HomeMy WebLinkAboutResolution 2004-17 Bank of America Loan
RESOLUTION NO. 2004-17
A RESOLUTION OF THE CITY COMMISSION OF THE
CITY OF WINTER SPRINGS, FLORIDA, ACCEPTING
THE PROPOSAL OF BANK OF AMERICA, N.A., TO
PROVIDE THE CITY WITH A $575,907 LOAN TO (i)
REFINANCE THE CITY'S CAPITAL IMPROVEMENT
REVENUE NOTE, SERIES 2000B, AND (ii) FINANCE THE
COST OF A CAPITAL PROJECT IN AND FOR THE CITY,
CONSISTING OF COMPLETING THE CONSTRUCTION
OF THE OAK FOREST SUBDIVISION WALL;
AUTHORIZING THE EXECUTION AND DELIVERY OF A
LOAN AGREEMENT WITH SAID BANK PURSUANT TO
WHICH THE CITY WILL ISSUE A NOTE TO SECURE
THE REPAYMENT OF SAID LOAN AND WILL PLEDGE
TO THE EXTENT PROVIDED THEREIN CERTAIN
PLEDGED FUNDS TO SECURE THE REPAYMENT OF
SAID NOTE; AUTHORIZING THE ISSUANCE OF A NOTE
IN THE AGGREGATE PRINCIPAL AMOUNT OF $575,907
PURSUANT TO THE LOAN AGREEMENT TO SECURE
THE REPAYMENT OF SAID LOAN; DESIGNATING SAID
NOTE FOR THE EXCEPTION TO THE PROVISIONS
CONTAINED IN THE INTERNAL REVENUE CODE OF
1986 WHICH DENY FINANCIAL INSTITUTIONS ANY
DEDUCTIONS FOR INTEREST EXPENSE ALLOCABLE
TO TAX-EXEMPT OBLIGATIONS; AUTHORIZING THE
EXECUTION AND DELIVERY OF OTHER DOCUMENTS
IN CONNECTION WITH SAID LOAN; AND PROVIDING
AN EFFECTIVE DATE.
BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF
WINTER SPRINGS, FLORIDA:
SECTION 1. AUTHORITY FOR THIS RESOLUTION. This Resolution is
adopted pursuant to the provisions of Chapter 166, Part II, Florida Statutes, as amended, Chapter
72-718, Laws of Florida, Special Acts of 1972, as amended, being the charter of the City of
Winter Springs, Florida and other applicable provisions of law.
SECTION 2. FINDINGS. It is hereby ascertained, determined and declared:
(A) The City of Winter Springs, Florida (the "City"), deems it necessary,
desirable and in the best interests of the City that the City (i) refinance the City's Capital
Improvement Revenue Note, Series 2000B, dated as of June 16,2000 (the "Prior Note"), and (ii)
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complete the construction of the Oak Forest subdivision wall in accordance with the plans and
specifications on file or to be on file with the City, as the same may be modified from time to
time (the "Project"), all as more particularly described in the Loan Agreement (as defined
herein).
(B) Bank of America, N.A. (the "Bank") has submitted a proposal to make a
loan (the "Loan") to the City, the proceeds of which will be applied to refinance the Prior Note
and finance the cost of the Project.
(C) The Loan will be secured by the Loan Agreement pursuant to which the
City will issue a note (the "2004A Note") to secure the repayment of the Loan.
(D) The City is advised that due to the present volatility of the market for
municipal debt, it is in the best interest of the City to issue the 2004A Note pursuant to the Loan
Agreement by negotiated sale, allowing the City to issue the 2004A Note at the most
advantageous time, rather than a specified advertised future date, thereby allowing the City to
obtain the best possible price, interest rate and other terms for the 2004A Note and, accordingly,
the City Commission of the City hereby finds and determines that it is in the best financial
interest of the City that a negotiated sale of the 2004A Note pursuant to the Loan Agreement be
authorized.
(E) The Loan will be repaid from the Pledged Funds (as defined in the Loan
Agreement) and the other sources provided for in the Loan Agreement. The ad valorem taxing
power of the City will never be necessary or authorized to pay the amounts due on the Loan.
(F) It is not reasonably anticipated that more than $10,000,000 of tax-exempt
obligations under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), will be issued by the City in calendar year 2004.
SECTION 3. AUTHORIZATION OF REFINANCING OF PRIOR NOTE AND
COMPLETION OF PROJECT. The City hereby authorizes the refinancing ofthe Prior Note and
the construction of the Project.
SECTION 4. ACCEPTANCE OF PROPOSAL. The City hereby accepts the
proposal of the Bank to provide the City with the Loan.
SECTION 5. AUTHORIZATION OF LOAN AGREEMENT. The Loan and the
repayment of the Loan by the City shall be pursuant to the terms and provisions of the Loan
Agreement. The City hereby authorizes the Mayor or the Deputy Mayor/Commissioner of the
City (the "Mayor") and the City Clerk or any assistant or deputy City Clerk of the City (the "City
Clerk") to execute and deliver on behalf of the City the Loan Agreement by and between the City
and the Bank substantially in the form attached hereto as Attachment A (the "Loan
Agreement"), with such changes, insertions and additions as they may approve, their execution
thereof being evidence of such approval.
