MARICOPA RSA (EXECUTION VERSION).PDF
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Execution Version 1 NTAC:3NS-20 REIMBURSEMENT AND SECURITY AGREEMENT This Reimbursement and Security Agreement dated September ___, 2023 (this “Agreement”), is made between The Northern Trust Company (“Northern Trust”), an Illinois banking corporation with a place of business at 50 South La Salle Street, Chicago, Illinois 60603, and Maricopa County (the “Client”). WHEREAS, the Client is or, for purposes of the Transactions (as defined below) is about to become, a custodial customer of Northern Trust or an affiliate of Northern Trust and has requested that Northern Trust provide the Services (as hereinafter defined) in connection with the Transactions (as hereinafter defined) to be effected from time to time through the Fixed Income Clearing Corporation (“FICC”); and WHEREAS, Northern Trust is willing to provide the Services upon the terms contained herein and in the other Transaction Documents (as hereinafter defined); NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Definitions. As used in this Agreement, terms defined in the Uniform Commercial Code of the State of Illinois (the “UCC”) have the same meanings in this Agreement as in the UCC. In addition, the following terms have the following meanings: “Collateral” means (a) the funds received or to be received by the Client in connection with a Transaction and credited to any deposit account maintained by the Client with Northern Trust or any affiliate of Northern Trust and any deposit account claims relating thereto, (b) the securities received or to be received by the Client in connection with a Transaction and credited to any securities account maintained by the Client with Northern Trust or any affiliate of Northern Trust and any securities entitlements relating thereto, (c) any proceeds of any Collateral referred to in the foregoing clause (a) or (b), and (d) any funds paid or securities delivered to Northern Trust in settling any Transaction pursuant to Section 5(b). “Guaranty” means a guaranty issued by Northern Trust in favor of FICC of the full payment and performance by the Client of its obligations to FICC under or in respect of the Transactions. “Master Repurchase Agreement” means that Master Repurchase Agreement dated on or about the date hereof between Northern Trust and the Client, as amended and in effect from time to time. “Qualifying Securities” means: (a) securities that are the direct obligations of, or are fully guaranteed as to principal and interest by, the United States and securities of United States government sponsored enterprises, agencies, or entities, including those securities issued by the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, commonly known as “Fannie Mae” and “Freddie Mac,”; (b) to the extent not included in the foregoing clause (a), mortgage-backed securities; and (c) securities that are “Purchased Securities” and “Additional Purchased Securities” as defined in the Master Repurchase Agreement. The applicable Master Repurchase Agreement may contain further limitations as to the securities that may be subject to Transactions thereunder. 2 NTAC:3NS-20 “Rules” means the Rulebook of FICC and any procedures and notices in the Rulebook applicable to a Sponsoring Member (as such term is defined in such Rulebook), a Sponsored Member (as such term is defined in such Rulebook) or a Transaction, each as in effect from time to time. A “securities account” includes the designation by Northern Trust or any affiliate of Northern Trust on its books and records that securities in a customer omnibus account or any interests therein are for the benefit of the Client. “Services” means Northern Trust (a) sponsoring the membership of the Client as a sponsored member of FICC, (b) acting as processing agent on behalf of the Client and as principal and a counterparty to the Client in effecting Transactions, and (c) issuing the Guaranty. “Sponsored Membership Agreement” means the Sponsored Membership Agreement dated on or about the date hereof among Northern Trust as “Sponsoring Member”, the Client as “Sponsored Member”, and FICC, as amended and in effect from time to time. “Transaction Documents” means, collectively, this Agreement, the Guaranty, the Master Repurchase Agreement, the Sponsored Membership Agreement and any other agreement or document executed or delivered in connection with the foregoing. “Transactions” means repurchase and reverse repurchase transactions in Qualifying Securities utilizing the matching and clearing facilities of FICC, including those evidenced by any Transaction Document. 