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GUARANTY AGREEMENT '. 1 I GUARANTY AGREEMENT THIS GUARANTY AGREEMENT, dated as of the 18th day of May, 2001, is by and between the City ofClearwater, Florida, a municipal corporation duly organized and existing under the laws of the State of Florida (herein called "City"), PACT, Inc., a corporation not-for-profit organized and existing under the laws of the State of Florida (herein called "PACT") and Bank of America, N.A., its successors and assigns as lender and holder of the Bonds issued under the documents described in the Commitment Letter attached hereto as Exhibit A (the "Fi~ancing Documents") (the "Lender"). WIT N E SSE T H: WHEREAS, arrangements have been made for the issuance and sale, pursuant to the aforesaid Financing Documents, by the Pinellas County Industrial Development Authority on behalf of PACT, of Bonds in the aggregate principal amount of not exceeding $5,000,000 (herein called the "Bonds"); and WHEREAS, the proceeds of the sale of the Bonds will be used by PACT to (i) retire the outstanding indebtedness of P ACT undertaken by PACT on behalf of the City to finance various improvements to a performing arts facility located within the corporate municipal boundaries ofthe City known as Ruth Eckerd Hall (the "Facility"), and (ii) pay the costs of constructing and equipping additions to the Facility (collectively, the "Project"), which Facility will be made available through PACT to itself and other community groups from time to time by the City under a Facility Use Agreement (herein called the "Use Agreement") as part of the City's public recreation program; and WHEREAS, the City acknowledges PACT's undertaking to borrow such funds and apply the proceeds for the purpose described above and, in order to support PACT and to provide an inducement to the Lender to buy the Bonds and for all who shall at any time become holders thereof, the City is willing to enter into this Guaranty Agreement; WHEREAS, the City previously executed a Guaranty Agreement dated as of June 1, 1981 which has been cancelled as of the execution hereof and the closing of the Refinancing; NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the City, PACT and the Lender do hereby covenant and agree with each other as follows: ARTICLE I REPRESENTATIONS OF THE CITY Section 1.1 The City hereby represents and warrants that it is a municipal corporation duly organized and existing under the laws of the State of Florida, has full power and authority to enter into and perform this Guaranty Agreement and has duly authorized this Guaranty Agreement by proper official action. /"',.7 ",' .' ~: / \ JI )/' , ,i l ! I I ARTICLE II COVENANTS AND AGREEMENTS Section 2.1 Subject to the provisions hereof, the City hereby unconditionally and irrevocably guarantees to the Lender the full and prompt payment of the principal of, premium, if any, and interest on the Bonds when and as the same shall become due, whether at the stated maturity thereof, by acceleration or other mandatory redemption of the Bonds when and as the same shall become due, up to the aggregate sum of One Million Dollars ($1,000,000.00), subject to restoration as hereinafter provided in this Section 2.1 (herein, the "Guarantee Amount"). The City further agrees, in the event of any failure of PACT to make such payments of principal of, premium, if any or interest on the Bonds when due, to make such payments to the Lender, provided however, that in all events such payment or payments by the City, together with all other amounts which the City may be obligated to make under this Guaranty Agreement, shall not exceed the Guarantee Amount. The Guarantee Amount shall be subject to automatic reinstatement following any payment by the City hereunder in the event and to the extent that PACT reimburses the City for any amounts paid under this Guaranty Agreement. If, after the City shall have made any payments to the Lender hereunder, PACT shall reimburse all or any part of such payment amounts to the City, the Guarantee Amount shall be restored by the amount of such payment, and the City shall notify Lender of such restoration. All payments by the City under this Guaranty Agreement shall be made in lawful money of the United States of America. Section 2.2 The obligations of the City hereunder are payable solely from funds derived by the City from sources other than ad valorem taxation and legally available for such purpose which are on deposit from time to time in the general fund of the City (hereinafter called "Non-Ad Valorem Funds"). The City hereby reserves the right to hereafter from time to time pledge and encumber by lien all or any part of such funds for the payment of obligations of the City, prior and superior to its agreement to pay under this agreement. The obligation of the City hereunder does not constitute a general indebtedness of the City or a pledge of the City's full faith or credit within the meaning of