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FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Fourth Amendment”) dated and effective as of June 29, 2023 (the “Fourth Amendment Effective Date”), is entered into by and among CITY OF SAN JOSE, CALIFORNIA (together with its successors and permitted assigns, the “City”), CITY OF SAN JOSE FINANCING AUTHORITY (together with its successors and permitted assigns, the “Authority’) and WELLS FARGO BANK, NATIONAL ASSOCIATION (together with its successors and assigns, the “Bank”).
WITNESSETH:
WHEREAS, the City, the Authority and the Bank have previously entered into that certain Credit Agreement dated as of October 1, 2017, as amended by that certain First Amendment to Credit Agreement dated as of June 27, 2018, by that Second Amendment to Credit Agreement dated as of October 15, 2020, and by that Third Amendment to Credit Agreement dated as of March 30, 2022 (the “Original Agreement”), pursuant to which the Bank agreed, upon the terms and conditions therein, to lend to the Authority up to the principal amount of $300,000,000; and
WHEREAS, pursuant to Section 8.04 of the Original Agreement, the City, the Authority and the Bank wish to amend the Original Agreement as provided herein; NOW, THEREFORE, in consideration of the foregoing and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
INTENTION OF PARTIES; AGREEMENT PROVISIONS
The City, the Authority and the Bank have entered into this Fourth Amendment pursuant to Section 8.04 of the Original Agreement to amend their rights and obligations set forth in the Original Agreement. The terms of the Original Agreement, as amended by this Fourth Amendment (as so amended, the “Agreement”), shall govern the rights and obligations of the City, the Authority and the Bank in connection with the transactions contemplated by the Agreement. Capitalized terms used but not defined in this Fourth Amendment shall have the respective meanings assigned thereto in the Original Agreement.
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ARTICLE II
AMENDMENTS
Section 2.01. Section 1.01 is hereby amended by amending and restating the following definitions in their entirety to read as follows:
“Commitment” means (a) prior to June 29, 2023, Three Hundred Million Dollars ($300,000,000) and (b) on and after June 29, 2023, Two Hundred Million Dollars ($200,000,000), in each case as the amount of the commitment of the Bank to make Advances under the Notes and this Agreement, as such amount may be reduced from time to time pursuant to Section 2.3 or Section 6.2.
“Fee Letter Agreement ” means the Fourth Amended and Restated Fee Letter Agreement dated June 29, 2023, between the Authority and the Bank, as amended, supplemented, restated or otherwise modified from time to time in accordance with its terms.
“Master Resolution” means Resolution No. 80770 adopted by the City Council of the City on November 15, 2022 entitled A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JOSE AMENDING AND RESTATING RESOLUTION NO. 78382
PROVIDING FOR THE ALLOCATION OF WASTEWATER SYSTEM REVENUES,
THE PLEDGE OF WASTEWATER NET SYSTEM REVENUES AND
ESTABLISHING COVENANTS TO SECURE THE PAYMENT OF OBLIGATIONS PAYABLE FROM WASTEWATER NET SYSTEM REVENUES, as amended from time to time in accordance with its terms and the terms of this Agreement. “Obligor Rating” means the ratings assigned by each Rating Agency to the City of San José Financing Authority Wastewater Revenue Bonds, Series 2022B (Green Bonds – Climate Bond Certified) (without regard to third party credit enhancement) while such bonds are outstanding and, thereafter, the ratings, if any, assigned by each Rating Agency (without regard to third party credit enhancement) to at least one issue of unenhanced long term debt constituting, or secured by obligations constituting, Parity Obligations under the Master Resolution.
“Stated Expiration Date ” means October 16, 2026, unless extended pursuant to Section 2.10 hereof.
