2007-R-10RESOLUTION NO.2007-R-10
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF EDGEWATER, FLORIDA, AUTHORIZING THE
ISSUANCE OF THAT CERTAIN REVENUE NOTE, SERIES
2007 OF THE CITY IN THE PRINCIPAL AMOUNT OF
NOT TO EXCEED $1,500,000, TO FINANCE THE COST OF
CERTAIN COUNCIL APPROVED EXPENDITURES;
AUTHORIZING THE SALE OF THE NOTE TO BANK OF
AMERICA, N.A.; PROVIDING THAT THE NOTE SHALL
BE A LIMITED OBLIGATION OF THE CITY PAYABLE
FROM NON -AD VALOREM REVENUES BUDGETED AND
APPROPRIATED AS PROVIDED HEREIN; PROVIDING
FOR THE RIGHTS, SECURITY AND REMEDIES FOR THE
OWNER OF THE NOTE; DESIGNATING THE NOTE AS A
QUALIFIED TAX-EXEMPT OBLIGATION WITHIN THE
MEANING OF THE INTERNAL REVENUE CODE;
MAKING CERTAIN COVENANTS AND AGREEMENTS IN
CONNECTION THEREWITH; AND PROVIDING FOR AN
EFFECTIVE DATE.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EDGEWATER,
FLORIDA, THAT:
SECTION 1. AUTHORITY FOR THIS RESOLUTION. This resolution is adopted
pursuant to the provisions of the Act (defined below).
SECTION 2. DEFINITIONS. The following terms shall have the following meanings
herein, unless otherwise expressly set forth herein:
A. "Act' means Article VIII, Section 2 of the Florida Constitution, Chapter 166,
Florida Statutes, the Charter of the City of Edgewater, Florida, other applicable provisions of law
and this Resolution.
B. "Authorized Expenditures" means unexpected capital and emergency
expenditures and other expenditures serving a public purpose that are permitted under the Act
and the Code and that are authorized by the Council and approved by Bond Counsel.
C. `Bank" means Bank of America, N.A.
D. "Bond Counsel' means an attorney or firm of attorneys which is of nationally
recognized standing in the field of law relating to municipal bonds and the exclusion from gross
income for federal income tax purposes of interest on municipal bonds.
E. "City Attorney" means the City Attorney or assistant City Attorney of the Issuer.
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F. "City Manager" means the City Manager or assistant, deputy, interim or acting
City Manager of the Issuer.
G. "Clerk" means the City Clerk or assistant or deputy City Clerk of the Issuer, or
such other person as may be duly authorized by the Council to act on his or her behalf.
H. "Code" means the Internal Revenue Code of 1986, as amended, and any rules or
regulations promulgated thereunder.
I. "Council" means the City Council of the Issuer.
J. "Default Rate" shall have the meaning set forth in Section 61 of this Resolution.
K. "Draw on the Line of Credit' shall mean a written request for a disbursement of
available amounts under the Note, signed by an authorized officer of the Issuer and substantially
in the form attached hereto as Exhibit D, satisfactorily completed pursuant to the terms of the
Note and approved by Bond Counsel.
L. "Event of Default' means the occurrence of one or more of the following
(i) failure by the Issuer to pay, when due, any principal, interest or other
amount due under the Note, this Resolution or any other obligation now existing of
hereafter arising, between the Issuer and the Bank after the expiration of any applicable
cure period;
(ii) the occurrence of any default under the Note, this Resolution or any other
document executed in connection with the Note and this Resolution;
(iii) the failure by the Issuer to comply with any agreement, term, covenant or
condition of this Resolution, the Note or any other document executed in connection
herewith;
(iv) if any representation or warranty made by the Issuer in this Resolution, the
Note or any other document executed in connection herewith is false or misleading in any
material respect on the date made or at any time thereafter;
(v) the liquidation or dissolution of the Issuer, the voluntary or involuntary
filing or commencement of a petition or case seeking reorganization, arrangement, or
readjustment of Issuer's debts or any other relief under bankruptcy or similar laws, the
voluntary or involuntary application or appointment of a receiver or Issuer or its
property;
(vi) the Bank reasonably determines that a material adverse change has
occurred in the financial condition of the Issuer; or
(vii) any security interest or other lien intended to secure the indebtedness
created pursuant hereto shall be or become invalid and unenforceable.
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M. "Finance Director" means the Finance Director of the Issuer, or such other
person as may be duly authorized by the City Manager to act on his or her behalf.
N. "Fiscal Year" means the fiscal year of the Issuer ending on each September 30.
O. "Holder" or "Owner" means the Person in whose name or names the Note shall
be registered on the books of the Issuer kept for that purpose in accordance with the provisions
of this Resolution. The Bank shall be the initial Holder.
P. "Interest Rate Limit" means the interest rate limit under Section 215.84, Florida
Statutes.
Q. "Issuer" means the City of Edgewater, Florida.
R. "Maturity Date" means [August 1, 2014].
S. "Mayor" means the Mayor of the Issuer, or in his or her absence or inability to
act, the Vice Mayor of the Issuer or such other person as may be duly authorized the Council to
act on his or her behalf.
T. "Non -Ad Valorem Revenues" means all revenues of the Issuer not derived from
ad valorem taxation, and which are lawfully available to be used to pay debt service on the Note.
U. "Note" means the Issuer's Revenue Note, Series 2007, in an amount of not to
exceed $1,500,000 authorized by this Resolution.
V. "Person" means natural persons, firms, trusts, estates, associations, corporations,
partnerships and public bodies.
W. "Paying Agent and Registrar" means such bank or trust company, within or
without the State of Florida, which may be approved by the Council prior to the issuance of the
Note, to be the agent of the Council for payment of the principal of and interest on the Note and
for maintenance of the registration books of the Council with respect to the exchange and
transfer of the Note; or, if no such bank or trust company is appointed, means the Clerk.
X. "Pledged Revenues" means, collectively: (i) all of the proceeds of the Note
pending the application thereof, and (ii) the Non -Ad Valorem Revenues budgeted and
appropriated as provided in this Resolution.
Y. "Purchase Price" means the face amount of the Note.
Z. "Resolution" means this Resolution, pursuant to which the Note is authorized to
be issued, including any supplements to or amendments of this Resolution.
AA. "State" means the State of Florida.
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SECTION 3. FINDINGS. It is hereby found, determined and declared as follows that:
A. It is necessary, desirable and in the best interests of the Issuer and its inhabitants
that the Note be issued to allow the Council flexibility for financing the costs of the Authorized
Expenditures. The Authorized Expenditures are appropriate to the needs and circumstances of,
and shall serve a public purpose by advancing the economic prosperity, the public health, or the
general welfare of the State and its people.
B. The Council deems it necessary, desirable and in the best interest of the Issuer
and its inhabitants that the Pledged Revenues be pledged to the payment of the principal and
interest on the Note. Except as previously disclosed to the purchaser of the Note, no part of the
Pledged Revenues has been or will be pledged or encumbered in any other manner without the
consent of the Owner.
C. The principal of and interest on the Note and all other payments provided for in
this Resolution or the Note will be paid solely from the sources herein provided in accordance
with the terms hereof; and no ad valorem taxing power of the Issuer will ever be exercised nor
will any Holder have the right to compel the exercise of such ad valorem taxing power to pay the
principal of or interest on the Note or to make any other payments provided for in this
Resolution, and the Note shall not constitute a lien upon any property of the Issuer.
D. Prior to adoption of this Resolution, significant changes have occurred in the
municipal bond market regarding interest rates on tax exempt obligations, which are favorable to
the Issuer.
