2016 MARICOPA COUNTY $35MM REVOLVING LINE PROMISSORY NOTE.DOCX

THIS NOTE IS IN FULLY REGISTERED FORM AND IS NOT TRANSFERABLE
EXCEPT ON THE REGISTRATION BOOKS OF BORROWER
MARICOPA COUNTY REVOLVING LINE OF CREDIT
PROMISSORY NOTE
JPMorgan Chase Bank, N.A.
201 North Central Ave., Floor 21
Phoenix, Arizona 85004
Date: July 1, 2016
Principal Amount: $35,000,000.00
1. PROMISE TO PAY AND INTEREST. For value received, the undersigned,
MARICOPA COUNTY, ARIZONA, ACTING THROUGH THE MARICOPA COUNTY
TREASURER, AS ITS AGENT (“Borrower”) promises to pay to or on the order of
JPMORGAN CHASE BANK, N.A., or registered assigns (“Bank”) at its above office, or at such
other place as Bank may designate in writing, in lawful money of the United States of America,
in the principal sum of Thirty-Five Million and No/100 Dollars ($35,000,000.00), or, if different,
the unpaid amount disbursed by Bank by making Advances (as such term is defined in the
Business Loan Agreement (Maricopa County Revolving Line of Credit), dated of even date
herewith (“Loan Agreement”), between Borrower and Bank, as it may be amended, modified,
extended, renewed, restated, or supplemented from time to time), as shown on the records of
Bank which, when in agreement with the records of Borrower, shall (absent manifest error) be
conclusive as to such unpaid amount, with interest thereon from the date advanced at the Interest
Rate. “Interest Rate” means the rate set forth below applicable from time to time:
2. QUALIFIED TAX-EXEMPT INTEREST RATE. If interest payable with respect
to an Advance under this Note is not included in the gross income of Bank, or the registered
owner, if other than Bank, under the Internal Revenue Code of 1986 and the regulations
thereunder, as such code and regulations heretofore have been and hereafter may be amended
from time to time (“Code and Regulations”), and is not otherwise subject to the federal income
tax, and if Borrower files with the United States Internal Revenue Service a properly completed
Form 8038-G (or any successor form or forms that the United States Internal Revenue Service
may require for such purposes, collectively, "Form 8038-G") as and when required by the Code
and Regulations and promptly delivers to Bank a copy of each filed Form 8038-G, and if
Borrower has delivered to Bank a Declaration (as defined in the Loan Agreement) certifying that
the indebtedness evidenced by this Note with respect to such Advance is a “Qualified Tax-
Exempt Obligation”, as such term is defined in Section 265 of the Code and Regulations, then
the Interest Rate (“Qualified Tax Exempt Interest Rate”) with respect to such Advance shall be a
rate per annum equal to sixty-one percent (61.0%) of the rate per annum most recently publicly
announced by Bank, or Bank’s successors, in Phoenix, Arizona, as Bank’s “prime rate”, as in
effect from time to time, provided that in no event shall the Qualified Tax-Exempt Interest Rate
at any time exceed ten percent (10%) per annum. The Qualified Tax-Exempt Interest Rate will
be redetermined by Bank on each day that the “prime rate” changes and any change in the
Qualified Tax-Exempt Interest Rate will be effective on and after the date of such change and
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until the next change in the Qualified Tax-Exempt Interest Rate. The “prime rate” is set by Bank
based on various factors, including Bank’s costs and desired return, general economic conditions
and other factors, and is used as a reference point in pricing some loans. Bank may price loans to
its customers at, above, or below its “prime rate.”
3. NON-QUALIFIED TAX-EXEMPT INTEREST RATE. If interest payable with
respect to an Advance under this Note allocable to Borrower is not included in the gross income
of Bank, or the registered owner, if other than Bank, under the Code and Regulations, and if
Borrower files with the United States Internal Revenue Service a properly completed Form
8038-G as and when required by the Code and Regulations and promptly delivers to Bank a copy
of each filed Form 8038-G, but, notwithstanding the foregoing, Borrower has not delivered to
Bank a Declaration (as that term is defined in the Loan Agreement), or the Advance is not a
“Qualified Tax-Exempt Obligation,” as such term is defined in Section 265 of the Code and
Regulations, or if an Advance previously designated in a Declaration as a Qualified Tax-Exempt
Obligation is no longer eligible to be treated as such as described in Section 5(b) below, then the
Interest Rate (“Non-Qualified Tax-Exempt Interest Rate”) shall be a rate per annum equal to
sixty-six percent (66%) of the rate per annum most recently publicly announced by Bank, or
Bank’s successors, in Phoenix, Arizona, as Bank’s “prime rate”, as in effect from time to time,
provided that in no event shall the Non-Qualified Tax-Exempt Interest Rate at any time exceed
ten percent (10%) per annum. The Non-Qualified Tax-Exempt Interest Rate will be redetermined
by Bank on each day that the “prime rate” changes and any change in the Non-Qualified Tax-
Exempt Interest Rate will be effective on and after the date of such change and until the next
change in the Non-Qualified Tax-Exempt Interest Rate. The “prime rate” is set by Bank based on
various factors, including Bank’s costs and desired return, general economic conditions and other
factors, and is used as a reference point in pricing some loans. Bank may price loans to its
customers at, above, or below its “prime rate.”
