Nikolai J. Sklaroff,
Capital Finance Director
January 13, 2026
SFPUC Interim Funding Programs
Approve Credit Facilities Agreements
Agenda
• Overview of the SFPUC’s Interim Funding
and Commercial Paper Program and
expansion
• Combined Presentation for Two Agenda
Items, Two Votes
• Power Enterprise Credit Facility Approvals
• Wastewater Enterprise Credit Facility Approvals
2 Interim Funding - Lowers Cost
• Use interim credit facilities – without drawing on them – to demonstrate funds available for release of Controller’s Reserves.
• Borrow in small amounts of $30 - 50 million only as
needed from Commercial Paper proceeds.
• When capacity exhausted, refunding commercial paper
with long-term bonds or loans to re-establish capacity.
Rates illustrative only 3
Capital Financing Progression To Lower Costs
4 Interim Funding Programs
• Provides low-cost interim funding for each
Enterprise’s Capital Programs
• with approximately 3% - 4% all-in Commercial Paper
borrowing rate in today's market (interest rate (coupon), credit or liquidity facility fees and dealer fees)
• The SFPUC solicited bids from the pre-qualified pool
of credit providers maintained by the San Francisco
Airport Commission and received responses from
seven banks
• The solicitation focused on renewals for both the
Power and Wastewater enterprises and expansion of
the interim funding program for Wastewater.
5 Interim Funding Program
(Power Enterprise)
• $450 million authorized:
• Three series ($350 million) for Commercial Paper (CP); one series ($100 million) for Revolving Credit Line
Series
Amount
($millions) Credit Facility Bank Facility Type Exp. Date A-1 $125 Bank of America Letter of Credit 3/6/2026
A-2 125 Bank of America Letter of Credit 3/6/2026
A-3/A-3-T 100 Sumitomo Mitsui Letter of Credit 2/15/2030 R-1/R-1T 100 Wells Fargo Revolver 3/3/2028
6 Amended/Substituted Credit Facility
(Power Enterprise)
• Staff recommends the following proposals to replace expiring facilities:
• Both facilities have the option to extend the Letter of Credit for up to a total term of nine years from the commencement of the initial term, subject to negotiation or competitive process.
• Initial renewal terms: A-1: 4 years. A-2: 3 years.
Expiring Facility Expiring
Fee
Proposed Replacement
Facility
Proposed Fee
(Level 1)
Short-Term
Bank Ratings
A-1,
Bank of America
($125 million)
0.31%
A-1,
Bank of America
($125 million)
(Third Amendment)
0.31%, or
approx. $451k
per year
A-1, F1+
A-2,
Bank of America
($125m)
0.29%
A-2,
Bank of America
($125 million)
(First Amendment)
0.31%, or
approx.
$424k per year
A-1, F1+
7 Interim Funding Program
(Wastewater Enterprise)
• $1.25 billion authorized:
• Six series ($825 million) for Commercial Paper (CP); one series ($75 million) for Revolving Credit Line
Series
Amount
($millions) Credit Facility Bank Facility Type Exp. Date A-1 $150 Sumitomo Mitsui Bank Letter of Credit 3/2/2029 A-2 150 Bank of America Letter of Credit 4/24/2026
A-3 - Dormant N/A -
A-4 150 TD Bank Liquidity Facility 7/3/2028
A-5 - Dormant N/A -
A-6 125 Bank of America Liquidity Facility 8/2/2027
A-7 100 Sumitomo Mitsui Letter of Credit 5/31/2027
A-8 150 BMO Liquidity Facility 11/9/2028
R-1 75 US Bank Revolving
Credit Agreement
7/16/2027
8 Amended/Substituted Credit Facility
(Wastewater Enterprise)
• Staff recommends the following proposals for renewal and new facilities, utilizing the expanded $1.25 billion authorization:
• All facilities include the option for future extensions for up to a total term of nine years, subject to negotiation or competitive process. • The initial renewed term for A-2 is 4 years, and for A-3/A-3-T is 5 years, and for A-5/A-5-T is 3 years.
Expiring
Facility
Expiring
Fee
Proposed Replacement
Facility
Proposed
Fee (Level 1)
Short-Term
Bank
Ratings
A-2,
Bank of
America
($150 million)
0.27%
A-2, Bank of America
($150 million)
Letter of Credit
0.31%, or
approx. $508k P-1, A-1
A-3,
Dormant N/A
A-3/A-3-T, Bank of America
($100 million) Letter of Credit
(New Reimbursement
Agreement)
0.33% or
approx. $366k P-1, A-1
A-5,
Dormant N/A
A-5/A-5-T, Truist ($125
million) Letter of Credit (New
Reimbursement Agreement)
0.32% or
Approx.
$444k
P-1, A-1
9 Recommended Commission Action
(Power Series A-1 and A-2)
• Series A-1: Request to approve Forms documents in the Principal amount Not to Exceed $125 Million with Bank of America:
• Third Amendment to the Original Reimbursement Agreement • Amended and Restated Fee Agreement
• Series A-2: Request to approve Forms documents in the Principal amount Not to Exceed $125 Million with Bank of America:
• Frist Amendment to the Original Reimbursement Agreement • Amended and Restated Fee Agreement
10 Recommended Commission Action
(Wastewater Series A-2, A-3 & A-5)
• Series A-2: Request to approve Forms documents in the Principal amount Not to Exceed $150 Million with Bank of America:
• Original Reimbursement Agreement and Form of Third Amendment • Proposed Fee Agreement
• Series A-3/A-3-T: Request to approve Forms documents to establish a new Letter of Credit in the Principal amount Not to Exceed $100 Million with Bank of America:
• Proposed Reimbursement Agreement
• Proposed Fee Agreement
• Series A-5/A-5-T: Request to approve Forms documents to establish a new Letter of Credit in the Principal amount Not to Exceed $125 Million with Bank of America:
• Proposed Reimbursement Agreement
• Proposed Fee Agreement
11 Questions
AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
DEPARTMENT Financial Services AGENDA NO. 9
MEETING DATE January 13, 2026
Calendar: Regular Calendar
Project Manager: Nikolai J. Sklaroff
Approve Credit Facility Agreement for Interim Funding of Power Enterprise Capital Program
Summary of Proposed
Commission Action
Approve the forms of (i) Third Amendment to the Reimbursement Agreement together with the Original Reimbursement Agreement for Series A -1 with Bank of America , N.A. (BANA) in the aggregat e principal amount not to exceed $125 million (exclusive of 270 days’ interest) and an Amended and R estated Fee Agreement ; (ii) First Amendment to th e Reimbursement Agreement together with the Original Reimbursement Agreement for Series A -2 with BANA in the aggregate principal amount not to exceed $125 million (exclusive of 270 days’ interest) an Amended and Restated Fee Agreement ; collectively the “ Bank Agreements”; (iii) and, included as exhibits to the Bank Agreements , forms of the supporting Letters of Credit and Bank Notes for each agreement; and authorize the General Manager to execute any other necessary agreements to execute the documents described here.
Agenda Title: Approve Credit Facility Agreement for Interim Funding of Power Enterprise Capital Program Commission Meeting Date: January 13, 2026
Background,
Description of Scope
of Services, and
Agreement Terms:
The San Francisco Public Utilities Commission (SFPUC) manages short-term (or interim) funding of the Power Enterprise capital program through a diverse array of strategies, including the availability of various types of credit or liquidity facilities, the periodic issuance of commercial paper notes or accessing available lines of credit, as needed.
Commercial Paper (CP) is a form of flexible, short -term financing that takes advantage of short -term interest rates from 1 to 270 days and is typically rolled to new investors at maturity, repaid or taken out by bonds. In today’s market, CP results in an approximate all -in borrowing rate of between 3% and 4%.1 The all-in interest rate includes (i) interest paid to investors and (ii) the bank facility fees and securities dealer fees. Commercial Paper dealers remarket (or resell) the CP to securities investors. The Federal Open Market Committee decreased the target federal funds rate by 0.25% to a range of 3.75% to 4.00% at its December 10 , 2025 meeting. This has steepened the difference between long- and short -term interest rates. As a result, short -term borrowing rates provide a significant advantage to long-term borrowing rates.
Without even drawing on the CP, the interim financing program provides capacity to release budget reserves by demonstrating to the City Controller that funds are available to let contracts and enter spending commitments. The facilities also allow the SFPUC to easily and efficiently fund construction costs by issuing only small amounts of CP to borrow only what is needed, and then to refinance this CP with bonds , thereby aggregating borrowing costs into larger, more efficient long-term financings.
Each series of the SFPUC’s CP is secured by a borrowing document.
The SFPUC intentionally diversifies the types of facilities backing CP , which may be reimbursement agreements supporting a letter of credit or liquidity facility agreements . T he bank facilities are available t o ensure the SFPUC has sufficient liquidity to purchase the CP notes in the event new buyers are not available to purchase them at the next maturity.
The Power Enterprise can also access available lines of credit using a
1 Actual interest rates vary based on multiple factors which can include market conditions, investor demand, rating of bank and term of the commercial paper which can be up to 270 days, but typically varies between 30 and 120 days. As of December 15, 2025 one-month indicative rates are approximately 2.75-2.85%, plus credit or liquidity fees for power enterprise (0.29%-0.32%) and dealer fees (0.045% - 0.050%).
Agenda Title: Approve Credit Facility Agreement for Interim Funding of Power Enterprise Capital Program Commission Meeting Date: January 13, 2026
credit revolver (such as Series R -1 herein) approved under its Interim Funding Program to fund capital projects. When drawing funds from one of these facilities, interest is paid to the bank at a variable rate based on a market index at the time of the draw plus a fixed spread, or margin predetermined per agreement terms. The term of the draw is open-ended (up to the expiration date of the facility) and can be repaid when long-term revenue bonds are issued or when advantageous for the SFPUC.
The interim funding program has been a cost -effective means to fund the encumbrance of and certify contracts of, and to provide low-cost financing to meet the cash spending requirements of , the Power Enterprise capital program. Encumbrance and contract certifications can be supported based on the availability of the bank facilities and cash spending can be funded through the issuance of commercial paper notes or draws on revolving credit agreements . The notes are remarketed until long -term revenue financing (such as revenue bonds, state loan or federal loan) proceeds are available.
CP Program History:
On November 17, 2015, by Resolution No. 427- 15, the Board of Supervisors authorized the establishment of the Power Enterprise Commercial Paper Program in the principal amount not to exceed $90 million against authorizations for indebtedness under Sections 9.107(6) and 9.107(8) of the Charter.
On June 15, 2018, the voters of San Francisco approved Proposition A (“Prop A”) which amended Charter Section 8B.124 to authorize the Power Enterprise to issue revenue bonds, notes, commercial paper or other forms of indebtedness when authorized by ordinance approved by two- thirds vote of the Board for the purpose of reconstructing, replacing, expanding, repairing or improving power facilities of the City.
On November 13, 2018, by Resolution No 18 -0188, this Commission authorized the increase in the Power Interim Funding Program from an aggregate principal amount of $90 million to an aggregate principal amount of $250 million.
On January 15, 2019, by Ordinance No. 2-19, the Board of Supervisors increased the Power CP Program to an amount not -to-exceed $250 million of commercial paper notes (collectively, the “CP Notes”) outstanding at any one time, pursuant to the provisions of (i) Article V of the City’s Administrative Code; (ii) Sections 9.107(6) and 9.107(8) of the Charter, and (iii) Section 8B.124 of the Charter.
Agenda Title: Approve Credit Facility Agreement for Interim Funding of Power Enterprise Capital Program Commission Meeting Date: January 13, 2026
On November 19, 2024, by Ordinance No. 269-24, the Board of Supervisors increased the Power Interim Funding Program from an aggregate principal amount of $250 million to an aggregate principal amount of $450 million.
Agreement History:
On September 8, 2015, by Resolution No. 15-0183, this Commission authorized the original Reimbursement Agreement with BANA to support the Commercial Paper Notes Series A -1, which was subsequently amended, with the current BANA Letter of Credit dated March 7, 2019.
On February 28, 2023, by Resolution No. 23-0056, this Commission authorized the original Reimbursement Agreement with BANA to support the Commercial Paper Notes Series A -2 dated March 1, 2023 with the Current BANA A -2 Letter of Credit dated March 6, 2023.
Both the current BANA A -1 and A-2 letter of credit terminate by their respective terms on March 6, 2026.
Current Program:
The Power Interim Funding Program is currently made up of the following components:
• Three series totaling $350 million (aggregate principal amount) that are for the issuance of CP and which are each supported by a high-grade bank facility in the form of a letter of credit (LOC). • One series that is for a $100 million revolving credit agreement (line of credit) that can be used to make tax -exempt or taxable draws from a high-grade bank.
Currently, the four series of the Power Interim Funding Program are as follows:
Series Amount
($million)
Bank Type Expiration
Date
Bank
Ratings
Series A-1 $125 Bank of
America
LOC 03/06/2026 A-1/F1+
Series A-2 $125 Bank of
America
LOC 03/06/2026 A-1/F1+
Series A-
3/A-3-T
$100 Sumitomo
Mitsui
LOC 02/15/2030 A-1/F1
Series R-
1/R-1-T
$100 Wells Fargo Revolver 03/03/2028 N/A
Total: $450
Agenda Title: Approve Credit Facility Agreement for Interim Funding of Power Enterprise Capital Program Commission Meeting Date: January 13, 2026
The Proposed Agreements:
The Commission action today approve s substantially complete forms of the following:
• For the $125 million BANA Letter of Credit for Series A -1: The Original and Third Amendment to the Reimbursement
Agreement and form of Amended and Restated Fee Agreement. • For the $125 million BANA Letter of Credit for Series A -2: The Original and First Amendment to the Reimbursement Agreement and form of Amended and Restated Fee Agreement.
• For both financings: a form of Offering Memorandum.
Bank Facility Procurement Process: F or this process the SFPUC has relied on the prequalified bank pool created by the San Francisco Airport Commission through a formal Request for Qualifications process. The SFPUC’s Municipal Advisors solicited proposals on August 1, 2025, from all banks in the pre -qualified Bank Credit Facilities Pool. On August 22, 2025, the SFPUC received proposals from seven banks, which the Municipal Advisors assisted in evaluating.
Recommendations: Staff recommends approval of the following facilities based on an evaluation of the terms, cost, credit quality of the bank, facility type offered, and other criteria as outlined in the RFP:
Power Series A -1 (Extended/ Amended Facility) : The Third Amendment to the Reimbursement Agreement with BANA for Letter of Credit in the Principal Amount of $12 5 million (exclusive of 270 days interest) for a term of four years and an annual cost of 0.33 %2 (approximately $451,000 annually). This agreement shall have an option to extend for nine years, and a proposed, capped fee of approximately $902,000 per year in connection in each extension year.3
Power Series A -2 (Extended/Amended Facility) : The First Amendment to the Reimbursement Agreement with BANA for Letter of Credit in the Principal Amount of $125 million (exclusive of 270 days interest) for a term of three years and at an annual cost of 0.311 (approximately $424,000 annually). This
2 Consistent with SFPUC’s other credit facility agreements, the Fee Agreements with BANA includes provisions that increase the annual cost in the Event of Default, credit downgrade or if the SFPUC’s credit is no longer available for any credit -related reason.
3 The actual fee and term for future extensions is unknown and would be determined in negotiation with the bank or through a competitive process.
Agenda Title: Approve Credit Facility Agreement for Interim Funding of Power Enterprise Capital Program Commission Meeting Date: January 13, 2026
agreement shall have an option to extend for nine years, and a proposed, capped fee of approximately $848,000 per year in connection in each extension year.2
These costs and fees are comparable to fees obtained from banks for other recent SFPUC agreements fees:
Proposed Facility Tenor Annual Fee
A-1 BANA LOC ($125m) 4 years 0.33%
A-2 BANA LOC ($125m) 3 years 0.31%
The proposed credit facilities are expected to receive high-grade short- term credit ratings from S&P Global Ratings, and Fitch Ratings, respectively: for BANA A-1/F1+.
Agenda Title: Approve Credit Facility Agreement for Interim Funding of Power Enterprise Capital Program Commission Meeting Date: January 13, 2026
1 Description of Documents:
Reimbursement Agreements ( BANA) and Fee Agreement : These agreements, by and between the SFPUC and BANA, set forth the terms pursuant to which the bank guarantees timely payment of the CP to the Issuing and Paying Agent. The a greements set forth the terms under which the SFPUC repay s BANA for draws on the respective letters of credit , the form of which are included as exhibits to the reimbursement agreements with the supporting bank notes.
The Fee Agreement s between the SFPUC and BANA sets out the annual facility fee paid by the SFPUC to the bank, including fees in the event of Power Enterprise credit rating downgrades, and any bank charges in connection with draws upon the credit facility.
Offering Memorandum: This is the disclosure document that is used by the Commercial Paper Dealers in placing or selling CP to prospective investors.
It contains brief descriptions of the SFPUC, including the Power Enterprise and Power Interim Funding Program; the CP Notes; BANA; and the Reimbursement Agreements.
Disclosure Considerations: The Power Enterprise Interim Funding Program is supported by the Reimbursement Agreements/LOCs with BANA as described in the Offering Memorandum. Unlike the Official Statement in a long-term revenue bond transaction, this Offering Memorandum for a commercial paper issuance is supported by either a liquidity facility or letter of credit. It does not include detailed financial and/or operating information of the debt issuer (in this case the SFPUC and its Power Enterprise).
Instead, commercial paper investors rely on the financial standing of the credit bank for the source of repayment , in this case the financia l standing of BANA.
Agenda Title: Approve Credit Facility Agreement for Interim Funding of Power Enterprise Capital Program Commission Meeting Date: January 13, 2026
Representations and Closing Considerations; Ongoing Disclosure : The Reimbursement Agreements and Fee Letter Agreement s with BANA contain representations and warranties which have been reviewed and affirmed to be appropriate for the SFPUC by staff, the City Attorney’s Office, municipal advisors , and the SFPUC’s outside Note Counsel. The representations and warranties include matters such as the good standing of the SFPUC; the authorization of the agreements, commercial paper /interim funding program , and credit facilities (as applicable) ; the absence of material litigation; the fairness and accuracy of the financial statements; and that there has been no material adverse change in the financial condition of the SFPUC.
Upon closing of this transaction, staff will post a notice and the key transaction documents on EMMA (Electronic Municipal Market Access), the municipal bond industry’s on-line disclosure repository operated by the Municipal Securities Rulemaking Board.
Budget & Costs: The Power Enterprise capital budget and associated appropriations cover these associated costs.
Environmental
Review:
This action does not constitute a project under the California Environmental Quality Act (CEQA) Guidelines section 15378(b)(4) because it involves the creation of government funding mechanism s or other government fiscal activities, which do not involve any commitment to any specific project that may result in a potentially significant physical impact on the environment.
Approval of projects to be funded through this action would only occur after the necessary environmental review process is completed in conformance with the CEQA.
On August 1, 2024, the Environmental Review Officer issued a Certificate of the City and County of San Francisco Planning Department , pursuant to Section 8B.124(b) of the City Charter under Proposition A (June 2018), certifying that the projects to be funded through the sale of Power Revenue Bonds and/or Other Forms of Indebtedness, including Commercial Paper, either already comply with the requirements of the CEQA or will undergo CEQA review when they are defined. This certificate can be found here:
https://sfgov.legistar.com/View.ashx?M=F&ID=13655933&GUID=E0C82847- 9CA9-4368-8C71-30AAB4A0962E%EF%BF%BC%EF%BF%BC
Agenda Title: Approve Credit Facility Agreement for Interim Funding of Power Enterprise Capital Program Commission Meeting Date: January 13, 2026
Attachments: 1. Original Reimbursement Agreement and Form of Third Amendment to the Reimbursement Agreement with Bank of America, N.A. (Series A-1)
2. Form of an Amended and Fee Agreement with Bank of America, N.A. (Series A-1)
3. Original Reimbursement and Form of First Amendment to Reimbursement Agreement with Bank of America, N.A. (Series A- 2)
4. Form of an Amended and Fee Agreement with Bank of America, N.A. (Series A-2)
5. Offering Memorandum
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO.: ___________
WHEREAS, On June 5, 2018, the voters of the City and County of San Francisco (the “City”) approved Proposition A (“Proposition A”), which among other things, amended Section 8B.124 of the Charter of the City and County of San Francisco (the “Charter”) to authorize the Public Utilities Commission of the City and County of San Francisco (the “Commission”) to issue indebtedness, including revenue bonds, notes, commercial paper or other forms of indebtedness, when authorized by ordinance approved by a two-thirds vote of the Board of Supervisors of the City and County of San Francisco (the “Board”), for the purpose of reconstructing, replacing, expanding, repairing or improving power facilities under the jurisdiction of the Commission (the “Power Enterprise”), or for any other lawful purpose of the power facilities of the City in furtherance of the purposes specified in Charter Section 8B.124, provided that the Commission is prohibited from financing the construction of power plants that generate electricity using fossil fuels or nuclear energy under Proposition A; and
WHEREAS, Pursuant to Section 43.5 of the San Francisco Administrative Code (“Article V”), enacted by Ordinance No. 203- 98 adopted by the Board on June 8, 1998, and signed by the Mayor of the City and County of San Francisco (the “Mayor”) on June 19, 1998, as amended by Ordinance No. 270-06, adopted on October 24, 2006 by the Board and signed by the Mayor on October 31, 2006, the Board established a procedure pursuant to which the Commission may issue short -term indebtedness, including the issuance of commer cial paper in anticipation of the issuance of its revenue bonds; and
WHEREAS, Under Section 8B.124 of the Charter, the Board’s authority to authorize an issuance of debt under Proposition A is subject to the provision of certain certifications of an independent engineer retained by the Commission and certain certifications by the San Francisco Planning Department, which certifications shall make the findings and determinations set forth in Charter Section 8B.124 (together, the “Proposition A Certificates”); and
WHEREAS, Pursuant to (i) Ordinance No. 142- 18 adopted by the Board on June 12, 2018 and signed by the Mayor on June 20, 2018, (ii) Ordinance No. 152- 19 adopted by the Board on June 25, 2019 and signed by the Mayor on June 28, 2019, (iii) Ordinance No. 127 -21 adopted by the Board on July 27, 2021 and signed by the Mayor on August 4, 2021, (iv) Ordinance No. 109-22 adopted by the Board on June 14, 2022 and signed by the Mayor on June 24, 2022, (v) Ordinance No. 182- 23 adopted by the Board on July 25, 2023 and signed by the Mayor on July 28, 2023, and (vi) Ordinance No. 126- 24 adopted by the Board on June 11, 2024 and signed by the Mayor on June 21, 2024, the Board has authorized the issuance from time to time of up to $836,960,525 of power revenue bonds and other forms of indebtedness of the Commission under Proposition A and Sections 9.107(6) and 9.107(8) of the Charter, and in the anticipation of the issuance of such indebtedness, has authorized the issuance of short -term indebtedness of the Commission; and
WHEREAS, The amount of authorized but unissued power revenue bonds under the ordinances set forth in the immediately preceding whereas clause is $742,330,456; and
WHEREAS, The Board has previously approved pursuant to Resolution No. 427- 15, adopted by the Board on November 17, 2015, and signed by the Mayor on November 25, 2015, the establishment of a commercial paper program/interim funding program (the “Power Interim Funding Program”) for the Power Enterprise and the issuance of up to $90 million, at that time, in aggregate principal amount of Power Enterprise commercial paper notes outstanding at any one time; and
WHEREAS, The Board has previously approved pursuant to Ordinance No. 2- 19, adopted by the Board on January 15, 2019, and signed by the Mayor on January 18, 2019, an increase in the Power Interim Funding Program from an aggregate principal amount of $90 million to an aggregate principal amount of $250 million of commercial paper notes outstanding at any one time; and
WHEREAS, Pursuant to Ordinance No. 269- 24 (“Ordinance No. 269- 24”), adopted by the Board on November 19, 2024 and signed by the Mayor on November 25, 2024, and Resolution No. 24-0193 (“Resolution No. 24 -0193”), adopted by this Commission on September 10, 2024, the Power Interim Funding Program was increased from an aggregate principal amount of $250 million to an aggregate principal amount of $450 million outstanding at any one time; and
WHEREAS, In connection with the Power Interim Funding Program, and in order to provide liquidity for the payment of the Commission’s maturing Commercial Paper Notes (Power Series) Series A -1 (Tax Exempt), the Commission has previously authorized, executed and delivered (as applicable), a letter of credit issued by Bank of America, N.A. (“BANA”), originally dated March 7, 2019 (the “Current BANA A -1 Letter of Credit”), a Reimbursement Agreement, dated as of December 1, 2015, as amended by a First Amendment to Reimbursement Agreement, dated as of March 1, 2019, and as amended by a Second Amendment to Reimbursement Agreement, dated as of February 23, 2022 (the “Current BANA A -1 Reimbursement Agreement”), between the Commission and BANA, and an Amended and Restated Fee Agreement, dated February 23, 2022 (the “Current BANA A -1 Fee Agreement”), between the Commission and BANA; and
WHEREAS, In connection with the Power Interim Funding Program, and in order to provide liquidity for the payment of the Commission’s maturing Commercial Paper Notes (Power Series) Series A -2 (Tax Exempt), the Commission has previously authorized, executed and delivered (as applicable), a letter of credit issued by Bank of America, N.A. (“BANA”), originally dated March 6, 2023 (the “Current BANA A -2 Letter of Credit”), a Reimbursement Agreement, dated as of March 1, 2023 (the “Current BANA A -2 Reimbursement Agreement”), between the Commission and BANA, and a Fee Agreement, dated March 6, 2023 (the “Current BANA A-2 Fee Agreement”), between the Commission and BANA; and
WHEREAS, The Current BANA A -1 Letter of Credit and the Current BANA A -2 Letter of Credit will each terminate by their respective terms on March 6, 2026; and
WHEREAS, In order to support and/or maintain the Power Interim Funding Program, the Commission issued a request for proposals from qualified banks to provide for one or more letters of credit, revolving credit facilities and/or revolving lines of credit and/or any other short - term borrowing facility which furthers the purpose and intent of the Power Interim Funding Program; and
WHEREAS, After an evaluation of the responses to such request for proposals, the Commission staff determined that the following were the most advantageous to the Commission, and were determined to be, among other things, the lowest cost, responsive and responsible bidders to support and/or maintain the Power Interim Funding Program: (i) a direct-pay letter of credit provided by BANA, in an original stated principal amount not -to-exceed $125 million, plus an amount equal to 270 days interest on such principa l amount at a rate of twelve -percent (12%) per annum, to secure the repayment of a portion of the Power Interim Funding Program commercial paper notes (the “Power CP Notes”), and (ii) a direct-pay letter of credit offered by BANA, in an original stated principal amount not -to-exceed $125 million, plus an amount equal to 270 days interest on such principal amount at a rate of twelve -percent (12%) per annum, to support the repayment of a portion of the Power CP Notes; and
WHEREAS, To assist in ease of drafting and for the convenience of the Commission and BANA (as the provider of the Current BANA A -1 Letter of Credit, the Current BANA A -2 Letter of Credit, the New BANA A-1 Letter of Credit (as defined herein) and the New BANA A- 2 Letter of Credit (as defined herein)), given the provider of the current letters of credit is the same as the provider of the proposed new letters of credit, rather than entering into new reimbursement agreements and fee agreements, and executing new bank notes in favor of BANA (the “BANA A-1 Bank Note” and “BANA A-2 Bank Note,” as applicable) the Commission finds it in its best interest to make certain amendments to (or amendments and restatements of) the Current BANA A- 1 Reimbursement Agreement, the Current BANA A -2 Reimbursement Agreement, the Current BANA A -1 Fee Agreement and the Current BANA A -2 Fee Agreement in connection with the New BANA A -1 Letter of Credit and the New BANA A -2 Letter of Credit, as applicable; and
WHEREAS, The proposed form of (i) the Third Amendment to Reimbursement Agreement (the “Third Amendment to Reimbursement Agreement”, and together with the Current BANA A-1 Reimbursement Agreement, the “BANA A -1 Reimbursement Agreement”), which includes, as an exhibit, an amendment to the Current BANA A -1 Letter of Credit (together, the “New BANA A -1 Letter of Credit”), between the Commission and BANA, and (ii) an Amended and Restated Fee Agreement, between the Commission and BANA (the “New BANA A- 1 Fee Agree ment”), have been presented to the Commission and filed with the Director of Commission Affairs, and the Commission finds it in its best interest to enter into and perform such agreements; and
WHEREAS, The proposed form of (i) the First Amendment to Reimbursement Agreement (the “First Amendment to Reimbursement Agreement”, and together with the Current BANA A-2 Reimbursement Agreement, the “BANA A -2 Reimbursement Agreement”), which includes, as an exhibit, an amendment to the Current BANA A -2 Letter of Credit (together, the
“New BANA A-2 Letter of Credit”), between the Commission and BANA, and (ii) an Amended and Restated Fee Agreement, between the Commission and BANA (the “New BANA A -2 Fee Agreement”), have been presented to the Commission and filed with the Director of Commission Affairs, and the Commission finds it in its best interest to enter into and perform such agreements; and
WHEREAS, The BANA A- 1 Bank Agreements (as defined herein) and the BANA A -2 Bank Agreements (as defined herein) will be treated as new agreements and not as amendments to the prior agreements for purposes of Charter Section 9.118(b) because the initial term of such documents will therefore commence upon their effectiveness and the term of the Current BANA A-1 Letter of Credit and the BANA A -2 Letter of Credit will not be considered for purposes of Charter Section 9.118(b); and
WHEREAS, Pursuant to Ordinance No. 269 -24, the Commission is authorized to take such actions and to execute and deliver such promissory notes, certificates, agreements, requests or other documents, as necessary or desirable to facilitate the issuance, sale and delivery of short- term indebtedness of the Power Interim Funding Program and to carry out the provisions of Ordinance No. 269- 24 to accomplish the purpose and intent of the Power Interim Funding Program; and
WHEREAS, In connection with the Power CP Notes, the Commission also finds it necessary to deliver an updated offering memorandum in connection with the issuance and sale of its Power CP Notes; and
WHEREAS, The proposed form of an offering memorandum (the “Offering Memorandum”) has been presented to the Commission and filed with the Director of Commission Affairs; and
WHEREAS, This action does not constitute a project under the California Environmental Quality Act (CEQA) Guidelines section 15378(b)(4) because it involves the creation of government funding mechanisms or other government fiscal activities, which do not involve any commitment to any specific project that may result in a potentially significant physical impact on the environment; and
WHEREAS, Approval of projects to be funded through this action would only occur after the necessary environmental review process is completed in conformance with the CEQA; and
WHEREAS, On August 1, 2024, the Environment Review Officer issued a Certificate of the City and County of San Francisco Planning Department, pursuant to Section 8B.124(b) of the City Charter under Proposition A (June 2018), certifying that the projects to be funded through the sale of Power Revenue Bonds and/or Other Forms of Indebtedness, including Commercial Paper, either already comply with the requirements of the CEQA or will undergo CEQA review when they are defined; and
WHEREAS, The Commission has paid, beginning no earlier than 60 days prior to the adoption of this Resolution, and will pay, on and after the date hereof, certain expenditures (the
“Expenditures” as defined in the Code referred to below) in connection with the acquisition, construction and/or equipping of the Power Enterprise capital improvement program projects; and
WHEREAS, The Commission adopts this Resolution as official action of the Commission in order to comply with Treasury Regulation §1.150- 2 and any other regulations of the Internal Revenue Service (the “Code”) relating to the qualification for reimbursement of Commission Expenditures (as defined in the Code) incurred prior to the date of issue of any obligations under the Power Interim Funding Program; and
WHEREAS, The Proposition A Certificates meeting the Proposition A requirements are on file with the Clerk of the Board in accordance with Proposition A prior to the issuance of any obligations under the Power Interim Funding Program; now, therefore, be it
RESOLVED by the Public Utilities Commission of the City and County of San Francisco, as follows:
Section 1. Approval of BANA A -1 Bank Agreements. The forms of the BANA A -1 Reimbursement Agreement (which includes, the form of the Third Amendment to Reimbursement Agreement, and as exhibits, the form of the New BANA A -1 Letter of Credit and the form of the BANA A -1 Bank Note) and the New BANA A -1 Fee Agreement, (collectively, the “BANA A -1 Bank Agreements”), in substantially the forms submitted to this Commission, are hereby approved and recommended to the Director of the City’s Office of Public Finance (the “Director”) for approval pursuant to the Administrative Code, Article V thereof. The General Manager (or the duly authorized and acting General Manager) of the Commission (in either capacity, referred to here as, the “General Manager”) or their designee, the Deputy Chief Financial Officer (also known currently as the Assistant General Manager for Business Services and Chief Financial Officer, but referred to here and in related historical documents as “Deputy Chief Financial Officer”) , and the Capital Finance Director, and each of them acting alone, are authorized and directed to execute and deliver the BANA A -1 Bank Agreements in substantially said forms, subject to such additions thereto or changes therein which the General Manager, upon consultation with the City Attorney and Director, s hall approve, such approval to be conclusively evidenced by the execution and delivery of such BANA A-1 Bank Agreements, provided that the BANA A -1 Bank Agreements may be extended for an additional term (as set forth in Section 3 below). The performance by the Commission of the terms of the BANA A-1 Bank Agreements in their respective executed forms are also hereby approved.
Section 2. Approval of BANA A -2 Bank Agreements. The forms of the BANA A -2 Reimbursement Agreement (which includes, the form of the First Amendment to Reimbursement Agreement, and as exhibits, the form of the New BANA A-2 Letter of Credit and the form of the BANA A-2 Bank Note) and the New BANA A-2 Fee Agreement, (collectively, the “BANA A-2 Bank Agreements ,” and together with the BANA A -1 Bank Agreements, the “Bank Agreements”), in substantially the forms submitted to this Commission, are hereby approved and recommended to the Director for approval pursuant to the Administrative Code, Article V thereof. The General Manager or their designee, the Deputy Chief Financial Officer and the Capital Finance Director, and each of them acting alone, are authorized and directed to execute
and deliver the BANA A -2 Bank Agreements in substantially said forms, subject to such additions thereto or changes therein which the General Manager, upon consultation with the City Attorney and Director, shall approve, such approval to be conclusively evidenced by the execution and delivery of such BANA A -2 Bank Agreements, provided that the BANA A -2 Bank Agreements may be extended for an additional term (as set forth in Section 3 below). The performance by the Commission of the terms of the BANA A -2 Bank Agreements in their respective executed forms are also hereby approved.
Section 3. Extension of Terms of Bank Agreements . The General Manager or their designee, the Deputy Chief Financial Officer and the Capital Finance Director, and each of them acting alone, are further authorized, upon consultation with the City Attorney and the Director, to execute one or more amendments to the Bank Agreements, to extend the term of the New BANA A-1 Letter of Credit and the New BANA A- 2 Letter of Credit authorized hereunder, by an aggregate period not to exceed nine (9) years from the commencement da te of the respective initial term. The annual facility fee payable by the Commission in connection with the New BANA A-1 Letter of Credit shall not exceed (i) $451,000, initially, and subject to adjustment as set forth in the New BANA A- 1 Fee Agreement, and (ii) $902,000 in connection with any future extension thereof. The annual facility fee payable by the Commission in connection with the New BANA A- 2 Letter of Credit shall not exceed (i) $424,000, initially, and subject to adjustment as set forth in the New BANA A- 2 Fee Agreement , and (ii) $848,000 in connection with any future extension thereof.
Section 4. Approval of Offering Memorandum . The General Manager or their designee, upon consultation with the City Attorney and the Director, is hereby authorized and directed to prepare and cause the distribution of an Offering Memorandum relating to the Power Interim Funding Program and the sale of commercial paper notes thereunder, in substantially the form on file with the Commission, subject to such additions thereto and changes therein, and any amendments or supplements thereto from time to time which the General Manager, upon consultation with the City Attorney and the Director, shall approve. The General Manager (or any designee thereof) is further authorized and directed to distribute, in connection with the sale of any commercial paper notes, one or more Offering Memorandum (s) in such form, as the General Manager, upon consultation with the City Attorney, Bond Counsel and the Director shall approve.
Section 5. Limitations. In no event shall the commercial paper notes or draws made under the Power Interim Funding Program exceed $450 million in aggregate principal amount and in no event shall the interest rate or interest rates cause the aggregate average interest cost to exceed twelve-percent (12%) per annum, provided, however, that if the City or the Board increases the maximum interest rate allowable under any bank agreement (as it relates to the obligations payable thereunder), then such increased rate shall b e the permitted maximum interest rate (as it relates to the obligations payable under bank agreements).
Section 6. Intent to Reimburse. This Commission hereby declares the official intent of the Commission to reimburse the Commission with proceeds of the commercial paper notes or from draws made under the Bank Agreements with respect to the Power Enterprise capital improvement projects made on and after a date that is no more than 60 days prior to the adoption of this Resolution. The Commission reasonably expects on the date hereof that it will reimburse
the Expenditures with proceeds of the commercial paper notes or from draws made under the Bank Agreements. Each such Expenditure was and will be either (A) of a type properly chargeable to a capital account under general federal income tax principles (determined in each case as of the date of the Expenditure), (B) a cost of issuance with respect to the commercial paper notes or from draws made under the Bank Agreements, (C) a nonrecurring item that is not customarily payable from current revenues, or (D) a grant to pay a party that is not related to or an agent of the issuer so long as such grant does not impose any obligation or condition (directly or indirectly) to repay any amount to or for the benefit of the Commission. The Commission will make a reimbursement allocation, which is a written allocation that evidences the Commission’s use of proceeds of the commercial paper notes or from draws made under the Bank Agreements to reimburse an Expenditure, no later than 18 months after the later of the date on which the Expenditure is paid or the component of the capital improvement projects is placed in service or abandoned, but in no event more than three years after the date on which the Expenditure is paid.
The Commission recognizes that exceptions are available for certain “preliminary expenditures,” costs of issuance, certain de minimis amounts, expenditures by “small issuers” (based on the year of issuance and not the year of expenditure) and expenditures for construction projects of at least 5 years.
Section 7. Further Actions. The General Manager or their designee, the Deputy Chief Financial Officer and the Capital Finance Director, and in consultation with the City Attorney and the Director, are each hereby authorized and directed to execute such other agreements, certifications or documents and to take any and all necessary action in connection with and in furtherance of the execution and performance of the Bank Agreements , any future extension of the Bank Agreements and the marketing and sale of the commercial paper notes under the Power Interim Funding Program.
Section 8. Delegation. The General Manager is authorized to delegate any of the responsibilities or duties set forth in this resolution to the Assistant General Manager, Business Services and Chief Financial Officer of the Commission.
Section 9. Ratification. All actions heretofore taken by the officials, employees and agents of the Commission with respect to the execution of the Bank Agreements in connection with providing short-term interim funding of the Power Enterprise capital improvement program, including the Power Interim Funding Program, are hereby approved, confirmed and ratified.
Section 10. Effective Date. This resolution shall take effect from and after its adoption.
I hereby certify that the foregoing resolution was adopted by the San Francsico Public Utilities Commission at its meeting on January 13, 2026.
Director of Commissioner Affairs
San Francisco Public Utilities Commission
[Execution Copy]
REIMBURSEMENT AGREEMENT
Dated as of December 1, 2015,
between
PUBLIC UTILITIES COMMISSION OF
THE CITY AND COUNTY OF SAN FRANCISCO
and
BANK OF AMERICA, N.A.
relating to:
$90,000,000
PUBLIC UTILITIES COMMISSION
OF THE CITY AND COUNTY OF SAN FRANCISCO
COMMERCIAL PAPER NOTES
(POWER REVENUES)
SERIES A-1
‐ i‐
REIMBURSEMENT AGREEMENT
(This Table of Contents is not a part of this
Reimbursement Agreement and is only for
convenience of reference)
ARTICLE 1 DEFINITIONS ......................................................................................................... ... 2 Section 1.1 Definitions ....................................................................................................... 2 ARTICLE 2 LETTER OF CREDIT .............................................................................................. 13 Section 2.1 Issuance of Letter of Credit ........................................................................... 13 Section 2.2 Letter of Credit Drawings ............................................................................. 13 Section 2.3 Reimbursement .............................................................................................. 13 Section 2.4 Advances; Term Loans .................................................................................. 14 Section 2.5 Fees............................................................................................................... . 16 Section 2.6 The Bank Note .............................................................................................. 16 Section 2.7 Termination of Letter of Credit; Reduction of Stated Amount ..................... 17 Section 2.8 Computation of Interest and Fees .................................................................. 17 Section 2.9 Payment Due on Non-Busine ss Day to Be Made on Next Business Day ................................................................................................................ 17 Section 2.10 Default Rate ................................................................................................... 1 7 Section 2.11 Source of Funds ............................................................................................. 17 Section 2.12 Extension of Stated Expiration Date ............................................................. 17 Section 2.13 Taxes ............................................................................................................ . 18 Section 2.14 Increased Costs .............................................................................................. 19 Section 2.15 Margin Regulations ....................................................................................... 21 Section 2.16 Maximum Rate; Payment of Fee ................................................................... 21 Section 2.17 Security of Obligations .................................................................................. 21 Section 2.18 Commercial Paper Operations ...................................................................... 21 Section 2.19 Method of Payment; Etc ................................................................................ 22 ARTICLE 3 CONDITIONS PRECEDENT .................................................................................. 22 Section 3.1 Conditions Precedent to Effectiveness .......................................................... 22
TABLE OF CONTENTS
(continued)
Page
‐ ii‐
ARTICLE 4 REPRESENTATIONS AND WARRANTIES ......................................................... 25 Section 4.1 Organization, Powers, Etc ............................................................................. 25 Section 4.2 Authorization, Ab sence of Conflicts, Etc ...................................................... 25 Section 4.3 Binding Obligations; Security for Bank Note ............................................... 25 Section 4.4 Governmental Consent or Approval ............................................................. 26 Section 4.5 Absence of Material Litigation ..................................................................... 26 Section 4.6 Financial Condition ....................................................................................... 27 Section 4.7 Incorporation of Re presentations and Warranties ......................................... 27 Section 4.8 Accuracy and Completeness of Information ................................................. 27 Section 4.9 No Default ..................................................................................................... 27 Section 4.10 No Proposed Legal Changes ......................................................................... 28 Section 4.11 Compliance with Laws, Etc .......................................................................... 28 Section 4.12 Environmental Matters .................................................................................. 28 Section 4.13 Tax Status of Interest on Notes ..................................................................... 28 Section 4.14 Issuing and Paying Agent; Dealers ............................................................... 28 Section 4.15 Regulation U ................................................................................................. 29 Section 4.16 Liens ............................................................................................................ .. 29 Section 4.17 Sovereign Immunity ...................................................................................... 29 Section 4.18 City Business Days........................................................................................ 29 Section 4.19 Usury ............................................................................................................ . 29 Section 4.20 Insurance ....................................................................................................... 29 Section 4.21 ERISA ........................................................................................................... 29 Section 4.22 Sanctions Concerns and Anti-Corruption Laws ............................................ 29 Section 4.23 Swap Contracts .............................................................................................. 30 ARTICLE 5 COVENANTS ........................................................................................................... 30 Section 5.1 Affirmative Covenants .................................................................................. 30 Section 5.2 Negative Covenants ....................................................................................... 36 ARTICLE 6 DEFAULTS ............................................................................................................ .. 41 Section 6.1 Events of Default and Remedies ................................................................... 41
TABLE OF CONTENTS
(continued)
Page
‐ iii‐
Section 6.2 Remedies ....................................................................................................... 44 ARTICLE 7 MISCELLANEOUS.................................................................................................. 44 Section 7.1 Amendments, Waivers, Etc ........................................................................... 44 Section 7.2 Notices ........................................................................................................... 45 Section 7.3 Survival of Covena nts; Successors and Assigns ........................................... 46 Section 7.4 Unconditional Obligations ............................................................................ 47 Section 7.5 Liability of Bank; Indemnification ................................................................ 47 Section 7.6 Expenses ........................................................................................................ 4 8 Section 7.7 No Waiver; Conflict ...................................................................................... 49 Section 7.8 Modification, Amendment, Waiver, Etc ....................................................... 49 Section 7.9 Dealing with the Commissi on, the Issuing and Paying Agent and/or the Dealer ...................................................................................................... 49 Section 7.10 Severability .................................................................................................... 49 Section 7.11 Counterparts .................................................................................................. 49 Section 7.12 Table of C ontents; Headings ......................................................................... 49 Section 7.13 Entire Agreement .......................................................................................... 50 Section 7.14 Governing Law Wa iver of Jury Trial ............................................................ 50 Section 7.15 Governmental Regulations ............................................................................ 50 Section 7.16 USA PATRIOT Act ...................................................................................... 51 Section 7.17 Electronic Transmissions .............................................................................. 51 Section 7.18 Assignment to Federal Reserve Bank ........................................................... 51 Section 7.19 City Requirements ......................................................................................... 51 Section 7.20 Arm’s Length Transaction ............................................................................ 52 -iv
Appendix I – Form of Letter of Credit
Exhibit A – Form of Bank Note
Exhibit B – Form of Compliance Certificate
Exhibit C – 2015 List of City Holidays
Exhibit D – City Requirements
Exhibit E – List of Qualified Dealers
1 This REIMBURSEMENT AGREEMENT, dated as of December 1, 2015 (together with any amendments or supplements hereto, this “Agreement”), is between the P UBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (together with its successors and assigns, the “Commission”) and B ANK OF AMERICA, N.A. (together with its successors and assigns, the “Bank”).
WITNESSETH:
WHEREAS, pursuant to Sections 4.112 and Article 8B of the Charter of the City and County of San Francisco (the “Charter”), the Commission has exclusive charge of the construction, management, supervision, maintenance, extensi on, operation, use and cont rol of all water and energy supplies and utilities of the City unde r the Commission’s jurisdiction, including the hereinafter defined Power Enterprise;
WHEREAS, pursuant to Section 9.107(6) of the Charte r, the Board of Supervisors of the City (the “Board”) is authorized to provide for the issuan ce of revenue bonds, without voter approval, issued for the purpose of the reconstruction or replacement of existing water facilities and/or electric power facilities under the jurisdiction of the Commission when authorized by resolution adopted by a three-fourths majority of all of the members of the Board; WHEREAS, pursuant to Section 9.107(8) of the Charter, the Board is also authorized to provide for the issuance of reve nue bonds, without voter approval, i ssued to finance or refinance the acquisition, construction, installation, equipping, improvement or rehabilitation of equipment or facilities for renewable energy and energy conservation; WHEREAS, pursuant to Section 43.5.2 of the Admini strative Code of the City, following Board approval of the issuance of revenue bonds by the Commission pursuant to Section 9.107 of the Charter, the Commission may incur short-term indebtedness in the form of commercial paper, temporary notes or other forms of indebtedness as long as such short-term indebtedness is incurred in anticipation of the issuance of such revenue bonds;
WHEREAS, the Commission deems it necessary and de sirable and in the public interest to authorize the issuance of commercial paper notes in anticipation of the i ssuance of revenue bonds, payable from and secured by the revenues of the Power Enterprise, after the payment of operating and maintenance expenses and any required deposits for repairs and replac ements to the Power Enterprise, under and in accordance with Se ction 9.107, 9.109 and 9.111 of the Charter and pursuant to the terms and conditions set forth herein, for any lawful purposes of the Power Enterprise, which commercial paper notes and the interest thereon shall constitute a subordinate lien and charge on the revenues provided for the payment thereof; and WHEREAS, pursuant to Resolution No. 15-0183, adopted by the Commission on September 8, 2015 (the “Resolution”) and Ordinance No. 427-15 adopted by the Board on November 17, 2015 by the Board and approved by th e Mayor on November 25, 2015 (the “Ordinance”), the Commission and the Board established procedures for the issuance by the Commission of revenue bonds and commercial paper notes for its Power Ente rprise and addressed certain other matters in connection therewith, including the issuance of commercial paper notes by the Commission in an aggregate principal amount not to exceed $90,000,000 at any one time;
2 WHEREAS, the Commission has authorized, executed and delivered that certain Issuing and Paying Agent Agreement, dated as of December 1 1, 2015 (as from time to time supplemented and amended in accordance w ith the terms hereof and thereof, the “Issuing and Paying Agent Agreement” ), with U.S. Bank National Associ ation, as issuing and paying agent (the “Issuing and Paying Agent” ), relating to the Public Utilities Commission of the City and County of San Francisco Notes (Power Revenues) Series A-1 (Tax-Exempt) (the “Notes”);
WHEREAS, the Commission has requested the Bank issue a letter of credit in the original stated amount of $97,989,042 (representing an amount supporting Notes in an aggregate principal amount of $90,000,000 plus an amount equal to 270 da ys interest on such principal amount at the rate per annum of twelve percent (12%) computed on the basis of a 365-day year (and rounded up to the nearest dollar)) for the payment by the Issu ing and Paying Agent, when and as due, of the principal of and interest on the Notes; and
WHEREAS, the Bank is willing to issu e such letter of credit upon the terms and conditions provided herein.
NOW THEREFORE, in consideration of the premises and the mutual agreements herein contained, the Commission and the Bank agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement:
“Acceleration Notice” has the meaning set forth in Section 6.2 hereof.
“Advance” has the meaning set forth in Section 2.4(a) hereof.
“Agreement” has the meaning set forth in the introductory paragraph hereof.
“Alternate Facility” has the meaning set forth in the Issuing and Paying Agent Agreement.
“Annual Budget” means the budget or budgets prepared by the Commission in substantially the form that has been previously presented to the Bank.
“Annual Debt Service” has the meaning set forth in the Master Trust Indenture.
“Applicable Law” means (i) all applicable common law and principles of equity and (ii) all applicable provisions of all (A) constitutions, statutes, rule s, regulations a nd orders of all governmental and non-governmental bodies, (B) Governmental Approvals and (C) orders, decisions, judgments and decrees of all courts (whether at law or in equity) and arbitrators.
“Authorized Representative” means each of the General Ma nager of the San Francisco Utilities Commission, Assistant Gene ral Manager and Chief Financial Officer, Business Services, Deputy Chief Financial Officer, Fi nancial Services, Debt Manage r, Financial Planning, Utility
3 Specialist, Financial Planning, Cont roller of the City and County of San Francisco, Director of Finance, and any other individual designated from time to time as a “Designated Representative” a certificate executed by the General Manager of the San Francisco Public Utilities Commission delivered to the Bank.
“Available Funds” means any unencumbered amounts, including non-appropriated fund balances and reserves, and cash and the book value of investments held by the Treasurer of the City for the Power Enterprise, that the Commission reasonably expects would be available, as of any date of calculation, to pay principal (or in the case of any capital appreciation bond, the accreted value thereof) of and interest on Bonds when due.
“Available Power Enterprise Revenues” has the meaning set forth in the Issuing and Paying Agent Agreement.
“Bank” has the meaning set forth in the introductory paragraph hereof.
“Bank Agreement” means any credit agreement, liquidity agreement, standby bond purchase agreement, reimbursement agreement, direct pu rchase agreement, bond pur chase agreement, or other agreement or instrument (or any amendment, supplement or other modification thereof) under which, directly or indirectly, any Person or Persons undertake(s) to make or provide funds to make payment of, or to purchase or provide credit en hancement for, bonds or notes of the Commission secured by or payable from Revenues (but excluding Reserve Account Credit Facility).
“Bank Note” has the meaning set forth in Section 2.6 hereof.
“Bank Rate” means, subject to the terms of Section 2.16 hereof, a rate of interest per annum with respect to an Advance or Term Loan, as applicable, (i) for any day commencing on the date such Advance is made up to and including the ninetieth (90th) day succeeding the date such Advance is made, equal to the Base Rate from time to time in effect and (ii) for any day commencing on the ninety-first (91st) day succeeding the date such Advance is made and thereafter, equal to the Base Rate from time to time in effect plus one percent (1.00%); provided, further, however, that immediately and automatically upon the occurrence of an Event of Default (and without any notice given with respect thereto) and during the continuance of such Event of Default, “Bank Rate” will mean the Default Rate; and provided, further, that at no time shall the Bank Rate be less than the highest rate on any outstanding Notes.
“Base Rate” means, for any day, the rate of interest per annum equal to the highest of: (i) the Prime Rate plus one percent (1%), (ii) the Federal Funds Rate plus two percent (2%), and (iii) seven percent (7%). Each determination of the Base Rate by the Bank shall be conclusive and binding on the Commission absent manifest error. Each change in the Base Rate will take effect simultaneously with the corresponding change or changes in the Prime Rate or the Federal Funds Rate, as the case may be.
“Basic Documents” means, at any time, each of the following documents and agreements as in effect or as outstanding, as the case may be, at such time: (a) the Notes, (b) the Resolution, (c) Ordinance, (d) the Offering Memorandum, (e) the Dealer Agreements, (f) the Issuing and Paying Agent Agreement, (g) the Bank Note, (h) the Fee Agreement and (i) this Agreement and any and all
4 future renewals and extensions or restatements of, or amendments or supplements to, any of the foregoing.
“Board” has the meaning set forth in the recitals hereof.
“Bond Coverage Ratio” for any Fiscal Year means the ratio of (a) Net Revenues in such Fiscal Year to (b) Annual Debt Service on the Outstanding Bonds in such Fiscal Year.
“Bonds” has the meaning set forth in the Master Trust Indenture.
“Bond Counsel” has the meaning set forth in the Issuing and Paying Agent Agreement.
“Business Day” has the same meaning set forth in the Letter of Credit.
“Certificate” of the Commission means a written cer tificate signed by a duly authorized officer or employee of the Commission.
“Change in Law” means the occurrence, after the Closing Date, of any of the following: (a) the adoption or taking effect of any Law, including, without limitation Risk-Based Capital Guidelines, (b) any change in any Law or in the enforcement, administration, interpretation, implementation or application thereof by any Governmental Authority or compliance by the Bank or any Participant therewith or (c) the making or issuance of any request, rule, ruling, guideline, regulation or directive (whether or not having the force of law) by any Governmental Authority; provided that, notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act (or any other statute referred to therein or amended thereby) and all laws, requests, rules, regulations, policies, rulings, guidelines, regulations, standards or directives thereunder or issued in connection therewith and any interpretation, application or promulgation implementing, invoking or in any way the Dodd-Frank Wall Street Reform and Consumer Protection Act and (ii) all laws, requests, rules, rulings, standards, policies, guidelines, regulations or directives promulgated by, or in response to requests, guidelines or directives published by, the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities will, in each case, be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.
“Charter” has the meaning set forth in the recitals hereof.
“City” has the meaning set forth in the recitals hereof.
“Closing Date” means the date on which the Letter of Credit is issued, which, subject to the satisfaction of the conditions precedent set forth in Section 3.1 hereof, is expected to be December 17, 2015.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, including regulations, rulings and judicial decisions promulgated thereunder.
“Commission” has the meaning set forth in the introductory paragraph hereof.
5 “Consulting Engineer” has the meaning set forth in the Master Trust Indenture.
“Dealers” means the dealer or dealers selected from time to time by the Commission (and acceptable to the Bank) to market the Notes pursuant to the terms of any applicable Dealer Agreement and any permitted assigns and successors thereto.
“Dealer Agreement” means each dealer agreement by and between the Commission and a Dealer, in form and substance reasonably acceptable to the Bank, as such agreement may be amended and supplemented from time to time in accordance with the terms thereof and hereof.
“Debt” of any Person means, at any date, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (d) all obligations of such Person as lessee under capital leases, (e) all debt of others secured by a Lien on any asset of such Person, whether or not such debt is assumed by such Person, (f) all Guarantees by such Person of debt of other Persons, (g) all obligations of such Person under any Swap Contract and (h) all obligations of such Person to reimburse or repay any bank or other Person in respect of amounts paid or advanced under a letter of credit, credit agreement, liquidity facility or other instrument.
“Default” means any condition or event which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.
“Default Rate” means, for any day, subject to the terms of Section 2.16 hereof, a per annum rate of interest equal to the sum of the Base Rate from time to time in effect plus four percent (4.00%).
“Designated Jurisdiction” means any country or territory to the extent that such country or territory itself is the subject of any Sanction.
“Drawing” has the meaning set forth in Section 2.3 hereof.
“DTC” means The Depository Trust Company, Ne w York, New York, and any successor securities depository.
“Employee Plan” means an employee benefit plan covered by Title IV of ERISA and maintained for employees of the Commission.
“Environmental Laws” means any and all federal, st ate and local statutes, laws, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges or releases of pollutants, contaminan ts, petroleum or petroleu m products, chemicals or industrial, toxic or hazardous substances or wastes into the enviro nment including, without limitation, ambient air, surface water, ground water or land, or otherwise relating to the processing, distribution, use, trea tment, storage, disposal, trans port or handling of pollutants,
6 contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes or the clean-up or other remediation thereof.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute thereto.
