Letter of Credit to pay such immediately due and payable amount.
SERIES A-2 LETTER OF CREDIT AND SERIES A-2 REIMBURSEMENT AGREEMENT Payments of principal and interest on the Series A -2 Notes will be made from drawings under the Series A - 2 Letter of Credit. The following description is a summary of certain provisions of the Series A-2 Letter of Credit and the Series A -2 Reimbursement Agreement. Such summary does not purport to be a complete description or restatement of the material provisions of the Series A-2 Letter of Credit or the Series A-2 Reimbursement Agreement.
Investors should obtain and review copies of the Series A-2 Letter of Credit and the Series A-2 Reimbursement Agreement in order to understand all of the terms of those documents. All capitalized terms appearing under this heading “SERIES A -2 LETTER OF CREDIT AND SERIES A -2 REIMBURSEMENT AGREEMENT” shall have the meanings assigned to them in the Series A-2 Reimbursement Agreement.
TIMELY PAYMENT OF PRINCIPAL OF AND/OR INTEREST ON MATURING SERIES A -2
NOTES IS DEPENDENT UPON THE AVAILABILITY OF PROCEEDS OF DRAWS UNDER THE SERIES A-2 LETTER OF CREDIT.
15 Series A-2 Letter of Credit
The Series A-2 Letter of Credit is an irrevocable transferable obligation of the Series A-2 Bank and supports the payment of principal of and interest on maturing Series A-2 Notes only. The Series A-2 Letter of Credit may not be drawn on for any other purpose. The Series A -2 Letter of Credit was issued in an amount equal to the maximum principal amount of $125,000,000 of the Series A-2 Notes plus 270 days’ interest thereon at the rate of 12% per annum computed on the basis of a 365-day year (the “Stated Amount”). The Issuing and Paying Agent is authorized to draw on the Series A-2 Letter of Credit in an aggregate amount not to exceed the Stated Amount of the Series 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 Series A -2 Letter of Credit, in one or more Drawings (as defined in the Series A-2 Letter of Credit), payable as set forth in the Series A -2 Letter of Credit on any Business D ay (as defined in the Series 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 Issuing and Paying Agent receives a Final Drawing Notice (as defined in the Series A-2 Letter of Credit) from the Series A-2 Bank.
Upon the Series A-2 Bank honoring any Drawing, the Stated Amount and the amount available to be drawn under the Series A -2 Letter of Credit by the 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, b ut only when and to the extent (i) (A) of transfer by the Issuing and Paying Agent to the Series A-2 Bank on the date such Drawing is honored of proceeds of Series A-2 Notes issued on such date or (B) the Issuing and Paying Agent receives written notice from the Series A -2 Bank that the Series A- 2 Bank has been reimbursed by or on behalf of the Commission for any amount drawn under the Series A -2 Letter of Credit by any Drawing, and (ii) that the Issuing and Paying Agent has not received a No -Issuance Notice (as defined in the Series A-2 Letter of Credit) from the Series A-2 Bank.
The Series A-2 Letter of Credit shall expire at the close of business of the Series A -2 Bank, on the date (the earliest of such date to occur referred to as the “Termination Date”) which is the earliest of (i) March 6, 2026 (unless extended pursuant to the terms of the Series A -2 Letter of Credit), (ii) the later of the date on which the Series A -2 Bank receives written notice from the Issuing and Paying Agent that an Alternate Facility (as defined in the Issuing and Paying Agent Agreement) has been substituted for the Series A-2 Letter of Credit in accordance with the Issuing and Paying Agent Agreement and the effective date of any such Alternate Facility (after the Series A -2 Bank honors any properly presented and conforming Drawing on such date), (iii) the date on which the Series A -2 Bank receives written notice from the Issuing and Paying Agent that there are no longer any Series A -2 Notes Outstanding within the meaning of the Issuing and Paying Agent Agreement and that the Issuing and Paying Agent elects to terminate the Series A-2 Letter of Credit, (iv) the earlier of (a) the fifteenth (15th) calendar day after the date on which the 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, and (v) the earlier of (a) the third (3rd) Business Day (as defined in the Series A-2 Letter of Credit) after the date on which the Commission receives an Acceleration Notice (as defined herein), and (b) the date on which the Drawing resulting from the delivery of the Acceleration Notice is honored under the Series A-2 Letter of Credit.
Pursuant to the Issuing and Paying Agent Agreement, no Series A-2 Notes may be outstanding at the time of any substitution of an Alternate Facility for the Series A-2 Letter of Credit.
