REIMBURSEMENT AGREEMENTDraft of January 31, 2008
Marked to Show Changes From
® Draft of January 9, 2008
Double underscore indicates insertion.
kethr-ettgh indicates deletion.
REIMBURSEMENT AGREEMENT
Among
DEPFA BANK PLC,
acting through its New York Branch,
TOWN OF AVON, COLORADO
and
AVON URBAN RENEWAL AUTHORITY
Dated as of February 15, 2008
r:
2347273.01.10.1)
1676436
Document Comparison of 2347273.0 against 2347273.01.09
REIMBURSEMENT AGREEMENT 0
(This Table of Contents is not a part of
this Reimbursement Agreement
and is only for
convenience of reference)
SECTION HEADING PAGE
ARTICLE ONE DEFINITIONS ................................................................................................1
Section 1.1. Definitions ....................................................................................................1
ARTICLE TWO
LETTER OF CREDIT ......................................................................................7
Section 2.1.
Issuance of Letter of Credit
..7
Section 2.2.
Letter of Credit Drawings
..7
Section 2.3.
Liquidity Drawings; Term Loans
..7
Section 2.4.
Reimbursement of Drawings Other Than Liquidity Drawings
Under the Letter of Credit
..9
Section 2.5.
Fees
..9
Section 2.6.
Method of Payment; Etc
10
Section 2.7.
Termination of Letter of Credit by the Issuer
10
Section 2.8.
Computation of Interest and Fees
11
Section 2.9.
Payment Due on Non-Business Day to Be Made on Next
Business Day
1 l
Section 2.10.
Default Rate
11
Section 2.11.
Source of Funds
11
Section 2.12.
Collateral Security
1 l
Section 2.13.
Maximum Rate; Payment of Fee
11
ARTICLE THREE CONDITIONS PRECEDENT ..........................................................................12
Section 3.1. Conditions Precedent to Issuance of Letter of Credit ................................12
Section 3.2. Conditions Precedent to Liquidity Advances; Conditions
Precedent to Term Loans .....................................................................13
ARTICLE FOUR REPRESENTATIONS AND WARRANTIES .....................................................14
Section 4.1. Representations and Warranties of the Issuer ............................................14
Section 4.2. Representations and Warranties of the Town ............................................17
ARTICLE FIVE COVENANTS ...............................................................................................20
Section 5.1. Covenants of the Issuer ..............................................................................20
Section 5.2. Covenants of the Town ..............................................................................24 is
ARTICLE SIX DEFAULTS .....:............................................................................................27
® Section 6. 1. Events of Default and Remedies ................................................................27
Section 6.2. Remedies ....................................................................................................29
11
C
ARTICLE SEVEN
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 7.17.
Signature
MISCELLANEOUS .......................................................................................29
No Deductions; Increased Costs
29
Right of Setoff; Other Collateral
31
Reimbursement
32
Obligations Absolute
32
Liability of the Bank
32
Participants
3 3
Survival of this Agreement
33
Modification of this Agreement
33
Waiver of Rights by the Bank
34
S ev erab i l i ty
34
Governing Law
34
Notices
34
Successors and Assigns
35
Taxes and Expenses
35
Headings
36
Counterparts
36
Entire Agreement
36
.....37
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•
REIMBURSEMENT AGREEMENT
Dated as of February 15, 2008
Town of Avon, Colorado
400 Benchmark Road. Box 975
Avon, Colorado 81620
Avon Urban Renewal Authority
400 Benchmark Road, Box 975
Avon, Colorado 81620
Ladies and Gentlemen:
The Issuer and the Town (each such term and each other capitalized term used herein
having the meaning set forth in Article One hereof) desire to secure a source of funds to be
devoted exclusively to the payment by the Trustee, when and as due, of the principal of and
interest on the Bonds, and in that connection has applied to the Bank for issuance by the Bank of
the Letter of Credit in an Original Stated Amount of $ .25.378.083. Further, the
Bank has been requested by the Issuer and the Town to provide a liquidity facility in the form of
a Liquidity Drawing under the Letter of Credit and to provide such liquidity facility in the
following manner and subject to the following terms and conditions. Accordingly, the Issuer, the
Town and the Bank hereby agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement:
"Act" - means the Colorado Urban Renewal Law, constituting part 1 of Article 25
of title 31, Colorado Revised Statutes, as amended.
"Additional Bonds " - shall have the meaning set forth in the Indenture.
"Agreement " - means this Reimbursement Agreement, as amended and
supplemented.
"Available Amount " - shall have the meaning set forth in the Letter of Credit.
"Bank" - means DEPFA BANK plc, acting through its New York Branch, and its
successors and assigns.
"Bank Bonds " shall have the meaning set forth in the Indenture. 0
® "Bank Rate " - means the rate of interest per annum with respect to a Liquidity
Advance (and the Bank Bond which evidences and secures such Liquidity Advance)
equal to (i) from and including the Purchase Date relating to each Liquidity Advance (and
the Bank Bond which evidences and secures such Liquidity Advance) through and
including the date ninety (90) days thereafter, the Base Rate, (ii) from and including the
date ninety-one (91) days following the Purchase Date relating to each Liquidity Advance
(and the Bank Bond which evidences and secures such Liquidity Advance) and thereafter,
the Base Rate plus 1.00%; provided, however, that immediately and automatically upon
the occurrence of an Event of Default (and without any notice being given with respect
thereto) and during the continuance of such Event of Default, "Bank Rate " shall equal
the Default Rate.
"Base Rate " - means for any day the greater of (i) the Prime Rate, or (ii) the
Federal Funds Rate plus 0.50%.
"Bond Documents " - means the Indenture, the Bond Purchase Agreement, the
Resolution, the Replenishment Resolution, the Cooperation Agreement, the Remarketing
Agreement, the Development Agreement, the Official Statement and the Bonds.
"Bond Purchase Agreement " - means the Bond Purchase Agreement dated
February , 2008, between the Issuer and the Original Purchaser.
is "Bond Reserve Fund" - shall have the meaning set forth in the Indenture.
"Bond Reserve Requirement " - shall have the meaning set forth in the Indenture.
"Bonds" - means the Issuer's Adjustable Rate Revenue Bonds (Town Center
West Area Urban Renewal Project) Series 2008.
"Business Day " - shall have the meaning set forth in the Letter of Credit.
"Cap Interest Rate " - shall have the meaning set forth in the Letter of Credit.
"Capital Lease " - means any lease of Property by any Person which in
accordance with GAAP would be required to be capitalized on the balance sheet of such
Person.
"Closing Date " - means the date on which the Letter of Credit is issued.
"Code " - means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.
"Cooperation Agreement " - shall have the meaning set forth in the Indenture.
® "Debt" - means, for any Person (without duplication), (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by bonds,
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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 Capital Leases of such Person, (e) all
obligations of such Person to purchase securities (or other property) which arise out of or
in connection with the sale of the same or substantially similar securities (or property), (f)
all deferred obligations of such Person to reimburse any bank or other Person in respect
of amounts paid or advanced under the letter of credit or other instrument, (g) all Debt of
others secured by a Lien on any asset of such Person, including any Guaranties, whether
or not such Debt is assumed by such Person, (h) all Debt of others guaranteed directly or
indirectly by such Person or as to which such Person has an obligation substantially the
economic equivalent of a Guaranty and (i) obligations in respect of interest rate protection
programs.
"Default Rate " - shall mean a rate of interest per annum determined in
accordance with Section 2.10 hereof.
"Debt Service Requirement " - shall have the meaning set forth in the Indenture.
{ "Developer " - shall mean any developer who enters into a Development
Agreement with respect to the Urban Renewal Plan.}
{"Development Agreement" - means any Development Agreement entered into
with a Developer with respect to the Urban Renewal Plan.} 0
"Event of Default " - has the meaning set forth in Section 6.1 hereof.
"Federal Funds Rate " - shall mean, for any day, the rate of interest per annum as
determined by the Bank at which overnight Federal Funds are offered to the Bank for
such day by major banks in the interbank market, with any change in such rate to become
effective as to the Issuer on the date of any change in such rate. Each determination of
the Federal Funds Rate by the Bank shall be deemed conclusive and binding on the Issuer
absent manifest error.
"Funds" - shall have the meaning given such term in Section 4.10) hereof.
"GAAP" - means generally accepted accounting principles in the United States as
in effect from time to time, applied by the Issuer and the Town on a basis consistent with
the Issuer's and the Town's most recent financial statements furnished to the Bank
pursuant to Section 4.1(h) and 4.2(g) hereof, respectively.
"Governmental Approval" - means an authorization, consent, approval, license,
or exemption of, registration or filing with, or report to any Governmental Authority.
"Governmental Authority " - means any nation or government, any state,
department, agency or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or pertaining to
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® any government, and any corporation or other entity owned or controlled (through stock
or capital ownership or otherwise) by any of the foregoing.
"Guaranty" - means, for any Person, any agreement or undertaking pursuant to
which such Person guarantees, endorses (other than for collection or deposit in the
ordinary course of business) assumes or otherwise becomes secondarily, contingently or
otherwise liable for any obligation of any other Person and shall include, without
limitation, any agreement to purchase, to provide funds for payment, to supply funds to
invest in such other Person or otherwise to assure a creditor of such other Person against
loss.
"Indenture" - means the Indenture of Trust dated as of the date hereof, between
the Issuer and the Trustee, as amended and supplemented through the date hereof, and as
further amended and supplemented in accordance with its terms and the terms of this
Agreement.
"Interest Payment Date " - shall have the meaning given such term in the
Indenture.
"Issuer " - means the Avon Urban Renewal Authority, a public body corporate
and politic duly organized and validly existing as an urban renewal authority under the
laws of the State of Colorado.
"Letter of Credit" - means the irrevocable transferable letter of credit issued by
the Bank for the account of the Issuer in favor of the Trustee, in the form of Appendix I
hereto with appropriate insertions, as amended.
"LIC Fee Rate " - is defined in Section 2.5(a) hereof.
"Lien " - means any mortgage, deed of trust, lien, security interest, assignment,
pledge, charge, hypothecation or encumbrance of any kind in respect of any Property,
including the interests of a vendor or lessor under any conditional sale, Capital Lease or
other title retention arrangement.
"Liquidity Advance " - has the meaning set forth in Section 2.3 hereof.
"Liquidity Drawing " - means a drawing under the Letter of Credit resulting from
the presentation of a certificate in the form of Exhibit E to the Letter of Credit.
"Maximum Rate " - means the maximum non-usurious lawful rate of interest
permitted by applicable law.
"Moody's" - means Moody's Investors Service, Inc. and its successors and
0 assigns.