2. Reimbursement. (a) In order to induce Northern Trust to provide the Services, the Client hereby agrees to (i) reimburse Northern Trust promptly upon demand for any and all payments and securities deliveries made by Northern Trust, whether pursuant to the Guaranty, any other Transaction Document, or the Rules, or otherwise on behalf or for the benefit of the Client to settle any Transactions, (ii) reimburse Northern Trust for any and all expenses incurred by Northern Trust in now or hereafter honoring demands for payment or delivery of securities under the Guaranty or for reimbursement of amounts referred to in the foregoing clause (i), and (iii) pay to Northern Trust any amounts owing by Client to Northern Trust under this Agreement or any other Transaction Document (all such amounts referred to clauses (i) to (iii) being herein referred to, collectively, as the “Obligations”). (b) Northern Trust may, but is not required to, make a demand for reimbursement or payment under this Agreement by submitting a Transfer Message for a Transfer Against Payment over the Federal Reserve’s Fedwire Securities Service. If the Client is the securities seller under any Transaction, a Transfer Message instructing the transfer to the Client of securities sold under the Transaction against payment of a specified sum will constitute a demand for reimbursement or payment in the amount of the specified sum. If, for any reason, the Client fails or is otherwise unable to satisfy the terms of the Transfer Against Payment before the close of operations of the federal book entry system on the same business day that the Transfer Message was sent, the failure will constitute a failure of the Client to reimburse or pay Northern Trust promptly upon demand, and Northern Trust will be entitled to exercise any rights or remedies under this Agreement and 3 NTAC:3NS-20 applicable law. This subsection does not limit Northern Trust’s right to make a demand for reimbursement or payment by any other method or otherwise limit the Client’s obligation to satisfy a demand promptly. 3. Grant of Security Interest. (a) In order to secure the payment and performance of the Obligations, Client hereby grants to Northern Trust a security interest in the Collateral. (b) Except for (i) the withdrawal of funds received under a Transaction when the Client is a seller of the Qualifying Securities at a time when the Client is not in default on any of the Obligations and which is otherwise not prohibited under any other Transaction Document, or (ii) as permitted in Section 5(b), the Client will not withdraw any Collateral held in any securities account or deposit account if the Client is not permitted to make such a withdrawal pursuant to the terms of any Transaction Document, or has any unsatisfied obligations due to FICC or if Client has incurred any Obligations then due. (c) The Obligations will not be secured by any financial assets of the Client to the extent that the financial assets are margin stock, as defined in Regulation U (12 CFR 221), and the “negative pledge” in Section 6(b) and the prohibition against withdrawal in Section 5(a) will not apply to such assets. This paragraph limits collateral security for only the Obligations and is not intended to limit or affect any security interest, lien or other encumbrance that Northern Trust may have with respect to any assets of the Client securing any other obligations of the Client to Northern Trust. (d) The Client authorizes Northern Trust to enter into an agreement with any affiliate of Northern Trust maintaining a securities account or deposit account for the Client that the affiliate will, without further consent of the Client, comply with any entitlement order with respect to any financial assets in the securities account, or, in the case of a deposit account, any instruction as to the disposition of funds in the deposit account, originated by Northern Trust. Northern Trust will not give any such entitlement order or instruction unless the Client has failed to pay or perform any of the Obligations when due or the Client is subject to a bankruptcy, receivership or other insolvency proceeding or has made an assignment for the benefit of creditors. This paragraph applies only if Northern Trust, the affiliate and Client have not entered into a separate agreement perfecting Northern Trust’s security interest in the securities account or deposit account and the Collateral relating thereto by “control” under Sections 8-106(d)(2) and 9-106 or, in the case of a deposit account, under Section 9-104(a)(2) of the UCC or having similar effect under the law of the jurisdiction in which the securities account or deposit account is maintained. 