E. Based upon all available information and advice, the Council has determined that
it is in the best interest of the inhabitants of the Issuer to respond to these favorable market
conditions without undue delay.
F. A negotiated sale of the Note will result in the most favorable and flexible
financing plan and is in the best interest of the Issuer.
G. The Bank has, by written proposal, offered to purchase the Note at the Purchase
Price, at the interest rate set forth below, resulting in an average net interest cost rate less than
the Interest Rate Limit. The Council had determined that it is in the best interest of the Issuer to
accept the offer of the Bank to purchase the Note at a private negotiated sale. Prior to the
issuance of the Note, the Issuer shall receive from the Bank a Purchaser's Certificate, the form of
which is attached hereto as Exhibit B and the Disclosure Letter containing the information
required by Section 218.385, Florida Statutes, a form of which is attached hereto as Exhibit C.
Code. H. The Note will not be a "private activity bond" as defined in Section 141 of the
I. The Council has not and does not reasonably expect to issue (including issues "on
behalf of the Issuer, as determined under Section 265(b)(3)(B) of the Code) tax-exempt
obligations in excess of $10,000,000 aggregate face amount during the 2007 calendar year.
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SECTION 4. RESOLUTION TO CONSTITUTE CONTRACT. In consideration of
the acceptance of the Note authorized to be issued hereunder by the Holder, this resolution shall
be deemed to be and shall constitute a contract between the Issuer and such Holder. The
covenants and agreements herein set forth to be performed by the Council and the Issuer shall be
for the benefit, protection and security of the legal Holder.
SECTION 5. AUTHORIZATION OF NOTE. For the purposes set forth herein, the
Council does hereby authorize and approve of the issuance of that certain "City of Edgewater,
Florida Revenue Note, Series 2007" (the "Note") in the principal amount of not to exceed
$1,500,000, in substantially the form of Exhibit A attached hereto, with such changes and
additions as the Mayor shall approve, his signature thereon constituting conclusive evidence of
such approval.
SECTION 6. DESCRIPTION OF NOTE.
A. The Note shall be issued in fully registered form, without coupons, shall be
effective as of the date of the initial Draw on the Line of Credit (the 'Draw Date"), shall be in
the denomination of $1,500,000 and shall bear interest on the outstanding principal balance
thereof at the rate specified below. The Note shall be outstanding in such mode and shall be
payable as to principal and interest as set forth therein, and shall mature on the Maturity Date.
On or after the date of issuance of the Note to [August 1, 2009], the Issuer may make one or
more Draws on the Note in the aggregate amount of $1,500,000, subject to the terms and
provisions for such Draws as set forth in the Note. The Note shall be payable with respect to
both principal and interest in lawful money of the United States of America at such address as
the Holder may from time to time designate.
B. The Note shall initially be issued in the line of credit mode in an amount not to
exceed $1,500,000, and the Issuer shall pay to the Owner interest on amounts outstanding from
the date funds are drawn at a variable interest rate equal to 67% of the 30 day LIBOR plus 75
basis points (0.75%), but in no event shall it exceed the maximum interest rate permitted by
applicable law (the "Variable Rate"). No principal payments shall be required by the Issuer
while the Note is in the line of credit mode. The Variable Rate set forth above shall be re-
adjusted monthly on the first day of each month, by the Owner. The Owner shall notify the
Issuer of the Variable Rate which will be applicable during the next calendar month by sending
written notice to the Finance Director at the beginning of such interest rate period, and shall
identify the beginning date and ending date of such period in the notice. The initial Variable
Rate shall be determined as of the date two Business Days prior to the first Draw Date. Such
interest shall be paid quarterly on the first day of each October, January, April and July,
commencing after the date of the first Draw Date, and thereafter until conversion to the term
loan mode as provided below. Draws under the Note, unless an Event of Default, or event that
with the giving of notice or the passage of time would constitute an Event of Default, then exists,
may be made at any time until conversion to a term loan mode as described below, but no more
than once in any given calendar month and for an amount no less than $50,000 (unless said draw
is made when the amount of the remaining line of credit is less than $50,000, in which case that
draw shall be in the amount of the remaining amount of the line of credit) such draws shall occur
by wire transfer at no cost to the Issuer. The Owner shall fund such draw request within 5 days
of receipt of the request, and each draw shall be noted on the Schedule A attached to the Note.
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C. While the Note is in the line of credit mode, the Issuer shall pay to the Owner a
fee based on the principal amount available under the Note subtracted by the average principal
amount drawn under the Note during the preceding month times 0.20%. Such fee shall be
calculated by the Owner and shall be invoiced to and payable by the Issuer monthly.
D. On any date, the Issuer may elect to convert the Note to a term loan, provided that
on [August 1, 2009], the Note shall convert to a tern loan. Conversion shall not be honored by
the Owner if an Event of Default, or event that with the giving of notice or the passage of time
would constitute an Event of Default, then exists. The interest rate on the Note upon conversion
to a term loan shall be equal to 67% of the 5 year U.S. Dollar Swap Ask plus 65 basis points
(0.65%) and shall be calculated as of the date two Business Days prior to such conversion. The
principal of and interest on this term loan shall be payable quarterly of the first day of each
October, January, April and July, commencing on first day of the next succeeding quarter
following a conversion. Upon conversion to term loan mode, the Owner shall provide an
amortization schedule to the Issuer that, with the approval of the Finance Director, such approval
not to be unreasonably withheld, shall provide substantially level annual debt service payments
until the Maturity Date if such conversion occurs on [August 1, 2009], or for a period of 5 years
if such conversion occurs prior to [August 1, 2009]. Such amortization schedule shall be
attached to the Note as Schedule B.
E. A final payment in the amount of the entire unpaid principal balance, together
with all accrued and unpaid interest hereon, shall be due and payable in full on the Maturity
Date.
F. At least thirty (30) days prior to the optional prepayment date, written notice of
any such prepayment shall be mailed, postage prepaid to the Owner at the address appearing
upon the registration books of the Issuer.
G. While in the line of credit mode, the Issuer may prepay all or any portion of the
Note on any interest payment date without any prepayment fee upon thirty (30) days prior
written notice to the Holder.
H. While in the term loan mode, the Issuer may prepay all or any portion of the Note
at any time upon thirty (30) days prior written notice to the Holder, provided that the Issuer shall
be obligated to pay a "Prepayment Fee" in the event that if the prevailing interest rates for
similar obligations issued by the Issuer at the time of prepayment me lower than the current
interest rate on the Note. For purposes of this subsection, "Prepayment Fee" means a fee equal
to the present value of the difference between: (1) the amount that would have been realized by
the Bank on the prepaid amount for the remaining term of the Note at _% (the Federal Reserve
H.15 Statistical Release rate for fixed-rate payers in interest rate swaps for a term corresponding
to the term of the Note, interpolated to the nearest month, if necessary, that was in effect three
Business Days prior to the date of the first Draw on the Line of Credit); and (2) the amount that
would be realized by the Bank by reinvesting such prepaid funds for the remaining term of the
Note at the Federal Reserve H.15 Statistical Release rate for fixed-rate payers in interest rate
swaps, interpolated to the nearest month, that was in effect three Business Day's prior to the
Note repayment date; with both of the amounts calculated in (1) and (2) above, discounted at the
current rate. Should the present value have no value or a negative value, the Issuer may prepay
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with no additional fee. Should the Federal Reserve no longer release rates for fixed-rate payers
in interest rate swaps, the Bank may substitute the Federal Reserve H.15 Statistical Release with
another similar index. The Bank shall provide the Issuer with a written statement explaining the
calculation of the Prepayment Fee due, which statement shall be subject to review by the Issuer
and its financial advisors, but which shall upon such review, in absence of manifest error, be
conclusive and binding.