Section 2.02. Exhibits C and D to the Original Agreement are hereby amended and restated in their entirety to read as provided in Exhibits C and D to this Fourth Amendment. On the Fourth Amendment Effective Date the existing original Taxable Note and the existing original Series A Tax-Exempt Note shall be amended and restated to conform to Exhibits C and D hereto, respectively. In order to amend and restate the existing original Taxable Note and the existing original Series A Tax-Exempt Note on the Fourth Amendment Effective Date, the Bank shall present the existing original Taxable Note and the existing original Series A Tax-Exempt Note to the Authority for cancellation and the Authority shall execute and deliver to the Bank a new Taxable Note (the “Replacement Taxable Note”) and a new Series A Tax-Exempt Note (the DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document. 3 Fourth Amendment To Credit Agreement
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“Replacement Series A Tax-Exempt Note” and together with the Replacement Taxable Note, the “Replacement Notes”) in exchange therefore modified to conform to Exhibits C and D hereto, respectively, in each case equal in aggregate principal amount to the existing original Taxable Note and existing original Series A Tax-Exempt Note and having the same maturity. Upon the execution and delivery of the Replacement Notes to the Bank and satisfaction of the other conditions precedent specified in Section 3.01 of this Fourth Amendment, the Authority shall cancel the existing original Taxable Note and existing original Series A Tax-Exempt Note and the existing original Taxable Note and existing original Series A Tax-Exempt Note shall no longer be outstanding under the Agreement. The execution and delivery of the Replacement Notes shall not be deemed to be an issuance of additional Notes under the Agreement but shall be deemed to be an amendment and restatement of the original Taxable Note and Series A Tax- Exempt Note, respectively.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Conditions Precedent . The parties hereto agree that this Fourth Amendment shall become effective as of the date first written above but only upon the Bank’s receipt of the following, each in form and substance satisfactory to the Bank:
(a) Fourth Amendment and Fee Letter. Counterparts of this Fourth Amendment, the fully executed Replacement Notes and that certain Fourth Amended and Restated Fee Letter Agreement dated June 29, 2023, between the Authority and the Bank, as amended, supplemented, restated or otherwise modified from time to time in accordance with its terms (the “Fee Letter Agreement”). (b) Incumbency of City and Authority. A certificate of the Secretary or an Assistant Secretary of the Authority certifying the names and specimen signatures of each Authorized Officer of the Authority and a certificate of the City Clerk or Deputy City Clerk of the City certifying the names and specimen signatures of each Authorized Officer of the City, each with respect to the authorization and execution of this Fourth Amendment, the Fee Letter Agreement and any other document to be delivered by the City or the Authority hereunder.
(c) Resolutions of Authority and City . Certified copies of all resolutions of the Authority and the City which authorize the execution, delivery or performance of this Fourth Amendment and the Fee Letter Agreement.
(d) Opinion of Bond Counsel. Opinion of Orrick Herrington & Sutcliffe LLP, bond counsel to the Authority, which shall include such matters as the Bank may reasonably request.
(e) Opinions of City Attorney . Opinion of the City Attorney, counsel for the Authority, and an opinion of the City Attorney, counsel for the City, which shall include such matters as the Bank may reasonably request for each opinion.
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(f) Other Documents. Such other documents, instruments, approvals and, if requested by the Bank, certified duplicates of executed copies thereof, and opinions as the Bank may reasonably request.
Section 3.02. Fees. Promptly following the receipt of an invoice therefor, the City and the Authority shall pay reasonable fees and expenses of the Bank (which shall include the reasonable fees and expenses of counsel to the Bank) incurred in connection with the negotiation, execution and delivery of this Fourth Amendment and the Fee Letter Agreement; provided that the Bank will pay said fees up to $10,000, with the remainder, if any, to be paid by the City and the Authority in accordance with this Section 3.02.
ARTICLE IV
FULL FORCE AND EFFECT
The Original Agreement is hereby amended to the extent provided in this Fourth Amendment and, except as specifically provided herein, the Original Agreement shall remain in full force and effect in accordance with its terms.
ARTICLE V
GOVERNING LAW
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS FOURTH AMENDMENT SHALL BE GOVERNED AS PROVIDED IN SECTION 8.09 OF THE ORIGINAL AGREEMENT.
ARTICLE VI
HEADINGS
Section headings in this Fourth Amendment are included herein for convenience of reference only and shall not have any effect for purposes of interpretation or construction of the terms of this Fourth Amendment.
ARTICLE VII
COUNTERPARTS
This Fourth Amendment may be signed in any number of counterpart copies, but all such copies shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Fourth Amendment by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Fourth Amendment.
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document. 5 Fourth Amendment To Credit Agreement
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ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Each party hereto represents and warrants to the other that this Fourth Amendment has been duly authorized and validly executed by it and that the Original Agreement as hereby amended constitutes its valid obligation, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally and subject to the application of general principles of equity including but not limited to the right of specific performance.