“Event of Default” has the meaning set forth in Section 6.1 hereof.
“Excluded Taxes” means, with respect to the Bank or any Participant, (a) taxes imposed on or measured by its overall net in come (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdicti on (or any political subdivision thereof) under the laws of which the Bank or such Participant is orga nized or in which its principal office is located and (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which the Commission is located.
“Federal Funds Rate” means, for any day, the rate pe r annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day sh all be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeedin g Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Bank on such day on such tran sactions as determin ed by the Bank. Each determination of the Federal Funds Rate by the Bank shall be deemed conclusive and binding on the Commission absent manifest error.
“Fee Agreement” means the Fee Agreement dated the Closing Date between the Commission and the Bank, as supplemented and amended from time to time.
“Final Drawing Notice” has the meaning set forth in the Letter of Credit.
“Fiscal Year” has the meaning set forth in the Master Trust Indenture.
“Fitch” means Fitch Ratings, Inc.
“GAAP” means generally accepted accounting principl es in the United States of America from time to time as set forth in (a) the opini ons and pronouncements of the Accounting Principles Board and the American Institute of Certifie d Public Accountants and (b) statements and pronouncements of the Government Accounting St andards Board, as modified by the opinions, statements and pronouncements of any similar accounting body of comparable standing having authority over accounting by governmental entities.
“Governmental Approval” means an authorization, consent, approval, license or exemption of, registration or filing with, or report to, any Governmental Authority.
7 “Governmental Authority” means the government of the United States or any other nation or any political subdivision thereof or any govern mental or quasi-governme ntal entity, including any court, department, commi ssion, board, bureau, agency, admini stration, central bank, service, district or other instrumentality of any government al entity or other ent ity exercising executive, legislative, judicial, taxing, regulatory, fiscal, monetary or administrative powers or functions of or pertaining to government, or any arbitrator, mediator or other Person with authority to bind a party at law.
“Guarantees” means, for any Person, all guarantees, endorsements (other than for collection or deposit in the ordinary course of bus iness) and other contingent obligations of such Person to purchase, to provide funds for payment, to supply funds to invest in any other Person or otherwise to assure a creditor of another Person against loss.
“Hetch Hetchy Project” means the Hetch Hetchy Water a nd Power Project, including the O’Shaughnessy Dam, the Hetch Hetchy Reser voir, the Canyon and M ountain Tunnels, the Kirkwood, Moccasin and Holms Powerhouses, Cherry Lake and its dam, Lake Eleanor and its dam, the related water storage and tr ansportation and hydro-electric ge nerating facilitie s down to and including the Moccasin Powerhouse, all located in Yosemite Nati onal Park, Stanislaus National Forest and Tuolumne County, the rights to which were granted to the City by the Raker Act of 1913, and the related transmission facilities down to the City of Newark. “Indemnified Taxes” means Taxes other than Excluded Taxes.
“Investment Policy and Guidelines” means the investment guidelines of the City as in effect on the date hereof, as su ch investment guidelines may be amended from time to time in accordance with the Issuing and Paying Agent Agr eement, the Resolutions and State laws, as applicable.
“Issuing and Paying Agent” has the meaning set forth in the recitals to this Agreement.
“Issuing and Paying Agent Agreement” has the meaning set forth in the recitals to this Agreement.
“Law” means any treaty or any Federal, regiona l, state and local law, statute, rule, ordinance, regulation, code, license, authorizat ion, decision, injunctio n, interpretation, policy, guideline, supervisory standard, order or decree of any court or other Governmental Authority.
“Letter of Credit” means the irrevocable letter of cred it issued by the Bank for the account of the Commission in favor of the Issuing and Pa ying Agent supporting the Notes, in the form of Appendix I hereto, with appropriate insertions, as amended.
“Lien” means, with respect to any asset, (a) any lien, charge, claim, mortgage, security interest, pledge or assignment of revenues of any kind in respect of such asset or (b) the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.
“Master Trust Indenture” means the Trust Indenture, dated as of May 1, 2015, between the Commission and U.S. Bank National Association, as trustee for the holders from time to time of the Commission’s power revenue bonds.
8 “Material Litigation” shall have the meaning assigned to such term in Section 4.5.
“Maximum Rate” means the lesser of (a) the maximum non-usurious interest rate that may, under applicable federal law and applicable state law, be contracted for, charged or received under such laws and (b) 12% per annum; provided, however, that if the City or the Commission increases the maximum rate allowable, which currently set forth in clause (b) of this “Maximum Rate” definition, at any time during the term hereof, then such increased rate shall be the Maximum Rate.
“Moody’s” means Moody’s Investors Service, Inc.
“Net Revenues” for any Fiscal Year (or other designated twelve-month period) means Revenues in such Fiscal Year (or other designated twelve-month period), less (a) Operation and Maintenance Expenses, and (b) any Priority R&R Fund Deposit for such Fiscal Year (or other designated twelve-month period).
“No-Issuance Notice” has the meaning set forth in the Letter of Credit.
“Notes” has the meaning set forth in the recitals to this Agreement.
“Obligations” means the Reimbursement Obligations (which includes amounts owing to the Bank evidenced by the Bank Note) and all other obligations of the Commission to the Bank arising under or in relation to this Agreement or the Fee Agreement.
“Offering Memorandum” means any offering memorandum or similar disclosure document relating to the Notes, among others, and the Commission as may be prepared by or on behalf of the Commission or the Dealers from time to time in connection with the offering and sale of Notes.
“Operation and Maintenance Expenses” means the costs of th e proper operation, maintenance and repair of the Power Enterprise and taxes, assessments or other governmental charges lawfully imposed on the Power Enterprise or the Revenues, or payments in lieu thereof, as determined in accordance with GAAP (as defined in the Master Trust Inde nture). Operation and Maintenance Expenses shall include the payment of pension charges and proportionate payments to such compensation and other insurance or outside reserve funds as the Commission may establish or the Board may require with respect to employees of the Power Enterprise, as provided in Section 16.103(a) of the Char ter. Operation and Maintenanc e Expenses shall also include repairs and maintenance costs that constitute operating expenses in accordance with GAAP (as defined in the Master Trust Inde nture). Operation and Maintena nce Expenses sh all not include (a) any allowance for amortization, depreciation or obsolescence, (b) operation and maintenance expenses of the Water Enterprise, (c) operation and maintenance expenses of the Wastewater Enterprise, (d) operation and maintenance expenses of any Separate System, (e) any expense for which, or to the extent to which, the Commission is or will be paid or reimbursed from or by any source that is not included or includable as Reve nues, (e) losses from any sa le or other disposition of Power Enterprise assets, and (g) non-cash losse s and costs that may be required or permitted under GAAP (as defined in the Master Trust Inde nture) to be expensed, including deferred expenses and unrealized mark-to-market losses.
9 “Ordinance” has the meaning set forth in the recitals hereof.
“Original Stated Amount” has the meaning set forth in Section 2.1 hereof.
“Other Debt Documents” has the meaning set forth in Section 5.1(c)(i) hereof.
“Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Basic Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Basic Document.
“Parity Debt” means the Bank Note and Parity Notes.
“Parity Notes” has the meaning set forth in the Issuing and Paying Agent Agreement.
“Participant” has the meaning set forth in Section 7.3(b) hereof.
“Participation” has the meaning set forth in Section 7.3(b) hereof.
“Payment Account” means the payment account for the Bank set forth in Section 7.2 hereof.
“Person” means an individual, a firm, a corporat ion, a partnership, a limited liability company, an association, a trust or any other entity or organization, including a government or political subdivision or any agency or instrumentality thereof.
“Power Enterprise” means the Commission’s Power Enterprise established and existing as of the date of the Master Trust Indenture to provide electric power and related services to the City and its departments, agencies a nd commissions as well as other cu stomers both in and outside of the City, including that portion of the Hetch He tchy Project used for power generation, and all other power generation, transmission and distributi on facilities and related f acilities, streetlights, property and rights constituting a part of the Power Enterprise, together with any and all additions, improvements, betterments, renewals, replacements a nd repairs thereto and ex tensions thereof, but shall not include: (a) the Water Enterprise, (b) th e Wastewater Enterprise, or (c) any Separate System.
“Power Enterprise Debt” means Debt of the Commission secured by Revenues, including, without limitation, Bonds, Notes and Parity Debt.
“Prime Rate” means on any day, the rate of interest in effect for such day as publicly announced from time to time by the Bank as its “prime rate.” The “prime rate” is a rate set by the Bank based upon various factors in cluding the Bank’s costs and desi red return, general economic conditions and other factors, and is used as a reference point for pr icing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by the Bank shall take effect at the opening of business on the day specified in the public announcement of such change.
10 “Priority R&R Fund Deposits” means, for any Fiscal Year or other designated twelve- month period, the amount, if any, required by the Ch arter to be deposited in the Reconstruction and Replacement Fund established pursuan t to the Master Trust Inde nture from Revenues prior to deposits in such Fiscal Year into the Bond Fund established pur suant to the Master Trust Indenture.
“Program Size” means $90,000,000 less the aggregate amount, if any, of all Reduction Amounts.
“Property” means any interest in any kind of propert y or asset, whether real, personal or mixed, or tangible or intangible, whether now owned or hereafter acquired.
“Quarterly Date” means the first Business Day of each March, June, September or December.
“Qualified Counterparty” means a party other than the Commission which is the party to a Swap Agreement and, at the time of execution and delivery of the Swap Ag reement, (a) (i) whose senior debt obligations are or cl aims-paying ability is rated in one of the three highest rating categories of each of at least two Rating Agencies (without regard to any gradations within a rating category) or (ii) whose obligations under the Swap Agreement are guaranteed for the entire term of the Swap Agreement by a Person whose senior debt obligations are or claims-paying ability is rated in one of the three highest rating categories of each of at least two Rating Agencies (without regard to any gradations within a rating category) and (b) which is otherwise qualified to act as the party to a Swap Agreement with the Commission under any applicable law. “Qualified Dealer” means, (i) RBC Capital Markets, LLC, (ii) Goldman, Sachs & Co., (iii) Barclays Capital Inc. and (iv) any other financial institution on the list set forth in Exhibit E hereto which financial institution (or any parent or affiliate of such financial institution) has capital of not less than $500,000,000, and underlying ratings from Moody’s, S&P and Fitch of at least “A3” (or its equivalent), “A-” (or its equivalent) and “A-” (or its equivalent), respect ively (unless, in each instance, the Bank in its discreti on provides in writing an exceptio n for a particular Dealer under specified circumstances), and (iv) at any time after the Closing Date, any other financial institution (or any parent or affiliate of such financial in stitution) with capital of not less than $500,000,000, and underlying ratings from Moody’s, S&P and Fitch of at least “A3” (or its equivalent), “A-” (or its equivalent) and “A-” (or its equivalent), respectively (unless, in each instance, the Bank in its sole discretion consents in writing to any other financial institution acting as a Dealer) approved in writing by the Bank, which approval shall not be unreasonably withheld or delayed.
“Rating Agency” and “Rating Agencies” means, individually or collectively, as applicable, Fitch, Moody’s and S&P.
“Reduction Amount” has the meaning set forth in Section 2.18(c) hereof.
“Refundable Credits” means amounts payable by the Federal government to the Commission under direct-pay subsidy programs subs tantially similar to th e Build America Bond program under Section 54AA of the Code.
“Reimbursement Obligations” means any and all obligati ons of the Commission to reimburse the Bank for Drawings u nder the Letter of Credit and a ll obligations to repay the Bank
11 any Advance or Term Loan, including in eac h instance all interest accrued thereon, which obligations are evidenced and secured by the Bank Note.
“Reserve Account Credit Facility” has the meaning set forth in the Master Trust Indenture.
“Resolution” has the meaning set forth in the recitals hereof.
“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 (as defined in the Master Trust Indenture). Revenues shall include payments to the Power Enterprise on or with respect to loans from any Separate System maintained by the Commission. Revenues shall not include (a) proceeds from the issuance of any obligations for borrowed money, (b) amounts loaned to the Power Enterprise, (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 (as defined in the Master Trust Indenture), 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 Enterprise, (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, (n) 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 (o) Wastewater Enterprise revenues as defined in the document or agreement governing the then-outstanding senior lien obligations of the Wastewater Enterprise for borrowed money.
“Risk-Based Capital Guidelines” means (i) the risk-based capital guidelines in effect in the United States, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States including transi tion rules, and any amendments to such regulations.
“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business.
“Sanction(s)” means any international economic sancti on administered or enforced by the United States Government (including, without limitation, OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.
“Senior Debt” means any Debt issued or incurred by the Commission and secured by or payable from Revenues on a basis se nior or superior to the Lien in favor of the Notes and other Parity Notes and includes, without limitation, the Bonds.
“Separate System” means any electric power or energy generation, transmission, or other facilities, property and rights that ma y be hereafter purchased, constructed or otherwise acquired by the Commission where the revenues derived from the ownership and operation of shall be pledged to the paymen t of bonds or other ob ligations for borrowed money issued or
12 to purchase, construct or otherwise acquire such facilities, property and rights and shall not be included in Revenues and the operation and maintena nce expenses with respect to which shall not included in Operation and Maintenance Expenses.
“Series” has the meaning set forth in the Master Trust Indenture.
“State” means the State of California.
“Stated Amount” has the meaning set forth in the Letter of Credit.
“Stated Expiration Date” has the meaning set forth in the Letter of Credit.
“Swap Agreement” means any financial instrument th at: (a) is entered into by the Commission with a party that is a Qualified Counterparty at the time the instrument is entered into; (b) is entered into with respect to all or a portion of a Series of Bonds; (c) is for a term not extending beyond the final maturity of the Series of Bonds or portion thereo f to which it relates; (d) provides that the Commission shall pay to su ch Qualified Counterparty an amount accruing at either a fixed rate or a variable rate, as the case may be, on a noti onal amount equal to or less than the principal amount of the Series of Bonds or por tion thereof to which it relates, and that such Qualified Counterparty shall pay to the Commission an amount accruing at either a variable rate or fixed rate, as appropriate, on such notional amoun t; (e) provides that one party shall pay to the other party any net amounts due under such instrume nt; and (f) has been designated to the Trustee in the Supplemental Trust Indenture (as defined in the Master Trust Inde nture) authorizing the issuance of the related Se ries of Bonds or porti on thereof or in a Certif icate (as defined in the Master Trust Indenture) of the Commission as a Swap Agreement with respect to such Bonds.
“Swap Agreement Receipts” means the regularly scheduled net amounts required to be paid by a Qualified Counterparty to the Commission pursuant to a Swap Agreement.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, fines, additions to tax or penalties applicable thereto.
“Term Loan” has the meaning set forth in Section 2.4(e) hereof.
“Term Loan Conversion Date” has the meaning set forth in Section 2.4(b) hereof.
“Term Loan Maturity Date” means, with respect to any Term Loan, the earliest of (a) the third anniversary of the Term Loan Conversion Date for such Term Loan, (b) the third anniversary of the Stated Expiration Date as in effect on the date on which the related Term Loan was made, (c) the date an Alternate Facility becomes eff ective in accordance with Section 9.02 of the Issuing and Paying Agent Agreement, (d) the date on which the Stated Amount is permanently reduced to zero or the Letter of Credit is otherwise terminated prior to the Stated Expiration Date, including as a result of the occurrence of an Event of Default and (e) the Business Day when Notes or bonds are sold to fund the repayment of any Term Loan.
“Termination Date” has the meaning set forth in the Letter of Credit.
13 “2014 Audited Financial Statements” has the meaning set forth in Section 4.6
“Unpaid Drawing” has the meaning set forth in Section 2.3 hereof.
“Wastewater Enterprise” means the municipal sanitary waste and storm water collection, treatment and disposal system, as located partiall y within and partially w ithout the City, and all additions, betterments, and extensions to said sanitary waste and storm water system. “Water Enterprise” means the municipal water supply, st orage and distribution system of the Commission, as located partially within and partially without the City, including all of the presently existing municipal water system of the City, and all additions, betterments, and extensions to said water system, but excluding a ny water supply, storage or distribution facilities which constitute part of the Hetch Hetchy Project.
The foregoing definitions are equally applicable to both the singular and plural forms of the defined terms. Any capitalized terms used he rein which are not specifically defined herein have the same meanings herein as in the Issuin g and Paying Agent Agreement. All references in this Agreement to times of day are references to New York time unless otherwise expressly provided herein. Unless otherwise in consistent with the terms of this Agreement, all accounting terms are interpreted and all a ccounting determinations hereunder are made in accordance with GAAP.
ARTICLE 2
LETTER OF CREDIT
Section 2.1 Issuance of Letter of Credit . Upon the terms, subject to the conditions and relying upon the representations and warranties set forth in this Agreement or incorporated into Section 4.7 hereof, the Bank agrees to issue the Letter of Credit substantially in the form of Appendix I hereto. The Letter of Credit will be in the original stated amount of $97,989,042 (the “Original Stated Amount” ), which is the sum of (i) the aggr egate principal amount of the Notes authorized to be issued under the Issuing and Paying Agent Agreemen t, plus (ii) interest thereon at the rate of 12 percent (12%) per annum for a pe riod of two hundred seventy (270) days calculated on the basis of a 365-day year (and rounded up to the nearest dollar).
Section 2.2 Letter of Credit Drawings . The Issuing and Paying Agent is authorized to make Drawings under the Letter of Credit in accordance with its terms. The Commission authorizes the Bank to make payments unde r the Letter of Cred it in the manner th erein provided. The Commission irrevocably approves reductions and reinstatements of the Stated Amount as provided in the Letter of Credit.
Section 2.3 Reimbursement. Subject to the provisions of Section 2.4 hereof, the Commission agrees to pay, or to cause to be paid, to the Bank (i ) on each date on which the Bank honors any demand for payment under the Letter of Credit (each such payment by the Bank being referred to as a “Drawing”) a sum equal to the amount so paid under the Letter of Credit (any so paid until reimbursed being referred to as an “Unpaid Drawing” ), plus (ii) interest on the of each such Unpaid Drawing from and including th e date such Drawing is paid until the Bank is reimbursed in full for such Drawing equal to the De fault Rate. Subject to the provisions of Section
14 2.4 hereof respecting Advances (each of wh ich Advances when made will constitute of a Drawing in an amount equal to the amount of such Advance), the Commission is obligated, without notice of a Drawing or demand for re imbursement (which notice is waived by the Commission), to reimburse the Bank for all Drawings on the same day as made. The amount of any Drawing relating to accrued inte rest on the related Notes must be reimbursed by the Commission the date on which such Drawing is made . The Commission and the Bank agree that the reimbursement in full of each Drawing on the day such Drawing is made is intended to be a contemporaneous exchange for new value given to the Commission by the Bank. If a Drawing is reimbursed at or prior to 4:00 p.m. on the same day on which it is made, no interest will be payable such Drawing.
Section 2.4 Advances; Term Loans.
(a) Making of Advances. The Bank agrees that if (i) the Bank pays any Drawing under the Letter of Credit, (ii) the por tion of such Drawing relating to the principal amount of the related Notes will not be reimbursed in full on the date of such Drawing by payment to the Bank as provided in Section 2.3 hereof a nd (iii) (A) the representations and warranties of the Commission contained in Article Four of this Agreement are true and correct as of the date of such Drawing, (B) no Material Litigation shall be pending; (C) no event has occurred and is continuing which has or is having a material adverse effect on the Commissi on’s obligations under this Agreement, the Fee Agreement, the Bank Note or the any of the othe r Basic Documents to which the Commission is a party or the ability of the Commission to perf orm its obligations in connection herewith or therewith and (D) no Default or Event of Default has occurred and is continuing on the date of such Drawing, the portion of such Drawi ng relating to the principal amount of the related Notes (or the portion thereof) which is not so reimbursed by the Commission to the Bank will automatically constitute an advance (individually an “Advance” and, collectively, the “Advances”) made by the Bank to the Commission on the date of and in an amount equal to the amount of such Drawing relating to the principal amount of the related Notes (or portion thereof) which is not so reimbursed by the Commission to the Bank. For purposes of S ection 2.3 hereof, each Advance when made will constitute reimbursement of the portion of the re lated Drawing relating to the principal amount of the related Notes in an amount equal to the am ount of such Advance; and each Advance when made will preclude, to the extent of the amount of such Advance, the portion of the related Drawing relating to the principal amount of the related Notes from being or constituting an Unpaid Drawing. Unless the Commission has otherwise prev iously advised the Bank in writing, payment by the Bank of any Drawing under the Letter of Credit will be deemed to constitute a representation and warranty by the Commission that on the date of such Drawing (i) th e representations and warranties of the Commission containe d in Article Four hereof are tr ue and correct on such date, (ii) no Material Litigation shall be pending on such date, (iii) no event has occurred and is continuing which has or is having a material adve rse effect on the Commission’s obligations under this Agreement, the Fee Agreement, the Bank Note or the any of the ot her Basic Documents to which the Commission is a party or the ability of the Commission to perform its obligations in connection herewith or therewith and (iv) no Default or Event of Default has occurred and is continuing on such date.
(b) Payment of Principal a nd Interest on Advances. Except as otherwise required or permitted by Section 2.4(c), 2.4(d) or 2.4(e) of th is Agreement, the Commission shall repay, or to be repaid, the unpaid principal amount of each Advance on the earlier to occur of (i) the ninetieth (90th) day following the date such Advance was ma de and (ii) the Termination Date (with respect such Advance, the “Term Loan Conversion Date” ). The Commission shall pay interest on the
15 amount of each Advance from the date of such Advance until paid in full at the Bank Rate from to time in effect; provided that, from and after the occurrence of an Event of Default, each Advance will bear interest at the Default Rate. Interest on each Advance shall be payable monthly, in arrears, on the first Business Day of each month (commencing with the first such date to occur after the making of the related Advance) and upon prepayment or maturity of such Advance. The amount of accrued interest on any Advance must be re imbursed by the Commission on the Term Loan Conversion Date.
(c) Mandatory Prepayment of Advances and Term Loans. The Commission shall prepay Advances and Term Loans if the aggregat e proceeds of the issuan ce of Notes exceed the aggregate principal amount of Note s maturing on the date of such i ssuance. On the date of each such prepayment of Advances or Term Loans, as applicable (or portions thereof), the Commission shall pay to the Bank interest accrued and unpaid to the date of such prepayment on the aggregate amount of the Advances and Term Loans (or porti ons thereof) prepaid. Upon the Bank’s receipt of any payment or prepayment of any Advance or Term Loan, the amount of such Advance and/or Term Loan shall be reduced by the amount of such payment or prepayment. Any prepayment pursuant to this paragraph (c) or paragraph (d) below will be applied firs t to outstanding Term Loans, in the inverse or der of maturity, and then to outstandi ng Advances in the inverse order of maturity.
(d) Optional Prepayment. The Commission may prepay Advances in whole, or in part in a minimum amount of $500,000 and in integral multiples of $100,000 in excess thereof, in each case without penalty or premium, on one Business Day’s prior written notice, such prepayment to be applied as set forth in paragraph (c) above.
(e) Term Loan Option. On a Term Loan Conversion Da te, each Advance maturing on such date will, if the conditions set forth in Sect ion 2.4(f) hereof have been satisfied, be converted to a term loan (a “Term Loan”).
(f) Conditions Precedent to Term Loans. Principal amounts owed by the Commission for Advances remaining unpaid on their respective Term Loan Conversion Dates will be converted to Term Loans if and only if:
(i) the representations and warranties of the Commission contained in Article Four of this Agreement are tr ue and correct on and as of th e Term Loan Conversion Date, and deemed made as of such date, as though made on and as of such date; (ii) no Material Litigation shall be pending;
(iii) no event has occurred and is continuing which has or is having a material adverse effect on the Commission’s obligations under this Agreement, the Fee Agreement, the Bank Note or the any of the other Basic Documents to which the Commission is a party or the ability of the Commission to perform its obligations in connection herewith or therewith;
(iv) no Default or Event of Default has o ccurred and is continuing or would result from converting the Advance to a Term Loan; and
(v) no No-Issuance Notice is in effect; no Fi nal Drawing Notice is in effect; and no Acceleration Notice has been delivered to the Commission.
16 (g) Repayment of Term Loans. The Commission agrees to pay to the Bank an amount equal to the unpaid principal amount of each Term Loan made by the Bank, together with interest thereon from and including the Term Loan Convers ion Date to but excluding the date the Bank is reimbursed therefor at a rate per annum equal to the Bank Rate; provided that, from and after the occurrence of an Event of Default, each Term Loan will bear interest at the Default Rate. Interest on the unpaid balance of each Term Loan must be paid to the Bank monthly in arrears on the first Business Day of each calendar month during the term of such Term Loan (commencing with the first such date to occur after the applicable Term Loan Convers ion Date) and on the Term Loan Maturity Date. Each Term Loan must be repaid in equal (or as nearly as possible) quarterly installments (each such installment referred to as a “Principal Payment” ), such Principal Payments to commence on the first Quarterly Date that is at least ninety (90) days following the date of the related Advance and on each Quarterly Date thereafte r and with the final installment being due and payable on the Term Loan Matur ity Date, until paid in full; provided that the unpaid amount of each Term Loan must be paid in full not later than the applicable Term Loan Maturity Date; provided, further, that if the Commission elects to prepay a Term Loan in part, such prepayment will be applied (i) to the Term Loans in inverse order of the Term Loan Conversion Dates of the Term Loans and (ii) to the remaining Principal Payments relating to each Term Loan prepaid in inverse order of the due dates of such Principal Payments. (h) Prepayment of Term Loans. The Authority may prepay any Term Loan in whole, or in part in a minimum amount of $500,000 and in integral multiples of $100,000 in excess thereof, in each case without penalty, on two Business Days’ prior written notice, such prepayment to be applied as set forth in paragraph (g) above.
Section 2.5 Fees. The Commission agrees to pay and perform its obligations provided for in the Fee Agreement, including the payment of all fees and expenses provided for therein in the amounts and on the dates set forth therein. The te rms and provisions of the Fee Agreement are incorporated herein by reference. All referenc es to amounts due under this Agreement will be deemed to include all amounts and obligations (i ncluding, but not limited to, fees and expenses) due under the Fee Agreement. All fees paid under this Agreemen t and the Fee Agreement will be fully earned when due and nonrefundable when paid.
Section 2.6 The Bank Note . All Reimbursement Obligations will be evidenced by one promissory note of the Commission, designated “San Francisco Public Utilities Commission Series A-1 Bank Note, (Power Revenues),” in substan tially the form of Exhibit A hereto (the “Bank Note”), to be issued on the Closing Date, payable to the Bank in a principal amount equal to the Original Stated Amount. All Reimbursement Obligat ions owed to the Bank and all payments and prepayments made on account of principal and inte rest thereof will be recorded by the Bank on the schedule (or a continuation thereof) attached to the Bank Note, it being understood, however, that failure by the Bank to make any such endorsem ent will not affect the obligations of the Commission hereunder or under the Bank Note in respect of unpaid principal of and interest on the Reimbursement Obligations. The Commission shall pa y principal and interest on the Bank Note on the dates and at the rates provid ed for in Sections 2.3 and 2.4 hereof with respect to Unpaid Drawings, Advances and Term Loans. The Commi ssion’s obligations to repay each Advance and Term Loan and to pay interest thereon as provi ded herein shall be evid enced and secured by the Bank Note, and the Commission shall redeem the Bank Note on each date on which the Commission is required to make a principal payment on an Advance or Term Loan, as applicable, in an amount equal to the Advance or Term Loan payment, as applicable, due on such date.
17 Section 2.7 Termination of Letter of Credit; Reduction of Stated Amount.
(a) Notwithstanding any provision of this Agr eement to the contrary, the Commission agrees not to terminate or replac e the Letter of Credit, except upon (i) the payment to the Bank of all Obligations payable hereunder and under the Ba nk Note and the Fee Agreement and (ii) the Commission providing the Bank with thirty (30) days’ prior written notice of its intent to terminate or replace the Letter of Credit; provided that all Obligations to the Bank must be paid to the Bank at or prior to the time of termination and any such termination or replacement of the Letter of Credit must be in compliance with the terms of the Issuing and Paying Agent Agreement. (b) Notwithstanding any provision of this Agr eement to the contrary, the Commission agrees not to permanently reduce the Stated Amount, except upon the Commission providing the Bank with thirty (30) days’ prio r written notice of its intent to permanently reduce the Stated Amount.
Section 2.8 Computation of Interest and Fees. Fees payable hereunder and under the Fee Agreement will be calculated on the basis of a year of 360 days and the actual number of days elapsed. Interest payable hereunde r and under the Bank Note will be calculated on the basis of a year of 365 or 366 days, as the case may be, and the actual number of days elapsed. Interest will accrue during each period during whic h interest is computed from and including the first day thereof to but excluding the last day thereof.
Section 2.9 Payment Due on Non-Business Day to Be Made on Next Business Day . If any sum becomes payable pursuant to this Agr eement on a day which is not a Business Day, the date for payment thereof will be extended, without penalty, to the next succeeding Business Day, and such extended time will be included in the computation of interest and fees.
Section 2.10 Default Rate. If any Obligation is not paid when due, such Obligation will bear interest until paid in fu ll at a rate per annum equal to the Default Rate, payable on demand.
Upon the occurrence and during the continuance of an Event of Default, the Obligations of the Commission hereunder will bear intere st at the Default Rate, which in terest will be payable by the Commission to the Bank upon demand therefor and be calculated on the basis of a 365- or 366-day year, as the case may be, and actual days elapsed.
Section 2.11 Source of Funds. All payments made by the Bank pursuant to the Letter of Credit will be made from funds of the Bank and not from the funds of any other Person.
Section 2.12 Extension of Stated Expiration Date. If the Commission on any date which is not more than one hundred twenty (120) days nor less than ninety (90) da ys prior to the Stated Expiration Date (as the same may be extended fr om time to time) submits to the Bank a written request for an extension of the Stated Expiration Date for a peri od as specified in such written (not to exceed three years), th e Bank shall make reasonable effo rts to respond to such request thirty (30) days after receipt of all information necessary, in the Bank’s reasonable judgment, to permit the Bank to make an informed credit decisi on. If the Bank fails to definitively respond to request within such period of time, the Bank will be deemed to have refused to grant the extension requested. The Bank may, in its sole and absolute discretion, decide to accept or reject any such proposed extension, and no extens ion will become effective unles s the Bank has consented thereto
18 writing. The consent of the Bank, if granted, is conditioned upon the pr eparation, execution and delivery of documentation in form and substance reasonably satisfactory to the Bank and consistent with this Agreement. If such an extension request is accepted by the Bank in its sole and absolute discretion, the then current Stated Expiration Date for the Letter of Credit will be extended to the agreed to by the Commission and the Bank.
Section 2.13 Taxes.
(a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Commission hereunder, under the Bank Note or under the Fee Agreement must be made free and clear of and without reducti on or withholding for any Indemn ified Taxes or Other Taxes; provided that if the Commission is required by Appli cable Law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable will be increased as necessary so that after making all required de ductions (including deductions applicable to additional sums payable under this Section) the Bank or any Part icipant receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Commission shall make such deductions and (iii) the Commission shall timely pa y the full amount deducted to the relevant Governmental Authority in accordance with Applicable Law. (b) Payment of Other Taxes by the Commission. Without limiting the provisions of paragraph (a) above, the Commission shall timel y pay any Other Taxes to the relevant Governmental Authority in accordance with Applicable Law. (c) Indemnification by the Commission. The Commission shall indemnify the Bank and each Participant, within thirty (30) days af ter demand therefor, for the full amount of any Indemnified Taxes or Other Taxe s (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Sec tion) paid by the Bank or such Participant and any penalties, interest and reason able expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate stating the amount of such payment or liability delivered to the Commission by the Bank or any Participant will be conclusive absent manifest error. In addition, the Commission shall indemnify the Bank and each Participant, within thirty (30) days after demand th erefor, for any incremental Taxes that may become payable by the Bank or such Participant as a result of any failure of the Commission to pay any Taxes when due to the appropriate Governmental Authority or to deliv er to the Bank or such Participant pursuant to paragraph (d) below, documentation evidencing the payment of Taxes. (d) Evidence of Payments. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Commission to a Governmental Authority, the Commission shall deliver to the Bank or the applicable Participant the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of th e return reporting such payment or other evidence of such payment reasonably satisfactory to the Bank or such Participant, as applicable.
(e) Treatment of Certain Refunds. If the Bank or any Participant determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified pursuant to this Section (inclu ding additional amounts paid by the Commission to this Section), it shall pay to the applicable indemnifying party an amount equal to such refund
19 only to the extent of indemnity payments made, or additional amounts paid, under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Bank or such Participant, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the applicable indemnifying party, upon the request of the Bank or such Participant, as applicab le, agrees to repay the amount over pursuant to this Section (plus any penalties, in terest or other charges imposed by the relevant Governmental Authority) to the Bank or such Part icipant in the event the Bank or such Participant required to repay such refund to such Governme ntal Authority. Notwiths tanding anything to the contrary in this paragraph (e), in no event will the Bank or any Participant be required to pay any amount to an indemnifying party pursuant to this paragraph (e) the payment of which would place Bank or such Participant in a less favorable net after-Tax position than the Bank or such Participant would have been in if the indemnification paym ents or additional amounts giving rise to such had never been paid. This paragraph will not be construed to require the Bank or any Participant make available its tax returns (or any other in formation relating to its taxes which it deems confidential) to the Commission or any other Person.
(f) Survival. Without prejudice to the survival of any other agreement of the Commission hereunder, the agreements and obliga tions of the Commissi on contained in this Section will survive the termination of this Agr eement and the Letter of Credit and the payment in full of the Bonds and the obligations of the Commission thereunder and hereunder.
Section 2.14 Increased Costs.
(a) Increased Costs Generally. If any Change in Law:
(i) imposes, modifies or deems applicable any reserve, liquidity ratio, special deposit, insurance premium, fee, financial charge, monetary burden, compulsory loan, insurance charge or similar requirement agains t assets of, deposits wi th or for the account of, or advances, loans or othe r credit extended or participat ed in by, the Bank or any Participant, or funding any Drawing under the Le tter of Credit or main taining the Letter of Credit, or complying with any term of this Ag reement, or against assets held by, or deposits with or for the account of, the Bank or such Participant; (ii) subjects the Bank or any Participant to any Tax of any kind whatsoever with respect to this Agreement, the Bank Note, the Fee Agreement or the Letter of Credit or changes the basis of taxation of payments to th e Bank or such Participant in respect thereof (except for Indemnified Taxes or Other Ta xes covered by Section 2.13 and the imposition of, or any change in the rate of, any Excluded Tax payable by the Bank or any Participant); (iii) subject credits or commitments to extend credit extended by the Bank or any Participant to any assessment or other cost imposed by the Federal Deposit Insurance Corporation or any successor thereto; or
(iv) imposes on the Bank or any Participant any other condition, cost or expense affecting this Agreement, the Bank Note, the Fee Agreement or the Letter of Credit; and the result of any of the foregoing is to increase the cost to the Bank or such Participant related funding any Drawing under the Letter of Credit or issuing or main taining the Lette r of Credit or participation therein, as the case may be, or to reduce the amount of any sum received or
20 by the Bank or such Participant hereunder, u nder the Bank Note or under the Fee Agreement (whether of principal, interest or any other amount), then, upon written request of the Bank or Participant as set forth in paragraph (c) of this Section, the Commission shall promptly pay to the Bank or such Participant, as the case may be , such additional amount or amounts as will compensate the Bank or such Participant, as the case may be, for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If the Bank or any Participant determines that any Change in Law affecting the Bank or such Participant or the Bank’s or such Participant’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on the Bank’s or such Partic ipant’s capital or liquidity or on the capital or liquidity of the Bank’s or such Participant’s hold ing company, if any, as a conse quence of this Agreement, the Bank Note, the Fee Agreement or the Letter of Credit, to a level below that which the Bank or such Participant or the Bank’s or such Participant’s holding company could have achieved but for such Change in Law (taking into consideration the Bank’s or such Participant’s policies and the policies of the Bank’s or such Participan t’s holding company with respect to capital adequacy), then from time to time, upon written request of the Bank or such Participant as set forth in paragraph (c) of this Section, the Commission will pay to the Bank or such Participant such additional amount or amounts as will compensate the Bank or such Part icipant or the Bank’s or such Participant’s holding company for any such reduction suffered. Notwithstanding the foregoing, the amount that any Participant will be entitled to receive under this Section 2.14(b) will in no event exceed the amount that the Bank would have been entitled to receive under this S ection 2.14(b) had such Participant’s funding obligation been a direct obligation of the Bank. (c) Certificates for Reimbursement . A certificate of the Bank or a Participant setting forth the amount or amounts necessary to compensate the Bank or such Participant or the Bank’s or such Participant’s parent or holding company, as th e case may be, as specified in paragraph (a) or (b) of this Section and delivered to the Commission, will be conclusi ve absent manifest error. The Commission shall pay the Bank or su ch Participant, as the case may be, the amount shown as due on any such certificate within thirty (30) days after receipt thereof. (d) Delay in Requests . Failure or delay on the part of the Bank or any Participant to demand compensation pursuant to this Section will not constitute a waiver of the Bank’s or such Participant’s right to demand such compensation; provided that the Commission is not required to compensate the Bank or such Participant pursuant to this Section for any increased costs incurred or reductions suffered more than one hundred eighty (180) days prior to the date that the Bank or such Participant, as the case may be, notifies the Commission of the Change in Law giving rise to such increased costs or reductions, and of the Bank’s or such Participant’s intention to claim compensation therefor (excep t that (i) if the Change of Law givi ng rise to such increased costs or reductions is retroactive, then the one hundred eighty day period referred to above will be extended to include the period of retroactive effect thereof a nd (ii) if the Bank or any such Participant had no actual knowledge of the action resulting in such incr eased costs as of the date six months prior to the date of notice to the Commission, then the six-month period referred to above will not apply). (e)
Survival. Without prejudice to the survival of any other agreement of the Commission hereunder, the agreements and obliga tions of the Commissi on contained in this will survive the termination of this Agreement and the Letter of Credit and the payment in full of Bank Note and the obligations of the Commission thereunder and hereunder.
21 Section 2.15 Margin Regulations. No portion of the proceeds of any Drawing under the Letter of Credit may be used by the Commission (or the Issuing and Paying Agent or any other Person on behalf of the Commission) for the purpos e of “purchasing” or “carrying” any margin stock or used in any manner which might cause th e borrowing or the applica tion of such proceeds to violate Regulation U, Regulatio n T or Regulation X of the Boar d of Governors of the Federal Reserve System or any other regulation of said Board of Governors or to violate the Securities Exchange Act of 1934, as amended, in each case as in effect on the date or da tes of such Drawings or such use of proceeds.
Section 2.16 Maximum Rate; Payment of Fee . Anything in Section 2.3, 2.4 or 2.10 hereof to the contrary notwithst anding, the amount of interest payable hereunder for any interest period will not exceed the Maximum Rate. If for any interest period the applicable interest rate would exceed the Maximum Rate, then (i) such inte rest rate will not exceed but will be capped at such Maximum Rate and (ii) in any interest period th ereafter that the applicable interest rate is less than the Maximum Rate, any Obligation hereunder will bear interest at the Maximum Rate until the earlier of (x) payment to the Bank of an amount equal to the amount which would have accrued but for the limitation set forth in this Section and (y ) the Term Loan Maturity Date. Upon the Term Loan Maturity Date or, if no Term Loan is or could be outstanding on the Termination Date, the Termination Date, in consideration for the limita tion of the rate of inte rest otherwise payable hereunder, to the extent permitted by Applicable Law, the Commission shall pay to the Bank a fee in an amount equal to the amount which would have accrued but for the limitation set forth in this Section that has not previously been paid to the Bank in accordance with the immediately preceding sentence.
Section 2.17 Security of Obligations . Notwithstanding any othe r provision of this Agreement or any other Basic Document to the contrary, all ob ligations to th e Bank under this Agreement, including, without limitation, the Bank Note, are limited obligations of the Commission payable solely from Revenues, as provided in the Issuing and Paying Agent Agreement, and subject to applicat ion as set forth in the Master Trust Indenture. The Obligations and the Bank Note are Subordinate Obligations (as defined in the Master Trust Agreement).
Section 2.18 Commercial Paper Operations.
(a) Issuance Generally. The Commission shall permit Notes to be issued, and authorize the Issuing and Paying Agent to issue Notes, only in accordance with the terms of the Issuing and Paying Agent Agreement and this Agreement.
(b) No-Issuance Notices; Final Drawi ng Notice; Acceleration Notice. Notes may be issued from time to time prior to the Stated Expi ration Date in accordance herewith and with the Issuing and Paying Agent Agreement so long as (i) the Issuing and Paying Agent is not in receipt of No-Issuance Notice by the Bank that has not been re scinded; and (ii) the Issuing and Paying Agent not in receipt of the Final Drawing Notice or th e Acceleration Notice. The Bank may deliver a No- No-Issuance Notice at any time a Default or an Ev ent of Default has occurred and is continuing.
Bank may deliver the Final Drawing Notice at any time when an Event of Default has occurred and continuing. The Bank may deliver the Acceleration Notice at any time an “event of default” has occurred and is continuing under the Issuing and Paying Agent Agreement. A No-Issuance Notice, the Final Drawing Notice or the Acceleration No tice (for purposes of th is Section 2.18(b)) is effective when received by the Issuing and Paying Agent; provided, however, that a No-Issuance
22 Notice, the Final Drawing Notice or the Accelerat ion Notice received by the Issuing and Paying Agent after 12:00 Noon on any day on which Notes ar e being issued will be effective on the next succeeding day. A No-Issuance Notice, the Final Drawing Notice or the Acceleration Notice may given by facsimile or electronic mail transmission, confirmed in wr iting within 24 hours, but the failure to so confirm such No-Issuance Notice, the Final Drawing Notice or the Acceleration Notice in writing will not render such No-Issuance Notice, the Final Dr awing Notice or the Acceleration Notice ineffective. The Bank shall furnish a copy of any No-Issuance Notice, the Final Drawing Notice and the Acceleration Notice to the Commission and the Dealers promptly following delivery thereof to the Issuing and Paying Agent, but the failure to furnish any such copy will not render ineffective such No-Issuance Notice, the Final Drawing Notice or the Acceleration Notice. (c) Reduction in Program Size. In the event the Commission elects not to issue Notes up to the Maximum Rate, or otherwise limits the interest rate on a rollover of Notes to a rate of interest less than the Maximum Rate and, as a result of these actions the Bank is not reimbursed for a Drawing made to pay maturing Notes, then the Bank may deliver written notice to the Commission with a copy to the Issuing and Paying Agent and the Dealer or Dealers for the Notes instructing the Commission to permanently reduce the Program Size by the principal amount of the Drawing made to purchase such maturing Notes (the “ Reduction Amount”). In the event the Bank delivers such a notice, the Commission shall cause the Issuing and Paying Agent to promptly deliver to the Bank a reduction certificate in the form of Annex G to the Letter of Credit requesting that the principal component of the Letter of Cr edit be reduced by the Reduction Amount and that the interest component of the Le tter of Credit be proportionately reduced. Notwithstanding any other provision of this Agreement to the contra ry, the Commission shall repay the amount of any Advance resulting from an Unpaid Drawing contem plated by this Section 2.18(c) together with accrued interest thereon no later than the date that is thirty (30) days following the date of such Advance.
Section 2.19 Method of Payment; Etc . All payments to be made by the Commission under this Agreement, the Bank Note or the Fee Ag reement must be made to the Payment Account not later than 4:00 p.m. on the date when due and must be made in lawf ul money of the United States of America in freely transferable and im mediately available funds. Any payment received after such time shall be deemed to be received on the next succeeding Business Day for purposes of calculating any interest payable in respect thereof.
ARTICLE 3
CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to Effectiveness . As conditions precedent to the obligation of the Bank to issue the Letter of Credit, each of the following conditions precedent must have been fulfilled to the satisfaction of the Bank and its counsel:
(a) Opinions. The Bank has received (i) an opinion of the City Attorn ey of the City the Closing Date and addressed to the Bank (or on which the Bank may rely) to the effect that (A) Commission is duly organi zed and validly existing as a commissi on of the City pu rsuant to the Charter with full legal power and authority to execute this Agreement, the Fee Agreement and the other Basic Documents to which it is a party and to issue the Notes; (B) this Agreement, the Fee Agreement and the other Basic Documents to which it is a party are valid and binding agreements the Commission enforceable agains t the Commission in accordance with their respective terms,
23 subject to bankruptcy, insolvency, moratorium or ot her laws affecting creditors’ rights, to general principles of equity and to limitations on remedi es against public agenci es; (C) no authorization, approval, consent or order of any agency or body having jurisdiction over the Commission is required in connection with the issuance of the Notes which has not been obtained; (D) the issuance of the Notes and the execution, delivery and perf ormance of this Agreem ent, the Fee Agreement the other Basic Documents to which it is a part y do not conflict with any law or material to which the Commission is a party or cause a default under any material documents to which the Commission is a party; and (E) no litigation is pending or, to the best knowledge of the City threatened against the Commission threatening its ex istence or power, its ability to issue the Notes to enter into and perform its ob ligations under this Agreement, the Fee Agreement and the other Basic Documents to which it is a party or in which a final adverse decision could materially affect the business, operations or financial conditi on of the Commission, such opinion (or, in lieu thereof, a reliance letter) to be addressed to the Bank, dated the Closing Date and in form and substance satisfactory to the Bank; and (ii) an opinion of the B ond Counsel dated the Closing Date and addressed to the Bank (or on which the Bank may rely) to the effect that (1) the Commission is duly organized and validly existing as a commission of the City pursuant to the Charter with full power and authority to execute this Agreement, the Fee Agreement and the other Basic Documents and to issue the Notes; (2) this Agreement, the Fee Agreement and the other Basic Documents are valid and binding agreements of the Commission en forceable in accordance with their respective terms, subject to bankruptcy, insolvency, moratorium or other laws affecting creditors’ rights, to general principles of equity and to limitations on remedies against public agencies and (3) the on the Notes is excludable from the gross income of the recipients thereof for Federal income tax purposes and for State of California income tax purposes. (b) Documents. The Bank has received executed copies of this Agreement, the Fee Agreement, the Ordinance, each Dealer Agreement th at is to be in effect on the Closing Date, the Resolution, the Issuing and Paying Agent Agreement and the Bank Note, including all amendments and supplements, if any, to the foregoing, certifi ed by the Secretary of the Commission, the Clerk of the Board or any Authorized Representative or the Board, as applicable, as being in full force and effect on and as of the Closing Date.
(c) Defaults; Representations and Warranties. On and as of the Closing Date, (i) no Default or Event of Default an d no default or event of defaul t under any of the other Basic Documents has occurred and is continuing or woul d occur upon the issuance of the Letter of Credit or the making of any Advance or Term Loan and (ii) the representations of the Commission set forth in Article Four hereof and in each of the other Basic Docume nts are true and correct in all material respects on and as of the Closing Date with the same force and effect as if made on and as of such date.
(d) No Litigation. No action, suit, investigation or proceeding is pending or, to the knowledge of the Commission, threatened (i) in connection with the Note s or the other Basic Documents or any transactions contemplated ther eby or hereby or (ii) ag ainst or affecting the Commission, the result of which could have a material adverse effect on the business, operations or condition (financial or otherwise) of the Commission or its abil ity to perform its obligations hereunder, under the Fee Agreement or under the Notes or the other Basic Documents to which it is a party.
24 (e) No Material Adverse Change. Since the date of the 2014 Audited Financial Statements, (i) no material adverse change has occurr ed in the status of the business, operations or condition (financial or otherwise) of the Commission or its abil ity to perform its obligations hereunder, under the Fee Agreement or under the Notes or the other Basic Documents to which it is a party and (ii) no law, regulation, ruling or other action (or interpretation or administration thereof) of the United States, the State of California or any political subdi vision or authority therein or thereof is in effect or has occurred, the effect of which would be to prevent the Bank from fulfilling its obligations hereunder or under the Notes, this Agreement, the Fee Agreement or the other Basic Documents to which it is a party.
(f) Certificate. The Bank has received (i) certified copies of all proceedings of the Commission authorizing the execution, delivery a nd performance of this Agreement, the Fee Agreement, the Bank Note and the other Basic Documents to which it is a party and the transactions contemplated hereby a nd thereby and (ii) a certificate or certificates of one or more Authorized Representatives dated the Closing Date certifying the accuracy of the statements made in Section 3.1(c), (d) and (e) hereof and furthe r certifying the name, incumbency and signature of each individual authorized to sign this Agreem ent, the Fee Agreement, the Bank Note, the other Basic Documents to which the Commission is a party and the other documents or certificates to be delivered by the Commission pursuant hereto or thereto, on which certification the Bank may conclusively rely until a revised certificate is similarly deliver ed, and that the c onditions precedent set forth in this Section 3.1 have been satisfied.
(g) Payment of Fees. The Bank has received all fees a nd expenses due and payable to the Bank or its legal counsel pursuant to the Fee Agreement or alternative arrangements satisfactory therefor have been made with the Bank.
(h) Financial Statements. The Bank has received th e 2014 Audited Financial Statements, internally prepared quarterly budget reports of the Commission for the most recent fiscal quarter end and a copy of the current quar terly budgeting status repor t, if not previously provided.
(i) Offering Memorandum. The Bank has received a copy of the Offering Memorandum.
(j) CUSIP and Rating for Bank Note. The Bank has received written confirmation that (a) a CUSIP number has been obtained from Sta ndard and Poor’s CUSIP Services for the Bank Note and (b) the Bank Note (and its CUSIP number) has been assigned a long term rating of at least investment grade from any Rating Agency.
(k) Notes Rating. The Bank has received written confirmation that the Notes have been rated “P-1” by Moody’s and “A-1” by Standard & Poor’s and that the underlying long-term credit ratings assigned to the Commi ssion’s unenhanced Bonds are at l east “A+” by Standard & Poor’s and “AA-” by Fitch.
(l) Other Matters.
The Bank has received such ot her statements, certificates, agreements, documents and information with resp ect to the Commission and matters contemplated by this Agreement as the Bank may have requested.
In addition, (A) the Bank must have made a reasonable determination that, as of the Date, no Law or other action of the United St ates of America, the State or any other
25 Authority or any political subdivision or authority therein or thereof is in effect or has occurred, effect of which would be to prevent the Comm ission, the Issuing and Paying Agent, the Dealers the Bank from fulfilling their respective obligations under this Agreement and the other Basic Documents and (B) no material adverse change in the financial condition of the Commission or in the Laws (or their interpretation or administration) currently in effect and applicable to the parties hereto and the transactions contemplated hereby has occurred as reasonably determined by the Bank. The execution and delivery of this Agreemen t by the Bank signifies its having made such determination.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to issue the Lett er of Credit, the Commission represents and warrants to the Bank as follows:
Section 4.1 Organization, Powers, Etc . The Commission (a) is a commission of the City and County of San Francisco organized and ex isting under the Charter; (b) has the full legal right, power and authority to (i) issue and sell the Notes in acco rdance with the Issuing and Paying Agent Agreement, (ii) own and operate the Power En terprise and control its properties and to carry on its business as now conducted and as contemplated to be conducted in c onnection with the issuance of the Notes, and th e execution, delivery and performan ce of its obliga tions under this Agreement, the Fee Agreement, the Bank Note a nd the other Basic Documents to which it is a party, (iii) execute, deliver and perform its obliga tions under the Bank Note, the Fee Agreement, the other Basic Documents to which it is a part y and this Agreement and (iv) provide for the security of the Notes and the Bank Note pursuan t to the Charter, the Issuing and Paying Agent Agreement and the Master Trust Indenture; and (c) has complied with all Laws in all matters related to such actions of the Commission as ar e contemplated by this Agreement, the Bank Note, the Fee Agreement and the other Basic Documents to which it is a party.
Section 4.2 Authorization, Absence of Conflicts, Etc . The issuance of the Notes and the execution, delivery and performance by the Comm ission of this Agreement, the Bank Note, the Fee Agreement and the other Basic Documents to wh ich it is a party (a) have been duly authorized by all necessary action on the part of the Commission, (b) do not an d will not conf lict with, or result in a violation of, any Laws, including the Charter, or any order, writ, rule or regulation of any court or governmental agency or instrumental ity binding upon or appli cable to the Commission which violation would result in a material adverse impact on th e Commission and (c) do not and will not conflict with, result in a violation of, or constitute a default under, any resolution, agreement or instrument to which the Commission is a party or by which the Commission or any of its property is bound which, in any case, would result in a ma terial adverse impact on the Commission.
Section 4.3 Binding Obligations; Security for Bank Note.
(a) This Agreement, the Fee Agreement, the Bank Note and each of the other Basic Documents to which the Commissi on is a party, when executed by the parties hereto and thereto, be valid and binding obligations of the Commis sion (assuming due authorization and execution by the other parties thereto) enforceable against th e Commission in accordance with their respective
26 terms, except to the extent, if any, that the enforceability thereof may be limited by (i) any bankruptcy, insolvency, reorganization, moratorium or other similar law of the State or Federal government affecting the enforcement of creditors’ rights generally heretofore or hereafter enacted, (ii) the fact that enforcement may also be subject to the exercise of judicial discretion in appropriate cases and (iii) the limitations on legal remedies against public agencies of the State, if any. (b) The obligations hereunder, under the Fee Agreement and under the Bank Note are obligations secured by a second Lien on, and payable from, the Re venues and a fi rst Lien on, and payable from, the Available Power Enterprise Reve nues, equally and ratably with any other Parity Notes and any obligations under any credit or li quidity facility secured by and payable from Available Power Enterprise Revenu es supporting such other series of Parity Notes secured by and payable from Available Power Enterprise Revenues.
(c) There is no pledge of or Lien on Revenues that ranks senior to the Obligations, the obligations under the Fee Agreement, the Notes or the Bank Note other th an the Bonds issued pursuant to the Master Trust Indenture.
(d) The Notes and the obligations of the Co mmission under this Agreement, the Fee Agreement and the Bank Note are revenue obliga tions and are not secure d by the taxing power of the Commission and are payable as to both principa l and interest from, and are secured by a pledge (which pledge will be effected in the manner a nd to the extent hereinafter provided) of, the Available Power Enterprise Revenues. The Available Power Enterprise Revenues constitute a trust fund for the security and payment of the interest on and principal of the Notes and the obligations of the Commission under this Agreem ent, the Fee Agreement, the Bank Note and all Parity Debt secured by the Available Power Enterprise Revenues.
Section 4.4 Governmental Consent or Approval . No consent, approval, permit, authorization or order of, or regi stration or filing with, any cour t or government agency, authority or other instrumentality not already obtained, given or made is requi red on the part of the Commission for the execution, delivery and performa nce by the Commission of this Agreement, the Bank Note, the Fee Agreement or any other Basic Document to which it is a party. All consents, approvals, permits, author izations and orders of, and regi strations and filings with, any court or governmental or public agency, authority or other instrumentality required for the issuance, sale, execution, delivery and performance of this Agreement, the Fee Agreement, the Bank Note or any other Basic Document to which it is a party, have been or will be obtained prior to the delivery hereof or thereof.
Section 4.5 Absence of Material Litigation . There is no action, suit, proceeding, or investigation, at law or in eq uity, before or by any court, arb itrator or governmental or other body or official pending or, to the best knowle dge of the Commission, threatened against or the Commission questioning the validity of the Char ter, the Ordinance or the Resolutions, or any proceeding taken or to be taken by the Commissi on in connection with the execution, delivery and performance by the Commission of this Agreemen t, the Bank Note, the Fee Agreement or any Basic Document to which it is a party, or seeki ng to prohibit, restrain or enjoin the execution, delivery or performance by the Commission of a ny of the foregoing, or which, if adversely determined, could reasonably be ex pected to result in any material adverse change in the financial condition, operations or prospects of the Commission, or wherein an unfavorable decision, ruling or finding would in any way materially adversely a ffect the transactions contemplated by this
27 Agreement or any of the other Basic Document s (any such action or proceeding being herein to as “Material Litigation”).
Section 4.6 Financial Condition. The audited financial statements of the Commission as at and for the period ended June 30, 2014 (the “ 2014 Audited Financial Statements”), and all other financial statements of the Commission furnished to the Bank were prepared in accordance with GAAP applied on a consistent basis throughout the pe riods involved and are subject to certification by independent certified public a ccountants of nationally recognized standing or by independent certified public accountants otherwise acceptable to the Bank. The 2014 Audited Financial Statements were prepared by KPMG LLP. The audi ted financial statements of the Commission for fiscal year 2015 will be prepared by KPMG LLP or a similar qualified independent auditing firm.
The data on which such financia l statements and budget reports ar e based were true and correct.
The 2014 Audited Financial Statements and the budget reports present fairly the financial position of the Commission as of the date they purport to represent and the revenues, expenses and changes in fund balances and in financial position for the periods then ended. Since June 30, 2014, no material adverse change has occurred in the business, operations or condition (financial or otherwise) of the Commission.