I. If the Issuer defaults in the payment of principal of or interest on the Note when
due, amounts payable under the Note shall bear interest at the default rate of 5% per annum in
excess of the rate otherwise applicable to the Note (the "Default Rate") but in no event shall the
Default Rate exceed the Interest Rate Limit.
J. Furthermore, if any payment of principal of or interest on the Note not received
by the Holder within 15 days after it is due, then, in addition to any other amounts due and
owing hereunder, the Issuer shall pay a late payment charge of 2% of the aggregate amount of
such payment that is due. Upon any such default, the Holder may, at its option, declare the
principal sum outstanding under the Note, together with all accrued interest thereon, to be
immediately due and payable.
SECTION 7. INTEREST RATE ADJUSTMENTS. Notwithstanding any contrary
provision set forth herein or in the Note, the interest rate applicable to the Note shall be adjusted
as follows:
A. The interest rate under the Note will be adjusted as follows:
(i) If the portion of the interest expense incurred or deemed to have been
incurred because the Owner holds the Note (the "Related Interest") and which would on
the date of issuance of the Note be allowable as a deduction to the Owner during any
period is decreased below 80% because of any change in the tax laws or regulations, or
because the Note is not or ceases to be qualified as a "qualified tax-exempt obligation"
under Section 265(b)(3)(B) of the Code, then the interest rate on the Note otherwise
applicable during such period shall be increased each calendar year by a percentage
amount equal to (A - .20) x B x C where:
A equals the fraction (expressed as a decimal) of the Related Interest not allowable as a
deduction to the Owner after the effective date of the change or loss of "qualified" status;
(a) B equals the maximum corporate tax rate then in effect (expressed
as a decimal);
(b) C equals the Owner's Adjusted Cost of Funds (as defined herein).
(ii) If the Owner or its parent holding company pays an alternative minimum
tax in any tax year and the interest on the Note is a direct tax preference item under
Section 57(a)(5) or any successor provision of the Code, then the interest rate on the Note
otherwise applicable for the period during such tax year in which interest on the Note is a
direct tax preference item will be increased by an amount equal to (A - B) x C where:
A equals the interest rate on the Note otherwise applicable expressed as a percentage;
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(a) B equals the Owner's Adjusted Cost of Funds; and
(b) C equals the maximum marginal rate of the alternative minimum
tax expressed as a decimal (currently .20).
(ii) If the Owner or its holding company pays an alternative minimum tax in
any tax year and the interest on the Note is not a direct tax preference item under Section
57(a)(5), but is an indirect tax preference item because of the application of Section 56(g)
or any successor provision of the Code, then the interest rate on the Note otherwise
applicable for the period during such tax year in which interest on the Note is an indirect
tax preference item will be increased by an amount equal to (A - B) x C where:
A equals the interest rate on the Note otherwise applicable expressed as a percentage;
(a) B equals the Owner's Adjusted Cost of Funds; and
(b) C equals 75% of the maximum marginal rate of the alternative
minimum tax expressed as a decimal, or, if the Code is amended to effectively
increase or decrease the percentage of interest on the Note which is subject to
such indirect alternative minimum tax, then C will equal the percentage of such
interest which is effectively subject to such indirect alternative minimum tax;
provided, however, that no such increase will be paid by the Issuer if such
circumstances relate primarily to changes in holdings of the Owner or its parent
holding company.
(ii) If the federal income tax deduction for state income taxes paid on the
interest payments received under the Note during any period is reduced because of any
change in the tax laws or regulations, then the interest rate on the Note otherwise
applicable will be increased during such period by an amount equal to A x B x C x D
where:
A equals the fraction (expressed as a decimal) of the total state income tax disallowed as a
deduction for federal income tax purposes as a result of such tax law change;
(a) B equals the rate of the applicable state income tax (expressed as a
decimal);
(b) C equals the maximum federal corporate tax rate then in effect for
the Owner (expressed as a decimal); and
(c) D equals the interest rate on the Note otherwise applicable
expressed as a percentage.
(ii) If the interest payments received under the Note during any period
become partially taxable because of any change in the tax laws or regulations, then the
interest rate on the Note otherwise applicable will be increased during such period by an
amount equal to (A - B) x C where:
A equals the Taxable Rate (as defined herein) (expressed as a percentage);
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(a) B equals the interest rate on the Note otherwise applicable,
expressed as a percentage; and
(b) C equals the fraction of the interest rate on the Note which has
become taxable as the result of such tax change (expressed as a decimal).
(ii) If the tax laws or regulations are amended to decrease the Federal Rate (as
defined herein), to cause the interest on the Note to be taxable, to be subject to a
minimum tax or an alternative minimum tax, or to otherwise decrease the effective after-
tax yield on the Note to the Owner (directly or indirectly, other than upon a
Determination of Taxability (as defined herein) or upon a change described in (i) through
(v) above) then the interest rate on the Note will be adjusted to cause the effective after-
tax yield on the Note to equal what the yield on the Note would have been in the absence
of such change or amendment in the tax laws or regulations. If the tax laws or
regulations are amended to increase the effective after-tax yield on this Note to the
Owner (including by way of an increase in the Federal Rate) then the interest rate on the
Note will be decreased to cause the effective after-tax yield on the Note to equal what the
yield would have been in the absence of such change or amendment in the tax laws or
regulations. Upon a Determination of Taxability, the interest rate applicable to the Note
shall be the Taxable Rate.
B. The above adjustments will be cumulative, but in no event will the interest rate on
the Note exceed the maximum rate permitted by law or the Taxable Rate, whichever is lower.
All adjustments to the interest rate on the Note resulting from a change in the tax laws or
regulations or otherwise will be effective on the effective date of the applicable change or the
effective date of the change in tax treatment. Interest on the Note and all other tax rates and
interest rates are expressed as annual rates. However, proper partial adjustment will be made if
the tax law change is effective after the first day of the Owner's tax year or if interest on the
Note does not accrue for the entire tax year of the Owner. Adjustments which create a circular
calculation because the interest rate on the Note is affected by the calculation will be carried out
sequentially, increasing the interest rate on the Note accordingly in each successive calculation
using as the new value the increase in the interest rate on the Note until the change on the
interest rate caused by the next successive calculation of the adjustment is de minimis. If more
than one of subparagraphs (i) through (vi) of paragraph (a) apply, then the interest rate on the
Note will be adjusted in the order in which listed above.
C. To the extent an adjustment to the interest rate on the Note is not effected within
3 months of the event giving rise to the adjustment, and such delay is not due to the action or
inaction of the Owner, the additional interest due as a result of such adjustment will be paid with
interest compounded monthly (on principal only) at the rate which is equal to the interest rate on
the Note. All unpaid amounts determined to be owing as a result of such calculation will be due
and payable within 30 days after delivery of notice of the amount of such adjustment, and will be
paid to the Owner of record during the period to which the adjustment relates. This obligation
will survive the payment and cancellation of the Note, but shall not include any adjustment with
respect to which the Holder cannot suffer an increase in tax liability.
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D. Upon the occurrence of a Determination of Taxability, the Owner may (i) declare
any and all amounts due under the Note immediately due and payable or, (ii) in the sole
discretion of the Owner, elect to hold the Note with the interest rate adjusted in accordance with
the terms of this Section 7. Upon the occurrence of a Determination of Taxability, the Issuer
agrees to pay to the Owner any penalties or interest or past due taxes payable by such Owner
(but not due to any negligent delay of the Owner) to the Internal Revenue Service by reason
thereof.