4. TAXABLE INTEREST RATE. If interest payable under this Note is included in
the gross income of Bank under the Code and Regulations, or is otherwise subject to federal
income tax or if Borrower does not file with the United States Internal Revenue Service a
properly completed Form 8038-G as and when required by the Code and Regulations, or does
not deliver a copy of any filed Form 8038-G to Bank upon request, then the Interest Rate
(“Taxable Interest Rate”) during each calendar quarter shall be the rate per annum equal to one
hundred ten percent (110.00%) of the previous quarter’s weighted average prime rate among the
top three financial institutions by asset size in the State of Arizona.
5. CHANGES IN TAX TREATMENT OF INTEREST.
(a) Borrower agrees that in the event that Borrower pays interest at a
Non-Qualified Tax-Exempt Rate or a Qualified Tax-Exempt Rate on any portion of the
sums outstanding hereunder, and
(i) the Internal Revenue Service determines that the interest on such
portion is not exempt from federal income taxation, or
(ii) Bank is required to pay any sums as federal income taxes because
of any assertion by the Internal Revenue Service (whether or not a final
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determination) that interest paid on such portion of the obligations of Borrower
hereunder is not exempt from federal income tax, then, the applicable interest rate
hereunder for that portion shall be deemed always to have been the Taxable
Interest Rate and Borrower shall, immediately upon request by Bank, pay to Bank
the difference between (A) interest, computed at the Taxable Interest Rate, on any
such portion at any time outstanding hereunder and (B) the interest already paid
for such portion by Borrower under this Agreement. The obligations of Borrower
under this section shall survive the termination of the Loan Documents and the
repayment of sums borrowed hereunder.
(b) Borrower agrees that in the event that Borrower pays interest at a
Qualified Tax-Exempt Rate on any portion of the sums outstanding hereunder and
(i) the Internal Revenue Service determines that the interest on such
portion is not subject to treatment as a “Qualified Tax-Exempt Obligation"
pursuant to Section 265(b)(3) of the Code, or
(ii) Borrower causes or is deemed to have caused (whether by way of
aggregation or otherwise) the amount of tax-exempt obligations issued in any
calendar year for which such Borrower is paying interest at a Qualified Tax-
Exempt Rate to exceed $10,000,000; or
(iii) Bank is required to pay any sums as federal income taxes because
of any assertion by the Internal Revenue Service (whether or not a final
determination) that interest paid on such portion of the obligations of Borrower
hereunder are not “Qualified Tax-Exempt Obligations” as defined in Section
265(b)(3) of the Code,
then, the applicable interest rate hereunder for the portion that no longer qualifies as a Qualified
Tax-Exempt Obligation but is otherwise exempt from federal income taxation shall be deemed
always to have been the Non-Qualified Tax-Exempt Interest Rate and Borrower shall,
immediately upon request by Bank, pay to Bank the difference between (A) interest, computed at
the Non-Qualified Tax-Exempt Interest Rate, on any such portion at any time outstanding
hereunder and (B) the interest already paid for such portion by Borrower under this Agreement.
The obligations of Borrower under this section shall survive the termination of the Loan
Documents and the repayment of sums borrowed hereunder.
6. REQUIRED PAYMENTS; PAYMENT ON MATURITY. Prior to June 30, 2017,
or if the Scheduled Commitment Expiration Date under the Loan Agreement has been extended
by mutual agreement between Borrower, acting through their agent, the Maricopa County
Treasurer, and Bank, such Scheduled Commitment Expiration Date (the “Maturity Date”),
payments under this Note shall be made as Borrower receives “non-restricted operating
revenues”, as such term is used in Arizona Revised Statutes Section 11-604.01. On the Maturity
Date Borrower shall pay to Bank the unpaid principal, all accrued and unpaid interest, and all
other amounts (“Other Amounts”) payable by such Borrower to Bank under the Loan
Documents. “Loan Documents” means this Note, the Loan Agreement, the Services Proposal (as
defined in the Loan Agreement), and any other agreements, documents, and instruments relating
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to this Note, as they may be amended, modified, extended, renewed, restated, or supplemented
from time to time.