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"Obligations" - means the Reimbursement Obligations, the letter of credit fees
payable pursuant to Section 2.5(a) hereof, the Bank Bonds and all other obligations of the
Issuer owed to the Bank arising under or in relation to this Agreement.
"Official Statement " - means the Official Statement dated
February, 2008, relating to the Bonds.
"Original Purchaser " - shall have the meaning set forth in the Indenture.
"Original Stated Amount" - shall mean, with respect to the Letter of Credit, the
original stated amount thereof as provided in Section 2.1 hereof.
"Permitted Investments " - shall have the meaning set forth in the Indenture.
"Person" - means an individual, a corporation, a partnership, an association, a
limited liability company, a trust or any other entity or organization, including a
government or political subdivision or any agency or instrumentality thereof.
"Pledged Revenues " - shall have the meaning set forth in the Indenture.
"Potential Default " - means an event or condition which, but for the lapse of time
or the giving of notice, or both, would constitute an Event of Default.
"Prime Rate " - for any day shall mean the per annum rate of interest for such day
announced by the Bank from time to time as its prime commercial rate or equivalent rate
for United States dollar denominated loans, with any change in such prime rate or
equivalent to be effective on the date of such change, it being understood that such rate
may not be the best or lowest rate offered by the Bank.
"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.
"Purchase Date " - shall have the meaning set forth in Section 2.3(a) hereof.
"Quarterly Date " - means the first day of each ,
and . January. April. July and October.
"Rating Agency" - means Moody's or S&P, individually, or Moody's and S&P,
collectively, as the context requires.
"Reimbursement Obligations " - means any and all obligations of the Issuer to
reimburse the Bank for any drawings under the Letter of Credit and all obligations to
repay the Bank for any Liquidity Advance or Term Loan, including in each instance all
interest accrued thereon (each of which shall be evidenced and secured by the related
Bank Bonds). 0
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"Related Documents " - means this Agreement, the Letter of Credit and the Bond
Documents.
"Remarketing Agent " - means, initially, Stifel, Nicolaus & Company,
Incorporated and its successors and assigns, or any successor remarketing agent appointed
in accordance with the terms of the Indenture.
"Remarketing Agreement " - means the remarketing agreement entered into
between a Remarketing Agent and the Issuer.
"Replenishment Resolution " shall have the meaning set forth in the Indenture.
"Resolution " - means the Resolution authorizing the issuance of the Bonds
adopted by the Issuer on February 12, 2008.
"S&P" - means Standard & Poor's Ratings Group, a Division of The McGraw-
Hill Companies, Inc. and its successors and assigns
"Stated Amount" - means the Original Stated Amount less the amount of any
Redemption or Stated Maturity Drawings (as defined in the Letter of Credit).
"Stated Expiration Date " - shall have the meaning set forth in the Letter of
Credit.
"Subordinate Debt " - shall have the meaning given such term in the Indenture.
"Substitute Credit Facility" - shall have the meaning given such term in the
Indenture.
"Termination Date " - shall have the meaning set forth in the Letter of Credit.
"Term Loan " is defined in Section 2.3(b) hereof.
"Term Loan Commencement Date" means, subject to the satisfaction of the
conditions precedent set forth in Section 3.2(b) hereof, the earlier to occur of (i) the
Termination Date and (ii) the ninety-first (91 st) day following the date on which the Bank
makes available to the Issuer any Liquidity Advance.
"Term Loan Maturity Date " means the date which is the fifth anniversary of the
Term Loan Commencement Date.
"Town" - means the Town of Avon, Colorado, and its successors and assigns.
® "Trustee " - means UMB Bank, n.a., as trustee under the Indenture, and any
successor trustee thereunder.
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"Trust Estate " - shall have the meaning set forth in the Indenture. 0
"Urban Renewal Plan " - shall have the meaning set forth in the Indenture.
"Urban Renewal Project" - shall have the meaning set forth in the Indenture.
The foregoing definitions shall be equally applicable to both the singular and plural forms
of the defined terms. Any capitalized terms used herein which are not specifically defined herein
shall have the same meanings herein as in the Indenture. All references in this Agreement to
times of day shall be references to New York time unless otherwise expressly provided herein.
Unless otherwise inconsistent with the terms of this Agreement, all accounting terms shall be
interpreted and all accounting determinations hereunder shall be made in accordance with
GAAP.
ARTICLE TWO
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 herein
by reference, the Bank agrees to issue the Letter of Credit to the Trustee for the account of the
Issuer. The Letter of Credit shall be in the Original Stated Amount of
$ ,25,378,083, which is the sum of (i) the principal amount of the Bonds
outstanding on the Closing Date, plus (ii) interest thereon at the Cap Interest Rate for a period of
forty-six (46) days (calculated on the basis of a 365-day year for the actual number of days
elapsed).
Section 2.2. Letter of Credit Drawings. The Trustee is authorized to make drawings
under the Letter of Credit in accordance with its terms. The Issuer hereby directs the Bank to
make payments under the Letter of Credit in the manner therein provided. The Issuer hereby
irrevocably approves reductions and reinstatements of the Available Amount with respect to the
Letter of Credit as provided in the Letter of Credit.
Section 2.3. Liquidity Drawings; Term Loans.
(a) Liquidity Drawings. If the conditions precedent in Section 3.2(a) hereof
are satisfied at the time of payment by the Bank of any Liquidity Drawing, each Liquidity
Drawing made under the Letter of Credit shall constitute an advance (a "Liquidity
Advance to the Issuer. The Issuer promises to pay to the Bank each Liquidity Advance
on the earliest to occur of (i) the date on which any Bonds purchased with funds
disbursed under the Letter of Credit in connection with such Liquidity Drawing (the
"Purchase Date are redeemed or cancelled pursuant to the Indenture, (ii) the date on
which any such Bonds are remarketed pursuant to the Indenture, (iii) the date on which
the Letter of Credit is replaced with a Substitute Credit Facility pursuant to the terms of
the Indenture and (iv) the Term Loan Commencement Date. The Issuer's obligation to
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® repay each Liquidity Advance and to pay interest thereon as hereinafter provided shall be
evidenced and secured by the related Bank Bonds.
(b) Term Loans. If the conditions precedent in Section 3.2(b) hereof are
satisfied on the Term Loan Commencement Date, each Liquidity Advance shall be
converted to a term loan (a "Term Loan to the Issuer. The Issuer promises to repay to
the Bank each Term Loan on the earliest to occur of (i) the date on which the Bonds
purchased under the Letter of Credit in connection with the related Liquidity Drawing are
redeemed, cancelled or remarketed pursuant to the Indenture, (ii) the date on which the
Letter of Credit is replaced with a Substitute Credit Facility pursuant to the terms of the
Indenture and (iii) the Term Loan Maturity Date. The Issuer shall pay to the Bank the
principal amount of the Term Loan in equal (as nearly as possible) quarterly installments
commencing on the first Quarterly Date to occur immediately succeeding the Term Loan
Commencement Date and on each Quarterly Date thereafter, with the outstanding
principal amount to be paid in full on the Term Loan Maturity Date. The Issuer's
obligation to repay each Term Loan and to pay interest thereon as hereinafter provided
shall be evidenced and secured by the related Bank Bonds.
(c) Upon the Bank's honoring any Liquidity Drawing and continuing upon the
conversion of any Liquidity Advance to a Term Loan, the Bank shall be deemed to have
purchased the Bank Bonds in respect of which such Drawing is made, and the Issuer shall
cause the Trustee to hold such Bank Bonds for the benefit of the Bank and register such
Bank Bonds in the name of the Bank or its nominee, or to otherwise deliver such Bank
Bonds as directed by the Bank pursuant to the Indenture. During such time as the Bank is
the owner of any Bonds, the Bank shall have all the rights granted to a Bondholder under
the Indenture and such additional rights as may be granted to the Bank hereunder. To the
extent that the Bank actually receives payment with respect to principal of or interest on
the Bank Bond held by the Bank, the Liquidity Advance or Term Loans, as applicable,
made in connection with the purchase of such Bank Bond shall be deemed to have been
reduced pro tanto, with the Bank crediting any payment on such Bank Bond received,
first to the payment of any outstanding interest accrued on the related Liquidity Advance
or Term Loans, as applicable, and second to the payment of the principal of such
Liquidity Advance or Term Loans, as applicable. Any such payment or prepayment to be
applied to principal of Liquidity Advances or Term Loans, as applicable, hereunder shall
be applied to the prepayment of related Liquidity Advances or Term Loans, as applicable,
in chronological order of their issuance hereunder, and within each Liquidity Advance or
Term Loans, as applicable, in inverse order of the principal installments payable thereon.
Following the occurrence of an Event of Default, any payments received by the Bank
hereunder shall be applied by the Bank to the payment of the Obligations in such order as
the Bank shall in its sole discretion determine.
(d) Interest on Liquidity Advances and Term Loans. Subject to Section 2.10
hereof, the Issuer also promises to pay to the Bank interest on the unpaid principal
amount of each Liquidity Advance and Term Loan (which are evidenced and secured by
the related Bank Bonds) from the date such Liquidity Advance or Term Loan is made
until it is paid in full as provided herein, at a rate per annum equal to the Bank Rate from
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time to time in effect, payable quarterly in arrears on the first Business Day of each month
(commencing on the first such date to occur after the date of such Liquidity Advance) and
on the date that the final principal installment of each such Liquidity Advance or Term
Loan is payable as herein provided.
Section 2.4. Reimbursement of Drawings Other Than Liquidity Drawings Under the
Letter of Credit. The Issuer agrees to reimburse the Bank or cause the Bank to be reimbursed for
the full amount of all drawings (other than Liquidity Drawings where the conditions precedent
set forth in Section 3.2(a) hereof are satisfied) made under the Letter of Credit immediately upon
payment by the Bank of each such drawing and on the date of each such payment. If the Issuer
does not make such reimbursement on such date, such Reimbursement Obligation shall bear
interest at the rate per annum specified in Section 2.10 hereof.
Section 2.5. Fees. The Issuer hereby agrees to pay, or cause to be paid, to the Bank:
(a) On A)ril 1, 2008, for the period commencing on the
Closing Date and ending on March 31. 2008, and in arrears on each
Quarterly Date occurring thereafter to the Termination Date and on the Termination Date,
a non-refundable letter of credit fee on the Available Amount of the Letter of Credit
(without regard to any temporary reductions of the Available Amount of the Letter of
Credit) at a rate per annum specified below during each related period (the "L/C Fee
Rate").
