Stradling – Draft of 08/30/24
4854-1970-3128v6/200891-0003
CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the “Disclosure Agreement”), dated [Closing Date], 2024, is executed and delivered by the City of Santa Clara, California (the “City”) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) in connection with the issuance of $_________ aggregate principal amount of City of Santa Clara, California Electric Revenue Bonds, Series 2024 A (the “Series 2024 A Bonds”). The Series 2024 A Bonds are being issued pursuant to an Amended and Restated Electric Revenue Bond Indenture, dated as of March 1, 2011, by and between the City and the Trustee, as supplemented and amended from time to time, including by the Fourth Supplemental Electric Revenue Bond Indenture, dated as of October 1, 2024, by and between the City and the Trustee, providing for the issuance of the Series 2024 A Bonds (collectively, the “Indenture”).
In connection therewith the City and the Trustee covenant and agree as follows:
Section 1. Purpose of this Disclosure Agreement . This Disclosure Agreement is being executed and delivered by the City and the Trustee for the benefit of the Holders and Beneficial Owners of the Series 2024 A Bonds and in order to assist the Participating Underwriters (as defined herein) in complying with Securities and Exchange Commission Rule 15c2-12(b)(5).
Section 2. Definitions. In addition to the definitions set forth above and in the Indenture, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this section, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. “Beneficial Owner” shall mean any person who (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Series 2024 A Bonds (including persons holding Series 2024 A Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Series 2024 A Bonds for federal income tax purposes. “Disclosure Representative” shall mean the City Manager or the Director of Finance of the City, or such other officer or employee as the City shall designate in writing to the Trustee from time to time.
“Dissemination Agent” shall mean the Trustee, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the City and which has filed with the Trustee a written acceptance of such designation. “Financial Obligation” shall mean a (a) debt obligation; (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) guarantee of a debt obligation or any such derivative instrument; provided that “financial obligation” shall not include municipal securities as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule. “Holder” shall mean either the registered owners of the Series 2024 A Bonds or, if the Series 2024 A Bonds are registered in the name of The Depository Trust Company or another recognized depository, any applicable participant in such depository system. “Listed Event” shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.
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“MSRB” shall mean the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934 or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.
“Official Statement” shall mean the Official Statement for the Series 2024 A Bonds dated ___________, 2024.
“Participating Underwriter” shall mean any underwriter of the Series 2024 A Bonds listed on the cover page of the Official Statement required to comply with the Rule in connection with offering of the Series 2024 A Bonds.
“Rule” shall mean Rule 15c2-12(b)(5) adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time.
“SEC” shall mean the United States Securities and Exchange Commission.
Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than 210 days after the end of the City’s Fiscal Year (which Fiscal Year presently ends on June 30), commencing with the report for the 2023-24 Fiscal Year, provide to the MSRB an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report must be submitted in electronic format, accompanied by such identifying information as prescribed by the MSRB. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross -reference other information as provided in Section 4 of this Disclosure Agreement; provided that if the audited financial statements of the City’s Electric Utility Enterprise Fund are not available by the date required above for the filing of the Annual Report, the City shall submit unaudited financial statements in a format similar to the audited financial statements and shall submit the audited financial statements as soon thereafter as available as provided in Section 4(i) of this Disclosure Agreement. If the City’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5. (b) If the City is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the City shall, or shall cause the Dissemination Agent to, send to the MSRB a notice in substantially the form attached hereto as Exhibit A. (c) The Dissemination Agent shall:
(i) determine the electronic filing address of, and then-current procedures for submitting Annual Reports to, the MSRB each year prior to the date for providing the Annual Report; and
(ii) file a report with the City and (if the Dissemination Agent is not the Trustee, the Trustee) certifying that the Annual Report has been provided to the MSRB pursuant to this Disclosure Agreement, and stating the date it was provided.
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Section 4. Content of Annual Reports. The City’s Annual Report shall contain or include by reference the following categories or similar categories of information updated to incorporate information for the most recent Fiscal Year (the tables referred to below are those appearing in the Official Statement relating to the Series 2024 A Bonds):
(i) The audited financial statements of the City’s Electric Utility Enterprise Fund (which may be included as a component of the City’s city-wide audited financial statements) for the most recently completed Fiscal Year, prepared in accordance with generally accepted accounting principles for governmental enterprises as prescribed from time to time by any regulatory body with jurisdiction over the City and by the Governmental Accounting Standards Board. If the City’s Electric Utility Enterprise Fund audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the audited financial statements, and the audited fina ncial statements shall be filed in the same manner as the Annual Report when they become available.