The City and the Authority each further represents and warrants to the Bank that: (a) no Default has occurred and is continuing on the date hereof and after giving effect to this Fourth Amendment, (b) each Note has been duly authorized and validly executed by it and constitutes its valid obligation, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally and subject to the application of general principles of equity including but not limited to the right of specific performance and (c) except as disclosed in writing by the Authority and the City to the Bank on or before the date hereof, the representations and warranties of the City and of the Authority contained in the Original Agreement are true and correct on and as of the date hereof and after giving effect to this Fourth Amendment, as though made on and as of the date hereof (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).
ARTICLE IX
SEVERABILITY
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. [Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to Credit Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
Approved as to form:
________________________, Nora V. Frimann, City Attorney By:
Chief Deputy City Attorney
CITY OF SAN JOSE FINANCING
AUTHORITY
By:
Name: _____________________________
Title: ______________________________
Attested to:
By:
Name: _____________________________
Title: ______________________________
CITY OF SAN JOSE
By:
Name: _____________________________
Title: ______________________________
Attested to:
By:
Name: _____________________________
Title: ______________________________
[Signatures Continued On Next Page]
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[Signature page of Fourth Amendment to Credit Agreement]
WELLS FARGO BANK, NATIONAL
ASSOCIATION
By: ______________________________
Name: Mary Lou Lopez
Title: Director
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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EXHIBIT C
[FORM OF TAXABLE NOTE]
NUMBER
R-__
CITY OF SAN JOSE FINANCING AUTHORITY
SUBORDINATE WASTEWATER REVENUE TAXABLE NOTE
INTEREST RATE DATED CUSIP
Variable October 19, 2017 79816NAA5
R
EGISTERED OWNER: WELLS FARGO BANK, NATIONAL ASSOCIATION CITY OF SAN JOSE FINANCING AUTHORITY, a joint powers authority and public entity of the State of California (the “Authority”), for value received, hereby promises to pay (but only out of the Authority Revenues pledged therefor as hereinafter mentioned) to the Registered Owner specified above (the “Registered Owner”), on the Termination Date (as defined in the Credit Agreement, dated as of October 1, 2017, among the Authority, the City of San José (the “City”) and Wells Fargo Bank, National Association (the “Bank”), as amended by that certain First Amendment to Credit Agreement dated as of June 27, 2018, by that certain Second Amendment to Credit Agreement, dated as of October 15, 2020, by that certain Third Amendment to Credit Agreement, dated as of March 30, 2022 and by that certain Fourth Amendment to Credit Agreement, dated as of June 29, 2023, each among the Authority, the City and the Bank (as so amended and as further amended from time to time in accordance with its terms, the “Credit Agreement”) the outstanding principal amount hereof, in lawful money of the United States of America; and to pay interest thereon (but only from said Authority Revenues) in like lawful money on the dates provided in the Credit Agreement at the rates per annum determined pursuant to the Credit Agreement. All payments of principal hereof, and interest hereon, are payable to the Registered Owner not later than the time specified in the Credit Agreement on the day when due, in federal or other funds immediately available as provided in the Fee Letter Agreement (as defined in the Credit Agreement). This Note is issuable in denominations of $1,000,000 and any amount in excess thereof. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.
This Note is one of a duly authorized issue of notes of the Authority designated as “City of San José Financing Authority Subordinate Wastewater Revenue Taxable Notes” (the “Notes”), limited in aggregate principal amount, at any time outstanding, to the Commitment in effect at such time, and issued pursuant to the provisions of the Joint Exercise of Powers Act, constituting Title 1, Division 7, Chapter 5 of the Government Code of the State of California (the “Act”), and the Credit Agreement. Subject to the terms of the Credit Agreement, Advances may be made on this Note, this Note may be prepaid, and the principal amount of this Note that is paid or prepaid by the Authority may again be Advanced under this Note. The Notes are issued DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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for the purpose of financing the acquisition, construction and installation from time to time of certain improvements, additions, and betterments to, and extensions and replacements of, the Treatment Plant for the City and/or, subject to the terms of the Credit Agreement, the refunding of any bonds, notes or other evidences of indebtedness of the Authority or the City issued or incurred for such purpose.