7. INTEREST ON PRINCIPAL; DEFAULT RATE. Principal shall bear interest at
the Interest Rate from the date of disbursement until the due date thereof, whether by
acceleration or otherwise. Principal, interest, and Other Amounts not paid when due and any
judgment therefor shall bear interest from its due date or the judgment date, as applicable, until
paid at a rate (“Default Rate”) of ten percent (10%) per annum, and such interest shall be
immediately due and payable.
8. INTEREST ACCRUAL. All interest under the Loan Documents shall be
computed on the basis of a 365-day year and accrue on a daily basis for the actual number of
days elapsed. Borrower agrees to pay an effective rate of Interest that is the sum of (i) the interest
rate provided herein and (ii) any additional rate of interest resulting from any other charges or
fees paid or to be paid in connection herewith that are determined to be interest or in the nature
of interest.
9. PAYMENT IN FULL PRIOR TO THE MATURITY DATE. Notwithstanding
any other provision herein or in the Loan Documents, Borrower shall pay to Bank all outstanding
principal, interest and Other Amounts on June 30 of each year. So long as Borrower makes such
payment, Borrower shall, subject to the provisions of the Loan Agreement, continue to be
entitled to Advances pursuant to the Loan Agreement prior to the commitment expiration date
specified therein. Principal, interest, and Other Amounts not paid on June 30 of each year shall
bear interest from June 30 until paid at the Default Rate, and such interest shall be immediately
due and payable.
10. APPLICATION OF PAYMENTS. At the option of Bank, payments shall be
applied to principal, Interest, and Other Amounts in such order as Bank shall determine.
11. PREPAYMENT. Borrower may prepay the outstanding principal balance hereof,
in whole or in part, at any time prior to the Maturity Date without penalty or premium.
12. NO COUNTERCLAIMS, DEDUCTIONS, ETC. All payments and other
obligations of Borrower under the Loan Documents will be made and performed without
counterclaim, deduction, defense, deferment, reduction, or set-off.
13. EVENTS OF DEFAULT. Each of the following shall be an event of default
(“Event of Default”):
(a) Failure by Borrower to pay when due (i) any amount payable by Borrower
under any of the Loan Documents, or (ii) any other indebtedness of Borrower to Bank.
(b) Failure by Borrower to perform any material obligation not involving the
payment of money, or to comply with any other term or condition applicable to
Borrower, in any of the Loan Documents.
(c) Any representation or warranty made by Borrower in any of the Loan
Documents or otherwise or any information delivered by Borrower to Bank in obtaining
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or hereafter in connection with the credit evidenced by this Note is or becomes materially
incomplete, incorrect, or misleading from the representations or warranties made of the
date of this Note or as of the date made or delivered.
(d) The occurrence of any change or other event that Bank determines has or
will materially and adversely affect (i) any or all property, interests in property, or rights
to property securing the obligations of Borrower under the Loan Documents, including
without limitation the security interest in the non-restricted operating revenues received
by the Maricopa County Treasurer on behalf of Borrower (“Collateral”) as security for
the obligations of Borrower under the Loan Documents, (ii) the financial condition of
Borrower, or (iii) the ability of Borrower to pay the monetary obligations of Borrower
under the Loan Documents.
(e) Borrower (i) is unable or admits in writing Borrower’s inability to pay
Borrower’s monetary obligations as they become due, (ii) is generally not paying its
debts as they become due, (iii) makes a general assignment for the benefit of creditors, or
(iv) applies for, consents to, or acquiesces in, appointment of a trustee, receiver, or other
custodian for Borrower or any or all of the property of Borrower, or in the absence of
such application, consent, or acquiescence by Borrower a trustee, receiver, or other
custodian is appointed for Borrower or any or all of the property of Borrower.
(f) Commencement of any case under the Bankruptcy Code (Title 9 of the
United States Code) or commencement of any other bankruptcy, arrangement,
reorganization, receivership, custodianship, or similar proceeding under any federal or
state law by or against Borrower.
(g) Attachment, garnishment, levy of execution, or seizure by legal process of
any or all Collateral of Borrower, except any pre-judgment attachment or garnishment of
any or all Collateral.
(h) Any legal proceeding or other action against or affecting any or all
Collateral of Borrower is commenced (including, without limitation, any prejudgment
attachment or garnishment) and is not quashed, stayed, or released within twenty (20)
days.
(i) Any Collateral of Borrower is sold, disposed of, or otherwise transferred
by such Borrower after the date of this Note, not in the ordinary course of operations of
Borrower.
(j) Any Collateral of Borrower becomes subject to any lien or security
interest, other than the security interest granted to Bank in this Note.