any constitutional or statutory provision or limitation. The ad valorem taxing power of the City is not pledged hereunder and neither the Lender, PACT, shall ever have the right to compel the exercise of the ad valorem taxing power of the City for performance of the City's obligations hereunder. Section 2.3 Pursuant to due notice from the Lender, the City will set up and appropriate in the annual budget of the City for expenditure in each of the years during which the Bonds will be outstanding and unpaid, from the Non-Ad Valorem Funds of the City, sufficient amounts of such Non-Ad Valorem Funds of the City to make the payments guaranteed hereunder. Such covenant and agreement on the part of the City to budget and appropriate such amounts of Non-Ad Valorem Funds shall be cumulative, and shall continue until such Non-Ad Valorem Funds in amounts sufficient to make all required payments due under Section 2.1 hereof shall have been budgeted, appropriated and actually paid to the Lender. 2 I I Section 2.4 The City covenants and agrees to take all action and pursue all such legal remedies which may be available to it to ensure that sufficient Non-Ad Valorem Funds will be available to fulfill the City's agreements hereunder. Section 2.5 The obligation of the City under this Agreement shall be absolute and unconditional and shall remain in full force and effect until all Bonds are no longer outstanding or the maximum amount the City is obligated to pay has been paid under Section 2.1 hereof. Except as so provided, such obligation shall not be affected, modified or impaired upon the happening from time to time of any event, including without limitation any of the following, whether or not such event shall occur with notice to, or the consent of, the City: (a) the failure to give notice to the City of the occurrence of a default under this Guaranty Agreement or an event of default under the terms and provisions of the Financing Documents; (b) the transfer, assignment or mortgaging or the purported transfer, assignment or mortgaging of all or any part of the interest ofP ACT or the City in the Project or any failure of title with respect to PACT's or the City's interest in the Project; (c) the waiver, surrender, compromise, settlement, release or termination of PACT's obligations, covenants or agreements contained in the Use Agreement; (d) the waiver, surrender, compromise, settlement, release or termination of any of the obligations, covenants or agreements of the City under the Use Agreement; ( e) the extension of the time for payment of any principal of, premium, if any, or interest owing or payable on any Bond or of the time for performance of any obligation, covenant or agreement under or arising out of the Use Agreement or the Financing Documents or any extension or renewal of either thereof; (f) the modification or amendment (whether material or otherwise) of any obligation, covenant or agreement set forth in the Use Agreement, the Bonds or the Financing Documents; (g) the taking or the omission of any action referred to in the Use Agreement or the Financing Documents or of any action under this Guaranty Agreement; (h) any failure, omission, delay or lack of diligence on the part of PACT or the Lender in the enforcement, assertion or exercise of any right, power or Lender conferred on PACT or the Lender under the Use Agreement or the Financing Documents, or conferred on the Lender in this Guaranty Agreement, or the inability of P ACT or the Lender to enforce any provision of the use Agreement or the Financing Documents or this Guaranty Agreement for any other reason, or any other act or omission on the part of PACT, or the Lender. (i) the dissolution, sale or other disposition of all or substantially all the assets, liquidation, the marshaling of assets and liabilities, receivership, insolvency, assignment for the 3 ) I benefit of creditors, bankruptcy, reorganization, arrangement, adjustment composition or other similar proceedings affecting PACT or the City under the Use Agreement or the Financing Documents or any of the assets of either of them, or any allegation or contest of the validity of this Guaranty Agreement or the Use Agreement; (j) to the extent permitted by law, any event or action that would, in the absence of this clause, result in the release or discharge by operation of law of the City from the performance or observance of any obligation, covenant or agreement contained in this Guaranty Agreement. Section 2.6 Whenever the Lender shall declare an event of default under the Financing Documents, the Lender shall give notice to the City of any anticipated deficiency in payments maturing principal of and premium, if any, and interest on the Bonds, such notice to be given not later than thirty days prior to the due date hereunder, and the City agrees to fulfill its obligations under this Article II with respect to such deficiency by payment of the sum required when due. Section 2.7 PACT