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SECTION 6. AUTHORIZATION OF 2004A NOTE TO REFINANCE THE
PRIOR NOTE AND TO FINANCE THE COST OF THE PROJECT. The City does hereby
authorize the issuance of the 2004A Note in the aggregate principal amount of $575,907 for the
purpose of providing the City with sufficient funds to (i) refinance the Prior Note, and (ii) finance
the cost of the Project. The Mayor or Deputy Mayor and the City Clerk or any assistant or deputy
City Clerk are hereby authorized to execute, seal and deliver on behalf of the City the 2004A
Note. The 2004A Note shall be issued in the principal amount of $575,907, shall bear interest at
the initial interest rate of _% and have a final maturity date of July I, 2010. The 2004A
Note shall have such other terms, all as set forth in the Loan Agreement and the 2004A Note
authorized herein and executed and delivered in connection with the Loan.
SECTION 7. DESIGNATION OF 2004A NOTE AS QUALIFIED TAX-
EXEMPT OBLIGATIONS. The City hereby designates the 2004A Note as "qualified tax-
exempt obligations" under Section 265(b)(3) of the Code. This designation is based upon the
findings of the City set forth in Section 2(F) of this Resolution. The City acknowledges that any
action which adversely impacts the status of the 2004A Note as "qualified tax-exempt
obligations" will result in an upward adjustment to the interest rate on the 2004A Note.
SECTION 8. LIMITED OBLIGATION. The obligation of the City to pay the
2004A Note is a limited and special obligation payable solely from the Pledged Funds in the
manner and to the extent set forth in the Loan Agreement and shall not be deemed a pledge of the
faith and credit or taxing power of the City and such obligation shall not create a lien on any
property whatsoever of or situated within the City other than the Pledged Funds.
SECTION 9. GENERAL AUTHORIZATION. The Mayor, Deputy Mayor, City
Manager, City Clerk and Finance Director are authorized to execute and deliver such documents,
instruments and contracts, and are hereby authorized and directed to do all acts and things
required hereby as may be necessary for the full, punctual and complete performance of all the
terms, covenants, provisions and agreements herein contained, or as otherwise may be necessary
or desirable to effectuate the purpose and intent of this Resolution and the Loan Agreement.
SECTION 10. REPEAL OF INCONSISTENT DOCUMENTS. All
resolutions or parts thereof in conflict herewith are hereby superseded and repealed to the extent
of such conflict.
SECTION 11.
immediately upon its adoption.
EFFECTIVE DATE. This Resolution shall take effect
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PASSED, APPROVED AND ADOPTED this 24th day of May, 2004.
CITY OF WINTER SPRINGS, FLORIDA
(OFFICIAL SEAL)
By Mayor
ATTEST:
City Clerk
Approved as to form:
City Attorney
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ATTACHMENT A
LOAN AGREEMENT
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LOAN AGREEMENT
BETWEEN
CITY OF WINTER SPRINGS, FLORIDA
AND
BANK OF AMERICA, N.A.
Dated as of June 2, 2004
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Section 1.1
Section 1.2
Section 1.3
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITION OF TERMS
Definitions................................................................................................... .1
Interpretation. ...............................................................................................5
Titles and Headings......................................................................................6
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS;
SECURITY FOR 2004A NOTE; ADDITIONAL OBLIGATIONS
Section 2.1
Section 2.2
Section 2.3
Section 2.4
Section 2.5
Section 2.6
Section 2.7
Section 2.8
Section 2.9
Section 2.10
Section 3.1
Section 3.2
Section 3.3
Section 4.1
Section 4.2
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Representations by the City. ........................................................................6
General Representations, Warranties and Covenants of the Bank. .............8
Making of Loan............................................................................................8
Tax Covenants. ............................................................................................8
2004A Note not to be Indebtedness of the City or State..............................9
Security for 2004A Note. ........................... ................... ........ ........ ...............9
Covenant to Budget and Appropriate. .........................................................9
Payment Covenant. ....................................................................................1 0
Financial Covenants................................................ ...................................10
Assessments. ..............................................................................................1 0
ARTICLE 3
DESCRIPTION OF 2004A NOTE; PAYMENT TERMS;
OPTIONAL PREP A YMENT
Description and Payment Terms of the 2004A Note. ................................11
Optional Prepayment. ....... ........ ... ........... ..... ..................... .................... .....12
Adj ustments to Interest Rates. ............................ .......................................13
ARTICLE 4
ISSUANCE OF 2004A NOTE
Issuance of 2004A Note. ........................................................................... .16
Proj ect Fund. .................................................. ........................................... .18
-1-
Section 5.1
Section 5.2
Section 6.1
Section 6.2
Section 6.3
Section 6.4
Section 6.5
Section 6.6
Section 6.7
Section 6.8
Section 6.9
Section 6.10
ARTICLE 5
EVENTS OF DEFAULTS; REMEDIES
Events of Default. .................................................................................... ..19
Remedies. .................................................................................................. .20
ARTICLE 6
MISCELLANEOUS
Arbitration. ................................................................................................ .20
Amendments, Changes or Modifications to the Agreement. .....................20
Counterparts. ............................................................................................. .21
Severability. .............................................................................................. .21
Term of Agreement. ................................................................................. ..21
Assignment. ............................................................................................. ..21
Notice of Changes in Fact. ...................................... ................................. ..21
Notices. ..................................................................................................... .22
Applicable Law. ........................................................................................ .22
Incorporation by Reference...................................................................... ..22
EXHIBIT A The Project
EXHIBIT B Form of2004A Note
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LOAN AGREEMENT
This LOAN AGREEMENT (this "Agreement") is made and entered into as of
June 2, 2004, between the City of Winter Springs, a municipality created and existing under and
by virtue of the laws of the State of Florida (the "City"), and Bank of America, N.A., a national
banking association, and its successors and assigns (the "Bank");
WIT N E SSE T H:
WHEREAS, the City is authorized pursuant to Chapter 166, Part II, Florida
Statutes, as amended, and other applicable provisions of law to, among other things, (a) refinance
outstanding debt of the City, (b) finance the cost of certain capital projects in and for the City,
and (c) pledge certain funds and credit of the City for payment of such debts; and
WHEREAS, the Bank is willing to make available to the City, and the City is
willing to enter into, a loan arrangement pursuant to the terms and provisions of this Agreement
in an aggregate principal amount of$575,907 under which the City shall refinance the Prior Note
(as hereinafter defined) and finance the cost of the Project (as hereinafter defined); and
WHEREAS, the City deems it necessary, desirable and in the best interest of the
City that the City undertake to refinance the Prior Note and to complete the construction of the
Oak Forest subdivision wall (the "Project").