L/C
LEVEL
MOODY's RATING
S&P RATING
FEE RATE
Level 1
Aa3 or above
AA- or above
0.38%
Level 2
Al
A+
0.405%
Level 3
A2
A
0.43%
Level 4
A3
A-
0.455%
Level5
Baal
BBB+
0.505%
Level 6
Baa2
BBB
0.555%
Level?
Baa3
BBB-
0.605%
Level 8
Below Baa3
Below BBB-
1.605%
In the event that a Rating (as defined below) is suspended or otherwise
unavailable from any of the Rating Agencies (for credit related reasons only), the L/C Fee
Rate shall be that set forth in Level 8 above. The term "Rating" as used above shall
mean the long-term unenhanced debt rating assigned by each of Moody's and S&P to the
general obligation debt of the Town. In the event of a split Rating (i.e., one of the
foregoing Rating Agency's Ratings is at a different level than the Rating of the other
Rating Agency), the L/C Fee Rate shall be based upon the level in which the lower rating
appears. Any change in the L/C Fee Rate resulting from a change in a Rating shall be and
become effective as of and on the date of the announcement of the change in such Rating.
References to Ratings above are references to rating categories as presently determined by
the Rating Agencies and in the event of adoption of any new or changed rating system by
•
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any such Rating Agency, each of the Ratings from the agency in question referred to
above shall be deemed to refer to the rating category under the new rating system which
most closely approximates the applicable rating category as currently in effect. The
Issuer acknowledges, and the Bank agrees, that as of the Closing Date the L/C Fee Rate is
that specified above for Level 1. The letter of credit fees shall be payable quarterly in
arrears, together with interest on the letter of credit fees from the date payment is due
until payment in full at the Default Rate.
(b) on the date of each drawing under the Letter of Credit, a draw fee equal to
$250;
(c) on the date of each amendment to this Agreement or the Letter of Credit,
an amendment fee, of $2,500; and
(d) on the date of each transfer of the Letter of Credit, a transfer fee of $2,500.
Section 2.6 Method of Payment; Etc. All payments to be made by the Issuer under this
Agreement shall be made to the Bank not later than 3:00 p.m. on the date when due and shall be
made in lawful money of the United States of America in freely transferable and immediately
available funds. Payments received by the Bank on any day after 3:00 p.m. shall be deemed to be
made on the next succeeding Business Day.
s Section 2.7. Termination of Letter of Credit by the Issuer. Notwithstanding any
provisions of this Agreement, the Letter of Credit or any Related Document to the contrary, the
Issuer agrees not to terminate, replace or substitute the Letter of Credit prior to the first
anniversary of the Closing Date unless (a) if the Bonds are then rated by Moody's, Moody's shall
have lowered or withdrawn either (i) the long-term rating on the Bonds backed by the Letter of
Credit below "A2 " or (ii) the short-term rating on the Bonds backed by the Letter of Credit
below "VMIGI, " (b) if the Bonds are then rated by S&P, S&P shall have lowered or withdrawn
either (i) the long-term rating on the Bonds backed by the Letter of Credit below "A " or (ii) the
short-term rating on the Bonds backed by the Letter of Credit below "A4, " (c) the Bank seeks
recovery of amounts described in Section 7.1 hereof, or (d) the Issuer pays to the Bank a
termination fee in an amount equal to the letter of credit fees payable pursuant to Section 2.5(a)
hereof (based upon the Original Stated Amount) for one full calendar year at the L/C Fee Rate in
effect as of the date of such termination, less the actual amount of letter of credit fees the Issuer
has previously paid to the Bank pursuant to Section 2.5(a) hereof. The Issuer agrees that it will
pay in connection with any termination of the Letter of Credit pursuant to the terms hereof to the
Bank all fees, expenses and other Obligations payable hereunder, including, without limitation,
all principal and accrued interest owing on any Liquidity Advances and Term Loans. All
payments from the Issuer to the Bank referred to in this Section 2.7 shall be made with
immediately available funds. Upon satisfaction of the conditions set forth in the first three
sentences of this Section 2.7, or at any time after the first anniversary of the Closing Date, the
Issuer may, upon thirty (30) days' written notice to the Bank, to the extent such termination is
permitted by the Related Documents, terminate the Letter of Credit.
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Section 2.8. Computation of Interest and Fees. All computations of interest and fees
payable by the Issuer under this Agreement shall be made on the basis of a 360-day year and
actual days elapsed. Interest and fees shall accrue during each period during which 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 Agreement on a day which is not a Business Day, the
date for payment thereof shall be extended, without penalty, to the next succeeding Business
Day, and such extended time shall not be included in the computation of interest and fees.
Section 2.10. Default Rate. If the principal amount of any Obligation is not paid when
due or if any Event of Default shall have occurred and be continuing, all Obligations shall bear
interest until paid in full at a rate per annum equal to the Base Rate plus 3%.
Section 2.11. Source of Funds. All payments made by the Bank pursuant to the Letter of
Credit shall be made from funds of the Bank, and not from the funds of any other Person.
Section 2.12. Collateral Security. As security for the payment of the Obligations of the
Issuer, the Issuer has, pursuant to the Indenture, pledged, and pursuant hereto hereby pledges to
the Bank all of the Issuer's right, title and interest in and to the Trust Estate, including without
limitation, the Pledged Revenues and all amounts appropriated to the Issuer by the Town
pursuant to the Replenishment Resolution.
Section 2.13. Maximum Rate; Payment of Fee. If the rate of interest payable hereunder
shall exceed the Maximum Rate for any period for which interest is payable, then (a) interest at
the Maximum Rate shall be due and payable with respect to such interest period, and (b) interest
at the rate equal to the difference between (i) the rate of interest calculated in accordance with the
terms hereof and (ii) the Maximum Rate (the "Excess Interest shall be deferred until such date
as the rate of interest calculated in accordance with the terms hereof ceases to exceed the
Maximum Rate, at which time the Issuer shall pay to the Bank, with respect to amounts then
payable to the Bank that are required to accrue interest hereunder, such portion of the deferred
Excess Interest as will cause the rate of interest then paid to the Bank to equal the Maximum
Rate, which payments of deferred Excess Interest shall continue to apply to such unpaid amounts
hereunder until all deferred Excess Interest is fully paid to the Bank. To the extent permitted by
law, upon the date all Reimbursement Obligations are payable hereunder following the
termination of the Letter of Credit, in consideration for the limitation of the rate of interest
otherwise payable hereunder, the Issuer shall pay to the Bank a fee equal to the amount of all
unpaid deferred Excess Interest.
ARTICLE THREE
CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to
Issuance of Letter
of Credit. As conditions
precedent to the obligation of the Bank to issue
the Letter of Credit,
(a) the Issuer and the Town
shall provide to the Bank on the Closing Date, in form and substance satisfactory to the Bank and
its counsel, Chapman and Cutler LLP (hereinafter, "Bank's counsel"):
(i) the written opinion of Sherman & Howard L.L.C., bond counsel, dated the
Closing Date and addressed to the Bank;
(ii) the written opinion of Sherman & Howard L.L.C., acting counsel to the
Issuer, dated the Closing Date and addressed to the Bank;
(iii) the written opinion of counsel to the Town, dated the Closing Date and
addressed to the Bank;
(iv) a certificate signed by a duly authorized officer of each of the Issuer and
the Town, dated the Closing Date and stating that:
(A) the representations and warranties contained in Article Four of this
Agreement are true and correct on and as of the Closing Date as though made on
such date; and
(B) no Event of Default or Potential Default has occurred and is
continuing, or would result from the issuance of the Letter of Credit or the
execution, delivery or performance of this Agreement or any Related Document to
which the Issuer or the Town is a party;
(v) a copy of the Resolution and the Replenishment Resolution, and all other
necessary approvals, if any, of the Issuer and the Town certified as of the Closing Date by
the Secretary of the Issuer and the Town Clerk, as applicable, authorizing, among other
things, the execution, delivery and performance by the Issuer and the Town of the Related
Documents to which either is a party;
(vi) certificates of appropriate officials of the Issuer and the Town certifying
the names and true signatures of the officials of the Issuer and the Town authorized to
execute on behalf of the Issuer, and the Town, as applicable, this Agreement and the other
Related Documents to which either is a party;
(vii) true and correct copies of all approvals necessary for the Issuer and the
Town to execute, deliver and perform the Related Documents to which either is a party;
(viii) evidence of the power and authority of the Trustee and the Remarketing
Agent to accept and execute their respective responsibilities under the Indenture and the
Remarketing Agreement; and certificates of the Trustee and the Remarketing Agent, in
each case, as to such matters incident to this Agreement and the transactions
contemplated hereby and thereby as the Bank shall have reasonably requested;
•
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(ix) an executed or certified copy of each document, instrument, certificate and
opinion delivered pursuant to the Indenture, the Bond Purchase Agreement and the other
Related Documents in connection with the issuance and delivery of the Bonds;
(x) evidence that the Issuer shall have duly executed, issued and delivered the
Bonds to the Trustee and the bond registrar shall have duly authenticated the Bonds and
delivered the bonds against payment;
(xi) executed originals of each of the Related Documents (other than the Letter
of Credit and the Bonds) and such other documents, certificates and opinions as the Bank
or Bank's counsel may reasonably request.
(b) no law, regulation, ruling or other action of the United States, the State of New York
or the State of Colorado or any political subdivision or authority therein or thereof shall be in
effect or shall have occurred, the effect of which would be to prevent the Bank from fulfilling its
obligations under this Agreement or the Letter of Credit; and
(c) all legal requirements provided herein incident to the execution, delivery and
performance of the Related Documents and the transactions contemplated thereby, shall be
reasonably satisfactory to the Bank and Bank's counsel.
Section 3.2. Conditions Precedent to Liquidity Advances; Conditions Precedent to Term
Loans. (a) Following any payment by the Bank under the Letter of Credit pursuant to a Liquidity
Drawing, a Liquidity Advance shall be made available to the Issuer only if on the date of payment
of such Liquidity Drawing by the Bank (i) the representations and warranties contained in Article
Four of this Agreement are true and correct as of such date and (ii) no event has occurred and is
continuing which constitutes a Potential Default or an Event of Default.
Unless the Issuer and the Town shall have previously advised the Bank in writing that the
above statements are no longer true, the Issuer and the Town shall be deemed to have represented
and warranted on the date of such payment that the above statements are true and correct.
(b) On the Term Loan Commencement Date, a Term Loan shall be made available to
the Issuer only if (i) the representations and warranties contained in Article Four of this
Agreement are true and correct as of such date and (ii) no event has occurred and is continuing
which constitutes a Potential Default or an Event of Default.
Unless the Issuer and the Town shall have previously advised the Bank in writing that the
above statements are no longer true, the Issuer and the Town shall be deemed to have represented
and warranted on the date of such payment that the above statements are true and correct.