Section 4.7 Incorporation of Representations and Warranties . The representations and warranties of the Commission set forth in the Basic Documents are true and accurate in all material respects on the Closing Date, as fully as though made on the Closing Date. The Commission makes, as of the Closing Date, each of such representations and warranties to, and for the benefit of, the Bank, as if the same were set fort h at length in this Sec tion 4.7 together with all applicable definitions thereto. No amendment, modification or termination of any such representations, warranties or definitions containe d in the Basic Documents will be effective to amend, modify or terminate the representations, wa rranties and definitions incorporated in this Section 4.7 by this reference, without the prior written consent of the Bank.
Section 4.8 Accuracy and Completeness of Information. The Basic Documents and all certificates, financial statements, documents and other written information furnished to the Bank by or on behalf of the Commission on or prior to the Closing Date in connection with the transactions contemplated hereby were, as of their respective dates, complete and correct in all material respects to the extent necessary to give the Bank true an d accurate knowledge of the subject matter thereof and did not contain any untrue statement of a ma terial fact. To the be st knowledge of the Commission, the Offering Memorandum does not contain any untrue statement of a material fact or omit to state any material fact necessary to ma ke the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that no representation is made with respect to information included in the Offering Memorandum c oncerning (i) the Bank, furnished in writing by th e Bank expressly for inclusion therein, or (ii) DTC, furnished in writing by DTC expressly for inclusion therein.
Section 4.9 No Default.
(a) No Default or Event of Default under this Agreement ha s occurred and is continuing that is or would, with the passage of time or the giving of notice, or both, constitute a default by the Commission in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Basic Document to which it is a party.
28 (b) No “event of default” has occurred and is continuing under any other material mortgage, indenture, contract, ag reement or undertaking to whic h the Commission is a party or which purports to be binding on the Commission or on any of its property.
Section 4.10 No Proposed Legal Changes . There is no amendment or, to the knowledge of the Commission, proposed amen dment to the Constitu tion of the State, a ny State law or the Charter or any administrative interpretation of th e Constitution of the State, any State law, or the Charter, or any judicial deci sion interpreting any of the fore going, the effect of which could reasonably be expected to have a material adverse effect on the Commission’s obligations under this Agreement, the Fee Agreement, the Bank Note or the any of the ot her Basic Documents to which the Commission is a party or the ability of the Commission to perform its obligations in connection herewith or therewith.
Section 4.11 Compliance with Laws, Etc . The Commission is in compliance with the Investment Policy and all Laws applicable to the Commission, non-complia nce with which might have a material adverse effect on the security for the Notes and the obligations under this Agreement, the Fee Agreement and the Bank Note or the validity and enforceability of this Agreement or any other Basic Document to whic h the Commission is a part y. In addition, no benefit plan maintained by the Commission for its employees is subject to the provisions of ERISA, and the Commission is in compliance with all Laws in respect of each such benefit plan.
Section 4.12 Environmental Matters . In the ordinary course of its business, the Commission conducts an ongoing revi ew of Environmental Laws on the business, operations and the condition of its propert y, in the course of which it identifies and evaluates associated liabilities and costs (including, but not limited to, any capital or operating expenditures required for clean-up or closure of properties curren tly or previously owned or ope rated, any capital or operating expenditures required to achieve or maintain co mpliance with environmental protection standards imposed by law or as a condition of any license, permit or contr act, any related constraints on operating activities, including any periodic or perm anent shutdown of any facility or reduction in the level of or change in the nature of opera tions conducted thereat and any actual or potential liabilities to third parties, including employees, and any related costs and expenses). On the basis of such review, the Commission does not believe that Environmental Laws are likely to have a material adverse effect on the ability of the Commission to make any payments in respect of the Notes, the Bank Note or any of its obligations hereunder or under the Fee Agreement.
Section 4.13 Tax Status of Interest on Notes . The Commission represents to the Bank that it has not taken any action, and knows of no action that any other Person has taken, which would cause interest on the Notes to be includable in the gross income of the recipients thereof for Federal income tax purposes or which would cause interest on the Notes to be includable in the gross income of the recipients thereof for State of California income tax purposes.
Section 4.14 Issuing and Paying Agent; Dealers . The Commission represents that U.S.
Bank National Association has been duly appointed the Issuing and Paying Agent for the Notes and that RBC Capital Markets, LLC, Goldman, Sachs & Co. and Barclays Capita l Inc., collectively, have each been duly appointed to serve as Dealers for the Note s under its Dealer Agreement and the Resolutions.
29 Section 4.15 Regulation U. The Commission is not engaged in the business of extending credit for the purpose of purchasi ng or carrying margin stock (with in the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System); and no proceeds of the Notes, the Advances or the Term Loans will be used to extend credit to others for the purpose of purchasing or carrying any margin stock.
Section 4.16 Liens. The Issuing and Paying Agent Agreement creates a valid Lien on and pledge of the Available Power En terprise Revenues, subject only to the provisions of the Issuing and Paying Agent Agreement permitting the applica tion thereof for purposes and on the terms and conditions set forth therein, and th e moneys and other property desc ribed in Article VI thereof to provide security for the payment of the principal of and interest on the Notes and the obligations of the Commission under this Agreement, the Fee Agreement and the Bank Note, and no filings, recordings, registrations or other actions are necessary to create or perfect such Lien.
Section 4.17 Sovereign Immunity . The Commission is not entitled to immunity from legal proceedings to enforce this Agreement, the Fee Agreement, the Bank Note, the Notes or any other Basic Document to which the Commission is a party (including, without limitation, immunity from service of process or immunity from jurisd iction of any court otherw ise having jurisdiction) and is subject to claims and suits for damage s in connection with its obligations under this Agreement, the Fee Agreement, the Bank Note, th e Notes or any other Basic Document to which the Commission is a party.
Section 4.18 City Business Days. Attached to this Agreement as Exhibit C is a complete and accurate list of the days that are legal holidays of the City for 2015, as well as any other day the City is authorized by law to be closed for official business during 2015.
Section 4.19 Usury. The terms of this Agreement and the Basic Documents to which the Commission is a party regarding the calculation and payment of interest and fees do not violate any applicable usury laws.
Section 4.20 Insurance. As of the Closing Date, the Commission maintains such insurance, including self-insurance, as is required by Section 5.1(k) hereof.
Section 4.21 ERISA. The Commission does not maintain or contribute to, and has not maintained or contributed to, any Employee Plan that is subject to Title IV of ERISA.
Section 4.22 Sanctions Concerns and Anti-Corruption Laws.
(a) Neither the Commission, nor, to the knowle dge of the Commission, any director, officer, employee, agent, affiliate or representative thereof, is an individual or entity that is, or is owned or controlled by a ny individual or entity th at is (i) currently the s ubject or target of any Sanctions, (ii) included on OFAC’s List of Specially Designated Nationals, HMT’s Consolidated List of Financial Sanctions Targets and the Investment Ban List, or any similar list enforced by any other relevant sanctions authority or (iii) located, organized or resident in a Designated Jurisdiction. (b) The Commission has conducted its business in compliance with the United States Foreign Corrupt Practices Act of 1977 and other similar anti-corruption legislation in other
30 jurisdictions, and have instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.
Section 4.23 Swap Contracts . The Commission has not entered into any Swap Agreement secured by Revenues (a) wherein any termination payment thereunder is senior to or on a parity with the payment of the Notes or the Ob ligations or (b) which re quires the Commission to post cash collateral to secure its obligations thereunder.
ARTICLE 5
COVENANTS
Section 5.1 Affirmative Covenants. So long as the Letter of Credit has not expired or terminated or any Obligations remain outstan ding under this Agreement, the Commission shall perform and observe the covenants set forth below, unless the Bank otherwise consents in writing:
(a) Accounting and Reports . The Commission shall maintain a standard system of accounting in accordance with GAAP consistently applied and furnish to the Bank:
(i) as soon as practicable a nd, in any event, within one hundred eighty (180) days after the end of each Fiscal Year of the Commission, a balance sheet of the Commission as at the end of such Fiscal Year and statements of income, changes in fund balances and cash flows for the Fiscal Year then ended, all in reasonable detail and prepared in accordance with GAAP consistently applied, accompanied by (A) a report and opinion of the Commission’s independent accountants (which will be of nationally recognized standing or an independent certified public accountant otherwise acceptable to the Bank), which report and opinion will have been prepared in accordance with generally accepted auditing standards and (B) a compliance certificate, subs tantially in the form of Exhibit B hereto, signed by an Authorized Repres entative stating that no Event of Default or Default has occurred or if any Event of Default or Defau lt has occurred, specifying the nature of such Event of Default or Default, the period of its existence, the nature and status thereof and any remedial steps taken or proposed to correct such Event of Default or Default; (ii) as soon as practicable but, in any even t, within ten (10) days after the issuance thereof, copies of any prospectus, o fficial statement, offering circular, placement memorandum or similar document, and any supplements thereto and updates and amendments thereof (including any filings made pursuant to Rule 15c2-12 under the Securities Act of 1933, as amended), that th e Commission makes available in connection with the offering for sale of any bonds or notes secured by Revenues of which it is the issuer and copies of any othe r financial reports or other wr itten information distributed generally to holders of bonds or notes issued by the Commission; (iii) within ten (10) days after the publication thereof, a copy of the Commission’s Annual Budget for the next Fiscal Year and such additional period as may be covered by such Annual Budget, which budget sh all include all obliga tions due hereunder, under the Fee Agreement and under the Bank Note for the next Fiscal Year and such additional period as may be covered by such Annual Budget;
31 (iv) promptly upon learning of any change in the legal holidays of the City or the day or days that the City is authorized by law to be closed for official business, as initially listed on Exhibit C attached hereto, written no tice of such change(s), in the form of an updated complete list, which will replace Exhibit C attached hereto; and (v) with reasonable promptness, such othe r data regarding the financial position or business of the Commission or its property as the Bank may reasonably request from time to time.
As and to the extent that any financial statem ent, audit report or ot her filing described in this Section 5.1(a) has been filed in accordan ce with the terms thereof with any nationally recognized municipal securities information repository and with the Municipal Securities Rulemaking Board, or posted to the Commission’s website, as applicable, and the Commission has provided written notice thereof to the Bank, the requi rements of Section 5.1(a) hereof with respect thereto will be deemed satisfied.
(b) Access to Records . At any reasonable time and from time to time, during normal business hours and, so long as no Event of Default has occurred and is continuing, on at least five (5) Business Days’ notice, the Commission sha ll permit the Bank or any of its agents or representatives to visit and insp ect any of the properties of the Commission and the other assets of the Commission, to examine the books of account of the Commission (and to make copies thereof and extracts therefrom), and to discuss the affa irs, finances and accounts of the Commission with, and to be advised as to the same by, its officers, all at such reasonable times and intervals as the Bank may reasonably request.
(c) Compliance with Documents and Othe r Debt Documents; Operation and Maintenance of Power Enterprise.
(i) The Commission shall perform and comply with each covenant set forth in Basic Documents, the Master Trust Indenture a nd in any other authorizing document that is entered into by the Commission and created subse quent to the Closing Date with respect to any Parity Debt including, without limitation, each line of credit, letter of credit, bond insurance policy, surety bond or other form of credit or liquidity enhancement the Commission may provide in conjunction with the issuance of any Bonds or Parity Debt (the foregoing documents (exclusive of the Basic Documents) being referred to herein as “Other Debt Documents”). By the terms of this Agreement, th e Bank is a third party beneficiary of the covenants set forth in each of the Basi c Documents, including each amendment and supplement thereto, and in each Other Debt Document, and each such covenant, together the related definitions of terms contained ther ein, is incorporated by reference in this
5.1(c) with the same effect as if it were set fo rth herein in its entirety. Except as otherwise forth in paragraph (ii) below and in Secti on 5.2(a) hereof, the Commission shall not amend, supplement or otherwise modify (or permit any of the foregoing), or request or agree to any consent or waiver under, or effect or permit the cancellation, acceleration or termination of, release or permit the release of any collateral held under, a ny of the Basic Documents or Other Debt Document in any ma nner without the prior writte n consent of the Bank, and the Commission shall take, or cause to be take n, all such actions as may be reasonably by the Bank to strictly enforce the obligations of the other parties to any of the Basic Documents and any Other Debt Documents, as well as each of th e covenants set forth
32 The Commission shall give prior written notice to the Bank of any action referred to in this subparagraph (i).
(ii) The Commission covenants that it will maintain and preserve the Power Enterprise in good repair and working order at all times from the Revenues available for such purposes, in conformity with standards customarily followed for municipal water and power systems of like size and character. The Commission will from time to time make all necessary and proper repairs, renewals, replacements and substitutions to the properties of the Power Enterprise, so that at all times business carried on in connec tion with the Power Enterprise shall and can be properly and adva ntageously conducted in an efficient manner and at reasonable cost, and will operate the Powe r Enterprise in an efficient and economical manner and shall not commit or allow any waste with respect to the Power Enterprise. (d) Defaults. The Commission shall notify the Bank of any Default or Event of Default of which the Commission has knowledge, as soon as possible and, in any ev ent, within three (3) Business Days of acquiring knowledge thereof, setting forth the details of such Default or Event of Default and the action which the Commission has taken and proposes to take with respect thereto. (e) Compliance with Laws. The Commission shall comply in all material respects with all Laws binding upon or applicable to the Co mmission (including Environmental Laws) and material to this Agreement, the Fee Agreement, the Bank Note or any other Basic Documents. (f) Use of Proceeds of the Notes. The Commission shall use the proceeds derived from the sale of the Notes only for the purposes set forth in the Basic Documents and for such other purpose or purposes as may be approved by the Ba nk. In addition, the Comm ission shall not use, nor permit the use of, the proceeds of the Notes or any Drawing to be applied in violation of Regulation U issued by the Board of Governors of the Federal Reserve System. (g) Litigation Notice. The Commission shall promptly give notice to the Bank of any action, suit or proceeding actually known to it at la w or in equity or by or before any court, governmental instrumentality or other agency wh ich, if adversely determined, would materially impair the ability of the Commission to perform its obligations under the Notes, the Bank Note, this Agreement, the Fee Agreement or any other Basic Document. (h) Bank Agreements. In the event that Commission sh all enter into or otherwise consent to any amendment, supplement or othe r modification of any Bank Agreement after the Closing Date which Bank Agreement contains a dditional or more restrictive covenants or additional or more restrictive events of default (“Improved Provisions,” which for the avoidance of doubt does not include pricing, termin ation fees and provisions relate d to interest rates), then the Commission shall provide the Bank with a co py of such Bank Agreement and the Improved Provisions shall automatically be deemed incorporated into this Agreement and the Bank shall have the benefit of the Improved Provisions until such time as the Bank Agreement containing such Improved Provisions terminates. Th e Commission shall promptly cooperate with the Bank to enter into an amendment of this Agreement to include such Improved Provisions. (i) Further Assurances. The Commission shall execute, acknowledge where and deliver, and cause to be executed, acknowledged where appropriate and delivered, from time to time, promptly at the request of the Bank, all su ch instruments and documents as are usual and
33 customary or advisable to carry out the intent and purpose of this Agreement, the Bank Note and other Basic Documents.
(j) Notices. The Commission shall promptly furnish, or cause to be furnished, to the Bank (i) notice of the occurrence of any “event of default” unde r the Issuing and Paying Agent Agreement, any other Basic Document to which it is a party or any ot her document pursuant to which Power Enterprise Debt is issued, incurred, enhanced or purchased, (ii) notice of the failure by any Dealer or the Issuing and the Paying Agent to perform any of their respective obligations under the applicable Dealer Agreement or the Issu ing and Paying Agent Agreement, as applicable, (iii) copies of any communicatio ns received from any taxing au thority, securities regulatory authority or Rating Agency with respect to the No tes, the transactions contemplated hereby or any other Power Enterprise Debt which are not restricted or prohibited from being shared under the law or the direction of a court of competent jurisd iction or other Government al Authority or, with respect to Rating Agency reports, confidential draft Rating Agen cy reports, (iv) notice of any proposed substitution of this Agreement, (v) notice of any proposed amendment to the Issuing and Paying Agent Agreement or the Resolutions or any other Basic Document and copies of all such amendments promptly following the execution thereof and (vi) notice of the passage of any state or local Law not of general applicability to al l Persons of which the Commission has knowledge, which could reasonably be expected to have a mate rial adverse effect on the Commission’s ability to perform its obligations under this Agreement or the other Basic Documents or to result in a material adverse effect on the enforceability or va lidity of this Agreement or any of the other Basic Documents.
(k) Maintenance of Insurance. The Commission shall maintain, or cause to be maintained, at all times, insurance on and with respect to its propertie s with responsible and reputable insurance companies; provided, however, that the Commission may maintain self- insurance general liability on its properties not covered by the public entity pr operty insurance program policy, for worker’s compensation and vehicle liability and, with the consent of the Bank, such other self-insurance as it deems prudent. Su ch insurance must include casualty, liability and workers’ compensation and be in amounts and w ith deductibles and exclusions customary and reasonable for governmental entities of similar size and with similar operations as the Commission.
The Commission shall, upon request of the Bank, furnish evidence of such insurance to the Bank.
The Commission shall also procure and maintain at all times adequate fidelity insurance or bonds on all officers and employees handling or respons ible for any Revenues or funds of the Power Enterprise, such insurance or bond to be in an aggregate amount at least equal to the maximum amount of such Revenues or f unds at any one time in the cust ody of all such officers and employees or in the amount of one million dolla rs ($1,000,000), whichever is less. The insurance described above may be provided as part of any comprehensive fidelity and other insurance and not separately for the Power Enterprise.
(l) Alternate Facility.
(i) The Commission shall use commercially reasonable efforts to obtain an Alternate Facility to replace the Letter of Cred it (or otherwise refinance the Notes) if (A) Bank decides not to extend the Stated Expira tion Date pursuant to Section 2.12 hereof, (B) Event of Default has occurred and is conti nuing, (C) the Commission terminates the Letter Credit pursuant to Section 2.7 hereof or (D) the Bank declares all amounts due hereunder, under the Fee Agreement and under the Bank Note immediately become due and payable.
34 The Commission shall not cause an Alternate Faci lity to become effective with respect to than all the Notes without the prior written consent of the Bank. (ii) The Commission agrees that any termination of this Agreement as a result of the provision of any Alternate Facility will require, as a condition thereto, that the Commission provide funds on the date of such termination, which funds will be sufficient to pay all amounts due to the Bank hereunder and under the Fee Agreement including, but not limited to, the amounts due with respect to th e Bank Note together, in each case, with accrued but unpaid interest thereon. On the date of such termination, the Commission shall pay to the Bank an amount equa l to the outstanding principa l amount, together with any accrued by unpaid interest thereon, of any and all other obligations due and owing hereunder and under the Fee Agreement.
(m) Preservation of Security. The Commission shall take a ny and all actions necessary or reasonably requested by the Bank to maintain th e security pledged in fa vor of this Agreement and the Bank Note as described in Section 5.1(n) hereof. (n) Pledge of Available Power Enterprise Revenues. The Available Power Enterprise Revenues are hereby pledged to th e payment of the Notes and the obligations of the Commission under this Agreement, the Fee Agreement and the Ba nk Note without priority or distinction of one over the other. The pledge of Available Power Enterprise Revenues herein made is irrevocable until all of the Notes and the obligations of the Comm ission under this Agreement, the Fee Agreement, the Bank Note and any Parity Debt secured by Av ailable Power Enterprise Revenues have been paid and retired and any relate d obligations of the Commission unde r this Agreement have been satisfied. The Commission will not issue Debt secu red by or payable from the Revenues on a basis that is senior to the obligations owed to the Bank hereunder, under the Fee Agreement under the Bank Note other than Bonds issued pursuant to the Master Trust Indenture. (o) Rates. The Commission shall fix, establish, ma intain and collect rates and charges for electric power and energy and other services, facilities and commodities sold, furnished or supplied through the faciliti es of the Power Enterprise, which shall be fair and nondiscriminatory and adequate to provide the Commission with Revenues in each Fiscal Year sufficient:
(i) To pay, to the extent not paid fr om other available moneys, (A) the Operation and Maintenance Expenses during su ch Fiscal Year, (B) Annual Debt Service on the Bonds due and payable in such Fiscal Ye ar, (C) the amounts, if any, required to be deposited into the Reserve Fund established pur suant to the Master Trust Indenture during such Fiscal Year and (D) any and all other amounts the Commi ssion is obligated to pay or set aside from the Revenues by law or contract in such Fiscal Ye ar, including, without limitation and without duplication, amounts payabl e to the Bank under this Agreement, the Fee Agreement and the Bank Note and the principal of any interest on all Notes outstanding and/or expected to be outstanding during such Fiscal Year; (ii) To maintain a Bond Coverage Ratio of at least 1.0 to 1.0; and (iii) Together with Available Funds, to ma intain a Bond Coverage Ratio of at least 1.25 to 1.00;
35 provided, however, the failure of the Commission to maintain the Bond Coverage Ratios in any Fiscal Year shall not constitute a default in the observance of the covenants of this subsection if:
(1) within 60 days after the Commission first determines that a Bond Coverage Ratio was not met or 60 days after the Commission’s receipt of audited financial statements showing that a Bond Coverage Ratio was not met (whichever is earlier), the Commission engages a Consulting Engineer to deliver a report to the Commission within 60 days after such engagement which includes recommendations as to how the Commission can increase Revenues and/or reduce Operation and Maintenance Expenses so as to satisfy the Bond Coverage Ratios; and
(2) (A) within 120 days after receipt of the Consulting Engineer’s report the Commission implements the recommendations set forth in such report; or (B) the report states that the Power Enterprise cannot generate Revenues and/or reduce Operation and Maintenance Expenses sufficient to enable the Commission to maintain the Bond Coverage Ratios while satisfying the other covenants set forth in the Master Trust Indenture, and the Commission increases its Revenues and/or reduces its Operation and Maintenance Expenses to the extent otherwise recommended in such report; or (C) the Commission is prevented from taking any such action by order of any court of competent jurisdiction.
Notwithstanding the foregoing, failure for two (2) consecutive Fiscal Years to maintain the Bond Coverage Ratios shall in all events constitute an Event of Default. (p) Budget. The Commission shall include in each annual budget of the Commission all amounts reasonably anticipated to be necessary to pay all obligations due to the Bank hereunder, under the Fee Agreement and under the Bank Note. If the amounts so budgeted are not adequate for the payment of the obligations due hereunder, under the Fee Agreement and under the Bank Note, the Commission shall take such action as may be necessary to cause such annual budget to be amended, corrected or augmented so as to include therein the amounts require d to be paid to the Bank during the course of the Fiscal Year to which such annual budget applies. (q) Payment of Taxes, Etc. The Commission shall pay and di scharge, or cause to be paid and discharged, all taxes, assessments and other governmental charges which may hereafter be lawfully imposed upon the Commission on account of the Power Enterprise or any portion thereof and which, if unpaid, might impair th e security of the Notes, this Agreement, the obligations of the Commission under the Fee Agreement and the Bank No te when the same become due, but nothing herein contained will require th e Commission to pay any such tax, a ssessment or charge so long as it in good faith contests the validity thereof. Th e Commission shall duly obs erve and comply with all valid material requirements of any Governmental Authority relative to the Power Enterprise or any part thereof.
(r) Notice of Rating Change. The Commission shall use its best efforts to notify the Bank as soon as practicable of an y suspension, reduction or withdr awal in the senior long-term rating of any Power Enterprise Debt.
(s) Issuing and Paying Agent and Dealer.
(i) The Commission shall at all times main tain a Dealer with respect to the The Commission shall use its best efforts at all times to enforce the Dealer Agreement. The
36 Commission agrees to cause the Dealer to use its best efforts to sell the Notes up to the maximum rate applicable to the Notes in order to repay maturing Notes. Each Dealer Agreement shall provide that the related Deal er may not resign until the earlier of (i) the appointment of a Dealer which is acceptable to the Bank and such Dealer’s acceptance of such appointment and (ii) the date which is at least sixty (60) days following the receipt by Commission, the Issuing and Paying Agent and the Bank of prior written notice of such resignation.
(ii) On and after the Closing Date, the Comm ission shall at all times maintain an Issuing and Paying Agent pursuant to the term s of the Issuing and Paying Agent. Any successor Issuing and Paying Agent (or any parent or affiliate of such Issuing and Paying Agent) shall have capital of not less than $500,000,000, and underlying ratings from Moody’s, S&P and Fitch of at least “A3” (or its equivalent), “A-” (or its equivalent) and “A-” (or its equivalent), respectively (unless, in each instance, the Bank in its discretion provides in writing an exception for a particul ar Issuing and Paying Agent under specified circumstances).
(iii) In no event shall the Commission permit any Dealer other than a Qualified Dealer to act as dealer for the Notes. In the event that any material adverse change occurs in the status of the financial condition of any Deal er for the Notes or its ability to perform its obligations under the Dealer Agreement to which it is a party, the Commission shall promptly disqualify and, if it desires, repl ace such Dealer and appoint another Qualified Dealer with respect to the Notes. If any A dvance or Term Loan remains outstanding for a period of thirty (30) consecutive calendar da ys or any Dealer fails to perform its duties under the Dealer Agreement to which it is a party, the Commission shall, at the written direction of the Bank, cause the related Dealer (that has been unable to sell rollover Notes or fails to perform its duties) to be replaced with a Qualified Dealer within thirty (30) calendar days after receipt of such written direction. Any successor Dealer (or any parent or affiliate of such Dealer shall have capital of not less than $500,000,000, and underlying ratings from Moody’s, S&P and Fitch of at le ast “A3” (or its equiva lent), “A-” (or its equivalent) and “A-” (or its equivalent), respec tively (unless, in each instance, the Bank in its discretion provides in writing an excepti on for a particular Dealer under specified circumstances).
(t) Maintenance of Ratings on Notes. The Commission shall at all times (i) maintain at least one short-term rating on the Notes by any of Fitch, Moody’s and S&P, (ii) require at least two of Moody’s, Fitch and S&P to maintain a long-t erm unenhanced debt rating on Senior Debt and (iii) cause at least one of Moody’s, Fitch and S&P to maintain a long-term rating on the Bank Note.
Section 5.2 Negative Covenants . So long as the Letter of Credit has not expired or terminated or any Obligations remain outstanding under this Agreement, th e Fee Agreement or the Bank Note the Commission shall not, unless the Bank otherwise consents in writing:
(a) Amendments. Subject to Section 5.1(c) hereof, directly or indirectly amend, supplement or terminate any of the Basic Documents or the Master Trust Inde nture, except that (i) Commission may amend or modify, or permit to be amended or modified, any of the Basic Documents (as and to the extent the Commission’s participation is required for such purpose) in a manner (A) not relating to the dutie s, obligations or rights of the Bank under this Agreement and not having a material adverse effect on (x) the ability of the Commission to pay when due the
37 principal of or interest on the Notes and the ob ligations of the Commissi on under this Agreement, Fee Agreement and the Bank Note or (y) the secu rity, rights or remedies of the Bank hereunder, under the Bank Note or under any other Basic Do cument; and (ii) the Commission may amend the Offering Memorandum to update information relating to any entity described therein other than the Bank. The Commission agrees to deliv er to the Bank copies of all such amendments, modification, supplements or other changes at least ten (10) Busi ness Days prior to the effective date of any such amendment, modification, supplement or other cha nge. The Bank shall, within five (5) Business Days, inform the Commission in writing if, in its reasonable discretion, such amendment, modification, supplement or other change requi res the prior written c onsent of the Bank in accordance with this Section 5.2(a). Notwithst anding the foregoing, the Commission, without the Bank’s prior written consent, may perform ministerial duties, make such provisions for the purpose of curing any ambiguity, inconsistency or omi ssion, or of curing or correcting any defective provision, as the Commission may deem necessary or desirable, in any case which do not adversely affect the security, rights or remedies of the Bank hereunder, under the Bank Note, or any other Basic Document and, solely in connecti on with the issuance of additional Debt, issue in strict compliance with the terms of the governing documents related thereto. (b) Merger, Disposition of Assets. Consolidate or merge with or into any Person or sell, lease or otherwise transfer all or substantially all of its assets to any Person. (c) Preservation of Corporate Existence, Etc. Take any action to terminate its existence as a body politic and corporate and a polit ical subdivision of the State or its rights and privileges as such entity within the State.
(d) Total Outstanding. Permit the aggregate principal amount of all Notes and the Bank Note outstanding at any time to exceed $97,989,042 (ex cept as provided in Section 5.2(f) hereof); or permit the aggregate principal amount of and interest on all Notes outstanding at any time to exceed the Stated Amount at such time.
(e) Exempt Status. Take any action, omit to take any action or cause or permit another Person to take any action or omit to take any ac tion, which, if taken or omitted, would adversely affect the excludability of interest on the Notes (o ther than those issued as taxable Notes) from the gross income of the holders thereof for purposes of Federal income taxation. (f) Issue Power Enterprise Debt.
(1) Issue any Senior Debt or Parity Debt unless:
(i) no “event of default” shall have occurred and be continuing under the agreement or instrument pursuant to which any outstanding Senior Debt or Parity Debt was issued or incurred and no event shall have occurred which, but for the passage of time or the giving of notice, would constitute an “event of default” under any such agreement or instrument;
(ii) such Senior Debt or Parity Debt does not exceed at any time any limitation set forth in the Constitution or ot her laws of the State, the Charter, the Resolution, the Ordinance, the Master Tr ust Indenture or any supplement thereto,
38 other resolutions adopted by the Commissi on, Ordinances adopted by the Board or the Issuing and Paying Agent Agreement;
(iii) in the case of Senior Debt, either:
(A) a Certificate of the Commissi on stating that, in each of the first three (3) full Fiscal Years after th e sale of such Senior Debt, projected Net Revenues (1) plus Available Funds, are at least 1.25 times Annual Debt Service on the outstanding Senior Debt, after giving effect to the issuance of such Senior Debt, and (2) are at l east 1.0 times Annual Debt Service on the outstanding Senior Debt, plus requ ired deposits into any Reserve Fund established pursuant to the Master Trust Indenture, after giving effect to the issuance of such Senior Debt; or
(B) a Certificate of the Commission stating that Net Revenues from any twelve consecutive mont hs of the prior 24 months: (1) plus Available Funds, are at least 1.25 times Annual Debt Service on the outstanding Senior Debt, afte r giving effect to the issuance of such Senior Debt, and (2) are at least 1.0 times Annual Debt Service on the outstanding Senior Debt, plus required deposits into any Reserve Fund established pursuant to the Master Trust Indenture af ter giving effect to the issuance of such Senior Debt; provided, however, for purposes of this paragraph (B) the following adjustments may be made to Net Revenues for such period, if so stated in the Certificate of the Comm ission; (I) an allo wance for additional Revenues anticipated from any additions , extensions and improvements to the Power Enterprise to be acquired or constructed from proceeds of such or a prior Senior Debt and for any ch anges in Operation and Maintenance Expenses resulting therefrom, that ar e not reflected in Net Revenues for such Fiscal Year, but only if such additional Revenues and changes in Operation and Maintenance Expenses represent a full twelve months’ change in Net Revenues attributable to such additions, extensions and improvements; and (II) An allowance for additional Revenues attributable to any increase in the rates and charges imposed by the Commission that (x) was in effect prior to the issuance of such Senior Debt but which, during all or part of such Fiscal Year, was not in effect, or (y) was adopted by the Commission prior to the issuance of such Senior Debt and will be in effect within 90 days after such issuance, but in either case only if such additional Revenues represent a full twelve months’ change in Net Revenues attributable to such increase in rates and charges;
(iv) in the case of Parity Debt, either:
(A) a Certificate of the Commissi on stating that, in each of the three (3) full Fiscal Years after the sa le of such Parity Debt, Revenues will sufficient to pay (I) the Operation and Maintenance Expenses during each such Fiscal Year, (II) Annual Debt Service on the Bonds and all other outstanding Senior Debt due and payable in each such Fiscal Year, (III) the
39 amounts, if any, required to be depos ited into the Reserv e Fund established pursuant to the Master Trust Indenture during each such Fiscal Year, (IV) in the case of the Notes, debt service on the Notes assuming the entire authorized amount of the Notes is i ssued and outstanding and that such amount will amortize over a thirty year period on a level debt basis using an interest rate equal to the Bond Buyer 25-Bond Reve nue Bond Index (or, if such index is no longer published, any other comparable revenue bond on the date of such Certificate an d (V) any and all other amounts the Commission is obligated to pay or set aside from Revenues by law or in each such Fiscal Year, including, without limitation and without duplication, amounts payable to the Ba nk under this Agre ement, the Fee Agreement and the Bank Note, as well as the principal of and interest on the Parity Debt to be issued; or
(B) a Certificate of the Commissi on stating that Revenues from any twelve consecutive months of the prior 24 months were sufficient to pay (I) the Operation and Maintenance Expenses during such twelve consecutive month period, (II) Annual Debt Service on the Bonds and all other outstanding Senior Debt due and payabl e in such twelve consecutive month period, (III) the amounts, if any, required to be deposited into the Reserve Fund established pursuant to the Master Trust Indenture du ring such twelve consecutive month period, (IV) in the case of the Notes, debt service on the Notes assuming the entire authorized amount of the Notes was issued and outstanding during such twelve consecu tive month period and that such amount was amortizing over a thirty year period on a level debt basis using an interest rate equal to the Bond Buyer 25-Bond Revenue Bond Index (or, if such index is no longer published, any other comparable revenue bond index) on the date of such Certificat e and (V) any and all other amounts the Commission was obligated to pay or set aside from Revenues by law or contract in such twel ve consecutive month period, including, without limitation and without duplication, amount s payable to the Bank under this Agreement, the Fee Agreement and the Bank Note during such twelve consecutive month period, as well as the principal of and interest on the Parity Debt to be issued (assuming su ch Parity Debt had been outstanding during such twelve consecutive month period);
(v) the issuance of Parity Debt will not result in the creation of a Lien on the Available Power Enterprise Revenues that is senior to the Lien securing the Notes or the obligations under the Agreem ent, the Fee Letter and the Bank Note; and
(vi) any such Parity Debt is issued in compliance with Section 5.07 of the Issuing and Paying Agent Agreement;
(vii) in connection with the issuance of any additional Senior Debt, the Commission provides certificat es demonstrating complian ce with the requirements set forth in Section 3.4 or Section 3.5, as the case may be, of the Master Trust Indenture;
40 (viii) in connection with the issuance of any additio nal Parity Debt, the Commission provides a certificate demonstrating compliance with the requirements set forth in Section 5.07 of the Issuing and Paying Agent Agreement; and
(ix) no Default or Event of Default has occurred and is continuing hereunder as a result thereof.
(2) The Commission will not issue De bt secured by or payable from the Revenues on a basis that is senior to the obligations owed to the Bank hereunder, under the Fee Agreement and the Bank Note other than the Bonds.
(g) Use of Bank’s Name. Permit the use of the Bank’s name in any official statement or other offering document unless the Bank has appr oved in writing the desc ription of the Bank contained in such document.
(h) Arbitrage Bonds; Tax-Exempt Status of Notes. Invest the proceeds of the Notes in any way that would violate the Code or cause the Notes to be deemed “arbitrage bonds” or take any action or omit to take any action if such action or omission would adversely affect the exclusion of interest on the Notes from gross income of the holders thereof for Federal income tax purposes. (i) Swap Agreements. Without the prior written consen t of the Bank, enter into any Swap Agreement secured by Revenues (a) wherein any termination payments thereunder are senior to or on parity with the payment of the Notes or the Obligations or (b) which requires the Commission to post cash collateral to secure its obligations thereunder. (j) Liens. Create or suffer to exist or permit any Lien on the Revenues other than the Liens created or permitted by the Master Trust Indenture, the Issuing and Paying Agent Agreement, this Agreement and Liens that are junior and s ubordinate to the Lien created by the Issuing and Paying Agent Agreement and this Agreement under terms and conditions satisfactory to the Bank. (k) Sovereign Immunity. Assert the defense of any future right of sovereign immunity in a legal proceeding to enforce or collect upon the obligations of the Commission under this Agreement, the Fee Agreement or the Bank Note or the transactions contemplated hereby and thereby.
(l) Power Enterprise. Construct, operate or maintain, and shall not within the scope of its powers permit any other public or private corporation, political subdivision, district or agency or any Person whatsoever to construct, operate or main tain, within the City or any part thereof, any system or utility competitive with the Power Enterprise. The Commission shall have in effect, or cause to have in effect, at all times an ordinan ce or resolution requiring a ll customers of the Power Enterprise to pay the fees, rates and charges applicable to the services and facilities furnished by the Power Enterprise. The Commission shall not pr ovide any service of the Power Enterprise free of charge to any Person, except (i) for free use by th e City and its agencies, (ii) to the extent that any such free use is required by the terms of any existing contract or agreement and (iii) for incidental insignificant free use so long as such free use does not prevent the Commission from satisfying the other covenants of this Agreem ent, including, without limitation, Section 5.1(o) hereof.
41 (m) Preservation of Existence, Etc. Take any action pursuant to the Charter to accomplish a merger of the Power Enterprise with any other entity or enterprise, unless and until the Commission has provided a method for segregating the Revenues from the revenues of said other entity or enterprise in a manner that will, or shall otherwise, preserve the Lien on the Available Power Enterprise Revenues for the payment of the Notes and the Obligations provided in Section 4.3 hereof and has obtained an opinion of c ounsel from a firm nationally recognized in the practice of tax-exempt financing that such merger will not, in and of itself, (i) affect the exclusion from gross income of the interest on the Notes or (ii) cause the Lien crea ted by this Agreement to be no longer valid as required by Section 5.1(n) hereof. If the Commission does effect such a merger, the Commission shall provide written notice thereof to the Bank and shall deliver a copy of the aforementioned opinion to the Bank.
(n) Use of Proceeds. Use the proceeds of any credit extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System) or to extend credit to others for th e purpose of purchasing or carryi ng margin stock or to refund indebtedness originally incurred for such purpose , in each case in viola tion of, or for a purpose which violates, or would be inconsistent with, Re gulation T, U or X of the Board of Governors of the Federal Reserve System. The Commission shall not use the proceeds of th e Notes or the Bank Note for any purpose other than as provided for in the Resolutions and not in contravention of applicable Law.
(o) Notes. Permit any Note issued pursuant to the Resolutions or the Issuing and Paying Agent Agreement to mature more than tw o hundred seventy (270) days after the date of issuance or after the Stated Expiration Date.
ARTICLE 6
DEFAULTS
Section 6.1 Events of Default and Remedies . If any of the following events occurs, each such event will be an “Event of Default”:
(a) the Commission fails to pay, or cause to be paid, as and when due, (i) any Reimbursement Obligation or (ii) any Obligatio n (other than a Reimbursement Obligation) hereunder or under the Fee Agreemen t and, in such case, such fa ilure continues for five (5) Business Days;
(b) any representation or warranty made by or on behalf of the Commission in this Agreement or in any other Basic Document or in any certificate or statement delivered hereunder or 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 perf ormance or observance of any of the covenants set forth in Section 2.15, 5.1( c), 5.1(d), 5.1(g), 5.1(m)(ii), 5.1(n),
5.1(s)(ii),5.1(s)(iii) or 5.2 hereof;
42 (d) the Commission defaults in the due pe rformance or observance of any other term, covenant or agreement contained in this 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 Count y of San Francisco, directly or indirectly, (i) has entered involunt arily against it an order for relief under the United States Bankruptcy Code, as amended, (ii) becomes inso lvent or does not pay, or is unable to pay, or admits in writing its inability to pay, its de bts 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, (v) institutes any proceeding seeking to have entered against it an order for relief under th e United States Bankruptcy Code, as amended, to adjudicate it insolvent or seeking dissoluti on, winding up, liquidati on, reorganization, arrangement, marshalling of assets, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorgani zation or relief of debtors or fails to file an answer or other pleading denying the materi al allegations of any such proceeding filed against it, (vi) takes any cor porate action in furtherance of any matter described in clauses (i) through (v) above or (vii) fa ils to contest in good faith a ny appointment or proceeding described in Section 6.1(f) of this Agreement;
(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 pr oceeding described in Section 6.1(e)(v) 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 restructuri ng, debt adjustment or comparable restriction is imposed on the repayment when due and payable of the principal of or interest on any Debt of the Commission by the Commis sion or any Governmental Authority with appropriate jurisdiction;
(h) any material provision of this 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 administrati ve action by a Governmental Authority with competent jurisdiction or is 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, including, without limitation, the Master Trust In denture, 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 this Agreement, the Charter, any other Basic Document or any operative document re lated to Power Enterprise Debt, including, without limitation, the Master Trust Indenture;
(i) dissolution or termination of the existence of the Commission; (j) the Commission (i) defaults on the paymen t of the principal of or interest on any Power Enterprise Debt beyond the period of grace, if any, provided in the instrument or
43 agreement under which such Power Enterprise Debt was created or incurred or (ii) defaults 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 pe rmit (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 paymen t 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 in strument 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 e ffect of which default, event of default or similar event or condit ion is to permit (determined without regard to whether any notice is required) any such 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 j udgments, 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 containe d 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 advi ce by the Internal Revenue Service is rendered to the effect that interest on the Notes is includable in the gross income of the holder(s) or owner(s) of such Notes and either (i) the Commission, after it has been notified by the Internal Revenue Service, does not challenge su ch ruling, assessment, notice or advice in a court of law during the period within which such challenge is permitted or (ii) the Commission challe nges such ruling, assessment, no tice 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, Moody’s and S&P (i) dow ngrades its long-term unenhanced rating of any Senior Debt of the Commission to below “A-” (or its equivalent), “A3” (or its equivalent), or “A-” (or its equivalent), respectively, and such rating remains below “A-” (or its equivalent), “A3” (or its equivalent), or “A-” (or its equivalent) for one hundred twenty (120) days, or (ii) suspends or withdraws its rating of the same; or
44 (p) the passage of any Law ha s occurred which could reasonably be expected to have a material adverse effect on the Commi ssion’s ability to perform its obligations under this Agreement or the other Basic Documents or to result in a material adverse effect on the enforceability or validity of this Agreement or any of the other Basic Documents.
Section 6.2 Remedies. Upon the occurrence of any Ev ent of Default the Bank may exercise any one or more of th e following rights and remedies in addition to any other remedies herein or by law provided:
(a) declare all Obligations to be immedi ately 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 Section 6.1(e), (f) or (g) hereof, such acceleration will automatically occur (unless such automatic acceleration is waived by the Bank in writing); or (b) issue a No-Issuance Notice (the effect of which will be as provided in Section 2.18 of this Agreement), reduce the St ated Amount of the Le tter of Credit to the amount of the then outstanding Notes supported by the Letter of Credit plus a corresponding amount of interest coverage and/or terminat e the Stated Amount as the then outstanding Notes are paid; or
(c) issue the Final Drawing Notice (the eff ect of which will be to cause the Termination Date of the 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 defa ult” under the Issuing and Paying Agent Agreement, the Bank may, pursuant to Section 8.01 of the Issuing and Paying Agent Agreement, by notice to the Commission and the Issui ng and Paying Agent (such notice, the “Acceleration Notice”), (i) declare the principal of all outstanding Notes, and the in terest accrued thereon, to be due and payable immediately, whereupon the same sh all become and shall be immediately due and payable and (ii) instruct the I ssuing and Paying Agent to submit a Drawing under the Letter to pay such immediately due and payable amount.
ARTICLE 7
MISCELLANEOUS
Section 7.1 Amendments, Waivers, Etc. No amendment or waiver of any provision of this Agreement, or consent to any departure by the Commission therefrom, will in any event be effective unless the same is in writing and signed by the Bank and an Authorized Representative of the Commission, and then such waiver or consent is effective only in the sp ecific instance and for the specific purpose for which given.
45 Section 7.2 Notices. All notices and other communica tions provided for hereunder must be in writing (including required copies) and sent by receipted hand de livery (including Federal Express or other receipted courier service), facsimile transmission or regular mail, as follows:
(a) if to the Commission:
City and County of San Francisco
Public Utilities Commission
Attention: Chief Financial Officer
525 Golden Gate Avenue, 13
th Floor
San Francisco, California 94102
Telephone: (415) 554-3155
Facsimile: (415) 554-3161
(b) if to the Bank:
Bank of America, N.A.
800 Fifth Avenue, Floor 34
WA1-501-34-03
Seattle, Washington 98104-3176
Attention: Nancy Nuerenberg, SVP
Telephone: (206) 358-6279
Facsimile: (206) 358-8815
In the case of communications to the Bank with respect to drawings under the Letter of Credit:
Bank of America, N.A.
1 Fleet Way, PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Telephone: (800) 370-7519 OPT 1
Facsimile: (800) 755-8743
In the case of payments to the Bank:
Bank of America, N.A.
ABA: 026009593
A/C: 04535-883980
Reference: Letter of Credit # 68122730
or such other account as the Bank may from time to time designate in writing to the Commission.
(c) if to Issuing and Paying Agent:
46 U.S. Bank National Association
100 Wall Street, 16th Floor
New York, New York 10005
Attention: Millie Rolla, Assistant Vice President
Telephone: (212) 361-2892
Facsimile: (212) 514-6841
(d) if to the Dealers:
At the address, telephone number
and telecopy number set forth in
each Dealer Agreement.
or, as to each Person named above, at such other address or telephone or telecopy number as is designated by such Person in a written notice to the parties hereto. All such notices and other communications will, when delivered, sent by facsimile transmission or mailed, be effective when deposited with the courier, sent by facsimile transmission or mailed, respectively, addressed as aforesaid, except that requests for Drawings submitted to the Bank will not be effective until received by the Bank.
Section 7.3 Survival of Covenants; Successors and Assigns . (a) All covenants, agreements, representations and warranties made he rein and in the certificat es delivered pursuant hereto will survive the making of any Drawing or Advance hereunder and will continue in full force and effect until all of the Obligations hereunde r are paid in full. Whenever in this Agreement any of the parties hereto is referred to, such refe rence will, subject to the last sentence of this Section, be deemed to include the successors and assigns of such party, and all covenants, promises and agreements by or on behalf of the Commissi on which are contained in this Agreement will inure to the benefit of the successors and assigns of the Bank. The Commission may not transfer its rights or obligations under this Agreement without the prior written consent of the Bank. The Bank may transfer or assign some or all of its rights and obligations under this Agreement, the Fee Letter, the Bank Note and the Letter of Credit with the prior written consent of the Commission (which consent may not be withheld unreasonably), provided that (i) with respect to the Letter of Credit only, the Commission has received written notice fr om each rating agency then rating the Notes that the transfer will not cause the lowering, withdrawal or suspension of such rating agency’s rating on the Notes, and (ii) the Bank shall be re sponsible for all costs solely relating to such transfer or assignment. This Agreement is made solely for the benefit of the Commission and the Bank, and no other Person (including, without limitation, the Issuing and Paying Agent, any Dealer or any holder of Notes) will have any right, benefit or interest under or because of the existence of this Agreement; provided, further, that the Commission’s liability to any Participant will not in any event exceed that liability which the Commission would owe to the Bank but for such participation.
(b) Notwithstanding the foregoing, the Bank will be permitted to grant to one or more financial institutions (each a “Participant”) a participation or participations in all or any part of the Bank’s rights and benefits and obligations under this Agreement, the Bank Note, the Fee and the Letter of Credit on a participating basi s but not as a party to this Agreement (a “Participation”) without the consent of the Commission. In the event of any such grant by the of a Participation to a Particip ant, the Bank shall remain respons ible for the performance of its
47 obligations hereunder and under the Letter of Credit, and the Commission may continue to deal solely and directly with the Bank in connection with the Bank’s rights a nd obligations under this Agreement and under the Letter of Credit. The Commi ssion agrees that each Participant will, to the extent of its Participation, be entitled to the benef its of this Agreement as if such Participant were Bank, provided that no Participant will have the right to de clare, or to take actions in response to, Event of Default under Section 6.1 hereof.
Section 7.4 Unconditional Obligations. The obligations of the Commission under this Agreement and under the Fee Agreement are abso lute, unconditional, irrevocable and payable strictly in accordance with the terms of the Issuing and Pa ying Agent Agreement, this Agreement and the other Basic Documents to which the Co mmission is a party, under all circumstances whatsoever, including, without limitation, the following:
(a) any lack of validity or enforceability of this Agreement, the Letter of Credit, the Fee Agreement or the Notes or any other Basic Document; (b) any amendment or waiver of or any c onsent to departure from the terms of the Issuing and Paying Agent Agreement or al l or any of the other Basic Documents to which the Bank has not consented in writing (unl ess pursuant to Section 5.2(a) hereof such consent is not required);
(c) the existence of any claim, counterclai m, set-off, recoupment, defense or other right which any Person may have at a ny time against the Bank, the Commission, the Issuing and Paying Agent, any Dealer or any other Person, whether in connection with this Agreement, the other Basic Documents or any transaction related thereto; (d) any statement or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or in sufficient in any respect or any statement therein being untrue or inaccurate in any respect;
(e) payment by the Bank under the Letter of Credit against presentation of a draft or certificate which does not comply with the terms of the Letter of Credit; and (f) any other circumstances or happening wh atsoever, whether or not similar to any of the foregoing.
Section 7.5 Liability of Bank; Indemnification.
(a) To the extent permitted by the law of the State, the Commission assumes all risks the acts or omissions of the Issuing and Paying Agen t with respect to the use of the Letter of Credit the use of proceeds thereunder; provided that this provision with respect to the Bank is not intended to and will not preclude the Co mmission from pursuing such right s and remedies as it may have against the Issuing and Paying Agent under any othe r agreements. Neither the Bank nor any of its respective officers or directors will be liable or responsible for (i) the use of the Letter of Credit, the Drawings or the Advances, the pr oceeds of the Notes or the trans actions contemplated hereby and the other Basic Documents or for any acts or om issions of the Issuing and Paying Agent or any Dealer, (ii) the validity, suffici ency or genuineness of any docume nts determined in good faith by Bank to be valid, sufficient or genuine, even if su ch documents, in fact, prove to be in any or all respects invalid, fraudulent, forged or insufficient, (iii) payments by the Bank against presentation
48 requests for Drawings or requests which the Ba nk in good faith has determined to be valid, or genuine and which subsequently are found not to comply with the terms of this Agreement or any other circumstances whatsoever in making or failing to make payment hereunder; provided that the Commission is not required to indemnify the Bank for any claims , losses, liabilities, costs or expenses to the extent, but only to the extent, caused by the gross negligence or willful misconduct the Bank.
(b) To the extent permitted by the law of th e State, the Commission indemnifies and holds harmless the Bank from and against any and a ll direct, as opposed to consequential, claims, damages, losses, liabilities, costs and expenses (including specifically reasonable attorneys’ fees) which the Bank may incur (or which may be claimed against the Bank by any Person whatsoever) by reason of or in connection with (i) the execu tion and delivery of this Agreement, the Fee Agreement, the Letter of Credit an d the transactions contemplated hereby or thereby and (ii) any untrue statement or alleged untru e statement of any material f act contained in the Offering Memorandum prepared and distributed in connecti on with the Notes or the omission or alleged omission to state therein a material fact necessary to make such statements, in the light of the circumstances under which they are or were made, not misleading; provided that the Commission is not required to indemnify the Bank to the extent, but only to the extent, any such claim, damage, loss, liability, cost or expense is caused by the Bank’s willful misconduct or gross negligence. The Bank is expressly authorized and directed to honor any demand for payment which is made under the Letter of Credit without regard to, and without any duty on its part to inquire into the existence of, any disputes or controversies between the Commission, any Dealer, th e Issuing and Paying Agent or any other Person or the re spective rights, duties or liabilit ies of any of them or whether any facts or occurrences represented in any of th e documents presented under the Letter of Credit are true and correct.
(c) To the fullest extent permitted by applicable law, the Commission shall not assert, and waives, any claim against the Bank, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damage s) arising out of, in connection with, or as a result of , this Agreement, the Letter of Credit, any other Basic Document or any agreement or instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby or the use of the proceeds thereof.
(d) The obligations of the Commission under this Section 7.5 will survive the termination of this Agreement.
Section 7.6 Expenses. Upon receipt of a written invoice, the Commission shall promptly pay (i) the reasonable fees and expenses of coun sel to the Bank incurred in connection with the preparation, execution and delivery a nd administration of this Agreemen t, the Letter of Credit, the Fee Agreement and the other Basic Documents as set forth in the Fee Agreement, (ii) the out-of-pocket expenses of the Bank incurred in connection with the prep aration, execution and delivery and administration of this Agreement, th e Letter of Credit, the Fee Agreement and the Basic Documents ( provided that such expenses to be paid in connection with the preparation and execution and delivery will not exceed the amount sp ecified in the Fee Agreement), (iii) the fees disbursements of counsel to th e Bank with respect to advising the Bank as to its rights and responsibilities under this Agreemen t after the occurrence of an Even t of Default and (iv) all costs and expenses, if any, in connecti on with the administration and enforcement of this Agreement and any other documents which may be delivered in connection herewith, including in each case the and disbursements of counsel to the Bank. In addi tion, and notwithstandi ng the foregoing, the
49 Commission agrees to pay, after the occurrence of an Event of Default, all costs and expenses (including attorneys’ fees and costs of settlement) incurred by the Bank in enforcing any or in collecting any payments due from the Co mmission hereunder by reason of such Event of Default or in connection with a ny refinancing or rest ructuring of the cred it arrangements provided under this Agreement in the nature of a “workout” or of any insolvency or bankruptcy proceedings.
The obligations of the Commission under this Sec tion 7.6 will survive the termination of this Agreement.
Section 7.7 No Waiver; Conflict . Neither any failure nor any delay on the part of the Bank in exercising any right, power or privilege hereunder, nor any c ourse of dealing with respect to any of the same, will operate as a waiver th ereof or preclude any other or further exercise thereof, nor will a single or partial exercise thereof, preclude any other or further exercise thereof or the exercise of any other right, power or privil ege. The remedies herein provided are cumulative and not exclusive of any remedies provided by la w. To the extent of any conflict between this Agreement, the Letter of Credit and any other Basi c Documents, this Agreement will control solely as between the Commission and the Bank.
Section 7.8 Modification, Amendment, Waiver, Etc . No modification, amendment or waiver of any provision of this Agreement will be effective unless the same is in writing and signed in accordance with Section 7.1 hereof.
Section 7.9 Dealing with the Commission, the Issuing and Paying Agent and/or the Dealer. The Bank and its affiliates may accept deposits from, extend credit to and generally engage in any kind of banking, trust or other business w ith the Commission, the Issuing and Paying Agent and/or any Dealer regardless of the capacity of the Bank hereunder.
Section 7.10 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction will, as to such ju risdiction, be ineffective to the extent of such prohibition or unenforceability w ithout invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction, and all other remaining provisions hereof will be construed to render them enforceable to the fullest extent permitted by law. The parties shall endeavor in good faith ne gotiations to replace th e invalid, illegal or unenforceable provisions with valid provisions the economic or legal effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
Section 7.11 Counterparts. This Agreement may be executed in two or more counterparts, each of which constitutes an origin al, but when taken together constitute but one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement may be delivered by the exchange of signed signature pages by facsimile transmission or by e-mail with a pdf c opy or other replicating image attached, and any printed or copied version of any signature page so delivered will have the same force and effect as an originally signed version of such signature page.
Section 7.12 Table of Contents; Headings . The table of contents and the section and subsection headings used herein have been insert ed for convenience of re ference only and do not constitute matters to be considered in interpreting this Agreement.
50 Section 7.13 Entire Agreement. This Agreement represents the final agreement between the parties hereto with respect to the subject matter hereof and may not be contradicted by evidence of prior, contemporaneous or subs equent oral agreements of the pa rties hereto as to such subject matter.
Section 7.14 Governing Law Waiver of Jury Trial.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT UNDER,
AND FOR ALL PURPOSES SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANC E WITH, THE LAWS OF TH E STATE OF NEW YORK
WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PROVISIONS (OTHER THAN NEW YORK GENERAL OBLIGATIONS LAWS 5-1401 AND 5-1402); PROVIDED, THAT THE
OBLIGATIONS OF THE COMMISSION HERE UNDER SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF CALIFORNIA WITHOUT REGA RD TO CHOICE OF LAW RULES.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
PARTIES HERETO WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE BASIC
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, INCLUDING CONTRACT CLAI MS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. IF AND TO THE
EXTENT THAT THE FOREGOING WAIVER OF THE RIGHT TO A JURY TRIAL IS
UNENFORCEABLE FOR ANY REASON IN SUCH FORUM, EACH OF THE PARTIES
HERETO CONSENTS TO THE ADJUDICAT ION OF ALL CLAIMS PURSUANT TO
JUDICIAL REFERENCE AS PROVIDED IN CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638, AND THE JUDICIAL REFE REE IS EMPOWERED TO HEAR AND DETERMINE ALL ISSUES IN SUCH REFERENC E, WHETHER FACT OR LAW. EACH OF
THE PARTIES HERETO REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND
CONSENT AND, FOLLOWING CONSULTATI ON WITH LEGAL COUNSEL ON SUCH
MATTERS, KNOWINGLY AND VOLUNTARILY WAIVES IT S JURY TRIAL RIGHTS AND CONSENTS TO JUDICIAL REFERENCE. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT OR TO JUDICIAL REFERENCE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638 AS PROVIDED HEREIN.