Series 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 Series 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 Series A -2 Reimbursement Agreement), or (ii) any Obligation (as defined in the Series A-2 Reimbursement Agreement) (other than a Reimbursement Obligation) under the Series A -2 Reimbursement Agreement or under the Fee Agreement (as defined in the Series A -2 Reimbursement Agreement) and, in such case, such failure continues for five (5) Business Days (as defined in the Series A - 2 Reimbursement Agreement);
16 (b) any representation or warranty made by or on behalf of the Commission in the Series A -2 Reimbursement Agreement or in any other Basic Document (as defined in the Series 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 covenants set forth in the Series A-2 Reimbursement Agreement;
(d) the Commission defaults in the due performance or observance of any other term, covenant or agreement contained in the Series 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, o r 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, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property (as defined in the Series 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 material 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) under the “SERIES A -2 LETTER OF CREDIT AND SERIES A-2 REIMBURSEMENT AGREEMENT—Series A-2 Reimbursement Agreement Events of Default”;
(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) under the “SE RIES A-2 LETTER OF CREDIT AND SERIES A -2 REIMBURSEMENT AGREEMENT —Series A-2 Reimbursement Agreement Events of Default,” 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 Series A- 2 Reimbursement Agreement) of the Commission by the Commission or any Governmental Authority with appropriate jurisdiction;
(h) any material provision of the Series 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 Power Enterprise Debt (as defined in the Series A -2 Reimbursement Agreement), including, without limitation, the Power 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 Series A-2 Reimbursement Agreement, the Charter, any other Basic Document or any operative docum ent related to Power Enterprise Debt, including, without limitation, the Power Bonds Indenture; (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 Power Enterprise Debt, beyond the period of grace, if any, provided in the instrument or agreement under which
17 such Power Enterprise Debt was created or incurred; or (ii) defaults in the observance or performance of any agreement or condition relating to any Power 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 Power Enterprise Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Power Enterprise Debt; (k) the Commission (i) defaults on the payment of the principal of or interest on any Debt (other than Power 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 Power 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 Power 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 Power 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 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;
(n) 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-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 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 Commissi on challenges such ruling, assessment, notice or advice and a court 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 or S&P (i) downgrades its long- term rating of any Senior Debt (as defined in the Series A-2 Reimbursement Agreement) of the Commission to below “BBB+” (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 Series 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 Series A-2 Reimbursement Agreement or the other Basic Documents or to result in a material adverse effect on the enforceability or validity of the Series A -2 Reimbursement Agreement or any of the other Basic Documents.
Series A-2 Reimbursement Agreement Remedies
Upon the occurrence of any Event of Default under the Series A-2 Reimbursement Agreement, the Series A- 2 Bank may exercise any one or more of the following rights and remedies in addition to any other remedies provided in the Series 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 the
18 Commission; provided, however, that in the case of an Event of Default described in paragraph (e), (f) or (g) above under the subcaption “LETTERS OF CREDIT AND REIMBURSEMENT AGREEMENTS — Series A-2 Reimbursement Agreement Events of Default,” such acceleration will automatically occur (unless such automatic acceleration is waived by the Series A-2 Bank in writing); or (b) issue a No Issuance Notice (the effect of which will be as provided in the Series A -2 Reimbursement Agreement), reduce the Stated Amount of the Series A -2 Letter of Credit to the amount of the then outstanding Series A-2 Notes supported by the Series A -2 Letter of Credit plus a corresponding amount of interest coverage and/or terminate the Stated Amount as the then outstanding Series A-2 Notes are paid; or
(c) issue the Final Drawing Notice (the effect of which will be to cause the Termination Date of the Series A-2 Letter of Credit to occur on the fifteenth (15) calendar day after the date of receipt thereof by the 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.
Upon the occurrence of an “event of default” under the Issuing and Paying Agent Agreement, the Series A - 2 Bank may by notice to the Commission and the Issuing and Paying Agent (such notice, the “Acceleration Notice”), declare the principal of all outstanding Series A -2 Notes, and the interest accrued thereon, to be due and payable immediately, whereupon the same shall become and shall be immediately due and payable and instruct the Issuing and Paying Agent to submit a Drawing under the Series A-2 Letter of Credit to pay such immediately due and payable amount.
SERIES A-3 LETTER OF CREDIT AND SERIES A-3 REIMBURSEMENT AGREEMENT Payments of principal and interest on the Series A -3 Notes will be made from drawings under the Series A - 3 Letter of Credit. The following description is a summary of certain provisions of the Series A-3 Letter of Credit and the Series A -3 Reimbursement Agreement. Such summary does not purport to be a complete description or restatement of the material provisions of the Series A-3 Letter of Credit or the Series A-3 Reimbursement Agreement.
Investors should obtain and review copies of the Series A-3 Letter of Credit and the Series A-3 Reimbursement Agreement in order to understand all of the terms of those documents. All capitalized terms appearing under this heading “SERIES A -3 LETTER OF CREDIT AND SERIES A -3 REIMBURSEMENT AGREEMENT” shall have the meanings assigned to them in the Series A-3 Reimbursement Agreement.
TIMELY PAYMENT OF PRINCIPAL OF AND/OR INTEREST ON MATURING SERIES A -3
NOTES IS DEPENDENT UPON THE AVAILABILITY OF PROCEEDS OF DRAWS UNDER THE SERIES A-3 LETTER OF CREDIT.