E. For purposes of this Section 7, the following terms shall have the following
meanings:
(i) "Owner's Adjusted Cost of Funds" means the fraction (expressed as a
percentage), determined by the Owner or its parent bank holding company (in each case
from an examination of its financial statements), of the total interest expense of the
Owner for each calendar year divided by the total average adjusted bases of all assets of
the Owner during the calendar year as determined under Section 265(b)(2)(B) of the
Code or any successor provision.
(ii) "Determination of Taxability" means the circumstances of interest paid or
payable on the Note becoming includable for federal income tax purposes in the gross
income of the Owner as a consequence of any act, omission or event whatsoever and
regardless of whether the same was within or beyond the control of the Issuer. A
Determination of Taxability will be deemed to have occurred upon: (aa) the receipt by
the Owner of an original or a copy of an Internal Revenue Service Technical Advice
Memorandum or Statutory Notice of Deficiency which holds that any interest payable on
the Note is includable in the gross income of the Owner, (bb) the issuance of any public
or private ruling of the Internal Revenue Service that any interest payable on the Note is
includable in the gross income of the Owner; or (cc) receipt by the Owner of an opinion
of bond counsel that any interest on the Note has become includable in the gross income
of the Owner for federal income tax purposes. For all purposes of this definition, a
Determination of Taxability will be deemed to occur on the date as of which the interest
on the Note is deemed includable in the gross income of the Owner. However, the Issuer
will have a reasonable opportunity to contest the memoranda, notices, rulings or opinions
described in clauses (aa), (bb) and (cc) above before a Determination of Taxability will
be deemed to have occurred, but, if unsuccessful, such Determination of Taxability shall
be retroactive to the applicable date under clause (aa), (bb) or (cc) above.
(III) "Federal Rate" means, at any time, the then-curent maximum marginal
rate of federal corporate income taxation imposed pursuant to the Code.
(iv) "Taxable Rate" means a rate equal to the applicable tax exempt rate
multiplied by 1.55.
SECTION 2. EXECUTION OF THE NOTE. The Council hereby authorizes and
delegates to the Mayor and the Clerk the authority to negotiate, execute and deliver the Note.
The Note shall be executed in the time of the Issuer by the Mayor and countersigned and
attested by the Clerk, either manually or with their facsimile signatures, and the Issuer's seal or a
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facsimile thereof shall be affixed thereto or reproduced thereon. In case any one or more of the
officers who shall have signed or sealed the Note shall cease to be such officer of the Council or
Issuer before the Note so signed and sealed shall have been actually sold and delivered, the Note
may nevertheless be sold and delivered as herein provided and may be issued as if the person
who signed or sealed the Note had not ceased to hold such office.
SECTION 3. NOTE MUTILATED. DESTROYED, STOLEN OR LOST. In case the
Note shall become mutilated, or be destroyed, stolen or lost, the Council shall issue and deliver a
new Note of like tenor as the Note so mutilated, destroyed, stolen or lost, in exchange and
substitution for such mutilated Note, or in lieu of and substitution for the Note, if any, destroyed,
stolen or lost, and upon the Holder furnishing the Council proof of its ownership thereof and
satisfactory indemnity and complying with such other reasonable regulations and conditions as
the Council may prescribe and paying such reasonable expenses as the Issuer may incur. Any
Note so surrendered shall be canceled. If the lost, stolen or destroyed Note shall have matured or
be about to mature, instead of issuing a substitute Note, the Council may pay the same, upon
being indemnified as aforesaid, without surrender thereof. Any such duplicate Note issued
pursuant to this Section shall constitute an original, additional contractual obligation on the part
of the Issuer whether or not the lost, stolen or destroyed Note be at any time found by anyone.
SECTION 4. NEGOTIABILITY. The Note shall be and have all the qualities and
incidents of a negotiable instrument under the laws of the State, and the Holder, in accepting the
Note, shall be conclusively deemed to have agreed that the Note shall be and have all of the
qualities and incidents of a negotiable instrument under the laws of the State.
SECTION 5. REGISTRATION. The Council shall, prior to the proposed date of
delivery of the Note, by resolution designate the Paying Agent and Registrar, if the Paying Agent
and Registrar will be a bank or trust company. If no such designation is made, the Clerk shall be
the Paying Agent and Registrar. The Paying Agent and Registrar shall be responsible for
maintaining the books for the registration and transfer of the Note and, if a bank or trust
company is so designated, in compliance with a written agreement to be executed between the
Council acid such bank or trust company as Paying Agent and Registrar prior to the delivery date
of the Note.
Upon surrender to the Paying Agent and Registrar for transfer or exchange of the Note,
duly endorsed for transfer or accompanied by an assignment or written authorization for
exchange, whichever is applicable, duly executed by the Holder or its attorney duly authorized in
writing, the Paying Agent and Registrar shall deliver in the name of the Holder or the transferee
or transferees, as the case may be, a new fully registered Note for the principal amount which the
Holder is entitled to receive.
When the Note is presented for transfer, exchange or payment (if so required by the
Council or the Paying Agent and Registrar), it shall be accompanied by a written instrument or
instruments of transfer or authorization for exchange, in form and with guaranty of signature
satisfactory to the Council or the Paying Agent and Registrar, duly executed by the Holder or by
its duly authorized attorney.
The Paying Agent and Registrar or the Council may require payment from the holder or
transferee of a sum sufficient to cover any tax, fee or other governmental charge that may be
Res. #2007-R-10
DRLIWFCPl 18]2
3731/217 11
imposed in connection with any exchange or transfer of the Note. Such charges and expenses
shall be paid before any new Note shall be delivered.
Any new Note delivered upon any transfer or exchange shall be a valid obligation of the
Issuer, evidencing the same debt as the Note surrendered, shall be secured by this Resolution and
shall be entitled to all of the security and benefits hereof.
The Council and the Paying Agent and Registrar may treat the Holder of the Note as the
absolute owner thereof for all purposes, whether or not such Note shall be overdue, and shall not
be bound by any notice to the contrary.
SECTION 6. DISPOSITION OF NOTE PAID OR REPLACED. Whenever the Note
shall be delivered to the Paying Agent and Registrar for cancellation, upon payment of the
principal amount thereof, or for replacement, transfer or exchange, it shall, after cancellation,
either be retained by the Paying Agent and Registrar for a period of time specified in writing by
the Council, or at the option of the Council, shall be destroyed by the Paying Agent and
Registrar and counterparts of a certificate of destruction evidencing such destruction shall be
famished to the Council.
SECTION 7. PAYMENT OF PRINCIPAL AND INTEREST: LIMITED
OBLIGATION. The Issuer promises that it will promptly pay the principal of and interest on
the Note at the place, on the dates and in the manner provided therein according to the true intent
and meaning hereof and thereof. The Note shall not be or constitute a general obligation or
indebtedness of the State or the Issuer as "bonds" within the meaning of Article VII, Section 12
of the Constitution of Florida, but shall be payable solely from the Pledged Revenues in
accordance with the terms hereof. No Holder of the Note issued hereunder shall ever have the
right to compel the exercise of any ad valorem taxing power to pay such Note, or be entitled to
payment of such Note from any funds of the Issuer except from the Pledged Revenues as
described herein.