L -13-
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the Issuer. In order to induce the Bank
to enter into this Agreement, the Issuer represents and warrants to the Bank as follows:
(a) Organization; Power and Authority. The Issuer is duly organized and
validly existing as a public body corporate and politic duly organized and existing as an
urban renewal authority under the laws of the State of Colorado. The Issuer has full right
and authority to enter into this Agreement and the other Related Documents to which it is
a party and to perform each and all of the matters and things herein and therein provided
for.
(b) Due Authorization; No Violation. The execution, delivery and
performance by the Issuer of this Agreement, the Indenture and the other Related
Documents and the issuance, execution and delivery of the Bonds have been duly
authorized by all necessary action, and do not and will not violate any constitutional
provisions or any law or any regulation, order, writ, injunction or decree of any court or
governmental body, agency or other instrumentality applicable to the Issuer, or result in a
breach of any of the terms, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of any Lien (other than the Lien of the Indenture) upon
41 any of the assets of the Issuer pursuant to the terms of, any resolution, ordinance,
mortgage, indenture, agreement or instrument to which the Issuer is a party or by which it
or any of its properties is bound.
(c) Enforceability. This Agreement and the other Related Documents to
which it is a party constitute the legal, valid and binding obligations of the Issuer,
enforceable against the Issuer in accordance with their respective terms, except as such
enforceability may be limited by applicable reorganization, insolvency, liquidation,
readjustment of debt, moratorium or other similar laws affecting the enforcement of the
rights of creditors generally and by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law). The Bonds, when
issued and delivered against payment therefor as contemplated by the Bond Purchase
Agreement, will have been duly issued, executed and delivered in conformity with the
Indenture and will constitute legal, valid and binding obligations of the Issuer,
enforceable in accordance with their terms, except as such enforceability may be limited
by applicable reorganization, insolvency, liquidation, readjustment of debt, moratorium or
other similar laws affecting the enforcement of the rights of creditors generally and by
general principles of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law), and entitled to the benefit and security of the Indenture.
(d) Status. As of the Closing Date, no other Debt of the Issuer other than the
Bonds is secured by a Lien on the Pledged Revenues. Under the terms of the Indenture,
the Pledged Revenues cannot secure any Debt of the Issuer other than the Bonds,
Additional Bonds, Subordinate Debt and the Obligations.
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(e) Disclosure. No representation, warranty or other statement made by the
Issuer in or pursuant to this Agreement or any Related Document or any other document
or financial statement provided by the Issuer to the Bank in connection with this
Agreement or any other Related Document, contains any untrue statement of a material
fact or omits (as of the date made or furnished) any material fact necessary to make the
statements herein or therein not misleading in light of the circumstances under which they
are made. There is no fact known to the Issuer which the Issuer has not disclosed to the
Bank in writing and which materially adversely affects or is likely to materially adversely
affect the ability (financial or otherwise) of the Issuer to perform it obligations hereunder
or under the Related Documents.
(f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body pending or threatened against
or affecting the Issuer wherein an unfavorable decision, ruling or finding would have a
material adverse effect on the properties, business, condition (financial or otherwise),
results of operations or prospects of the Issuer or the transactions contemplated by this
Agreement or the Related Documents to which it is a party, or which would adversely
affect the validity or enforceability of, or the authority or ability of the Issuer to perform
its obligations under, this Agreement, the Indenture or the other Related Documents to
which it is a party, or the Pledged Revenues or the pledge of the Pledged Revenues
pursuant to the terms of this Agreement and the Related Documents.
(g) Other Agreements. The Issuer is not in default under (i) any order, writ,
injunction or decree of any court or governmental body, agency or other instrumentality,
or (ii) any law or regulation, or (iii) any other Debt of the Issuer payable from or secured
by the Pledged Revenues, or other funds in the Trust Estate, or (iv) any contract,
agreement or instrument to which the Issuer is a party or by which it or its property is
bound, which default would have a material adverse effect on the properties, business,
condition (financial or otherwise), results of operations or prospects of the Issuer or the
transactions contemplated by this Agreement or the Related Documents, or which would
have a material adverse effect on the validity or enforceability of, or the authority or
ability of the Issuer to perform its obligations under this Agreement, the Indenture or the
other Related Documents to which it is a party; and no event has occurred which with the
giving of notice or the passage of time or both would constitute such a default.
(h) Financial Statements and Condition. The most recent financial reports of
the Issuer as of , 2006.12007 copies of which have been delivered to the
Bank, are complete and correct and fairly present the financial condition of the Issuer as
at such date, for the periods covered by such statements, all in conformity with GAAP.
Since , 2-OW,,2007, there has been no material adverse change in the
condition (financial or otherwise), business or operations of the Issuer.
(i) Consents. No authorization, consent, order or other approval of, or
registration or filing with, or taking of any other action in respect of or by, any court or
governmental body, agency or other instrumentality is required for the valid execution,
delivery or performance by the Issuer of this Agreement or any other Related Document
-15-
to which it is a party or the issuance, execution and delivery and performance of the
Bonds, except such as shall have been duly obtained, given or accomplished prior to the
execution and delivery hereof or thereof.
0) Security. The Indenture creates, for the benefit and security of the Bonds
and the Obligations (including, without limitation, Bank Bonds), the legally valid and
binding Lien on and pledge of the Trust Estate, including, without limitation, the Pledged
Revenues, all amounts appropriated to the Issuer by the Town pursuant to the
Replenishment Resolution and the funds (the "Funds") in which they are from time to
time on deposit. There is no Lien on the Pledged Revenues, all amounts appropriated to
the Issuer by the Town pursuant to the Replenishment Resolution or the Funds other than
the Lien created by the Indenture and this Agreement. The Indenture does not permit the
issuance of any Debt secured by the Pledged Revenues, all amounts appropriated to the
Issuer by the Town pursuant to the Replenishment Resolution or the Funds to rank senior
to the Bonds or the Obligations (including, without limitation, Bank Bonds). The
payment of the Obligations (including, without limitation, Bank Bonds) constitutes an
obligation of the Issuer payable on a parity with all other Additional Bonds issued under
the Indenture and senior to all Subordinate Debt. No filing, registering, recording or
publication of the Indenture or any other instrument is required to establish the pledge
under the Indenture or to perfect, protect or maintain the Lien created thereby on the
Pledged Revenues, all amounts appropriated to the Issuer by the Town pursuant to the
® Replenishment Resolution or the Funds and the Trust Estate.
(k) Related Documents. The Issuer makes each of the representations,
warranties and covenants contained in the Related Documents to which it is a party to,
and for the benefit of, the Bank as if the same were set forth at length herein, together
with all applicable definitions thereto. No amendment, modification, termination or
replacement of any such representations, warranties, covenants and definitions contained
in any Related Document to which the Issuer is a party shall be effective to amend,
modify, terminate or replace the representations, warranties, covenants and definitions
incorporated herein by this reference, without the prior written consent of the Bank.
(1) No Proposed Legal Changes. There is no amendment, or to the
knowledge of the Issuer, proposed amendment certified for placement on a statewide
ballot, to the Constitution of the State of Colorado or any published administrative
interpretation of the Constitution of Colorado or any State of Colorado law, or any
legislation that has passed either house of the State legislature, or any published judicial
decision interpreting any of the foregoing, the effect of which is to materially adversely
affect the Bonds, or any holder thereof in its capacity as such, or the ability of the Issuer
to perform its obligations under this Agreement or the other Related Documents.
(m) Environmental Matters. The Issuer does not have knowledge that the
operations of the Urban Renewal Project are not in compliance with any of the
requirements of applicable federal, state or local environmental, health and safety statutes
and regulations or are the subject of any governmental investigation evaluating whether
any remedial action is needed to respond to a release of any toxic or hazardous waste or
-16-
substance into the environment, which non-compliance or remedial action could have a
material adverse effect on the financial condition, Property, business or operations of the
Issuer or the Urban Renewal Project.
(n) Immunity. Except for actions which lie or could lie in tort, the Issuer has
no immunity from jurisdiction of any court of competent jurisdiction or from any legal
process therein which could be asserted in any action to enforce the obligations of the
Issuer under this Agreement or the Related Documents. In the event the Issuer acquires
such immunity subsequent to the execution and delivery hereof, the Issuer agrees to
waive any such immunity to the fullest extent permitted by law.
(o) Limitation on Interest Rate. The maximum interest rate payable on the
Bank Bonds or the Issuer's Obligations to the Bank hereunder under the laws or
Constitution of the State of Colorado is 45% per annum.
(p) Approvals. No authorization, consent, license, exemption, filing or
registration with any court or Governmental Authority or any approval or consent of any
other Person that has not been obtained, is or will be necessary to the valid execution,
delivery or performance by the Issuer of any Related Document to which it is a party.
(q) No Defaults. No Event of Default or Potential Default has occurred and is
continuing.
Section 4.2. Representations and Warranties of the Town. In order to induce the Bank to
enter into this Agreement, the Town represents and warrants to the Bank as follows:
(a) Organization; Power and Authority. The Town is duly organized and
validly existing as a home rule municipality under the laws of the State of Colorado. The
Town has full right and authority to enter into this Agreement and the other Related
Documents to which it is a party and to perform each and all of the matters and things
herein and therein provided for.
(b) Due Authorization; No Violation. The execution, delivery and
performance by the Town of this Agreement and the other Related Documents to which it
is a party have been duly authorized by all necessary action, and do not and will not
violate any constitutional provisions or any law or any regulation, order, writ, injunction
or decree of any court or governmental body, agency or other instrumentality applicable
to the Town, or result in a breach of any of the terms, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of any Lien (other than
the Lien of the Indenture) upon any of the assets of the Town pursuant to the terms of,
any resolution, ordinance, mortgage, indenture, agreement or instrument to which the
Issuer is a party or by which it or any of its properties is bound.
(c) Enforceability. This Agreement and the other Related Documents to
which it is a party constitute the legal, valid and binding obligations of the Town,
enforceable against the Town in accordance with their respective terms, except as such
-17-
enforceability may be limited by applicable reorganization, insolvency, liquidation,
readjustment of debt, moratorium or other similar laws affecting the enforcement of the
rights of creditors generally and by general principles of equity (regardless of whether
such enforceability is considered in a proceeding inequity or at law).