Series A-3 Letter of Credit
The Series A-3 Letter of Credit is an irrevocable transferable obligation of the Series A-3 Bank and supports the payment of principal of and interest on maturing Series A-3 Notes only. The Series A-3 Letter of Credit may not be drawn on for any other purpose or for any other series of Commercial Paper Notes. The Series A-3 Letter of Credit was issued in an amount equal to the maximum principal amount of $1 00,000,000 of the Series A -3 Notes plus 270 days’ interest thereon at the rate of 12% per annum computed on the basis of a 360-day year (the “Stated Amount”).
The Issuing and Paying Agent is authorized to draw on the Series A -3 Letter of Credit in an aggregate amount not to exceed the Stated Amount of the Series A -3 Letter of Credit and in accordance with t he terms and conditions and, subject to the reductions and reinstatements as described therein, in amounts as set forth in the Series A -3 Letter of Credit, in one or more Drawings (as defined in the Series A -3 Letter of Credit), payable as set forth in the Series A-3 Letter of Credit on any Business Day (as defined in the Series A-3 Letter of Credit), by presentation of the appropriate certifications, (i) for the payment at maturity of the principal of and interest on Series A-3 Notes or (ii) for the payment at maturity of the principal of and interest to maturity on Series A -3 Notes that otherwise mature on or after the date
19 that the Issuing and Paying Agent receives a Final Drawing Notice (as defined in the Series A-3 Letter of Credit) from the Series A-3 Bank.
Upon the Series A-3 Bank honoring any Drawing, the Stated Amount and the amount available to be drawn under the Series A -3 Letter of Credit by the 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, b ut only when and to the extent (i) (A) of transfer by the Issuing and Paying Agent to the Series A-3 Bank on the date such Drawing is honored of proceeds of Series A-3 Notes issued on such date or (B) the Issuing and Paying Agent receives written notice from the Series A -3 Bank that the Series A- 3 Bank has been reimbursed by or on behalf of the Commission for any amount drawn under the Series A -3 Letter of Credit by any Drawing, and (ii) that the Issuing and Paying Agent has not received a No -Issuance Notice (as defined in the Series A-3 Letter of Credit) from the Series A-3 Bank.
The Series A-3 Letter of Credit shall expire at the close of business of the Series A -3 Bank, on the date (the earliest of such date to occur referred to as the “Termination Date”) which is the earliest of (i) February [ __], 2030 (unless extended pursuant to the terms of the Series A -3 Letter of Credit and the Series A -3 Reimbursement Agreement), (ii) the later of the date on which the Series A-3 Bank receives written notice from the Issuing and Paying Agent that an Alternate Facility (as defined in the Iss uing and Paying Agent Agreement) has been substituted for the Series A-3 Letter of Credit in accordance with the Issuing and Paying Agent Agreement and the effective date of any such Alternate Facility (after the Series A -3 Bank honors any properly presented and conforming Drawing on such date), (iii) the date on which the Series A-3 Bank receives written notice from the Issuing and Paying Agent that there are no longer any Series A-3 Notes Outstanding within the meaning of the Issuing and Paying Agent Agre ement and that the Issuing and Paying Agent elects to terminate the Series A-3 Letter of Credit, (iv) the earlier of (a) the fifteenth (15th) calendar day after the date on which the 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 Notic e is honored, and (v) the earlier of (a) the third (3rd) Business Day (as defined in the Series A -3 Letter of Credit) after the date on which the Commission receives an Accelerat ion Notice (as defined herein), and (b) the date on which the Drawing resulting from the delivery of the Acceleration Notice is honored under the Series A -3 Letter of Credit.
Pursuant to the Issuing and Paying Agent Agreement, no Series A-3 Notes may be outstanding at the time of any substitution of an Alternate Facility for the Series A-3 Letter of Credit.
Series A-3 Reimbursement Agreement Events of Default
If any of the following events occurs, each such event will be an “Event of Default” under the Series A -3 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 Series A -3 Reimbursement Agreement), or (ii) any Obligation (as defined in the Series A-3 Reimbursement Agreement) (other than a Reimbursement Obligation) under the Series A -3 Reimbursement Agreement or under the Fee Agreement (as defined in the Series A -3 Reimbursement Agreement) and, in such case, such failure continues for five (5) Business Days (as defined in the Series A - 3 Reimbursement Agreement);
(b) any representation or warranty made by or on behalf of the Commission in the Series A -3 Reimbursement Agreement or in any other Basic Document (as defined in the Series A -3 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 covenants set forth in the Series A-3 Reimbursement Agreement;
(d) the Commission defaults in the due performance or observance of any other term, covenant or agreement contained in the Series A -3 Reimbursement Agreement (other than as specified in any other
20 Event of Default thereunder) 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, o r 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, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property (as defined in the Series A-3 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 material 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) under the “SERIES A -3 LETTER OF CREDIT AND SERIES A-3 REIMBURSEMENT AGREEMENT—Series A-3 Reimbursement Agreement Events of Default”;
(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) under the “SE RIES A-3 LETTER OF CREDIT AND SERIES A -3 REIMBURSEMENT AGREEMENT —Series A-3 Reimbursement Agreement Events of Default,” 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 Series A- 3 Reimbursement Agreement) of the Commission by the Commission or any Governmental Authority with appropriate jurisdiction;
(h) any material provision of the Series A -3 Reimbursement Agreement, the Charter , the Power Bonds Indenture or any other Basic Document or any operative document related to the Power Enterprise Debt 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 by any court or other Governmental Authority 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 Power Enterprise Debt (as defined in the Series A-3 Reimbursement Agreement), including, without limitation, the Power 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 Series A-3 Reimbursement Agreement, the Charter, any other Basic Document or any operative document related to Power Enterprise Debt, including, without limitation, the Power Bonds Indenture; (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 Power Enterprise Debt, beyond the period of grace, if any, provided in the instrument or agreement under which such Power Enterprise Debt was created or incurred; or (ii) defaults in the observance or performance of any agreement or condition relating to any Power 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 Power Enterprise Debt t o become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Power Enterprise Debt;
21 (k) the Commission (i) defaults on the payment of the principal of or interest on any Debt (other than Power 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 Power 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 Power 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 witho ut regard to whether any notice is required) or cause 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 Power 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 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;
(n) 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-3 Notes is includable in the gross income of the holder(s) or owner(s) of such Series A -3 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 Commissi on challenges such ruling, assessment, notice or advice and a court 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 or S&P (i) downgrades its long- term rating of any Senior Debt (as defined in the Series A-3 Reimbursement Agreement) of the Commission to below “BBB+” (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 Series A-3 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 Series A-3 Reimbursement Agreement or the other Basic Documents or to result in a material adverse effect on the enforceability or validity of the Series A -3 Reimbursement Agreement or any of the other Basic Documents.