SECTION 8. COVENANT TO BUDGET AND APPROPRIATE. Subject to the next
paragraph, the Issuer covenants and agrees to appropriate in its annual budget, by amendment, if
necessary, from Non -Ad Valorem Revenues, amounts sufficient to pay principal of and interest
on the Note as the same shall become due. Such covenant and agreement on the part of the
Issuer to budget and appropriate such amounts of Non -Ad Valorem Revenues shall be
cumulative to the extent not paid, and shall continue until such Non -Ad Valorem Revenues or
other legally available funds in amounts sufficient to make all such required payments shall have
been budgeted, appropriated and actually paid. No lien upon or pledge of such budgeted Non -
Ad Valorem Revenues shall be in effect until such monies are budgeted and appropriated. The
Issuer further acknowledges and agrees that the obligation of the Issuer to include the amount of
any deficiency in payments in each of its annual budgets and to pay such deficiencies from Non -
Ad Valorem Revenues may be enforced in a court of competent jurisdiction in accordance with
the remedies set forth herein.
Such covenant to budget and appropriate does not create any lien upon or pledge of such
Non -Ad Valorem Revenues, nor does it preclude the Issuer from pledging in the future its Non -
Ad Valorem Revenues, nor does it require the Issuer to levy and collect any particular Non -Ad
Valorem Revenues, nor does it give any holder of the Note a prior claim on the Non -Ad Valorem
Revenues as opposed to claims of general creditors of the Issuer. Such covenant to budget and
appropriate Non -Ad Valorem Revenues is subject in all respects to the prior payment of
Res. #2007-R-10
ORLIWFCP19i018]2 12
37319 1]
obligations secured by a pledge of such Non -Ad Valorem Revenues heretofore or hereafter
entered into (including the payment of debt service on bonds and other debt instruments).
Anything in this Resolution to the contrary notwithstanding, it is understood and agreed that any
obligation of the Issuer hereunder shall be payable from the portion of Non -Ad Valorem
Revenues budgeted and appropriated as provided for hereunder and nothing herein shall be
deemed to pledge ad valorem tax revenues or to permit or constitute a mortgage or lien upon any
assets owned by the Issuer and no Holder nor any other person, may compel the levy of ad
valorem taxes on real or personal property within the boundaries of the Issuer. Notwithstanding
any provisions of this Resolution or the Note to the contrary, the Issuer shall never be obligated
to maintain or continue any of the activities of the Issuer which generate user service charges,
regulatory fees or any Non -Ad Valorem Revenues. Neither this Resolution nor the obligation of
the Issuer hereunder shall be construed as a pledge of or a lien on all or any legally available
Non -Ad Valorem Revenues of the Issuer, but shall be payable solely as provided herein and is
subject in all respects to the provisions of Section 166.241, Florida Statutes, and is subject,
further, to the payment of services and programs which are for essential public purposes
affecting the health, welfare and safety of the inhabitants of the Issuer.
SECTION 9. AVAILABILITY OF NOTE PROCEEDS: COSTS. The Note proceeds
are available solely for the purposes provided herein and consistent with the requirements of
Florida law, including the Act. The money received from the proceeds of the Note shall be
applied to pay the costs of the authorized expenditures, and, at the election of the Issuer, the
costs of issuance of this Note.
SECTION 10. NOTEHOLDER NOT AFFECTED BY USE OF NOTE PROCEEDS.
The Holder of the Note shall have no responsibility for the use of the proceeds of the sale of the
Note, and the use of the Note proceeds by the Issuer shall in no way affect the rights of such
Owner.
SECTION 11. SALE OF NOTE. The Note is hereby awarded and sold at negotiated
sale to the Bank at the Purchase Price. The applicable officers of the Council are authorized, in
their discretion, to execute and deliver agreements, certificates or documents related to the
issuance of the Note, including a waiver of right to jury trial, to the extent deemed necessary by
the Holder.
SECTION 12. TAX EXEMPTION: OUALIFIED TAX-EXEMPT OBLIGATION
DESIGNATION. The Issuer covenants that it (i) will not use the proceeds of the Note in any
manner which would cause the interest on the Note to be or become includable in the gross
income of the owner thereof for federal income tax purposes or cause the Note not to be a
"qualified tax-exempt obligation", (ii) will not do any act or fail to do any act which would cause
the interest on the Note to become includable in the gross income of the owner thereof for
federal income tax purposes or cause the Note not to be "qualified tax-exempt obligations", and
(iii) will comply with all provisions of the Code necessary to maintain the exclusion of interest
on the Note from the gross income of the owner thereof for federal income tax purposes,
including, in particular, the payment of any amount required to be rebated to the United States
Treasury pursuant to the Code. The Clerk, or his designee, is authorized to make or effect any
election, selection, choice, consent, approval or waiver on behalf of the Council with respect to
the Note as the Council or the Issuer is required to make or give under the federal income tax
Res. #2007-R-10
OauwFCR 1m2
M1& 1) 13
laws, for the purpose of assuring, enhancing or protecting favorable tax treatment or
characterization of the Note or interest thereon or assuring compliance with requirements for that
purpose, reducing the burden or expense of such compliance, reducing the rebate amount or
payments of penalties thereon, or making payments in lieu thereof, or obviating such amounts or
payments, as determined by such officer, or his designee. Any action of such officer, or his
designee, in that regard shall be in writing and signed by such officer, or his designee.
The Issuer shall be responsible for determining any rebate to the United States Treasury
which is required by Section 148 of the Code. However, if the Issuer fails, in the Owner's
judgment, to properly determine such rebate amount then the Owner may, at the Issuer's
expense, hire counsel, accountants or experts which the Owner, in its sole discretion, determines
advisable to determine the amount, due dates and any other rebate requirements and the Issuer
shall remit such rebate amount to the federal government not later than the due date thereof. The
Owner will not be liable for any failure to comply with Section 148 of the Code. The Owner
shall not be liable for any failure of the Issuer or the Council to comply with Section 148 of the
Code with respect to the Note.
The Council hereby designates the Note as a "qualified tax-exempt obligation" as defined
in Section 265(b)(3)(B) of the Code.
SECTION 13. REMEDIES OF HOLDER. Upon the occurrence and during the
continuation of any Event of Default, the Owner may declare any and all amounts due under the
Note and this Resolution to be immediately due and payable. In addition to any other remedies
set forth in this Resolution or the Note, either at law or in equity, by suit, action, mandamus or
other proceeding in any court of competent jurisdiction, protect and enforce any and all rights
under the laws of the State, or granted or contained in this Resolution, and may enforce and
compel the performance of all duties required by this Resolution, or by any applicable statutes to
be performed by the Issuer or by any officer thereof.
SECTION 14. OTHER COVENANTS. The Issuer covenants that, so long as the Note
remains outstanding:
A. As long as any amounts remain outstanding under the Note, the Issuer shall
deliver to the Holder (a) a copy of its audited financial statements, including without limitation,
balance sheets, income statements, statements of financial condition, cash flows and changes in
equity, for the Fiscal Year then ended no later than 270 days after the end of each Fiscal Year;
(b) a copy of the accountant's management letter received by Issuer from its accountant; and (c)
a copy of its budget for each fiscal year not later than November 15 of each such year. In
addition to all other rights and remedies that the Holder has upon the occurrence of an Event of
Default, the Holder may by notice to the Issuer assess the Issuer a late fee upon each failure by
the Issuer to deliver financial statements or information within the time periods set forth in this
Section. Such fee shall be in an amount not to exceed $500.00 per occurrence. The Issuer shall
pay such fee no later than ten days after the Holder has notified the Issuer of such assessment.
The Holder may assess the late fee on successive occasions based upon any successive failures
to deliver financial statements or financial information within the periods required herein.
The Issuer will maintain a system of accounting in accordance with generally accepted
accounting principles, and will furnish a certificate of the independent certified public
Res. #2007-R-10
ORL'WFC 1 01e]3
ni1M17 14
accountants preparing the Issuer audited financial statements addressed to the Owner stating
either (i) that during the course of their preparation of the financial statements of the Issuer
nothing came to their attention which led them to believe that the Issuer was in default under the
Note documents, or (ii) the nature and extent of any matter which led them to believe that such
default had occurred.