(d) Disclosure. No representation, warranty or other statement made by the
Town in or pursuant to this Agreement or any Related Document to which it is a party or
any other document or financial statement provided by the Town to the Bank in
connection with this Agreement or any other Related Document, contains any untrue
statement of a material fact or omits (as of the date made or furnished) any material fact
necessary to make the statements herein or therein not misleading in light of the
circumstances under which they are made. There is no fact known to the Town which the
Town has not disclosed to the Bank in writing and which materially adversely affects or
is likely to materially adversely affect the ability (financial or otherwise) of the Town to
perform it obligations hereunder or under the Related Documents to which it is a party.
(e) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body pending or threatened against
or affecting the Town wherein an unfavorable decision, ruling or finding would have a
material adverse effect on the properties, business, condition (financial or otherwise),
results of operations or prospects of the Town or the transactions contemplated by this
Agreement or the other Related Documents to which it is a party, or which would
I~ adversely affect the validity or enforceability of, or the authority or ability of the Town to
perform its obligations under, this Agreement or the other Related Documents to which it
is a party.
(f) Other Agreements. The Town is not in default under (i) any order, writ,
injunction or decree of any court or governmental body, agency or other instrumentality,
or (ii) any law or regulation, or (iii) any other Debt of the Town subject to appropriation
by the Town Council of the Town, or (iv) any contract, agreement or instrument to which
the Town is a party or by which it or its property is bound, which default would have a
material adverse effect on the properties, business, condition (financial or otherwise),
results of operations or prospects of the Town or the transactions contemplated by this
Agreement or the Related Documents, or which would have a material adverse effect on
the validity or enforceability of, or the authority or ability of the Town to perform its
obligations under this Agreement or the other Related Documents to which it is a party;
and no event has occurred which with the giving of notice or the passage of time or both
would constitute such a default.
(g) Financial Statements and Condition. The most recent financial reports of
the Town as of ,December 31. 2006, copies of which have been delivered
to the Bank, are complete and correct and fairly present the financial condition of the
Town as at such date, for the periods covered by such statements, all in conformity with
GAAP. Since December 3L, 2006, there has been no material adverse
change in the condition (financial or otherwise), business or operations of the Town.
-18-
(h) Consents. No authorization, consent, order or other approval of, or
registration or filing with, or taking of any other action in respect of or by, any court or
governmental body, agency or other instrumentality is required for the valid execution,
delivery or performance by the Town of this Agreement or any other Related Document
to which it is a party, except such as shall have been duly obtained, given or
accomplished prior to the execution and delivery hereof or thereof.
(i) Related Documents. The Town makes each of the representations,
warranties and covenants contained in the Related Documents to which it is a party to,
and for the benefit of, the Bank as if the same were set forth at length herein, together
with all applicable definitions thereto. No amendment, modification, termination or
replacement of any such representations, warranties, covenants and definitions contained
in any Related Document to which it is a party shall be effective to amend, modify,
terminate or replace the representations, warranties, covenants and definitions
incorporated herein by this reference, without the prior written consent of the Bank.
0) No Proposed Legal Changes. There is no amendment, or to the
knowledge of the Town, proposed amendment certified for placement on a statewide
ballot, to the Constitution of the State of Colorado or any published administrative
interpretation of the Constitution of Colorado or any State of Colorado law, or any
legislation that has passed either house of the State legislature, or any published judicial
decision interpreting any of the foregoing, the effect of which is to materially adversely
affect the Bonds, or any holder thereof in its capacity as such, or the ability of the Town
to perform its obligations under this Agreement or the other Related Documents to which
it is a party.
(k) Environmental Matters. The Town does not have knowledge that the
operations of the Urban Renewal Project are not in compliance with any of the
requirements of applicable federal, state or local environmental, health and safety statutes
and regulations or are the subject of any governmental investigation evaluating whether
any remedial action is needed to respond to a release of any toxic or hazardous waste or
substance into the environment, which non-compliance or remedial action could have a
material adverse effect on the financial condition, Property, business or operations of the
Town or the Urban Renewal Project.
(1) Immunity. Except for actions which lie or could lie in tort, the Town has
no immunity from jurisdiction of any court of competent jurisdiction or from any legal
process therein which could be asserted in any action to enforce the obligations of the
Town under this Agreement or the other Related Documents to which it is a party. In the
event the Town acquires such immunity subsequent to the execution and delivery hereof,
the Town agrees to waive any such immunity to the fullest extent permitted by law.
(m) Limitation on Interest Rate. The maximum interest rate payable on the
Bonds or the Issuer's Obligations to the Bank hereunder is not limited under the laws or
Constitution of the State of Colorado. 0
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(n) Approvals. No authorization, consent, license, exemption, filing or
registration with any court or Governmental Authority or any approval or consent of any
other Person that has not been obtained, is or will be necessary to the valid execution,
delivery or performance by the Town of this Agreement or any other Related Document
to which it is a party.
ARTICLE FIVE
COVENANTS
Section 5.1. Covenants of the Issuer. The Issuer will do the following so long as any
amounts may be drawn under the Letter of Credit or any Obligations remain outstanding under
this Agreement, unless the Bank shall otherwise consent in writing:
(a) Performance of This and Other Agreements; Compliance with Laws, Etc.
The Issuer shall punctually pay or cause to be paid all amounts payable under this
Agreement and the other Related Documents and observe and perform all of the
conditions, covenants and requirements of this Agreement and the other Related
Documents. The Issuer shall comply with all material applicable laws and orders of any
governmental entity (including, without limitation, compliance with environmental laws,
ERISA and the rules and regulations thereunder and state securities and blue sky laws in
connection with the offering, sale and delivery of the Bonds) and shall promptly notify
the Bank of any legislation enacted which would have a material adverse effect on the
ability of the Issuer to pay the Obligations hereunder.
(b) Further Assurances. The Issuer shall execute, acknowledge where
appropriate, and deliver, and cause to be executed, acknowledged where appropriate, and
delivered, from time to time promptly at the request of the Bank, all such instruments and
documents as in the opinion of the Bank are necessary or advisable to carry out the intent
and purpose of this Agreement and the Related Documents.
(c) Books and Records; Inspection Rights. The Issuer shall keep adequate
records and books of account, in which complete entries will be made, reflecting all
financial transactions of the Issuer; and at any reasonable time and from time to time,
permit the Bank or any agents or representatives thereof, at the expense of the Bank, to
examine and make copies of and abstracts from the records and books of account of, and
visit the properties of, the Issuer and to discuss the affairs, finances and accounts of the
Issuer with any of the Issuer's officers, trustees and independent auditors (and by this
provision the Issuer authorizes said auditors to discuss with the Bank or its agents or
representatives, the affairs, finances and accounts of the Issuer).
(d) Reporting Requirements. The Issuer shall furnish or cause to be furnished
to the Bank:
(1) as soon as available and in any event (i) within days after the
end of each fiscal year, the unaudited financial statements for the Urban Renewal
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Project for such fiscal year, which unaudited financial statements shall include the
results of certain operations of the Urban Renewal Project and (ii) within 45 days
of each fiscal quarter, the quarterly financial statements of the Urban Renewal
Project;
(ii) concurrently with each delivery of the financial statements referred
to in clause (i) above, a certificate of the Issuer's chief financial officer stating that
(a) he or she has reviewed this Agreement and the Indenture and has made, or
caused to be made under his or her supervision, a review in reasonable detail of
the transactions and condition of the Issuer and the Urban Renewal Area during
the accounting period covered by such financial statements, (b) based on such
review, the Issuer has observed or performed all of its covenants and agreements,
and satisfied every condition contained in this Agreement and the Indenture to be
observed, performed or satisfied by it, (c) such review has not disclosed the
existence during or at the end of such accounting period, and he or she does not
have knowledge of the existence as at the date of the certificate, of any Potential
Default or Event of Default or, if he or she has any knowledge of any Potential
Default or Event of Default, specifying the same and what action the Issuer is
taking or proposes to take with respect thereto and (d) that the Issuer is in
compliance with Section 5.1(p) hereof,
(iii) as soon as possible and in any event within ten days after the
adoption thereof, the annual budget of the Issuer, containing estimates of 18
expenditures and anticipated Pledged Revenues for the fiscal year covered
thereby;
(iv) as soon as possible and in any event within ten days after the same
shall have been requested by the Bank, copies of (i) all final feasibility studies that
have been prepared by the Issuer with respect to the Issuer in connection with the
issuance of Debt by the Issuer relating to the Urban Renewal Project, and (ii) all
final official statements or other final disclosure statement prepared with respect
to any Additional Bonds or Subordinate Debt;
(v) as soon as possible and in any event within ten days after an
official of the Issuer has knowledge thereof, notice of any action, suit, proceeding,
inquiry or investigation before or by any court, public board or body pending or
threatened which is of the nature described in Section 4.1(f) of this Agreement;
(vi) as soon as possible and in any event within five days after the
occurrence of each Event of Default or Potential Default of which the chief
financial officer or any responsible officer of the Issuer has knowledge, continuing
on the date of such statement, a statement of the Issuer's chief financial officer
setting forth details of such Event of Default or Potential Default and the action
which the Issuer is taking or proposes to take with respect thereto;
-21-
® (vii) promptly after the receipt or giving thereof, copies of all notices of
resignation by or removal of the Trustee, the Remarketing Agent which are
received and/or given by the Issuer;
(viii) the unaudited quarterly reports prepared by the Trustee, as and
when available, setting forth the amount of funds on deposit in each fund and
account established under the Indenture;
}(ix) a report, prepared by the Issuer, detailing receipt by the Issuer of
Pledged Revenues, beginning June 1, 2008 (for the period from
and including the Closing Date to and including ,May 3 12008),
and on each ,December L and June 1 occurring
thereafter;}
(x) as soon as available, all reports, budgets and financial
documentation submitted by the Developer to the Issuer pursuant to the
Development Agreement; and
(xi) from time to time such additional information regarding the
financial position or business of the Issuer as the Bank may reasonably request.
® (e) Special Remedies. Notwithstanding anything in this Agreement or in any
Related Document to the contrary, to the extent the holder of any Additional Bonds or
Subordinate Debt, or any other Person, is permitted to accelerate or otherwise cause the
maturity of Debt secured by the Pledged Revenues to become due prior to its scheduled
terms upon the occurrence of an Event of Default hereunder, the Bank may immediately
declare all Obligations to be, and such amounts shall thereupon become, immediately due
and payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Issuer, and upon the occurrence of an Event of Default
under Section 6.1(1) hereof, such acceleration shall automatically occur (unless such
automatic acceleration is waived by Bank in writing).
(f) Preservation of Lien. The Issuer shall take all necessary action to maintain
and preserve the Lien on the Pledged Revenues and the Trust Estate to secure the
Obligations and the Bonds on a parity with all Additional Bonds.