Series A-3 Reimbursement Agreement Remedies
Upon the occurrence of any Event of Default under the Series A-3 Reimbursement Agreement, the Series A- 3 Bank may exercise any one or more of the following rights and remedies in addition to any other remedies provided in the Series A-3 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 the Commission; provided, however, that in the case of an Event of Default described in paragraph (e), (f) or (g) above under the subcaption “LETTERS OF CREDIT AND REIMBURSEMENT AGREEMENTS — Series A-3 Reimbursement Agreement Events of Default,” such acceleration will automatically occur (unless such automatic acceleration is waived by the Series A-3 Bank in writing); or (b) issue a No Issuance Notice (the effect of which will be as provided in the Series A -3 Reimbursement Agreement), reduce the Stated Amount of the Series A -3 Letter of Credit to the amount of the then outstanding Series A-3 Notes supported by the Series A -3 Letter of Credit plus a corresponding
22 amount of interest coverage and/or terminate the Stated Amount as the then outstanding Series A-3 Notes are paid and terminate the Series A-3 Letter of Credit when no Series A-3 Notes remain oustanding; or (c) issue the Final Drawing Notice (the effect of which will be to cause the Termination Date of the Series A-3 Letter of Credit to occur on the fifteenth (15) calendar day after the date of receipt thereof by the 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.
Upon the occurrence and during the continuance of an Event of Default, all amounts owing to the Bank hereunder shall bear interest at the Default Rate (as defined in the Series A-3 Reimbursement Agreement), payable on demand. Upon the occurrence of an “event of default” under the Issuing and Paying Agent Agreement, the Series A - 3 Bank may by notice to the Commission and the Issuing and Paying Agent (such notice, the “Acceleration Notice”), declare the principal of all outstanding Series A -3 Notes, and the i nterest accrued thereon, to be due and payable immediately, whereupon the same shall become and shall be immediately due and payable and instruct the Issuing and Paying Agent to submit a Drawing under the Series A-3 Letter of Credit to pay such immediately due and payable amount.
THE BANKS
[TO BE UPDATED PRIOR TO POSTING]
The following information has been furnished by the Bank s for use in this Offering Memorandum . Such information has not been independently confirmed or verified by the Commission. No representation is made as to the accuracy or adequacy of such information subsequent to the date hereof. No representation is made herein by the Commission or the Dealers 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 Bank s prior to making a decision to purchase the applicable Commercial Paper Notes.
Bank of America, N.A.
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 March 31, 2024, Bank of America had consolidated assets of $2.550 trillion, consolidated deposits of $2.048 trillion and stockholder’s equity of $237.333 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, 2023, 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 such 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.
23 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 Bank of America 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
100 North Tryon Street, NC1-007-56-06
Charlotte, North Carolina 28255
PAYMENTS OF PRINCIPAL AND INTEREST ON SERIES A-1 NOTES AND THE SERIES A-2 NOTES WILL BE MADE FROM DRAWINGS UNDER THE SERIES A- 1 LETTER OF CREDIT AND THE SERIES A-2 LETTER OF CREDIT, RESPECTIVELY . ALTHOUGH THE SERIES A -1 LETTER OF CREDIT AND THE SERIES A -2 LETTER OF CREDIT ARE EACH A BINDING OBLIGATION OF BANK OF AMERICA, THE SERIES A -1 NOTES AND 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-1 NOTES AND 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.
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 referred to under this caption is correct as of any time subsequent to the referenced date.
Sumitomo Mitsui Banking Corporation, acting through its New York Branch 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, 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 statutory share transfer ( kabushiki-iten) as a holding company under which SMBC became a wholly-owned subsidiary.