The Issuer shall also provide the Owner with such other financial information as it shall
reasonably request from time to time. Such information may include, but is not limited to,
financial information relating to the authorized expenditures financed with proceeds of the Note.
B. The Issuer covenants to maintain adequate insurance with respect to any project,
if any, financed with proceeds of the Note (a "Project") and its operations, to comply with
federal and State laws applicable to its business and operations and the Project, shall maintain
the Project in good condition and working order and shall promptly provide the Bank with
written notice of any environmental claim or the occurrence of an Event of Default under the
Note, this Resolution or any other obligations of the Issuer to the Bank in connection with the
transactions contemplated by this Resolution.
C. The Issuer will immediately give the Owner written notice of any Event of
Default or an event which with the passage of time would become an Event of Default under the
Note documents.
SECTION 15. AUTO -DEBIT. The Issuer hereby authorizes the Bank to automatically
deduct the amount of any payment due under the Note from any of the Issuer's accounts now or
hereafter maintained with the Bank. If the funds in such account are insufficient to cover any
payment, the Bank shall not be obligated to advance fluids to cover the payment. The Bank or
the Issuer may at any time terminate the automatic payment provisions set forth herein by notice
to the other party.
SECTION 16. BANK FEES AND EXPENSES. The Issuer agrees to pay, and save the
Owner harmless against liability for the payment of, all out-of-pocket expenses arising in
connection with this transaction (including any renewals or modifications relating hereto), and
the fees and expenses of the Owner's counsel, provided, however, that such fees and expenses of
Owner's counsel shall not exceed $6,000. If an Event of Default shall occur, the Issuer shall also
pay all of the Owner's costs of collection, including court costs and fees of attorneys and legal
assistants (whether incurred in connection with trial or appellate proceedings). The Issuer
authorizes the Owner to make advances under the Note to pay all such expenses.
SECTION 17. MODIFICATION AND AMENDMENT. No modification or
amendment of this Resolution or of any resolution amendatory hereof or supplemental hereto
may be made without the consent in writing of the Holder of the Note; provided, however, that
no consent of the Holder shall be required for amendments made to cure any ambiguity, formal
defect or omission in this Resolution.
SECTION 18. SEVERABILITY OF INVALID PROVISIONS. If any one or more of
the covenants, agreements or provisions of this resolution should be held contrary to any express
provision of law or contrary to the policy of express law, though not expressly prohibited, or
Res. #2007-R-10
oRL'WCV 0187]
3]31& 17 15
against public policy, or shall for any reason whatsoever be held invalid, then such covenants,
agreements or provisions shall be null and void and shall be deemed separate from the remaining
covenants, agreements or provisions and in no way affect the validity of all the other provisions
of this resolution or of the Note issued hereunder.
SECTION 19. REGULARITY OF PROCEEDINGS; COMPLIANCE WITH
STATUTES. The adoption of this Resolution and the issuance and delivery of the Note has
been duly authorized by the Council, and all conditions, acts and things necessary and required
by the Constitution and laws of the State or otherwise, to exist, to have happened, or to have
been performed precedent to and in connection with the execution and delivery of the Note, and
precedent to and in connection with the adoption of this Resolution, do exist, have happened and
have been performed in regular form, time and manner.
SECTION 20. ARBITRATION. The parties agree to the following arbitration
provisions:
(a) These arbitration provisions govem the resolution of any controversies or
claims between the parties, whether arising in contract, tort or by statute, including but
not limited to controversies or claims that wise out of or relate to: (i) this Agreement
(including any renewals, extensions or modifications); or (ii) any document related to this
Agreement (collectively a "Claim"). For the purposes of this arbitration provision only,
the term "parties" shall include any parent corporation, subsidiary or affiliate of the Bank
involved in the servicing, management or administration of army obligation described or
evidenced by this Agreement.
(b) At the request of any party to this Agreement, any Claim shall be resolved
by binding arbitration in accordance with the Federal Arbitration Act (Title 9, U.S. Code)
(the "Arbitration Act'). The Arbitration Act will apply even though this Agreement
provides that it is governed by the law of a specified state. The arbitration will take place
on an individual basis without resort to any form of class action,
(c) Arbitration proceedings will be determined in accordance with the
Arbitration Act, the then -current rules and procedures for the arbitration of financial
services disputes of the American Arbitration Association or any successor thereof
("AAA"), and the terms of this paragraph. In the event of any inconsistency, the terms of
this paragraph shall control. If AAA is unwilling or unable to (i) serve as the provider of
arbitration or (ii) enforce any provision of this arbitration clause, any party to this
Agreement may substitute another arbitration organization with similar procedures to
serve as the provider of arbitration.
(d) The arbitration shall be administered by AAA and conducted, unless
otherwise required by law, in any U.S. state where real or tangible personal property
collateral for this credit is located or if there is no such collateral, in the state specified in
the governing law section of this Agreement. All Claims shall be determined by one
arbitrator; however, if Claims exceed Five Million Dollars ($5,000,000), upon the request
of any party, the Claims shall be decided by three arbitrators. All arbitration hearings
shall commence within ninety (90) days of the demand for arbitration and close within
Res. #2007-R-10
ORLZFCPl 187 2
3731a 17 16
ninety (90) days of commencement and the award of the arbitrator(s) shall be issued
within thirty (30) days of tile 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 sixty (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, judgment entered and enforced.
(e) The arbitrator(s) will give effect to statutes of limitation in determining
any Claim and may dismiss the arbitration on the basis that the Claim is barred. For
purposes of the application of the statute of limitations, the service on AAA under
applicable AAA rules of a notice of Claim is the equivalent of the filing of a lawsuit.
Any dispute concerning this arbitration provision or whether a Claim is arbitrable shall
he determined by the arbitrator(s). The arbitrator(s) shall have the power to award legal
fees pursuant to the terms of this Agreement.
(f) These arbitration provisions do not limit the right of any party to: (i)
exercise self-help remedies, such as but not limited to, setoff (ii) exercise any judicial or
power of sale rights, or (iii) act in a court of law to obtain an interim remedy, such as but
not limited to, injunctive relief, writ of possession or appointment of a receiver, or
additional or supplementary remedies.
(g) The filing of a court action is not intended to constitute a waiver of the
right of any party, including the suing party, thereafter to require submittal of the Claim
to arbitration.
(h) 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 Agreement 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 Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
Res. N2007-R-10
ORLIWFC% 01610
3731& 17 17
r
u
U
SECTION 21. EFFECTIVE DATE. This resolution shall take effect
immediately upon its adoption.
After Motion to approve byCouncilwoman Lichter and second by
Councilmanyincenzi , the vote on this resolution was as follows:
AYE NAY
Mayor Mike Thomas x
Councilman Debra J. Rogers x
Councilman Dennis A. V incenzi x
Councilwoman Harriet B. Rhodes x
Councilwoman Judy Lichter x
,TED this 13th day of August, 2007.
CITY COUNCIL OF THE
CITYgOFDGEW ER, F ORIDA
By yvt
ike Th m
ayor
For the use and reliance only by the City of
Edgewater, Florida. Approved as to form
and legality by: Carolyn S. Away, Esquire
City Attorney
Doran, Wolfe, Ansay & Kundid
Robin L. Matusick
Paralegal
Approved by the City Council of the City of
Edgewater at a meeting held on this 13th
day of August, 2007 under Agenda Item No.
7G .