4. Subrogation and Netting Rights. (a) Upon any payment or performance by Northern Trust under the Guaranty, Northern Trust shall succeed by subrogation to all of the rights of FICC as against the Client to the extent of the payment or performance. The right of subrogation is in addition to and not in derogation of all other rights and remedies of Northern Trust under or in respect of this Agreement. 4 NTAC:3NS-20 (b) If at any time there are any Obligations due and owing by the Client to Northern Trust, including after giving effect to Northern Trust’s subrogation, and Northern Trust owes any obligations to the Client in respect of the Transactions, the amounts and values owed by the Client and Northern Trust will, through setoff, recoupment or the exercise of secured party remedies, be netted to determine a single amount or value owed by the one to the other. (c) The Agreement constitutes (i) a “master netting agreement” as defined in 11 U.S.C. § 101(38A), a “master agreement” as referred to 12 U.S.C. § 1821(e)(8)(D) and 12 U.S.C. § 5390(c)(8)(D), and a “netting contract” as defined in 12 U.S.C. § 4402(14) and (ii) a “security agreement or arrangement or other credit enhancement” under such sections. 5. Processing Agent for Transactions, Etc. (a) The Client will execute all Transactions with FICC in accordance with the Rules through Northern Trust as processing agent for the Client. (b) For purposes of settling any Transaction, Northern Trust may at any time and from time to time, in its sole and absolute discretion, elect to (i) deliver to FICC, on behalf of the Client, any funds or securities owed by the Client to FICC, whether or not the Client has in deposit accounts or securities accounts sufficient funds or securities to settle the Transaction, or (ii) before payment or delivery of any funds or securities by FICC for the benefit of the Client under the Transaction, credit the funds or securities for the benefit of the Client. For any advance of funds or securities made by Northern Trust under this subsection, Northern Trust will be entitled to reimbursement by the Client pursuant to Section 2. 6. Representations, Warranties and Covenants of the Client. The Client represents, warrants and acknowledges to and covenants with Northern Trust as follows: (a) The Client is duly authorized to execute and deliver this Agreement and the other Transaction Documents, to enter into the Transactions and to perform its obligations hereunder and thereunder and has taken all necessary action to authorize such execution, delivery and performance, and the execution, delivery and performance of this Agreement, the other Transaction Documents, and the Transactions will not violate any law, ordinance, charter, by-law or rule applicable to it or any agreement by which it is bound or by which any of its assets are affected. (b) The Client is the securities account entitlement holder or, as the case may be, deposit account customer of the Collateral free and clear of all security interests, liens and encumbrances. The Client will defend the Collateral against the claims and demands of all persons other than Northern Trust. The Client will not pledge, mortgage or create or suffer to exist a lien, security interest or other encumbrance in or on the Collateral in favor of any person other than Northern Trust. (c) For each securities account maintained for the Client with Northern Trust with respect to any Collateral, Northern Trust is acting as the Client’s securities intermediary and, accordingly, Northern Trust has control of the securities entitlements in the securities account by reason of Sections 8-106(e) and 9-106 of the UCC. For each deposit account maintained with Northern Trust with respect to any Collateral, Northern Trust is acting as the Client’s bank and, 5 NTAC:3NS-20 accordingly, Northern Trust has control of the funds in the deposit account by reason of Section 9-104(a)(1) of the UCC. (d) For each securities account or deposit account maintained for the Client with an affiliate of Northern Trust with respect to any Collateral, when any “control” agreement referred to in Section 3(d) has been entered into by the affiliate with Northern Trust or, as the case may be, among Northern Trust, the affiliate and the Client, the affiliate will be acting as (i) the Client’s securities intermediary and, accordingly, Northern Trust will have control of the securities entitlements in the securities account by reason of Sections 8-106(d)(2) and 9-106 of the UCC and (ii) the Client’s bank and, accordingly, Northern Trust will have control of the funds in the deposit account by reason of Section 9-104(a)(2) of the