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 governmental 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 aut horities, 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 fin ancing 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
24 Audited consolidated financial statements for SMFG and its consolidated subsidiaries, 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 i ts 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.
RATINGS
[MA TO CONFIRM] Fitch has assigned a rating of “ [F1+]” to the Series A -1 Notes. S&P has assigned a rating of “[A-1]” to the Series A-1 Notes. Each of such ratings is based on the understanding that the Series A-1 Letter of Credit has been issued by the Series A -1 Bank. Fitch has assigned a rating of “ [F1+]” to the Series A -2 Notes.
S&P has assigned a rating of “[A-1]” to the Series A-2 Notes. Each of such ratings is based on the understanding that the Series A-2 Letter of Credit has been issued by the Series A -2 Bank. Fitch has assigned a rating of “[F1 +]” to the Series A-3 Notes. S&P has assigned a rating of “[A-1]” to the Series A-3 Notes. Each of such ratings is based on the understanding that the Series A-3 Letter of Credit has been issued by the Series A-3 Bank.
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: Fitch Ratings, Inc., 33 Whitehall Street, New York, New York 10004 and S&P G lobal Ratings, a division of Standard & Poor’s Financial Services LLC, 55 Water Street, New York, New York 10041. The Commission furnished to such rating agencies certain information and materials regarding the Commercial Paper Notes and the Power Enterprise. In addition, the Bank furnished certain information to such rating agencies regarding the Bank and its applicable Letter of Credit and applicable Reimbursement Agreement. There is no assurance such ratings will continue for any given period or that they 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 ratings prior to purchasing the Commercial Paper Notes. Any such change in or withdrawal of such ratings could have an adverse effect on the market for or market price of the Commercial Paper Notes . The above ratings are not recommendations to buy, sell or hold the Commercial 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 the Commercial Paper Notes.
The ratings on the Commercial Paper Notes may be adversely affected by a downgrade of the credit ratings of the Bank. The Commission undertakes no responsibility to oppose any such change or withdrawal . Although the Commission has covenanted to maintain a credit or liquidity facility for the Commercial Paper Notes, it is not obligated to replace the Bank in the event of a downgrade of the Bank’s rating. The Commission has not covenanted to provide notice to holders of the Commercial Paper Notes of any downgrade of the credit ratings of the Bank.
ABSENCE OF LITIGATION
[CAT TO CONFIRM] 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 Barclays Capital Inc., Goldman Sachs & Co. LLC and RBC Capital Markets, LLC, each as a non-exclusive dealer with respect to the offering and sale of the Commercial Paper Notes.
Each Dealer and its respective affiliates together comprise a full- service financial institution engaged in various activities, which may include securities trading, commercial and investment banking, advisory, investment management, principal investment, hedging, financing and brokerage activities. Each Dealer and its respecti ve
25 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 ordinary 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 include 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. Each Dealer and its respective affiliates may also communicate independent investment recommendations, market color or trading ideas and publish independent research views in respect of such offerings of the Commission.
TAX MATTERS
Series A-1 Notes and Series A-2 Notes
On March 7, 2019, Orrick, Herrington & Sutcliffe LLP, Tax Counsel to the Commission (“Tax Counsel”), delivered its opinion that, based upon an analysis of then existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series A -1 Notes and Series A -2 Notes, when issued in accordance with the Issuing and Paying Agent Agreement and the tax certificate of the Commission, dated March 7 , 2019 (as it has been or may be amended or supplemented from time to time, the “Series A -1 and Series A -2 Tax Certificates”), will be excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “C ode”) and exempt from State of California personal income taxes. Tax Counsel’s opinion stated that interest on the Series A -1 Notes and Series A-2 Notes is not a specific preference item for purposes of the federal alternative minimum tax. Tax Counsel expressed no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Series A -1 Notes or the Series A -2 Notes. Tax Counsel now observes that interest on the Series A-1 Notes and Series A-2 Notes included in adjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax. A complete copy of the opinion of Tax Counsel, which speaks only as of its date, is set forth in Appendix [B -1] hereto. Such opinion has not been updated since the date of its issuance and Tax Counsel is not rendering an opinion on the current tax status of the Series A-1 Notes or the Series A-2 Notes.
Notice 94-84, 1994-2 C.B. 559, states that the Internal Revenue Service (the “IRS”) is studying whether the amount of the payment at maturity on short -term debt obligations (i.e., debt obligations with a stated fixed rate of interest which mature not more than one year from the date of issue) that is excluded from gross income for federal income tax purposes is (i) the stated interest payable at maturity or (ii) the difference between the issue price of the short-term debt obligations and the aggregate amount to be paid at maturity of the short -term debt obligations (the “original issue discount”). For this purpose, the issue price of the short-term debt obligations is the first price at which a substantial amount of the short-term debt obligations is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of Dealer, placement agents or wholesalers). Until the IRS provides further guidance with respect to tax- exempt short-term debt obligations, taxpayers may treat either the stated interest payable at maturity or the original issue discount as interest that is excluded from gross income for federal income tax purposes. However, taxpayers must treat the amount to be paid at maturity on all tax- exempt sho rt-term debt obligations in a consistent manner. Prospective purchasers of Series A -1 Notes and Series A-2 Notes should consult their own tax advisors with respect to the tax consequences of ownership of Series A-1 Notes and Series A-2 Notes if the prospective purchaser elects original issue discount treatment.