The Notes and the interest thereon are limited obligations of the Authority payable solely from the Authority Revenues (as that term is defined in the Credit Agreement), constituting installment payments (the “Installment Payments”) to be made by the City to the Authority pursuant to the Subordinate Installment Purchase Contract, dated as of October 1, 2017 (as amended from time to time in accordance with its terms and the terms of the Credit Agreement, the “Installment Purchase Agreement”), between the Authority and the City, and are secured by a pledge and assignment of said Authority Revenues, subject only to the provisions of the Credit Agreement permitting the application thereof for the purposes and on the terms and conditions set forth in the Credit Agreement. The Notes are further secured by an assignment of the right, title and interest of the Authority in the Installment Purchase Agreement (to the extent and as more particularly described in the Credit Agreement).
The Notes are limited obligations of the Authority and the principal thereof, premium, if any, and interest thereon, are payable solely from, and secured in accordance with their terms and the provisions of the Credit Agreement solely by, the Authority Revenues. The Notes are not a debt or liability of the State of California, the City or of any other political subdivision of the State of California other than the Authority or a pledge of the faith and credit of the State of California, the City or of any other political subdivision of the State of California, but shall be payable solely from the Authority Revenues. None of the State of California, the City, any other political subdivision of the State of California, or the Authority shall be obligated to pay the principal of, premium, if any, or interest on the Notes except from the Authority Revenues and neither the faith and credit nor the taxing power of the State of California, the City or of any political subdivision of the State of California is pledged to the payment of the principal of, premium, if any, or the interest on the Notes. The issuance of the Notes shall not directly or indirectly or contingently obligate the State of California, the City or any other political subdivision of the State of California to levy or to pledge any form of taxation whatever therefor or to make any appropriation for their payment. Notwithstanding anything herein or in the Credit Agreement, the Authority shall have no pecuniary liability under the Notes except that which can be satisfied from the Authority Revenues, and the Authority shall not be required to advance any moneys derived from any source other than the Authority Revenues for the payment of the principal of, premium, if any, or the interest on the Notes.
Reference is hereby made to the Credit Agreement (a copy of which is on file with the Authority) and to the Act for a description of the rights thereunder of the Registered Owner, of the nature and extent of the security for the Notes, and of the rights and obligations of the Authority thereunder, all of the provisions of which Credit Agreement are incorporated herein and to which the Registered Owner of this Note, by acceptance hereof, assents and agrees.
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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Interest
This Note shall bear interest on the outstanding principal amount hereof, for each day from and including the date the initial Advance is made hereunder until it is paid in full, at the Taxable Rate.
“Taxable Rate” means a per annum rate of interest established by the Calculation Agent on each SOFR Determination Date equal to the sum of the Taxable Applicable Spread plus Daily Simple SOFR. The Taxable Rate shall be rounded upwards to the fifth decimal place. Upon the occurrence and during the continuance of an Event of Default the Taxable Rate shall equal the Default Rate.
The Calculation Agent shall determine the applicable interest rate for this Note as set forth in the Credit Agreement. Interest on the outstanding principal amount of this Note shall accrue each day during the applicable Interest Period. Interest on this Note shall be computed on the basis specified in the Credit Agreement.
Interest on the outstanding principal amount of this Note is payable monthly in arrears on each Interest Payment Date, on the date the outstanding principal of this Note is paid in full and, solely with respect to the portion of this Note being prepaid, on the date any portion of the principal of this Note is prepaid in part.
The interest rate borne by this Note is subject to adjustment as provided in Section 2.15 of the Credit Agreement.
Optional Prepayment
The Authority may prepay this Note in whole at any time, or from time to time in part in amounts aggregating $1,000,000 and any amount in excess thereof or, if the outstanding principal amount of this Note being prepaid is less than $1,000,000, the total amount of this Note which is then outstanding, by giving notice to the Registered Owner by 11:00 a.m. on the date which is at least five U.S. Government Securities Business Days prior to the date on which such prepayment is to be made and by paying to the Registered Owner the principal amount thereof to be prepaid together with accrued interest to the date of prepayment. Any such notice shall be irrevocable once received by the Registered Owner.