(g) Permitted Investments. The Issuer shall not permit the Pledged Revenues
or any monies in the Trust Estate to be invested in anything other than Permitted
Investments.
(h) Debt. The Issuer will not issue, incur, assume, create or have outstanding
any Debt payable from the Pledged Revenues or the Trust Estate other than as expressly
permitted in the Indenture, as in effect as of the Closing Date.
0
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(i) Liens. The Issuer will not create, incur or permit to exist any Lien of any
kind on the Pledged Revenues or the Trust Estate, other than as expressly provided in the
Indenture, as in effect as of the Closing Date.
0) Related Documents. The Issuer shall not (i) modify, amend or supplement
any of the Related Documents, (ii) give any consent to any modification, amendment or
supplement of any of the Related Documents, or (iii) make any waiver with respect to any
of the Related Documents. The Issuer will supply the Bank with one fully executed copy
of any modification, amendment, supplement or waiver of any of the Related Documents
within five days after the execution thereof.
(k) Optional Redemption of Bonds. The Issuer will not permit an optional
redemption or purchase of the Bonds under the Indenture without the prior written
consent of the Bank; provided, however, that if the Issuer has deposited with the Bank or
the Trustee an amount equal to the principal amount of Bonds to be redeemed pursuant to
the Indenture, the Bank shall be deemed to have consented to such optional redemption to
the extent of the amounts so deposited.
(1) Substitution. The Issuer will not provide or permit to be provided credit
enhancement for the Bonds provided by a third party other than the Letter of Credit unless
the Letter of Credit shall have been returned to the Bank for cancellation and all
Obligations shall have been paid in full.
(m) Inspection. The Issuer shall pen-nit the Bank and its duly authorized
representatives and agents to visit and inspect the Urban Renewal Project, any of its
books and records relating thereto, to examine and make copies of such books and
records, and to discuss the finances of the Urban Renewal Project and the Pledged Taxes
with the Issuer's officers, independent public accountants (and by this provision the
Issuer authorizes such accountants to discuss with the Bank the finances and affairs of the
Issuer) at such reasonable times and reasonable hours as the Bank may designate.
(n) No Priority. No Debt of the Issuer shall be issued having any priority over
payment of the Obligations from the Pledged Revenues or the Funds.
(o) Additional Bonds or Debt Secured by Pledged Revenues. The Issuer shall
not issue Additional Bonds or other Debt secured by Pledged Revenues except as
expressly provided in the Indenture.
(p) Debt Service Coverage Ratio. The Issuer shall not take any action which
would cause the Pledged Revenues for any calendar year to be less than 110% of the Debt
Service Requirement of the Bonds and all other Debt secured by the Pledged Revenues
for such year.
(q) Compliance with Act; Payment of Obligations. The Issuer will comply
with the Act and collection procedures for collection of the taxes making up a portion of
the Pledged Revenues. The Issuer agrees, to the fullest extent permitted by law, to take
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® such actions, make such filings, prepare such budgets, reports or estimates or do such
other things as may be desirable, necessary or appropriate in order to insure at all times
that the Obligations are paid in full as the same are due and payable.
(r) Compliance with other Covenants. From and after the date hereof and so
long as this Agreement is in effect, except to the extent compliance in any case or cases is
waived in writing by the Bank, the Issuer agrees that it will, for the benefit of the Bank,
comply with, abide by, and be restricted by all the agreements, covenants, obligations and
undertakings contained in the provisions of the Indenture and in the other Related
Documents to which it is party, regardless of whether any indebtedness is now or
hereafter remains outstanding thereunder, together with the related definitions, exhibits
and ancillary provisions, are incorporated herein by reference, mutatis mutandis, and
made a part hereof to the same extent and with the same force and effect as if the same
had been herein set forth in their entirety, and without regard or giving effect to any
amendment or modification of any provisions of any of the Indenture or any Related
Document to which the Issuer is a party or any waiver of compliance therewith, no such
amendment, modification or waiver to in any manner constitute an amendment,
modification or waiver of the provisions thereof as incorporated herein unless consented
to in writing by the Bank.
Section 5.2. Covenants of the Town. The Town will do the following so long as any
amounts may be drawn under the Letter of Credit or any Obligations remain outstanding under
this Agreement, unless the Bank shall otherwise consent in writing:
(a) Performance of This and Other Agreements; Compliance with Laws, Etc.
The Town shall punctually pay or cause to be paid all amounts payable by the Town
under the Related Documents to which it is a party, subject to the terms and conditions
thereof, and observe and perform all of the conditions, covenants and requirements of this
Agreement and the other Related Documents to which it is a party. The Town shall
comply with all material applicable laws and orders of any governmental entity
(including, without limitation, compliance with environmental laws, ERISA and the rules
and regulations thereunder and state securities and blue sky laws in connection with the
offering, sale and delivery of the Bonds) and shall promptly notify the Bank of any
legislation enacted which would have a material adverse effect on the ability of the Town
to pay the Obligations hereunder.
(b) Further Assurances. The Town shall execute, acknowledge where
appropriate, and deliver, and cause to be executed, acknowledged where appropriate, and
delivered, from time to time promptly at the request of the Bank, all such instruments and
documents as in the opinion of the Bank are necessary or advisable to carry out the intent
and purpose of this Agreement and the Related Documents.
(c) Books and Records; Inspection Rights. The Town shall keep adequate
records and books of account, in which complete entries will be made, reflecting all
financial transactions of the Town; and at any reasonable time and from time to time,
permit the Bank or any agents or representatives thereof, at the expense of the Bank, to
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examine and make copies of and abstracts from the records and books of account of, and
visit the properties of, the Town and to discuss the affairs, finances and accounts of the
Town with any of the Town's officers, trustees and independent auditors (and by this
provision the Town authorizes said auditors to discuss with the Bank or its agents or
representatives, the affairs, finances and accounts of the Town).
(d) Reporting Requirements. The Town shall furnish our cause to be
furnished to the Bank:
(i) as soon as available and in any event (i) within days after the
end of each fiscal year, the audited financial statements for the Town for such
fiscal year, Town and (ii) within 60 days of each fiscal quarter, the quarterly
unaudited financial statements of the Town;
(ii) concurrently with each delivery of the financial statements referred
to in clause (i) above, a certificate of the Town's chief financial officer stating that
(a) he or she has reviewed this Agreement and the Indenture and has made, or
caused to be made under his or her supervision, a review in reasonable detail of
the transactions and condition of the Town during the accounting period covered
by such financial statements, (b) based on such review, the Town has observed or
performed all of its covenants and agreements, and satisfied every condition
contained in this Agreement and the Indenture to be observed, performed or
satisfied by it, and (c) such review has not disclosed the existence during or at the
end of such accounting period, and he or she does not have knowledge of the
existence as at the date of the certificate, of any Potential Default or Event of
Default or, if he or she has any knowledge of any Potential Default or Event of
Default, specifying the same and what action the Town is taking or proposes to
take with respect thereto;
(iii) as soon as possible and in any event within ten days after the
adoption thereof, the annual budget of the Town, containing estimates of
expenditures and any anticipated appropriations required to pay the principal of
and interest on the Bonds and the Obligations for the fiscal year covered thereby;
(iv) as soon as possible and in any event within ten days after the same
shall have been requested by the Bank, copies of (a) all final feasibility studies
that have been prepared by the Town with respect to the Town in connection with
the issuance of Debt by the Issuer relating to the Urban Renewal Project, and (b)
all final official statements or other final disclosure statement prepared with
respect to any Additional Bonds or Subordinate Debt;
(v) as soon as possible and in any event within ten days after an
official of the Town has knowledge thereof, notice of any action, suit, proceeding,
inquiry or investigation before or by any court, public board or body pending or
threatened which is of the nature described in Section 4.2(e) of this Agreement;
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(vi) as soon as possible and in any event within five days after the
occurrence of each Event of Default or Potential Default, continuing on the date
of such statement, a statement of the Town's chief financial officer setting forth
details of such Event of Default or Potential Default and the action which the
Issuer is taking or proposes to take with respect thereto; and
(vii) from time to time such additional information regarding the
financial position or business of the Town as the Bank may reasonably request.
(e) Related Documents. The Town shall not (i) modify, amend or supplement
any of the Related Documents to which it is a party, (ii) give any consent to any
modification, amendment or supplement of any of the Related Documents to which it is a
party, or (iii) make any waiver with respect to any of the Related Documents to which it
is a party. The Town will supply the Bank with one fully executed copy of any
modification, amendment, supplement or waiver of any of the Related Documents to
which it is a party within five days after the execution thereof.
(f) Activities of Town. The Town will preserve, renew and maintain all
material licenses, approvals, authorizations, permits, rights, privileges and franchises
necessary or desirable in the ordinary conduct of its business.
(g) Urban Renewal Plan. The Town will not rescind or revise the Urban
Renewal Plan in any manner that would materially adversely affect the Bank or the
security for the Bonds prior to repayment of all Obligations and expiration or termination
of the Letter of Credit.
(h) Compliance with other Covenants. From and after the date hereof and so
long as this Agreement is in effect, except to the extent compliance in any case or cases is
waived in writing by the Bank, the Town agrees that it will, for the benefit of the Bank,
comply with, abide by, and be restricted by all the agreements, covenants, obligations and
undertakings contained in the Related Documents to which it is party, regardless of
whether any indebtedness is now or hereafter remains outstanding thereunder, together
with the related definitions, exhibits and ancillary provisions, are incorporated herein by
reference, mutatis mutandis, and made a part hereof to the same extent and with the same
force and effect as if the same had been herein set forth in their entirety, and without
regard or giving effect to any amendment or modification of any provisions of any
Related Document to which the Town is a party or any waiver of compliance therewith,
no such amendment, modification or waiver to in any manner constitute an amendment,
modification or waiver of the provisions thereof as incorporated herein unless consented
to in writing by the Bank.
(i) Covenant to Consider Appropriation Requests. The Town hereby
covenants and agrees, from time to time, to consider (without obligation to approve) any
request from the Town Manager for appropriations to the Bond Reserve Fund in the event
that the Bond Reserve Fund is not funded at the Bond Reserve Requirement subject to the
terms, provisions and limitations set forth in the Replenishment Resolution.