Series A-1 Notes or Series A -2 Notes purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) (“Premium Series A-1 or Series A -2 Notes”) will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of notes, like the Premium Series A-1 or Series A-2 Notes, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a beneficial owner’s basis in a Premium Series A -1 or Series A -2 Note, will be reduced by the amount of amortizable bond premium properly allocable to such beneficial owner. Beneficial owners of Premium Series A-1 or Series A -2 Notes should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.
26 The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Series A-1 Notes and Series A-2 Notes.
The Commission has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Series A -1 Notes and Series A -2 Notes will not be included in federal gross income. Inaccuracy of these representations o r failure to comply with these covenants may result in interest on the Series A-1 Notes and Series A-2 Notes being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Series A-1 Notes and Series A-2 Notes. The opinion of Tax Counsel, which speaks only as of its date, assumed the accuracy of these representations and compliance with these covenants.
Tax Counsel will not undertake, and has not undertaken, to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Tax Counsel’s attention after March 7, 2019, may adversely affect or have adversely affected the value of, or the tax status of interest on, the Series A-1 Notes and Series A-2 Notes. Accordingly, the opinion of Tax Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.
Although Tax Counsel rendered an opinion on March 7, 2019, that interest on the Series A-1 Notes and Series A-2 Notes, when issued in accordance with the Issuing and Paying Agent Agreement and the Series A -1 and Series A-2 Tax Certificates, will be exclude d from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Series A-1 Notes and Series A-2 Notes may otherwise affect a beneficial owner’s federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the beneficial owner or the beneficial owner’s other items of income or deduction. Tax Counsel expressed no opinion regarding any such other tax consequences.
Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions, including any proposals, clarifications or decisions occurring after March 7, 2019, may cause interest on the Series A- 1 Notes and Series A-2 Notes to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such int erest. The introduction or enactment of any such legislative proposals, or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Series A-1 Notes and Series A-2 Notes. Prospective purchasers of the Series A-1 Notes and Series A-2 Notes should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, including those occurring after March 7, 2019, as to which Tax Counsel expressed no opinion.
The opinion of Tax Counsel delivered on March 7, 2019, was based on then current legal authority, covered certain matters not directly addressed by such authorities, and represented Tax Counsel’s judgment as to the proper treatment of the Series A-1 Notes and Series A-2 Notes for federal income tax purposes. It is not binding on the IRS or the courts. Furthermore, Tax Counsel did not give, cannot give and will not give any opinion or assurance about the activities of the Commission after the date of such opinion, or about the effect of changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS occurring after the date of its opinion. The Commission has covenanted, however, to comply with the requireme nts of the Code.
Tax Counsel’s engagement with respect to the Series A -1 Notes and Series A -2 Notes ended on March 7, 2019, and, unless separately engaged, Tax Counsel is not obligated to defend the Commission or the beneficial owners regarding the tax-exempt status of the Series A-1 Notes and Series A-2 Notes in the event of an audit examination by the IRS. Under current procedures, the beneficial owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax - exempt notes is difficult, obtaining an independent review of IRS positions with which the Commission legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Series A -1 Notes and Series A-2 Notes for audit, or the course or result of such audit, or an audit of notes presenting similar tax issues may affect the market price for, or the marketability of, the Series A -1 Notes and Series A -2 Notes, and may cause the Commission or the beneficial owners to incur significant expense.
Payments on the Series A -1 Notes and Series A -2 Notes generally will be subject to U.S. information reporting and possibly to “backup withholding.” Under Section 3406 of the Code and applicable U.S. Treasury Regulations issued thereunder, a non- corporate beneficial owner of Series A -1 Notes and Series A -2 Notes may be
27 subject to backup withholding with respect to “reportable payments,” which include interest paid on the Series A -1 Notes and Series A-2 Notes and the gross proceeds of a sale, exchange, redemption, retirement or other disposition of the Series A-1 Notes and Series A-2 Notes. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a U.S. taxpayer identification number (“TIN”) to the payor in the manner required, (ii) the IRS notifies the payor that the TIN furnished by the payee is incorrect, (iii) there has been a “notified payee underreporting” described in Section 3406(c) of the Code or (iv) the payee fails to certify under penalty of perjury that the payee is not subject to withholding under Section 3406(a)(1)(C) of the Code. Amounts withheld under the backup withholding rules may be refunded or credited against a beneficial owner’s federal income tax liability, if any, provided that the required information is timely furnished to the IRS. Certain benef icial owners (including among others, corporations and certain tax- exempt organizations) are not subject to backup withholding. The failure to comply with the backup withholding rules may result in the imposition of penalties by the IRS .