UCC. (e) The Client either (i) is not (A) an “employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is subject to Part 4 of Subtitle B of Title I of ERISA, (B) a “plan” within the meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the “IRC”), to which Section 4975 of the IRC applies, (C) an entity whose underlying assets include “plan assets” subject to Title I of ERISA or Section 4975 of the IRC by reason of Section 3(42) of ERISA, Department of Labor regulation 29 C.F.R. § 2510.3-101 as modified by Section 3(42) of ERISA, or otherwise (any of the foregoing (A) through (C), a “Plan”), or (D) a plan subject to any restriction under a law that is materially similar to Section 406 of ERISA or Section 4975 of the IRC (a “Similar Law Plan”); (ii) is a Plan, in which case: (A) The person acting on behalf of the Client in entering into this Agreement and the other Transaction Documents (the “Agent”) (I) is an investment manager (as defined in Section 3(38) of ERISA) with respect to the Client’s assets that are involved in any Transaction, (II) is a fiduciary (as defined in Section 3(21)(A)(i) of ERISA and Section 4975(e)(3)(A) of the IRC) with respect to the Client’s assets that are involved in any Transaction, and (III) has full and exclusive power and authority to act on behalf of Client in connection with the negotiation, execution and delivery of this Agreement and the other Transaction Documents; (B) The Agent (I) is a “qualified professional asset manager” within the meaning of Part VI(a) of U.S. Department of Labor Prohibited Transaction Class Exemption 84-14, as amended the (“QPAM Exemption”), with respect to the Client, and (B) has negotiated and made the decision to enter into and approve this Agreement, the other Transaction Documents, and each Transaction on behalf of the Client; 6 NTAC:3NS-20 (C) With respect to this Agreement, the other Transaction Documents and each Transaction, either (I) the requirements and conditions of Part I “General Exemption” of the QPAM Exemption have been met; (II) the requirements and conditions of the exemption provided by Section 408(b)(17) of ERISA and Section 4975(d)(20) of the IRC have been met, including that the Agent has made a good faith determination for each Transaction that Counterparty is receiving no less, nor paying no more, than “adequate consideration” within the meaning of such exemption, or (III) the conditions of another applicable exemption from the prohibitions of Section 406(a)(1)(A)-(D) of ERISA and Section 4975(c)(1)(A)-(D) of the IRC have been met; (D) The Client and Northern Trust each acknowledges and agrees continually throughout the term of this Agreement, and reiterates the same on each date any Transaction remains outstanding, that any Collateral held pursuant to the terms hereof shall not be treated as “plan assets” for purposes of ERISA or Section 4975 of the IRC; (E) Neither Northern Trust nor any affiliate thereof has or exercises any discretionary authority or control with respect to the investment of the Client’s assets involved under this Agreement, the other Transaction Documents or any Transaction thereunder or renders investment advice (within the meaning of Section 3(21)(A)(ii) of ERISA or Section 4975(e)(3)(B) of the IRC) with respect to such assets; (F) The Agent possesses the appropriate experience and expertise to prudently negotiate and decide whether to enter into the types of Transactions described under this Agreement and the other Transaction Documents on behalf of the Client, and is unaffiliated with and independent of Northern Trust; (G) The execution, delivery and performance of this Agreement and the other Transaction Documents do not violate the constituent documents of the Client, including, without limitation, any applicable investment guidelines or restrictions; and (H) Neither the Agent nor the Client has relied or will rely on any recommendation or advice provided by or on behalf of Northern Trust or any affiliate thereof as a primary basis for any investment decision with respect to this Agreement, the other Transaction Documents, or any Transaction (and there is no agreement, arrangement or understanding to the contrary), and neither Northern Trust nor any affiliate thereof otherwise is a “fiduciary” with respect to the investment of the assets of the Client involved in any such Transaction within the meaning of Section 3(21)(A) of ERISA (including, without limitation, by virtue of Northern Trust’s reservation or exercise of any rights Northern Trust may have in connection with this Agreement or any of the other Transaction Documents); or 7 NTAC:3NS-20 (iii) Is a Similar Law Plan, in which case the execution, delivery and performance of this Agreement, the other Transaction Documents and each Transaction do not contravene any law that is materially similar to Section 406 of ERISA or Section 4975 of the IRC. (f) The Client will notify Northern Trust, in writing, reasonably in advance, if any of the foregoing representations becomes untrue, in whole or part, or any of the foregoing warranties or covenants is breached in any way (or, if unaware of any such occurrence beforehand, immediately upon awareness). 