(c) The covenants and waivers made pursuant to this Section 7.14 are irrevocable and unmodifiable, whether in writing or orally, and are applicable to any subsequent amendments, renewals, supplements or modifications of this Agreement. In the even t of litigation, this Agreement may be filed as a written consent to a trial by the court.
Section 7.15 Governmental Regulations . The Commission shall (a) ensure that no who owns a controlling in terest in or otherwise controls the Commission is or will be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control ( “OFAC”), the Department of the Treasury or included in any Executive Order that prohibits or limits the Bank fr om making any advance or extension of credit the Commission or from otherwise conducting busin ess with the Commission and (b) ensure that proceeds of the Notes are not used to violate any of the foreign asset control regulations of OFAC any enabling statute or Executive Order relating thereto. Further, the Commission shall comply,
51 cause any of its subsidiaries to comply, with all applicable Bank Secrecy Act laws and regulations, amended.
Section 7.16 USA PATRIOT Act . The Bank notifies the Co mmission that, pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signe d into law October 26, 2001)) (the “Act”), it is required to obtai n, verify and record information that identifies the Commission, which information includes the name and address of the Commission and other information that will allow the Bank to identif y the Commission in accordance with the Act. The Commission agrees to provide such documentary and other evidence of th e Commission’s identity as may be requested by the Bank at any time to enable the Bank to verify the Commission’s identity or to comply with any applicable law or regulation, including, without limitation, the Act.
Section 7.17 Electronic Transmissions . The Bank is authorized to accept and process any amendments, transfers, assignments of pr oceeds, Drawings, consents, waivers and all documents relating to the Letter of Credit whic h are sent to Bank by electronic transmission, including SWIFT, electronic mail, telex, telecopy, courier, mail or other computer generated telecommunications and such electronic communication will have the same legal effect as if written and will be binding upon and enforceable against the Commission. The Bank may, but shall not be obligated to, require authentication of such el ectronic transmission or that the Bank receives original documents prior to acting on such electronic transmission.
Section 7.18 Assignment to Federal Reserve Bank. The Bank may assign and pledge all or any portion of the obligations owing to it hereunder and under the Bank Note to any Federal Reserve Bank or the United States Treasury as colla teral security pursuant to Regulation A of the Board of Governors of the Federal Reserve Syst em and any Operating Circular issued by such Federal Reserve Bank, provided that any payment in respect of such assigned obligations made by the Commission to the Bank in accordance with the terms of this Agreement or the Bank Note will satisfy the Commission’s obligations hereunder and/or under the Ba nk Note in respect of such assigned obligation to the extent of such payment. No such assignment will release the Bank from its obligations hereunder.
Section 7.19 City Requirements . The Bank agrees to the City’s requirements, as provided in Exhibit D attached hereto.
52 Section 7.20 Arm’s Length Transaction. The transaction described in this Agreement is an arm’s length, commercial transaction between th e Commission and the Bank in which: (i) the Bank is acting solely as a principal ( i.e., as a lender) and for its own interest; (ii) the Bank is not acting as a municipal advisor or financial advisor to the Comm ission; (iii) the Bank has no duty pursuant to Section 15B of the Securities Exchange Ac t of 1934 to the Commission with to this transaction and the discussions, undertaki ngs and procedures leading thereto (irrespective of whether the Bank or any of its affiliates has provided other services or is currently providing other services to the Commission on other matters); (i v) the only obligations the Bank has to the Commission with respect to this transaction are set forth in this Agreement; and (v) the Bank is not recommending that the Commission ta ke an action with respect to th e transaction described in this Agreement and the other Basic Documents, and befo re taking any action with respect to the this transaction, the Commission should discuss th e information contained herein with the own legal, accounting, tax, financial and other advisors, as the Commission deems appropriate.
[SIGNATURE PAGES FOLLOW]
1 APPENDIX I
IRREVOCABLE TRANSFERABLE LETTER OF CREDIT
BANK OF AMERICA, N.A.
1 FLEET WAY
PA6-580-02-30
SCRANTON, PENNSYLVANIA 18507
December 17, 2015
U.S. $97,989,042
No. 68122730
U.S. Bank National Association,
as Issuing and Paying Agent
100 Wall Street, 16th Floor
New York, New York 10005
Attention: Millie Rolla
Ladies and Gentlemen:
We hereby establish in your favor as issuing and paying agent (the “ Issuing and Paying Agent”) under that certain Issuing and Paying Agent Agreement, dated as of December 1, 2015 (as amended, supplemented, restated or otherw ise modified from time to time, the “Issuing and Paying Agent Agreement” ), between the Public Utilities Commissi on of the City and County of San Francisco (the “Commission”) and the Issuing and Paying Agent for the benefit of the holders of the Series A-1 Notes (as hereinafter defined) our Irrevocable Transferable Letter of Credit No. 68122730 (as amended, supplemented, restated or ot herwise modified from time to time, this “Letter of Credit” ) for the account of the Commission, wher eby we hereby irrevocably authorize you to draw on us from time to time, from and afte r the date hereof to and including the earliest to occur of our close of business on: (i) Decem ber 17, 2018, (as extended from time to time, the “Stated Expiration Date” ), (ii) the later of the date on which we receive a written certificate from you in the form of Annex C attached hereto that an Alternate Facility has been substituted for this Letter of Credit in accordance with the Issuing a nd Paying Agent Agreement and the effective date of any such Alternate Facility as specified in such notice (after we honor any properly presented and conforming Drawing (as defined below) on such date ), (iii) the date on which we receive a written certificate from you in the form of Annex F attached hereto that there are no longer any Series A-1 Notes Outstanding within the meaning of the I ssuing and Paying Agent Agreement and that you elect to terminate this Letter of Credit, (iv) the earlier of (a) the fifteenth (15th) calendar day after the date on which you receive notice from us in the form of Annex H (the “Final Drawing Notice”), and (v) the earlier of (a) the third (3rd) Busine ss Day after the date on which you receive notice from us in the form of Annex I (the “ Acceleration Notice”) and (b) the date on which the Drawing resulting from the delivery of the Acceleration Notice is honored hereunder (the earliest of the foregoing dates herein referred to as the “Termination Date” ), a maximum aggregate amount not 2 exceeding $97,989,042 (the “Original Stated Amount” ) to pay the unpaid principal amount of, and accrued interest on, the Commission’s Commercial Pa per Notes (Power Series) Series A-1 (Tax- Exempt) (the “Series A-1 Notes” ), in accordance with the terms hereof (said $97,989,042 having been calculated to be equal to (A) $90,000,000, the maximum aggregate principal amount of the Series A-1 Notes which may be issued pursuant to the Issuing and Paying Agent Agreement, plus (B) $7,989,042 which is 270 days’ accrued interest on said principal amount of the Series A-1 Notes at the rate of 12% per annum (the “Cap Interest Rate” ) and assuming a year of 365 days and rounded up to the nearest dollar. This credit is available to you against presentation of the following documents (the “Payment Documents”) presented to the Bank:
A certificate (with all blanks appropriately completed) (i) in the form attached as Annex A hereto with re spect to the payment at maturity of the principal of and interest at maturity on Series A-1 Notes, and (ii) in the form attached as Annex B hereto with respect to the payment at maturity of the principal of and interest to maturity on Series A-1 Notes and that ot herwise mature on or after the date that you receive the Final Drawing Notice, each certificate to state therein that it is given by your duly authorized officer and dated the date such certificate is presented hereunder (each such completed and executed certificate, a “Drawing”). No Drawings shall be made under this Letter of Credit for (i) Series A-1 Notes bearing registered in the name of the Bank or its nominee or (ii) Series A-1 Notes owned by or on behalf of the Commission (“Ineligible Series A-1 Notes” ).
All drawings shall be made by presentation of each Payment Document at Bank of America, N.A., Scranton, at telecopier number (800) 755-8743, Attention: Standby Letter of Credit Department, without further need of documentation, including the original of this Letter of Credit, it being understood that each Payment Document so s ubmitted is to be the sole operative instrument of a Drawing. You shall use your best efforts to give telephonic notice of a drawing to the Bank at (800) 370-7519 OPT 1 on the Business Day preceding the day of such drawing (but such notice shall not be a condition to drawing hereunder and you shall have no liability for not doing so).
We agree to honor and pay the amount of any Dr awing if presented in compliance with all of the terms of this Letter of Credit to the following account: U.S. Bank National Association, ABA # 091-000-022, A/C# 1731-0185-1827, A/C NAME: U.S. Trust, Attn: Rosalyn Callender, Reference: Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Power Series) Series A-1 (Tax-Exempt) (such account, the “Beneficiary Payment Account”). If any such Drawing is presented at or prior to 11:30 A.M., New York time, on a Business Day, payment shall be made, in immedi ately available funds, by 2:30 P.M., New York time, on the same Business Day. If any such Dr awing is presented after 11:30 A.M., New York time, on a Business Day, payment shall be made, in immediately available funds, by 2:30 P.M., New York time, on the next succeeding Business Day. “Business Day” shall mean any day other than (a) a Saturday or Sunday, (b) a day on wh ich banks located in the cities in which the designated office of the Issuing and Paying Agent or the Bank (initially, Scranton, Pennsylvania) is located are required or authorized to close, or (c) a day on which the New York Stock Exchange is required or authorized to close.
3 The Stated Amount (as hereinafter defined) of this Letter of Cr edit will be reduced automatically by the amount of any drawing hereunder. In connection therewith (except in the case of a Drawing resulting from the delivery of a Final Drawing Notice or the Acceleration Notice), the Stated Amount will be increased when and to the extent, but only when and to the extent, (i) (A) of transfer by you to us on the date such Dr awing is honored of proceeds of Commercial Paper Notes issued on such date or (B) you receive writte n notice from us in the form of Annex K hereto that we have been reimburse d by or on behalf of the Commission for the amount of any Drawing honored hereunder, and (ii) that you ha ve not received notice from us in the form of Annex J hereto (a “No-Issuance Notice” ). The Stated Amount under this Letter of Credit will be reduced automatically upon our receipt of Annex G to the amount stated in paragraph 2 therein.
The “Stated Amount” shall mean the Original Stated Amount (i) less the amount of all prior reductions pursuant to Drawings, (ii) less the amount of any reduction thereof pursuant to a reduction certificate in the form of Annex G hereto, (iii) plus the amount of all reinstatements as above provided.
Prior to the Termination Date, we may extend the Stated Expiration Date from time to time at the request of the Commission by delivering to you an amendment to this Letter of Credit in the form of Annex E hereto designating the date to wh ich the Stated Expiration Date is being extended, and thereafter all references in this Letter of Credit to the Stated Expiration Date shall be deemed to be references to the date designated as such in such notice. Any date to which the Stated Expiration Date has been extended as herein provided may be extended in a like manner.
Upon the Termination Date this Letter of Credit shall automatically terminate.
This Letter of Credit is transferable to a ny transferee whom has succeeded you as Issuing and Paying Agent under the Issuing and Paying Agent Agreement, and may be successively transferred in its entirety. Transfer of the ava ilable balance under this Letter of Credit to such transferee shall be effected by the presentation to us of a Transfer Certificate in the form of Annex D attached hereto signed by the transferor and acknowledged by the transferee (each a “Transfer”) together with the original Letter of Credit.
Other than the provisions for communicati on by facsimile copy, communications with respect to this Letter of Credit shall be addresse d to us at Bank of America, N.A., 1 Fleet Way, PA6-580-02-30, Scranton, Pennsylvania 18507, Attenti on: Standby Letter of Credit Department, specifically referring to the number of this Letter of Credit.
To the extent not inconsistent with the expre ss terms hereof, this Letter of Credit shall be governed by, and construed in accordance with, the terms of the International Standby Practices 1998, International Chamber of Commerce-Publication No. 590 (“ ISP98”). As to matters not governed by the ISP98, this Letter of Credit shall be governed by and construed in accordance with Article 5 of the Uniform Commercia l Code of the State of New Yor k, without regard to conflict of laws.
All payments made by us hereunder shall be made from our funds and not with the funds of any other person.
4 This Letter of Credit sets forth in full the terms of our undertaking, and such undertaking shall not in any way be modified or amended by reference to any other document whatsoever.
BANK OF AMERICA, N.A.
By: ___________________________________
Name: ______________________________
Title: _______________________________
5 ANNEX A
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT NO. 68122730
PRINCIPAL AND INTEREST DRAWING CERTIFICATE
PRIOR TO FINAL DRAWING CERTIFICATE
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
The undersigned individual, a duly authorized officer of __________________ (the “Beneficiary”), hereby certifies on behalf of the Benefici ary as follows with respect to (i) that certain Irrevocable Transferable Letter of Credit No. 68122730 dated December 17, 2015 (as amended, the “Letter of Credit” ), issued by Bank of America, N.A. (the “Bank”) in favor of the Beneficiary; (ii) those certain Series A-1 Notes (a s defined in the Letter of Credit); and (iii) that certain Issuing and Paying Agent Agreement (as defined in the Letter of Credit):
1. The Beneficiary is the Issuing and Paying Agent (as defined in the Letter of Credit) under the Issuing and Paying Agent Agreement.
2. The Beneficiary is entitled to make this Drawing in the amount of $_____________ under the Letter of Credit pursuant to the Issu ing and Paying Agent Agreement, of which $___________ is being drawn with respect to the payment of principal of maturing Series A-1 Notes, other than Ineligible Series A-1 Notes (as defined in the Letter of Credit), and $___________ is being drawn in respect of _____ days of interest thereon.
3. The amount of the Drawing is equal to th e amount required to be drawn by the Issuing and Paying Agent pursuant to the Issuing and Paying Agent Agreement.
4. The amount of the drawing made by this Ce rtificate was computed in compliance with the terms of the Issuing and Paying Agent Agr eement and does not exceed the Stated Amount (as defined in the Letter of Credit).
5. Payment by the Bank pursuant to this Dr awing should be made to the Beneficiary Payment Account (as defined in the Letter of Cr edit) in accordance with the terms the Letter of Credit.
6 6. Upon receipt by the Beneficiary of the amount demanded hereby, (a) the Beneficiary will deposit the same directly into the Debt Service Account maintained by the Beneficiary pursuant to the Issuing and Paying Agent Agreement and apply the same directly to the payment when due of the principal amount of Series A-1 Notes and the interest amount owing on account of the Series A- 1 Notes pursuant to the Issuing and Paying Agent Agreement, (b) no portion of said amount will be applied by the Beneficiary for any other purpose, (c) no portion of said amount will be commingled with other funds held by the Beneficiary, except for other funds drawn unde r the Letter of Credit, and (d) when such Series A-1 Notes have been presented for payment and paid by the Beneficiary, the Beneficiary will cancel such matured Series A-1 Notes.
IN WITNESS WHEREOF, this Certificate has been executed this ____ day of ____________________, 20___.
______________________________________
as Issuing and Paying Agent
By ___________________________________
[Title of Authorized Officer]
7 ANNEX B
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT NO. 68122730
PRINCIPAL AND INTEREST DRAWING CERTIFICATE
AFTER FINAL DRAWING CERTIFICATE
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
The undersigned individual, a duly authorized officer of __________________ (the “Beneficiary”), hereby certifies on behalf of the Benefici ary as follows with respect to (i) that certain Irrevocable Transferable Letter of Credit No. 68122730 dated December 17, 2015 (as amended, the “Letter of Credit” ), issued by Bank of America, N.A. (the “Bank”) in favor of the Beneficiary; (ii) those certain Series A-1 Notes (a s defined in the Letter of Credit); and (iii) that certain Issuing and Paying Agent Agreement (as defined in the Letter of Credit):
1. The Beneficiary is the Issuing and Paying Agent (as defined in the Letter of Credit) under the Issuing and Paying Agent Agreement.
2. The Issuing and Paying Agent has received the Final Drawing Notice.
3. The Beneficiary is entitled to make this Drawing in the amount of $_____________ under the Letter of Credit pursuant to the Issu ing and Paying Agent Agreement, of which $___________ is being drawn with respect to the pa yment of principal of Series A-1 Notes maturing on or after the Final Drawi ng Notice, other than Ineligible Series A-1 Notes (as defined in the Letter of Credit), and $___________ is being drawn in respect of _____ days of interest thereon.
4. The amount of the Drawing is equal to th e amount required to be drawn by the Issuing and Paying Agent pursuant to the Issuing and Paying Agent Agreement.
5. The amount of the drawing made by this Ce rtificate was computed in compliance with the terms of the Issuing and Paying Agent Agr eement and does not exceed the Stated Amount (as defined in the Letter of Credit).
6. This Payment Document is being presented to the Bank on a date which is no later than the fifteenth (15
th) calendar day after receipt by the Beneficiary of the Final Drawing Notice. 8 7. Payment by the Bank pursuant to this Dr awing should be made to the Beneficiary Payment Account (as defined in the Letter of Cr edit) in accordance with the terms the Letter of Credit.
8. Upon receipt by the Beneficiary of the amount demanded hereby, (a) the Beneficiary will deposit the same directly into the Debt Service Account maintained by the Beneficiary pursuant to the Issuing and Paying Agent Agreement and apply the same directly to the payment when due of the principal amount of Series A-1 Notes and the interest amount owing on account of the Series A- 1 Notes pursuant to the Issuing and Paying Agent Agreement, (b) no portion of said amount will be applied by the Beneficiary for any other purpose, (c) no portion of said amount will be commingled with other funds held by the Beneficiary, except for other funds drawn unde r the Letter of Credit, and (d) when such Series A-1 Notes have been presented for payment and paid by the Beneficiary, the Beneficiary will cancel such matured Series A-1 Notes.
IN WITNESS WHEREOF, this Certificate has been executed this ____ day of ____________________, 20___.
______________________________________
as Issuing and Paying Agent
By ___________________________________
[Title of Authorized Officer]
9 ANNEX C
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT NO. 68122730
CERTIFICATE REGARDING ALTERNATE FACILITY
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
The undersigned individual, a duly authorized officer of __________________ (the “Beneficiary”), hereby certifies on behalf of the Benefici ary as follows with respect to (i) that certain Irrevocable Transferable Letter of Credit No. 68122730 dated December 17, 2015 (as amended, the “Letter of Credit” ), issued by Bank of America, N.A. (the “Bank”) in favor of the Beneficiary; (ii) those certain Series A-1 Notes (a s defined in the Letter of Credit); and (iii) that certain Issuing and Paying Agent Agreement (as defined in the Letter of Credit):
1. The Beneficiary is the Issuing and Paying Agent (as defined in the Letter of Credit) under the Issuing and Paying Agent Agreement.
2. The conditions precedent to the acceptance of an Alternate Facility set forth in the Issuing and Paying Agent Agreement have been satisfied.
3. An Alternate Facility in full and complete substitution for the Letter of Credit has been accepted by the Issuing and Paying Agent and is or will be in effect as of _____________, 20__.
4. There will be no further Drawings requested from the Bank under the Letter of Credit.
5. Upon receipt by the Bank of this Certificat e, the Letter of Credit will terminate with respect to all outstanding Series A-1 Notes, and the Letter of Credit (and any amendments thereto) is returned to you herewith for cancellation.
6. No payment is demanded of you in connection with this Certificate. 10 IN WITNESS WHEREOF, this Certificate has been executed this _______ day of ___________________, ____.
_______________________________________
as Issuing and Paying Agent
By ___________________________________
[Title of Authorized Officer]
11 ANNEX D
TO
B ANK OF AMERICA, N.A.
L ETTER OF CREDIT NO. 68122730
TRANSFER CERTIFICATE
[Date]
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Re: Irrevocable Transferable Letter of Credit No. 68122730 dated December 17, 2015
We, the undersigned “Transferor”, hereby irrevocably transfer all of our rights to draw under the above referenced Letter of Credit (as amended, the “Letter of Credit” ) in its entirety to:
NAME OF TRANSFEREE
______________________________________________________________________________ (Print Name and complete address of the Transferee) “Transferee”
_____________________________________________________________________________
ADDRESS OF TRANSFEREE
_____________________________________________________________________________
CITY/STATE/COUNTRY ZIP
(the “Transferee”) all rights of the Transfer or with respect to the above-referenced Letter of Credit, including the right to draw under said Le tter of Credit in the amount of the full unutilized balance thereof. Said Transferee has succeeded the Transferor as Issuing and Paying Agent under that certain Issuing and Paying Agent Agreement, dated as of December 1, 2015 (as amended, supplemented, restated or otherw ise modified from time to time, the “Issuing and Paying Agent Agreement” ), between the Public Utilities Commi ssion of the City and County of San Francisco (the “Commission”) and U.S. Bank National Association as the initial Issuing and Paying Agent with respect to the Commission’s Co mmercial Paper Notes (Power Series) Series A-1 (Tax-Exempt).
By virtue of this transfer, the Transferee sha ll have the sole rights as beneficiary of said Letter of Credit, including sole rights relating to any past or future amendments thereof, whether increases or extensions or otherwise. All am endments are to be advised directly to the Transferee without necessity of any consent of or notice to the Transferor. 12 By its signature below, the Transferee acknowledges that it has duly succeeded the Transferor as Issuing and Paying Agent under the Issuing and Paying Agent Agreement, and agrees to be bound by the terms of the Issuing and Paying Agent Agreement as if it were the original Issuing and Paying Agent thereunder.
The Letter of Credit is returned herewith, a nd we ask you to endorse the transfer on the reverse thereof and to forward it directly to the Transferee with your customary notice of transfer.
Very truly yours,
[Insert Name of Issuing and Paying Agent],
as Issuing and Paying Agent
By:
[Insert name and title of authorized officer]
SIGNATURE OF THE ABOVE OFFICER,
DULY AUTHORIZED TO ACT ON
BEHALF OF [insert name of
Issuing and Paying Agent],
AUTHENTICATED BY:
By:
Name:
Title:
Acknowledged by
[insert name of Transferee]
as Transferee and successor Issuing and Paying Agent
By:______________________________
Name:
Title:
SIGNATURE OF THE ABOVE OFFICER
DULY AUTHORIZED TO ACT ON BEHALF
OF [insert name of Transferee], AUTHENTICATED BY:
By:___________________________
Name:
Title:
13 ANNEX E
TO
B ANK OF AMERICA, N.A.
L ETTER OF CREDIT NO. 68122730
NOTICE OF EXTENSION
______________, ____
[ISSUING AND PAYING AGENT]
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter of Credit No. 68122730 dated December 17, 2015 (as amended, the “Letter of Credit” ), established by us in your favor as Beneficiary. We hereby notify you that, in accordance with the terms of the Letter of Credit, the Stated Expiration Date (as defined in the Letter of Credit) has been extended to ____________________.
This letter shall be attached to the Letter of Credit and made a part thereof.
B
ANK OF AMERICA, N.A.
By: ____________________________________
Name: _______________________________
Title: ________________________________
14 ANNEX F
TO
B ANK OF AMERICA, N.A.
L ETTER OF CREDIT NO. 68122730
CERTIFICATE REGARDING NO OUTSTANDING NOTES
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
The undersigned, a duly authori zed officer of _________________________ [insert name of Issuing and Paying Agent] (the “Beneficiary”), hereby notifies Bank of America, N.A. (the “Bank”), with reference to that certain Irre vocable Transferable Letter of Credit No. 68122730 dated December 17, 2015 (as amended, the “Letter of Credit” ; terms defined therein and not otherwise defined herein shall have the meanings set forth in the Letter of Credit) issued by the Bank in favor of the Beneficiary as follows:
1. The Beneficiary is the Issuing and Paying Agent under the Issuing and Paying Agent Agreement for the holders of the Series A-1 Notes.
2. No Series A-1 Notes (other than Seri es A-1 Notes with respect to which an Alternate Facility is in effect) remain outstanding under the Issuing and Paying Agent Agreement, nor does the Commission intend to i ssue any additional Series A-1 Notes under the Issuing and Paying Agent Agreement.
3. There will be no further Drawings reque sted from the Bank under the Letter of Credit, and the Beneficiary hereby elects to term inate the Letter of Credit, and returns such Letter of Credit (along with any amendments thereto) to you herewith for cancellation.
4. No payment is demanded of you in connection with this Certificate. 15 IN WITNESS WHEREOF, the Issuing and Paying Agent has executed and delivered this Certificate as of this ______ day of _____________, ___.
[I
NSERT NAME OF ISSUING AND PAYING AGENT],
as Issuing and Paying Agent
By ____________________________________
Name: _______________________________
Title: ________________________________
16 ANNEX G
TO
B ANK OF AMERICA, N.A.
L ETTER OF CREDIT NO. 68122730
NOTICE OF REDUCTION
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
The undersigned, a duly authori zed officer of _________________________ [insert name of Issuing and Paying Agent] (the “Beneficiary”), hereby notifies Bank of America, N.A. (the “Bank”), with reference to that certain Irre vocable Transferable Letter of Credit No. 68122730 dated December 17, 2015 (as amended, the “Letter of Credit” ; terms defined therein and not otherwise defined herein shall have the meanings set forth in the Letter of Credit) issued by the Bank in favor of the Beneficiary as follows:
1. The Beneficiary is the Issuing and Paying Agent under the Issuing and Paying Agent Agreement for the holders of the Series A-1 Notes.
2. The Stated Amount of the Letter of Cr edit will be decreased by the amount of $____________ ($___________ applicable to princi pal and $____________ applicable to interest), effective on ______________ (the “Decrease Date”).
3. The new Stated Amount of the Letter of Credit is $_____________, of which $___________ is applicable to principal and $____________ is applicable to interest, which amounts are not less than the outstanding principa l amount of Series A-1 Notes on the Decrease Date and interest thereon at the Cap Interest Rate for a period of two hundred seventy (270) days, calculated on the basis of a year of 365 days on the Decrease Date.
4. You are required to attach this Notice of Reduction to the Letter of Credit and to treat this Notice of Reduction as an amendment to the Letter of Credit. 17 IN WITNESS WHEREOF, the Issuing and Paying Agent has executed and delivered this Certificate as of this ______ day of _____________, ___.
[I
NSERT NAME OF ISSUING AND PAYING AGENT],
as Issuing and Paying Agent
By ____________________________________
Name: _______________________________
Title:
18 ANNEX H
TO
B ANK OF AMERICA, N.A.
L ETTER OF CREDIT NO. 68122730
FINAL DRAWING NOTICE
[DATE]
[ISSUING AND PAYING AGENT]
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter of Credit No. 68122730 dated December 17, 2015 (as amended, the “Letter of Credit;”; terms defined therein and not otherwise defined herein shall have the meanings set forth in the Letter of Credit), established by us in your favor as Issuing and Paying Agent.
Please be advised that:
1. An Event of Default under and as de fined in the Reimbursement Agreement, dated as of December 1, 2015, between the unders igned and the Public Utilities Commission of the City and County of San Francisco, pursuant to which the Letter of Credit was issued, has occurred and is continuing.
2. The undersigned instructs the Issuing a nd Paying Agent, effective upon receipt of this Final Drawing Notice, to cease issuing Series A-1 Notes.
3. The undersigned hereby notifies you as Issuing and Paying Agent that (i) effective upon receipt of this Final Drawing No tice, the Stated Amount available to be drawn under the Letter of Credit will not be reinstated in accordance with the Letter of Credit, (ii) the Issuing and Paying Agent is instructed to make the final Drawing under the Letter of Credit to provide for the payment of Series A-1 Notes issued in accordance with the Issuing and Paying Agent Agreement which are outstanding and are maturing or are hereafter to mature, and (iii) the Termination Date of the Letter of Credit will o ccur and the Letter of Credit will terminate on the earlier of (a) date which is the fifteenth (15th) calendar day after the date of receipt by the Issuing and Paying Agent of this Final Drawi ng Notice and (b) the date on which the Drawing resulting from the delivery of this Final Drawing Notice is honored by the undersigned. 19 BANK OF AMERICA, N.A.
By: ____________________________________
Name: _______________________________
Title: ________________________________
20 ANNEX I
TO
B ANK OF AMERICA, N.A.
L ETTER OF CREDIT NO. 68122730
ACCELERATION NOTICE
[DATE]
[ISSUING AND PAYING AGENT]
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter of Credit No. 68122730 dated December 17, 2015 (as amended, the “Letter of Credit;”; terms defined therein and not otherwise defined herein shall have the meanings set forth in the Letter of Credit), established by us in your favor as Issuing and Paying Agent.
Please be advised that:
1. An “event of default” under and as defined in the Issuing and Paying Agent Agreement, dated as of December 1, 2015 (the “IPAA”), between the Issuing and Paying Agent and the Public Utilities Commission of the City and County of San Francisco, has occurred.
2. Pursuant to Section 8.01 of the IPAA, the undersigned notifies the Issuing and Paying Agent that is has declared the principa l of all outstanding Series A-1 Notes, and the interest accrued thereon, to be due and payable immediately.
3. The undersigned hereby notifies you as Issuing and Paying Agent that (i) effective upon receipt of this Acceleration Noti ce, the Stated Amount available to be drawn under the Letter of Credit will not be reinstated in accordance with the Letter of Credit, (ii) the Issuing and Paying Agent is instructed to make the final Drawing under the Letter of Credit to provide for the payment of the principal of and interest on Series A-1 Notes issued in accordance with the Issuing and Paying Agent Agreement which are outstanding and which have been accelerated, and (iii) the Termination Date of th e Letter of Credit will occur and the Letter of Credit will terminate on the earlier of (a) date which is the third (3rd) Business Day after the date of receipt by the Issuing and Paying Agent of th is Acceleration Notice and (b) the date on which the Drawing resulting from the delivery of this Acceleration Notice is honored by the undersigned.
21 BANK OF AMERICA, N.A.
By: ____________________________________
Name: _______________________________
Title: ________________________________
CC: PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
Attention: Chief Financial Officer
525 Golden Gate Avenue, 13
th Floor
San Francisco, California 94102
22 ANNEX J
TO
B ANK OF AMERICA, N.A.
L ETTER OF CREDIT NO. 68122730
NO-ISSUANCE NOTICE
[DATE]
[ISSUING AND PAYING AGENT]
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter of Credit No. 68122730 dated December 17, 2015 (as amended, the “Letter of Credit;”; terms defined therein and not otherwise defined herein shall have the meanings set forth in the Letter of Credit), established by us in your favor as Issuing and Paying Agent.
Please be advised that:
1. A Default or an Event of Default unde r and as defined in the Reimbursement Agreement, dated as of December 1, 2015, betw een the undersigned and the Public Utilities Commission of the City and County of San Francisco, pursuant to which the Letter of Credit was issued, has occurred and is continuing.
2. Subject to the following sentence, you shall cease
authenticating and issuing
Series A-1 Notes, as provided in the Issuing and Paying Agent Agreement, unless and until we rescind this No-Issuance Notice. If you receive this No-Issuance Notice after 2:00 p.m., New York City time, on a Business Day, you shall cease authenticating Series A-1 Notes on the next Business Day.
3. This No-Issuance Notice will not affect our obligation to honor demands for payment under the Letter of Credit with respect to Series A-1 Notes authenticated and issued prior to your receipt of this No-Issuance Noti ce (or, as provided in paragraph 2 above, on the same Business Day that you receive this No-Issuance Notice), and you will continue to have the right to draw under the Letter of Cred it to pay the principal of and accrued interest on maturing Series A-1 Notes authenticated and issued prior to your receipt of this No-Issuance Notice (or, as provided in paragraph 2 above, authenticated and issued on the same Business Day that you receive this No-Issuance Notice.
23 BANK OF AMERICA, N.A.
By: ____________________________________
Name: _______________________________
Title: ________________________________
24 ANNEX K
TO
B ANK OF AMERICA, N.A.
L ETTER OF CREDIT NO. 68122730
NOTICE OF REIMBURSEMENT
[DATE]
[ISSUING AND PAYING AGENT]
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter of Credit No. 68122730 dated December 17, 2015 (as amended, the “Letter of Credit;”; terms defined therein and not otherwise defined herein shall have the meanings set forth in the Letter of Credit), established by us in your favor as Issuing and Paying Agent.
Please be advised that:
1. The Bank has been reimbursed by or on behalf of the Commission for an
amount drawn and honored by the Bank under the Letter of Credit and that the Stated Amount of the Letter of Credit will be increased by the amount of $_____________, of which $____________
is applicable to principal and $___________is applicable to interest, effective as of ___________ (the “Increase Date”).
2. The new Stated Amount of the Letter of Credit is $_____________, of which $____________ is applicable to principal and $___________is applicable to interest. You are authorized and directed to attach this Notice of Reimbursement to the Letter of Credit and to treat this Notice of Reimbursement as an amendment to the Letter of Credit.
BANK OF AMERICA, N.A.
By: ____________________________________
Name: _______________________________
Title: ________________________________
A-1
EXHIBIT A
FORM OF BANK NOTE
SAN FRANCISCO PUBLIC UTILITIES COMMISSION BANK NOTE
(POWER SERIES) B ANK OF AMERICA, N.A.
CUSIP No. 79773D AD2
December __, 2015 $97,989,042 San Francisco, California
For value received, P UBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”) promises to pay to the order of B ANK OF AMERICA N.A. (the “Bank”), by wire transfer to the payment account sp ecified in the Agreement referred to below, or such other account as the Bank may specify to the Commission in wr iting, the principal sum of Ninety Seven Million Nine Hundred Eighty Nine Thousand Forty Two Dollars ($97,989,042) or, if less, the aggregate outstanding principal amount of the Reimbursement Obligations from time to time owing to the Bank pursuant to the Reimburse ment Agreement, dated as of December 1, 2015, between the Commission and the Bank (as amended and supplemented from time to time, the “Agreement”), on the dates and in the amounts provided for in the Agreement.
The Commission promises to pay interest on the unpaid principal amount of such Reimbursement Obligations on the dates and at the rates provided for in the Agreement. All payments of principal and interest must be made in lawful money of the United States of America in immediately available funds. All capitalized terms used herein and not otherwise defined herein have the meanings specified in the Agreement.
This Bank Note is the Bank Note referred to in the Agreement and is entitled to the benefits thereof and of the other Basic Documents referred to therein. As provided in the Agreement, this Bank Note is subject to prepayme nt, in whole or in pa rt. In case an Event of Default occurs and is continuing, the principal of and accrued inte rest on this Bank Note may be declared due and payable in the manner and with the effect provided in the Agreement.
The Bank agrees, by acceptance of this Bank No te, that, before disposing of this Bank Note, it will make a notation on the schedule att ached hereto of all Re imbursement Obligations evidenced hereby and all principal payments and prepayments made hereunder and of the date to which interest hereon has been paid; provided, however , that the failure to make any such notation will not limit or otherwise affect the obligation of the Commission hereunder with respect to payments of principal of and interest on this Bank Note.
Notwithstanding any other provis ion hereof or of the Agr eement to the contrary, the obligations of the Commission hereunder are payable from the Available Power Enterprise Revenues. This Bank Note constitutes a valid a nd binding obligation of the Commission issued under the Issuing and Paying Agent Agreement and is secured by, and payable from, the Available Power Enterprise Revenues and from the procee ds of subsequent borrowings by the Commission, including but not limited to additional or rollover Commercial Paper Notes authorized thereunder.
A-2
The undersigned maker and all guarantors, endo rsers and pledgors that may exist at any time with respect hereto hereby waive presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Bank Note and assent to extensions of the time of payment or forbear ance or other indulgence without notice.
THIS BANK NOTE IS GOVERNED BY , AND TO BE CONSTRUED IN ACCORDANCE WITH , THE LAW OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PROVISIONS.
[SIGNATURE PAGE TO FOLLOW]
A-3
IN WITNESS WHEREOF, the Public Utilities Commission of the City and County of San Francisco has caused this Bank Note to be signed in its corporate name as an instrument under seal by its duly authorized officer on the date and in the year first above written.
PUBLIC UTILITIES COMMISSION OF THE CITY
AND COUNTY OF SAN FRANCISCO
B y :
Name: Harlan L. Kelly, Jr.
Title: General Manager
Approved as to Form:
DENNIS J. HERRERA
City Attorney of the City and
County of San Francisco
B y :
Name: Mark D. Blake
Title: Deputy City Attorney
Acknowledged:
Name: Nadia Sesay
Title: Director of Public Finance of the City
and County of San Francisco
A-4
TRANSACTIONS ON BANK NOTE
Date
Principal
Amount of
Reimbursement
Obligation
Amount of
Principal Paid
Date to
Which
Interest Paid
Notation
Made By
B-1
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate (this “Certificate”) is furnished to Bank of America, N.A. (the “Bank”) pursuant to the Reimbursement Agreem ent, dated as of December 1, 2015 (the “Agreement”), between the Public Utilities Commission of the City and County of San Francisco (the “Commission”) and Bank. Unless otherwise defined herein, the terms used in this Certificate have the meanings assigned thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am an Authorized Representative of the Commission;
2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed revi ew of the transactions and conditions of the Commission during the accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or the occurre nce of any event which c onstitutes a Default or Event of Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth below; and
4. To the best of my knowledge the financial statements required by Section 5.1(a) of the Agreement and being furnished to you concurrently with this certificate fairly represent the consolidated financial condition of the Commissi on in accordance with GAAP as of the date and for the period covered thereby.
Describe below the exceptions, if any, to pa ragraph 3 by listing, in detail, the nature of the condition or event, the pe riod during which it has exis ted and the action which the Commission has taken, is taking, or proposes to take with resp ect to each such condition or event:
The foregoing certifications and the financial stat ements delivered with this Certificate in support hereof, are made and delivered this __ day of ________, 20__.
PUBLIC UTILITIES COMMISSION OF THE CITY
AND COUNTY OF SAN FRANCISCO
B y :
N a m e :
Title:
C-1
EXHIBIT C
2015 LIST OF CITY HOLIDAYS
(INCLUDING DAYS CITY IS OFFICIALLY CLOSED)
New Year’s Day - Thursday, January 1, 2015
Dr. Martin Luther King, Jr. Day - Monday, January 19, 2015
President’s Day - Monday, February 16, 2015
Memorial Day - Monday, May 25, 2015
Independence Day - Saturday, July 4, 2015
Labor Day - Monday, September 7, 2015
Columbus Day - Monday, October 12, 2015
Veterans Day - Wednesday, November 11, 2015
Thanksgiving Day and the Day After - Thursday, November 26, 2014 & Friday, November 27, 2015
Christmas Day - Friday, December 25, 2015
D-2
EXHIBIT D
CITY REQUIREMENTS
(a) Tropical Hardwood and Virgin Redwood Ban . The City urges contractors not to import, purchase, obtain, or use for any purpose, any tropi cal hardwood, tropical hardwood wood product, virgin redwood or virgin redwood wood product. (b) Nondiscrimination: Penalties.
(i) Bank Shall Not Discriminate. In the performance of this Agreement, the Bank agrees not to discriminate against any employee, City and County employee working with the Bank or subcontractor, applicant for em ployment with the Bank or subcontractor, or against any person seeking accommodations, advant ages, facilities, privileges, services, or membership in all business, social, or other establishments or organizations, on the basis of the fact or perception of a person’s race, color, creed, religi on, national origi n, ancestry, age, height, weight, sex, sexual orie ntation, gender identity, domestic partner status, marital status, disability or Acquired Immune Deficiency Synd rome or HIV status, or association with members of such protected classes, or in re taliation for opposition to discrimination against such classes.
(ii) Subcontracts. The Bank shall incorporate by reference in all subcontracts made in fulfillment of its obligations hereunder the provisions of Sections 12B.2(a), 12B.2(c)-(k) and 12C.3 of the San Francisco Administrative Code and shall require all subcontractors to comply with su ch provisions. The Bank’s failure to comply with the obligations in this subsection shall constitute a material breach of this Agreement. (iii) Non-Discrimination in Benefits . The Bank does not as of the date of this Agreement and will not during the term of this Agreement, in any of its operations in San Francisco, on real property ow ned by San Francisco, or where work is being performed for the City elsewhere in the United States, discri minate in the provision of bereavement leave, family medical leave, health benefits, membership or membership discounts, moving expenses, pension and retirement bene fits or travel benefits, as we ll as any benefits other than the benefits specified above, between employees with domestic partners and employees with spouses, and/or between the do mestic partners and spouses of such employees, where the domestic partnership has been registered with a governmental entity pursuant to state or local law authorizing such registration, subject to the conditions set fo rth in Section 12B.2(b) of the San Francisco Administrative Code.
(iv) HRC Form . The Bank shall execute the “Chapter 12B Declaration:
Nondiscrimination in Contracts and Benefits ” form (Form HRC-12B-101) with supporting documentation and secure the approval of th e form by the San Francisco Human Rights Commission.
(v) Incorporation of Administrative C ode Provisions by Reference. The provisions of Chapters 12B and 12C of the San Francisc o Administrative Code are incorporated in this Section by reference and made a part of this Agreement as though fully set D-3
forth herein. The Bank shall comply fully with and be bound by all of the provisions that apply to this Agreement under such Chapters of th e San Francisco Administ rative Code, including but not limited to the remedies provided in such Chapters. Without limiting the foregoing, the Bank understands that pursuant to Section 12B.2(h) of the San Francisco Administrative Code, a penalty of $50 for each person for each calendar day during which such person was discriminated against in violation of the provisions of this Agreement may be assessed against the Bank and/or deducted from any payments due the Bank; provided, however, that such damages shall not be set off ag ainst the payment of rental or other contract related to Commercial Paper Notes or other debt obligations of the City. (c) Limitations on Contributions . Through execution of this Agreement, the Bank acknowledges that it is familiar with Section 1.126 of the City’s Campaign and Governmental Conduct Code, which prohibits any person w ho contracts with the City, including the Commission, for the rendition of personal services, for the furnishing of any material, supplies or equipment, for the sale or lease of any land or building, or for a grant, loan or loan guarantee, from making any campaign contribu tion to (A) an individual holding a City elective office if the contract must be approv ed by the individual, a board on which that individual serves, or a board on which an appoin tee of that individual serves, (B) a candidate for the office held by such individual, or (C) a committee controlled by such individual, at any time from the commencement of negotiations for the contract until the later of either the termination of negotiations for su ch contract or six months af ter the date the contract is approved. The Bank acknowledges that the foregoing restriction applies onl y if the contract or combination or series of cont racts approved by the same individual or board in a fiscal year have a total anticipated or actual value of $50,000 or more. The Bank further acknowledges that the prohibition on contributions applies to each prospective party to the contract; each member of the Bank’s board of directors; th e Bank’s chairperson, chief executive officer, chief financial officer and chie f operating officer; any person with an ownership interest of more than 20 percent in the Bank; any subcontractor listed in the bid or contract; and any committee that is sponsored or controll ed by the Bank. Additionally, the Bank acknowledges that the Bank must inform each of the persons described in the preceding sentence of the prohibitions contained in Section 1.126 of the City’s Campaign and Governmental Conduct Code.
(d) MacBride Principles Northern Ireland . Pursuant to San Francisco Administrative Code Section 12F.5, the City urges companies doing business in Northern Ireland to move towards resolving employment in equities, and encourages such companies to abide by the MacBride Principles. The City ur ges San Francisco companies to do business with corporations that abide by the MacBri de Principles. By sign ing below, the person executing this Agreement on behalf of the Bank acknowledges and agrees that he or she has read and understood this section.
(e) Conflict of Interest. Through its execution of this Agreement, the Bank hereby acknowledges that it is familiar with the provision of Section 15.103 of the City’s Charter, Article III, Chapter 2 of City’s Campaign and Governmental Conduct Code, and Section 87100
et seq. and Section 1090 et seq. of the Government C ode of the State of California, and certifies that it does not know of any facts which constitutes a violation of said provisions and agrees that it will immediately notify the City if it becomes aware of any such fact during the term of this Agreement.
D-4
(f) Earned Income Credit (“EIC”) Forms . San Francisco Administrative Code section 12O requires that employers provide their employees with IRS Form W-5 (The Earned Income Credit Advance Payment Certificate) and the IRS EIC Schedule, as set forth below.
Employers can locate these forms at the IRS Office, on the Internet, or anywhere that Federal Tax Forms can be found.
(i) The Bank shall provide EIC Forms to each Eligible Employee at each of the following times: (A) within thirty da ys following the date on which this Agreement becomes effective (unless the Bank has already provided such EIC Forms at least once during the calendar year in which such effective da te falls); (B) promptly after any Eligible Employee is hired by the Bank; and (C) annually between January 1 and January 31 of each calendar year during the term of this Agreement.
(ii) Failure to comply with any requir ement contained in the immediately preceding paragraph shall constitute a material breach by the Bank of the terms of this Agreement. If, within thirty days after the Bank receives written notice of such a breach, the Bank fails to cure such breach or, if such br each cannot reasonably be cured within such period of thirty days, the Bank fails to commen ce efforts to cure within such period or thereafter fails to diligently pursue such cure to completion, the City may pursue any rights or remedies available under this Agreement or under applicable law. (iii) Any subcontract entered into by the Bank shall require the subcontractor to comply, as to the subcontractor’s Eligible Employees, with each of the terms of this Section.
(iv) Capitalized terms used in this Section and not defined in this Agreement shall have the meanings assigned to such terms in Section 12O of the San Francisco Administrative Code.
(g) Local Business Enterprise Utilization; Liquidated Damages. (i) The LBE Ordinance. The Bank shall comply with all the requirements of the Disadvantaged Business Enterprise Ordi nance set forth in Chapter 14B of the San Francisco Administrative Code as it now exists or as it may be amended in the future (collectively the “LBE Ordinance”), provided such amendments do not materially increase the Bank’s obligations or liabiliti es, or materially diminish the Bank’s right s, under this Agreement. Such provisions of the LBE Ordina nce are incorporated by reference and made a part of this Agreement as though fully set forth in this section. The Bank ’s willful failure to comply with any applicable provisions of the LBE Ordinance is a material breach of the Bank’s obligations under this Agreement and sh all entitle City, subject to any applicable notice and cure provisions set forth in this Agreement, to exercise any of the remedies provided for under this Agreement, under the LBE Ordinance or otherwise available at law or in equity, which remedies shall be cumulative unless this Agreement expressly provides that any remedy is exclusive. In a ddition, the Bank shall comply fu lly with all other applicable local, state and federal laws prohibiting disc rimination and requiring equal opportunity in contracting, including subcontracting.
D-5
(ii) Compliance and Enforcement. If the Bank willfully fails to comply with any of the provisions of the LBE Ordinance, the rules and regulations implementing the LBE Ordinance, or the provisions of this Agreement pertaining to LBE participation, the Bank shall be liable for liquidated damages in an amount equal to the Bank’s net profit on this Agreement, or 10% of the total amount of th is Agreement, or $1,000, wh ichever is greatest.
The Director of the City’s Human Rights Commission or any other public official authorized to enforce the LBE Ordinance (separ ately and collectively, the “Director of HRC”) may also impose other sanctions against the Bank authorized in the LBE Ordinance, including declaring the Bank to be irresponsible and ineligib le to contract with th e City for a period of up to five years or revocation of the Bank’ s LBE certification. The Director of HRC will determine the sanctions to be imposed, includi ng the amount of liquidated damages, after investigation pursuant to the San Francisco Administrative Code Section 14B.17.
By entering into this Agreement, th e Bank acknowledges and agrees that any liquidated damages assessed by the Director of the HRC sh all be payable to City upon demand. The Bank further acknowledges and agr ees that any liquidated damages assessed may be withheld from any monies due to the Bank on any contract with City.
The Bank agrees to maintain records necessary for monitoring its compliance with the LBE Ordinance for a period of three years following termina tion or expiration of this Agreement, and shall make such records availa ble for audit and inspection by the Director of HRC or the Controller upon request.
(h) Drug-Free Workplace Policy . The Bank acknowledges that pursuant to the Federal Drug-Free Workplace Act of 1989, th e unlawful manufact ure, distribution, dispensation, possession, or use of a controlled substance is prohibited on Commission or City premises. The Bank agrees that any violation of this prohibition by the Bank, its employees, agents or assigns will be deemed a material breach of this Agreement. (i) Compliance with Americans with Disabilities Act . The Bank acknowledges that, pursuant to the Americans with Disabilitie s Act (“ADA”), programs, services and other activities provided by a public entity to the public , whether directly or through a contractor, must be accessible to the disabled public. The Ba nk shall provide the services specified in this Agreement in a manner that comp lies with the ADA and any and all other applicable federal, state and local disability right s legislation. The Bank agrees not to discriminate against disabled persons in the provisi on of services, benefits or activities provided under this Agreement and further agrees that any violation of this prohibition on the part of the Bank, its employees, agents or assigns will constitute a material breach of this Agreement. (j) Sunshine Ordinance . In accordance with San Francisco Administrative Code Section 67.24(e), contracts, contractors’ bids, responses to solicitations and all other records of communications between the Commission or the C ity and persons or firm s seeking contracts, shall be open to inspection immediately after a contract has been awarded. Nothing in this provision requires the disclosure of a private person or organization’ s net worth or other proprietary financial data submitted for qualification for a contract or other benefit until and unless that person or organizati on is awarded the contract or benefit. Information provided which is covered by this paragraph will be made available to the public upon request.
D-6
(k) Requiring Minimum Compensation for Covered Employees. (i) The Bank agrees to comply fully with and be bound by all of the provisions of the Minimum Comp ensation Ordinance (“MCO”), as set forth in San Francisco Administrative Code Chapter 12P (“Chapter 12P”), including the remedies provided, and implementing guidelines and rules. The provisions of Chapter 12P are incorporated herein by reference and made a part of th is Agreement as though fully set forth. The text of the MCO is available on the web at www.sfgov.org/olse/mc o. A partial listing of some of the Bank’s obligations under the MCO is set forth in this Section. The Bank is required to comply with all the provisions of the MCO, irrespective of this listing of obligations in this Section. (ii) The MCO requires the Bank to pay the Bank’s employees a minimum hourly gross compensa tion wage rate and to provide minimum compensated and uncompensated time off. The minimum wage rate may change from year to year and the Bank is obligated to keep informed of the then-current requirements . Any subcontract entered into by the Bank shall require the subcontractor to comply with the requirements of the MCO and shall contain contractual obligations substantially the same as those set fort h in this Section. It is the Bank’s obligation to ensure that any subcontractors of any tie r under this Agreement comply with the requirements of the MCO. If any subcontra ctor under this Agreement fails to comply, City may pursue any of the remedies set forth in this Section against the Bank. (iii) The Bank shall not take adverse ac tion or otherwise discriminate against an employee or other pers on for the exercise or attempted exercise of rights under the MCO. Such actions, if taken within 90 days of the exercise or attempted exercise of such rights, will be rebuttably presumed to be retaliation prohibited by the MCO. (iv) The Bank shall maintain employee a nd payroll records as required by the MCO. If the Bank fails to do so, it shall be presumed that the Bank paid no more than the minimum wage required under State law.
(v) The City is authorized to insp ect the Bank’s job sites and conduct interviews with employees and conduct audits of the Bank. (vi) The Bank’s commitment to provid e the Minimum Compensation is a material element of the City’s consideration for this Agreement. The City in its sole discretion shall determine whether such a brea ch has occurred. The City and the public will suffer actual damage that will be impractical or extremely difficult to determine if the Bank fails to comply with these requirements. The Bank agrees that the sums set forth in Section 12P.6.1 of the MCO as liquidated damages are not a penalty, but are re asonable estimates of the loss that the City and the public will incu r for the Bank’s noncompliance. The procedures governing the assessment of liquidated damages sh all be those set forth in Section 12P.6.2 of Chapter 12P.
(vii) The Bank understands and agrees that if it fails to comply with the requirements of the MCO, the City shall have the right to pursue any rights or remedies available under Chapter 12P (inc luding liquidated damages), unde r the terms of the contract, and under applicable law. If, within 30 days after receiving wr itten notice of a breach of this Agreement for violating the MCO, the Bank fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days , the Bank fails to commence efforts to cure D-7
within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue any rights or remedies available under applicable law, including those set forth in Se ction 12P.6(c) of Chapter 12P. Each of these remedies shall be exercisable individually or in combination with any other rights or reme dies available to the City.
(viii) The Bank represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the MCO. (ix) The City may conduct random audits of the Bank. Random audits shall be (A) noticed in advance in writing; (B) lim ited to ascertaining whet her Covered Employees are paid at least the minimum compensation required by the MCO; (C) accomplished through an examination of pertinent r ecords at a mutually agreed u pon time and location within ten days of the written notice; and (D) limited to one audit of the Bank every two years for the duration of this Agreement. Nothing in this Ag reement is intended to preclude the City from investigating any report of an alleged violation of the MCO. (l) Requiring Health Benefits for Covered Employees . Unless exempt, the Bank agrees to comply fully with and be bound by all of the provisions of the Health Care Accountability Ordinance (“HCAO”), as set fo rth in San Francisco Administrative Code Chapter 12Q, including the remedies provided , and implementing regulations, as the same may be amended from time to time. The provisi ons of Chapter 12Q are incorporated herein by reference and made a part of this Agreement as though fully set forth herein. The text of the HCAO is available on the we b at http://www.sfgov.org/lwlh.ht m. Capitalized terms used in this Section and not defined in this Agreem ent shall have the meanings assigned to such terms in Chapter 12Q.
(i) For each Covered Employee, the Bank shall provide the appropriate health benefit set forth in Sect ion 12Q.3 of the HCAO. If the Ba nk chooses to offer the health plan option, such health plan shall meet the minimum standards set forth by the San Francisco Health Commission.
(ii) Notwithstanding the above, if the Ba nk is a small business as defined in Section 12Q.3(d) of the HCAO, it shall have no obligation to comply with part (i) above. (iii) The Bank’s failure to comply with the HCAO shall constitute a material breach of this Agre ement. The City shall notify the Bank if such a breach has occurred. If, within 30 days after receiving City’s written notice of a breach of this Agreement for violating the HCAO, the Bank fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 da ys, the Bank fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, City shall have the right to pursue the remedies set fo rth in Section 12Q.5(f)(1-5). Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to City.
(iv) Any subcontract entered into by the Bank shall require the subcontractor to comply with the requirements of the HCAO and sha ll contain contractual D-8
obligations substantially the sa me as those set forth in this Section. The Bank shall notify City’s Office of Contract Administration when it enters into such a subcontract and shall certify to the Office of Contract Administration that it has notified th e subcontractor of the obligations under the HCAO and has imposed the requirements of the HCAO on subcontractor through the subcontract. The Bank shall be responsible for its subcontractors’ compliance with this Chapter. If a subcontractor fails to compl y, the City may pursue the remedies set forth in this Section against the Bank based on the subc ontractor’s failure to comply, provided that City has first provided the Bank with notice and an opportunity to obtain a cure of the violation.
(v) The Bank shall not discharge, redu ce in compensation, or otherwise discriminate against any employee for notifying City with regard to the Bank’s noncompliance or anticipated noncompliance with the requireme nts of the HCAO, for opposing any practice proscribed by the HCAO, for pa rticipating in proceedings related to the HCAO, or for seeking to assert or enforce any righ ts under the HCAO by any lawful means. (vi) The Bank represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the HCAO. (vii) The Bank shall maintain employee a nd payroll records in compliance with the California Labor Code and Industr ial Welfare Commission orders, including the number of hours each employee has worked on the City Contract. (viii) The Bank shall keep itself informed of the current requirements of the HCAO.
(ix) The Bank shall provide reports to the City in accordance with any reporting standards promulgated by the City under the HCAO, incl uding reports on subcontractors and subtenants, as applicable.
(x) The Bank shall provide City with access to records pertaining to compliance with HCAO after receiving a written request from City to do so and being provided at least ten business days to respond.
(xi) The Bank shall allow City to inspect the Bank’s job sites and have access to the Bank’s employees in order to monitor and determine compliance with HCAO. (xii) The City may conduct random audits of the Bank to ascertain its compliance with HCAO. The Bank agrees to co operate with City when it conducts such audits.
(xiii) If the Bank is exempt from the HCAO when this Agreement is executed because its amount is less than $25,000 ($50,000 for nonpr ofits), but the Bank later enters into an agreement or agreements th at cause the Bank’s aggregate amount of all agreements with City to reach $75,000, all the ag reements shall be thereafter subject to the D-9
HCAO. This obligation arises on the effective date of the agreement that causes the cumulative amount of agreements between the Bank and the City to be equal to or greater than $75,000 in the fiscal year.