agrees that all of the covenants and agreements made by it in the Financing Documents for the benefit of the holders of the Bonds shall also be incorporated herein by reference and are made for the benefit of the City, and the City shall have the right to enforce such covenants and agreements in the same manner as the Lender may so enforce them under the Financing Documents. However, no default by PACT hereunder shall be available to the City as a set-off, counterclaim, reduction or diminution of the City's obligations to the Lender hereunder, or available as a defense of any kind or nature to the City against the Lender. Section 2.8 Whenever the City shall have made any payments to the Lender hereunder, the City shall become subrogated to the rights of a holder ofthe Bonds under the Financing Documents to the extent of such payments, and PACT agrees to perform and carry out for the benefit of the City all of its obligations and duties to the Lender under the Financing Documents. ARTICLE III DEFAULT AND REMEDIES Section 3.1 The Lender shall have the right, power and authority to do all things it deems necessary or advisable to enforce the provisions of this Guaranty Agreement and protect the interest [of the Lender] and, in the event ofa default in payment of the principal of or premium, if any, on any Bond when and as the same shall become due, whether at the stated maturity thereof, by acceleration, call for redemption or otherwise, or in the event of a default in the payment of any interest on any Bond when and as the same shall become due, the Lender may institute or appear in such appropriate judicial proceedings as the Lender shall deem most effectual to protect and enforce any of its rights whether for the specific enforcement of any covenant or agreement in this Guaranty Agreement or in aid of the exercise of any power granted herein, or to enforce nay other proper remedy. Without limiting the generality of the foregoing, in the event ofa default in payment of the principal of, premium, ifany, or interest on any Bond when due, the Lender may institute ajudicial 4 I I proceeding for the collection ofthe sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the City. Section 3.2 No remedy conferred upon or reserved to the Lender herein is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Guaranty Agreement or now or hereafter existing at law or in equity. Section 3.3 Each and every event of default under the Financing Documents shall give rise to a separate cause of action hereunder, and separate suits may be brought hereunder as each cause of action arises. In the event of such a default, the Lender shall proceed first and directly against PAC Foundation, Inc. (the "Foundation") under its guaranty and thereafter upon proceeding against the Foundation and exhausting any remedies which it may have against the Foundation, then the Lender shall draw upon this Guaranty Agreement. Section 3.4. The non-prevailing party agrees to pay all costs, expenses and fees, including all reasonable attorneys' fees, which may be incurred by the prevailing party in enforcing or attempting to enforce this Guaranty Agreement or protecting the rights of the Lender or the City, if any, hereunder following any default hereunder, whether the same shall be enforced by suit or otherwise. Should the City be the non-prevailing party, the amount of any payment due hereunder shall not be in excess of the Guarantee Amount. Section 3.5 No delay or omission to exercise any right or power accruing upon any default, omission or failure of performance hereunder shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. ARTICLE IV GENERAL Section 4.1 The obligations ofthe City under this Guaranty Agreement shall arise absolutely and unconditionally upon the issue, sale and delivery ofthe Bonds or any installment thereof. This Guaranty Agreement is executed subsequent to the execution of the Use Agreement and is separate and independent of the Use Agreement. Any modification, limitation or discharge of the City's liability under the Use Agreement arising out of or by virtue of any bankruptcy, arrangement, reorganization or similar proceeding shall not modify, limit, discharge or otherwise affect the liability of the City under this Guaranty Agreement in any manner whatsoever. Section 4.2 All moneys recovered by the Lender pursuant to this Guaranty Agreement (other than those provided for in Section 3.4 hereof) shall be applied solely to the payment ofthe principal of, premium, if any, and interest on, the Bonds in accordance with the Financing Documents. This Guaranty Agreement is entered into by the City for the benefit of the Lender may be enforced by or on Lender only by the Lender in accordance with the provisions of this Guaranty Agreement. 