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
That the parties hereto, intending to be legally bound hereby and in consideration
of the mutual covenants hereinafter contained, DO HEREBY AGREE as follows:
ARTICLE 1
DEFINITION OF TERMS
Section 1.1 Definitions.
The terms defined in this Article 1 shall, for all purposes of this Agreement, have
the meanings specified in this Article 1, unless the context clearly otherwise requires.
"Act" shall mean Chapter 166, Part II, Florida Statutes, as amended, Chapter 72-
718, Laws of Florida, Special Acts of 1972, as amended, and other applicable provisions oflaw.
"Additional Amount" shall have the meaning ascribed to such term in Section
3.1(d) hereof.
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"Agreement" shall mean this Loan Agreement dated as of June 2, 2004, between
the City and the Bank, and any and all modifications, alterations, amendments and supplements
hereto made in accordance with the provisions hereof.
"Authorized Depository" shall mean the State Board of Administration of Florida
or a bank or trust company which is eligible under the laws of the State to receive funds of the
City.
"Authorized Investments" shall mean any of the following which shall be
authorized from time to time by applicable laws of the State of Florida for deposit or purchase by
the City for the investment of its funds:
(a) Direct obligations of (including obligations issued or held in book entry form
on the books of the Department of the Treasury of the United States of America and stripped and
zero coupon obligations), or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America.
(b) Bonds, debentures or notes or other evidences of indebtedness payable in cash
issued by anyone or a combination of any of the following federal agencies whose obligations
represent the full faith and credit of the United States of America: Export Import Bank of the
United States, Federal Financing Bank, Farmers Home Administration, Federal Housing
Administration, Maritime Administration, Public Housing Authority and Government National
Mortgage Association.
(c) Certificates of deposit properly secured at all times by collateral security
described in either or both of paragraphs (a) and (b) of this definition or in the collateral
provisions of Chapter 280, Florida Statutes, as amended, and issued by commercial banks,
savings and loan associations or mutual savings banks chartered by the State of Florida or the
United States of America, and bank trust receipts issued by commercial banks or trust companies
chartered by the State of Florida or the United States of America upon any securities described in
paragraph (a) of this definition.
(d) The following investments fully insured by the Federal Deposit Insurance
Corporation: (i) certificates of deposit, (ii) savings accounts, (iii) deposit accounts, or (iv)
depository receipts of a bank, savings and loan association or mutual savings bank.
( e) Commercial paper rated in one of the two highest rating categories by at least
two nationally recognized rating agencies or commercial paper backed by a letter of credit or line
of credit rated in one of the two highest rating categories by Moody's Investors Service and
Standard & Poor's.
(f) Written repurchase agreements with any bank, savmgs institution or trust
company which is insured by the Federal Deposit Insurance Corporation, or with any
broker-dealer with retail customers which falls under Securities Investors Protection Corporation
protection, provided that such repurchase agreements are fully secured by collateral described in
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(a) above or obligations of any agency or instrumentality of the United States of America, and
provided further that (i) such collateral is held by a bank or trust company chosen by the City
which has no interest in the repurchase agreement during the term of such repurchase agreement,
(ii) such collateral is not subject to liens or claims of third parties, (iii) such collateral has a
market value (determined at least once every 30 days) at least equal to the amount invested in the
repurchase agreement, (iv) the entity holding the collateral has a perfected first security interest
in the collateral for the benefit of the Noteholder, (v) the agreement shall be for a term not longer
than 270 days and (vi) the failure to maintain such collateral at the level required in (iii) above
will require the entity holding the collateral to liquidate the collateral.
(g) Money market funds rated in the highest rating category by Moody's
Investors Service and Standard & Poor's.
(h) Units of participation in the Local Government Surplus Funds Trust Fund
established pursuant to Chapter 218, Part IV, Florida Statutes, as amended, or any similar
common trust fund which is established pursuant to the law of the State of Florida as a legal
depository of public moneys.
(i) Obligations of state or local government municipal bond issuers that are rated
in one of the two highest rating categories by Moody's Investors Service and Standard & Poor's.
(j) Such other obligations as shall be permitted to be legal investments of the City
by the laws of the State of Florida.
Rating categories when referred to herein shall be without regard to gradations
within such categories, such as "plus" or "minus."
"Authorized City Officer" for the performance on the behalf of the City of any act
of the City or the execution of any instrument on behalf of the City shall mean any person
authorized by resolution or certificate of the City to perform such act or sign such document.
"Bank" shall mean Bank of America, N.A., and its successors and assigns.