Payment of Principal after Termination Date
Notwithstanding anything to the contrary contained herein or in the Credit Agreement, in the event the Registered Owner does not receive repayment of the outstanding principal of this Note on or before the Termination Date, provided that the conditions set forth in Section 2.07(c) or the Credit Agreement are satisfied, including (A) no Default or Event of Default shall have occurred and be continuing and (B) the representations and warranties set forth in the Credit Agreement shall be true and correct on the Termination Date, then the Authority shall pay the outstanding principal amount of this Note (the “Amortization Amount”) in installments payable on each Amortization Principal Payment Date (each such payment, an “Amortization Principal Payment”), with the final installment in an amount equal to the remaining balance of the Amortization Amount on the Amortization End Date (the period commencing on the DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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Termination Date and ending on the Amortization End Date is herein referred to as the “Amortization Period”). Each Amortization Principal Payment shall be that amount of principal which will result in equal (as nearly as possible) aggregate Amortization Principal Payments over the Amortization Period so the Amortization Amount is fully repaid by the end of the Amortization Period. The Authority may prepay, or cause to be prepaid, some or all of the Amortization Amount on any date upon one Business Days’ notice to the Registered Owner, such prepayment to be accompanied by interest accrued thereon at the Bank Rate to the date of prepayment.
During the Amortization Period, interest on the Notes shall accrue at the Bank Rate and shall be payable in arrears on each Amortization Interest Payment Date.
Maximum Interest Rate
If the amount of interest payable on this Note for any period in accordance with the terms hereof or the Credit Agreement exceeds the amount of interest that would be payable on this Note for such period had interest for such period been calculated at the Maximum Interest Rate, then interest for such period shall be payable in an amount calculated at the Maximum Interest Rate for such period.
Any interest that would have been due and payable for any period but for the operation of the immediately preceding paragraph shall accrue and be payable on this Note as provided in this paragraph and shall, less interest actually paid to the Registered Owner, as applicable, for such period, constitute the “Excess Interest Amount.” If there is any accrued and unpaid Excess Interest Amount as of any date with respect to this Note then the principal amount of this Note shall bear interest at the Maximum Interest Rate, until payment to the Registered Owner, of the entire Excess Interest Amount.
The Authority shall treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority shall not be affected by any notice to the contrary.
THE REGISTERED OWNER OF THIS NOTE WILL PURCHASE THE PRINCIPAL
AMOUNT OF THIS NOTE IN INSTALLMENTS BY MAKING ADVANCES IN ACCORDANCE WITH THE TERMS OF THE CREDIT AGREEMENT. ACCORDINGLY,
THE PRINCIPAL AMOUNT OF THIS NOTE WHICH HAS BEEN PURCHASED AND IS
OUTSTANDING AT ANY GIVEN TIME MAY BE LESS THAN THE COMMITMENT IN EFFECT AT SUCH TIME. THE REGISTERED OWNER OF THIS NOTE MAY MAKE A
NOTATION ON THIS NOTE ON THE SCHEDULE ATTACHED HERETO AS TO THE
DATE AND THE AMOUNT OF EACH ADVANCE AND AS TO EACH PAYMENT OF
PRINCIPAL OF THIS NOTE, BUT THE FAILURE TO MAKE A NOTATION SHALL NOT
RELIEVE THE AUTHORITY OF ITS OBLIGATIONS TO PAY THE OUTSTANDING
PRINCIPAL OF THIS NOTE, TOGETHER WITH INTEREST HEREON, AS PROVIDED HEREIN AND IN THE CREDIT AGREEMENT.
PAYMENTS OF THE PRINCIPAL OF AND PREMIUM, IF ANY, AND INTEREST
ON THIS NOTE MAY BE MADE DIRECTLY TO THE REGISTERED OWNER HEREOF DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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WITHOUT NOTATION HEREON. IT CANNOT BE DETERMINED FROM THE FACE OF THIS NOTE WHETHER ALL OR ANY PART OF SUCH PAYMENTS HAVE BEEN PAID.
It is hereby certified and recited that any and all acts, conditions and things required to exist, to have happened and to have been performed precedent to and in the issuance of this Note do exist, have happened and have been performed in due time, form and manner as required by the provisions of the Act and by the Constitution and laws of the State of California, and that the amount of this Note, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Act or the Constitution and laws of the State of California, and is not in excess of the amount of Notes permitted to be issued under the Credit Agreement.
IN WITNESS WHEREOF, CITY OF SAN JOSE FINANCING AUTHORITY has caused this Note to be executed in its name and on its behalf by the manual signature of its [Treasurer] as of the date set forth above.