Subseries A-3 Notes
In the opinion of Tax Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Subseries A -3 Notes, when issued in accordance with the Issuing and Paying Agent Agreement and the tax certificate of the Commission, dated February [__], 2025 (as it may be amended or supplemented from time to time, the “Subseries A-3 Tax Certificate”), will be excluded from gross income for federal income tax purposes under Section 103 of the Code and will be exempt from State of California personal income taxes. Tax Counsel is of the further opinion that interest on the Subseries A-3 Notes will not be a specific preference item for purposes of the federal individual alternative minimum tax. Tax Counsel observes that interest on the Subseries A-3 Notes included in adjusted financial statement income of certain corporations will not be excluded from the federal corpo rate alternative minimum tax. Tax Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Subseries A-3 Notes. A complete copy of the proposed form of opinion of Tax Counsel is set forth in Appendix [B-2].
Notice 94-84, 1994-2 C.B. 559, states that the IRS is studying whether the amount of the payment at maturity on short-term debt obligations (i.e., debt obligations with a stated fixed rate of interest which mature not more than one year from the date of is sue) that is excluded from gross income for federal income tax purposes is (i) the stated interest payable at maturity or (ii) the difference between the issue price of the short -term debt obligations and the aggregate amount to be paid at maturity of the short -term debt obligations (the “original issue discount”). For this purpose, the issue price of the short-term debt obligations is the first price at which a substantial amount of the short- term debt obligations is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of Dealer, placement agents or wholesalers). Until the IRS provides further guidance with respect to tax-exempt short-term debt obligations, taxpayers may treat either the stated interest payable at maturity or the original issue discount as interest that is excluded from gross income for federal income tax purposes. However, taxpayers must treat the amount to be paid at maturity on all tax -exempt short-term debt obligations in a consistent manner.
Prospective purchasers of Subseries A -3 Notes should consult their own tax advisors with respect to the tax consequences of ownership of Subseries A -3 Notes if the prospective purchaser elects original issue discount treatment.
Subseries A-3 Notes purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) (“Premium Subseries A -3 Notes”) will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of notes, like the Premium Subseries A -3 Notes, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a beneficial owner’s basis in a Premium Subseries A -3 Note, will be reduced by the amount of amortizable bond premium properly allocable to such beneficial owner. Beneficial owners of Premium Subseries A-3 Notes should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.
The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Subseries A -3 Notes. The Commission has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Subseries A -3 Notes will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Subseries A -3 Notes
28 being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Subseries A-3 Notes. The opinion of Tax Counsel assumes the accuracy of these representations and compliance with these covenants. Tax Counsel will not undertake, and has not undertaken, to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring), or any other matters coming to Tax Counsel’s attention after the date of issuance of the Subseries A-3 Notes may adversely affect the value of, or the tax status of interest on, the Subseries A -3 Notes. Accordingly, the opinion of Tax Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.
Although Tax Counsel is of the opinion that interest on the Subseries A-3 Notes, when issued in accordance with the Issuing and Paying Agent Agreement and the Subseries A -3 Tax Certificate, will be excluded from gross income for federal income tax purposes and will be exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Subseries A -3 Notes may otherwise affect a beneficial owner’s federal, state or local tax liability. The nature and extent of these other tax consequences will depend upon the particular tax status of the beneficial owner or the beneficial owner’s other items of income or deduction. Tax Counsel expresses no opinion regarding any such other ta x consequences.
Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Subseries A -3 Notes to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subjec t to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Subseries A-3 Notes. Prospective purchasers of the Subseries A-3 Notes should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, and regarding the impact of future legislation, regulations or litigation, as to which Tax Counsel expresses no opinion.
The opinion of Tax Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Tax Counsel’s judgment as to the proper treatment of the Subseries A -3 Notes for federal income tax purposes. It is not binding on the IRS or the courts. Furthermore, Tax Counsel cannot give and has not given any opinion or assurance about the future activities of the Commission, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The Commission has covenanted, however, to comply with the requirements of the Code.
Tax Counsel’s engagement with respect to the Subseries A-3 Notes ends with the delivery of its opinion, and, unless separately engaged, Tax Counsel is not obligated to defend the Commission or the beneficial owners regarding the tax-exempt status of the Subseries A -3 Notes in the event of an audit examination by the IRS. Under current procedures, beneficial owners would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt notes is difficult, obtaining an independent review of IRS positions with which the Commission legitimately disagrees, may not be practicable.
Any action of the IRS, including but not limited to selection of the Subseri es A-3 Notes for audit, or the course or result of such audit, or an audit of notes presenting similar tax issues may affect the market price for, or the marketability of, the Subseries A-3 Notes, and may cause the Commission or the beneficial owners to incur significant expense.