"Bond Counsel" shall mean Akerman Senterfitt, Orlando, Florida, or any other
attorney at law or firm of attorneys of nationally recognized standing in matters pertaining to the
federal tax exemption of interest on obligations issued by states and political subdivisions, and
duly admitted to practice law before the highest court of any state of the United States of
America.
"Business Day" or "business day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions within the State are authorized by law to remain
closed.
"City" shall mean the City of Winter Springs, Florida.
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"City Clerk" shall mean the City Clerk of the City and such other person as may
be duly authorized to act on his or her behalf.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
applicable rules and regulations thereto and thereunder.
"Cost" when used in connection with the Project, shall mean the costs of the
Project described in Section 4.1 (b) hereof.
"Determination of Taxability" shall mean the circumstance of interest paid or
payable on the 2004A Note becoming includable for federal income tax purposes in the gross
income of the Noteholder as a consequence of any act, omission or event whatsoever and
regardless of whether the same was within or beyond the control of the City. A Determination of
Taxability will be deemed to have occurred upon (a) the receipt by the City or a Noteholder 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 2004A Note is includable in
the gross income of the Noteholder; (b) the issuance of any public or private ruling of the
Internal Revenue Service that any interest payable on the 2004A Note is includable in the gross
income of the Noteholder; or (c) receipt by the City or a Noteholder of an opinion of Bond
Counsel that any interest on the 2004A Note has become includable in the gross income of the
Noteholder 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 2004A Note is
deemed includable in the gross income of the Noteholder. A Determination of Taxability shall
not occur solely from the fact that such interest is taken into account in determining adjusted
current earnings for the purpose of the alternative minimum income tax imposed on corporations.
"Fiscal Year" shall mean the period commencing on October 1 of each year and
continuing through the next succeeding September 30, or such other period as may be prescribed
by law.
"Interest Payment Date" shall have the meaning ascribed thereto in Section 3.1 ( c)
hereof.
"Mayor" shall mean the Mayor of the City and such other person as may be duly
authorized to act on his or her behalf.
"Non-Ad Valorem Funds" shall mean all legally available funds of the City
derived from any source whatsoever other than ad valorem taxation on real and personal
property, which are legally available to make the payments required herein, but only after
provision has been made by the City for the payment of services and programs which are for
essential public purposes affecting the health, welfare and safety of the inhabitants of the City or
which are legally mandated by applicable law.
"Noteholder" shall mean the Bank as the holder of the 2004A Note, or any other
registered holder of the 2004A Note.
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"Noteholder's Adjusted Cost of Funds" shall mean the fraction (expressed as a
percentage), determined by the Noteholder, the numerator of which is the total interest expense
of the Noteholder for each calendar year and the denominator of which is the total average
adjusted basis of all assets of the Noteholder during the calendar year as determined under
Section 265(b)(2)(B) of the Code or any successor provision thereto.
"Pledged Funds" shall mean (a) the proceeds of the 2004A Note pending the
application thereof and (b) moneys budgeted and appropriated pursuant to Section 2.7 hereof.
"Prior Note" shall mean that certain Capital Improvement Revenue Note, Series
2000B, dated as of June 16, 2000, in the original principal amount of $723,262.00 and having a
current outstanding principal balance of $495,906.86.
"Project" shall refer to the capital projects described generally in Exhibit A
attached hereto, as such Project may be amended from time to time by the City with the prior
written approval of the Bank.
"Project Fund" shall mean the Project fund established pursuant to Section 4.2
hereof.
"Resolution" shall mean the resolution adopted by the City on May 24, 2004,
which among other things authorized the execution and delivery of this Agreement and the
issuance of the 2004A Note.
"State" shall mean the State of Florida.
"Taxable Period" shall have the meaning ascribed to such term in Section 3.1 (d)
hereof.
"Tax Certificate" shall have the meaning ascribed to such term in Section 2.4
hereof.
"Taxable Rate" shall mean the interest rate on the 2004A Note multiplied by 1.54.
"2004A Note" shall mean the revenue note authorized by the Resolution and
delivered by the City to the Noteholder in accordance with the requirements set forth in Article 4
hereof.
Section 1.2 Interpretation.
Unless the context clearly requires otherwise, words of the masculine gender shall
be construed to include correlative words of the feminine and neuter genders and vice versa, and
words of the singular number shall be construed to include correlative words of the plural
number and vice versa. Any capitalized terms used in this Agreement not herein defined shall
have the meanings ascribed to such terms in the Resolution. This Agreement and all the terms
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and provisions hereof shall be construed to effectuate the purpose set forth herein and to sustain
the validity hereof.
Section 1.3
Titles and Headings.
The titles and headings of the articles and sections of this Agreement, which have
been inserted for convenience of reference only and are not to be considered a part hereof, shall
not in any way modify or restrict any of the terms and provisions hereof, and shall not be
considered or given any effect in construing this Agreement or any provision hereof or in
ascertaining intent, if any question of intent should arise.
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS;
SECURITY FOR 2004A NOTE; ADDITIONAL OBLIGATIONS
Section 2.1
Representations by the City.
The City represents, warrants and covenants that:
(a) The City is a municipality validly created and existing under the laws of the
State of Florida. Pursuant to the Resolution, the City (i) has duly authorized the execution and
delivery of this Agreement and the performance by the City of all of its obligations hereunder,
and (ii) has duly authorized the 2004A Note issued hereunder and the performance by the City of
all its obligations relating thereto.