CITY OF SAN JOSE FINANCING AUTHORITY
By:
[Treasurer]
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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ADVANCES AND PAYMENTS OF PRINCIPAL
Date
Amount Of
Advance
Amount Of
Principal
Repaid
Unpaid
Principal
Balance
Notation Made
By
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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EXHIBIT D
[FORM OF TAX EXEMPT NOTE]
NUMBER
R-__
C
ITY OF SAN JOSE FINANCING AUTHORITY
SUBORDINATE WASTEWATER REVENUE NOTE, SERIES [__]
INTEREST RATE DATED CUSIP
Variable [October 19, 2017] [________]
REGISTERED OWNER: WELLS FARGO BANK, NATIONAL ASSOCIATION CITY OF SAN JOSE FINANCING AUTHORITY, a joint powers authority and public entity of the State of California (the “Authority”), for value received, hereby promises to pay (but only out of the Authority Revenues pledged therefor as hereinafter mentioned) to the Registered Owner specified above (the “Registered Owner”), on the Termination Date (as defined in the Credit Agreement, dated as of October 1, 2017, among the Authority, the City of San José (the “City”) and Wells Fargo Bank, National Association (the “Bank”), as amended by that certain First Amendment to Credit Agreement dated as of June 27, 2018, by that certain Second Amendment to Credit Agreement, dated as of October 15, 2020, by that certain Third Amendment to Credit Agreement, dated as of March 30, 2022 and by that certain Fourth Amendment to Credit Agreement, dated as of June 29, 2023, each among the Authority, the City and the Bank (as so amended and as further amended from time to time in accordance with its terms, the “Credit Agreement”) the principal amount specified above or so much of such maximum authorized principal amount as may have been Advanced hereunder as provided in the Credit Agreement, in lawful money of the United States of America; and to pay interest thereon (but only from said Authority Revenues) in like lawful money on the dates provided in the Credit Agreement at the rates per annum determined pursuant to the Credit Agreement. All payments of principal hereof, and interest hereon, are payable to the Registered Owner not later than the time specified in the Credit Agreement on the day when due, in federal or other funds immediately available as provided in the Fee Letter Agreement (as defined in the Credit Agreement). This Note is issuable in denominations of $1,000,000 and any amount in excess thereof. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.
This Note is one of a duly authorized issue of notes of the Authority designated as “City of San José Financing Authority Subordinate Wastewater Revenue Notes, Series [__]” (the “Notes”), limited in aggregate principal amount, at any time outstanding, to the Commitment in effect at such time, and issued pursuant to the provisions of the Joint Exercise of Powers Act, DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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constituting Title 1, Division 7, Chapter 5 of the Government Code of the State of California (the “Act”), and the Credit Agreement. The Notes are issued for the purpose of financing the acquisition, construction and installation from time to time of certain improvements, additions, and betterments to, and extensions and replacements of, the Treatment Plant for the City and/or, subject to the terms of the Credit Agreement, the refunding of any bonds, notes or other evidences of indebtedness of the Authority or the City issued or incurred for such purpose.
The Notes and the interest thereon are limited obligations of the Authority payable solely from the Authority Revenues (as that term is defined in the Credit Agreement), constituting installment payments (the “Installment Payments”) to be made by the City to the Authority pursuant to the Subordinate Installment Purchase Contract, dated as of October 1, 2017 (as amended from time to time in accordance with its terms and the terms of the Credit Agreement, the “Installment Purchase Agreement”), between the Authority and the City, and are secured by a pledge and assignment of said Authority Revenues, subject only to the provisions of the Credit Agreement permitting the application thereof for the purposes and on the terms and conditions set forth in the Credit Agreement. The Notes are further secured by an assignment of the right, title and interest of the Authority in the Installment Purchase Agreement (to the extent and as more particularly described in the Credit Agreement).