(ii) Updated information comparable to the information in the table entitled “CITY OF SANTA CLARA ELECTRIC UTILITY DEPARTMENT POWER
SUPPLY RESOURCES” as it appears in the Official Statement; (iii) Updated information comparable to the information in the table entitled “CITY OF SANTA CLARA ELECTRIC UTILITY DEPARTMENT CUSTOMERS, SALES, REVENUES AND DEMAND” as it appears in the Official Statement; (iv) Updated information comparable to the information in the table entitled “CITY OF SANTA CLARA ELECTRIC UTILITY DEPARTMENT
OUTSTANDING DEBT OF JOINT POWERS AGENCIES” as it appears in the Official Statement;
(v) Updated information comparable to the information in the table entitled “CITY OF SANTA CLARA ELECTRIC UTILITY DEPARTMENT SUMMARY OF FINANCIAL OPERATING RESULTS” as it appears in the Official Statement; and (vi) Updated information comparable to the information in the table entitled “CITY OF SANTA CLARA RATE COVENANT COMPLIANCE UNDER
ELECTRIC REVENUE BOND INDENTURE” as it appears in the Official Statement.
Financial and operating information relating to the City referenced in items (ii)-(vi) above may be updated from time to time, and such updates may involve displaying data in a different format or eliminating data that is no longer material.
Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which have been submitted to the MSRB or the SEC. If any document included by reference is a final official statement, it must be available from the MSRB. The City shall clearly identify each such other document so included by reference.
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Section 5. Reporting of Listed Events.
(a) Pursuant to the provisions of this section, upon the occurrence of any of the following events (in each case to the extent applicable) with respect to the Series 2024 A Bonds, the City shall give, or cause to be given by so notifying the Dissemination Agent in writing and instructing the Dissemination Agent to give, notice of the occurrence of such event, in each case, pursuant to Section 5(c) hereof:
1. principal or interest payment delinquencies;
2. non-payment related defaults, if material;
3. modifications to the rights of the Bondholders, if material;
4. optional, contingent or unscheduled calls, if material, and tender offers;
5. defeasances;
6. rating changes;
7. adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds;
8. unscheduled draws on the debt service reserves reflecting financial difficulties;
9. unscheduled draws on the credit enhancements reflecting financial difficulties;
10. substitution of the credit or liquidity providers or their failure to perform;
11. release, substitution or sale of property securing repayment of the Bonds, if material;
12. bankruptcy, insolvency, receivership or similar proceedings of the City, which shall occur as described below;
13. appointment of a successor or additional trustee or the change of name of a trustee, if material;
14. the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City’s Electric Utility other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material;
15. incurrence of a Financial Obligation of the City with respect to the Electric Utility, if material, or agreement to covenants, events of default, remedies,
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priority rights, or other similar terms of a Financial Obligation of the City with respect to the Electric Utility , any of which affects Holders of the Bonds, if material; or
16. default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the City with respect to the Electric Utility, any of which reflect financial difficulties.
For these purposes, (i) any event described in item 12 of this Section 5(a) is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City or its Electric Utility, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City or its Electric Utility; and (ii) the City intends to comply with the provisions hereof for the Listed Events described in subparagraphs (15) and (16) of this Section 5(a), and the definition of the “Financial Obligation” in Section 2, with reference to the Rule, any other applicable federal securities laws and guidance provided by th e SEC in its Release No. 34-83885 dated August 20, 2018 (the “2018 Release”), any further amendments or written guidance provided by the SEC or its staff with respect to the amendments to the Rule effected by the 2018 Release.
(b) Upon receipt of notice from the City and instruction by the City to report the occurrence of any Listed Event, the Dissemination Agent shall provide notice thereof to the MSRB in accordance with Section 5(c) hereof. In the event the Dissemination Agent sha ll obtain actual knowledge of the occurrence of any of the Listed Events, the Dissemination Agent shall, immediately after obtaining such knowledge, contact the Disclosure Representative, inform such person of the event, and request that the City promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to Section 5(c). For purposes of this Disclosure Agreement, “actual knowledge” of the occurrence of such Listed Event shall mean actual knowledge by the Dissemination Agent, if other than the Trustee, and if the Dissemination Agent is the Trustee, then by the officer at the corporate trust office of the Trustee with regular responsibility for the administration of matters related to the Indenture. The Dissemination Agent s hall have no responsibility to determine the materiality, if applicable, of any of the Listed Events. (c) The City, or the Dissemination Agent, if the Dissemination Agent has been instructed by the City to report the occurrence of a Listed Event, shall file a notice of the occurrence of any of the events listed in Section 5(a) hereof with the MSRB in a timely manner not more than ten (10) business days after the occurrence of the event.
Section 6. Termination of Reporting Obligation. The City’s obligations under this Disclosure Agreement shall terminate with respect to all Series 2024 A Bonds upon the maturity, legal defeasance, prior redemption or payment in full of all of the Series 2024 A Bonds and with respect to any Series 2024 A Bonds upon the maturity, defeasance, prior redemption or payment in full of such Series 2024 A Bonds.
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Section 7. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Trustee, upon notice from the City, shall be the Dissemination Agent. The initial Dissemination Agent shall be the Trustee.