Payments on the Subseries A-3 Notes generally will be subject to U.S. information reporting and possibly to “backup withholding.” Under Section 3406 of the Code and applicable U.S. Treasury Regulations issued thereunder, a non- corporate beneficial owner o f Subseries A -3 Notes may be subject to backup withholding with respect to “reportable payments,” which include interest paid on the Subseries A -3 Notes and the gross proceeds of a sale, exchange, redemption, retirement or other disposition of the Subserie s A-3 Notes. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a U.S. TIN to the payor in the manner required, (ii) the IRS notifies the payor that the TIN furnished by the payee is incorrect, (iii) there has been a “notified payee underreporting” described in Section 3406(c) of the Code or (iv) the payee fails to certify under penalty of perjury that the payee is not subject to withholding under Section 3406(a)(1)(C) of the Code. Amounts withheld under the backup withholding rules may be refunded or credited against a beneficial owner’s federal income tax liability, if any, provided that the required information is timely furnished to the IRS. Certain beneficial owners (including among
29 others, corporations and certain tax- exempt organizations) are not subject to backup withholding. The failure to comply with the backup withholding rules may result in the imposition of penalties by the IRS.
Subseries A-3-T Notes
State of California Income Tax Considerations. In the opinion of Tax Counsel, interest on the Subseries A - 3-T Notes is exempt from State of California personal income taxes.
Certain United States Federal Tax Considerations. Interest on the Subseries A -3-T Notes is not excluded from gross income for federal income tax purposes.
Prospective investors that are not individuals or regular C corporations who are U.S. persons purchasing the Subseries A-3-T Notes for investment should consult their own tax advisors as to any tax consequences to them from the purchase, ownership and disposition of the Subseries A-3-T Notes.
LEGAL MATTERS
Tax Counsel rendered the legal opinions described in “TAX MATTERS” above, copies of which are set forth in Appendix B hereto. Tax Counsel’s opinions speak only as of their dates. Tax Counsel is not passing upon and undertakes no responsibility for the ac curacy, completeness or fairness of the information contained in this Offering Memorandum.
ADDITIONAL INFORMATION
The descriptions of and references to the Issuing and Paying Agent Agreement, the Letters of Credit and the Reimbursement Agreements 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. Capitalized terms used herein not otherwise defined shall have the meanings ascribed thereto in the related Issuing and Paying Agent Agreement.
The Commercial Paper Notes are exempt from the continuing disclosure requirements of Securities Exchange Commission Rule 15c2- 12, and the Commission has not undertaken to provide any secondary market information regarding the Commercial Paper Notes. The C ommission files official statements and continuing disclosure reports and notices with respect to its Power Revenue Bonds with the Municipal Securities Rulemaking Board (the “MSRB”).
Such filings may be accessed through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org. Neither such website nor the information contained therein (including such filings) are incorporated by reference herein.
The information and expressions of opinion in this Offering Memorandum 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 such information or expressions of opinion since the date hereof.
Copies of the Resolutions, the Ordinances and the Issuing and Paying Agent Agreement, and redacted forms of the Letters of Credit and the Reimbursement 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: Capital Finance Director
525 Golden Gate Ave., 4th Floor
San Francisco, California 94102
Tel: (415) 551-2973
30 Fax. (415) 487-5258
Email: [email protected]
No dealer or other person has been authorized by the Commission 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.
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APPENDIX A
BOOK-ENTRY SYSTEM FOR COMMERCIAL PAPER NOTES
General
One master Commercial Paper Note in the aggregate principal amount not exceeding the $125,000,000 available to secure the Commercial Paper Notes (Power Series) Series A-1 (Tax-Exempt), have been registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), New York, NY.
One master Commercial Paper Note in the aggregate principal amount not exceeding the $125,000,000 available to secure the Commercial Paper Notes (Power Series) Series A-2 (Tax-Exempt), have been registered in the name of Cede & Co., as nominee of DTC.
Two master Commercial Paper Notes in the collective, aggregate principal amount not exceeding the $100,000,000 evidencing the Commercial Paper Notes (Water Series, Proposition E), Subseries A -3 (Tax-Exempt) and Subseries A-3-T (Taxable), respectively, have been registered in the name of Cede & Co., as nominee of DTC.
The information in this section concerning DTC and DTC’s book- entry system has been obtained from sources that the Commission believes to be reliable, but the Commission takes no responsibility for the accuracy thereof.
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 such other name as may be requested by an authorized representative of DTC.
DTC, the world’s largest securities 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 corpor ation” 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 Participants 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 the 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 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 a Standard & Poor’s rating of AA+ . T he 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 conf irmations 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
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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 other 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 Direct 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 Commer cial Paper Notes . For example, Beneficial Owners of Commercial Paper Notes may wish to ascertain that the nominee holding the Commercial Paper Notes for their benefit has agreed to obtain and transmit notices to Beneficial Owners . In the alternative, 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 MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Commission 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 records .
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 responsibility of such Participant and not of DTC, the Issuing and Paying Agent, or t he Commission, subject to any statutory or regulatory requirements as may be in effect from time to time . Payment of principal of and interest on 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 PARTICIPANTS, 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 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
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the event that a successor depository is not obtained, Commercial Paper Note certificates will be printed and delivered as described in the Issuing and Paying Agent Agreement.
The Commission may decide to discontinue use of the system of book-entry only 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 NOTICE 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 D IRECT 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.
APPENDIX B
COPY OF BOND COUNSEL OPINION
[Attached]
APPENDIX C
POWER ENTERPRISE FINANCIAL STATEMENTS
[Attached]