The Notes are limited obligations of the Authority and the principal thereof, premium, if any, and interest thereon, are payable solely from, and secured in accordance with their terms and the provisions of the Credit Agreement solely by, the Authority Revenues. The Notes are not a debt or liability of the State of California, the City or of any other political subdivision of the State of California other than the Authority or a pledge of the faith and credit of the State of California, the City or of any other political subdivision of the State of California, but shall be payable solely from the Authority Revenues. None of the State of California, the City, any other political subdivision of the State of California, or the Authority shall be obligated to pay the principal of, premium, if any, or interest on the Notes except from the Authority Revenues and neither the faith and credit nor the taxing power of the State of California, the City or of any political subdivision of the State of California is pledged to the payment of the principal of, premium, if any, or the interest on the Notes. The issuance of the Notes shall not directly or indirectly or contingently obligate the State of California, the City or any other political subdivision of the State of California to levy or to pledge any form of taxation whatever therefor or to make any appropriation for their payment. Notwithstanding anything herein or in the Credit Agreement, the Authority shall have no pecuniary liability under the Notes except that which can be satisfied from the Authority Revenues, and the Authority shall not be required to advance any moneys derived from any source other than the Authority Revenues for the payment of the principal of, premium, if any, or the interest on the Notes.
Reference is hereby made to the Credit Agreement (a copy of which is on file with the Authority) and to the Act for a description of the rights thereunder of the Registered Owner, of the nature and extent of the security for the Notes, and of the rights and obligations of the Authority thereunder, all of the provisions of which Credit Agreement are incorporated herein and to which the Registered Owner of this Note, by acceptance hereof, assents and agrees.
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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Interest
This Note shall bear interest on the outstanding principal amount hereof, for each day from and including the date the initial Advance is made hereunder until it is paid in full, at the Tax Exempt Rate.
“Tax Exempt Rate” means a per annum rate of interest established by the Calculation Agent on each SOFR Determination Date equal to the sum of (a) the Tax Exempt Applicable Spread plus (b) the product of (i) Daily Simple SOFR multiplied by (ii) the Applicable Factor.
The Tax Exempt Rate shall be rounded upwards to the fifth decimal place. Upon the occurrence and during the occurrence of an Event of Default the Tax Exempt Rate shall equal the Default Rate.
The Calculation Agent shall determine the applicable interest rate for this Note as provided in the Credit Agreement. Interest on the outstanding principal amount of this Note shall accrue each day during the applicable Interest Period. Interest on this Note shall be computed on the basis specified in the Credit Agreement.
Interest on the outstanding principal amount of this Note is payable monthly in arrears on each Interest Payment Date, on the date the outstanding principal of this Note is paid in full and, solely with respect to the portion of this Note being prepaid, on the date any portion of the principal of this Note is prepaid in part.
The interest rate borne by this Note is subject to adjustment as provided in Section 2.15 of the Credit Agreement.
Taxability
On and after a Taxable Date for this Note, this Note shall bear interest at the Taxable Rate until such time as another interest rate shall apply pursuant to the terms hereof. “Taxable Rate” means a per annum rate of interest established by the Calculation Agent on each SOFR Determination Date equal to the sum of the Taxable Applicable Spread plus Daily Simple SOFR. The Taxable Rate shall be rounded upwards to the fifth decimal place. Upon the occurrence and during the continuance of an Event of Default the Taxable Rate shall equal the Default Rate.
Optional Prepayment
The Authority may prepay this Note in whole at any time, or from time to time in part in amounts aggregating $1,000,000 and any amount in excess thereof or, if the outstanding principal amount of this Note being prepaid is less than $1,000,000, the total amount of this Note which is then outstanding, by giving notice to the Registered Owner by 11:00 a.m. on the date which is at least five U.S. Government Securities Business Days prior to the date on which such prepayment is to be made and by paying to the Registered Owner the principal amount thereof to DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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be prepaid together with accrued interest to the date of prepayment. Any such notice shall be irrevocable once received by the Registered Owner.
Payment of Principal after Termination Date
Notwithstanding anything to the contrary contained herein or in the Credit Agreement, in the event the Registered Owner does not receive repayment of the outstanding principal of this Note on or before the Termination Date, provided that the conditions set forth in Section 2.07(c) or the Credit Agreement are satisfied, including (A) no Default or Event of Default shall have occurred and be continuing and (B) the representations and warranties set forth in the Credit Agreement shall be true and correct on the Termination Date, then the Authority shall pay the outstanding principal amount of this Note (the “Amortization Amount”) in installments payable on each Amortization Principal Payment Date (each such payment, an “Amortization Principal Payment”), with the final installment in an amount equal to the remaining balance of the Amortization Amount on the Amortization End Date (the period commencing on the Termination Date and ending on the Amortization End Date is herein referred to as the “Amortization Period”). Each Amortization Principal Payment shall be that amount of principal which will result in equal (as nearly as possible) aggregate Amortization Principal Payments over the Amortization Period so the Amortization Amount is fully repaid by the end of the Amortization Period. The Authority may prepay, or cause to be prepaid, some or all of the Amortization Amount on any date upon one Business Days’ notice to the Registered Owner, such prepayment to be accompanied by interest accrued thereon at the Bank Rate to the date of prepayment.