Res. #2007-R-10
ORL9PFC l IW 2
3731 Wn
18
EXHIBIT A
IFORM OF NOTE]
ANY HOLDER SHALL, PRIOR TO BECOMING A HOLDER, EXECUTE A PURCHASER'S
CERTIFICATE IN THE FORM ATTACHED TO THE RESOLUTION (HEREIN DEFINED)
CERTIFYING, AMONG OTHER THINGS, THAT SUCH HOLDER IS AN "ACCREDITED
INVESTOR" AS SUCH TERM IS DEFINED IN THE SECURITIES ACT OF 1933, AS
AMENDED, AND REGULATION D THEREUNDER.
Not to Exceed $1,500,000
CITY OF EDGEWATER, FLORIDA
REVENUE NOTE, SERIES 2007
Issue Date: Draw Date (defined herein) Maturity Date: [August 1, 2014]
rw
ORLIWFCM92392
3]3tM1<
KNOW ALL MEN BY THESE PRESENTS that the City of Edgewater, Florida (the "Issuer), a
municipal corporation created and existing pursuant to the Constitution and the laws of the State
of Florida, for value received, promises to pay from the sources hereinafter provided, to the
order of Bank of America, N.A. or its registered assigns (hereinafter, the "Holder"), the principal
sums advanced hereunder in an amount not to exceed $1,500,000, together with interest on the
outstanding principal balance of this Note at such interest rates described below based upon a
360-day year for the actual number of days elapsed. Unless sooner paid in accordance with the
terms of this Note, all outstanding amounts under the Note shall be due and payable on [August
1, 2014]. Principal of and interest on this Note is payable in lawful money of the United States
of America at such place as the Holder may designate to the Issuer in writing. Capitalized terms
used herein but not defined shall have the respective meanings set forth in that certain Resolution
duly adopted by the Issuer on , 2007 as from time to time amended and
supplemented (herein referred to as the "Resolution").
Interest shall initially accrue on the outstanding principal balance of this Note from the date of
the initial drawing under this Note (the 'Draw Date") at a variable interest rate equal to 67% of
the 30-day LIBOR plus 75 basis points (0.75%), but in no event shall it exceed the Interest Rate
Limit (the "Variable Rate"). This Note shall initially be issued in the line of credit mode in an
amount not to exceed $1,500,000, and the Issuer promises pay to the Owner interest on amounts
outstanding from the date funds are drawn at the Variable Rate. No principal payments shall be
required by the Issuer while the Note is in the line of credit mode. The Variable Rate shall be re-
adjusted monthly on the first day of each month, by the Owner. The Owner shall notify the
Issuer of the Variable Rate which will be applicable during the next calendar month by sending
written notice to the Finance Director at the beginning of such interest rate period, and shall
identify the beginning date and ending date of such period in the notice. The initial Variable
Rate shall be determined on the date two Business Days prior to the first Draw Date. Such
interest shall be paid quarterly on the first day of each October, January, April and July,
commencing after the first Draw Date, and thereafter until conversion to the term loan mode as
provided herein. Draws under this Note, unless an Event of Default, or event that with the
giving of notice or the passage of time would constitute an Event of Default, then exists, may be
made at any time until conversion to a term loan mode as described below, but no more than
once in any given calendar month and for an amount no less than $50,000 (unless said draw is
made when the amount of the remaining line of credit is less than $50,000, in which case that
draw shall be in the amount of the remaining amount of the line of credit) such draws shall occur
by wire transfer at no cost to the Issuer. The Owner shall fund such draw request within 5 days
of receipt of the request, and each draw shall be noted on the Schedule A attached to this Note.
While this Note is in the line of credit mode, the Issuer agrees to pay the Owner a fee based on
the principal amount available under this Note subtracted by the average principal meant drawn
under this Note during the preceding month times 0.20%. Such fee shall be calculated by the
Owner and shall be invoiced to and payable by the Issuer monthly.
On any date, the Issuer may elect to convert this Note to a term loan, provided that on
[August 1, 2009], this Note shall convert to a term loan. Conversion shall not be honored by the
Owner if an Event of Default, or event that with the giving of notice or the passage of time
would constitute an Event of Default, then exists. The interest rate on this Note upon conversion
A-2
ORUTFOMW39.1
3MM10
to a term loan shall be equal to 67% of the 5 year U.S. Dollar Swap Ask plus 65 basis points
(0.65%) and shall be calculated as of the date two Business Days prior to such conversion. The
principal of and interest on this term loan shall be payable quarterly of the first day of each
October, January, April and July, commencing on first day of the next succeeding quarter
following a conversion. Upon conversion to term loan mode, the Owner shall provide an
amortization schedule to the Issuer that, with the approval of the Finance Director, such approval
not to be unreasonably withheld, shall provide substantially level annual debt service payments
until the Maturity Date if such conversion occurs on [August 1, 2009], or for a period of 5 years
if such conversion occurs prior to [August 1, 20091. Such amortization schedule shall be
attached to this Note as Schedule B.
This Note is subject to optional prepayment by the Issuer in accordance with the terms of
the Resolution. At least thirty (30) days prior to the optional prepayment date, written notice of
any such prepayment shall be mailed, postage prepaid to the registered Holder at the address
appearing upon the registration books of the Issuer.
If any date for the payment of principal and interest hereon shall fall on a day which is
not a Business Day the payment due on such date shall be due on the next succeeding day which
is a Business Day, but the Issuer shall not receive credit for the payment until it is actually
received by the Holder.
All payments by the Issuer pursuant to this Note shall apply first to accrued interest, then
to other charges due the Holder, and the balance thereof shall apply to principal.
THIS NOTE DOES NOT CONSTITUTE A GENERAL INDEBTEDNESS OF THE
ISSUER WITHIN THE MEANING OF ANY CONSTITUTIONAL, STATUTORY OR
CHARTER PROVISION OR LIMITATION, AND IT IS EXPRESSLY AGREED BY THE
HOLDER OF THIS NOTE THAT SUCH HOLDER SHALL NEVER HAVE THE RIGHT TO
REQUIRE OR COMPEL THE EXERCISE OF THE AD VALOREM TAXING POWER OF
THE ISSUER OR TAXATION OF ANY REAL OR PERSONAL PROPERTY THEREIN FOR
THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THIS NOTE OR THE
MAKING OF ANY OTHER PAYMENTS PROVIDED FOR IN THE RESOLUTION.
This Note is issued pursuant to Article VIII, Section 2 of the Florida Constitution,
Chapter 166, Florida Statutes, the Charter of the City of Edgewater, Florida and the Resolution,
and is subject to all the terms and conditions of the Resolution. All terms, conditions and
provisions of the Resolution including without limitation remedies in the Event of Default are by
this reference thereto incorporated herein as a part of this Note. Payment of the Note is secured
by a covenant to budget and appropriate Non -Ad Valorem Revenues of the Issuer.
This Note may be exchanged or transferred by the Holder hereof but only upon the
registration books maintained by the Issuer and in the manner provided in the Resolution.
It is hereby certified, recited and declared that all acts, conditions and prerequisites
required to exist, happen and be performed precedent to and in the execution, delivery and the
issuance of this Note do exist, have happened and have been performed in due time, form and
manner as required by law, and that the issuance of this Note is in full compliance with and does
not exceed or violate any constitutional or statutory limitation.
A-3
OPLIIPFLPI9]41 2
3731M1G
If (i) the interest on this Note becomes includable in the gross income of the Holder for
Federal income tax purposes (an "Event of Taxability") because of any amendments to existing
law which would adversely affect the Holder's after-tax yield, or (ii) the Note shall not be "a
qualified tax exempt obligation" as defined in Section 265(b)(3) of the Internal Revenue Service
Code of 1986, as amended (the "Code"), then the Holder shall have the right to declare any and
all amounts due under this Note immediately due and payable or to adjust the interest rate with
the same after-tax yield as if the events in (i) or (ii) had not occurred in accordance with the
terms of the Resolution. This adjustment shall survive payment of this Note until such time as
the federal statute of limitations under which the interest on this Note could be declared taxable
under the Code shall have expired.