(b) The City has complied with all of the provisions of the Constitution and laws
of the State, and has full power and authority to enter into and consummate all transactions
contemplated by this Agreement or under the 2004A Note, and to perform all of its obligations
hereunder and, to the best knowledge of the City, the transactions contemplated hereby do not
conflict with the terms of any statute, order, rule, regulation, judgment, decree, agreement,
instrument or commitment to which the City is a party or by which the City is bound.
(c) The City is duly authorized and entitled to issue the 2004A Note. This
Agreement and, when issued in accordance with the terms of this Agreement, the 2004A Note
will constitute legal, valid and binding obligations of the City enforceable in accordance with
their terms, subject as to enforceability to bankruptcy, insolvency, moratorium, reorganization or
other similar laws affecting creditors' rights generally, or by the exercise of judicial discretion in
accordance with general principles of equity.
(d) There are no actions, suits or proceedings pending or, to the best knowledge
of the City, threatened against or affecting the City, at law or in equity, or before or by any
governmental authority, that, if adversely determined, would materially impair the ability of the
City to perform the City's obligations under this Agreement or under the 2004A Note.
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(e) The City will furnish to the Bank (i) within 270 days following the end of
each Fiscal Year, a comprehensive annual financial report of the City for such Fiscal Year,
which shall include a balance sheet as of the end of such Fiscal Year, audited without scope
limitations by independent certified public accountants of recognized standing selected by the
City and (ii) by November 15 of each year, the annual budget of the City for the upcoming Fiscal
Year. Such reports shall be prepared in accordance with generally accepted accounting
principles. The City acknowledges and agrees that the Bank's ability to monitor and evaluate the
status of the loan is dependent upon the City timely providing the financial information required
herein. Should the City fail to timely provide the financial information, in addition to all other
rights and remedies the Bank has, including declaring the loan to be in default, the Bank may
charge the City, upon ten (10) days prior written notice, a late fee up to 10 basis points (.1 %) of
the outstanding principal balance of the loan, not to be less than $500.00. The charging and/or
payment of such late fee is not a waiver of the City's continuing obligation to provide the
required financial information.
(f) No authorization, consent, approval, license, exemption of or registration or
filing with any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, has been or will be necessary for the valid execution,
delivery and performance by the City of this Agreement, the 2004A Note and the related
documents, except such as have been obtained, given or accomplished.
(g) Except as disclosed in writing to the Bank, the City is not in default in the
payment when due of any indebtedness of the City.
(h) The financial statements of the City for the fiscal year ending September 30,
2003, copies of which have been furnished to the Bank, have been prepared in accordance with
generally accepted accounting principles and present fairly the financial condition of the City as
of such date and the results of its operations for the period then ended. Since September 30,
2003, there has been no material adverse change in the financial condition, revenues, properties
or operations of the City.
(i) Any written information, reports and other papers and data prepared by the
City and furnished to the Bank by the City were, at the time the same were so furnished,
complete and correct in all material respects to the extent necessary to give the Bank a true and
accurate knowledge of the subject matter thereof. There is no fact, circumstance or condition
that has not been disclosed to the Bank in writing by the City which materially and adversely
affects or, so far as the City can now foresee, will materially and adversely affect, (i) the
financial condition, revenues, properties or operations of the City or (ii) the validity or
enforceability of, or the authority or ability of the City to perform its obligations under, this
Agreement, the 2004A Note and the related documents.
U) The obligations of the City under this Agreement and the 2004A Note are not
subject to any law, rule or regulation of the State of Florida prescribing a maximum rate of
interest, except for Sections 159.825(1),215.84 and 687.03, Florida Statutes, as amended.
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(k) The City acknowledges and agrees that its timely and complete compliance
with all of the terms and conditions contained in this Agreement is material consideration for the
loan made hereunder. The City's failure to timely and completely comply with each and every
term and condition contained in this Agreement is, at the Bank's option, an Event of Default
under this Agreement. In addition to all other rights and remedies the Bank has, the Bank may,
in its sole discretion, elect to waive such default or to forbear to exercise its rights and remedies
for such default and may charge the City a fee for agreeing to do so.
(1) The City hereby authorizes the Bank to automatically deduct from any of the
City's accounts with the Bank the amount of any loan payment due hereunder to the extent there
are sufficient Pledged Funds in such accounts. If the funds in the account are insufficient to
cover any payment, the Bank shall not be obligated to advance funds to cover the payment. At
any time and for any reason, the City or the Bank may voluntarily terminate automatic payments.
Please debit account number for such payments.
(m) The City will discharge all outstanding principal and interest on the Prior
Note on the date the 2004A Note is issued.
Section 2.2 General Representations, Warranties and Covenants of the Bank.
The Bank hereby represents, warrants and agrees that it is a national banking
association authorized to execute and deliver this Agreement and to perform its obligations
hereunder, and such execution and delivery will not constitute a violation of its charter, articles
of incorporation or bylaws.
Section 2.3 Making of Loan.
Pursuant to the terms and provisions of this Agreement, the Bank agrees to make
one or more loans to the City for the purpose of refinancing the Prior Note and financing the cost
of the Project.
Section 2.4 Tax Covenants.
(a) The City hereby covenants with the holder of the 2004A Note that in order to
maintain the exclusion from gross income for purposes of federal income taxation of interest on
the 2004A Note, it shall comply with each requirement of the Code applicable to the 2004A
Note. In furtherance of the covenant contained in the preceding sentence, the City agrees to
continually comply with the provisions of the Federal Tax Certific executed by the City
relating to the 2004A Note, as such Certificate may be amended from time to time, as a source of
guidance for achieving compliance with the Code (referred to herein as the "Tax Certificate").