During the Amortization Period, interest on the Notes shall accrue at the Bank Rate and shall be payable in arrears on each Amortization Interest Payment Date.
Maximum Interest Rate
If the amount of interest payable on this Note for any period in accordance with the terms hereof or the Credit Agreement exceeds the amount of interest that would be payable on this Note for such period had interest for such period been calculated at the Maximum Interest Rate, then interest for such period shall be payable in an amount calculated at the Maximum Interest Rate for such period.
Any interest that would have been due and payable for any period but for the operation of the immediately preceding paragraph shall accrue and be payable on this Note as provided in this paragraph and shall, less interest actually paid to the Registered Owner, as applicable, for such period, constitute the “Excess Interest Amount.” If there is any accrued and unpaid Excess Interest Amount as of any date with respect to this Note then the principal amount of this Note shall bear interest at the Maximum Interest Rate, until payment to the Registered Owner, of the entire Excess Interest Amount.
The Authority shall treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority shall not be affected by any notice to the contrary.
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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THIS NOTE IS BEING ISSUED AS A DRAW-DOWN NOTE, IN THAT THE
REGISTERED OWNER OF THIS NOTE WILL PURCHASE THE PRINCIPAL AMOUNT OF
THIS NOTE IN INSTALLMENTS BY MAKING ADVANCES IN ACCORDANCE WITH THE TERMS OF THE CREDIT AGREEMENT. ACCORDINGLY, THE PRINCIPAL
AMOUNT OF THIS NOTE WHICH HAS BEEN PURCHASED AND IS OUTSTANDING AT
ANY GIVEN TIME MAY BE LESS THAN THE COMMITMENT IN EFFECT AT SUCH TIME. THE REGISTERED OWNER OF THIS NOTE MAY MAKE A NOTATION ON THIS
NOTE ON THE SCHEDULE ATTACHED HERETO AS TO THE DATE AND THE
AMOUNT OF EACH ADVANCE AND AS TO EACH PAYMENT OF PRINCIPAL OF THIS
NOTE, BUT THE FAILURE TO MAKE A NOTATION SHALL NOT RELIEVE THE
AUTHORITY OF ITS OBLIGATIONS TO PAY THE OUTSTANDING PRINCIPAL OF THIS
NOTE, TOGETHER WITH INTEREST HEREON, AS PROVIDED HEREIN AND IN THE CREDIT AGREEMENT.
PAYMENTS OF THE PRINCIPAL OF AND PREMIUM, IF ANY, AND INTEREST
ON THIS NOTE MAY BE MADE DIRECTLY TO THE REGISTERED OWNER HEREOF WITHOUT NOTATION HEREON. IT CANNOT BE DETERMINED FROM THE FACE OF THIS NOTE WHETHER ALL OR ANY PART OF SUCH PAYMENTS HAVE BEEN PAID.
It is hereby certified and recited that any and all acts, conditions and things required to exist, to have happened and to have been performed precedent to and in the issuance of this Note do exist, have happened and have been performed in due time, form and manner as required by the provisions of the Act and by the Constitution and laws of the State of California, and that the amount of this Note, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Act or the Constitution and laws of the State of California, and is not in excess of the amount of Notes permitted to be issued under the Credit Agreement.
IN WITNESS WHEREOF, CITY OF SAN JOSE FINANCING AUTHORITY has caused this Note to be executed in its name and on its behalf by the manual signature of its [Treasurer] as of the date set forth above.
CITY OF SAN JOSE FINANCING AUTHORITY
By:
[Treasurer]
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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ADVANCES AND PAYMENTS OF PRINCIPAL
Date
Amount Of
Advance
Amount Of
Principal
Repaid
Unpaid
Principal
Balance
Notation Made
By
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.