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ARTICLE SIX
DEFAULTS
Section 6.1. Events of Default and Remedies. If any of the following events shall occur,
each such event shall be an "Event of Default
(a) any material representation or warranty made by the Issuer or the Town in
this Agreement (or incorporated herein by reference) or any material representation or
warranty made by the Issuer or the Town in any of the other Related Documents or in any
certificate, document, instrument, opinion or financial or other statement contemplated by
or made or delivered pursuant to or in connection with this Agreement or with any of the
other Related Documents, shall prove to have been incorrect, incomplete or misleading in
any material respect;
(b) any "event of default " shall have occurred under any of the Related
Documents (as defined respectively therein);
(c) failure to pay to the Bank any Obligations when and as due;
(d) default in the due observance or performance by the Issuer of any covenant
set forth in the Indenture or in Section 5.1 hereof,
0
(e) default in the due observance or performance by the Town of any covenant
set forth in Section 5.2 hereof,
(f) default in the due observance or performance by the Issuer or the Town of
any other term, covenant or agreement set forth in this Agreement and the continuance of
such default for 30 days after the occurrence thereof,
(g) any material provision of this Agreement or any of the Related Documents
shall cease to be valid and binding, or the Issuer or the Town shall contest any such
provision, or the Issuer or the Town or any agent or trustee on behalf of the Issuer or the
Town shall deny that it has any or further liability under this Agreement or any of the
Related Documents;
(h) the Issuer shall fail to pay any Additional Bonds or Subordinate Debt or
any other Debt payable from Pledged Revenues or any interest or premium thereon, when
due (whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise);
(i) the Town shall fail to pay any Debt subject to appropriation by the Town
Council of Town or any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise);
0) one or more judgments against the Issuer or the Town for the payment of
money payable out of Pledged Revenues, or attachments against the property of the Urban
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® Renewal Area or the funds on deposit in the funds estimated under the Indenture shall
remain unpaid, unstayed, undischarged, unbonded or undismissed for a period of 30 days;
(k) the occurrence of any one or more of the following events: (i) the Issuer or
the Town shall generally not pay, or shall be unable to pay, or shall admit in writing its
inability to pay it Debts as such Debts become due; (ii) the Issuer or the Town shall make
an assignment for the benefit of creditors, or petition or apply to any tribunal for the
appointment of a custodian, receiver, or trustee for it or for a substantial part of its assets;
(iii) the Issuer or the Town shall commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution, or liquidation law or
statute of any jurisdiction, whether now or hereafter in effect; (iv) the Issuer or the Town
shall have had any such petition or application filed or any such proceeding commenced
against it in which an order for relief is entered or an adjudication or appointment is
made, and such order, adjudication or appointment shall remain in effect and not be
stayed, revoked or dismissed within 30 days after its occurrence; (v) the Issuer or the
Town shall take any action indicating its consent to, approval of, or acquiescence in any
such petition, application, proceeding, or order for relief or the appointment of a
custodian, receiver, or trustee for all or any substantial part of its properties; (vi) the
Issuer or the Town shall suffer any such custodianship, receivership, or trusteeship to
continue undischarged; or (vii) the taking of any action by the Issuer or the Town for the
purpose of effecting any of the acts set forth in clauses (i) through (vi) hereof,
(1) this Agreement, the Indenture, the Resolution, or any material provision
thereof or hereof, at any time after its execution and delivery, shall, for any reason, cease
to be valid and binding on the Issuer or the Town or in full force or effect or shall be
declared to be null and void by a court of competent jurisdiction, or the validity or
enforceability of this Agreement or any of the Related Documents shall be contested by
the Issuer, the Town or by any Governmental Authority having jurisdiction over the
Issuer or the Town; or the Issuer or the Town shall deny that it has any further liability
under this Agreement or the Related Documents;
(m) any pledge or security interest created under any Related Document to
secure any Bonds or any amounts due under this Agreement shall fail to be fully
enforceable with the priority required under such Related Document by reason of the
enactment of or the repeal or amendment of any law applicable to the Issuer or by reason
of a judgment of a court of competent jurisdiction;
(n) dissolution or termination of the existence of the Issuer or the Urban
Renewal Area;
(o) Moody's or S&P shall have downgraded its rating on the long-term
general obligation indebtedness of the Town (without regard to any form of credit
enhancement) to below "Baal" (or its equivalent) or "BBB+" (or its equivalent),
40 respectively, or either Rating Agency shall have suspended or withdrawn its rating of the
same; or
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(p) the occurrence of any action affecting the zoning for the Urban Renewal
Area which would have a material adverse effect upon the Issuer's ability to perform its
obligations under this Agreement or to repay any indebtedness secured by the Pledged
Revenues or the rights and remedies of the Bank under the Related 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) give notice of the occurrence of any Event of Default to the Trustee,
directing the Trustee to cause a mandatory tender of the Bonds, thereby causing the Letter
of Credit to expire 15 days thereafter;
(b) give notice of the occurrence of any Event of Default to the Trustee,
directing the Trustee to cause an acceleration of the Bonds, thereby causing the Letter of
Credit to expire 15 days thereafter;
(c) by written notice to the Issuer require that the Issuer immediately prepay to
the Bank in immediately available funds an amount equal to the Available Amount (such
amounts to be held as collateral security for the Obligations), provided, however, that in
the case of an Event of Default under Section 6.1(k) hereof, such prepayment Obligations
shall automatically become immediately due and payable without any notice (unless the
coming due of such Obligations is waived in writing by the Bank);
(d) by notice to the Issuer, declare all Obligations to be, and such amounts
shall thereupon become, immediately due and payable without presentment, demand,
protest of other notice of any kind, all of which are hereby waived by the Issuer, provided
that upon the occurrence of an Event of Default under Section 6.1(k) hereof, such
acceleration shall automatically occur (unless automatic acceleration is waived by the
Bank in writing);
(e) pursue any rights and remedies it may have under the Related Documents;
(f) pursue any other action available at law or in equity.
ARTICLE SEVEN
MISCELLANEOUS
Section 7.1. No Deductions; Increased Costs. (a) Except as otherwise required by law,
each payment by the Issuer to the Bank under this Agreement or any other Related Document
shall be made without setoff or counterclaim and without withholding for or on account of any
present or future taxes (other than overall net income taxes on the recipient imposed by any
jurisdiction having control of such recipient) imposed by or within the jurisdiction in which the
Issuer is domiciled, any jurisdiction from which the Issuer makes any payment hereunder, or (in
each case) any political subdivision or taxing authority thereof or therein. If any such 40
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withholding is so required, the Issuer shall make the withholding, pay the amount withheld to the
appropriate Governmental Authority before penalties attach thereto or interest accrues thereon
and forthwith pay such additional amount as may be necessary to ensure that the net amount
actually received by the Bank free and clear of such taxes (including such taxes on such
additional amount) is equal to the amount which the Bank would have received had such
withholding not been made. If the Bank pays any amount in respect of any such taxes, penalties
or interest, the Issuer shall reimburse the Bank for that payment on demand in the currency in
which such payment was made. If the Issuer pays any such taxes, penalties or interest, it shall
deliver official tax receipts evidencing that payment or certified copies thereof to the Bank on or
before the thirtieth day after payment.
(b) If the Code or any newly adopted law, treaty, regulation, guideline or directive, or
any change in any, law, treaty, regulation, guideline or directive or any new or modified
interpretation of any of the foregoing by any authority or agency charged with the administration
or interpretation thereof or any central bank or other fiscal, monetary or other authority having
jurisdiction over the Bank or the transactions contemplated by this Agreement (whether or not
having the force of law) shall:
(i) limit the deductibility of interest on funds obtained by the Bank to pay any
of its liabilities or subject the Bank to any tax, duty, charge, deduction or withholding on
or with respect to payments relating to the Bonds, the Letter of Credit or this Agreement,
or any amount paid or to be paid by the Bank as the issuer of the Letter of Credit (other
than any tax measured by or based upon the overall net income of the Bank imposed by
any jurisdiction having control over the Bank);
(ii) impose, modify, require, make or deem applicable to the Bank any reserve
requirement, capital requirement, special deposit requirement, insurance assessment or
similar requirement against any assets held by, deposits with or for the account of, or
loans, letters of credit or commitments by, an office of the Bank;
(iii) change the basis of taxation of payments due the Bank under this
Agreement or the Bonds (other than by a change in taxation of the overall net income of
the Bank),
(iv) cause or deem letters of credit to be assets held by the Bank and/or as
deposits on its books; or
(v) impose upon the Bank any other condition with respect to any amount paid
or payable to or by the Bank or with respect to this Agreement or any of the other Related
Documents;
and the result of any of the foregoing is to increase the cost to the Bank of making any payment
or maintaining the Letter of Credit, or to reduce the amount of any payment (whether of
® principal, interest or otherwise) receivable by the Bank, or to reduce the rate of return on the
capital of the Bank or to require the Bank to make any payment on or calculated by reference to
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the gross amount of any sum received by it, in each case by an amount which the Bank in its
reasonable judgment deems material, then:
(1) the Bank shall promptly notify the Issuer in writing of such event;
(2) the Bank shall promptly deliver to the Issuer a certificate stating the
change which has occurred or the reserve requirements or other costs or conditions which
have been imposed on the Bank or the request, direction or requirement with which it has
complied, together with the date thereof, the amount of such increased cost, reduction or
payment and a reasonably detailed description of the way in which such amount has been
calculated, and the Bank's determination of such amounts, absent fraud or manifest error,
shall be conclusive; and
(3) the Issuer shall pay to the Bank, from time to time as specified by the
Bank, such an amount or amounts as will compensate the Bank for such additional cost,
reduction or payment.
(c) The protection of Section 7.1(b) hereof shall be available to the Bank regardless of
any possible contention of invalidity or inapplicability of the law, regulation or condition which
has been imposed; provided, however, that if it shall be later determined that any amount so paid
by the Issuer pursuant to Section 7.1(b) hereof is in excess of the amount payable under the
provisions hereof, the Bank shall refund such excess amount to the Issuer as soon as practicable.
Section 7.2. Right of Setoff; Other Collateral. (a) Upon the occurrence and during the
continuance of an Event of Default, the Bank is hereby authorized at any time and from time to
time without notice to the Issuer (any such notice being expressly waived by the Issuer), and to
the fullest extent permitted by law, to setoff, to exercise any banker's lien or any right of
attachment and apply any and all balances, credits, deposits (general or special, time or demand,
provisional or final), accounts or monies at any time held and other indebtedness at any time
owing by the Bank which such balances, credits, deposits, accounts or monies constitute Pledged
Revenues to or for the account of the Issuer (irrespective of the currency in which such accounts,
monies or indebtedness may be denominated and the Bank is authorized to convert such
accounts, monies and indebtedness into United States dollars) against any and all of the
Obligations of the Issuer, whether or not the Bank shall have made any demand for any amount
owing to the Bank by the Issuer.
(b) The rights of the Bank under this Section 7.2 are in addition to, in augmentation of,
and, except as specifically provided in this Section 7.2, do not derogate from or impair other
rights and remedies (including, without limitation, other rights of setoff) which the Bank may
have.