5 I I This Guaranty Agreement shall not be deemed to create any right in, or to be in whole or in part for the benefit of any person other than, the Lender, the City, PACT, and their permitted successors and assIgns. Section 4.3 This Guaranty Agreement (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof; (b) may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument; (c) may be modified only by an instrument in writing signed by the duly authorized representatives of the parties and only ifthe modification is made for the same purposes and in accordance with the same requirements as apply for the entering into of amendments to the Financing Documents; and (d) shall be governed in all respects, including validity, interpretation and effect, by, and shall be enforceable in accordance with, the laws of the State of Florida. If any provision of this Guaranty Agreement shall be held to be invalid by any court of competent jurisdiction, the invalidity of such provision shall not affect any of the remaining provisions. Section 4.4 This Section 4.4 concerns the resolution of any controversies or claims between the City and the Lender, whether arising in contract, tort or by statute, that arise out of or relate to this Guaranty (a "Claim"). At the request ofthe City or the Lender, any Claim shall be resolved by binding arbitration in accordance with the Federal Arbitration Act (Title 9, U. S. Code) (the "Act"). The Act will apply even though this Guaranty provides that it is governed by the law of a specified state. Arbitration proceedings will be determined in accordance with the Act, the rules and procedures for the arbitration of financial services disputes of l.AM.S./Endispute or any successor thereof ("l.AM.S."), and the terms of this paragraph. In the event of any inconsistency, the terms of this Section shall control. The arbitration shall be administered by lAM.s. and conducted in Pinellas County, Florida. All Claims shall be determined by one arbitrator; however, if Claims exceed $5,000,000, upon the request of any party, the Claims shall be decided by three arbitrators; provided however, the Lender acknowledges that no claim against the City shall exceed the Guarantee Amount. All arbitration hearings shall commence within 90 days of the demand for arbitration and close within 90 days of commencement and the award of the arbitrator(s) shall be issued within 30 days ofthe close of the hearing. However, the arbitrator(s), upon a showing of good cause, may extend the commencement of the hearing for up to an additional 60 days. The arbitrator(s) shall provide a concise written statement of reasons for the award. The arbitration award may be submitted to any court having jurisdiction to be confirmed and enforced. The arbitrator(s) will have the authority to decide whether any Claim is barred by the statute of limitations and, if so, to dismiss the arbitration on that basis. For purposes of the application of the statute of limitations, the service on l.AM.S. under applicable l.AM.S. rules of a notice of Claim is the equivalent of the filing ofa lawsuit. Any dispute concerning this arbitration provision 6 I I or whether a Claim is arbitrable shall be determined by the arbitrator(s). The arbitrator(s) shall have the power to award legal fees pursuant to the terms of this Guaranty. This paragraph does not limit the right of the City or the Lender to: (i) exercise self-help remedies, such as but not limited to, setoff; (ii) initiate judicial or nonjudicial foreclosure against any real or personal property collateral; (iii) exercise any judicial or power of sale rights, or (iv) act in a court of law to obtain an interim remedy, such as but not limited to, injunctive relief, writ of possession or appointment ofa receiver, or additional or supplementary remedies. By agreeing to binding arbitration, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of any Claim. Furthermore, without intending in any way to limit this Continuing and Unconditional Guaranty to arbitrate, to the extent any Claim is not arbitrated, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of such Claim. This provision is a material inducement for the parties entering into this Guaranty. No provision in this Guaranty regarding submission to jurisdiction and/or venue in any court is intended or shall be construed to be in derogation of the provisions of this Guaranty for arbitration of any controversy or claim. IN WITNESS WHEREOF, the parties hereto have caused this Guaranty Agreement to be executed in their names and behalf and their corporate seals to be affixed hereto and attested by their duly authorized officers, as of the date first above written. By: EARWATER, FLORIDA .~Jf Approved as to form and correctness: C{1fJ City Attorney Attest: By: ~G)l.~ [Signatures continued on next page] 7 " ~ ~ . .. (CORPORATE SEAL) (SEAL) J:\Bonds\4363\guarag3. wpd I I PACT, INC. By: IA-t...t........-J. 1\ , fl-l.,~.,c President and CEO Attest: By: ~d-4~ ~ General Manager and CFO Accepted this 18th day of May, 2001. BANK OF AMERICA, N.A., Lender f~cfJ>, f2J/.A-J Senior Vice President By: [Signature page to Guaranty Agreement] 8