The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Agreement. The Dissemination Agent shall receive compensation for the services provided pursuant to this Disclosure Agreement.
Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the City and the Dissemination Agent may amend this Disclosure Agreement, (and, to the extent that any such amendment does not materially change or increase its obligations hereunder, the Dissemination Agent shall agree to any amendment so requested by the City), and any provision of this Disclosure Agreement may be waived; provided, that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Section 3(a), Section 4 or Section 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Series 2024 A Bonds, or the type of business conducted; (b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Series 2024 A Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Series 2024 A Bonds.
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the City shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and i ts impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(c), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.
Section 9. Filings with the MSRB. All information, operating data, financial statements, notices and other documents provided to the MSRB in accordance with this Disclosure Agreement shall be provided in an electronic format prescribed by the MSRB and shall be accompanied by identifying information as prescribed by the MSRB.
Section 10. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which
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is required by this Disclosure Agreement. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the City shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 11. Default. In the event of a failure of the City or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Trustee may (and, at the request of any Participating Underwriter or the Holders of at least 25% of the aggregate principal am ount of Outstanding Series 2024 A Bonds and upon provision of indemnification satisfactory to the Trustee, shall), or any Holder or Beneficial Owner of the Series 2024 A Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the City or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance hereunder.
Section 12. Duties, Immunities and Liabilities of Trustee and Dissemination Agent. Article VII of the Indenture is hereby made applicable to this Disclosure Agreement as if the Disclosure Agreement were (solely for this purpose) contained in the Indenture. The Dissemination Agent shall receive reasonable compensation for its services provided under this Disclosure Agreement and be entitled to the protections and limitations on liability afforded to the Trustee under Article VII of the Indenture. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement. The Dissemination Agent’s obligation to deliver the information at the times and with the contents described herein shall be limited to the extent that the City has provided such information to the Dissemination Agent as required by this Disclosure Agreement. The Dissemination Agent may conclusively rely upon any Annual Report or notice of a Listed Event provided by the City pursuant to this Disclosure Agreement as sati sfying the obligations of the City with respect to the provision thereof, and shall have no duty or obligation to review the content thereof. In performing its duties under this Disclosure Agreement, the Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the City, the Holders of the Series 2024 A Bonds or any other party. The Dissemination Agent shall not be liable in connection with the performance of its duties under this Disclosure Agreement, except for its own negligence, willful misconduct or breach of the express terms hereof. The City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding any loss, expense and liabilities due to the Dissemination Agent’s negligence or willful misconduct. The obligations of the City under this Section 12 shall survive resignation or removal of the Dissemination Agent and payment of the Series 2024 A Bonds.
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Section 13. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows:
To the City: To the Dissemination Agent:
City of Santa Clara
1500 Warburton Avenue
Santa Clara, California 95050
Attention: Director of Finance
Phone: (408) 615-2344
E-mail: [email protected]
The Bank of New York Mellon
Trust Company, N.A.
333 South Hope Street, Suite 2525
Los Angeles, California 90071
Phone: (213) 630-6237
E-mail: [email protected]
Section 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the City, the Trustee, the Dissemination Agent, the Participating Underwriters and the Holders and Beneficial Owners from time to time of the Series 2024 A Bonds, and shall create no rights in any other person or entity.
Section 15. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
IN WITNESS WHEREOF, this Disclosure Agreement has been executed on behalf of the City and the Trustee by their duly authorized representatives.
CITY OF SANTA CLARA, CALIFORNIA,
a chartered California municipal corporation
APPROVED AS TO FORM:
GLEN R. GOOGINS
City Attorney
JŌVAN D. GROGAN
City Manager
1500 Warburton Avenue
Santa Clara, CA 95050
Telephone: (408) 615-2210
Facsimile: (408) 241-6771
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.
By
Authorized Officer
A-1
4854-1970-3128v6/200891-0003
EXHIBIT A
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Name of City: CITY OF SANTA CLARA
Name of Bond Issue: $__________ City of Santa Clara, California Electric Revenue Bonds, Series 2024 A
(the “Series 2024 A Bonds”)
Date of Issuance: _________, 20__
NOTICE IS HEREBY GIVEN that the City of Santa Clara, California (the “City”) has not provided an Annual Report with respect to the above -named Series 2024 A Bonds as required by Section 3(a) of the Continuing Disclosure Agreement, dated [Closing Date], 20__, by and between the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) and in accordance with Section 14.15 of the Fourth Supplemental Electric Revenue Bond Indenture, dated as of October 1, 2024, by and between the City and the Trustee, amending and supplementing the Amended and Restated Electric Revenue Bond Indenture dated as of March 1, 2011, as amended and supplemented from time to time, by and between the City and the Trustee, providing for the issuance of the Series 2024 A Bonds. The City anticipates that the Annual Report will be filed by ___________, 20__.
Dated: ______________, 20__
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee on behalf of the City
By:
Authorized Officer
cc: City of Santa Clara, California