(k) Any Collateral of Borrower is lost, stolen, suffers substantial damage or
destruction, or is used in violation of any law, ordinance, regulation, or rule (federal,
state, or local).
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(l) Borrower abandons or, except for expenditure of funds included in the
Collateral in the ordinary operations of Borrower, ceases to have exclusive possession of
any Collateral or any books and records of Borrower relating to the Collateral.
(m) Borrower or any other person on behalf of Borrower claims that any Loan
Document is not legal, valid, binding, and enforceable against Borrower, that any lien,
security interest, or other encumbrance securing any of the obligations under the Loan
Documents is not legal, valid, binding, and enforceable, or that the priority of any lien,
security interest, or other encumbrance securing any of the obligations in the Loan
Documents is different than the priority set forth in Arizona Revised Statutes Section 11-
604.01 (except as such priority may be affected by the laws regarding garnishment of
wages of Borrower’s employees and federal and state tax liens for withholding taxes of
Borrower’s employees).
(n) The occurrence of any condition or event that is a default or is designated
as a default, an event of default, or an Event of Default in any other Loan Document or in
any agreement, document, or instrument relating to any other indebtedness of Borrower
to Bank.
(o) The occurrence of any condition or event that is designated as a default or
an event of default and the expiration of any cure period with respect to any other
indebtedness of Borrower to any other person.
(p) The failure of Borrower to repay to Bank within five (5) Business Days of
written notice from Bank to Borrower the amount by which the outstanding amount of
Advances exceeds the Commitment.
14. RIGHTS AND REMEDIES OF BANK. Upon occurrence of an Event of Default,
Bank may, at its option, in its absolute and sole discretion, and without demand or notice, (i)
declare the obligations in the Loan Documents to be immediately due and payable, whereupon
the obligations in the Loan Documents shall be immediately due and payable, and (ii) exercise
any or all other rights and remedies of Bank concurrently or consecutively in such order as Bank
elects. The rights and remedies of Bank shall be cumulative and non-exclusive. Delay,
discontinuance, or failure to exercise any right or remedy of Bank shall not be a waiver thereof,
or of any other right or remedy of Bank, or of the time, of the essence provision. Exercise of any
right or remedy of Bank shall not cure or waive any Event of Default or invalidate any act done
in response to any Event of Default.
15. LIMIT OF LIABILITY OF BANK. In exercising rights and remedies, neither
Bank nor any affiliate thereof or any stockholder, director, officer, employee, agent, or
representative of Bank or any affiliate thereof shall have any liability for any injury to the assets,
business, operations, or property of Borrower or any other liability to Borrower, other than for its
own gross negligence or willful misconduct.
16. PROVISIONS IN LOAN AGREEMENT GOVERN THIS AGREEMENT. This
Note is subject to certain terms and provisions in the Loan Agreement, to which reference is
made for a statement of such terms and provisions.
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17. WAIVER OF STATUTE OF LIMITATIONS. Borrower waives, to the full extent
permitted by law, the right to plead any statutes of limitations as a defense to any or all
obligations under the Loan Documents.
18. WAIVERS BY BORROWER. Borrower (i) waives, to the full extent permitted
by law, presentment, notice of dishonor, protest, notice of protest, notice of intent to accelerate,
notice of acceleration, and all other notices or demands of any kind (except notices specifically
provided for in the Loan Documents), and (ii) agrees that Bank may enforce this Note and any
other Loan Documents against Borrower without first having sought enforcement against any
Collateral.
19. JURY WAIVER. TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, BORROWER AND BANK HEREBY VOLUNTARILY, KNOWINGLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) BETWEEN BORROWER AND BANK ARISING OUT OF OR IN
ANY WAY RELATED TO THIS NOTE. THIS PROVISION IS A MATERIAL
INDUCEMENT TO BANK TO PROVIDE THE FINANCING DESCRIBED HEREIN.
20. WAIVER OF SPECIAL DAMAGES. BORROWER WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT BORROWER MAY
HAVE TO CLAIM OR RECOVER FROM BANK IN ANY LEGAL ACTION OR
PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES.
[SIGNATURE PAGE FOLLOWS]
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DATED as of the date first above stated.
MARICOPA COUNTY BOARD OF SUPERVISORS
By:
Name:
Title: Chairman, Board of Supervisors
ATTEST:
By:
Clerk of the Board
MARICOPA COUNTY TREASURER,
As Agent for the Districts Listed on Schedule I hereto
By:
Name: Charles "Hos" Hoskins
Title: Maricopa County Treasurer
4826-5700-7410.2 Maricopa County Revolving Line of Credit - Promissory Note