7. Default and Remedies. (a) If the Client fails to pay or perform any of the Obligations, the failure will constitute an “Event of Default” under and as defined in the Master Repurchase Agreement and a default under this Agreement. Following the default, Northern Trust shall have in any jurisdiction where enforcement under the Master Repurchase Agreement or this Agreement is sought, in addition to all other rights and remedies, the rights and remedies under the Master Repurchase Agreement and of a secured party under the UCC including the right to sell or otherwise dispose of, realize upon, set off or apply the Collateral to satisfy Obligations. (b) Without prejudice to Section 7(a), (i) if the Client fails timely to deliver cash or securities to Northern Trust or fails to pay to Northern Trust the amount of any Obligations when due, Northern Trust may cancel the novation of any Transaction and may submit to FICC on behalf of the Client any instructions that Northern Trust considers necessary or advisable to effect the cancellation, and (ii) if the failure to reimburse occurs on any day that Northern Trust has entered into a Transaction to be novated to FICC and in which the Client is the seller of securities, Northern Trust may (A) terminate the Transaction (the “Original Transaction”), (B) enter into a replacement Transaction on the same terms as the Original Transaction but with the purchase price being increased by any unreimbursed amount owing to Northern Trust, and (C) submit the replacement Transaction to FICC for novation instead of the Original Transaction. 8. Expenses. The Client will pay all expenses (including reasonable fees and disbursements of counsel) paid or incurred by Northern Trust in connection with the enforcement of the Obligations or the preservation of Northern Trust’s rights in respect of the Obligations or under this Agreement or any other Transaction Document, or in connection with any bankruptcy, reorganization, insolvency or similar proceeding to which the Client is subject. 9. Interest. Any amounts owing to Northern Trust under this Agreement will bear interest, payable on demand, at a rate per annum equal to the Prime Rate, as published in The Wall Street Journal, in effect from time to time or such other rate as agreed between Northern Trust and the Client. Interest will accrue on reimbursement obligations commencing on the date that Northern Trust makes any payment under the Guaranty or any other Transaction Document or otherwise on behalf of the Client with respect to any of the Transactions until such amount is paid in full in cash. Interest on the same terms will likewise be payable on the value of any securities delivered by Northern Trust under the Guaranty, under any other Transaction Document or otherwise on behalf of the Client with respect to the Transactions until the securities are delivered by the Client to Northern Trust or their value is paid in full in cash to Northern Trust. 8 NTAC:3NS-20 10. Waivers, Etc. Northern Trust may exercise its rights with respect to the Collateral without resorting or regard to other collateral or sources of repayment or reimbursement. Northern Trust shall not have waived any of its rights in respect of the Obligations or the Collateral unless the waiver is in writing and signed by the Northern Trust. No delay or omission on the part of Northern Trust in exercising any right shall operate as a waiver of such right or any other right. A waiver on any one occasion shall not be construed as a bar to or waiver of any right on any future occasion. All rights and remedies of Northern Trust with respect to the Obligations or the Collateral, whether evidenced hereby or by any instrument or papers, shall be cumulative and may be exercised separately or concurrently. 11. Non-Recourse to Trustees. Any liability under this Agreement of a Client that is a Massachusetts business shall be discharged only out of the assets of the Client, and no shareholder, officer, director or trustee of the Client shall be liable with respect thereto. 