Res 2005-127 - Laserfiche WebLink

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ARTICLE XIII SECURITY FOR PERFORMANCE SECTION 13.1. LETTER OF CREDIT. (A) Terms and Purpose. On or before the Commencement Date, the Authority shall provide security for the performance of its obligations hereunder through an irrevocable direct pay letter of credit (the "Letter of Credit") issued by a commercial bank, whose long term debt is rated "A" or better by either Rating Service, that is organized and existing under the laws of the United States which has a branch in Texas and which is subject to federal or Texas banking regulatory jurisdiction. The commercial bank selected by the Authority to issue the Letter of Credit shall be subject to the approval of the City, which shall not unreasonably be withheld or delayed. The Letter of Credit shall be in the stated amount of the annual Service Fee (adjusted each Contract Year by the Service Fee Adjustment Factor, rounded upward to the nearest $100), except as provided in the following sentence, shall be for a term of one year, shall be continuously renewed, extended or repIaced so that it remains in effect until 180 days after the Termination Date, and shall be issued substantially in the form set forth in the Transaction Forms. The Letter of Credit in the amount of the annual Service Fee (as adjusted each Contract Year by the Service Fee Adjustment Factor) shall, upon each renewal, extension or replacement thereof, be reduced from the required stated amount applicable for that Contract Year by the aggregate amount of all amounts drawn on all previous Letters of Credit provided under this subsection. The Letter of Credit shall serve as security for the performance of the Authority's obligations hereunder, and the stated amount thereof shall in no way limit the amount of damages to which the City may be entitled for any Authority Event of Default hereunder. (B) Drawings for Non-Renewal or Bankruptcv. The Letter of Credit shall authorize the City to draw the full stated amount thereof (1) in the event that any required renewal, extension or replacement thereof is not made earlier than the date which is 30 days prior to its expiration date, or (2) upon certain events of bankruptcy or insolvency of the Authority described in the drawing certificate attached thereto. The proceeds of any such drawings shall be held by the City as cash collateral to secure the performance of the Contract Services and, in the event of a material breach of this Service Contract following any such drawing, may be retained by the City in payment of actual damages resulting therefrom. (C) Drawings for Material Breach. The Letter of Credit also shall authorize the City to draw an amount representing the estimated damages suffered by the City in the event of a material breach of this Service Contract by the Authority. It shall be a condition to the right of the City to draw on the Letter of Credit for a material breach that: (1) the City Manager has given the Authority written notice of a material breach of this Service Contract, whether or not such breach constitutes an Event of Default, and attached a copy of his or her 85