(m) Prohibition on Political Ac tivity with City Funds . In accordance with San Francisco Administrative Code Chapter 12.G, th e Bank may not particip ate in, support, or attempt to influence any political campaign for a candidate or for a ballot measure (collectively, “Political Activity”) in the pe rformance of the servi ces provided under this Agreement. The Bank agrees to comply with San Francisco Administrative Code Chapter
12.G and any implementing rules and regulations promulgated by the City’s Controller. The terms and provisions of Chapter 12.G are incor porated herein by this reference. In the event the Bank violates the provi sions of this section, the City may, in addition to any other rights or remedies available hereunder, (i) terminate this Agreement, and (ii) prohibit the Bank from bidding on or receiving any new City contract for a period of two (2) years. The Controller will not consider the Bank’s use of profit as a violation of this section.
(n) Graffiti Removal. Graffiti is detrimental to the health, safety and welfare of the community in that it promotes a perception in the community that the laws protecting public and private property can be disregarded with impunity. This perception fosters a sense of disrespect of the law that results in an increase in crime; degrades the community and leads to urban blight; is detrimental to property valu es, business opportunities and the enjoyment of life; is inconsistent with the City’s property maintenance goals and ae sthetic standards; and results in additional graffiti and in other properti es becoming the target of graffiti unless it is quickly removed from public and private property. Graffiti results in visual pollution and is a public nuisance. Graffiti must be abated as quickly as possible to avoid detrimental impacts on the City and its residents, and to prevent the further spread of graffiti.
The Bank shall remove all graffiti from any real property owned or leased by such Bank in the City and County of San Francisco within forty eight (48) hours of the earlier of such Bank’s (i) discovery or notification of th e graffiti or (ii) receipt of notification of the graffiti from the Department of Public Works. This Section is not intended to require any Bank to breach any lease or other agreement that it may have concerni ng its use of the real property. The term “graffiti” means any inscription, word, figure, marking or design that is affixed, marked, etched, scratche d, drawn or painted on any build ing, structure, fixture or other improvement, whether permanent or te mporary, including by way of example only and without limitation, signs, banners, billboards a nd fencing surrounding construction sites, whether public or private, wit hout the consent of the owner of the property or the owner’s authorized agent, and which is visible from the public right-of-way. “Graffiti” shall not include: (A) any sign or banner that is author ized by, and in compliance with, the applicable requirements of the San Francisco Public Work s Code, the San Francisco Planning Code or the San Francisco Building Code ; or (B) any mural or other painting or marking on the property that is protected as a work of fi ne art under the California Art Preservation Act (California Civil Code Sections 987 et seq.) or as a work of visual art under the Federal Visual Artists Rights Act of 1990 (17 U.S.C. Section 101 et seq.).
Any failure of the Bank to comply with this Section of this Agreement shall constitute a material breach of this Agreement.
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(o) Food Service Waste Reduction Requirements. The Bank agrees to comply fully with and be bound by all of the provisio ns of the Food Service Waste Reduction Ordinance, as set forth in San Francisc o Environment Code Ch apter 16, including the remedies provided, and implementing guidelines a nd rules. The provisions of Chapter 16 are incorporated herein by reference and made a part of this Agreement as though fully set forth. This provision is a material term of this Agreement. By entering into this Agreement, the Bank agrees that if it breaches this provisi on, the City will suffer actual damages that will be impractical or extremely difficult to determine; further, the Bank agrees that the sum of one hundred dollars ($100) liquidated damages for the first breach, two hundred dollars ($200) liquidated damages for the second breach in the same year, and five hundred dollars ($500) liquidated damages for subsequent breaches in th e same year is reason able estimate of the damage that the City will incur based on the violation, established in light of the circumstances existing at the time this Agre ement was made. Such amount shall not be considered a penalty, but rather agreed moneta ry damages sustained by the City because of such Bank’s failure to comply with this provision.
(p) Preservative-treated Wood Containing Arsenic . The Bank may not purchase preservative-treated wood products containing arsenic in the pe rformance of this Agreement unless an exemption from the requirement s of Chapter 13 of the San Francisco Environment Code is obtained from the Department of the Environment under Section 1304 of the Code. The term “preservativ e-treated wood containing arseni c” shall mean wood treated with a preservative that contai ns arsenic, elemental arsenic, or an arsenic copper combination, including, but not limited to, chromated copper arsenate preservative, ammoniacal copper zinc arsenate preservative, or ammoniacal copper ar senate preservative. The Bank may purchase preservative-treated wood products on the list of environmentally preferable alternatives prepared and adopted by the Department of the Environment. This provision does not preclude the Bank from purchasing preservative-treated wood containing arsenic for saltwater immersion. The term “saltwater immersion” sha ll mean a pressure-treat ed wood that is used for construction purposes or facilities that are partially or totally immersed in saltwater. (q) Nondisclosure of Private Information . The Bank agrees to comply fully with and be bound by all of the provisions of Chapte r 12M of the San Francisco Administrative Code (the “Nondisclosure of Privat e information Ordinance” ), including the remedies provided. The provisions of the Nondisclosure of Private Information Ordinance are incorporated herein by referen ce and made a part of this Ag reement as though fully set forth.
Capitalized terms used in this section and not defined in this Agreement shall have the meanings assigned to such terms in the Nond isclosure of Private In formation Ordinance.
Consistent with the requirements of the Nondisc losure of Private Information Ordinance, the Bank agrees to all of the following:
(i) Neither the Bank nor any of its Subc ontractors shall disclose Private Information obtained from the City in the pe rformance of this Agreement to any other Subcontractor, person, or other entity, unless one of the following is true:
(1) the disclosure is authorized by this Agreement;
D-11
(2) the Bank received advance wr itten approval from the Contracting Department to disclose the information; or
(3) the disclosure is required by law or judicial order. (ii) Any disclosure or use of Privat e Information aut horized by this Agreement shall be in accordance with any conditions or restrictions stated in this Agreement.
Any disclosure or use of Private Information au thorized by a Contracting Department shall be in accordance with any conditions or restrictions stated in the approval.
(iii) Private Information shall mean any in formation that: (1) could be used to identify an individual, includ ing without limitation, name, addr ess, social security number, medical information, financial information, date and location of birth, a nd names of relatives; or (2) the law forbids any person from disclosing.
(iv) Any failure of the Bark to comply with the Nondisclo sure of Private Information Ordinance shall be a material breach of this Agreem ent. In such an event, in addition to any other remedies available to it un der equity or law, the City may terminate this Agreement, debar the Bank, or bring a false claim action against the Bank. (r) Proprietary or Confidential Information of City . The Bank agrees to maintain the confidentiality of the Informati on (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and othe r advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedi es hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participan t in, or any prospective assignee of or Participant in, any of its righ ts or obligations under this Ag reement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the City and its obligations, (g) with the cons ent of the City or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Bank on a nonc onfidential basis from a source other than the City. For the purposes of this Section, “Information” means all information received from the City relating to the City or its business, other th an any such information that is available to the Bank on a nonconfidential basis prio r to disclosure by the City; provided that, in the case of information received from the City after th e date hereof, such information is clearly identified at the time of delivery as confid ential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has ex ercised the same degree of care to maintain the confidentiality of such Information as su ch Person would accord to its own confidential information.
D-12
(s) Submitting False Claims; Monetary Penalties . Pursuant to San Francisco Administrative Code Section 21.35, any contractor, subcontractor or consultant who submits a false claim shall be liable to the City for th ree times the amount of damages which the City sustains because of the false claim. A contract or, subcontractor or consultant who submits a false claim shall also be liable to the City for the costs, including attorneys’ fees, of a civil action brought to recover any of those penalties or damages, and may be liable to the City for a civil penalty of up to $10,000 for each false clai m. A contractor, subcontractor or consultant will be deemed to have submitted a false claim to the City if the contractor, subcontractor or consultant: (i) knowingly presents or causes to be presented to an officer or employee of the City a false claim or request for payment or appr oval; (ii) knowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the City; (iii) conspires to defraud the City by getting a false claim allowed or paid by the City; (iv) knowingly makes, uses, or causes to be made or used a false reco rd or statement to conceal, avoid, or decrease an obligation to pay or transm it money or property to the City; or (v) is a beneficiary of an inadvertent submission of a false claim to the City, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the City within a reasonable time after discovery of the false claim.
(t) Subcontracting. Except as otherwise provided in this Agreement, the Bank is prohibited from subcontracting this Agreement or any part of it unless such subcontracting is first approved by City in writing. Neither party shall, on the basis of this Agreement, contract on behalf of or in th e name of the other party. An agreement made in violation of this provision shall confer no rights on any party and shall be null and void. (u) Non-Waiver of Rights . The omission by either party at any time to enforce any default or right reserved to it, or to require performance of any of the terms, covenants, or provisions hereof by the other part y at the time designated, shall not be a waiver of any such default or right to which the party is entitled, nor shall it in any way affect the right of the party to enforce such provisions thereafter.
(v) City a Third Party Beneficiary. The City is hereby designated as a third party beneficiary for the purpose of enforcing all of the obligations of the Bank contained in this Exhibit D to this Agreement.
E-1
EXHIBIT E
LIST OF QUALIFIED DEALERS
ALAMO CAPITAL
BACKSTROM MCCARLEY BERRY & CO., LLC
BANK OF AMERICA MERRILL LYNCH
BARCLAYS CAPITAL INC.
BLAYLOCK BEAL VAN, LLC
CASTLEOAK SECURITIES, L.P.
CITIGROUP INC.
FIDELITY CAPITAL MARKETS
GOLDMAN SACHS & CO.
HUTCHINSON, SHOCKEY, ERLEY & CO.
JANNEY MONTGOMERY SCOTT
JEFFERIES LLC
JP MORGAN SECURITIES LLC
LOOP CAPITAL MARKETS LLC
MESIROW FINANCIAL, INC.
MITSUBISHI UFJ SECURITIES (USA), INC.
MORGAN STANLEY & CO. LLC
PIPER JAFFRAY & CO.
RBC CAPITAL MARKETS, LLC
SIEBERT BRANDFORD SHANK & CO., LLC
STERN BROTHERS & CO.
STIFEL NICOLAUS & COMPANY
STINSON SECURITIES, LLC
U.S. BANCORP INVESTMENTS, INC.
WELLS FARGO SECURITIES LLC
WILLIAM BLAIR & COMPANY, L.L.C.
4897-9257-9443.5
NP DRAFT 11/22
THIRD AMENDMENT TO
REIMBURSEMENT AGREEMENT
BY AND BETWEEN
PUBLIC UTILITIES COMMISSION
OF THE CITY AND COUNTY OF SAN FRANCISCO
AND
BANK OF AMERICA, N.A.
DATED AS OF JANUARY [__], 2026
4897-9257-9443.5
THIRD AMENDMENT TO
REIMBURSEMENT AGREEMENT
This THIRD AMENDMENT to REIMBURSEMENT AGREEMENT , dated as of January [__], 2026 (this “ Third Amendment ”), is by and between the PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “ Commission”) and BANK OF AMERICA, N.A. (the “ Bank”). Terms used herein with initial capital letters and not otherwise defined shall have the respective meanings attributed thereto in the Agreement (as defined below).
RECITALS
WHEREAS, the Commission and the Bank have previously entered into the Reimbursement Agreement, dated as of December 1, 2015 (the “ Original Agreement”), and a Fee Agreement, dated December 1, 2015 (the “ 2015 Fee Agreement ”), pursuant to which the Bank previously agreed to provide support for the payment of and interest on the Commission’s Commercial Paper Notes (Power Series), Series A-1 (Tax-Exempt) (the “Notes”) by issuing a letter of credit (the “2015 Letter of Credit”); and
WHEREAS, on June 5, 2018, the voters of the City and County of San Francisco (the “City”) approved Proposition A, which among other things, authorized the Commission to issue revenue bonds, including notes, commercial paper or other forms of indebtedness, when authorized by ordinance approved by a two-thirds vote of the Board of Supervisors of the City for the purpose of reconstructing, replacing, expanding, repairing or improving power facilities under the jurisdiction of the Commission; and
WHEREAS, on March 1, 2019, the Commission a nd the Bank (i) entered into that certain First Amendment to Reimbursement Agreement, dated as of March 1, 2019 (the “ First Amendment”), pursuant to which the Stated Expiration Date was extended from April 1, 2019 to March 7, 2022, (ii) made certain additional amendm ents to the Original Agreement, including increasing the Stated Amount from $97,989,042 to $136,095,891, (iii) issued a new letter of credit (the “New Letter of Credit”) which replaced the 2015 Letter of Credit to increase the Stated Amount from $97,989,042 to $136,095,891 and extended the Stated Expiration Date, (iv) executed a new Bank Note to reflect the increase in the Stated Amount, and (v) executed a new fee agreement (replacing the 2015 Fee Agreement) to document certain pricing changes (the “ 2019 Fee Agreement”); and
WHEREAS, on February 23, 2022, the Commission and the Bank (i) entered into that certain Second Amendment to Reimbursement Agreement, dated as of February 23, 2022 (the “ Second Amendment,” and together with the Original Agreement and the First Amendment, the “ Amended Agreement”), pursuant to which the Stated Expiration Date was extended from March 7, 2022 to March 6, 2026, (ii) made certain additional amendm ents to the Original Agreement, and (iii) executed a new amended and restated fee agreement (replacing the 2019 Fee Agreement) to document certain pricing changes (the “2022 Fee Agreement”); and WHEREAS, the Commission and the Bank now desire to, among other things, (i) extend the Stated Expiration Date from March 6, 2026 to [March __, 2030], pursuant to this Third Amendment, and (ii) execute an amended and restated fee agreement to document certain pricing changes, which 4897-9257-9443.5
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will amend and restate in full, the 2022 Fee Agreement (the “ Amended and Restated Fee Agreement”); and
NOW, THEREFORE, in consideration of the foregoing, the premises and mutual covenants contained herein and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I. INTENTION OF PARTIES, AGREEMENT PROVISIONS.
The Commission and the Bank have entered into this Third Amendment pursuant to Section 2.12 and Section 7.1 of the Amended Agreement, and have entered into the Amended and Restated Fee Agreement to, among other things, exte nd the Stated Expiration Date and change other terms set forth in the Amended Agreement to, among other things, extend the Stated Expiration Date and amend other terms set forth in the Amended Agreement, to reflect the delivery of the Amended and Restated Fee Agreement to replace the 2022 Fee Agreement. The terms of the Amended Agreement, as amended by this Third Amendment (as so amended, the “ Agreement”), shall govern the rights and obligations of the Commission, and the Bank in connection with the transactions contemplated by the Agreement.
ARTICLE II. AMENDMENTS. The Amended Agreement is hereby amended as follows:
(a) All references in the Amended Agreement to “U.S. Bank National Association” are hereby deleted and replaced with “U.S. Bank Trust Company, National Association”. (b) The definition of “Fee Agreement” in Section 1.1 of the Amended Agreement is hereby amended by deleting it in its entirety and replacing it with the following:
“ ‘Amended and Restated Fee Agreement’ means that certain Amended and Restated Fee Agreement dated the Third Amendment Effective Date, between the Commission and the Bank, as amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof and thereof.” (c) The definition of “Program Size” in Section 1.1 of the Amended Agreement is hereby amended by deleting it in its entirety and replacing it with the following:
“ ‘Program Size’ means $125,000,000.”
(d) The definition of “Reduction Amount” in Section 1.1 of the Amended Agreement is hereby deleted.
(e) There is hereby added to Section 1.1 of the Amended Agreement each of the following definitions, each of which is to be situated alphabetically:
“ ‘Third Amendment’ means that certain Third Amendment to the Reimbursement Agreement, dated as of January [__], 2026, between the Commission and the Bank.”
“ ‘Third Amendment Effective Date’ means January [__], 2026.” 4897-9257-9443.5
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(f) Section 2.18(c) (“Reduction in Program Size”) of the Amended Agreement is hereby deleted in its entirety and replaced with the following: “Reserved.” (g) Section 7.2(b) of the Agreement is hereby amended by deleting the information regarding the Bank “In the case of communications to the Bank with respect to drawings under the Letter of Credit” and replacing it with the following:
Bank of America, N.A.
333 S. Hope Street, 38th Floor
Los Angeles, California 90071
Attention: Jyoti Rathore
Telephone: (213) 621-4971
Email: [email protected]
(h) The “City Requirements” set forth in Exhibit C of the Amended Agreement are hereby deleted in their entirety and replaced with the “City Requirements” set forth in Exhibit B hereto.
(i) The “List of Qualified Dealers” set forth in Exhibit E of the Amended Agreement is hereby deleted in its entirety and replaced with the “List of Qualified Dealers” set forth in Exhibit C hereto.
(j) Section 7.2(a) of the Amended Agreement is deleted in its entirety and replaced with the following:
“if to the Commission:
City and County of San Francisco
Public Utilities Commission
Attention: Chief Financial Officer
525 Golden Gate Avenue, 13th Floor
San Francisco, California 94102
Telephone: (415) 554-3155
Facsimile: (415) 554-3161
with copies to (as it relates to notices and invoices):
City and County of San Francisco
Public Utilities Commission
Attention: Capital Finance Director
525 Golden Gate Avenue, 4th Floor
San Francisco, California 94102
[email protected]”
4897-9257-9443.5
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ARTICLE III. CONDITIONS TO DELIVERY OF THIS THIRD AMENDMENT.
The amendments to the Amended Agreement provided for in Article II hereof shall become effective on the Third Amendment Effective Date; provided that each of the following conditions shall be fulfilled to the satisfaction of the Bank:
(a) Documentation:
(i) Executed counterparts of this Third Amendment and the Amended and Restated Fee Agreement, each signed by the Commission and the Bank; (ii) The Commission shall have paid or made arrangements for payment of all costs and expenses incurred by the Bank in connection with this transaction, including without limitation reasonable attorney’s fees; provided, that the Commission shall pay the Bank’s attorney’s fees (which shall not exceed $10,000) no later than 30 days following its receipt of an invoice from such counsel; and
(iii) All other legal matters pertaining to the execution and delivery of this Third Amendment and the Amended and Restated Fee Agreement shall be satisfactory to the Bank and the execution and delivery hereof by the Bank shall constitute conclusive evidence that all such legal matters have been completed to the satisfaction of the Bank.
(b) Amendment of the Letter of Credit. No later than the Third Amendment Effective Date, the Bank shall execute and deliver to the Issuing and Paying Agent a certificate in the form of Annex E to the Letter of Credit (a form of which is attached hereto as Exhibit A) extending the Stated Expiration Date to [March __, 2030].
(c) Representations and Warranties True.
(i) The representations and warranties of the Commission contained in Article 4 of the Amended Agreement and in this Third Amendment shall be true and correct with the same effect as though made on and as of the Third Amendment Effective Date, except to the extent a representation or warranty relates specifically to an earlier date (in which case, such representation and warranty shall be true and correct as of such date) and except that the representations in Section 4.6 of the Amended Agreement refers to the Commission’s June 30, 2025 financial statements (instead of the 2021 financial statements) which has been previously provided to the Bank and the word nationally shall hereinafter be deemed to have been deleted from Section 4.6.
(ii) In addition to the foregoing representations, the Commission hereby represents and warrants as follows:
(A) The execution, delivery and performance by the Commission of this Third Amendment and the Amended and Restated Fee Agreement are within its powers, have been duly authorized by all necessary actions and do 4897-9257-9443.5
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not contravene any law or any contractual restriction binding on the Commission;
(B) No further authorization, approval or other action by, and no notice or filing, is required for the due execution, delivery and performance by the Commission of this Third Amendment and the Amended and Restated Fee Agreement that has not been received as of the Third Amendment Effective Date; and
(C) The Commission has provided, or will cause to have
provided, written notice of this Third Amendment to the Issuing and Paying Agent, the Dealers and the Rating Agencies.
(d) Absence of Certain Events. (i) On or prior to the Third Amendment Effective Date, there shall not have occurred any material adverse change in the affairs, condition and/or operations, financial or otherwise, of the Commission since the date of the Commission’s fiscal year ended 2025 audited financial statements; (ii) on or prior to the Third Amendment Effective Date, no change shall have occurred in any law, rule or regulation or in any interpretation thereof that, in the opinion of the Bank, would make it illegal for the Bank to execute and deliver this Third Amendment and the Amended and Restated Fee Agreement; and (iii) no event has occurred which constitutes an Event of Default under the Amended Agreement.
(e) Bank Representations and Acknowledgements. (i) The Bank hereby represents that, as of the Third Amendment Effective Date, it has no knowledge of any Change in Law that would result in increased costs; and (ii) the Bank here by acknowledges that the Commission is executing a Third Amendment to Reimbursement Agreement, dated as of January [__], 2026, as may be amended, supplemented, modified and restated from time to time, in accordance with the provisions thereof, together with the Amended and Restated Fee Agreement, dated February 23, 2022, between the Commission and the Bank, as may be amended, supplemented, modified and restated from time to time, and any similar document entered into with respect to an Alternate Facility supporting the Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Power Series), Series A-2 (the “Series A-2 Notes”).
ARTICLE IV. MISCELLANEOUS.
(a) The parties hereto acknowledge and confirm that, from and after the Third Amendment Effective Date, any reference in the Amended Agreement or in the other Basic Documents to the “Agreement” shall mean and refer to the Amended Agreement as amended hereby. (b) Except as provided herein, the Amended Agreement shall remain in full force and effect and unaffected hereby except, as set forth herein, from and after the Third Amendment Effective Date.
(c) This Third Amendment and the Amended Agreement, as amended hereby, shall be subject to Section 7.14 of the Agreement. In case any one or more of the provisions contained herein should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired hereby. 4897-9257-9443.5
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(d) This Third Amendment may be executed in one or more counterparts, each of which taken together shall constitute one original and all of which shall constitute one and the same instrument.
(e) The parties agree that the electronic signature of a party to this Third Amendment shall be as valid as an original signature of such party and shall be effective to bind such party to this Third Amendment. The parties agree that any electronically signed document (including this Third Amendment) shall be deemed (i) to be “written” or “in writing,” (ii) to have been signed and (iii) to constitute a record established and maintained in the ordinary course of business and an original written record when printed from electronic files. Su ch paper copies or “printouts,” if introduced as evidence in any judicial, arbitral, mediation or administrative proceeding, will be admissible as between the parties to the same extent and under the same conditions as other original business records created and maintained in documentary form. Neither party shall contest the admissibility of true and accurate copies of electronically signed documents on the basis of the best evidence rule or as not satisfying the business records exception to the hearsay rule. For purposes hereof, “electronic signature” means a manually-signed original signatu re that is then transmitted by electronic means; “transmitted by electronic means” means sent in the fo rm of a facsimile or sent via the internet as a “pdf’ (portable document format) or other replicating image attached to an e-mail message; and, “electronically signed document” means a document transmitted by electronic means and containing, or to which there is affixed, an electronic signature.
[Remainder of page intentionally left blank; signature pages to follow.] 4897-9257-9443.5
[Signature page to Third Amendment to Reimbursement Agreement]
IN WITNESS WHEREOF, the parties have duly executed this Third Amendment as of the day and year first above written.
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By:
Name: Dennis J. Herrera
Title: General Manager
APPROVED AS TO FORM:
DAVID CHIU
City Attorney of the City and
County of San Francisco
By: ____________________________
Name: Katherine Thursby Ortega
Title: Deputy City Attorney
ACKNOWLEDGED:
By: ____________________________
Name: Anna Van Degna
Title: Director of Public Finance of the City
and County of San Francisco
BANK OF AMERICA, N.A.
By: __________________________________
Name: Jyoti Rathore
Title: Senior Vice President
4897-9257-9443.5
A-1
Exhibit A
FORM OF ANNEX E
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT NO. 68122730
NOTICE OF EXTENSION
January [__], 2026
U.S. Bank N.A.
Global Corporate Trust
100 Wall Street
Suite 600/Ex-NY-Wall
New York, New York 10005
Attention: Beverly A. Freeney, Vice President -Relationship Manager Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferab le Letter of Credit No. 68122730 dated March 7, 2019 (as amended, the “ Letter of Credit ”), established by us in your favor as Beneficiary. We hereby notify you that , in accordance with the terms of the Letter of Credit, the Stated Expiration Date (as defined in the Letter of Credit) has been extended to [
March __, 2030].
This letter shall be attached to the Letter of Credit and made a part thereof.
BANK OF AMERICA, N.A.
By:
Name:
Title:
4897-9257-9443.5
EXHIBIT B
CITY REQUIREMENTS
Laws Incorporated by Reference . The full text of the laws listed in this Exhibit, including enforcement and penalty provisions, are incorporated by reference into this Agreement. The full text of the San Francisco Munici pal Code provisions incorporated by reference in this Exhibit and elsewhere in the Agreement (“Mandatory City Requirements”) are available at http://www.amlegal.com/codes/client/san-francisco_ca/.
Conflict of Interest . By executing this Agreement, Bank ce rtifies that it does not know of any fact which constitutes a violation of Section 15.103 of the City’s Ch arter; Article III, Chapter 2 of City’s Campaign and Governmental Conduct Code; Title 9, Chapter 7 of the California Government Code (Section 87100 et seq .); or Title 1, Division 4, Ch apter 1, Article 4 of the California Government Code (Section 1090 et seq.), and further agrees promptly to notify City if it becomes aware of any such fact during the term of this Agreement.
Prohibition on Use of Public Funds for Political Activity . In performing the Services, Bank shall comply with San Franci sco Administrative Code Chapte r 12G, which prohibits funds appropriated by City for this Agreement from being expended to partic ipate in, support, or attempt to influence any political campaign for a candidate or for a ballot measure. Bank is subject to the enforcement and penalty provisions in Chapter 12G.
Limitations on Contributions . By executing this Agreement, Bank acknowledges its obligations under Section 1.126 of the City’s Campaign and Governmental Conduct Code, which prohibits any person who contracts with, or is seeking a contract with, any department of City for the rendition of personal services, for the furnishing of any material, supplies or equipment, for the sale or lease of any land or building, for a gran t, loan or loan guarantee, or for a development agreement, from making any campa ign contribution to (i) a City el ected official if the contract must be approved by that official, a board on which that official serves, or the board of a state agency on which an appointee of that official serv es; (ii) a candidate for that City elective office; or (iii) a committee controlled by su ch elected official or a candidate for that office, at any time from the submission of a proposal fo r the contract until the later of either the termination of negotiations for such contract or twelve (12) months afte r the date City approves the contract. The prohibition on contributions applies to each prospective party to the contract; each member of Bank’s board of directors; Bank’s chairperson, chief executive officer, chief financial officer and chief operating officer; any person w ith an ownership interest of more than ten percent (10%) in Bank; any subcontractor listed in the bid or contract; and any committee that is sponsored or controlled by Bank. Bank certifies that it has informed each such person of the limitation on contributions impos ed by Section 1.126 by the time it submitted a proposal for the contract, and has provided the na mes of the persons required to be informed to the City department with whom it is contracting.
4897-9257-9443.5
Tropical Hardwood and Virgin Redwood Ban . Pursuant to San Francisco Environment Code Section 804(b), City urges Bank not to import, purchase, obtain, or use for any purpose, any tropical hardwood, tropical ha rdwood wood product, virgin re dwood or virgin redwood wood product.
MacBride Principles – Northern Ireland . The provisions of San Francisco Administrative Code Chapter12F are incorporated herein by this reference and made part of this Agreement. By signing this Agreement, Bank confirms that Bank has read and understood that City urges companies doing business in Northern Ireland to resolve employment inequities and to abide by the MacBride Principles, and urges San Francisc o companies to do busine ss with corporations that abide by the MacBride Principles.
4897-9257-9443.5
EXHIBIT C
LIST OF QUALIFIED DEALERS
BANK OF AMERICA MERRILL LYNCH
BARCLAY’S CAPITAL INC.
GOLDMAN SACHS & CO. LLC
J.P. MORGAN SECURITIES LLC
JEFFERIES LLC
LOOP CAPITAL MARKETS LLC
MORGAN STANLEY & CO. LLC
PIPER SANDLER & CO.
RAMIREZ & CO. (SAMUEL A. RAMIREZ & CO., INC.)
RBC CAPITAL MARKETS, LLC
SIEBERT WILLIAMS SHANK & CO., LLC
STIFEL NICOLAS & COMPANY, INC.
TD SECURITIES (USA) LLC
U.S. BANCORP INVESTMENTS, INC. U.S. BANK MUNICIPAL PRODUCTS GROUP (A DIVISION OF U.S. BANK NATIONAL ASSOCIATION)
WELLS FARGO BANK, N.A.
4902-6542-1939.4
NP DRAFT 11/22
AMENDED AND RESTATED FEE AGREEMENT
January [__], 2026
Public Utilities Commission of the City
and County of San Francisco
525 Golden Gate Avenue
San Francisco, CA 94102
Ladies and Gentlemen:
Reference is hereby made to that certain Reimbursement Agreement , dated as of December 1, 2015, as amended by that certain First Amendment to Reimbursement Agreement , dated as of March 1, 2019, as amended by that certain Second Amendment to Reimbursement Agreement, dated as of February 23, 2022, and as further amended by th at certain Third Amendment to Reimbursement Agreement , dated as of January [__], 2026 (as may be further amended, supplemented, restated or otherwise modified from time to time, the “ Agreement”), between the Public Utilities Commission of the City and County of San Francisco (the “Commission”) and Bank of America, N.A. (the “Bank”), relating to the Commission’s Commercial Paper Notes (Power Series), Series A -1 (Tax -Exempt). Capitalized terms not otherwise defined herein shall have the meanings set forth in the Agreement.
The purpose of this Amended and Restated Fee Agreement is to amend and restate in full the Amended and Restated Fee Agreement , dated February 23, 2022, between the Bank and the Commission (the “2022 Fee Agreement”), and to confirm the agreement between the Bank and the Commission with respect to the Commitment Fees (as defined below) and certain other fees payable by the Commission to the Bank. This Amended and Restated Fee Agreement is the Fee Agreement referenced in the Agreement, and the terms hereof are incorporated by reference into the Agreement. For the avoidance of doubt, this Amended and Restated Fee Agreement replaces in its entirety that certain 2022 Fee Agreement, dated February 23, 2022, between the Bank and the Commission, and the parties hereby agree and confirm that such fee letter is no longer in force and effect (other than as a reference as noted in Paragraph 1 herein) . In connection therewith, the Bank confirms that it has agreed to not charge any amendment fee as set forth in the 2022 Fee Agreement, dated February 23, 2022.
In order to induce the Bank to enter into the Agreement, the Commission agrees to make the following payments to the Bank at the following times:
(1) A commitment fee (the “Commitment Fee”) which shall be determined on a daily basis by multiplying (a) the Stated Amount at 5:00 p.m., Eastern time, on each day, by (b) the applicable Commitment Fee Rate (as defined below) in effect for such day, expressed as a decimal, and by (c) a fraction equa l to 1/360. As used herein, “Commitment Fee Rate” means, initially,
0.33%, provided that in the event that any Rating (as defined below) is downgraded below “AA-” by S&P or below “AA-” by Fitch to a level included in the grid below, the Commitment Fee Rate shall be equal to the per annum percentage set forth in the grid below, expressed as a decimal, opposite the level that contains the lowest Rating (it being understood that Level 1 contains the highest Ratings and Level 5 contains the lowest Ratings):
4902-6542-1939.4
- 2 -
LEVEL S&P RATING FITCH RATING COMMITMENT FEE RATE
Level 1: AA- or above AA- or above 0.33%
Level 2: A+ A+ 0.43%
Level 3: A A 0.63%
Level 4: A- A- 0.83%
Level 5: BBB+ and Below BBB+ and Below 2.33%
As used herein, the “Rating” means, with respect to S&P or Fitch, the lowest long -term, unenhanced rating assigned by such Rating Agency to any Bonds. Notwithstanding the foregoing, (a) in the event that the Rating is withdrawn, suspended or otherwise unavailable from S&P or Fitch for credit related reasons and/or (b) upon the occurrence and during the continuance of an Event of Default, the Commitment Fee Rate shall be increased in both cases by 1.50% per annum from the Commitment Fee Rate in effect immediately prior thereto. Any change in the Commitment Fee Rate resulting from a change in the Rating shall be and become effective as of and on the date of the announcement of the change in the Rating. References to the Rating above is a reference to the ratin g category of S&P and Fitch as presently determined by S&P and Fitch and in the event of adoption of any new or changed rating system by S&P or Fitch, the Ratings from S&P or Fitch, as applicable, shall be deemed to refer to the rating category under the n ew rating system which most closely approximates the applicable rating category as currently in effect.
In connection with the Commitment Fees payable pursuant to this Section 1.1 for any fee period, the Bank hereby agrees to use its best efforts to deliver an invoice to the Commission for such Commitment Fees at least thirty (30) days in advance of the paym ent due date; provided, however, that the failure to provide any such invoice shall not limit or otherwise affect the obligation of the Commission to pay such Commitment Fees when due.
The Commitment Fee shall be payable in immediately available funds semiannually in arrears commencing on the first Business Day of July 2026; provided, however, that in connection with the payment due on the first Business Day of July 2026, the Commitment Fee shall be computed as follows: (X) at a rate equal to 0.3 1% per annum for the period from and including January 1, 2026 to but not including the Third Amendment Effective Date (subject to any adjustments as set forth in the 2022 Fee Agreement), and (Y) at a rate equal to 0.33 % per annum for the period from and including the Third Amendment Effective Date through and including June 30, 2026; and, thereafter, on the first Business Day of January and July to the Stated Expiration Date, and on the Stated Expiration Date, in all cases, covering the period from the date of the immediately preceding payment to such Business Day. The Bank’s determination of the Commitment Fee pursuant hereto shall be conclusive absent manifest error. (2) A fee of $250 plus the Bank’s customary wire transfer and courier costs in respect of each drawing made under the Letter of Credit and honored by the Bank, which fee, wire transfer and courier cost shall be earned on the date such drawing is honored by the Bank and, unless paid to the Bank at the time each Drawing is reimbursed, shall be paid in arrears on the first Business Day of January that occurs after the date such drawing is honored by the Bank. 4902-6542-1939.4
- 3 -
(3) A transfer fee equal to $3,000 upon each transfer of the Letter of Credit in accordance with its terms. A transfer shall be deemed to have occurred whenever the Issuing and Paying Agent is replaced, substituted or changed as a result of sale, assignment, merger, consolidation, reorganization or an act of law. A transfer shall not be deemed to have occurred solely as a result of a change in the legal name of the Issuing and Paying Agent. (4) At the time any amendment, modification, waiver, supplement or restatement of or consent sought in respect of, the Agreement, the Basic Documents and any other documents delivered under the Agreement is sought by any person other than the Bank, a fee of $3,000 plus attorneys’ fees and expenses, which fee shall be earned and payable whether or not any such amendment, modification, waiver, supplement or restatement is executed or consent granted. Fees for complex amendments, modifications, waivers, supplements, restatements or consents shall be negotiated on a case-by-case basis.
All amounts paid pursuant to this Amended and Restated Fee Agreement shall be non - refundable and payable in immediately available funds. Computations of the Commitment Fee shall be made on the basis of a 360 -day year and actual days elapsed. All amounts paid pursuant to this Amended and Restated Fee Agreement shall be paid in the manner and to the account set forth in the Agreement.
This Amended and Restated Fee Agreement may not be amended or waived except by an instrument in writing signed by the Bank and the Commission.
The provisions of Section 7.14 of the Agreement shall be incorporated by this reference into this Amended and Restated Fee Agreement as if such provisions were set forth in their entirety except that references to “this Agreement” shall mean this Amended and Restated Fee Agreement and references to “hereunder” or “hereof’ shall mean under this Amended and Restated Fee Agreement or of this Amended and Restated Fee Agreement.
This Amended and Restated Fee Agreement may be executed in any number of counterparts, each of which shall be an original, and all of which, when taken together, shall constitute one agreement. Delivery of an executed signature page of this Amended and Restated Fee Agreement by electronic transmission shall be effective as delivery of a manually executed counterpart hereof.
This Amended and Restated Fee Agreement is delivered to the Commission on the understanding that neither this Amended and Restated Fee Agreement nor any of its terms shall be disclosed, directly or indirectly, to any financial institution other than the Issuing and Paying Agent unless such disclosure is made to such financial institution in accordance with the terms of the California Public Records Act.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]
4902-6542-1939.4
[Signature Page to Amended and Restated Fee Agreement CP Notes Series A-1 (Power Series)]
IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Fee Agreement to be duly executed and delivered by their respective officers thereunto duly authorized on the date first set forth above.
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By:
Name: Dennis J. Herrera
Title: General Manager
BANK OF AMERICA, N.A.
By:
Name: Jyoti Rathore
Title: Senior Vice President
4886-4749-3705,9
REIMBURSEMENT AGREEMENT
Dated as of March 1, 2023,
between
PUBLIC UTILITIES COMMISSION OF
THE CITY AND COUNTY OF SAN FRANCISCO
and
BANK OF AMERICA, N.A.
relating to:
$125,000,000
PUBLIC UTILITIES COMMISSION
OF THE CITY AND COUNTY OF SAN FRANCISCO
COMMERCIAL PAPER NOTES
(POWER SERIES)
SERIES A-2
Table of Contents
Page
ARTICLE 1 DEFINITIONS ........................................................................................................... 3 Section I. 1 Definitions ........................................................................................................... 3 ARTICLE 2 LETTER OF CREDIT ............................................................................................. 15 Section 2.1
Section 2.2
Section 2.3
Section 2.4
Section 2.5
Section 2.6
Section 2.7
Section 2.8
Section 2.9
Section 2.10
Section 2.11
Issuance of Letter of Credit ............................................................................... 15 Letter of Credit Drawings ................................................................................. 15 Reimbursement .................................................................................................. 15 Advances; Term Loans ...................................................................................... 15 Fees .................................................................................................................... 18 The Bank Note .................................................................................................. 18 Termination of Letter of Credit; Reduction of Stated Amount ......................... 18 Computation oflnterest and Fees ...................................................................... 18 Payment Due on Non-Business Day to Be Made on Next Business Day ......... 19 Default Rate ....................................................................................................... 19 Source of Funds ................................................................................................. 19 Section 2.12 Extension of Stated Expiration Date ................................................................. 19 Section 2.13 Taxes ................................................................................................................. 19 Section 2.14 Increased Costs .................................................................................................. 21 Section 2.15 Margin Regulations ........................................................................................... 22 Section 2.16 Maximum Rate; Payment of Fee ....................................................................... 22 Section 2.17 Security of Obligations ...................................................................................... 23 Section 2.18 Commercial Paper Operations ........................................................................... 23 Section 2.19 Method of Payment; Etc .................................................................................... 24 ARTICLE 3 CONDITIONS PRECEDENT ................................................................................. 24 Section 3.1 Conditions Precedent to Effectiveness .............................................................. 24 ARTICLE 4 REPRESENTATIONS AND WARRANTIES ........................................................ 27 Section 4.1
Section 4.2
Section 4.3
Section 4.4
Section 4.5
Section 4.6
Section 4.7
Section 4.8
Section 4.9
Section 4.10
Section 4.11
Section 4.12
Section 4.13
Section 4.14
Section 4.15
4886-4749-3705,9
Organization, Powers, Etc ................................................................................. 27 Authorization, Absence of Conflicts, Etc .......................................................... 27 Binding Obligations; Security for Bank Note ................................................... 27 Governmental Consent or Approval ................................................................. 28 Absence of Material Litigation ......................................................................... 28 Financial Condition ........................................................................................... 28 Incorporation of Representations and Warranties ............................................. 29 Accuracy and Completeness oflnformation ..................................................... 29 No Default ......................................................................................................... 29 No Proposed Legal Changes ............................................................................. 29 Compliance with Laws, Etc .............................................................................. 30 Environmental Matters ...................................................................................... 30 Tax Status oflnterest on Series A-2 Notes ....................................................... 30 Issuing and Paying Agent; Dealers ................................................................... 30 Regulation U ..................................................................................................... 30 Table of Contents ( continued)
Page
Section 4.16 Liens .................................................................................................................. 30 Section 4.17 Sovereign Inununity .......................................................................................... 31 Section 4.18 City Business Days ............................................................................................ 31 Section 4.19 Usury ................................................................................................................. 31 Section 4.20 Insurance ........................................................................................................... 31 Section 4.21 ERISA ............................................................................................................... 31 Section 4.22 Sanctions Concerns and Anti-Corruption Laws ................................................ 31 Section 4.23 Swap Contracts .................................................................................................. 31 ARTICLE 5 COVENANTS ......................................................................................................... 32 Section 5. I Affirmative Covenants ...................................................................................... 32 Section 5 .2 Negative Covenants ........................................................................................... 39 ARTICLE 6 DEF AUL TS ............................................................................................................. 44 Section 6.1 Events of Default and Remedies ....................................................................... 44 Section 6.2 Remedies ........................................................................................................... 46 ARTICLE 7 MISCELLANEOUS ................................................................................................ 47 Section 7.1
Section 7.2
Section 7.3
Section 7.4
Section 7.5
Section 7.6
Section 7.7
Section 7.8
Section 7.9
Section 7 .10
Section 7 .11
Section 7.12
Section 7.13
Section 7.14
Section 7.15
Section 7 .16
Section 7 .1 7
Section 7 .18
Section 7 .19
Section 7 .20
4886-4749-3705.9
Amendments, Waivers, Etc ............................................................................... 47 Notices ............................................................................................................... 47 Survival of Covenants; Successors and Assigns ............................................... 48 Unconditional Obligations ................................................................................ 49 Liability of Bank; Indemnification .................................................................... 50 Expenses ............................................................................................................ 51 No Waiver; Conflict .......................................................................................... 51 Modification, Amendment, Waiver, Etc ........................................................... 51 Dealing with the Conunission, the Issuing and Paying Agent and/or the Dealer 51 Severability ........................................................................................................ 51 Counterparts ...................................................................................................... 52 Table of Contents; Headings ............................................................................. 52 Entire Agreement .............................................................................................. 52 Governing Law Waiver of Jury Trial ................................................................ 52 Governmental Regulations ................................................................................ 53 USA PA TRI OT Act .......................................................................................... 53 Electronic Transmissions .................................................................................. 53 Assignment to Federal Reserve Bank ............................................................... 53 City Requirements ............................................................................................. 54 Ann's Length Transaction ................................................................................. 54 11 Table of Contents ( continued)
Appendix I - Form of Letter of Credit
Exhibit A - Form of Bank Note
Exhibit B - Form of Compliance Certificate
Exhibit C - 2023 List of City Holidays
Exhibit D - City Requirements
Exhibit E - List of Qualified Dealers
4886-4749-3705.9 iii
Page
This REIMBURSEMENT AGREEMENT, dated as of March 1, 2023 (together with any amendments or supplements hereto, this "Agreement"), is between the
PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (together with its successors and assigns, the "Commission") and BANK OF AMERICA, N.A. (together with its successors and assigns, the "Bank").
WITNESSETH:
WHEREAS, pursuant to Sections 4.112 and Article SB of the Charter of the City and County of San Francisco (the "Charter"), the Commission has exclusive charge of the construction, management, supervision, maintenance, extension, operation, use and control of all water and energy supplies and utilities of the City under the Commission's jurisdiction, including the hereinafter defined Power Enterprise; and
WHEREAS, Pursuant to Article V of Chapter 43 ("Article V") of the San Francisco Administrative Code (the "City's Administrative Code"), enacted by Ordinance No. 203-98, adopted by the Board of Supervisors (the "Board") of the City and County of San Francisco (the "City") on June 8, 1998, and signed by the Mayor of the City (the "Mayor") on June 19, 1998 ("Ordinance No. 203-98"), as amended by Ordinance No. 270-06, adopted by the Board on October 24, 2006, and signed by the Mayor on October 31, 2006 ("Ordinance No. 270-06" and, together with Ordinance No. 203 98, the "Ordinances"), the Board established a procedure pursnant to which the Commission may issue short-term indebtedness, including the issuance and reissuance of commercial paper notes in anticipation of the issuance of revenue bonds; and WHEREAS, On June 5, 2018, the voters of the City approved Proposition A ("Proposition A"), which among other things, amended Section SB.124 of the Charter of the City and County of San Francisco (the "Charter") to authorize the Commission to issue indebtedness, including revenue bonds, notes, commercial paper or other forms of indebtedness, for the benefit of the Power Enterprise, when authorized by ordinance approved by a two-thirds vote of the Board, or for any other lawful purpose of the power facilities of the City in furtherance of the purposes specified in Charter Section SB. I 24, provided that the Commission is prohibited from financing the construction of power plants that generate electricity using fossil fuels or nuclear energy under Proposition A; and
WHEREAS, pursuant to Section 9.107(6) of the Charter, the Board of Supervisors of the City (the "Board") is authorized to provide for the issuance of revenue bonds, without voter approval, issued for the purpose of the reconstruction or replacement of existing water facilities and/or electric power facilities under the jurisdiction of the Commission when authorized by resolution adopted by a three-fourths majority of all of the members of the Board; and WHEREAS, pursuant to Section 9.107(8) of the Charter, the Board is also authorized to provide for the issuance of revenue bonds, without voter approval, issued to finance or refinance the acquisition, construction, installation, equipping, improvement or rehabilitation of equipment or facilities for renewable energy and energy conservation; and WHEREAS, pursuant to Section 43.5.2 of the Administrative Code of the City, following Board approval of the issuance of revenue bonds by the Commission pursuant to Section 9.107 of the Charter, the Commission may incur short-term indebtedness in the form of commercial 4886-4749-3705.9
paper, temporary notes or other forms of indebtedness as long as such short-term indebtedness is incurred in anticipation of the issuance of such revenue bonds; and WHEREAS, the Commission deems it necessary and desirable and in the public interest to authorize the issuance of commercial paper notes in anticipation of the issuance of revenue bonds, payable from and secured by the revenues of the Power Enterprise, after the payment of operating and maintenance expenses and any required deposits for repairs and replacements to the Power Enterprise, under and in accordance with Section 9 .107, 9 .109 and 9 .111 of the Charter and pursuant to the terms and conditions set forth herein, for any lawful purposes of the Power Enterprise, which commercial paper notes and the interest thereon shall constitute a subordinate lien and charge on the revenues provided for the payment thereof; and WHEREAS, the Commission has previously authorized, pursuant to Resolution No. 15- 0183 adopted by the Commission on September 8, 2015, the establishment of the Power Enterprise Commercial Paper Program (the "Power Enterprise CP Program") and the issuance of up to $90 million in aggregate principal amount of commercial paper notes outstanding at any one time; and
WHEREAS, pursuant to Article V, the Ordinances and Resolution No. 427-15, adopted by the Board on November 17, 2015, and signed by the Mayor on November 25, 2015, the Board has previously authorized the establishment of the Power Enterprise CP Program and the issuance of up to $90 million in aggregate principal amount of commercial paper notes outstanding at any one time against authorizations for indebtedness under Article V and Sections 9.107(6) and 9.107(8) of the Charter, to provide additional interim financing of capital improvements and related costs for improvements, betterments and additions to the Power Enterprise; and
WHEREAS, on November 13, 2018, the Commission approved Resolution No. 18-0188 to authorize an increase in the principal amount of the Power CP Program to an amount not-to exceed $250 million of commercial paper notes outstanding at any one time from a principal amount of not-to-exceed $90 million of commercial paper notes outstanding at any one time pursuant to the provisions of (i) Article V of the City's Administrative Code; (ii) Sections
9.107(6) and 9.107(8) of the Charter, and (iii) Section 8B.124 of the Charter; and WHEREAS, the Board has approved pursuant to Ordinance No. 2-19, adopted by the Board on January 15, 2019, and signed by the Mayor on January 18, 2019, an ordinance to authorize, an increase in the Power CP Program to an amount not-to-exceed $250 million of commercial paper notes (collectively, the "CP Notes") outstanding at any one time, from a principal amount of not-to-exceed $90 million of commercial paper notes outstanding at any one time pursuant to the provisions of (i) Article V of the City's Administrative Code; (ii) Sections
9.107(6) and 9.107(8) of the Charter, and (iii) Section 8B.124 of the Charter; and WHEREAS, in connection with the Power CP Program, and in order to provide liquidity for the payment of the Commission's maturing CP Notes (Power Series) Series A-2 (Tax Exempt) (the "Series A-2 Notes"), the Commission has previously authorized, executed and delivered a letter of credit (the "Prior Letter of Credit") and a Reimbursement Agreement, dated as of March 1, 2019, between the Commission and Sumitomo Mitsui Banking Corporation, acting through its New York Branch ("SMBC'), and a First Amended and Restated 4886-4749-3705.9 -2-
Issuing and Paying Agent Agreement, dated as of March I, 2019 (the "Original Issuing and Paying Agent Agreement"), by and between the Commission and U.S. Bank Trust Company, National Association, (as successor in interest to U.S. Bank, National Association); and WHEREAS, the SMBC Letter of Credit will terminate by its terms on March 7, 2023; and
WHEREAS, the Commission has requested the Bank issue a letter of credit in the original stated amount of $136,095,891 (representing an amount supporting Series A-2 Notes in an aggregate principal amount of $ I 25,000,000 plus an amount equal to 270 days interest on such principal amount at the rate per annum of twelve percent (12%) computed on the basis of a 365-day year (and rounded up to the nearest dollar)) for the payment by the Issuing and Paying Agent, when and as due, of the principal of and interest on the Series A-2 Notes; and WHEREAS, the Bank is willing to issue such letter of credit upon the terms and conditions provided herein.
NOW THEREFORE, in consideration of the premises and the mutual agreements herein contained, the Commission and the Bank agree as follows:
Section I.I
ARTICLE 1
DEFINITIONS
Definitions. As used in this Agreement:
"Acceleration Notice" has the meaning set forth in Section 6.2 hereof "Advance" has the meaning set forth in Section 2.4(a) hereof. "Agreement" has the meaning set forth in the introductory paragraph hereof. "Alternate Facility" has the meaning set forth in the Issuing and Paying Agent Agreement.
"Annual Budget" means the budget or budgets prepared by the Commission m substantially the form that has been previously presented to the Bank. "Annual Debt Service" has the meaning set forth in the Master Trust Indenture. "Applicable Law" means (i) all applicable common law and principles of equity and (ii) all applicable provisions of all (A) constitutions, statutes, rules, regulations and orders of all governmental and non-governmental bodies, (B) Governmental Approvals and (C) orders, decisions, judgments and decrees of all courts (whether at law or in equity) and arbitrators. "Authorized Representative" means each of the General Manager of the San Francisco Utilities Commission, Assistant General Manager and Chief Financial Officer, Business Services, Deputy Chief Financial Officer, Financial Services, Utility Specialist, Financial Plarming, Controller of the City and County of San Francisco, Director of Finance, Capital 4886-4749-3705.9 - 3 -
Finance Director, and any other individual designated from time to time as a "Designated Representative" a certificate executed by the General Manager of the San Francisco Public Utilities Commission delivered to the Bank.
"Available Funds" means any unencumbered amounts, including non-appropriated fund balances and reserves, and cash and the book value of investments held by the Treasurer of the City for the Power Enterprise, that the Commission reasonably expects would be available, as of any date of calculation, to pay principal ( or in the case of any capital appreciation bond, the accreted value thereof) of and interest on Bonds when due. "Available Power Enterprise Revenues" has the meaning set forth in the Issuing and Paying Agent Agreement.
"Bank" has the meaning set forth in the introductory paragraph hereof. ''Bank Agreement" means any credit agreement, liquidity agreement, standby bond purchase agreement, reimbursement agreement, direct purchase agreement, bond purchase agreement, or other agreement or instrument ( or any amendment, supplement or other modification thereof) under which, directly or indirectly, any Person or Persons undertake(s) to make or provide funds to make payment of, or to purchase or provide credit enhancement for, bonds or notes of the Commission secured by or payable from Revenues (but excluding Reserve Account Credit Facility).
"Bank Note" has the meaning set forth in Section 2.6 hereof. "Bank Rate" means, subject to the terms of Section 2.16 hereof, a rate of interest per annum with respect to an Advance or Term Loan, as applicable, (i) for any day commencing on the date such Advance is made up to and including the ninetieth (90th) day succeeding the date such Advance is made, equal to the Base Rate from time to time in effect and (ii) for any day commencing on the ninety-first (91st) day succeeding the date such Advance is made and thereafter, equal to the Base Rate from time to time in effect plus one percent (1.00%); provided, further, however, that immediately and automatically npon the occurrence of an Event of Default (and without any notice given with respect thereto) and during the continuance of such Event of Default, "Bank Rate" will mean the Default Rate; and provided, further, that at no time shall the Bank Rate be less than the highest rate on any outstanding Series A-2 Notes. "Base Rate" means, for any day, the rate of interest per annum equal to the highest of:
(i) the Prime Rate plus one percent (1 %), (ii) the Federal Funds Rate plus two percent (2%), and (iii) seven percent (7%). Each determination of the Base Rate by the Bank shall be conclusive and binding on the Commission absent manifest error. Each change in the Base Rate will take effect simultaneously with the corresponding change or changes in the Prime Rate or the Federal Funds Rate, as the case may be.
"Basic Documents" means, at any time, each of the following documents and agreements as in effect or as outstanding, as the case may be, at such time: (a) the Notes, (b) the Resolution, ( c) Ordinance, ( d) the Offering Memorandum, ( e) the Dealer Agreements, (f) the Issuing and Paying Agent Agreement, (g) the Bank Note, (h) the Fee Agreement and (i) this Agreement and any and all future renewals and extensions or restatements of, or amendments or supplements to, any of the foregoing.
4886-4749-3705.9 -4-
"BHC Act Affiliate" of a party means an "affiliate" (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 184l(k)) of such party. "Board" has the meaning set forth in the recitals hereof. "Bond Coverage Ratio" for any Fiscal Year means the ratio of(a) Net Revenues in such Fiscal Year to (b) Annual Debt Service on the Outstanding Bonds in such Fiscal Year. "Bonds" has the meaning set forth in the Master Trust Indenture. "Bond Counsel" has the meaning set forth in the Issuing and Paying Agent Agreement. "Business Day" has the same meaning set forth in the Letter of Credit. "Certificate" of the Commission means a written certificate signed by a duly authorized officer or employee of the Commission.
"Change in Law" means the occurrence, after the Closing Date, of any of the following:
(a) the adoption or taking effect of any Law, including, without limitation any Risk-Based Capital Guidelines, (b) any change in any Law or in the administration, interpretation, implementation or application thereof by any Govermnental Authority or ( c) the making or issuance of any request, rule, ruling, guideline, regulation or directive (whether or not having the force of law) by any Govermnental Authority; provided that, notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, rulings, guidelines, regulations or directives thereunder or issued in connection therewith and (ii) all requests, rules, rulings, guidelines, regulations or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision ( or any successor or similar authority) or the United States or foreign regulatory authorities shall in each case be deemed to be a "Change in Law", regardless of the date enacted, adopted or issued. "Charter" has the meaning set forth in the recitals hereof. "City" has the meaning set forth in the recitals hereof. "Closing Date" means the date on which the Letter of Credit is issued, which, subject to the satisfaction of the conditions precedent set forth in Section 3 .1 hereof, is expected to be March 6, 2023.
"Code" means the Internal Revenue Code of I 986, as amended from time to time, including regulations, rulings and judicial decisions promulgated thereunder. "Commission" has the meaning set forth in the introductory paragraph hereof. "Consulting Engineer" has the meaning set forth in the Master Trust Indenture. "Covered Entity" means any of the following: (i) a "covered entity" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a "covered bank" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a 4886-4749-3705.9 - 5 -
"covered FSI" as that term 1s defined m, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
"Dealers" means the dealer or dealers selected from time to time by the Commission (and acceptable to the Bank) to market the Series A-2 Notes pursuant to the terms of any applicable Dealer Agreement and any permitted assigns and successors thereto. "Dealer Agreement" means each dealer agreement by and between the Commission and a Dealer, in form and substance reasonably acceptable to the Bank, as such agreement may be amended and supplemented from time to time in accordance with the terms thereof and hereof. "Debt" of any Person means, at any date, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, ( c) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, ( d) all obligations of such Person as lessee under capital leases, ( e) all debt of others secured by a Lien on any asset of such Person, whether or not such debt is assumed by such Person, (f) all Guarantees by such Person of debt of other Persons, (g) all obligations of such Person under any Swap Contract and (h) all obligations of such Person to reimburse or repay any bank or other Person in respect of amounts paid or advanced under a letter of credit, credit agreement, liquidity facility or other instrument.
"Default" means any condition or event which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Default Rate" means, for any day, subject to the terms of Section 2.16 hereof, a per annum rate of interest equal to the sum of the Base Rate from time to time in effect plus four percent (4.00%).
"Default Right" has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable. "Designated Jurisdiction" means any country or territory to the extent that such country or territory itself is the subject of any Sanction.