Section 7.3. Reimbursement. The Issuer agrees, to the extent permitted by law, to
reimburse and hold the Bank harmless from and against, and to pay on demand, any and all
claims, damages, losses, liabilities, costs and expenses whatsoever which the Bank may incur or
suffer by reason of or in connection with the execution and delivery of this Agreement or the
Letter of Credit, or any other documents which may be delivered in connection with this
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Agreement or the Letter of Credit, or in connection with any payment under the Letter of Credit,
including, without limitation, the reasonable fees and expenses of counsel for the Bank with
respect thereto and with respect to advising the Bank as to its rights and responsibilities under
this Agreement and the Letter of Credit and all reasonable fees and expenses, if any, in
connection with the enforcement or defense of the rights of the Bank in connection with this
Agreement or the Letter of Credit, or the collection of any monies due under this Agreement or
such other documents which may be delivered in connection with this Agreement or the Letter of
Credit; except, only if, and to the extent that any such claim, damage, loss, liability, cost or
expense shall be caused by the willful misconduct or gross negligence of the Bank in performing
its obligations under this Agreement or in making payment against a drawing presented under the
Letter of Credit which does not comply with the terms thereof (it being understood and agreed by
the parties hereto that in making such payment the Bank's exclusive reliance on the documents
presented to the Bank in accordance with the terms of the Letter of Credit as to any and all
matters set forth therein, whether or not any statement or any document presented pursuant to the
Letter of Credit proves to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein proves to be untrue or inaccurate in any respect whatsoever shall not be deemed
willful misconduct or gross negligence of the Bank). The Issuer, upon demand by the Bank at
any time, shall reimburse the Bank for any legal or other expenses incurred in connection with
investigating or defending against any of the foregoing except if the same is directly due to the
Bank's gross negligence or willful misconduct. Promptly after receipt by the Bank of notice of
the commencement, or threatened commencement, of any action subject to the indemnities
contained in this Section 7.3, the Bank shall promptly notify the Issuer thereof, provided,
however, that the failure of the Bank so to notify the Issuer will not affect the obligation of the
Issuer to reimburse the Bank with respect to such action or any other action pursuant to this
Section 7.3. The obligations of the Issuer under this Section 7.3 shall survive payment of any
funds due under this Agreement or the expiration of the Letter of Credit.
Section 7.4. Obligations Absolute. The obligations of the Issuer and the Town under this
Agreement shall be absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances.
Section 7.5. Liability of the Bank. The Issuer assumes all risks of the acts or omissions
of the Trustee, the Remarketing Agent or any other agent of the Trustee and any transferee of the
Letter of Credit with respect to its use of the Letter of Credit. Neither the Bank nor any of its
officers or directors shall be liable or responsible for: (a) the use which may be made of the
Letter of Credit or for any acts or omissions of the Trustee and any transferee in connection
therewith; (b) the validity or genuineness of documents, or of any endorsement(s) thereon, even
if such documents should in fact prove to be in any or all respects invalid, fraudulent or forged;
(c) payment by the Bank against presentation of documents which do not comply with the terms
of the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make
payment under the Letter of Credit; provided, however, that the Issuer shall have a claim against
the Bank, and the Bank shall be liable to the Issuer, to the extent of any direct, as opposed to
consequential, damages suffered by the Issuer which the Issuer proves were caused by (1) the
Bank's willful misconduct or gross negligence in determining whether documents presented
under the Letter of Credit comply with the terms of the Letter of Credit or (ii) the Bank's willful
or grossly negligent failure to make lawful payment under the Letter of Credit after the
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presentation to the Bank by the Trustee or a successor trustee under the Indenture of a draft and
certificate strictly complying with the terms and conditions of the Letter of Credit (it being
understood that in making such payment the Bank's exclusive reliance on the documents
presented to the Bank in accordance with the terms of the Letter of Credit as to any and all
matters set forth therein, whether or not any statement or any document presented pursuant to the
Letter of Credit proves to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein proves to be untrue or inaccurate in any respect whatsoever, shall not be
deemed willful misconduct or gross negligence of the Bank). The Bank is hereby 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 Issuer, the Remarketing Agent, the Trustee 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
correct.
Section 7.6. Participants. The Bank shall have the right to grant participations in the
Letter of Credit to one or more other banking institutions, and such participants shall be entitled
to the benefits of this Agreement, including, without limitation, Sections 7.1, 7.3 and 7.14 hereof,
to the same extent as if they were a direct party hereto; provided, however, that no such
participation by any such participant shall in any way affect the obligation of the Bank under the
Letter of Credit; and provided further that no such participant shall be entitled to receive payment
hereunder of any amount greater than the amount which would have been payable had the Bank
not granted a participation to such participant. Notwithstanding the foregoing, the Issuer and the
Town may look solely to the Bank as the entity to whom performance of any of its obligations
hereunder are owed.
Section 7.7. Survival of this Agreement. All covenants, agreements, representations and
warranties made in this Agreement shall survive the issuance by the Bank of the Letter of Credit
and shall continue in full force and effect so long as the Letter of Credit shall be unexpired or any
Obligations shall be outstanding and unpaid. The obligations of the Issuer to reimburse the Bank
pursuant to Sections 7.1, 7.3 and 7.14 hereof shall survive the payment of the Bonds and
termination of this Agreement.
Section 7.8. Modification of this Agreement. No amendment, modification or waiver of
any provision of this Agreement shall be effective unless the same shall be in writing and signed
by the Bank and no amendment, modification or waiver of any provision of the Letter of Credit,
and no consent to any departure by the Issuer or the Town therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Bank. Any such waiver or consent
shall be effective only in the specific instance and for the purpose for which given. No notice to
or demand on the Issuer in any case shall entitle the Issuer to any other or further notice or
demand in the same, similar or other circumstances.
Section 7.9. Waiver of Rights by the Bank. No course of dealing or failure or delay on
the part of the Bank in exercising any right, power or privilege hereunder or under the Letter of
Credit or this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise
thereof preclude any other or further exercise or the exercise of any other right or privilege. The
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rights of the Bank under the Letter of Credit and the rights of the Bank under this Agreement are
cumulative and not exclusive of any rights or remedies which the Bank would otherwise have.
Section 7.10. Severability. In case any one or more of the provisions contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable provisions.
Section 7.11. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving effect to conflict of
law principles provided that the obligations of the Issuer and the Town hereunder shall be
governed by, and construed in accordance with, the laws of the State of Colorado.
Section 7.12. Notices. All notices hereunder shall be given by United States certified or
registered mail or by telecommunication device capable of creating written record of such notice
and its receipt. Notices hereunder shall be effective when received and shall be addressed:
If to the Bank, to: DEPFA BANK plc
623 Fifth Avenue, 22nd Floor
New York, NY 10022
Attention: General Manager
Telephone: (212) 796-9170
Telecopier: (212) 796-9217
With a copy to: DEPFA BANK plc
30 North LaSalle Street
Chicago, Illinois 60602
Attention: Marnin Lebovits
Telephone: (312) 332-9100
Facsimile: (312) 332-9192
If to the Town, to: Town of Avon, Colorado
400 Benchmark Road, Box 975
Avon, Colorado 81620
Attention: Finance Director
Telephone: (970) 748-4066
Telecopier: (970) 949-9139
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If to the Issuer, to: Avon Urban Renewal Authority
400 Benchmark Road, Box 975
Avon, Colorado 81620
Attention: Executive Director
Telephone: (970) 748-4006
Telecopier: (970) 949-9139
If to the Trustee, to: UMB Bank, n.a.
1670 Broadway
Denver, Colorado 80202
Attention: Corporate Trust & Escrow Services
Telephone: (303) 267-9486
Telecopier: (303) 721-6387
Section 7.13. Successors and Assigns. Whenever in this Agreement the Bank is referred
to, such reference shall be deemed to include the successors and assigns of the Bank and all
covenants, promises and agreements by or on behalf of the Issuer which are contained in this
Agreement shall inure to the benefit of such successors and assigns; provided, however, that any
assignment by the Bank to any other Person of its obligations under the Letter of Credit shall
constitute the delivery of a Substitute Credit Facility for purposes of the Indenture. The rights
and duties of the Issuer and the Town hereunder, however, may not be assigned or transferred,
except as specifically provided in this Agreement or with the prior written consent of the Bank,
and all obligations of the Issuer and the Town hereunder shall continue in full force and effect
notwithstanding any assignment by the Issuer of any of its rights or obligations under any of the
Related Documents or any entering into, or consent by the Issuer and the Town to, any
supplement or amendment to any of the Related Documents.
Section 7.14. Taxes and Expenses. The Issuer and the Town agree to pay to the Bank
(i) on the Closing Date, all reasonable costs and expenses incurred by the Bank and its counsel in
connection with the preparation, execution and delivery of this Agreement and any other
documents and instruments that may be delivered or required in connection therewith (including
fees and expenses in an amount not to exceed $25,000 of Chapman and Cutler LLP, counsel for
the Bank) (ii) all costs and expenses incurred by the Bank, including reasonable fees and out-of-
pocket expenses of counsel for the Bank, otherwise arising in connection with this Agreement
and the Related Documents, including, without limitation, in connection with any amendment
hereto or thereto, the enforcement hereof or thereof or the protection of the rights of the Bank
hereunder or thereunder, and (iii) any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution and delivery of this Agreement and
any other documents or instruments that may be delivered in connection herewith. Any taxes
(other than any tax measured by or based upon the overall net income of the Bank imposed by
any jurisdiction having control over the Bank) payable or ruled payable by any Governmental
Authority in respect of this Agreement, the Letter of Credit or the Bonds shall be paid by the
Issuer and the Town, together with interest and penalties, if any; provided, however, that the
Issuer and the Town may conduct a reasonable contest of any such taxes with the prior written
consent of the Bank.
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Section 7.15. Headings. The captions in this Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
Section 7.16. Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute an original but all taken together to constitute one instrument.
Section 7.17. Entire Agreement This Agreement constitutes the entire understanding of
the parties with respect to the subject matter thereof and any prior agreements, whether written or
oral, with respect thereto are superseded hereby.
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Please signify your agreement and acceptance of the foregoing by executing this
Agreement in the space provided below.
Very truly yours,
DEPFA BANK p1c, acting through its New
York Branch
By: _
Its:
By: _
Its:
Accepted and agreed to:
AVON URBAN RENEWAL AUTHORITY ATTEST:
By:
Its: Chairman
TOWN OF AVON, COLORADO
By: _
Its:
ATTEST:
By: _
Its:
Bv:
•
Its: Executive Director
C
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