(b) The City hereby covenants with the holder of the 2004A Note that it shall
make any and all payments required to be made to the United States Department of the Treasury
in connection with the 2004A Note pursuant to Section 148(f) of the Code.
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(c) So long as necessary in order to maintain the exclusion from gross income of
interest on the 2004A Note for federal income tax purposes, the covenants contained in this
Section 2.4 shall survive the payments of the 2004A Note and the interest thereon, including any
payment or defeasance thereof.
(d) The City hereby covenants with the holder of the 2004A Note that it shall not
take or permit any action or fail to take any action which would cause the 2004A Note to be
"arbitrage bonds" within the meaning of Section 148( a) of the Code.
Section 2.5 2004A Note not to be Indebtedness of the City or State.
The 2004A Note, when delivered by the City pursuant to the terms of this
Agreement, shall not be or constitute an indebtedness of the City, the State or any political
subdivision or agency thereof, within the meaning of any constitutional, statutory or charter
limitations of indebtedness, but shall be payable from and secured by a lien upon and pledge of
the Pledged Funds, in the manner and to the extent provided herein. No Noteholder shall ever
have the right to compel the exercise of the ad valorem taxing power of the City or taxation in
any form on any property therein to pay the 2004A Note or the interest thereon. The 2004A
Note is a special and limited obligation payable as to principal and interest from the Pledged
Funds in the manner and to the extent provided herein.
Section 2.6 Security for 2004A Note.
The 2004A Note shall be secured by and payable from the Pledged Funds. The
City does hereby irrevocably pledge the Pledged Funds to the payment of the 2004A Note in
accordance with the provisions hereof. .
Section 2.7 Covenant to Budget and Appropriate.
(a) Until the 2004A Note is paid or deemed paid pursuant to the provisions of this
Agreement, the City hereby covenants to appropriate in its annual budget, by amendment if
necessary, from Non-Ad Valorem Funds lawfully available in each Fiscal Year of the City in
which principal of or interest on the 2004A Note becomes due and payable, amounts sufficient,
together with other available moneys, to pay the principal of and interest on the 2004A Note, as
the same become due (whether by redemption, at maturity or otherwise). Such covenant and
agreement on the part of the City to budget and appropriate such amounts of Non-Ad Valorem
Funds shall be cumulative to the extent not paid, and shall continue until such Non-Ad Valorem
Funds or other legally available funds in amounts sufficient to make all such required payments
hereunder and under the 2004A Note shall have been budgeted, appropriated and actually paid.
Notwithstanding the foregoing covenant of the City, the City does not covenant to maintain any
services or programs, now provided or maintained by the City, which generate Non-Ad Valorem
Funds. No Noteholder shall have a lien on such Non-Ad Valorem Funds until such time as the
City has irrevocably set such funds aside for payment of debt service on the 2004A Note.
{OR749842;5}
9
(b) Except as otherwise provided herein, such covenant to budget and appropriate
does not create any lien upon or pledge of such Non-Ad Valorem Funds, nor does it preclude the
City from pledging in the future its Non-Ad Valorem Funds, nor does it require the City to levy
and collect any particular Non-Ad Valorem Funds, nor does it give the Noteholder a prior claim
on the Non-Ad Valorem Funds as opposed to claims of general creditors of the City. Such
covenant to budget and appropriate Non-Ad Valorem Funds is subject in all respects to the
payment of obligations secured by a pledge of such Non-Ad Valorem Funds heretofore or
hereafter entered into (including the payment of debt service on bonds and other debt
instruments). However, the covenant to budget and appropriate in its general annual budget for
the purposes and in the manner stated herein shall have the effect of making available for the
payment of the principal of and interest on the 2004A Note in the manner described herein Non-
Ad Valorem Funds and placing on the City a positive duty to appropriate and budget, by
amendment, if necessary, amounts sufficient to meet its obligations hereunder; subject, however,
in all respects to the restrictions of Section 166.241(3), Florida Statutes, as amended, which
provides that the governing body of each municipality shall make appropriations for each fiscal
year which, in anyone year, shall not exceed the amount to be received from taxation or other
revenue sources; and subject, further, to the payment of services and programs which are
essential public purposes affecting the health, welfare and safety of the inhabitants of the City or
which are legally mandated by applicable law.
Section 2.8 Payment Covenant.
The City covenants that it shall duly and punctually pay from the Pledged Funds
the principal of and interest on the 2004A Note at the dates and place and in the manner provided
herein and in the 2004A Note according to the true intent and meaning thereof and all other
amounts due under this Agreement.
Section 2.9 Financial Covenants.
The City covenants that it shall maintain a debt service coverage ratio calculated
annually (as reflected in the City's audited financials) of at least 1.10 to 1.0 based upon the
City's general fund as more particularly described as follows: the sum of the general fund's total
revenues plus operating transfers into the general fund, less the general fund's total expenditures
inclusive of debt service paid from the general fund during the year other than debt service on
the 2004A Note, less operating transfers out from the general fund, plus the general fund's
undesignated/unreserved fund balance, divided by debt service to be paid on the 2004A Note
during the year.
Section 2.10 Assessments.
The City covenants in each Fiscal Year to designate to the payment of debt
service due on the 2004A Note the first amounts received in each Fiscal Year of the "Debt
Service Amount" of the Annual Improvement Assessments as such terms are defined in
Resolution No. 2000-6 of the City as amended and supplemented.