For so long as this Note is owned by the Holder, the interest rate set forth above assumes
a maximum corporate tax rate of 35%. In the event of a change in the maximum corporate tax
rate, so long as this Note is owned by the Holder, or its successors and assigns, the Holder shall
have the right to adjust such interest rate in order to maintain the same after-tax yield. The
interest rate on the Note is also subject to adjustment in accordance with the terms of the
Resolution.
[NO FURTHER TEXT THIS PAGE]
A-4
OALZFCP W382
.310MU
IN WITNESS WHEREOF, the City Council of the City of Edgewater, Florida has caused
this Note to be executed in its name by the manual signature of its Mayor and attested by the
manual signature of its City Clerk, and its seal to be impressed hereon, all as of this day of
,2007.
CITY COUNCIL
CITY OF EDGEWATER, FLORIDA
(SEAL)
By:
Michael L. Thomas, Mayor
ATTEST:
By:
Susan J. Wadsworth, CMC
Robin L. Mamsick
City Clerk
Paralegal
A-5
ORUWlcPl W392
a]JIMI,
SCHEDULE A
Date of
Transaction
Principal
Drawine
Issuer's Initials
(not required)
Principal
Prepayments
Outstanding
Principal
Balance
/ /2007*
$
$
$
$
$
$
$
$
$
$
$
$
* Initial Draw Date.
A-6
ORMPFCP%W1W2
3M1 17
t
EXHIBIT B
FORM OF PURCHASER'S CERTIFICATE
This is to certify that Bank of America, N.A. (the "Purchaser") has not required the City
of Edgewater, Florida (the "Issuer") to deliver any offering document and has conducted its own
investigation, to the extent it deems satisfactory or sufficient, into matters relating to business
affairs or conditions (either financial or otherwise) of the Issuer in connection with the issuance
of its Revenue Note, Series 2007 dated , 2007 in an aggregate principal amount of
not to exceed $1,500,000 (the "Note"), and no inference should be drawn that the Purchaser, in
the acceptance of said Note, is relying on Bond Counsel or Issuer's Counsel as to any such
matters other than the legal opinion rendered by Bond Counsel, Broad and Cassel, and by
Issuer's Counsel, Any capitalized undefined terms used herein not
otherwise defined shall have the meaning set forth in that certain Resolution No. adopted
by the City Council of the Issuer on , 2007 (the "Resolution").
We acknowledge and understand that the Resolution is not being qualified under the
Trust Indenture Act of 1939, as amended, and the Note is not being registered in reliance upon
the exemption from registration under Section 3(a)(2) of the Securities Act of 1933, as amended
(the "Securities Act"), Section 517.051(1), Florida Statutes, and/or Section 517.061(7), Florida
Statutes, and that neither the Issuer, Bond Counsel nor Issuer's Counsel shall have any
obligation to effect any such registration or qualification.
We are not acting as a broker or other intermediary, and are purchasing the Note as an
investment for our own account and not with a present view to a resale or other distribution to
the public. We understand that the Note may not be transferred except to a bank, savings
association, insurance company or other "accredited investor" as described below in accordance
with the restrictions set forth in the Note.
We are a bank as contemplated by Section 517.061(7), Florida Statutes. We are not
purchasing the Note for the direct or indirect promotion of any scheme or enterprise with the
intent of violating or evading any provision of Chapter 517, Florida Statutes.
We are an "accredited investor" as such term is defined in the Securities Act, and
Regulation D thereunder.
DATED this day of , 2007,
M.
BANK OF AMERICA, N.A.
By:
Name: Todd A. Morley
Its: Senior Vice President
ORLITFCN O18]2
3]31& 17
EXHIBIT C
FORM OF DISCLOSURE LETTER
The undersigned, as purchaser, proposes to negotiate with the City of Edgewater, Florida
(the "Issuer") for the private purchase of its Revenue Note, Series 2007 (the "Note") in the
principal amounts of not to exceed $1,500,000. Prior to the award of the Note, the following
information is hereby furnished to the Issuer:
1. Set forth is an itemized list of the nature and estimated amounts of expenses to be
incurred for services rendered to us (the `Bank") in connection with the issuance of the Note
(such fees and expenses to be paid by the Issuer):
Broad and Cassel
Bank Counsel Fees — $6,000
2. (a) No other fee, bonus or other compensation is estimated to be paid by the Bank in
connection with the issuance of the Note to any person not regularly employed or retained by the
Bank (including any "finder" as defined in Section 218.386(1)(a), Florida Statutes), except as
specifically enumerated as expenses to be incurred by the Bank, as set forth in paragraph (1)
above.
(b) No person has entered into an understanding with the Bank, or to the knowledge of
the Bank, with the Issuer, for any paid or promised compensation or valuable consideration,
directly or indirectly, expressly or implied, to act solely as an intermediary between the Issuer
and the Bank or to exercise or attempt to exercise any influence to effect any transaction in the
purchase of the Note.
3. The amount of the underwriting spread expected to be realized by the Bank is $0.
4. The management fee to be charged by the Bank is $0.
5. Truth -in -Bonding Statement:
The Note is being issued primarily to finance the costs of unexpected capital and
emergency expenditures and other expenditures serving a public purpose that are permitted
under the Act and the Code and that are authorized by the City Council of the Issuer and
approved by bond counsel of the Issuer.
Unless earlier redeemed, the Note is expected to be repaid at the end of seven (7) years.
At an assumed interest rate of % and further assuming that the entire authorized amount
was drawn on the date hereof, total interest paid over the life of the Note is estimated to be
The Note will be payable solely from Pledged Revenues pledged by the Issuer under and
as described in Resolution No. adopted by the Issuer on , 2007
(the "Resolution"). See the Resolution for a definition of Pledged Revenues. Based on the
above assumptions, issuance of the Note is estimated to result in an annual average of
approximately $ of revenues of the Issuer not being available to finance other
services of the Issuer during the life of the Note.
tr1
ORLIWCM 101e]z
3]31& 17
6. The name and address of the Bank is as follows:
Bank of America, NA.
390 North Orange Avenue, Suite 900
Orlando, Florida 32801
IN WITNESS WHEREOF, the undersigned has executed this Disclosure Statement on
behalf of the Bank this day of , 200T
C-2
BANK OF AMERICA, N.A.
By:
Name: Todd A. Morley
Its: Senior Vice President
ORt9FFCMW187 2
MIM1]
EXHIBIT D
FORM OF DRAW REQUEST
City of Edgewater, Florida
Revenue Note, Series 2007
Amount Requested:
Aggregate Amount drawn to date:
1. The Issuer hereby certifies that proceeds from this Draw have been or will be used for
lawful purposes for the in accordance with the provisions of
Resolution No. of the City of Edgewater, Florida adopted on ,
2007 (the 'Resolution") and has not been the basis of any previous disbursement;
2. The Issuer hereby certifies that no Event of Default, or event that with the giving of
notice or the passage of time would constitute an Event of Default, exists.
3. Unless otherwise noted, all capitalized terns herein shall have the meanings assigned to
them in the Resolution.
This day of , 200 .
M
CITY COUNCIL
CITY OF EDGEWATER, FLORIDA
ORLINFGN 018i2
3731.17
ORLINFCF 0187.2
37310 17