12. Investment Adviser. The following provisions apply if an investment adviser (the "Adviser") is executing this Agreement: (a) The Adviser hereby represents and warrants to Northern Trust that (i) the Adviser is executing this Agreement in its capacity as the investment adviser to each Client on behalf of the Client pursuant to the terms of an investment advisory agreement between the Adviser and the Client, (ii) the Client has the power to authorize the Adviser to enter into this Agreement and to perform the Client’s obligations under this Agreement, (iii) the Client has taken all necessary action to authorize the execution and delivery of, and the performance of the Client’s obligations under, this Agreement by the Adviser, and (iv) the Client has duly authorized the Adviser to execute, deliver, and perform the Client’s obligations under this Agreement on behalf of the Client. (b) The Adviser will identify, on the date and at the time at which it agrees to take any action hereunder, the Client for which it is acting in connection with the action. Any and all communications or actions taken by the Adviser either identifying the Client or otherwise using any credentials that Northern Trust assigns to the Client, are actions taken by the Adviser on behalf of the Client. (c) This Agreement is an agreement entered into between Northern Trust and each Client that is a party hereto. The rights and obligations set forth in this Agreement shall accrue to, and burden, each Client severally and not jointly as to all Clients. 13. Governing Law. This Agreement and all rights and obligations hereunder shall be construed in accordance with, and governed by, the laws of the State of [Illinois] without regard to any conflict-of-laws rules that would require the application of the laws of any other jurisdiction. 14. WAIVER OF JURY TRIAL. THE CLIENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM OR COUNTERCLAIM UNDER OR IN RESPECT OF THIS AGREEMENT OR ITS ENFORCEMENT, AND AGREES THAT IT WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. 9 NTAC:3NS-20 15. Additional Agreements required by Arizona Revised Statutes. (a) All parties acknowledge that this Agreement is subject to cancellation by the Sponsored Member pursuant to the provision of Section 38-511, Arizona Revised Statutes (“A.R.S.”). (b) Pursuant to A.R.S. § 35-393.01, if Northern Trust engages in for-profit activity and has 10 or more employees, and if this Agreement has a value of $100,000 or more, Northern Trust certifies it is not currently engaged in, and agrees for the duration of this Agreement to not engage in, a boycott of goods or services from Israel. This certification does not apply to a boycott prohibited by 50 U.S.C. § 4842 or a regulation issued pursuant to 50 U.S.C. § 4842. (c) Pursuant to A.R.S. § 35-394, Northern Trust certifies that, (i) with respect to its services and activities in the U.S., it does not currently, and agrees for the duration of the agreement that it will not, use (1) the forced labor of ethnic Uyghurs in the People's Republic of China, (2) any goods or services produced by the forced labor of ethnic Uyghurs in the People's Republic of China, or (3) any contractors, subcontractors or suppliers that use the forced labor or any goods or services produced by the forced labor of ethnic Uyghurs in the People's Republic of China; (ii) with respect to its services and activities outside of the U.S., to its knowledge, it does not currently, and agrees for the duration of this Agreement that it will exercise reasonable care and diligence to prohibit the use of (1) forced labor of ethnic Uyghurs in the People's Republic of China, (2) any goods or services produced by the forced labor of ethnic Uyghurs in the People's Republic of China, or (3) any contractors, subcontractors or suppliers that use the forced labor or any goods or services produced by the forced labor of ethnic Uyghurs in the People's Republic of China. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 10 NTAC:3NS-20 IN WITNESS WHEREOF, the Client and Northern Trust have executed this Reimbursement and Security Agreement as of the date first set forth above. MARICOPA COUNTY, SPONSORED MEMBER By:_________________________________ Name: Clint Hickman Title: Chairman, Board of Supervisors ATTEST ___________________________ Juanita Garza Date___________________ Clerk of the Board of Supervisors LEGAL REVIEW Approved as to form and within the powers and authority granted under the laws of the State of Arizona to Maricopa County ___________________________ Deputy County Attorney Date___________________ THE NORTHERN TRUST COMPANY By:_____________________________________ Name:___Ryan Barrett_____________________ Title:____Senior Vice President______________