"Drawing" has the meaning set forth in Section 2.3 hereof. "DTC" means The Depository Trust Company, New York, New York, and any successor securities depository.
"Employee Plan" means an employee benefit plan covered by Title IV of ERISA and maintained for employees of the Commission.
"Environmental Laws" means any and all federal, state and local statutes, laws, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges or releases of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes into the environment including, without limitation, ambient air, surface water, ground water or land, or otherwise relating to the 4886-4749-3705.9 - 6 -
processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes or the clean-up or other remediation thereof. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute thereto.
"Event of Default" has the meaning set forth in Section 6.1 hereof. "Excluded Taxes" means, with respect to the Bank or any Participant, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which the Bank or such Participant is organized or in which its principal office is located and (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which the Commission is located. "Federal Funds Rate" means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day;providedthat (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1 % ) charged to the Bank on such day on such transactions as determined by the Bank. Each determination of the Federal Funds Rate by the Bank shall be deemed conclusive and binding on the Commission absent manifest error.
"Fee Agreement" means that certain Fee Agreement dated the Closing Date, between the Commission and the Bank, as amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof and thereof. "Final Drawing Notice" has the meaning set forth in the Letter of Credit. "Fiscal Year" has the meaning set forth in the Master Trust Indenture. "Fitch" means Fitch Ratings, Inc. "GAAP" means generally accepted accounting principles in the United States of America from time to time as set forth in (a) the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and (b) statements and pronouncements of the Government Accounting Standards Board, as modified by the opinions, statements and pronouncements of any similar accounting body of comparable standing having authority over accounting by governmental entities. "Governmental Approval" means an authorization, consent, approval, license or exemption of, registration or filing with, or report to, any Governmental Authority. "Governmental Authority" means the government of the United States or any other nation or any political subdivision thereof or any governmental or quasi-governmental entity, including any court, department, commission, board, bureau, agency, administration, central bank, service, district or other instrumentality of any governmental entity or other entity 4886-4749-3705.9 - 7 -
exercising executive, legislative, judicial, taxing, regulatory, fiscal, monetary or administrative powers or functions of or pe1iaining to government, or any arbitrator, mediator or other Person with authority to bind a party at law.
"Guarantees" means, for any Person, all guarantees, endorsements ( other than for collection or deposit in the ordinary course of business) and other contingent obligations of such Person to purchase, to provide funds for payment, to supply funds to invest in any other Person or otherwise to assure a creditor of another Person against loss. "Hetch Hetchy Project" means the Hetch Hetchy Water and Power Project, including the O'Shaughnessy Dam, the Hetch Hetchy Reservoir, the Canyon and Mountain Tunnels, the Kirkwood, Moccasin and Holms Powerhouses, Cherry Lake and its dam, Lake Eleanor and its dam, the related water storage and transportation and hydro-electric generating facilities down to and including the Moccasin Powerhouse, all located in Yosemite National Park, Stanislaus National Forest and Tuolumne County, the rights to which were granted to the City by the Raker Act of 1913, and the related transmission facilities down to the City ofNewark. "Indemnified Taxes" means Taxes other than Excluded Taxes. "Insolvency Proceeding" means a receivership, insolvency, liquidation, resolution, or similar proceeding.
"Investment Policy and Guidelines" means the investment guidelines of the City as in effect on the date hereof, as such investment guidelines may be amended from time to time in accordance with the Issuing and Paying Agent Agreement, the Resolutions and State laws, as applicable.
"Issuing and Paying Agent" has the meaning set forth in the recitals to this Agreement. "Issuing and Paying Agent Agreement" has the meaning set forth in the recitals to this Agreement.
"Law" means any treaty or any Federal, regional, state and local law, statute, rule, ordinance, regulation, code, license, authorization, decision, injunction, interpretation, policy, guideline, supervisory standard, order or decree of any court or other Govermnental Authority. "Letter of Credit" means the irrevocable letter of credit issued by the Bank for the account of the Commission in favor of the Issuing and Paying Agent supporting the Series A-2 Notes, in the form of Appendix I hereto, with appropriate insertions, as amended. "Lien" means, with respect to any asset, (a) any lien, charge, claim, mortgage, security interest, pledge or assignment of revenues of any kind in respect of such asset or (b) the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.
"Master Trust Indenture" means the Trust Indenture, dated as of May 1, 2015, between the Commission and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as trustee for the holders from time to time of the Commission's power revenue bonds.
4886~4749-3 705.9 - 8 -
"Material Litigation" shall have the meaning assigned to such term in Section 4.5. "Maximum Rate" means the lesser of (a) the maximum non-usurious interest rate that may, under applicable federal law and applicable state law, be contracted for, charged or received under such laws and (b) 12% per annum; provided, however, that if the City or the Commission increases the maximum rate allowable, which cun-ently set forth in clause (b) of this "Maximum Rate" definition, at any time during the term hereof, then such increased rate shall be the Maximum Rate.
"Net Revenues" for any Fiscal Year ( or other designated twelve-month period) means Revenues in such Fiscal Year (or other designated twelve-month period), less (a) Operation and Maintenance Expenses, and (b) any Priority R&R Fund Deposit for such Fiscal Year ( or other designated twelve-month period).
"No-Issuance Notice" has the meaning set forth in the Letter of Credit. "Notes" means, collectively, the Series A-1 Notes and the Series A-2 Notes. "Obligations" means the Reimbursement Obligations (which includes amounts owing to the Bank evidenced by the Bank Note) and all other obligations of the Commission to the Bank arising under or in relation to this Agreement or the Fee Agreement. "Offering Memorandum" means any offering memorandum or similar disclosure document relating to the Series A-2 Notes, among others, and the Commission as may be prepared by or on behalf of the Commission or the Dealers from time to time in connection with the offering and sale of Series A-2 Notes.
"Operation and Maintenance Expenses" means the costs of the proper operation, maintenance and repair of the Power Enterprise and taxes, assessments or other governmental charges lawfully imposed on the Power Enterprise or the Revenues, or payments in lieu thereof, as determined in accordance with GAAP (as defined in the Master Trust Indenture). Operation and Maintenance Expenses shall include the payment of pension charges and proportionate payments to such compensation and other insurance or outside reserve funds as the Commission may establish or the Board may require with respect to employees of the Power Enterprise, as provided in Section 16.103(a) of the Charter. Operation and Maintenance Expenses shall also include repairs and maintenance costs that constitute operating expenses in accordance with GAAP (as defined in the Master Trust Indenture). Operation and Maintenance Expenses shall not include (a) any allowance for amortization, depreciation or obsolescence, (b) operation and maintenance expenses of the Water Enterprise, (c) operation and maintenance expenses of the Wastewater Enterprise, (d) operation and maintenance expenses of any Separate System, (e) any expense for which, or to the extent to which, the Commission is or will be paid or reimbursed from or by any source that is not included or includable as Revenues, ( e) losses from any sale or other disposition of Power Enterprise assets, and (g) non-cash losses and costs that may be required or permitted under GAAP (as defined in the Master Trust Indenture) to be expensed, including deferred expenses and unrealized mark-to-market losses. "Ordinance" has the meaning set forth in the recitals hereof. "Original Stated Amount" has the meaning set forth in Section 2.1 hereof. 4886-4749-3705.9 - 9 -
"Other Debt Documents" has the meaning set forth in Section 5.l(c)(i) hereof. "Other Taxes., means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Basic Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Basic Document. "Parity Debt" means the Series A-2 Notes, the Bank Note, the Series A-1 Notes, the Series A-1 Bank Note, and all obligations of the Commission relating to the Series A-2 Notes and the Series A-1 Notes under the Issuing and Paying Agent Agreement, this Agreement and the Series A-1 Reimbursement Agreement, and all other bonds, notes or other obligations of the Commission for borrowed money payable from and secured by a pledge of and lien and charge on revenues of the Power Enterprise on a parity with the lien on Available Power Enterprise Revenues securing the payment of the Series A-2 Notes or the Obligations. "Parity Notes" has the meaning set forth in the Issuing and Paying Agent Agreement. "Participant" has the meaning set forth in Section 7.3(b) hereof. "Participation" has the meaning set forth in Section 7.3(b) hereof. "Payment Account" means the payment account for the Bank set forth in Section 7 .2 hereof.
"Person" means an individual, a firm, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organization, including a goverrnnent or political subdivision or any agency or instrumentality thereof. "Power Enterprise" means the Commission's Power Enterprise established and existing as of the date of the Master Trust Indenture to provide electric power and related services to the City and its departments, agencies and commissions as well as other customers both in and outside of the City, including that portion of the Hetch Hetchy Project used for power generation, and all other power generation, transmission and distribution facilities and related facilities, streetlights, property and rights constituting a part of the Power Enterprise, together with any and all additions, improvements, betterments, renewals, replacements and repairs thereto and extensions thereof, but shall not include: (a) the Water Enterprise, (b) the Wastewater Enterprise, or (c) any Separate System.
"Power Enterprise Debt" means Debt of the Commission secured by Revenues, including, without limitation, Bonds, Series A-2 Notes and Parity Debt. "Prime Rate" means on any day, the rate of interest in effect for such day as publicly announced from time to time by the Bank as its "prime rate." The "prime rate" is a rate set by the Bank based upon various factors including the Bank's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by the Bank shall take effect at the opening of business on the day specified in the public announcement of such change.
4886-4749-3705.9
"Prior Letter of Credit" has the meaning set forth in the recitals to this Agreement. "Priority R&R Fund Deposits" means, for any Fiscal Year or other designated twelve month period, the amount, if any, required by the Charter to be deposited in the Reconstruction and Replacement Fund established pursuant to the Master Trust Indenture from Revenues prior to deposits in such Fiscal Year into the Bond Fund established pursuant to the Master Trust Indenture.
"Program Size" means $125,000,000 less the aggregate amount, if any, of all Reduction Amounts.
"Property" means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, whether now owned or hereafter acquired. "QFC' has the meaning assigned to the term "qualified financial contract" in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D). "Quarterly Date" means the first Business Day of each March, June, September or December.
"Qualified Counterparty" means a party other than the Commission which is the party to a Swap Agreement and, at the time of execution and delivery of the Swap Agreement, (a) (i) whose senior debt obligations are or claims-paying ability is rated in one of the three highest rating categories of each of at least two Rating Agencies ( without regard to any gradations within a rating category) or (ii) whose obligations under the Swap Agreement are guaranteed for the entire term of the Swap Agreement by a Person whose senior debt obligations are or claims-paying ability is rated in one of the three highest rating categories of each of at least two Rating Agencies (without regard to any gradations within a rating category) and (b) which is otherwise qualified to act as the party to a Swap Agreement with the Commission under any applicable law.
"Qualified Dealer" means, (i) RBC Capital Markets, LLC, (ii) Goldman, Sachs & Co., (iii) Barclays Capital Inc. and (iv) any other financial institution on the list set forth in Exhibit E hereto which financial institution ( or any parent or affiliate of such financial institution) has capital of not less than $500,000,000, and underlying ratings from S&P and Fitch of at least "A-" (or its equivalent) and "A-" (or its equivalent), respectively (unless, in each instance, the Bank in its discretion provides in writing an exception for a particular Dealer under specified circumstances), and (iv) at any time after the Closing Date, any other financial institution (or any parent or affiliate of such financial institution) with capital of not less than $500,000,000, and underlying ratings from S&P and Fitch of at least "A-" ( or its equivalent) and "A-" ( or its equivalent), respectively (unless, in each instance, the Bank in its sole discretion consents in writing to any other financial institution acting as a Dealer) approved in writing by the Bank, which approval shall not be unreasonably withheld or delayed. "Rating Agency" and "Rating Agencies" means, individually or collectively, as applicable, Fitch and S&P.
"Reduction Amount" has the meaning set forth in Section 2.18( c) hereof. 4886-4749-3705.9 - 11 -
"Refundable Credits" means amounts payable by the Federal government to the Commission under direct-pay subsidy programs substantially similar to the Build America Bond program under Section 54AA of the Code.
"Reimbursement Obligations" means any and all obligations of the Commission to reimburse the Bank for Drawings under the Letter of Credit and all obligations to repay the Bank any Advance or Term Loan, including in each instance all interest accrued thereon, which obligations are evidenced and secured by the Bank Note. "Reserve Account Credit Facility" has the meaning set forth m the Master Trust Indenture.
"Resolution" has the meaning set forth in the recitals hereof. "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 (as defined in the Master Trust Indenture).
Revenues shall include payments to the Power Enterprise on or with respect to loans from any Separate System maintained by the Commission. Revenues shall not include (a) proceeds from the issuance of any obligations for borrowed money, (b) amounts loaned to the Power Enterprise, ( 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, G) non-cash revenues or gains that may be required or permitted under GAAP (as defined in the Master Trust Indenture), 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 Enterprise, (1) 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, (n) 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 ( o) Wastewater Enterprise revenues as defined in the document or agreement governing the then-outstanding senior lien obligations of the Wastewater Enterprise for borrowed money. "Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in effect in the United States, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States including transition rules, and any amendments to such regulations.
"S&P" means Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business.
"Sanction(s)" means any international economic sanction administered or enforced by the United States Government (including, without limitation, OFAC), the United Nations Security Council, the European Union, Her Majesty's Treasury or other relevant sanctions authority.
4886-4749-3705.9 - 12 -
"Senior Debt" means any Debt issued or incurred by the Commission and secured by or payable from Revenues on a basis senior or superior to the Lien in favor of the Series A-2 Notes and other Parity Notes and includes, without limitation, the Bonds. "Separate System" means any electric power or energy generation, transmission, or other facilities, property and rights that may be hereafter purchased, constructed or otherwise acquired by the Commission where the revenues derived from the ownership and operation of shall be pledged to the payment of bonds or other obligations for borrowed money issued or to purchase, construct or otherwise acquire such facilities, property and rights and shall not be included in Revenues and the operation and maintenance expenses with respect to which shall not be included in Operation and Maintenance Expenses.
"Series" has the meaning set forth in the Master Trust Indenture. "Series A-I Bank Note" has the meaning set forth in the Issuing and Paying Agent Agreement.
"Series A-I Notes" has the meaning set forth in the Issuing and Paying Agent Agreement. "Series A-I Reimbursement Agreement" has the meaning set forth in the Issuing and Paying Agent Agreement.
"Series A-2 Notes" has the meaning set forth in the recitals to this Agreement. "SMBC" has the meaning set forth in the recitals to this Agreement. "State" means the State of California.
"Stated Amount" has the meaning set forth in the Letter of Credit. "Stated Expiration Date" has the meaning set forth in the Letter of Credit. "Swap Agreement" means any financial instrument that: (a) is entered into by the Commission with a party that is a Qualified Counterparty at the time the instrument is entered into; (b) is entered into with respect to all or a portion of a Series of Bonds; ( c) is for a term not extending beyond the final maturity of the Series of Bonds or portion thereof to which it relates; ( d) provides that the Commission shall pay to such Qualified Counterparty an amount accruing at either a fixed rate or a variable rate, as the case may be, on a notional amount equal to or less than the principal amount of the Series of Bonds or portion thereof to which it relates, and that such Qualified Counterparty shall pay to the Commission an amount accruing at either a variable rate or fixed rate, as appropriate, on such notional amount; ( e) provides that one party shall pay to the other party any net amounts due under such instrument; and (f) has been designated to the Trustee in the Supplemental Trust Indenture (as defined in the Master Trust Indenture) authorizing the issuance of the related Series of Bonds or portion thereof or in a Certificate (as defined in the Master Trust Indenture) of the Commission as a Swap Agreement with respect to such Bonds.
"Swap Agreement Receipts" means the regularly scheduled net amounts required to be paid by a Qualified Counterparty to the Commission pursuant to a Swap Agreement. 4886-4749-3705.9 - 13 -
"Taxes" means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Govermnental Authority, including any interest, fines, additions to tax or penalties applicable thereto.
"Term Loan" has the meaning set forth in Section 2.4( e) hereof. "Term Loan Conversion Date" has the meaning set forth in Section 2.4(b) hereof. "Term Loan Maturity Date" means, with respect to any Term Loan, the earliest of (a) the third anniversary of the Term Loan Conversion Date for such Term Loan, (b) the third anniversary of the Stated Expiration Date as in effect on the date on which the related Term Loan was made, the date an Alternate Facility becomes effective in accordance with Section 9.02 of the Issuing and Paying Agent Agreement, (d) the date on which the Stated Amount is permanently reduced to zero or the Letter of Credit is otherwise terminated prior to the Stated Expiration Date, including as a result of the occurrence of an Event of Default and (e) the Business Day when Series A-2 Notes or bonds are sold to fund the repayment of any Term Loan.
"Termination Date" has the meaning set forth in the Letter of Credit. "2022 Audited Financial Statements" has the meaning set forth in Section 4.6 "Unpaid Drawing" has the meaning set forth in Section 2.3 hereof. "Wastewater Enterprise" means the municipal sanitaiy waste and storm water collection, treatment and disposal system, as located partially within and partially without the City, and all additions, betterments, and extensions to said sanitary waste and storm water system.
"Water Enterprise" means the municipal water supply, storage and distribution system of the Commission, as located partially within and partially without the City, including all of the presently existing municipal water system of the City, and all additions, betterments, and extensions to said water system, but excluding any water supply, storage or distribution facilities which constitute part of the Hetch Hetchy Project.
The foregoing definitions are equally applicable to both the singular and plural forms of the defined terms. Any capitalized terms used herein which are not specifically defined herein have the same meanings herein as in the Issuing and Paying Agent Agreement.
All references in this Agreement to times of day are references to New York time unless otherwise expressly provided herein. Unless otherwise inconsistent with the terms of this Agreement, all accounting terms are interpreted and all accounting determinations hereunder are made in accordance witli GAAP.
4886-4749-3705.9 - 14 -
ARTICLE2
LETTER OF CREDIT
Section 2.1 Issuance of Letter of Credit. Upon the terms, subject to the conditions and relying upon the representations and warranties set forth in this Agreement or incorporated into Section 4.7 hereof, the Bank agrees to issue the Letter of Credit substantially in the form of Appendix I hereto. The Letter of Credit will be in the original stated amount of $136,095,891 (the "Original Stated Amount"), which is the sum of (i) the aggregate principal amount of the Series A-2 Notes authorized to be issued under the Issuing and Paying Agent Agreement, plus (ii) interest thereon at the rate of 12 percent (12%) per annum for a period of two hundred seventy (270) days calculated on the basis of a 365-day year (and rounded up to the nearest dollar).
Section 2.2 Letter of Credit Drawings. The Issuing and Paying Agent is authorized to make Drawings under the Letter of Credit in accordance with its terms. The Commission authorizes the Bank to make payments under the Letter of Credit in the manner therein provided.
The Commission irrevocably approves reductions and reinstatements of the Stated Amount as provided in the Letter of Credit.
Section 2.3 Reimbursement. Subject to the prov1s10ns of Section 2.4 hereof, the Commission agrees to pay, or to cause to be paid, to the Bank (i) on each date on which the Bank honors any demand for payment under the Letter of Credit ( each such payment by the Bank being referred to as a "Drawing") a sum equal to the amount so paid under the Letter of Credit (any so paid until reimbursed being referred to as an "Unpaid Drawing"), plus (ii) interest on each such Unpaid Drawing from and including the date such Drawing is paid until the Bank is reimbursed in full for such Drawing equal to the Default Rate. Subject to the provisions of Section 2.4 hereof respecting Advances ( each of which Advances when made will constitute of a Drawing in an amount equal to the amount of such Advance), the Commission is obligated, without notice of a Drawing or demand for reimbursement (which notice is waived by the Commission), to reimburse the Bank for all Drawings on the same day as made. The amount of any Drawing relating to accrued interest on the related Series A-2 Notes must be reimbursed by the Commission the date on which such Drawing is made. The Commission and the Bank agree that the reimbursement in full of each Drawing on the day such Drawing is made is intended to be a contemporaneous exchange for new value given to the Commission by the Bank. If a Drawing is reimbursed at or prior to 4:00 p.m. on the same day on which it is made, no interest will be payable such Drawing.
Section 2.4 Advances; Term Loans.
(a) Making of Advances. The Bank agrees that if (i) the Bank pays any Drawing under the Letter of Credit, (ii) the portion of such Drawing relating to the principal amount of the related Series A-2 Notes will not be reimbursed in full on the date of such Drawing by payment to the Bank as provided in Section 2.3 hereof and (iii) (A) the representations and warranties of the Commission contained in Article Four of this Agreement are true and correct as of the date of such Drawing, and (B) no Default or Event of Default has occurred and is continuing on the date of such Drawing, the p01iion of such Drawing relating to the principal amount of the related Series A-2 Notes (or the portion thereof) which is not so reimbursed by the Commission to the 4886-4749-3705,9 - 15 -
Bank will automatically constitute an advance (individually an "Advance" and, collectively, the "Advances") made by the Bank to the Commission on the date of and in an amount equal to the amount of such Drawing relating to the principal amount of the related Series A-2 Notes ( or portion thereof) which is not so reimbursed by the Commission to the Bank. For purposes of Section 2.3 hereof, each Advance when made will constitute reimbursement of the portion of the related Drawing relating to the principal amount of the related Series A-2 Notes in an amount equal to the amount of such Advance; and each Advance when made will preclude, to the extent of the amount of such Advance, the portion of the related Drawing relating to the principal amount of the related Series A-2 Notes from being or constituting an Unpaid Drawing. Unless the Commission has otherwise previously advised the Bank in writing, payment by the Bank of any Drawing under the Letter of Credit will be deemed to constitute a representation and warranty by the Commission that on the date of such Drawing (i) the representations and warranties of the Commission contained in Article Four, except Sections 4.5 and 4.6 hereof, are true and correct on such date, (ii) no event has occurred and is continuing which has or is having a material adverse effect on the Commission's obligations under this Agreement, the Fee Agreement, the Bank Note or the any of the other Basic Documents to which the Commission is a party or the ability of the Commission to perform its obligations in connection herewith or therewith and (iii) no Default or Event of Default has occurred and is continuing on such date. (b) Payment of Principal and Interest on Advances. Except as otherwise required or permitted by Section 2.4(c), 2.4(d) or 2.4(e) of this Agreement, the Commission shall repay, or to be repaid, the unpaid principal amount of each Advance on the earlier to occur of (i) the ninetieth (90th) day following the date such Advance was made and (ii) the Termination Date (with respect such Advance, the "Term Loan Conversion Date"). The Commission shall pay interest on the amount of each Advance from the date of such Advance until paid in full at the Bank Rate from to time in effect; provided that, from and after the occurrence of an Event of Default, each Advance will bear interest at the Default Rate. Interest on each Advance shall be payable monthly, in arrears, on the first Business Day of each month (commencing with the first such date to occur after the making of the related Advance) and upon prepayment or maturity of such Advance. The amount of accrued interest on any Advance must be reimbursed by the Commission on the Term Loan Conversion Date.
(c) Mandatory Prepayment of Advances and Term Loans. The Commission shall prepay Advances and Term Loans if the aggregate proceeds of the issuance of Series A-2 Notes exceed the aggregate principal amount of Series A-2 Notes maturing on the date of such issuance. On the date of each such prepayment of Advances or Term Loans, as applicable ( or portions thereof), the Commission shall pay to the Bank interest accrued and unpaid to the date of such prepayment on the aggregate amount of the Advances and Term Loans ( or portions thereof) prepaid. Upon the Bank's receipt of any payment or prepayment of any Advance or Term Loan, the amount of such Advance and/or Term Loan shall be reduced by the amount of such payment or prepayment. Any prepayment pursuant to this paragraph ( c) or paragraph ( d) below will be applied first to outstanding Term Loans, in the inverse order of maturity, and then to outstanding Advances in the inverse order of maturity. (d) Optional Prepayment. The Commission may prepay Advances in whole, or in part in a minimum amount of $500,000 and in integral multiples of $100,000 in excess thereof, in each case without penalty or premium, on one Business Day's prior written notice, such prepayment to be applied as set forth in paragraph ( c) above. 4886-4749-3705.9 - 16 -
(e) Term Loan Option. On a Term Loan Conversion Date, each Advance maturing on such date will, if the conditions set forth in Section 2.4(f) hereof have been satisfied, be converted to a te1m loan (a "Term Loan").
(f) Conditions Precedent to Term Loans. Principal amounts owed by the Commission for Advances remaining unpaid on their respective Term Loan Conversion Dates will be converted to Term Loans if and only if:
(i) the representations and warranties of the Commission contained in Article Four, except Sections 4.5 and 4.6, of this Agreement are true and correct on and as of the Term Loan Conversion Date, and deemed made as of such date, as though made on and as of such date;
(ii) no event has occurred and is continuing which has or is having a material adverse effect on the Commission's obligations under this Agreement, the Fee Agreement, the Bank Note or the any of the other Basic Documents to which the Commission is a party or the ability of the Commission to perform its obligations in connection herewith or therewith;
(iii) no Default or Event of Default has occurred and is continuing or would result from converting the Advance to a Term Loan; and (iv) no No-Issuance Notice is in effect; no Final Drawing Notice is in effect; and no Acceleration Notice has been delivered to the Commission. (g) Repayment of Term Loans. The Commission agrees to pay to the Bank an amount equal to the unpaid principal amount of each Term Loan made by the Bank, together with interest thereon from and including the Term Loan Conversion Date to but excluding the date the Bank is reimbursed therefor at a rate per annum equal to the Bank Rate; provided that, from and after the occurrence of an Event of Default, each Term Loan will bear interest at the Default Rate. Interest on the unpaid balance of each Term Loan must be paid to the Bank monthly in arrears on the first Business Day of each calendar month during the term of such Term Loan ( commencing with the first such date to occur after the applicable Term Loan Conversion Date) and on the Term Loan Maturity Date. Each Term Loan must be repaid in equal (or as nearly as possible) quarterly installments ( each such installment referred to as a "Principal Payment"), such Principal Payments to commence on the first Quarterly Date that is at least ninety (90) days following the date of the related Advance and on each Quarterly Date thereafter and with the final installment being due and payable on the Term Loan Maturity Date, until paid in full; provided that the unpaid amount of each Term Loan must be paid in full not later than the applicable Term Loan Maturity Date;provided,further, that if the Commission elects to prepay a Term Loan in part, such prepayment will be applied (i) to the Term Loans in inverse order of the Term Loan Conversion Dates of the Term Loans and (ii) to the remaining Principal Payments relating to each Term Loan prepaid in inverse order of the due dates of such Principal Payments. (h) Prepayment of Term Loans. The Authority may prepay any Term Loan in whole, or in part in a minimum amount of $500,000 and in integral multiples of $100,000 in excess thereof, in each case without penalty, on two Business Days' prior written notice, such prepayment to be applied as set forth in paragraph (g) above. 4886-4749-3705.9 - 17 -
Section 2.5 Fees. The Commission agrees to pay and perform its obligations provided for in the Fee Agreement, including the payment of all fees and expenses provided for therein in the amounts and on the dates set forth therein. The terms and provisions of the Fee Agreement are incorporated herein by reference. All references to amounts due under this Agreement will be deemed to include all amounts and obligations (including, but not limited to, fees and expenses) due under the Fee Agreement. All fees paid under this Agreement and the Fee Agreement will be fully earned when due and nonrefundable when paid.
Section 2.6 The Bank Note. All Reimbursement Obligations will be evidenced by one promissory note of the Commission, designated "San Francisco Public Utilities Commission Series A-2 Bank Note, (Power Series)," in substantially the form of Exhibit A hereto (the "Bank Note"), to be issued on the Closing Date, payable to the Bank in a principal amount equal to the Original Stated Amount. All Reimbursement Obligations owed to the Bank and all payments and prepayments made on account of principal and interest thereof will be recorded by the Bank on the schedule (or a continuation thereof) attached to the Bank Note, it being understood, however, that failure by the Bank to make any such endorsement will not affect the obligations of the Commission hereunder or under the Bank Note in respect of unpaid principal of and interest on the Reimbursement Obligations. The Commission shall pay principal and interest on the Bank Note on the dates and at the rates provided for in Sections 2.3 and 2.4 hereof with respect to Unpaid Drawings, Advances and Term Loans. The Commission's obligations to repay each Advance and Term Loan and to pay interest thereon as provided herein shall be evidenced and secured by the Bank Note, and the Commission shall redeem the Bank Note on each date on which the Commission is required to make a principal payment on an Advance or Term Loan, as applicable, in an amount equal to the Advance or Term Loan payment, as applicable, due on such date.
Section 2.7 Termination of Letter of Credit; Reduction of Stated Amount. (a) Notwithstanding any provision of this Agreement to the contrary, the Commission agrees not to terminate or replace the Letter of Credit, except upon (i) the payment to the Bank of all Obligations payable hereunder and under the Bank Note and the Fee Agreement and (ii) the Commission providing the Bank with thirty (30) days' prior written notice of its intent to terminate or replace the Letter of Credit; provided that all Obligations to the Bank must be paid to the Bank at or prior to the time of termination and any such termination or replacement of the Letter of Credit must be in compliance with the terms of the Issuing and Paying Agent Agreement.
(b) Notwithstanding any provision of this Agreement to the contrary, the Commission agrees not to permanently reduce the Stated Amount, except upon the Commission providing the Bank with thirty (30) days' prior written notice of its intent to permanently reduce the Stated Amount.
Section 2.8 Computation of Interest and Fees. Fees payable hereunder and under the Fee Agreement will be calculated on the basis of a year of 360 days and the actual number of days elapsed. Interest payable hereunder and under the Bank Note will be calculated on the basis of a year of 365 or 366 days, as the case may be, and the actual number of days elapsed. Interest will accrue during each period during which interest is computed from and including the first day thereof to but excluding the last day thereof.
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Section 2.9 Payment Due on Non-Business Day to Be Made on Next Business Day. If any sum becomes payable pursuant to this Agreement on a day which is not a Business Day, the date for payment thereof will be extended, without penalty, to the next succeeding Business Day, and such extended time will be included in the computation of interest and fees.
Section 2.10 Default Rate. If any Obligation is not paid when due, such Obligation will bear interest until paid in full at a rate per annum equal to the Default Rate, payable on demand. Upon the occurrence and during the continuance of an Event of Default, the Obligations of the Commission hereunder will bear interest at the Default Rate, which interest will be payable by the Commission to the Bank upon demand therefor and be calculated on the basis of a 365- or 366-day year, as the case may be, and actual days elapsed.
Section 2.11 Source of Funds. All payments made by the Bank pursuant to the Letter of Credit will be made from funds of the Bank and not from the funds of any other Person.
Section 2.12 Extension of Stated Expiration Date. If the Commission on any date which is not more than one hundred twenty (120) days nor less than ninety (90) days prior to the Stated Expiration Date ( as the same may be extended from time to time) submits to the Bank a written request for an extension of the Stated Expiration Date for a period as specified in such written (not to exceed three years), the Bank shall make reasonable efforts to respond to such request thirty (30) days after receipt of all information necessary, in the Bank's reasonable judgment, to permit the Bank to make an informed credit decision. If the Bank fails to definitively respond to request within such period of time, the Bank will be deemed to have refused to grant the extension requested. The Bank may, in its sole and absolute discretion, decide to accept or reject any such proposed extension, and no extension will become effective unless the Bank has consented thereto writing. The consent of the Bank, if granted, is conditioned upon the preparation, execution and delivery of documentation in form and substance reasonably satisfactory to the Bank and consistent with this Agreement. If such an extension request is accepted by the Bank in its sole and absolute discretion, the then current Stated Expiration Date for the Letter of Credit will be extended to the agreed to by the Commission and the Bank.
Section 2.13 Taxes.
(a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Commission hereunder, under the Bank Note or under the Fee Agreement must be made free and clear of and without reduction or withholding for any Indenmified Taxes or Other Taxes; provided that if the Commission is required by Applicable Law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable will be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Bank or any Participant receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Commission shall make such deductions and (iii) the Commission shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with Applicable Law. (b) Payment of Other Taxes by the Commission. Without limiting the provisions of paragraph (a) above, the Commission shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with Applicable Law. 4886-4749-3705.9 - 19 -
( c) Indemnification by the Commission. The Commission shall indemnify the Bank and each Participant, within thirty (30) days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Bank or such Participant and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate stating the amount of such payment or liability delivered to the Commission by the Bank or any Participant will be conclusive absent manifest error. In addition, the Commission shall indemnify the Bank and each Participant, within thirty (30) days after demand therefor, for any incremental Taxes that may become payable by the Bank or such Participant as a result of any failure of the Commission to pay any Taxes when due to the appropriate Governmental Authority or to deliver to the Bank or such Participant pursuant to paragraph ( d) below, documentation evidencing the payment of Taxes.
( d) Evidence of Payments. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Commission to a Governmental Authority, the Commission shall deliver to the Bank or the applicable Participant the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Bank or such Participant, as applicable.
(e) Treatment of Certain Refunds. If the Bank or any Participant determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified pursuant to this Section (including additional amounts paid by the Commission to this Section), it shall pay to the applicable indemnifying party an amount equal to such refund only to the extent of indemnity payments made, or additional amounts paid, under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Bank or such Participant, and without interest ( other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the applicable indemnifying paiiy, upon the request of the Bank or such Participant, as applicable, agrees to repay the amount over pursuant to this Section (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Bank or such Participant in the event the Bank or such Participant required to repay such refund to such Governmental Authority.
Notwithstanding anything to the contrary in this paragraph (e), in no event will the Bank or any Paiiicipant be required to pay any amount to an indemnifying party pursuant to this paragraph ( e) the payment of which would place Bank or such Participant in a less favorable net after-Tax position than the Bank or such Participant would have been in if the indemnification payments or additional amounts giving rise to such had never been paid. This paragraph will not be construed to require the Bank or any Participant make available its tax returns ( or any other information relating to its taxes which it deems confidential) to the Commission or any other Person. (f) Survival. Without prejudice to the survival of any other agreement of the Commission hereunder, the agreements and obligations of the Commission contained in this Section will survive the termination of this Agreement and the Letter of Credit and the payment in full of the Bonds and the obligations of the Commission thereunder and hereunder. 4886-4749-3705.9 - 20 -
Section 2.14 Increased Costs.
(a) Increased Costs Generally. If any Change in Law:
(i) imposes, modifies or deems applicable any reserve, liquidity ratio, special deposit, insurance premium, fee, financial charge, monetary burden, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or advances, loans or other credit extended or participated in by, the Bank or any Participant, or funding any Drawing under the Letter of Credit or maintaining the Letter of Credit, or complying with any term of this Agreement, or against assets held by, or deposits with or for the account of, the Bank or such Participant; (ii) subjects the Bank or any Participant to any Tax of any kind whatsoever with respect to this Agreement, the Bank Note, the Fee Agreement or the Letter of Credit or changes the basis of taxation of payments to the Bank or such Participant in respect thereof ( except for Indemnified Taxes or Other Taxes covered by Section 2.13 and the imposition of, or any change in the rate of, any Excluded Tax payable by the Bank or any Participant);
(iii) subject credits or commitments to extend credit extended by the Bank or any Paiiicipant to any assessment or other cost imposed by the Federal Deposit Insurance Corporation or any successor thereto; or
(iv) imposes on the Bank or any Participant any other condition, cost or expense affecting this Agreement, the Bank Note, the Fee Agreement or the Letter of Credit;
and the result of any of the foregoing is to increase the cost to the Bank or such Participant related funding any Drawing under the Letter of Credit or issuing or maintaining the Letter of Credit or participation therein, as the case may be, or to reduce the amount of any sum received or by the Bank or such Participant hereunder, under the Bank Note or under the Fee Agreement (whether of principal, interest or any other amount), then, upon written request of the Bank or Participant as set forth in paragraph ( c) of this Section, the Commission shall promptly pay to the Bank or such Participant, as the case may be, such additional amount or amounts as will compensate the Bank or such Participant, as the case may be, for such additional costs incurred or reduction suffered. Notwithstanding the foregoing, the ainount that any Participant will be entitled to receive under this Section 2.14(a) will in no event exceed the amount that the Bank would have been entitled to receive under this Section 2.14(a) had such Participant's funding obligation been a direct obligation of the Bank. (b) Capital Requirements. If the Bank or any Participant determines that any Change in Law affecting the Bank or such Participant or the Bank's or such Participant's holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on the Bank's or such Participant's capital or liquidity or on the capital or liquidity of the Bank's or such Participant's holding company, if any, as a consequence of this Agreement, the Bank Note, the Fee Agreement or the Letter of Credit, to a level below that which the Bank or such Participant or the Bank's or such Participant's holding company could have achieved but for such Change in Law (taking into consideration the Bank's or such 4886-4749-3705.9 - 21 -
Participant's policies and the policies of the Bank's or such Participant's holding company with respect to capital adequacy), then from time to time, upon written request of the Bank or such Participant as set forth in paragraph ( c) of this Section, the Commission will pay to the Bank or such Participant such additional amount or amounts as will compensate the Bank or such Participant or the Bank's or such Participant's holding company for any such reduction suffered.
Notwithstanding the foregoing, the amount that any Participant will be entitled to receive under this Section 2. l 4(b) will in no event exceed the amount that the Bank would have been entitled to receive under this Section 2.14(b) had such Participant's funding obligation been a direct obligation of the Bank.
( c) Certificates for Reimbursement. A certificate of the Bank or a Participant setting forth the amount or amounts necessary to compensate the Bank or such Participant or the Bank's or such Participant's parent or holding company, as the case may be, as specified in paragraph (a) or (b) of this Section and delivered to the Commission, will be conclusive absent manifest error. The Commission shall pay the Bank or such Participant, as the case may be, the amount shown as due on any such certificate within thirty (30) days after receipt thereof. (d) Delay in Requests. Failure or delay on the part of the Bank or any Participant to demand compensation pursuant to this Section will not constitute a waiver of the Bank's or such Participant's right to demand such compensation; provided that the Commission is not required to compensate the Bank or such Participant pursuant to this Section for any increased costs incurred or reductions suffered more than one hundred eighty (180) days prior to the date that the Bank or such Participant, as the case may be, notifies the Commission of the Change in Law giving rise to such increased costs or reductions, and of the Bank's or such Participant's intention to claim compensation therefor ( except that if the Change of Law giving rise to such increased costs or reductions is retroactive, then the one hundred eighty day period referred to above will be extended to include the period of retroactive effect thereof. ( e) Survival. Without prejudice to the survival of any other agreement of the Commission hereunder, the agreements and obligations of the Commission contained in this will survive the termination of this Agreement and the Letter of Credit and the payment in full of Bank Note and the obligations of the Commission thereunder and hereunder.
Section 2.15 Margin Regulations. No portion of the proceeds of any Drawing under the Letter of Credit may be used by the Commission ( or the Issuing and Paying Agent or any other Person on behalf of the Commission) for the purpose of "purchasing" or "carrying" any margin stock or used in any marmer which might cause the borrowing or the application of such proceeds to violate Regulation U, Regulation Tor Regulation X of the Board of Governors of the Federal Reserve System or any other regulation of said Board of Governors or to violate the Securities Exchange Act of 1934, as amended, in each case as in effect on the date or dates of such Drawings or such use of proceeds.
Section 2.16 Maximum Rate; Payment of Fee. Anything in Section 2.3, 2.4 or 2.10 hereof to the contrary notwithstanding, the amount of interest payable hereunder for any interest period will not exceed the Maximum Rate. If for any interest period the applicable interest rate would exceed the Maximum Rate, then (i) such interest rate will not exceed but will be capped at such Maximum Rate and (ii) in any interest period thereafter that the applicable interest rate is less than the Maximum Rate, any Obligation hereunder will bear interest at the Maximum Rate 4886-4749-3705.9 - 22 -
until the earlier of (x) payment to the Bank of an amount equal to the amount which would have accrued but for the limitation set forth in this Section and (y) the Term Loan Maturity Date.
Upon the Term Loan Maturity Date or, if no Term Loan is or could be outstanding on the Termination Date, the Termination Date, in consideration for the limitation of the rate of interest otherwise payable hereunder, to the extent permitted by Applicable Law, the Commission shall pay to the Bank a fee in an amount equal to the amount which would have accrued but for the limitation set forth in this Section that has not previously been paid to the Bank in accordance with the immediately preceding sentence.
Section 2.17 Security of Obligations. Notwithstanding any other provision of this Agreement or any other Basic Document to the contrary, all obligations to the Bank under this Agreement, including, without limitation, the Bank Note, are limited obligations of the Commission payable solely from Revenues, as provided in the Issuing and Paying Agent Agreement, and subject to application as set forth in the Master Trust Indenture. The Obligations and the Bank Note are Subordinate Obligations (as defined in the Master Trust Agreement).
Section 2.18 Commercial Paper Operations.
(a) Issuance Generally. The Commission shall permit Series A-2 Notes to be issued, and authorize the Issuing and Paying Agent to issue Series A-2 Notes, only in accordance with the terms of the Issuing and Paying Agent Agreement and this Agreement. (b) No-Issuance Notices; Final Drawing Notice; Acceleration Notice. Series A-2 Notes may be issued from time to time prior to the Stated Expiration Date in accordance herewith and with the Issuing and Paying Agent Agreement so long as (i) the Issuing and Paying Agent is not in receipt of No-Issuance Notice by the Bank that has not been rescinded; and (ii) the Issuing and Paying Agent not in receipt of the Final Drawing Notice or the Acceleration Notice. The Bank may deliver a No-No-Issuance Notice at any time a Default or an Event of Default has occun-ed and is continuing. Bank may deliver the Final Drawing Notice at any time when an Event of Default has occun-ed and continuing. The Bank may deliver the Acceleration Notice at any time an "event of default" has occun-ed and is continuing under the Issuing and Paying Agent Agreement. A No-Issuance Notice, the Final Drawing Notice or the Acceleration Notice (for purposes of this Section 2.18(b)) is effective when received by the Issuing and Paying Agent; provided, however, that a No-Issuance Notice, the Final Drawing Notice or the Acceleration Notice received by the Issuing and Paying Agent after 12:00 Noon on any day on which Series A-2 Notes are being issued will be effective on the next succeeding day. A No Issuance Notice, the Final Drawing Notice or the Acceleration Notice may be given by facsimile or electronic mail transmission, confirmed in writing within 24 hours, but the failure to so confirm such No-Issuance Notice, the Final Drawing Notice or the Acceleration Notice in writing will not render such No-Issuance Notice, the Final Drawing Notice or the Acceleration Notice ineffective. The Bank shall furnish a copy of any No-Issuance Notice, the Final Drawing Notice and the Acceleration Notice to the Commission and the Dealers promptly following delivery thereof to the Issuing and Paying Agent, but the failure to furnish any such copy will not render ineffective such No-Issuance Notice, the Final Drawing Notice or the Acceleration Notice.
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( c) Reduction in Program Size. In the event the Commission elects not to issue Series A-2 Notes up to the Maximum Rate, or otherwise limits the interest rate on a rollover of Series A-2 Notes to a rate of interest less than the Maximum Rate and, as a result of these actions the Bank is not reimbursed for a Drawing made to pay maturing Series A-2 Notes, then the Bank may deliver written notice to the Commission with a copy to the Issuing and Paying Agent and the Dealer or Dealers for the Series A-2 Notes instructing the Commission to permanently reduce the Program Size by the principal amount of the Drawing made to purchase such maturing Series A-2 Notes (the "Reduction Amount"). In the event the Bank delivers such a notice, the Commission shall cause the Issuing and Paying Agent to promptly deliver to the Bank a reduction certificate in the form of Annex G to the Letter of Credit requesting that the principal component of the Letter of Credit be reduced by the Reduction Amount and that the interest component of the Letter of Credit be proportionately reduced. Notwithstanding any other provision of this Agreement to the contrary, the Commission shall repay the amount of any Advance resulting from an Unpaid Drawing contemplated by this Section 2.18( c) together with accrued interest thereon no later than the date that is thirty (30) days following the date of such Advance.
Section 2.19 Method of Payment; Etc. All payments to be made by the Commission under this Agreement, the Bank Note or the Fee Agreement must be made to the Payment Account not later than 4:00 p.m. on the date when due and must be made in lawful money of the United States of America in freely transferable and immediately available funds. Any payment received after such time shall be deemed to be received on the next succeeding Business Day for purposes of calculating any interest payable in respect thereof.
ARTICLE3
CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to Effectiveness. As conditions precedent to the obligation of the Bank to issue the Letter of Credit, each of the following conditions precedent must have been fulfilled to the satisfaction of the Bank and its counsel:
(a) Opinions. The Bank has received (i) an opinion of the City Attorney of the City the Closing Date and addressed to the Bank (or on which the Bank may rely) to the effect that (A) Commission is duly organized and validly existing as a commission of the City pursuant to the Charter with full legal power and authority to execute this Agreement, the Fee Agreement and the other Basic Documents to which it is a party and to issue the Series A-2 Notes; (B) this Agreement, the Fee Agreement and the other Basic Documents to which it is a party are valid and binding agreements the Commission enforceable against the Commission in accordance with their respective terms, subject to bankruptcy, insolvency, moratorium or other laws affecting creditors' rights, to general principles of equity and to limitations on remedies against public agencies; (C) no authorization, approval, consent or order of any agency or body having jurisdiction over the Commission is required in connection with the issuance of the Series A-2 Notes which has not been obtained; (D) the issuance of the Series A-2 Notes and the execution, delivery and performance of this Agreement, the Fee Agreement the other Basic Documents to which it is a party do not conflict with any law or material to which the Commission is a party or cause a default under any material documents to which the Commission is a party; and (E) no 4886-4749-3705.9 - 24 -
litigation is pending or, to the best knowledge of the City threatened against the Commission threatening its existence or power, its ability to issue the Series A-2 Notes to enter into and perfonn its obligations under this Agreement, the Fee Agreement and the other Basic Documents to which it is a party or in which a final adverse decision could materially affect the business, operations or financial condition of the Commission, such opinion ( or, in lieu thereof, a reliance letter) to be addressed to the Bank, dated the Closing Date and in form and substance satisfactory to the Bank; and (ii) an opinion of the Bond Counsel dated the Closing Date and addressed to the Bank (or on which the Bank may rely) to the effect that (1) the Commission is duly organized and validly existing as a commission of the City pursuant to the Charter with full power and authority to execute this Agreement, the Fee Agreement and the other Basic Documents and to issue the Series A-2 Notes; (2) this Agreement, the Fee Agreement and the other Basic Documents are valid and binding agreements of the Commission enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, moratorium or other laws affecting creditors' rights, to general principles of equity and to limitations on remedies against public agencies and (3) the on the Series A-2 Notes is excludable from the gross income of the recipients thereof for Federal income tax purposes and for State of California income tax purposes.
(b) Documents. The Bank has received executed copies of this Agreement, the Fee Agreement, the Ordinance, each Dealer Agreement that is to be in effect on the Closing Date, the Resolution, the Issuing and Paying Agent Agreement and the Bank Note, including all amendments and supplements, if any, to the foregoing, certified by the Secretary of the Commission, the Clerk of the Board or any Authorized Representative or the Board, as applicable, as being in full force and effect on and as of the Closing Date. (c) Defaults; Representations and Warranties. On and as of the Closing Date, (i) no Default or Event of Default and no default or event of default under any of the other Basic Documents has occurred and is continuing or would occur upon the issuance of the Letter of Credit or the making of any Advance or Term Loan and (ii) the representations of the Commission set forth in Article Four hereof and in each of the other Basic Documents are true and correct in all material respects on and as of the Closing Date with the same force and effect as if made on and as of such date,
( d) No Litigation. No action, suit, investigation or proceeding is pending or, to the knowledge of the Commission, threatened (i) in connection with the Series A-2 Notes or the other Basic Documents or any transactions contemplated thereby or hereby or (ii) against or affecting the Commission, the result of which could have a material adverse effect on the business, operations or condition (financial or otherwise) of the Commission or its ability to perform its obligations hereunder, under the Fee Agreement or under the Series A-2 Notes or the other Basic Documents to which it is a party.
( e) No Material Adverse Change. Since the date of the 2022 Audited Financial Statements, (i) no material adverse change has occurred in the status of the business, operations or condition (financial or otherwise) of the Commission or its ability to perform its obligations hereunder, under the Fee Agreement or under the Series A-2 Notes or the other Basic Documents to which it is a party and (ii) no law, regulation, ruling or other action ( or interpretation or administration thereof) of the United States, the State of California or any political subdivision or authority therein or thereof is in effect or has occurred, the effect of which would be to prevent 4886-4749-3705.9 - 25 -
the Bank from fulfilling its obligations hereunder or under the Series A-2 Notes, this Agreement, the Fee Agreement or the other Basic Documents to which it is a paiiy. (t) Certificate. The Bank has received (i) certified copies of all proceedings of the Commission authorizing the execution, delivery and performance of this Agreement, the Fee Agreement, the Bank Note and the other Basic Documents to which it is a paiiy and the transactions contemplated hereby and thereby and (ii) a certificate or certificates of one or more Authorized Representatives dated the Closing Date certifying the accuracy of the statements made in Section 3 .1 ( c ), ( d) and ( e) hereof and further certifying the name, incumbency and signature of each individual authorized to sign this Agreement, the Fee Agreement, the Bank Note, the other Basic Documents to which the Commission is a party and the other documents or certificates to be delivered by the Commission pursuant hereto or thereto, on which certification the Bank may conclusively rely until a revised certificate is similarly delivered, and that the conditions precedent set forth in this Section 3 .1 have been satisfied. (g) Payment of Fees. The Bank has received all fees and expenses due and payable to the Bank or its legal counsel pursuant to the Fee Agreement or alternative arrangements satisfactory therefor have been made with the Bank.
(h) Financial Statements. The Bank has received the 2022 Audited Financial Statements, internally prepared quarterly budget reports of the Commission for the most recent fiscal quarter end and a copy of the current quarterly budgeting status report, if not previously provided.
(i) Offering Memorandum. The Bank has received a copy of the Offering Memorandum.
(i) CUSIP and Rating for Bank Note. The Bank has received written confirmation that (a) a CUSIP number has been obtained from Standard and Poor's CUSIP Services for the Bank Note and (b) the Bank Note (and its CUSIP number) has been assigned a long term rating of at least investment grade from any Rating Agency.
(k) Series A-2 Notes Rating. The Bank has received written confirmation that the Series A-2 Notes have been rated "A-1" by Standard & Poor's and that the underlying long-term credit ratings assigned to the Commission's unenhanced Bonds are at least "AA" by Standard & Poor's and "AA-" by Fitch.
(l) Prior Letter of Credit. Confirmation that arrangements have been made with SMBC to terminate the Prior Letter of Credit as soon as allowable under the Basic Documents. (m) Other Matters. The Bank has received such other statements, ce1iificates, agreements, documents and information with respect to the Commission and matters contemplated by this Agreement as the Bank may have requested.
In addition, (A) the Bank must have made a reasonable determination that, as of the Date, no Law or other action of the United States of America, the State or any other Authority or any political subdivision or authority therein or thereof is in effect or has occurred, effect of which would be to prevent the Commission, the Issuing and Paying Agent, the Dealers the Bank from fulfilling their respective obligations under this Agreement and the other Basic 4886-4749-3705.9 - 26 -
Documents and (B) no material adverse change in the financial condition of the Commission or in the Laws ( or their interpretation or administration) currently in effect and applicable to the parties hereto and the transactions contemplated hereby has occurred as reasonably determined by the Bank. The execution and delivery of this Agreement by the Bank signifies its having made such determination.
ARTICLE4
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to issue the Letter of Credit, the Commission represents and warrants to the Bank as follows:
Section 4.1 Organization, Powers, Etc. The Commission (a) is a commission of the City and County of San Francisco organized and existing under the Charter; (b) has the full legal right, power and authority to (i) issue and sell the Series A-2 Notes in accordance with the Issuing and Paying Agent Agreement, (ii) own and operate the Power Enterprise and control its properties and to carry on its business as now conducted and as contemplated to be conducted in connection with the issuance of the Series A-2 Notes, and the execution, delivery and performance of its obligations under this Agreement, the Fee Agreement, the Bank Note and the other Basic Documents to which it is a party, (iii) execute, deliver and perform its obligations under the Bank Note, the Fee Agreement, the other Basic Documents to which it is a party and this Agreement and (iv) provide for the security of the Series A-2 Notes and the Bank Note pursuant to the Charter, the Issuing and Paying Agent Agreement and the Master Trust Indenture; and ( c) has complied with all Laws in all matters related to such actions of the Commission as are contemplated by this Agreement, the Bank Note, the Fee Agreement and the other Basic Documents to which it is a party.
Section 4.2 Authorization, Absence of Conflicts, Etc. The issuance of the Series A- 2 Notes and the execution, delivery and performance by the Commission of this Agreement, the Bank Note, the Fee Agreement and the other Basic Documents to which it is a party (a) have been duly authorized by all necessary action on the part of the Commission, (b) do not and will not conflict with, or result in a violation of, any Laws, including the Charter, or any order, writ, rule or regulation of any court or governmental agency or instrumentality binding upon or applicable to the Commission which violation would result in a material adverse impact on the Commission and ( c) do not and will not conflict with, result in a violation of, or constitute a default under, any resolution, agreement or instrument to which the Commission is a party or by which the Commission or any of its property is bound which, in any case, would result in a material adverse impact on the Commission.
Section 4.3 Binding Obligations; Security for Bank Note. (a) This Agreement, the Fee Agreement, the Bank Note and each of the other Basic Documents to which the Commission is a party, when executed by the pmiies hereto and thereto, be valid and binding obligations of the Commission (assuming due authorization and execution by the other parties thereto) enforceable against the Commission in accordance with their respective terms, except to the extent, if any, that the enforceability thereof may be limited by 4886-4749-3705.9 - 27 -
(i) any bankruptcy, insolvency, reorganization, moratorium or other similar law of the State or Federal government affecting the enforcement of creditors' rights generally heretofore or hereafter enacted, (ii) the fact that enforcement may also be subject to the exercise of judicial discretion in appropriate cases and (iii) the limitations on legal remedies against public agencies of the State, if any.
(b) The Note and the Bank Note are secured by the pledge of Available Power Enterprise Revenues and certain other funds and accounts held by the Issuing and Paying Agent as provided in Section 5. l(n) hereof and the Issuing and Paying Agent Agreement. The only debt obligations secured by Revenues on a basis senior to the Series A-2 Notes and Bank Note is the Senior Debt issued in accordance with the Master Trust Indenture.
Section 4.4 Governmental Consent or Approval. No consent, approval, permit, authorization or order of, or registration or filing with, any court or government agency, authority or other instrumentality not already obtained, given or made is required on the part of the Commission for the execution, delivery and performance by the Commission of this Agreement, the Bank Note, the Fee Agreement or any other Basic Document to which it is a party. All consents, approvals, permits, authorizations and orders of, and registrations and filings with, any court or governmental or public agency, authority or other instrumentality required for the issuance, sale, execution, delivery and performance of this Agreement, the Fee Agreement, the Bank Note or any other Basic Document to which it is a party, have been or will be obtained prior to the delivery hereof or thereof.
Section 4.5 Absence of Material Litigation. There is no action, suit, proceeding, or investigation, at law or in equity, before or by any court, arbitrator or governmental or other body or official pending or, to the best knowledge of the Commission, threatened against or the Commission questioning the validity of the Charter, the Ordinance or the Resolutions, or any proceeding taken or to be taken by the Commission in connection with the execution, delivery and performance by the Commission of this Agreement, the Bank Note, the Fee Agreement or any Basic Document to which it is a party, or seeking to prohibit, restrain or enjoin the execution, delivery or performance by the Commission of any of the foregoing, or which, if adversely detennined, could reasonably be expected to result in any material adverse change in the financial condition, operations or prospects of the Commission, or wherein an unfavorable decision, ruling or finding would in any way materially adversely affect the transactions contemplated by this Agreement or any of the other Basic Documents ( any such action or proceeding being herein to as "Material Litigation").
Section 4.6 Financial Condition. The audited financial statements of the Commission as at and for the period ended June 30, 2022 (the "2022 Audited Financial Statements"), and all other financial statements of the Commission furnished to the Bank were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved and are subject to certification by independent certified public accountants of nationally recognized standing or by independent certified public accountants otherwise acceptable to the Bank. The 2022 Audited Financial Statements were prepared by KPMG LLP. The audited financial statements of the Commission for fiscal year 2022 will be prepared by KPMG LLP or a similar qualified independent auditing firm. The data on which such financial statements and budget reports are based were true and c01Tect. The 2022 Audited Financial Statements and the budget reports present fairly the financial position of the Commission as of the date they purport to represent 4886-4749-3705.9 - 28 -
and the revenues, expenses and changes in fund balances and in financial position for the periods then ended. Since June 30, 2022, no material adverse change has occurred in the business, operations or condition (financial or otherwise) of the Commission.