{OR749842;5}
10
ARTICLE 3
DESCRIPTION OF 2004A NOTE; PAYMENT TERMS;
OPTIONAL PREP A YMENT
Section 3.1 Description and Payment Terms of the 2004A Note.
(a) The City shall, pursuant to authority granted under the Resolution, issue and
deliver the 2004A Note to the Bank, which 2004A Note shall be issued in the principal amount
of FIVE HUNDRED SEVENTY-FIVE THOUSAND NINE HUNDRED AND SEVEN AND
NO/lOO DOLLARS ($575,907) in aggregate principal amount. The 2004A Note shall be
designated as "City of Winter Springs, Florida, Capital Improvement Revenue Note, Series
2004A." The text of the 2004A Note shall be substantially in the form attached hereto as
Exhibit B, with such omissions, insertions and variations as may be necessary and desirable to
reflect the terms of the 2004A Note. The provisions of the form of the 2004A Note are hereby
incorporated in this Agreement.
(b) The 2004A Note shall be dated the date of its delivery, shall be in the
principal amount set forth therein and payable as set forth therein and shall bear interest from its
date at the rate or rates set forth therein or as the same may be adjusted pursuant to Section 3.3
hereof. The 2004A Note shall be executed in the name of the City by the manual signature of the
Mayor and the official seal of the City shall be affixed thereto and attested by the manual
signature of the City Clerk. In case anyone or more of the officers, who shall have signed or
sealed the 2004A Note, shall cease to be such officer of the City before the 2004A Note so
signed and sealed has been actually delivered, the 2004A Note may nevertheless be delivered as
herein provided and may be issued as if the person who signed or sealed the 2004A Note had not
ceased to hold such office. The 2004A Note may be signed and sealed on behalf of the City by
such person who at the actual time of the execution of the 2004A Note shall hold the proper
office, although at the date the 2004A Note shall actually be delivered, such person may not have
held such office or may have been so authorized.
(c) Interest on the 2004A Note shall be payable on the dates set forth therein (the
"Interest Payment Dates") commencing on the date set forth therein. Principal of the 2004A
Note shall be payable at the times and in the manner set forth therein. Interest on the 2004A Note
shall be calculated on the basis of a 365/366-day year.
(d) In the event of a Determination of Taxability, the interest rate on the 2004A
Note subject to such Determination of Taxability shall be changed to the Taxable Rate effective
retroactively to the date on which such Determination of Taxability was made. Immediately
upon a Determination of Taxability, the City agrees to pay to any holder of the 2004A Note
subject to such Determination of Taxability the Additional Amount (as defined herein).
"Additional Amount" means (i) the difference between (A) interest on the 2004A Note for the
period commencing on the date on which the interest on the 2004A Note (or portion thereof)
loses its tax-exempt status and ending on the earlier of the date the 2004A Note ceased to be
outstanding or such adjustment is no longer applicable to the 2004A Note (the "Taxable Period")
{OR749842;5}
11
at a rate per annum equal to the Taxable Rate as adjusted from time to time on the same dates
and in the same manner as the interest rate on the 2004A Note was or would be adjusted pursuant
to the provisions of the 2004A Note, and (B) the aggregate amount of interest payable on the
2004A Note for the Taxable Period under the provisions of the 2004A Note without considering
the Determination of Taxability, plus (ii) any penalties and interest paid or payable by the
Noteholder to the Internal Revenue Service by reason of such Determination of Taxability. This
provision shall survive the repayment of the Note until the federal statute of limitation
applicable to a Determination of Taxability shall have expired. If the 2004A Note has matured,
any Additional Amount shall be paid to the former Noteholder(s) within thirty (30) days after
written demand.
( e) All payments of principal of and interest on the 2004A Note shall be payable
in any coin or currency of the United States which, at the time of payment, is legal tender for the
payment of public and private debts and shall be made to the Bank (i) in immediately available
funds, (ii) by delivering to the Bank no later than payment date a check drawn on an account at
any bank that is a member of the Federal Reserve system, or (iii) in such other manner as the
City and the Bank shall agree upon in writing.
(f) There will be no Bank fees to maintain the loan and the 2004A Note. The
Bank shall pay for all of its costs relating to servicing the loan and the 2004A Note. The City
agrees to pay the legal fees and costs of Bond Counsel and counsel to the Bank. The fees and
costs of counsel to the Bank shall be equal to $2,500.00.
Section 3.2 Optional Prepayment.
The City may prepay and redeem the 2004A Note as a whole or in part, at any
time or from time to time, without penalty or premium, by paying to the Noteholder all or part of
the principal amount of the 2004A Note, together with the unpaid interest accrued on the amount
of principal so prepaid to the date of such prepayment. Notwithstanding the immediately
preceding sentence if the funds used to effectuate such prepayment are obtained from a financial
institution other than the Bank, a premium of I % of the principal amount of the 2004A Note
shall also be due at the time of prepayment. Each prepayment of the 2004A Note shall be made
on such date and in such principal amount as shall be specified by the City in a written notice
delivered to the Noteholder not less than five (5) Business Days prior thereto specifying the
principal amount of the 2004A Note to be prepaid and the date of such prepayment. Notice
having been given as aforesaid, the principal amount of the 2004A Note stated in such notice or
the whole thereof, as the case may be, shall become due and payable on the prepayment date
stated in such notice, together with interest accrued and unpaid to the prepayment date on the
principal amount then being paid; and the amount of principal and interest then due and payable
shall be paid (a) in case the entire unpaid balance of the principal of the 2004A Note is to be
prepaid, upon presentation and surrender of the 2004A Note at the office of the City on the date
specified for prepayment, and (b) in case only part of the unpaid balance of principal of the
2004A Note is to be paid, upon presentation of the 2004A Note at the office of the City for
notation thereon of the amount of principal and interest on the 2004A Note then paid. If on the
{OR749842;6 }
12
prepayment date moneys for the payment of the principal amount to be prepaid, together with
interest to the prepayment date on such principal amount, shall have been paid to the Noteholder
as above provided and if notice of prepayment shall have been given to the Noteholder as above
provided, then from and after the prepayment date interest on such principal amount of the
2004A Note shall cease to accrue. If said moneys shall not have been so paid on the prepayment
date, such principal amount of the 2004A Note shall continue to bear interest until payment
thereof at the rate or rates provided for in this Agreement.