Section 4.7 Incorporation of Representations and Warranties. The representations and warranties of the Commission set forth in the Basic Documents are true and accurate in all material respects on the Closing Date, as fully as though made on the Closing Date. The Commission makes, as of the Closing Date, each of such representations and warranties to, and for the benefit of, the Bank, as if the same were set forth at length in this Section 4. 7 together with all applicable definitions thereto. No amendment, modification or termination of any such representations, warranties or definitions contained in the Basic Documents will be effective to amend, modify or terminate the representations, warranties and definitions incorporated in this Section 4.7 by this reference, without the prior written consent of the Bank.
Section 4.8 Accuracy and Completeness of Information. The Basic Documents and all certificates, financial statements, documents and other written information furnished to the Bank by or on behalf of the Commission on or prior to the Closing Date in connection with the transactions contemplated hereby were, as of their respective dates, complete and correct in all material respects to the extent necessary to give the Bank true and accurate knowledge of the subject matter thereof and did not contain any untrue statement of a material fact. To the best knowledge of the Commission, the Offering Memorandum does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that no representation is made with respect to information included in the Offering Memorandum concerning (i) the Bank, furnished in writing by the Bank expressly for inclusion therein, or (ii) DTC, furnished in writing by DTC expressly for inclusion therein.
Section 4.9 No Default.
(a) No Default or Event of Default under this Agreement has occurred and is continuing that is or would, with the passage of time or the giving of notice, or both, constitute a default by the Commission in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Basic Document to which it is a party. (b) No "event of default" has occurred and is continuing under any other material mortgage, indenture, contract, agreement or undertaking to which the Commission is a party or which purports to be binding on the Commission or on any of its property.
Section 4.10 No Proposed Legal Changes. There is no amendment or, to the knowledge of the Commission, proposed amendment to the Constitution of the State, any State law or the Charter or any administrative interpretation of the Constitution of the State, any State law, or the Charter, or any judicial decision interpreting any of the foregoing, the effect of which could reasonably be expected to have a material adverse effect on the Commission's obligations under this Agreement, the Fee Agreement, the Bank Note or the any of the other Basic Documents to which the Commission is a party or the ability of the Commission to perform its obligations in connection herewith or therewith.
4886-4749-3705.9 - 29 -
Section 4.11 Compliance with Laws, Etc. The Commission is in compliance with the Investment Policy and all Laws applicable to the Commission, non-compliance with which might have a material adverse effect on the security for the Series A-2 Notes and the obligations under this Agreement, the Fee Agreement and the Bank Note or the validity and enforceability of this Agreement or any other Basic Document to which the Commission is a party. In addition, no benefit plan maintained by the Commission for its employees is subject to the provisions of ERJSA, and the Commission is in compliance with all Laws in respect of each such benefit plan.
Section 4.12 Environmental Matters. In the ordinary course of its business, the Commission conducts an ongoing review of Environmental Laws on the business, operations and the condition of its property, in the course of which it identifies and evaluates associated liabilities and costs (including, but not limited to, any capital or operating expenditures required for clean-up or closure of properties currently or previously owned or operated, any capital or operating expenditures required to achieve or maintain compliance with environmental protection standards imposed by law or as a condition of any license, permit or contract, any related constraints on operating activities, including any periodic or pe1manent shutdown of any facility or reduction in the level of or change in the nature of operations conducted thereat and any actual or potential liabilities to third patties, including employees, and any related costs and expenses). On the basis of such review, the Commission does not believe that Environmental Laws are likely to have a material adverse effect on the ability of the Commission to make any payments in respect of the Series A-2 Notes, the Bank Note or any of its obligations hereunder or under the Fee Agreement.
Section 4.13 Tax Status of Interest on Series A-2 Notes. The Commission represents to the Bank that it has not taken any action, and knows of no action that any other Person has taken, which would cause interest on the Series A-2 Notes to be includable in the gross income of the recipients thereof for Federal income tax purposes or which would cause interest on the Series A-2 Notes to be includable in the gross income of the recipients thereof for State of California income tax purposes.
Section 4.14 Issuing and Paying Agent; Dealers. The Commission represents that U.S. Bank National Association has been duly appointed the Issuing and Paying Agent for the Series A-2 Notes and that RBC Capital Markets, LLC, Goldman, Sachs & Co. and Barclays Capital Inc., collectively, have each been duly appointed to serve as Dealers for the Series A-2 Notes under its Dealer Agreement and the Resolutions.
Section 4.15 Regulation U. The Commission is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System); and no proceeds of the Series A-2 Notes, the Advances or the Term Loans will be used to extend credit to others for the purpose of purchasing or carrying any margin stock.
Section 4.16 Liens. The Issuing and Paying Agent Agreement creates a valid Lien on and pledge of the Available Power Enterprise Revenues, subject only to the provisions of the Issuing and Paying Agent Agreement permitting the application thereof for purposes and on the terms and conditions set forth therein, and the moneys and other property described in Article VI thereof to provide security for the payment of the principal of and interest on the Series A-2 Notes and the obligations of the Commission under this Agreement, the Fee Agreement and the 4886-4749-3705,9 - 30 -
Bank Note, and no filings, recordings, registrations or other actions are necessary to create or perfect such Lien.
Section 4.17 Sovereign Immunity. The Commission is not entitled to immunity from legal proceedings to enforce this Agreement, the Fee Agreement, the Bank Note, the Series A-2 Notes or any other Basic Document to which the Commission is a party (including, without limitation, immunity from service of process or immunity from jurisdiction of any court otherwise having jurisdiction) and is subject to claims and suits for damages in connection with its obligations under this Agreement, the Fee Agreement, the Bank Note, the Series A-2 Notes or any other Basic Document to which the Commission is a party.
Section 4.18 City Business Days. Attached to this Agreement as Exhibit C is a complete and accurate list of the days that are legal holidays of the City for 2023, as well as any other day the City is authorized by law to be closed for official business during 2023.
Section 4.19 Usury. The terms of this Agreement and the Basic Documents to which the Commission is a party regarding the calculation and payment of interest and fees do not violate any applicable usury laws.
Section 4.20 Insurance. As of the Closing Date, the Commission maintains such insurance, including self-insurance, as is required by Section 5.l(k) hereof.
Section 4 .21 ERISA. The Commission does not maintain or contribute to, and has not maintained or contributed to, any Employee Plan that is subject to Title IV of ERISA.
Section 4.22 Sanctions Concerns and Anti-Corruption Laws. (a) Neither the Commission, nor, to the knowledge of the Commission, any director, officer, employee, agent, affiliate or representative thereof, is an individual or entity that is, or is owned or controlled by any individual or entity that is (i) currently the subject or target of any Sanctions, (ii) included on OFAC's List of Specially Designated Nationals, HMT's Consolidated List of Financial Sanctions Targets and the Investment Ban List, or any similar list enforced by any other relevant sanctions authority or (iii) located, organized or resident in a Designated Jurisdiction.
(b) The Commission has conducted its business in compliance with the United States Foreign Corrupt Practices Act of 1977 and other similar anti-corruption legislation in other jurisdictions, and have instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.
Section 4.23 Swap Contracts. The Commission has not entered into any Swap Agreement secured by Revenues (a) wherein any termination payment thereunder is senior to or on a parity with the payment of the Series A-2 Notes or the Obligations or (b) which requires the Commission to post cash collateral to secure its obligations thereunder. 4886-4749-3705.9 - 31 -
ARTICLES
COVENANTS
Section 5.1 Affirmative Covenants. So long as the Letter of Credit has not expired or terminated or any Obligations remain outstanding under this Agreement, the Commission shall perform and observe the covenants set forth below, unless the Bank otherwise consents in writing:
(a) Accounting and Reports. The Commission shall maintain a standard system of accounting in accordance with GAAP consistently applied and furnish to the Bank:
(i) as soon as practicable and, in any event, within two hundred forty (240) days after the end of each Fiscal Year of the Commission, a balance sheet of the Commission as at the end of such Fiscal Year and statements of income, changes in fund balances and cash flows for the Fiscal Year then ended, all in reasonable detail and prepared in accordance with GAAP consistently applied, accompanied by (A) a report and opinion of the Commission's independent accountants ( which will be of recognized standing or an independent certified public accountant otherwise acceptable to the Bank), which report and opinion will have been prepared in accordance with generally accepted auditing standards and (B) a compliance certificate, substantially in the form of Exhibit B hereto, signed by an Authorized Representative stating that no Event of Default or Default has occurred or if any Event of Default or Default has occurred, specifying the nature of such Event of Default or Default, the period of its existence, the nature and status thereof and any remedial steps taken or proposed to correct such Event of Default or Default;
(ii) as soon as practicable but, in any event, within ten (10) days after the issuance thereof, copies of any prospectus, official statement, offering circular, placement memorandum or similar document, and any supplements thereto and updates and amendments thereof (including any filings made pursuant to Rule 15c2-12 under the Securities Act of 1933, as amended), that the Commission makes available in connection with the offering for sale of any bonds or notes secured by Revenues of which it is the issuer and copies of any other financial reports or other written information distributed generally to holders of bonds or notes issued by the Commission; (iii) within ten (I 0) days after the publication thereof, a copy of the Commission's Annual Budget for the next Fiscal Year and such additional period as may be covered by such Annual Budget, which budget shall include all obligations due hereunder, under the Fee Agreement and under the Bank Note for the next Fiscal Year and such additional period as may be covered by such Annual Budget; (iv) promptly upon learning of any change in the legal holidays of the City or the day or days that the City is authorized by law to be closed for official business, as initially listed on Exhibit C attached hereto, written notice of such change( s ), in the form of an updated complete list, which will replace Exhibit C attached hereto; and 4886-4749-3705.9 - 32 -
(v) with reasonable promptness, such other data regarding the financial position or business of the Commission or its property as the Bank may reasonably request from time to time.
As and to the extent that any financial statement, audit report or other filing described in this Section 5.l(a) has been filed in accordance with the terms thereof with any nationally recognized municipal securities information repository and with the Municipal Securities Rulemaking Board, or posted to the Commission's website, as applicable, and the Commission has provided written notice thereof to the Bank, the requirements of Section 5.l(a) hereof with respect thereto will be deemed satisfied.
(b) Access to Records. At any reasonable time and from time to time, during normal business hours and, so long as no Event of Default has occurred and is continuing, on at least five (5) Business Days' notice, the Commission shall permit the Bank or any of its agents or representatives to visit and inspect any of the properties of the Commission and the other assets of the Commission, to examine the books of account of the Commission (and to make copies thereof and extracts therefrom), and to discuss the affairs, finances and accounts of the Commission with, and to be advised as to the same by, its officers, all at such reasonable times and intervals as the Bank may reasonably request.
(c) Compliance with Documents and Other Debt Documents; Operation and Maintenance of Power Enterprise.
(i) The Commission shall perform and comply with each covenant set forth in Basic Documents, the Master Trust Indenture and in any other authorizing document that is entered into by the Commission and created subsequent to the Closing Date with respect to any Parity Debt including, without limitation, each line of credit, letter of credit, bond insurance policy, surety bond or other form of credit or liquidity enhancement the Commission may provide in conjunction with the issuance of any Bonds or Parity Debt (the foregoing documents (exclusive of the Basic Documents) being referred to herein as "Other Debt Documents"). By the terms of this Agreement, the Bank is a third party beneficiary of the covenants set forth in each of the Basic Documents, including each amendment and supplement thereto, and in each Other Debt Document, and each such covenant, together the related definitions of terms contained therein, is incorporated by reference in this 5 .1 ( c) with the same effect as if it were set forth herein in its entirety. Except as otherwise forth in paragraph (ii) below and in Section 5.2(a) hereof, the Commission shall not amend, supplement or otherwise modify ( or permit any of the foregoing), or request or agree to any consent or waiver under, or effect or pennit the cancellation, acceleration or termination of, release or permit the release of any collateral held under, any of the Basic Documents or Other Debt Document in any manner without the prior written consent of the Bank, and the Commission shall take, or cause to be taken, all such actions as may be reasonably by the Bank to strictly enforce the obligations of the other parties to any of the Basic Documents and any Other Debt Documents, as well as each of the covenants set forth. The Commission shall give prior written notice to the Bank of any action referred to in this subparagraph (i).
4886-4749-3705.9 - 33 -
(ii) The Commission covenants that it will maintain and preserve the Power Enterprise in good repair and working order at all times from the Revenues available for such purposes, in conformity with standards customarily followed for municipal water and power systems of like size and character. The Commission will from time to time make all necessary and proper repairs, renewals, replacements and substitutions to the properties of the Power Enterprise, so that at all times business carried on in connection with the Power Enterprise shall and can be properly and advantageously conducted in an efficient manner and at reasonable cost, and will operate the Power Enterprise in an efficient and economical manner and shall not commit or allow any waste with respect to the Power Enterprise.
(d) Defaults. The Commission shall notify the Bank of any Default or Event of Default of which the Commission has knowledge, as soon as possible and, in any event, within three (3) Business Days of acquiring knowledge thereof, setting forth the details of such Default or Event of Default and the action which the Commission has taken and proposes to take with respect thereto.
( e) Compliance with Laws. The Commission shall comply in all material respects with all Laws binding upon or applicable to the Commission (including Environmental Laws) and material to this Agreement, the Fee Agreement, the Bank Note or any other Basic Documents.
(f) Use of Proceeds of the Series A-2 Notes. The Commission shall use the proceeds derived from the sale of the Series A-2 Notes only for the purposes set forth in the Basic Documents and for such other purpose or purposes as may be approved by the Bank. In addition, the Commission shall not use, nor permit the use of, the proceeds of the Series A-2 Notes or any Drawing to be applied in violation of Regulation U issued by the Board of Governors of the Federal Reserve System.
(g) Litigation Notice. The Commission shall promptly give notice to the Bank of any action, suit or proceeding actually known to it at law or in equity or by or before any court, governmental instrumentality or other agency which, if adversely detern1ined, would materially impair the ability of the Commission to perform its obligations under the Series A-2 Notes, the Bank Note, this Agreement, the Fee Agreement or any other Basic Document. (h) Bank Agreements. In the event that Commission shall enter into or otherwise consent to any amendment, supplement or other modification of any Bank Agreement after the Closing Date which Bank Agreement contains additional or more restrictive covenants or additional or more restrictive events of default ("Improved Provisions," which for the avoidance of doubt does not include pricing, termination fees and provisions related to interest rates), then the Commission shall provide the Bank with a copy of such Bank Agreement and the Improved Provisions shall automatically be deemed incorporated into this Agreement and the Bank shall have the benefit of the Improved Provisions until such time as the Bank Agreement containing such Improved Provisions terminates. The Commission shall promptly cooperate with the Bank to enter into an amendment of this Agreement to include such Improved Provisions. 4886-4749-3 705.9 - 34 -
(i) Further Assurances. The Commission shall execute, acknowledge where and deliver, and cause to be executed, acknowledged where appropriate and delivered, from time to time, promptly at the request of the Bank, all such instruments and documents as are usual and customary or advisable to carry out the intent and purpose of this Agreement, the Bank Note and other Basic Documents.
G) Notices. The Commission shall promptly furnish, or cause to be furnished, to the Bank (i) notice of the occurrence of any "event of default" under the Issuing and Paying Agent Agreement, any other Basic Document to which it is a party or any other document pursuant to which Power Enterprise Debt is issued, incurred, enhanced or purchased, (ii) notice of the failure by any Dealer or the Issuing and the Paying Agent to perform any of their respective obligations under the applicable Dealer Agreement or the Issuing and Paying Agent Agreement, as applicable, (iii) notice of any proposed substitution of this Agreement, (iv) notice of any proposed amendment to the Issuing and Paying Agent Agreement or the Resolutions or any other Basic Document and copies of all such amendments promptly following the execution thereof and (v) notice of the passage of any state or local Law not of general applicability to all Persons of which the Commission has knowledge, which could reasonably be expected to have a material adverse effect on the Commission's ability to perform its obligations under this Agreement or the other Basic Documents or to result in a material adverse effect on the enforceability or validity of this Agreement or any of the other Basic Documents.
(k) Maintenance of Insurance. The Commission shall maintain, or cause to be maintained, at all times, insurance on and with respect to its properties with responsible and reputable insurance companies; provided, however, that the Commission may maintain self insurance general liability on its properties not covered by the public entity property insurance program policy, for worker's compensation and vehicle liability and, with the consent of the Bank, such other self-insurance as it deems prudent. Such insurance must include casualty, liability and workers' compensation and be in amounts and with deductibles and exclusions customary and reasonable for governmental entities of similar size and with similar operations as the Commission. The Commission shall, upon request of the Bank, furnish evidence of such insurance to the Bank. The Commission shall also procure and maintain at all times adequate fidelity insurance or bonds on all officers and employees handling or responsible for any Revenues or funds of the Power Enterprise, such insurance or bond to be in an aggregate amount at least equal to the maximum amount of such Revenues or funds at any one time in the custody of all such officers and employees or in the amount of one million dollars ($1,000,000), whichever is less. The insurance described above may be provided as part of any comprehensive fidelity and other insurance and not separately for the Power Enterprise. (1) Alternate Facility.
(i) The Commission shall use commercially reasonable efforts to obtain an Alternate Facility to replace the Letter of Credit ( or otherwise refinance the Series A-2 Notes) if (A) Bank decides not to extend the Stated Expiration Date pursuant to Section 2.12 hereof, (B) Event of Default has occurred and is continuing, (C) the Commission terminates the Letter Credit pursuant to Section 2. 7 hereof or (D) the Bank declares all amounts due hereunder, under the Fee Agreement and under the Bank Note immediately become due and payable.
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(ii) The Commission shall not cause an Alternate Facility to become effective with respect to than all the Series A-2 Notes without the prior written consent of the Bank.
(iii) The Commission agrees that any termination of this Agreement as a result of the provision of any Alternate Facility will require, as a condition thereto, that the Commission provide funds on the date of such termination, which funds will be sufficient to pay all amounts due to the Bank hereunder and under the Fee Agreement including, but not limited to, the amounts due with respect to the Bank Note together, in each case, with accrued but unpaid interest thereon. On the date of such termination, the Commission shall pay to the Bank an amount equal to the outstanding principal amount, together with any accrued by unpaid interest thereon, of any and all other obligations due and owing hereunder and under the Fee Agreement.
(m) Preservation of Security. The Commission shall take any and all actions necessary or reasonably requested by the Bank to maintain the security pledged in favor of this Agreement and the Bartle Note as described in Section 5.l(n) hereof. (n) Pledge of Available Power Enterprise Revenues. The Series A-2 Notes and the obligations of the Commission under this Agreement, the Fee Agreement and the Bank Note are revenue obligations, are not secured by the taxing power of the Commission or the City and shall be payable as to both principal and interest from, and shall be secured solely by a pledge as hereinafter provided of, the Available Power Enterprise Revenues, and, as set forth below, funds and accounts created under the Issuing and Paying Agent Agreement.
The Available Power Enterprise Revenues ( on a parity with the pledge securing any Parity Notes and on a parity with and to the extent of the pledge set f01ih in Section 6.01 of the Issuing and Paying Agent Agreement) and the Construction Fund and the accounts therein ( on a parity with and to the extent of the pledge set forth in Section 6.01 of the Issuing and Paying Agent Agreement) are hereby pledged to the payment of the Series A-2 Notes, the Bank Note and all obligations of the Commission relating to the Series A-2 Notes under the Issuing and Paying Agent Agreement and under this Agreement, on a parity with all obligations of the Commission relating to the Series A-1 Notes, the Series A-1 Bank Note and all obligations of the Commission relating to the Series A-1 Notes under the Issuing and Paying Agent Agreement and under the Series A-1 Reimbursement Agreement without priority or distinction of one over the other, except as expressly provided under the Issuing and Paying Agent Agreement. In addition, the Series A-2 Debt Service Account (on a parity with and to the extent of the pledge set forth in Section 6.01 of the Issuing and Paying Agent Agreement) is hereby pledged to secure the payment of the interest on and principal of the Series A-2 Notes, and the Series A-2 Bank Payment Account and the Series A-2 Bank Note Debt Service Account are hereby pledged (on a parity with and to the extent of the pledge set forth in Section 6.01 of the Issuing and Paying Agent Agreement) to secure the payment of the interest on and principal of the Bank Note and obligations under this Agreement.
The Available Power Enterprise Revenues and the funds and accounts pledged to the payment of the Series A-2 Notes, the Bank Note and all obligations of the Commission relating to the Series A-2 Notes hereunder and under the Issuing and Paying Agent Agreement constitute a trust fund for the security and payment of the interest on and principal of the Series A-2 Notes, 4886-4749-3705.9 - 36 -
the Bank Note and all obligations of the Commission relating to the Series A-2 Notes w1der the Issuing and Paying Agent Agreement and under this Agreement, as provided herein and in the Issuing and Paying Agent Agreement, and shall be irrevocable W1til all of the Series A-2 Notes and the Bank Note have been paid and retired and any related obligations of the Commission under this Agreement have been satisfied.
The Commission will not issue or incur Debt secured by or payable from the Power Enterprise Revenues on a basis that is senior to the obligations owed to the Bank hereW1der, under the Fee Agreement and the Bank Note other than Bonds and Swap Agreements (as defined in the Master Trust Indenture) and other than the prior payment of amoW1ts required by Sections 5.5(a)-(e) of the Master Trust Indenture.
( o) Rates. The Commission shall fix, establish, maintain and collect rates and charges for electric power and energy and other services, facilities and commodities sold, furnished or supplied through the facilities of the Power Enterprise, which shall be fair and nondiscriminatory and adequate to provide the Commission with Revenues in each Fiscal Year sufficient:
(i) To pay, to the extent not paid from other available moneys, (A) the Operation and Maintenance Expenses during such Fiscal Year, (B) Annual Debt Service on the Bonds due and payable in such Fiscal Year, (C) the amoW1ts, if any, required to be deposited into the Reserve Fund established pursuant to the Master Trust Indenture during such Fiscal Year and (D) any and all other amounts the Commission is obligated to pay or set aside from the Revenues by law or contract in such Fiscal Year, including, without limitation and without duplication, amounts payable to the Bank under this Agreement, the Fee Agreement and the Bank Note and the principal of any interest on all Series A-2 Notes outstanding and/or expected to be outstanding during such Fiscal Year; (ii) To maintain a Bond Coverage Ratio of at least 1.0 to 1.0; and (iii) Together with Available Funds, to maintain a Bond Coverage Ratio of at least 1.25 to 1.00;
provided, however, the failure of the Commission to maintain the Bond Coverage Ratios in any Fiscal Year shall not constitute a default in the observance of the covenants of this subsection if:
(1) within 60 days after the Commission first determines that a Bond Coverage Ratio was not met or 60 days after the Commission's receipt of audited financial statements showing that a Bond Coverage Ratio was not met (whichever is earlier), the Commission engages a Consulting Engineer to deliver a report to the Commission within 60 days after such engagement which includes recommendations as to how the Commission can increase Revenues and/or reduce Operation and Maintenance Expenses so as to satisfy the Bond Coverage Ratios; and (2) (A) within 120 days after receipt of the Consulting Engineer's report the Commission implements the recommendations set forth in such report; or (B) the report states that the Power Enterprise cannot generate Revenues and/or reduce Operation and Maintenance Expenses sufficient to enable the Commission to maintain the Bond Coverage Ratios while satisfying the other covenants set fo1th in the Master Trust Indenture, and the Commission increases its Revenues and/or reduces its 4886-4749-3705,9 - 37 -
Operation and Maintenance Expenses to the extent otherwise recommended in such report; or (C) the Commission is prevented from taking any such action by order of any court of competent jurisdiction.
Notwithstanding the foregoing, failure for two (2) consecutive Fiscal Years to maintain the Bond Coverage Ratios shall in all events constitute an Event of Default. (p) Budget. The Commission shall include in each annual budget of the Commission all amounts reasonably anticipated to be necessary to pay all obligations due to the Bank hereunder, under the Fee Agreement and under the Bank Note. If the amounts so budgeted are not adequate for the payment of the obligations due hereunder, under the Fee Agreement and under the Bank Note, the Commission shall take such action as may be necessary to cause such annual budget to be amended, corrected or augmented so as to include therein the amounts required to be paid to the Bank during the course of the Fiscal Year to which such annual budget applies.
(q) Payment of Taxes, Etc. The Commission shall pay and discharge, or cause to be paid and discharged, all taxes, assessments and other governmental charges which may hereafter be lawfully imposed upon the Commission on account of the Power Enterprise or any portion thereof and which, if unpaid, might impair the security of the Series A-2 Notes, this Agreement, the obligations of the Commission under the Fee Agreement and the Bank Note when the same become due, but nothing herein contained will require the Commission to pay any such tax, assessment or charge so long as it in good faith contests the validity thereof. The Commission shall duly observe and comply with all valid material requirements of any Governmental Authority relative to the Power Enterprise or any part thereof. (r) Notice of Rating Change. The Commission shall use its best efforts to notify the Bank as soon as practicable of any suspension, reduction or withdrawal in the senior long-term rating of any Power Enterprise Debt.
(s) Issuing and Paying Agent and Dealer.
(i) The Commission shall at all times maintain a Dealer with respect to the Commission and use its best efforts at all times to enforce the Dealer Agreement.
The Commission agrees to cause the Dealer to use its best efforts to sell the Series A-2 Notes up to the maximum rate applicable to the Series A-2 Notes in order to repay maturing Series A-2 Notes. Each Dealer Agreement shall provide that the related Dealer may not resign until the earlier of (i) the appointment of a Dealer which is acceptable to the Bank and such Dealer's acceptance of such appointment and (ii) the date which is at least sixty (60) days following the receipt by Commission, the Issuing and Paying Agent and the Bank of prior written notice of such resignation. (ii) On and after the Closing Date, the Commission shall at all times maintain an Issuing and Paying Agent pursuant to the terms of the Issuing and Paying Agent. Any successor Issuing and Paying Agent ( or any parent or affiliate of such Issuing and Paying Agent) shall have capital of not less than $500,000,000, and underlying ratings from S&P and Fitch of at least "A3" (or its equivalent), "A-" (or its equivalent) and "A-" (or its equivalent), respectively (unless, in each instance, the Bank in its 4886-4749-3705.9 - 38 -
discretion provides in writing an exception for a particular Issuing and Paying Agent under specified circumstances).
(iii) In no event shall the Commission permit any Dealer other than a Qualified Dealer to act as dealer for the Series A-2 Notes. In the event that any material adverse change occurs in the status of the financial condition of any Dealer for the Series A-2 Notes or its ability to perform its obligations under the Dealer Agreement to which it is a party, the Commission shall promptly disqualify and, if it desires, replace such Dealer and appoint another Qualified Dealer with respect to the Series A-2 Notes.
If any Advance or Term Loan remains outstanding for a period of thirty (30) consecutive calendar days or any Dealer fails to perform its duties under the Dealer Agreement to which it is a party, the Commission shall, at the written direction of the Bank, cause the related Dealer (that has been unable to sell rollover Series A-2 Notes or fails to perform its duties) to be replaced with a Qualified Dealer within thirty (30) calendar days after receipt of such written direction. Any successor Dealer ( or any parent or affiliate of such Dealer shall have capital of not less than $500,000,000, and underlying ratings from S&P and Fitch of at least "A-" (or its eqnivalent) and "A-" (or its equivalent), respectively (unless, in each instance, the Bank in its discretion provides in writing an exception for a particular Dealer under specified circumstances).
(t) Maintenance of Ratings on Series A-2 Notes. The Commission shall at all times (i) cause at least one of Fitch and S&P to maintain at least one short-tenn rating on the Series A-2 Notes, (ii) Fitch and S&P to maintain a long-term, unenhanced debt rating on Senior Debt, and (iii) cause at least one of Fitch and S&P to maintain a long-term rating on the Bank Note.
Section 5.2 Negative Covenants. So long as the Letter of Credit has not expired or terminated or any Obligations remain outstanding under this Agreement, the Fee Agreement or the Bank Note the Commission shall not, unless the Bank otherwise consents in writing:
(a) Amendments. Subject to Section 5.l(c) hereof, directly or indirectly amend, supplement or terminate any of the Basic Documents or the Master Trust Indenture, except that (i) Commission may amend or modify, or permit to be amended or modified, any of the Basic Documents (as and to the extent the Commission's participation is required for such purpose) in a manner (A) not relating to the duties, obligations or rights of the Bank under this Agreement and not having a material adverse effect on (x) the ability of the Commission to pay when due the principal of or interest on the Series A-2 Notes and the obligations of the Commission under this Agreement, Fee Agreement and the Bank Note or (y) the security, rights or remedies of the Bank hereunder, under the Bank Note or under any other Basic Document; and (ii) the Commission may amend the Offering Memorandum to update information relating to any entity described therein other than the Bank. The Commission agrees to deliver to the Bank copies of all such amendments, modification, supplements or other changes at least ten (10) Business Days prior to the effective date of any such amendment, modification, supplement or other change.
The Bank shall, within five (5) Business Days, inform the Commission in writing if, in its reasonable discretion, such amendment, modification, supplement or other change requires the prior written consent of the Bank in accordance with this Section 5.2(a). Notwithstanding the foregoing, the Commission, without the Bank's prior written consent, may perform ministerial duties, make such provisions for the purpose of curing any ambiguity, inconsistency or omission, 4886-4749-3 705.9 - 39 -
or of curing or correcting any defective provision, as the Commission may deem necessary or desirable, in any case which do not adversely affect the security, rights or remedies of the Bank hereunder, under the Bank Note, or any other Basic Document and, solely in connection with the issuance of additional Debt, issue in strict compliance with the terms of the governing documents related thereto.
(b) Merger, Disposition of Assets. Consolidate or merge with or into any Person or sell, lease or otherwise transfer all or substantially all of its assets to any Person. ( c) Preservation of Corporate Existence, Etc. Take any action to terminate its existence as a body politic and corporate and a political subdivision of the State or its rights and privileges as such entity within the State.
(d) Total Outstanding. Permit the aggregate principal amount of all Series A-2 Notes and the Bank Note outstanding at any time to exceed $136,095,891 (except as provided in Section 5.2(f) hereof); or pennit the aggregate principal amount of and interest on all Series A-2 Notes outstanding at any time to exceed the Stated Amount at such time. ( e) Exempt Status. Take any action, omit to take any action or cause or permit another Person to take any action or omit to take any action, which, if taken or omitted, would adversely affect the excludability of interest on the Series A-2 Notes (other than those issued as taxable Series A-2 Notes) from the gross income of the holders thereof for purposes of Federal income taxation.
(t) Issue Power Enterprise Debt.
4886-4749-3705.9
(I) Issue any Senior Debt or Parity Debt unless:
(i) no "event of default" shall have occurred and be continuing under the agreement or instrument pursuant to which any outstanding Senior Debt or Parity Debt was issued or incurred and no event shall have occurred which, but for the passage of time or the giving of notice, would constitute an "event of default" under any such agreement or instrument;
(ii) such Senior Debt or Parity Debt does not exceed at any time any limitation set forth in the Constitution or other laws of the State, the Charter, the Resolution, the Ordinance, the Master Trust Indenture or any supplement thereto, other resolutions adopted by the Commission, Ordinances adopted by the Board or the Issuing and Paying Agent Agreement;
(iii) in the case of Senior Debt, either:
(A) a Ce1iificate of the Commission stating that, in each of the first three (3) full Fiscal Years after the sale of such Senior Debt, projected Net Revenues (1) plus Available Funds, are at least 1.25 times Annual Debt Service on the outstanding Senior Debt, after giving effect to the issuance of such Senior Debt, and (2) are at least 1.0 times Annual Debt Service on the outstanding Senior Debt, plus required deposits into any Reserve Fund established pursuant to the Master Trust Indenture, after giving effect to the issuance of such Senior Debt; or - 40 -
4886-4749-3705,9
(B) a Certificate of the Commission stating that Net Revenues from any twelve consecutive months of the prior 24 months: (1) plus Available Funds, are at least 1.25 times Annual Debt Service on the outstanding Senior Debt, after giving effect to the issuance of such Senior Debt, and (2) are at least
1.0 times Annual Debt Service on the outstanding Senior Debt, plus required deposits into any Reserve Fund established pursuant to the Master Trust Indenture after giving effect to the issuance of such Senior Debt; provided, however, for purposes of this paragraph (B) the following adjustments may be made to Net Revenues for such period, if so stated in the Certificate of the Commission; (I) an allowance for additional Revenues anticipated from any additions, extensions and improvements to the Power Enterprise to be acquired or constructed from proceeds of such or a prior Senior Debt and for any changes in Operation and Maintenance Expenses resulting therefrom, that are not reflected in Net Revenues for such Fiscal Year, but only if such additional Revenues and changes in Operation and Maintenance Expenses represent a full twelve months' change in Net Revenues attributable to such additions, extensions and improvements; and (II) An allowance for additional Revenues attributable to any increase in the rates and charges imposed by the Commission that (x) was in effect prior to the issuance of such Senior Debt but which, during all or part of such Fiscal Year, was not in effect, or (y) was adopted by the Commission prior to the issuance of such Senior Debt and will be in effect within 90 days after such issuance, but in either case only if such additional Revenues represent a full twelve months' change in Net Revenues attributable to such increase in rates and charges; (iv) in the case of Parity Debt in addition to the Series A-2 Notes and the Series A-1 Notes, either:
(A) a Certificate of the Commission stating that, in each of the three (3) full Fiscal Years after the sale of such Parity Debt, Revenues will sufficient to pay (I) the Operation and Maintenance Expenses during each such Fiscal Year, (II) Annual Debt Service on the Bonds and all other outstanding Senior Debt due and payable in each such Fiscal Year, (III) the amounts, if any, required to be deposited into the Reserve Fund established pursuant to the Master Trust Indenture during each such Fiscal Year, (IV) in the case of the Series A-2 Notes, debt service on the Series A-2 Notes assuming the entire authorized amount of the Series A-2 Notes is issued and outstanding and that such amount will amortize over a thirty year period on a level debt basis using an interest rate equal to the Bond Buyer 25-Bond Revenue Bond Index (or, if such index is no longer published, any other comparable revenue bond on the date of such Ce1tificate and (V) any and all other amounts the Commission is obligated to pay or set aside from Revenues by law or in each such Fiscal Year, including, without limitation and without duplication, amounts payable to the Bank wider this Agreement, the Fee Agreement and the Bank Note, as well as the principal of and interest on the Parity Debt to be issued; or
(B) a Certificate of the Commission stating that Revenues from any nvelve consecutive months of the prior 24 months were sufficient to pay (I) the Operation and Maintenance Expenses during such twelve consecutive - 41 -
month period, (II) Annual Debt Service on the Bonds and all other outstanding Senior Debt due and payable in such twelve consecutive month period, (III) the amounts, if any, required to be deposited into the Reserve Fund established pursuant to the Master Trust Indenture during such twelve consecutive month period, (IV) in the case of the Series A-2 Notes, debt service on the Series A-2 Notes assuming the entire authorized amount of the Series A-2 Notes was issued and outstanding during such twelve consecutive month period and that such amount was amortizing over a thirty year period on a level debt basis using an interest rate equal to the Bond Buyer 25-Bond Revenue Bond Index (or, if such index is no longer published, any other comparable revenue bond index) on the date of such Certificate and (V) any and all other amounts the Commission was obligated to pay or set aside from Revenues by law or contract in such twelve consecutive month period, including, without limitation and without duplication, amounts payable to the Bank under this Agreement, the Fee Agreement and the Bank Note during such twelve consecutive month period, as well as the principal of and interest on the Parity Debt to be issued ( assuming such Parity Debt had been outstanding during such twelve consecutive month period); (v) the issuance of Parity Debt will not result in the creation of a Lien on the Available Power Enterprise Revenues that is senior to the Lien securing the Series A-2 Notes or the obligations under the Agreement, the Fee Letter and the Bank Note; and
(vi) any such Parity Debt is issued in compliance with Section 5.07 of the Issuing and Paying Agent Agreement;
(vii) in connection with the issuance of any additional Senior Debt, the Commission provides certificates demonstrating compliance with the requirements set forth in Section 3.4 or Section 3.5, as the case may be, of the Master Trust Indenture;
(viii) in connection with the issuance of any additional Parity Debt, the Commission provides a certificate demonstrating compliance with the requirements set forth in Section 5.07 of the Issuing and Paying Agent Agreement; and
(ix) no Default or Event of Default has occurred and is continuing hereunder as a result thereof.
(2) The Commission will not issue Debt secured by or payable from the Revenues on a basis that is senior to the obligations owed to the Bank hereunder, under the Fee Agreement and the Bank Note other than the Bonds other than in accordance with this Section 5.2(f), the Master Trust Indenture and the Issuing and Paying Agent Agreement.
(g) Use of Bank's Name. Permit the use of the Bank's name in any official statement or other offering document unless the Bank has approved in writing the description of the Bank contained in such document.
4886-4749-3705.9 - 42 -
(h) Arbitrage Bonds; Tax-Exempt Status of Series A-2 Notes. Invest the proceeds of the Series A-2 Notes in any way that would violate the Code or cause the Series A-2 Notes to be deemed "arbitrage bonds" or take any action or omit to take any action if such action or omission would adversely affect the exclusion of interest on the Series A-2 Notes from gross income of the holders thereof for Federal income tax purposes.
(i) Swap Agreements. Without the prior written consent of the Bank, enter into any Swap Agreement secured by Revenues (a) wherein any termination payments thereunder are senior to or on parity with the payment of the Series A-2 Notes or the Obligations or (b) which requires the Commission to post cash collateral to secure its obligations thereunder.
G) Liens. Create or suffer to exist or permit any Lien on the Revenues other than the Liens created or permitted by the Master Trust Indenture, the Issuing and Paying Agent Agreement (including Parity Debt), this Agreement, the Series A-2 Reimbursement Agreement and Liens that are junior and subordinate to the Lien created by the Issuing and Paying Agent Agreement and this Agreement under terms and conditions satisfactory to the Bank. (k) Sovereign Immunity. Assert the defense of any future right of sovereign immunity in a legal proceeding to enforce or collect upon the obligations of the Commission under this Agreement, the Fee Agreement or the Bank Note or the transactions contemplated hereby and thereby.
(1) Power Enterprise. Construct, operate or maintain, and shall not within the scope of its powers pe1mit any other public or private corporation, political subdivision, district or agency or any Person whatsoever to construct, operate or maintain, within the City or any part thereof, any system or utility competitive with the Power Enterprise. The Commission shall have in effect, or cause to have in effect, at all times an ordinance or resolution requiring all customers of the Power Enterprise to pay the fees, rates and charges applicable to the services and facilities furnished by the Power Enterprise. The Commission shall not provide any service of the Power Enterprise free of charge to any Person, except (i) for free use by the City and its agencies, (ii) to the extent that any such free use is required by the terms of any existing contract or agreement and (iii) for incidental insignificant free use so long as such free use does not prevent the Commission from satisfying the other covenants of this Agreement, including, without limitation, Section 5.l(o) hereof.
(m) Preservation of Existence, Etc. Take any action pursuant to the Charter to accomplish a merger of the Power Enterprise with any other entity or enterprise, unless and until the Commission has provided a method for segregating the Revenues from the revenues of said other entity or enterprise in a manner that will, or shall otherwise, preserve the Lien on the Available Power Enterprise Revenues for the payment of the Series A-2 Notes and the Obligations provided in Section 4.3 hereof and has obtained an opinion of counsel from a firm nationally recognized in the practice of tax-exempt financing that such merger will not, in and of itself, (i) affect the exclusion from gross income of the interest on the Series A-2 Notes or (ii) cause the Lien created by this Agreement to be no longer valid as required by Section 5.l(n) hereof. If the Commission does effect such a merger, the Commission shall provide written notice thereof to the Bank and shall deliver a copy of the aforementioned opinion to the Bank. 4886-4749-3705.9 - 43 -
(n) Use of Proceeds. Use the proceeds of any credit extension, whether directly or indirectly, and whether innnediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose, in each case in violation of, or for a purpose which violates, or would be inconsistent with, Regulation T, U or X of the Board of Governors of the Federal Reserve System. The Connnission shall not use the proceeds of the Series A-2 Notes or the Bank Note for any purpose other than as provided for in the Resolutions and not in contravention of applicable Law.
(o) Series A-2 Notes. Permit any Series A-2 Note issued pursuant to the Resolutions or the Issuing and Paying Agent Agreement to mature more than two hundred seventy (270) days after the date of issuance or after the Stated Expiration Date.
ARTICLE6
DEFAULTS
Section 6.1 Events of Default and Remedies. If any of the following events occurs, each such event will be an "Event of Default":
(a) the Connnission fails to pay, or cause to be paid, as and when due, (i) any Reimbursement Obligation or (ii) any Obligation ( other than a Reimbursement Obligation) hereunder or under the Fee Agreement and, in such case, such failure continues for five (5) Business Days;
(b) any representation or warranty made by or on behalf of the Connnission in this Agreement or in any other Basic Document or in any certificate or statement delivered hereunder or thereunder is incorrect or untrue in any material respect when made or deemed to have been made or delivered;
( c) the Connnission defaults in the due performance or observance of any of the covenants set forth in Section 2.15, 5.l(c), 5.l(d), 5.l(g), 5.l(m)(ii), 5.l(n), 5.l(s)(ii),5.l(s)(iii) or 5.2 hereof;
( d) the Connnission defaults in the due performance or observance of any other term, covenant or agreement contained in this 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, (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, 4886-4749-3705.9 - 44-
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 Section 6.1 (f) of this Agreement; (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 pait of its Property, or a proceeding described in Section 6.l(e)(v) 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 of the Commission by the Commission or any Governmental Authority with appropriate jurisdiction;
(h) any material prov1s1on of this 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 is 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, including, without limitation, the Master Trust 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 this Agreement, the Charter, any other Basic Document or any operative document related to Power Enterprise Debt, including, without limitation, the Master Trust Indenture; (i) dissolution or termination of the existence of the Commission; G) 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 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, mandat01y 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, 4886-4749-3705.9 - 45 -
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); (I) 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 Commission challenges such ruling, assessment, notice or advice and a court of law makes a determination, not subject to appeal or review by another comi oflaw, 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 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 has occurred which could reasonably be expected to have a material adverse effect on the Commission's ability to perform its obligations under this Agreement or the other Basic Documents or to result in a material adverse effect on the enforceability or validity of this Agreement or any of the other Basic Documents.
Section 6.2 Remedies. Upon the occurrence of any Event of Default the Bank may exercise any one or more of the following rights and remedies in addition to any other remedies herein or by law provided:
(a) declare all Obligations to be immediately due and payable, whereupon the same are immediately due and payable without any fmiher notice of any kind, which notice is waived by the Commission; provided, however, that in the case of an Event of Default described in Section 6.l(e), (f) or (g) hereof, such acceleration will automatically occur (unless such automatic acceleration is waived by the Bank in writing); or (b) issue a No-Issuance Notice (the effect of which will be as provided in Section 2.18 of this Agreement), reduce the Stated Amount of the Letter of Credit to the amount of the then outstanding Series A-2 Notes supported by the 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
4886-4 749-3705.9 - 46 -
( c) issue the Final Drawing Notice (the effect of which will be to cause the Termination Date of the 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 Bank may, pursuant to Section 8.01 of the Issuing and Paying Agent Agreement, by notice to the Commission and the Issuing and Paying Agent ( such notice, the "Acceleration Notice"), (i) 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 (ii) instruct the Issuing and Paying Agent to submit a Drawing under the Letter to pay such immediately due and payable amount.
ARTICLE?
MISCELLANEOUS
Section 7.1 Amendments, Waivers, Etc. No amendment or waiver of any provision of this Agreement, or consent to any departure by the Commission therefrom, will in any event be effective unless the same is in writing and signed by the Bank and an Authorized Representative of the Commission, and then such waiver or consent is effective only in the specific instance and for the specific purpose for which given.
Section 7.2 Notices. All notices and other communications provided for hereunder must be in writing (including required copies) and sent by receipted hand delivery (including Federal Express or other receipted courier service), facsimile transmission or regular mail, as follows:
(a) ifto the Commission: City and County of San Francisco Public Utilities Commission
(b) if to the Bank:
4886-4749-3705.9
525 Golden Gate Avenue, 4th Floor
San Francisco, California 94102
Attention: Capital Finance Director
Telephone: (415) 551-2973
Facsimile: (415) 487-5258
Email: [email protected]
Bank of America, N.A.
333 S. Hope Street, 38th Floor
Los Angeles, California 90071
Attention: Jyoti Rathore
Telephone: (213) 621-4971
Email: Jvoti.rathore(m,bofa.com
- 47 -
( c) if to Issuing and
Paying Agent:
( d) if to the Dealers:
In the case of communications to the Bank with
respect to drawings under the Letter of Credit:
Bank of America, N.A.
I Fleet Way, PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Telephone: (800) 370-7519 OPT I
Facsimile: (800) 755-8743
In the case of payments to the Bank:
Bank of America, N.A.
ABA: 026009593
A/C: 04535-88398
Reference: Letter of Credit# 68183906
or such other account as the Bank may from time to time designate in writing to the Commission.
U.S. Bank Trust Company National Association
100 Wall Street, 6th Floor
New York, New York 10005
Attention: Maria Cepeda-Holly
Telephone: (779) 225-8163
At the address, telephone number and telecopy number set forth in each Dealer Agreement
or, as to each Person named above, at such other address or telephone or telecopy number as is designated by such Person in a written notice to the parties hereto. All such notices and other communications will, when delivered, sent by facsimile transmission or mailed, be effective when deposited with the courier, sent by facsimile transmission or mailed, respectively, addressed as aforesaid, except that requests for Drawings submitted to the Bank will not be effective until received by the Bank.
Section 7.3 Survival of Covenants; Successors and Assigns. (a) All covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto will survive the making of any Drawing or Advance hereunder and will continue in full force and effect until all of the Obligations hereunder are paid in full. Whenever in this Agreement any of the parties hereto is referred to, such reference will, subject to the last sentence of this Section, be deemed to include the successors and assigns of such party, and all covenants, promises and agreements by or on behalf of the Commission which are contained in this Agreement will inure to the benefit of the successors and assigns of the Bank. The Commission may not transfer its rights or obligations under this Agreement without the prior written consent of the Bank. The Bank may transfer or assign some or all of its rights and obligations under this Agreement, the Fee Letter, the Bank Note and the Letter of Credit with the prior written consent of the Commission (which consent may not be withheld unreasonably), provided that (i) with respect to the Letter of Credit only, the Commission has received written notice from each rating 4886-4749-3705.9 - 48 -
agency then rating the Series A-2 Notes that the transfer will not cause the lowering, withdrawal or suspension of such rating agency's rating on the Series A-2 Notes, and (ii) the Bank shall be responsible for all costs solely relating to such transfer or assignment. This Agreement is made solely for the benefit of the Commission and the Bank, and no other Person (including, without limitation, the Issuing and Paying Agent, any Dealer or any holder of Series A-2 Notes) will have any right, benefit or interest under or because of the existence of this Agreement; provided, further, that the Commission's liability to any Participant will not in any event exceed that liability which the Commission would owe to the Bank but for such participation. (b) Notwithstanding the foregoing, the Bank will be pennitted to grant to one or more financial institutions (each a "Participant") a participation or participations in all or any part of the Bank's rights and benefits and obligations under this Agreement, the Bank Note, the Fee and the Letter of Credit on a participating basis but not as a party to this Agreement (a "Participation") without the consent of the Commission. In the event of any such grant by the of a Pmiicipation to a Participant, the Bank shall remain responsible for the performance of its obligations hereunder and under the Letter of Credit, and the Commission may continue to deal solely and directly with the Bank in connection with the Bank's rights and obligations under this Agreement and under the Letter of Credit. The Commission agrees that each Participant will, to the extent of its Participation, be entitled to the benefits of this Agreement as if such Participant were Bank, provided that no Participant will have the right to declare, or to take actions in response to, Event of Default under Section 6.1 hereof.
Section 7.4 Unconditional Obligations. The obligations of the Commission under this Agreement and under the Fee Agreement are absolute, unconditional, irrevocable and payable strictly in accordance with the terms of the Issuing and Paying Agent Agreement, this Agreement and the other Basic Documents to which the Commission is a party, under all circumstances whatsoever, including, without limitation, the following:
(a) any lack of validity or enforceability of this Agreement, the Letter of Credit, the Fee Agreement or the Series A-2 Notes or any other Basic Document; (b) any amendment or waiver of or any consent to departure from the terms of the Issuing and Paying Agent Agreement or all or any of the other Basic Documents to which the Bank has not consented in writing (unless pursuant to Section 5.2(a) hereof such consent is not required);
( c) the existence of any claim, counterclaim, set-off, recoupment, defense or other right which any Person may have at any time against the Bank, the Commission, the Issuing and Paying Agent, any Dealer or any other Person, whether in connection with this Agreement, the other Basic Documents or any transaction related thereto; ( d) any statement or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;
( e) payment by the Bank under the Letter of Credit against presentation of a draft or certificate which does not comply with the terms of the Letter of Credit; and 4886A749-3705.9 - 49 -
(t) any other circumstances or happening whatsoever, whether or not similar to any of the foregoing.
Section 7 .5 Liability of Bank; Indemnification.
(a) To the extent permitted by the law of the State, the Commission assumes all risks the acts or omissions of the Issuing and Paying Agent with respect to the use of the Letter of Credit the use of proceeds thereunder; provided that this provision with respect to the Bank is not intended to and will not preclude the Commission from pursuing such rights and remedies as it may have against the Issuing and Paying Agent under any other agreements. Neither the Bank nor any of its respective officers or directors will be liable or responsible for (i) the use of the Letter of Credit, the Drawings or the Advances, the proceeds of the Series A-2 Notes or the transactions contemplated hereby and the other Basic Documents or for any acts or omissions of the Issuing and Paying Agent or any Dealer, (ii) the validity, sufficiency or genuineness of any documents determined in good faith by Bank to be valid, sufficient or genuine, even if such documents, in fact, prove to be in any or all respects invalid, fraudulent, forged or insufficient, (iii) payments by the Bank against presentation requests for Drawings or requests which the Bank in good faith has determined to be valid, or genuine and which subsequently are found not to comply with the terms of this Agreement or any other circumstances whatsoever in making or failing to make payment hereunder; provided that the Commission is not required to indemnify the Bank for any claims, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by the gross negligence or willful misconduct the Bank. (b) To the extent permitted by the law of the State, the Commission indemnifies and holds harmless the Bank from and against any and all direct, as opposed to consequential, claims, damages, losses, liabilities, costs and expenses (including specifically reasonable attorneys' fees) which the Bank may incur ( or which may be claimed against the Bank by any Person whatsoever) by reason of or in connection with (i) the execution and delivery of this Agreement, the Fee Agreement, the Letter of Credit and the transactions contemplated hereby or thereby and (ii) any untrue statement or alleged untrue statement of any material fact contained in the Offering Memorandum prepared and distributed in connection with the Series A-2 Notes or the omission or alleged omission to state therein a material fact necessary to make such statements, in the light of the circumstances under which they are or were made, not misleading; provided that the Commission is not required to indemnify the Bank to the extent, but only to the extent, any such claim, damage, loss, liability, cost or expense is caused by the Bank's willful misconduct or gross negligence. The Bank is expressly authorized and directed to honor any demand for payment which is made under the Letter of Credit without regard to, and without any duty on its part to inquire into the existence of, any disputes or controversies between the Commission, any Dealer, the Issuing and Paying Agent or any other Person or the respective rights, duties or liabilities of any of them or whether any facts or occurrences represented in any of the documents presented under the Letter of Credit are true and c01Tect. ( c) To the fullest extent permitted by applicable law, the Commission shall not assert, and waives, any claim against the Bank, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, the Letter of Credit, any other Basic Document or any agreement or instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby or the use of the proceeds thereof. 4886-4749-3 705.9 - 50 -
(d) The obligations of the Connnission under this Section 7.5 will survive the termination of this Agreement.
Section 7 .6 Expenses. Upon receipt of a written invoice, the Commission shall promptly pay (i) the reasonable fees and expenses of counsel to the Bank incurred in connection with the preparation, execution and delivery and administration of this Agreement, the Letter of Credit, the Fee Agreement and the other Basic Documents as set forth in the Fee Agreement, (ii) the out-of-pocket expenses of the Bank incurred in connection with the preparation, execution and delivery and administration of this Agreement, the Letter of Credit, the Fee Agreement and the Basic Documents (provided that such expenses to be paid in connection with the preparation and execution and delivery will not exceed the amount specified in the Fee Agreement), (iii) the fees disbursements of counsel to the Bank with respect to advising the Bank as to its rights and responsibilities under this Agreement after the occurrence of an Event of Default and (iv) all costs and expenses, if any, in connection with the administration and enforcement of this Agreement and any other documents which may be delivered in connection herewith, including in each case the and disbursements of counsel to the Bank. In addition, and notwithstanding the foregoing, the Commission agrees to pay, after the occurrence of an Event of Default, all costs and expenses (including attorneys' fees and costs of settlement) incurred by the Bank in enforcing any or in collecting any payments due from the Commission hereunder by reason of such Event of Default or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a "workout" or of any insolvency or bankruptcy proceedings. The obligations of the Commission under this Section 7.6 will survive the termination of this Agreement.
Section 7.7 No Waiver; Conflict. Neither any failure nor any delay on the part of the Bank in exercising any right, power or privilege hereunder, nor any course of dealing with respect to any of the same, will operate as a waiver thereof or preclude any other or further exercise thereof, nor will a single or partial exercise thereof, preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. To the extent of any conflict between this Agreement, the Letter of Credit and any other Basic Documents, this Agreement will control solely as between the Commission and the Bank.
Section 7.8 Modification, Amendment, Waiver, Etc. No modification, amendment or waiver of any provision of this Agreement will be effective unless the same is in writing and signed in accordance with Section 7. I hereof.
Section 7.9 Dealing with the Commission, the Issuing and Paying Agent and/or the Dealer. The Bank and its affiliates may accept deposits from, extend credit to and generally engage in any kind of banking, trust or other business with the Commission, the Issuing and Paying Agent and/or any Dealer regardless of the capacity of the Bank hereunder.
Section 7 .10 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction, and all other remaining provisions hereof will be construed to render them enforceable to the fullest extent permitted by law. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or 4886-4749-3705.9 - 51 -
unenforceable provisions with valid provisions the economic or legal effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
Section 7.11 Counterparts. This Agreement may be executed in two or more counterparts, each of which constitutes an original, but when taken together constitute but one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement may be delivered by the exchange of signed signature pages by facsimile transmission or by e-mail with a pdf copy or other replicating image attached, and any printed or copied version of any signature page so delivered will have the same force and effect as an originally signed version of such signature page.
Section 7.12 Table of Contents; Headings. The table of contents and the section and subsection headings used herein have been inserted for convenience of reference only and do not constitute matters to be considered in interpreting this Agreement.
Section 7.13 Entire Agreement. This Agreement represents the final agreement between the parties hereto with respect to the subject matter hereof and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties hereto as to such subject matter.
Section 7.14 Governing Law Waiver of Jury Trial.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT UNDER,
AND FOR ALL PURPOSES SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PROVISIONS (OTHER THAN NEW YORK GENERAL OBLIGATIONS LAWS 5-1401 AND 5-1402); PROVIDED, THAT
THE OBLIGATIONS OF THE COMMISSION HEREUNDER SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO CHOICE OF LAW RULES.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
PARTIES HERETO WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE BASIC
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. IF AND TO
THE EXTENT THAT THE FOREGOING WAIVER OF THE RIGHT TO A JURY TRIAL IS
UNENFORCEABLE FOR ANY REASON IN SUCH FORUM, EACH OF THE PARTIES
HERETO CONSENTS TO THE ADJUDICATION OF ALL CLAIMS PURSUANT TO
JUDICIAL REFERENCE AS PROVIDED IN CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638, AND THE JUDICIAL REFEREE IS EMPOWERED TO HEAR AND DETERMINE ALL ISSUES IN SUCH REFERENCE, WHETHER FACT OR LAW. EACH OF
THE PARTIES HERETO REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND
CONSENT AND, FOLLOWING CONSULTATION WITH LEGAL COUNSEL ON SUCH
MATTERS, KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS AND CONSENTS TO JUDICIAL REFERENCE. IN THE EVENT OF LITIGATION, A COPY
OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY 4886-4749-3705.9 - 52 -
THE COURT OR TO JUDICIAL REFERENCE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638 AS PROVIDED HEREIN.
( c) The covenants and waivers made pursuant to this Section 7.14 are in-evocable and unmodifiable, whether in writing or orally, and are applicable to any subsequent amendments, renewals, supplements or modifications of this Agreement. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.
Section 7.15 Governmental Regulations. The Commission shall (a) ensure that no who owns a controlling interest in or otherwise controls the Commission is or will be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control ("OFAC"), the Department of the Treasury or included in any Executive Order that prohibits or limits the Bank from making any advance or extension of credit the Commission or from otherwise conducting business with the Commission and (b) ensure that proceeds of the Series A-2 Notes are not used to violate any of the foreign asset control regulations of OF AC any enabling statute or Executive Order relating thereto. Further, the Commission shall comply, cause any of its subsidiaries to comply, with all applicable Bank Secrecy Act laws and regulations, amended.
Section 7.16 USA PATRIOT Act. The Bank notifies the Commission that, pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies the Commission, which information includes the name and address of the Commission and other information that will allow the Bank to identify the Commission in accordance with the Act. The Commission agrees to provide such documentary and other evidence of the Commission's identity as may be requested by the Bank at any time to enable the Bank to verify the Commission's identity or to comply with any applicable law or regulation, including, without limitation, the Act.
Section 7 .17 Electronic Transmissions. The Bank is authorized to accept and process any amendments, transfers, assignments of proceeds, Drawings, consents, waivers and all documents relating to the Letter of Credit which are sent to Bank by electronic transmission, including SWIFT, electronic mail, telex, telecopy, courier, mail or other computer generated telecommunications and such electronic communication will have the same legal effect as if written and will be binding upon and enforceable against the Commission. The Bank may, but shall not be obligated to, require authentication of such electronic transmission or that the Bank receives original documents prior to acting on such electronic transmission.
Section 7.18 Assignment to Federal Reserve Bank. The Bank may assign and pledge all or any portion of the obligations owing to it hereunder and under the Bank Note to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank, provided that any payment in respect of such assigned obligations made by the Commission to the Bank in accordance with the terms of this Agreement or the Bank Note will satisfy the Commission's obligations hereunder and/or under the Bank Note in respect of such assigned obligation to the extent of such payment. No such assignment will release the Bank from its obligations hereunder.
4886-4749-3705.9 - 53 -
Section 7.19 City Requirements. The Banlc agrees to the City's requirements, as provided in Exhibit D attached hereto.
Section 7.20 Arm's Length Transaction. The transaction described in this Agreement is an arm's length, commercial transaction between the Commission and the Bank in which:
(i) the Banlc is acting solely as a principal (i.e., as a lender) and for its own interest; (ii) the Banlc is not acting as a municipal advisor or financial advisor to the Commission; (iii) the Banlc has no duty pursuant to Section I SB of the Securities Exchange Act of 1934 to the Commission with to this transaction and the discussions, undertakings and procedures leading thereto (irrespective of whether the Banlc or any of its affiliates has provided other services or is currently providing other services to the Commission on other matters); (iv) the only obligations the Banlc has to the Commission with respect to this transaction are set forth in this Agreement; and (v) the Bank is not recommending that the Commission take an action with respect to the transaction described in this Agreement and the other Basic Documents, and before taldng any action with respect to the this transaction, the Commission should discuss the information contained herein with the own legal, accounting, tax, financial and other advisors, as the Commission deems appropriate.
Section 7.21 QFC Provisions. To the extent that the Basic Documents provide support, through a guarantee or otherwise, for any agreement or instrument that is a QFC (such support, "QFC Credit Support", and each such QFC, a "Supported QFC"), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Franlc Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the "U.S. Special Resolution Regimes") in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Basic Documents and any Supported QFC may in fact be stated to be governed by the laws of the State ofNew York and/or of the United States or any other state of the United States):
(a) Acknowledgment Regarding Supported QFCs. In the event a Covered Entity that is party to a Supported QFC ( each, a "Covered Party") becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Basic Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Basic Documents were governed by the laws of the United States or a state of the United States. (b) Limitation on the Exercise of Certain Rights Related to Affiliate Insolvency Proceedings with Respect to Any Supported QFCs. Notwithstanding anything to the contrary in the Basic Documents or any other agreement, but without prejudice to the requirements of the preceding paragraph (a), Default Rights under the Basic Documents that might otherwise apply to a Supported QFC or any QFC Credit Support may not be exercised against a Covered Party if 4886-4749-3705.9 - 54 -
such Default Rights are related, directly or indirectly, to a BHC Act Affiliate of such Covered Party becoming subject to Insolvency Proceedings, except to the extent such exercise would be permitted under 12 C.F.R. § 252.84, 12 C.F.R. § 47.5, or 12 C.F.R. § 382.4, as applicable. After a BHC Act Affiliate of a Covered Party has become subject to Insolvency Proceedings, if any party to the Basic Documents, any Supported QFC or any QFC Credit Support seeks to exercise any Default Right against such Covered Party with respect to such Supported QFC or such QFC Credit Support, the party seeking to exercise such Default Right shall have the burden of proof, by clear and convincing evidence, that the exercise of such Default Right is permitted hereunder. [SIGNATURE PAGES FOLLOW]
4886-4749-3705.9 - 55 -
IN WITNESS WHEREOF, the Commission and the Bank have duly executed this Agreement as of the date first written above.
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By ~ Name: .,Nil J. off
Title: C::;::::::
APPROVED AS TO FORM:
DAVIDCIDU
City Attorney of the City and
County of San Francisco
By: -----------
Name: Mark D. Blake
Title: Deputy City Attorney
ACKNOWLEDGED
By:------- ----
Name:
Title:
Anna Van Degna
Director of Public Finance of the
City and County of San Francisco
[Signature Page - Power Enterprise Reimbursement Agreement - Series A-2 Notes] IN WITNESS WHEREOF, the Commission and the Bank have duly executed this Agreement as of the date first written above.
APPROVED AS TO FORM:
DAVID CHIU
Deputy City Allor
ACKNOWLEDGED
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By:
Name: Nikolai J. Sklaroff
Title: Capital Finance Director
By:-----------
Name:
Title:
Anna Van Degna
Director of Public Finance of the
City and County of San Francisco
[Signature Page-Power Enterprise Reimbursement Agreement- Series A-2 Notes] IN WITNESS WHEREOF, the Commission and the Bank have duly executed this Awccrncnt as of the date first written above.
APPROVED AS TO FORM:
DAVID CHIU
City Attorney of' the City and
County of' San Francisco
By:-----------
Name: Mark D. Blake
Tille: Deputy City Attorney
ACKNOWLEDGED
c"l.. •,, __ I )\ /
By: ..c(·-=-~---"'---· _lC'-A----"-._\1--/---------
Name:
Title:
Anna Van · egna
Director o Public Finance of the
Ci ly and County of San Francisco
PUBLIC UTILITIES C:OMMISSJON OF THE
CITY AND COUNTY OF SAN FRANCJSC:0
By:
Name: Nikolai J. Sklaroff
Title: Capital Finance Director
[Signature Page. - Power Enlcrprisc Rcimburscmcnl Agreement - Series A~2 Notes] BANK OF AMERfCA, N.A.
By: ____;.~¥.,t~~P----4;.7~~~:::::::;;:.::J-
N am e:
Title:
[Signature Page - Power Enterprise Reimbursement Agreement- Series A-2 Notes]
APPENDIX I
FORM OF
IRREVOCABLE TRANSFERABLE LETTER OF CREDIT
BANK OF AMERICA, N.A.
I FLEET WAY
P A6-580-02-30
SCRANTON, PENNSYLVANIA 18507
U.S. Bank Trust Company, National Association,
as Issuing and Paying Agent
100 Wall Street, 6th Floor
New York, New York 10005
Attention: Maria Cepeda-Holly
Ladies and Gentlemen:
March 6, 2023
U.S. $136,095,891
No. 68183906
We hereby establish in your favor as issuing and paying agent (the "Issuing and Paying Agent") under that ce1iain First Amended and Restated Issuing and Paying Agent Agreement, dated as of March 1, 2019 ( as amended, supplemented, restated or otherwise modified from time to time, the "Issuing and Paying Agent Agreement"), between the Public Utilities Commission of the City and County of San Francisco (the "Commission") and the Issuing and Paying Agent for the benefit of the holders of the Series A-2 Notes (as hereinafter defined) our Irrevocable Transferable Letter of Credit No. 68183906 (as amended, supplemented, restated or otherwise modified from time to time, this "Letter of Credit") for the account of the Commission, whereby we hereby irrevocably authorize you to draw on us from time to time, from and after the date hereof to and including the earliest to occur of our close of business on: (i) March 6, 2026, (as extended from time to time, the "Stated Expiration Date"), (ii) the later of the date on which we receive a written ce1iificate from you in the form of Annex C attached hereto that an Alternate Facility has been substituted for this Letter of Credit in accordance with the Issuing and Paying Agent Agreement and the effective date of any such Alternate Facility as specified in such notice (after we honor any properly presented and conforming Drawing (as defined below) on such date), (iii) the date on which we receive a written certificate from you in the form of Annex F attached hereto that there are no longer any Series A-2 Notes Outstanding within the meaning of the Issuing and Paying Agent Agreement and that you elect to terminate this Letter of Credit, (iv) the earlier of (a) the fifteenth (15th) calendar day after the date on which you receive notice from us in the form of Annex H (the "Final Drawing Notice"), (b) the date on which the drawing resulting from the delive1y of the Final Drawing Notice is honored, and (v) the earlier of (a) the third (3rd) Business Day after the date on which you receive notice from us in the form of Annex I (the "Acceleration Notice") and (b) the date on which the Drawing resulting from the delivery of the Acceleration Notice is honored hereunder (the earliest of the foregoing dates herein referred to as the "Termination Date"), a maximum aggregate amount not exceeding $136,095,891 (the "Original Stated Amount") to pay the unpaid principal amount of, 4886-4749-3705.9 Appendix I-1
and accrned interest on, the Commission's Commercial Paper Notes (Power Series) Series A-2 (Tax-Exempt) (the "Series A-2 Notes"), in accordance with the terms hereof (said $136,095,891 having been calculated to be equal to (A) $125,000,000, the maximum aggregate principal amount of the Series A-2 Notes which may be issued pursuant to the Issuing and Paying Agent Agreement, plus (B) $11,095,891 which is 270 days' accrned interest on said principal amount of the Series A-2 Notes at the rate of 12% per annum (the "Cap Interest Rate") and assuming a year of 365 days and rounded up to the nearest dollar. This credit is available to you against presentation of the following documents (the "Payment Documents") presented to the Bank:
A certificate (with all blanks appropriately completed) (i) in the form attached as Annex A hereto with respect to the payment at maturity of the principal of and interest at maturity on Series A-2 Notes, and (ii) in the form attached as Annex B hereto with respect to the payment at maturity of the principal of and interest to maturity on Series A-2 Notes and that otherwise mature on or after the date that you receive the Final Drawing Notice, each certificate to state therein that it is given by your duly authorized officer and dated the date such certificate is presented hereunder ( each such completed and executed certificate, a "Drawing").
No Drawings shall be made under this Letter of Credit for (i) Series A-2 Notes bearing registered in the name of the Bank or its nominee or (ii) Series A-2 Notes owned by or on behalf of the Commission ("Ineligible Series A-2 Notes").
All drawings shall be made by presentation of each Payment Document at Bank of America, N.A., Scranton, at telecopier number (800) 755-8743, Attention: Standby Letter of Credit Department, without further need of documentation, including the original of this Letter of Credit, it being understood that each Payment Document so submitted is to be the sole operative instrnment of a Drawing. You shall use your best efforts to give telephonic notice of a drawing to the Bank at (800) 370-7519 OPT 1 on the Business Day preceding the day of such drawing (but such notice shall not be a condition to drawing hereunder and you shall have no liability for not doing so).
We agree to honor and pay the amount of any Drawing if presented in compliance with all of the terms of this Letter of Credit to the following account: U.S. Bank National Association, ABA # 091-000-022, A/C# 1731-0185-1827, A/C NAME: U.S. Trust, Attn:
Charlie Van Vleet, Reference: Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Power Series) Series A-2 (Tax-Exempt) (such account, the "Beneficiary Payment Account"). If any such Drawing is presented at or prior to 11 :30 A.M., New York time, on a Business Day, payment shall be made, in immediately available funds, by 2:30 P.M., New York time, on the same Business Day. If any such Drawing is presented after 11:30 A.M., New York time, on a Business Day, payment shall be made, in immediately available funds, by 2:30 P.M., New York time, on the next succeeding Business Day. "Business Day" shall mean any day other than (i) Saturday or Sunday, (ii) day on which banks located in the cities in which the designated office of the Issuing and Paying Agent or the Banks (initially, Scranton, Pennsylvania, and New York, New York) is located are required or authorized to close, or (iii) a day on which the New York Stock Exchange is required or authorized to close, or (iv) a legal holiday of the City or any other day the City is authorized by law to be closed for official business.
4886-4749-3705.9 Appendix I-2
The Stated Amount (as hereinafter defined) of this Letter of Credit will be reduced automatically by the amount of any drawing hereunder. In connection therewith ( except in the case of a Drawing resulting from the delivery of a Final Drawing Notice or the Acceleration Notice), the Stated Amount will be increased when and to the extent, but only when and to the extent, (i) (A) of transfer by you to us on the date such Drawing is honored of proceeds of Commercial Paper Notes issued on such date or (B) you receive written notice from us in the form of Annex K hereto that we have been reimbursed by or on behalf of the Commission for the amount of any Drawing honored hereunder, and (ii) that you have not received notice from us in the form of Annex J hereto (a "No-Issuance Notice"). The Stated Amount under this Letter of Credit will be reduced automatically upon our receipt of Annex G to the amount stated in paragraph 2 therein.
The "Stated Amount" shall mean the Original Stated Amount (i) less the amount of all prior reductions pursuant to Drawings, (ii) less the amount of any reduction thereof pursuant to a reduction ce1iificate in the form of Annex G hereto, (iii) plus the amount of all reinstatements as above provided.
Prior to the Termination Date, we may extend the Stated Expiration Date from time to time at the request of the Commission by delivering to you an amendment to this Letter of Credit in the form of Annex E hereto designating the date to which the Stated Expiration Date is being extended, and thereafter all references in this Letter of Credit to the Stated Expiration Date shall be deemed to be references to the date designated as such in such notice. Any date to which the Stated Expiration Date has been extended as herein provided may be extended in a like manner.
Upon the Termination Date this Letter of Credit shall automatically terminate.
This Letter of Credit is transferable to any transferee whom has succeeded you as Issuing and Paying Agent under the Issuing and Paying Agent Agreement, and may be successively transferred in its entirety. Transfer of the available balance under this Letter of Credit to such transferee shall be effected by the presentation to us of a Transfer Certificate in the form of Annex D attached hereto signed by the transferor and acknowledged by the transferee ( each a "Tramfer") together with the original Letter of Credit.
Other than the provisions for communication by facsimile copy, communications with respect to this Letter of Credit shall be addressed to us at Bank of America, N.A., 1 Fleet Way, PA6-580-02-30, Scranton, Pennsylvania 18507, Attention: Standby Letter of Credit Depaiiment, specifically referring to the number of this Letter of Credit.
To the extent not inconsistent with the express terms hereof, this Letter of Credit shall be governed by, and construed in accordance with, the terms of the International Standby Practices 1998, International Chamber of Commerce-Publication No. 590 ("ISP98"), except for (i) Rule 2.06( c )(iii) thereof, with regard to an amendment of this Letter of Credit for the purpose of extending the Stated Expiration Date, (ii) Rule 3.12(a) thereof, and (iii) Rule 5.0l(a) thereof.
As to matters not governed by the ISP98, this Letter of Credit shall be governed by and construed in accordance with Article 5 of the Uniform Commercial Code of the State of New York, without regard to conflict of laws.
4886-4749-3705.9 Appendix 1-3
All payments made by us hereunder shall be made from our funds and not with the funds of any other person.
This Letter of Credit sets forth in full the terms of our undertaking, and such undertaking shall not in any way be modified or amended by reference to any other document whatsoever.
BANK OF AMERICA, N.A.
By:
Name:
Title:
4886-4749-3705.9 Appendix I-4
ANNEX A
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT NO. 68183906
PRINCIPAL AND INTEREST DRAWING CERTIFICATE
PRIOR TO FINAL DRAWING CERTIFICATE
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
The undersigned individual, a duly authorized officer of ________ _ (the "Beneficiary"), hereby certifies on behalf of the Beneficiary as follows with respect to (i) that certain Irrevocable Transferable Letter of Credit No. 68183906 dated March 6, 2023 (as amended, the "Letter of Credit"), issued by Bank of America, N.A. (the "Bank") in favor of the Beneficiary; (ii) those certain Series A-2 Notes (as defined in the Letter of Credit); and (iii) that certain Issuing and Paying Agent Agreement (as defined in the Letter of Credit):
I. The Beneficiary is the Issuing and Paying Agent ( as defined in the Letter of Credit) under the Issuing and Paying Agent Agreement.
2. The Benefieiary is entitled to make this Drawing in the amount of $_____ under the Letter of Credit pursuant to the Issuing and Paying Agent Agreement, of which $ _____ is being drawn with respect to the payment of principal of maturing Series A-2 Notes, other than Ineligible Series A-2 Notes (as defined in the Letter of Credit), and $ _____ is being drawn in respect of ___ days of interest thereon.
3. The amount of the Drawing is equal to the amount required to be drawn by the Issuing and Paying Agent pursuant to the Issuing and Paying Agent Agreement.
4. The amount of the drawing made by this Certificate was computed in compliance with the terms of the Issuing and Paying Agent Agreement and does not exceed the Stated Amount (as defined in the Letter of Credit).
5. Payment by the Bank pursuant to this Drawing should be made to the Beneficiary Payment Account (as defined in the Letter of Credit) in accordance with the terms the Letter of Credit.
6. Upon receipt by the Beneficiary of the amount demanded hereby, (a) the Beneficiary will deposit the same directly into the Series A-2 Debt Service Account maintained by the Beneficiary pursuant to the Issuing and Paying Agent Agreement and apply the same directly to the payment when due of the principal amount of Series A-2 4886-4749-3 705.9 Appendix I-5
Notes and the interest amount owing on account of the Series A-2 Notes pursuant to the Issuing and Paying Agent Agreement, (b) no portion of said amount will be applied by the Beneficiary for any other purpose, ( c) no p01iion of said amount will be commingled with other funds held by the Beneficiary, except for other funds drawn under the Letter of Credit, and (d) when such Series A-2 Notes have been presented for payment and paid by the Beneficiary, the Beneficiary will cancel such matured Series A-2 Notes.
IN WITNESS WHEREOF, this Certificate has been executed this _ day of _________ ,20_.
as Issuing and Paying Agent
By:
[Title of Authorized Officer]
4886-4749-3705.9 Appendix I-6
ANNEXB
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT NO. 68183906
PRINCIPAL AND INTEREST DRAWING CERTIFICATE
AFTER FINAL DRAWING CERTIFICATE
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
The undersigned individual, a duly authorized officer of ________ _ (the "Beneficiary"), hereby ce1tifies on behalf of the Beneficiary as follows with respect to (i) that certain In-evocable Transferable Letter of Credit No. 68 I 83906 dated March 6, 2023 (as amended, the "Letter of Credit"), issued by Bank of America, N.A. (the "Bank") in favor of the Beneficiary; (ii) those certain Series A-2 Notes (as defined in the Letter of Credit); and (iii) that certain Issuing and Paying Agent Agreement (as defined in the Letter of Credit):
1. The Beneficiary is the Issuing and Paying Agent ( as defined in the Letter of Credit) under the Issuing and Paying Agent Agreement.
2. The Issuing and Paying Agent has received the Final Drawing Notice.
3. The Beneficiary is entitled to make this Drawing in the amount of $ _____ under the Letter of Credit pursuant to the Issuing and Paying Agent Agreement, of which $ ____ is being drawn with respect to the payment of principal of Series A-2 Notes maturing on or after the Final Drawing Notice, other than Ineligible Series A-2 Notes (as defined in the Letter of Credit), and $ _____ is being drawn in respect of __ days of interest thereon.
4. The amount of the Drawing is equal to the amount required to be drawn by the Issuing and Paying Agent pursuant to the Issuing and Paying Agent Agreement.
5. The amount of the drawing made by this Certificate was computed in compliance with the terms of the Issuing and Paying Agent Agreement and does not exceed the Stated Amount (as defined in the Letter of Credit).
6. This Payment Document is being presented to the Bank on a date which is no later than the second Business Day prior to the fifteenth (15th) calendar day after receipt by the Beneficiary of the Final Drawing Notice. 4886-4749-3705,9 Appendix I-7
7. Payment by the Bank pursuant to this Drawing should be made to the Beneficiary Payment Account (as defined in the Letter of Credit) in accordance with the terms the Letter of Credit.
8. Upon receipt by the Beneficiary of the amount demanded hereby, (a) the Beneficiary will deposit the same directly into the Series A-2 Debt Service Account maintained by the Beneficiary pursuant to the Issuing and Paying Agent Agreement and apply the same directly to the payment when due of the principal amount of Series A-2 Notes and the interest amount owing on account of the Series A-2 Notes pursuant to the Issuing and Paying Agent Agreement, (b) no portion of said amount will be applied by the Beneficiary for any other purpose, ( c) no portion of said amount will be commingled with other funds held by the Beneficiary, except for other funds drawn under the Letter of Credit, and (d) when such Series A-2 Notes have been presented for payment and paid by the Beneficiary, the Beneficiary will cancel such matured Series A-2 Notes.
IN WITNESS WHEREOF, this Certificate has been executed this --------~20
as Issuing and Paying Agent
day of
By: ---------------
[Title of Authorized Officer]
4886-4749-3705.9 Appendix I-8
ANNEXC
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT NO. 68183906
CERTIFICATE REGARDING ALTERNATE FACILITY
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Depmiment
Ladies and Gentlemen:
The undersigned individual, a duly authorized officer of ________ _ (the "Beneficiary"), hereby certifies on behalf of the Beneficiary as follows with respect to (i) that certain Irrevocable Transferable Letter of Credit No. 68183906 dated March 6, 2023 (as amended, the "Letter of Credit"), issued by Bank of America, N.A. (the "Bank") in favor of the Beneficiary; (ii) those certain Series A-2 Notes (as defined in the Letter of Credit); and (iii) that certain Issuing and Paying Agent Agreement (as defined in the Letter of Credit):
2. 3.
4. 5.
6. 4886-4749~3705.9
The Beneficimy is the Issuing and Paying Agent ( as defined in the Letter of Credit) under the Issuing and Paying Agent Agreement.
The conditions precedent to the acceptance of an Alternate Facility set forth in the Issuing and Paying Agent Agreement have been satisfied.
An Alternate Facility in full and complete substitution for the Letter of Credit has been accepted by the Issuing and Paying Agent and is or will be in effect as of _________ ,20_
There will be no further Drawings requested from the Bank under the Letter of Credit.
Upon receipt by the Bank of this Ce1iificate, the Letter of Credit will terminate with respect to all outstanding Series A-2 Notes, and the Letter of Credit (and any amendments thereto) is returned to you herewith for cancellation.
No payment is demanded of you in connection with this Certificate.
Appendix 1-9
IN WITNESS WHEREOF, this Certificate has been executed this __ day of as Issuing and Paying Agent
[Title of Authorized Officer]
4886-4749-3705.9 Appendix I-10
ANNEXD
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT NO. 68183906
Bank of America, N.A.
1 Fleet Way
P A6-580-02-30
Scranton, Pennsylvania 18507
TRANSFER CERTIFICATE
Attention: Standby Letter of Credit Depaiiment
Re: Irrevocable Transferable Letter of Credit No. 68183906 dated March 6, 2023 [Date]
We, the undersigned "Transferor", hereby irrevocably transfer all of our rights to draw under the above referenced Letter of Credit (as amended, the "Letter of Credit") in its entirety to:
NAME OF TRANSFEREE
Print Name and complete address of the Transferee) "Transferee"
ADDRESS OF TRANSFEREE
CITY/STATE/COUNTRY ZIP
(the "Transferee") all rights of the Transferor with respect to the above-referenced Letter of Credit, including the right to draw under said Letter of Credit in the amount of the full unutilized balance thereof. Said Transferee has succeeded the Transferor as Issuing and Paying Agent under that certain First Amended and Restated Issuing and Paying Agent Agreement, dated as of March 1, 2019 ( as amended, supplemented, restated or otherwise modified from time to time, the "Issuing and Paying Agent Agreement"), between the Public Utilities Commission of the City and County of San Francisco (the "Commission") and U.S. Bank Trust Company National Association as the initial Issuing and Paying Agent with respect to the Commission's Commercial Paper Notes (Power Series) Series A-2 (Taic-Exempt).
By virtue of this transfer, the Transferee shall have the sole rights as beneficiary of said Letter of Credit, including sole rights relating to any past or future amendments thereof, whether increases or extensions or otherwise. All amendments are to be advised directly to the Transferee without necessity of any consent of or notice to the Transferor. 4886-4749-3705.9 Appendix 1-11
By its signature below, the Transferee acknowledges that it has duly succeeded the Transferor as Issuing and Paying Agent under the Issuing and Paying Agent Agreement, and agrees to be bound by the terms of the Issuing and Paying Agent Agreement as if it were the original Issuing and Paying Agent thereunder.
The Letter of Credit is returned herewith, and we ask you to endorse the transfer on the reverse thereof and to forward it directly to the Transferee with your customary notice of transfer.
AUTHENTICATED BY:
Acknowledged by
[inse1i name of Transferee],
as Transferee and successor
Issuing and Paying Agent
By: ------------Name: ___________ _
Title: ___________ _
SIGNATURE OF THE ABOVE OFFICER
DULY AUTHORIZED TO ACT ON BEHALF
OF [insert name of Transferee],
AUTHENTICATED BY:
By: -----------
Name:
Title: ___________ _
Very truly yours,
[Insert Name ofissuing and Paying Agent],
as Issuing and Paying Agent
By:
[Insert name and title of authorized officer]
SIGNATURE OF THE ABOVE OFFICER,
DULY AUTHORIZED TO ACT ON
BEHALF OF [insert name of
Issuing and Paying Agent],
By: ------------
Name: -------------
Title: -------------
4886-4749-3705.9 Appendix 1-12
ANNEXE
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT NO. 68183906
NOTICE OF EXTENSION
[ISSUING AND PA YING AGENT]
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter of Credit No. 68183906 dated March 6, 2023 (as amended, the "Letter of Credit"), established by us in your favor as Beneficiary. We hereby notify you that, in accordance with the tenns of the Letter of Credit, the Stated Expiration Date (as defined in the Letter of Credit) has been extended to This letter shall be attached to the Letter of Credit and made a part thereof.
BANK OF AMERICA, N.A.
By: --------------
Name:
Title:
4886-4 749-3 705.9 Appendix I-13
ANNEXF
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT NO. 68183906
CERTIFICATE REGARDING NO OUTSTANDING NOTES
Bank of America, N.A.
I Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
The undersigned, a duly authorized officer of _________ [insert name of Issuing and Paying Agent] (the "Beneficiary"), hereby notifies Bank of America, N.A. (the "Bank"), with reference to that certain liTevocable Transferable Letter of Credit No. 68183906 dated March 6, 2023 (as amended, the "Letter of Credit''; terms defined therein and not otherwise defined herein shall have the meanings set forth in the Letter of Credit) issued by the Bank in favor of the Beneficiary as follows:
1. The Beneficiary is the Issuing and Paying Agent under the Issuing and Paying Agent Agreement for the holders of the Series A-2 Notes.
2. No Series A-2 Notes ( other than Series A-2 Notes with respect to which an Alternate Facility is in effect) remain outstanding under the Issuing and Paying Agent Agreement, nor does the Commission intend to issue any additional Series A-2 Notes under the Issuing and Paying Agent Agreement.
3. There will be no fmther Drawings requested from the Bank under the Letter of Credit, and the Beneficiary hereby elects to terminate the Letter of Credit, and returns such Letter of Credit (along with any amendments thereto) to you herewith for cancellation.
4. No payment is demanded of you in connection with this Certificate.
IN WITNESS WHEREOF, the Issuing and Paying Agent has executed and delivered this Certificate as of this __ day of _________ ,
4886-4749-3705.9
[INSERT NAME OF ISSUING AND PAYING
AGENT], as Issuing and Paying Agent
By:
Name:
Title:
Appendix I-14
ANNEXG
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT NO. 68183906
NOTICE OF REDUCTION
Bank of America, N.A.
1 Fleet Way
PA6-580-02-30
Scranton, Pennsylvania 18507
Attention: Standby Letter of Credit Department
Ladies and Gentlemen:
The undersigned, a duly authorized officer of _________ [insert name of Issuing and Paying Agent] (the "Beneficiary"), hereby notifies Bank of America, N.A. (the "Bank"), with reference to that certain Irrevocable Transferable Letter of Credit No. 68183906 dated March 6, 2023 (as amended, the "Letter of Credit"; terms defined therein and not otherwise defined herein shall have the meanings set forth in the Letter of Credit) issued by the Bank in favor of the Beneficiary as follows:
I. The Beneficiary is the Issuing and Paying Agent under the Issuing and Paying Agent Agreement for the holders of the Series A-2 Notes.
2. The Stated Amount of the Letter of Credit will be decreased by the amount of $_____ ($ applicable to principal and $ ___ _ applicable to interest), effective on _____ (the "Decrease Date").
3. The new Stated Amount of the Letter of Credit is$ _____ , of which $ _____ is applicable to principal and $ _____ is applicable to interest, which amounts are not less than the outstanding principal amount of Series A-2 Notes on the Decrease Date and interest thereon at the Cap Interest Rate for a period of two hundred seventy (270) days, calculated on the basis of a year of 365 days on the Decrease Date.
4. You are required to attach this Notice of Reduction to the Letter of Credit and to treat this Notice of Reduction as an amendment to the Letter of Credit. 4886-4749-3705.9 Appendix I-15
IN WITNESS WHEREOF, the Issuing and Paying Agent has executed and delivered this Certificate as of this __ day of ________ ___,
4886-4749-3705.9
[INSERT NAME OF ISSUING AND PA YING
AGENT], as Issuing and Paying Agent
By: ----------------Name: _______________ _
Title: _______________ _
Appendix I-16
ANNEXH
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT NO. 68183906
FINAL DRAWING NOTICE
[DATE]
[ISSUING AND PA YING AGENT]
Attention: -----------
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter of Credit No. 68183906 dated March 6, 2023 (as amended, the "Letter of Credit;"; terms defined therein and not otherwise defined herein shall have the meanings set fo1th in the Letter of Credit), established by us in your favor as Issuing and Paying Agent.
Please be advised that:
I. An Event of Default under and as defined in the Reimbursement Agreement, dated as of March 1, 2023, between the undersigned and the Public Utilities Commission of the City and County of San Francisco, pursuant to which the Letter of Credit was issued, has occurred and is continuing.
2. The undersigned instructs the Issuing and Paying Agent, effective upon receipt of this Final Drawing Notice, to cease issuing Series A-2 Notes.
3. The undersigned hereby notifies you as Issuing and Paying Agent that (i) effective upon receipt of this Final Drawing Notice, the Stated Amount available to be drawn under the Letter of Credit will not be reinstated in accordance with the Letter of Credit, (ii) the Issuing and Paying Agent is instructed to make the final Drawing under the Letter of Credit to provide for the payment of Series A-2 Notes issued in accordance with the Issuing and Paying Agent Agreement which are outstanding and are maturing or are hereafter to mature, and (iii) the Termination Date of the Letter of Credit will occur and the Letter of Credit will terminate on the earlier of (a) date which is the fifteenth (15th) calendar day after the date of receipt by the Issuing and Paying Agent of this Final Drawing Notice and (b) the date on which the Drawing resulting from the delivery of this Final Drawing Notice is honored by the undersigned.
4886-4749-3705,9 Appendix I-17
BANK OF AMERICA, N.A.
By: ----------------
Name: ----------------
Tit 1 e: ----------------
4886-4749-3705.9 Appendix I-18
ANNEX I
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT NO. 68183906
ACCELERATION NOTICE
[DATE]
[ISSUING AND PA YING AGENT]
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter of Credit No. 68183906 dated March 6, 2023 (as amended, the "Letter of Credit;"; terms defined therein and not otherwise defined herein shall have the meanings set f011h in the Letter of Credit), established by us in your favor as Issuing and Paying Agent.
Please be advised that:
I. An "event of default" under and as defined in the First Amended and Restated Issuing and Paying Agent Agreement, dated as of March 1, 2019 (the "!PAA"), between the Issuing and Paying Agent and the Public Utilities Commission of the City and County of San Francisco, has occurred.
2. Pursuant to Section 8.0 I of the IP AA, the undersigned notifies the Issuing and Paying Agent that is has declared the principal of all outstanding Series A-2 Notes, and the interest accrued thereon, to be due and payable immediately.
3. The undersigned hereby notifies you as Issuing and Paying Agent that (i) effective upon receipt of this Acceleration Notice, the Stated Amount available to be drawn under the Letter of Credit will not be reinstated in accordance with the Letter of Credit, (ii) the Issuing and Paying Agent is instructed to make the final Drawing under the Letter of Credit to provide for the payment of the principal of and interest on Series A-2 Notes issued in accordance with the Issuing and Paying Agent Agreement which are outstanding and which have been accelerated, and (iii) the Termination Date of the Letter of Credit will occur and the Letter of Credit will tenninate on the earlier of (a) date which is the third (3rd) Business Day after the date of receipt by the Issuing and Paying Agent of this Acceleration Notice and (b) the date on which the Drawing resulting from the delivery of this Acceleration Notice is honored by the undersigned. 4886-4749-3705.9 Appendix I-19
BANK OF AMERICA, N.A.
By: ----------------Name: ______________ _
Title: ______________ _
CC: PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
Attention: Chief Financial Officer
525 Golden Gate Avenue, 13th Floor
San Francisco, California 94102
4886-4749-3705.9 Appendix I-20
ANNEXJ
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT NO. 68183906
NO-ISSUANCE NOTICE
[DATE]
[ISSUING AND PA YING AGENT]
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter of Credit No. 68183906 dated March 6, 2023 (as amended, the "Letter of Credit;"; terms defined therein and not otherwise defined herein shall have the meanings set forth in the Letter of Credit), established by us in your favor as Issuing and Paying Agent.
Please be advised that:
1. A Default or an Event of Default under and as defined in the Reimbursement Agreement, dated as of March 1, 2023, between the Commission and the Bank (as amended and supplemented from time to time), between the undersigned and the Public Utilities Commission of the City and County of San Francisco, pursuant to which the Letter of Credit was issued, has occurred and is continuing.
2. Subject to the following sentence, you shall cease authenticating and issuing Series A-2 Notes, as provided in the Issuing and Paying Agent Agreement, unless and until we rescind this No-Issuance Notice. If you receive this No-Issuance Notice after 12:00 p.m., New York City time, on a Business Day, you shall cease authenticating Series A-2 Notes on the next Business Day.
3. This No-Issuance Notice will not affect our obligation to honor demands for payment under the Letter of Credit with respect to Series A-2 Notes authenticated and issued prior to your receipt of this No-Issuance Notice (or, as provided in paragraph 2 above, on the same Business Day that you receive this No-Issuance Notice), and you will continue to have the right to draw under the Letter of Credit to pay the principal of and accrued interest on maturing Series A-2 Notes authenticated and issued prior to your receipt of this No-Issuance Notice (or, as provided in paragraph 2 above, authenticated and issued on the same Business Day that you receive this No-Issuance Notice. 4886-4749-3705.9 Appendix I-21
BANK OF AMERICA, N.A.
By: ---------------Name: _______________ _
Title: _______________ _
4886-4749-3 705.9 Appendix I-22
ANNEXK
TO
BANK OF AMERICA, N.A.
LETTER OF CREDIT NO. 68183906
NOTICE OF REIMBURSEMENT
[DATE]
[ISSUING AND PAYING AGENT]
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain lITevocable Transferable Letter of Credit No. 68183906 dated March 6, 2023 (as amended, the "Letter of Credit;"; tenns defined therein and not otherwise defined herein shall have the meanings set forth in the Letter of Credit), established by us in your favor as Issuing and Paying Agent.
Please be advised that:
1. The Bank has been reimbursed by or on behalf of the Commission for an amount drawn and honored by the Bank under the Letter of Credit and that the Stated Amount of the Letter of Credit will be increased by the amount of $ , of which $ ____ is applicable to principal and $ _____ is applicable to interest, effective as of _________ ,, __ (the "Increase Date").
2. The new Stated Amount of the Letter of Credit is $ ____ , of which $ _____ is applicable to principal and$ _____ is applicable to interest. You are authorized and directed to attach this Notice of Reimbursement to the Letter of Credit and to treat this Notice of Reimbursement as an amendment to the Letter of Credit.
BANK OF AMERICA, N.A.
By----------------Name: _______________ _
Title: _______________ _
4886-4749-3705.9 Appendix 1-23
EXHIBIT A
FORM OF BANK NOTE
SAN FRANCISCO PUBLIC UTILITIES COMMISSION BANK NOTE
Series A-2 Bank Note (POWER SERIES) BANK OF AMERICA, N.A.
CUSIP No. 79768UA W9
March 6, 2023 $136,095,891 San Francisco, California
For value received, PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the "Commission") promises to pay to the order of BANK OF AMERICA N.A. (the "Bank"), by wire transfer to the payment account specified in the Agreement referred to below, or such other account as the Bank may specify to the Commission in writing, the principal sum of One Hundred Thirty-Six Million Ninety-Five Thousand and Eight Hundred Ninety-One Dollars ($136,095,891) or, if less, the aggregate outstanding principal amount of the unreimbursed Reimbursement Obligations from time to time owing to the Bank pursuant to the Reimbursement Agreement, dated as of March I, 2023, between the Commission and the Bank ( as amended and supplemented from time to time, the "Agreement"), on the dates and in the amounts provided for in the Agreement.
The Commission promises to pay interest on the unpaid principal amount of such Reimbursement Obligations on the dates and at the rates provided for in the Agreement.
All payments of principal and interest must be made in lawful money of the United States of America in immediately available funds. All capitalized terms used herein and not otherwise defined herein have the meanings specified in the Agreement.
This Bank Note is the Bank Note referred to in the Agreement and is entitled to the benefits thereof and of the other Basic Documents referred to therein. As provided in the Agreement, this Bank Note is subject to prepayment, in whole or in part. In case an Event of Default occurs and is continuing, the principal of and accrued interest on this Bank Note may be declared due and payable in the manner and with the effect provided in the Agreement.
The Bank agrees, by acceptance of this Bank Note, that, before disposing of this Bank Note, it will make a notation on the schedule attached hereto of all Reimbursement Obligations evidenced hereby and all principal payments and prepayments made hereunder and of the date to which interest hereon has been paid; provided, however, that the failure to make any such notation will not limit or otherwise affect the obligation of the Commission hereunder with respect to payments of principal of and interest on this Bank Note.
Notwithstanding any other provision hereof or of the Agreement to the contrary, the obligations of the Commission hereunder are payable from the Available Power Enterprise Revenues. This Bank Note constitutes a valid and binding obligation of the Commission issued under the Issuing and Paying Agent Agreement and is secured by, and payable from, the Available Power Enterprise Revenues and from the proceeds of subsequent borrowings by the Commission, including but not limited to additional or rollover Notes authorized thereunder. 4886-4749-3705.9 Exhibit A-1
The undersigned maker and all guarantors, endorsers and pledgors that may exist at any time with respect hereto hereby waive presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Bank Note and assent to extensions of the time of payment or forbearance or other indulgence without notice.
THIS BANK NOTE IS GOVERNED BY, AND TO BE CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PROVISIONS.
IN WITNESS WHEREOF, the Public Utilities Commission of the City and County of San Francisco has caused this Bank Note to be signed in its corporate name as an instrument under seal by its duly authorized officer on the date and in the year first above written.
APPROVED AS TO FORM:
DAVID CHIU
City Attorney of the City and
County of San Francisco
By:
Name: Mark D. Blake
Title: Deputy City Attorney
ACKNOWLEDGED:
By: -----------
Name: Anna Van Degna
Title: Director of Public Finance of the
City and County of San Francisco
4886-4749-3705,9
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By: ----------------
Name: Nikolai J. Sklaroff
Title: Capital Finance Director
Exhibit A-2
4886+4749-3705.9
TRANSACTIONS ON BANK NOTE
Principal Amount of
Reimbursement
Obligation
Amount of Date to Which
Principal Paid Interest Paid Notation Made By
Exhibit A-3
EXHIBITB
FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate (this "Certificate") is furnished to Bank of America, N.A. (the "Bank") pursuant to the Reimbursement Agreement, dated as of March 1, 2023 (the "Agreement"), between the Public Utilities Commission of the City and County of San Francisco (the "Commission") and Bank. Unless otherwise defined herein, the terms used in this Certificate have the meanings assigned thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. 1 am an Authorized Representative of the Commission;
2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Commission during the accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or the occurrence of any event which constitutes a Default or Event of Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth below; and
4. To the best ofmy knowledge the financial statements required by Section 5.l(a) of the Agreement and being furnished to you concurrently with this certificate fairly represent the consolidated financial condition of the Commission in accordance with GAAP as of the date and for the period covered thereby.
Describe below the exceptions, if any, to paragraph 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Commission has taken, is taking, or proposes to take with respect to each such condition or event:
The foregoing certifications and the financial statements delivered with this Certificate in support hereof, are made and delivered this __ day of _____ , 20_ 4886-4749-3 705.9
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By:----------------
Name:
Title:
Exhibit B-1
EXHIBITC
2023 LIST OF CITY HOLIDAYS
(INCLUDING DAYS CITY IS OFFICIALLY CLOSED)
New Year's Day - Monday, January 2, 2023
Dr. Martin Luther King, Jr. Day - Monday, January 16, 2023 President's Day - Monday, February 20, 2023
Memorial Day - Monday, May 29, 2023
Independence Day - Tuesday, July 4, 2023
Labor Day - Monday, September 4, 2023
Indigenous Peoples Day, Italian American Heritage Day - Monday, October 9, 2023 Veterans Day- Friday, November 10, 2023
Thanksgiving Day and the Day After - Thursday, November 23, 2023 & Friday, November 24, 2023
Christmas Day - Monday, December 25, 2023
4886-4749-3705.9 Exhibit C-1
EXHIBITD
CITY REQUIREMENTS
(a) Tropical Hardwood and Virgin Redwood Ban. The City urges contractors not to import, purchase, obtain, or use for any purpose, any tropical hardwood, tropical hardwood wood product, virgin redwood or virgin redwood wood product. (b) Nondiscrimination: Penalties.
(i) Bank Shall Not Discriminate. In the performance of this Agreement, the Bank agrees not to discriminate against any employee, City and County employee working with the Bank or subcontractor, applicant for employment with the Bank or subcontractor, or against any person seeking accommodations, advantages, facilities, privileges, services, or membership in all business, social, or other establishments or organizations, on the basis of the fact or perception of a person's race, color, creed, religion, national origin, ancestry, age, height, weight, sex, sexual orientation, gender identity, domestic partner status, marital status, disability or Acquired Immune Deficiency Syndrome or HIV status, or association with members of such protected classes, or in retaliation for opposition to discrimination against such classes. (ii) Subcontracts. The Bank shall incorporate by reference in all subcontracts made in fulfillment of its obligations hereunder the provisions of Sections 12B.2(a), 12B.2(c)-(k) and 12C.3 of the San Francisco Administrative Code and shall require all subcontractors to comply with such provisions. The Bank's failure to comply with the obligations in this subsection shall constitute a material breach of this Agreement. (iii) Non-Discrimination in Benefits. The Bank does not as of the date of this Agreement and will not during the term of this Agreement, in any of its operations in San Francisco, on real property owned by San Francisco, or where work is being performed for the City elsewhere in the United States, discriminate in the provision of bereavement leave, family medical leave, health benefits, membership or membership discounts, moving expenses, pension and retirement benefits or travel benefits, as well as any benefits other than the benefits specified above, between employees with domestic partners and employees with spouses, and/or between the domestic partners and spouses of such employees, where the domestic partnership has been registered with a governmental entity pursuant to state or local law authorizing such registration, subject to the conditions set forth in Section 12B.2(b) of the San Francisco Administrative Code. (iv) HRC Form. The Bank shall execute the "Chapter 12B Declaration:
Nondiscrimination in Contracts and Benefits" form (Form HRC-12B-101) with supporting documentation and secure the approval of the form by the San Francisco Human Rights Commission.
(v) Incorporation of Administrative Code Provisions by Reference. The provisions of Chapters 12B and 12C of the San Francisco Administrative Code are incorporated in this Section by reference and made a part of this Agreement as though fully set forth herein. The Bank shall comply fully with and be bound by all of the 4886-4749-3705.9 Exhibit D-1
prov1S1ons that apply to this Agreement under such Chapters of the San Francisco Administrative Code, including but not limited to the remedies provided in such Chapters. Without limiting the foregoing, the Bank understands that pursuant to Section 12B.2(h) of the San Francisco Administrative Code, a penalty of $50 for each person for each calendar day during which such person was discriminated against in violation of the provisions of this Agreement may be assessed against the Bank and/or deducted from any payments due the Bank; provided, however, that such damages shall not be set off against the payment of rental or other contract related to Commercial Paper Notes or other debt obligations of the City.
(c) Limitations on Contributions. Through execution of this Agreement, the Bank acknowledges that it is familiar with Section 1.126 of the City's Campaign and Governmental Conduct Code, which prohibits any person who contracts with the City, including the Commission, for the rendition of personal services, for the furnishing of any material, supplies or equipment, for the sale or lease of any land or building, or for a grant, loan or loan guarantee, from making any campaign contribution to (A) an individual holding a City elective office if the contract must be approved by the individual, a board on which that individual serves, or a board on which an appointee of that individual serves, (B) a candidate for the office held by such individual, or (C) a committee controlled by such individual, at any time from the commencement of negotiations for the contract until the later of either the termination of negotiations for such contract or six months after the date the contract is approved. The Bank acknowledges that the foregoing restriction applies only if the contract or combination or series of contracts approved by the same individual or board in a fiscal year have a total anticipated or actual value of $50,000 or more. The Bank further acknowledges that the prohibition on contributions applies to each prospective party to the contract; each member of the Bank's board of directors; the Bank's chairperson, chief executive officer, chief financial officer and chief operating officer; any person with an ownership interest of more than 20 percent in the Bank; any subcontractor listed in the bid or contract; and any committee that is sponsored or controlled by the Bank. Additionally, the Bank acknowledges that the Bank must inform each of the persons described in the preceding sentence of the prohibitions contained in Section 1.126 of the City's Campaign and Governmental Conduct Code.
( d) MacBride Principles - Northern Ireland. Pursuant to San Francisco Administrative Code Section 12F.5, the City urges companies doing business in Northern Ireland to move towards resolving employment inequities, and encourages such companies to abide by the MacBride Principles. The City urges San Francisco companies to do business with corporations that abide by the MacBride Principles. By signing below, the person executing this Agreement on behalf of the Bank acknowledges and agrees that he or she has read and understood this section.
( e) Conflict of Interest. Through its execution of this Agreement, the Bank hereby acknowledges that it is familiar with the provision of Section 15.103 of the City's Charter, Article III, Chapter 2 of City's Campaign and Governmental Conduct Code, and Section 87100 et seq. and Section 1090 et seq. of the Government Code of the State of California, and certifies that it does not know of any facts which constitutes a violation of said provisions and agrees that it will immediately notify the City if it becomes aware of any such fact during the term of this Agreement.
4886-4749-3705.9 Exhibit D-2
(f) Earned Income Credit ("EIC'') Forms. San Francisco Administrative Code section 120 requires that employers provide their employees with IRS Form W-5 (The Earned Income Credit Advance Payment Certificate) and the IRS EIC Schedule, as set forth below.
Employers can locate these forms at the IRS Office, on the Internet, or anywhere that Federal Tax Forms can be found.
(i) The Bank shall provide EIC Forms to each Eligible Employee at each of the following times: (A) within thirty days following the date on which this Agreement becomes effective (unless the Bank has already provided such EIC Forms at least once during the calendar year in which such effective date falls); (B) promptly after any Eligible Employee is hired by the Bank; and (C) annually between January 1 and January 31 of each calendar year during the term of this Agreement. (ii) Failure to comply with any requirement contained in the immediately preceding paragraph shall constitute a material breach by the Bank of the terms of this Agreement. If, within thirty days after the Bank receives written notice of such a breach, the Bank fails to cure such breach or, if such breach cannot reasonably be cured within such period of thirty days, the Bank fails to commence efforts to cure within such period or thereafter fails to diligently pursue such cure to completion, the City may pursue any rights or remedies available under this Agreement or under applicable law. (iii) Any subcontract entered into by the Bank shall require the subcontractor to comply, as to the subcontractor's Eligible Employees, with each of the terms of this Section.
(iv) Capitalized terms used in this Section and not defined in this Agreement shall have the meanings assigned to such terms in Section 120 of the San Francisco Administrative Code.
(g) Local Business Enterprise Utilization; Liquidated Damages. (i) The LBE Ordinance. The Bank shall comply with all the requirements of the Disadvantaged Business Enterprise Ordinance set forth in Chapter 14B of the San Francisco Administrative Code as it now exists or as it may be amended in the future ( collectively the "LBE Ordinance"), provided such amendments do not materially increase the Bank's obligations or liabilities, or materially diminish the Bank's rights, under this Agreement. Such provisions of the LBE Ordinance are incorporated by reference and made a part of this Agreement as though fully set forth in this section. The Bank's willful failure to comply with any applicable provisions of the LBE Ordinance is a material breach of the Bank's obligations under this Agreement and shall entitle City, subject to any applicable notice and cure provisions set forth in this Agreement, to exercise any of the remedies provided for under this Agreement, under the LBE Ordinance or otherwise available at law or in equity, which remedies shall be cumulative unless this Agreement expressly provides that any remedy is exclusive. In addition, the Bank shall comply fully with all other applicable local, state and federal laws prohibiting discrimination and requiring equal opportunity in contracting, including subcontracting. 4886-4749-3705.9 Exhibit D-3
(ii) Compliance and Enforcement. If the Bank willfully fails to comply with any of the provisions of the LBE Ordinance, the rules and regulations implementing the LBE Ordinance, or the provisions of this Agreement pertaining to LBE participation, the Bank shall be liable for liquidated damages in an amount equal to the Bank's net profit on this Agreement, or 10% of the total amount of this Agreement, or $1,000, whichever is greatest. The Director of the City's Human Rights Commission or any other public official authorized to enforce the LBE Ordinance (separately and collectively, the "Director of HRC") may also impose other sanctions against the Bank authorized in the LBE Ordinance, including declaring the Bank to be irresponsible and ineligible to contract with the City for a period of up to five years or revocation of the Bank's LBE certification. The Director of HRC will determine the sanctions to be imposed, including the amount of liquidated damages, after investigation pursuant to the San Francisco Administrative Code Section 14B.l 7.
By entering into this Agreement, the Bank acknowledges and agrees that any liquidated damages assessed by the Director of the HRC shall be payable to City upon demand. The Bank further acknowledges and agrees that any liquidated damages assessed may be withheld from any monies due to the Bank on any contract with City.
The Bank agrees to maintain records necessary for monitoring its compliance with the LBE Ordinance for a period of three years following te1mination or expiration of this Agreement, and shall make such records available for audit and inspection by the Director of HRC or the Controller upon request.
(h) Drug-Free Workplace Policy. The Bank acknowledges that pursuant to the Federal Drug-Free Workplace Act of 1989, the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited on Commission or City premises. The Bank agrees that any violation of this prohibition by the Bank, its employees, agents or assigns will be deemed a material breach of this Agreement.
(i) Compliance with Americans with Disabilities Act. The Bank acknowledges that, pursuant to the Americans with Disabilities Act ("ADA"), programs, services and other activities provided by a public entity to the public, whether directly or through a contractor, must be accessible to the disabled public. The Bank shall provide the services specified in this Agreement in a manner that complies with the ADA and any and all other applicable federal, state and local disability rights legislation. The Bank agrees not to discriminate against disabled persons in the provision of services, benefits or activities provided under this Agreement and further agrees that any violation of this prohibition on the part of the Bank, its employees, agents or assigns will constitute a material breach of this Agreement.
G) Sunshine Ordinance. In accordance with San Francisco Administrative Code Section 67.24(e), contracts, contractors' bids, responses to solicitations and all other records of communications between the Commission or the City and persons or firms seeking contracts, shall be open to inspection immediately after a contract has been awarded. Nothing in this provision requires the disclosure of a private person or organization's net worth or other proprietary financial data submitted for qualification for a contract or other benefit until and unless that person or organization is awarded the contract or benefit. Information provided which is covered by this paragraph will be made available to the public upon request. 4886-4749-3705.9 Exhibit D-4
(k) Requiring Minimum Compensation for Covered Employees. (i) The Bank agrees to comply fully with and be bound by all of the provisions of the Minimum Compensation Ordinance ("MCO"), as set forth in San Francisco Administrative Code Chapter 12P ("Chapter 12P"), including the remedies provided, and implementing guidelines and rules. The provisions of Chapter l 2P are incorporated herein by reference and made a part of this Agreement as though fully set forth. The text of the MCO is available on the web at www.sfgov.org/olse/mco. A partial listing of some of the Bank's obligations under the MCO is set forth in this Section. The Bank is required to comply with all the provisions of the MCO, irrespective of this listing of obligations in this Section.
(ii) The MCO requires the Bank to pay the Bank's employees a minimum hourly gross compensation wage rate and to provide minimum compensated and uncompensated time off. The minimum wage rate may change from year to year and the Bank is obligated to keep informed of the then-current requirements. Any subcontract entered into by the Bank shall require the subcontractor to comply with the requirements of the MCO and shall contain contractual obligations substantially the same as those set forth in this Section. It is the Bank's obligation to ensure that any subcontractors of any tier under this Agreement comply with the requirements of the MCO. If any subcontractor under this Agreement fails to comply, City may pursue any of the remedies set forth in this Section against the Bank.
(iii) The Bank shall not take adverse action or otherwise discriminate against an employee or other person for the exercise or attempted exercise of rights under the MCO. Such actions, if taken within 90 days of the exercise or attempted exercise of such rights, will be rebuttably presumed to be retaliation prohibited by the MCO. (iv) The Bank shall maintain employee and payroll records as required by the MCO. If the Bank fails to do so, it shall be presumed that the Bank paid no more than the minimum wage required under State law.
(v) The City is authorized to inspect the Bank's job sites and conduct interviews with employees and conduct audits of the Bank. (vi) The Bank's commitment to provide the Minimum Compensation is a material element of the City's consideration for this Agreement. The City in its sole discretion shall determine whether such a breach has occurred. The City and the public will suffer actual damage that will be impractical or extremely difficult to determine if the Bank fails to comply with these requirements. The Bank agrees that the sums set forth in Section 12P.6.l of the MCO as liquidated damages are not a penalty, but are reasonable estimates of the loss that the City and the public will incur for the Bank's noncompliance. The procedures governing the assessment of liquidated damages shall be those set forth in Section 12P.6.2 of Chapter 12P.
(vii) The Bank understands and agrees that if it fails to comply with the requirements of the MCO, the City shall have the right to pursue any rights or remedies available under Chapter 12P (including liquidated damages), under the terms of the 4886-4749-3705.9 Exhibit D-5
contract, and under applicable law. If, within 30 days after receiving written notice of a breach of this Agreement for violating the MCO, the Bank fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Bank fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue any rights or remedies available under applicable law, including those set forth in Section 12P.6(c) of Chapter 12P. Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(viii) The Bank represents and wan-ants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the MCO. (ix) The City may conduct random audits of the Bank. Random audits shall be (A) noticed in advance in writing; (B) limited to ascertaining whether Covered Employees are paid at least the minimum compensation required by the MCO; (C) accomplished through an examination of pertinent records at a mutually agreed upon time and location within ten days of the written notice; and (D) limited to one audit of the Bank every two years for the duration of this Agreement. Nothing in this Agreement is intended to preclude the City from investigating any report of an alleged violation of the MCO.
(1) Requiring Health Benefits for Covered Employees. Unless exempt, the Bank agrees to comply fully with and be bound by all of the provisions of the Health Care Accountability Ordinance ("HCAO"), as set forth in San Francisco Administrative Code Chapter 12Q, including the remedies provided, and implementing regulations, as the same may be amended from time to time. The provisions of Chapter l 2Q are incorporated herein by reference and made a part of this Agreement as though fully set forth herein. The text of the HCAO is available on the web at http://www.sfgov.org/lwlh.htm. Capitalized terms used in this Section and not defined in this Agreement shall have the meanings assigned to such terms in Chapter 12Q.
(i) For each Covered Employee, the Bank shall provide the appropriate health benefit set forth in Section 12Q.3 of the HCAO. If the Bank chooses to offer the health plan option, such health plan shall meet the minimum standards set forth by the San Francisco Health Commission.
(ii) Notwithstanding the above, if the Bank is a small business as defined in Section 12Q.3(d) of the HCAO, it shall have no obligation to comply with part (i) above. (iii) The Bank's failure to comply with the HCAO shall constitute a material breach of this Agreement. The City shall notify the Bank if such a breach has occun-ed.