Section 3.3
Adiustments to Interest Rates.
(a) The interest rate on the 2004A Note shall be subject to adjustment as
described in this Section 3.3 from the date of its issuance. The Bank shall promptly notify the
City in writing of any adjustments for the 2004A Note pursuant to this Section 3.3. Such
adjustments shall become effective as of the effective date of the event causing such adjustment.
Adjustments pursuant to this Section 3.3 may be retroactive. The Bank shall certify to the City
in writing the additional amount, if any, due to the Bank as a result of an adjustment pursuant to
this Section 3.3.
(b) Subject to the provisions of Section 3.3(a) above, the interest rate on the
2004A Note shall be adjusted as follows:
(i) Alternative Minimum Tax Where Interest on the 2004A Note is a
Direct Tax Preference Item. If the Noteholder or its holding company pays an
alternative minimum tax in any tax year and the interest on the 2004A 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 2004A Note for the period during such tax year
in which interest is accruing on the 2004A Note shall be increased during such
accrual period by an amount equal to (A - B) x C where:
(A) A equals the interest rate on the 2004A Note expressed as a
percentage;
(B) B equals the Noteholder's Adjusted Cost of Funds; and
(C) C equals the maximum marginal rate of the alternative
minimum tax expressed as a decimal (currently .20);
(ii) Alternative Minimum Tax Where Interest on the 2004A Note is an
Indirect Tax Preference Item. If the Noteholder or its holding company pays an
alternative minimum tax in any tax year and the interest on the 2004A Note is not
a direct tax preference item under Section 57(a)(5) or any successor provision of
the Code, 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
2004A Note for the period during such tax year in which interest is accruing on
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13
{OR749842;5 )
the 2004A Note shall be increased during such accrual period by an amount equal
to (A - B) x C where:
(A) A equals the interest rate on the 2004A Note expressed as a
percentage;
(B) B equals the Noteholder's Adjusted Cost of Funds; and
(C) 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 2004A Note which is subject
to such indirect alternative minimum tax, then C shall equal
the percentage of such interest which is effectively subject
to such indirect alternative minimum tax.
(iii) Loss of Federal Income Tax Deduction for State Income Taxes. If the
federal income tax deduction for state income taxes paid on the interest payments
received under the 2004A Note during any period is reduced because of any
change in the tax laws or regulations and the Noteholder is then subject to
payment of state income tax on the interest on the 2004A Note then the interest
rate on the 2004A Note shall be increased during such period by an amount equal
to A x B x C x D where:
(A) A equals the fraction (expressed as a decimal) of the total
state income tax disallowed as a result of such tax law
change;
(B) B equals the rate of the Florida state income tax (expressed
as a decimal);
(C) C equals the maximum federal corporate tax rate then in
effect for the Noteholder (expressed as a decimal); and
(D) D equals the interest rate on the 2004A Note (expressed as
a percentage).
(iv) Partial Taxability. If the interest payments received under the 2004A
Note during any period become partially taxable to the extent not otherwise
taxable on the date of issuance thereof because of any change in the tax laws or
regulations, then the interest rate on the 2004A Note shall be increased during
such period by an amount equal to (A - B) x C where:
(A) A equals the Taxable Rate (expressed as a percentage);
14
(B) B equals the interest rate on the 2004A Note (expressed as
a percentage); and
(C) C equals the fraction of the interest rate on the 2004A Note
which has become taxable as the result of such tax change
(expressed as a decimal).
(v) Other Changes in Tax Laws. If the tax laws or regulations are
amended to cause the interest on the 2004A Note to become taxable to the extent
not otherwise taxable on the date of issuance thereof, to be subject to a minimum
tax or an alternative minimum tax or to otherwise decrease the yield on the 2004A
Note to the Noteholder (directly or indirectly, other than a change described in (i)
through (iv) above or because of a Determination of Taxability), then the interest
rate on the 2004A Note shall be adjusted to cause the yield on the 2004A Note to
equal what the yield on the 2004A 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 yield on the 2004A Note to the Noteholder, then the
Bank shall adjust the interest rate on the 2004A Note to cause the yield on the
2004A Note to equal what the yield on the 2004A Note would have been in the
absence of such change or amendment in the tax laws or regulations.
(vi) Transfer of Primary Depository Accounts. If the City transfers its
primary depository accounts out of the Bank prior to the payment in full of the
2004A Note, the interest rate on the then outstanding 2004A Note shall be
increased by 1.25%.
(c) The above adjustments shall be cumulative, but in no event shall the interest
rate on the 2004A Note exceed the maximum rate permitted by law. Interest on the 2004A Note
and all other tax rates and interest rates are expressed as annual rates. However, proper partial
adjustment shall be made if the tax law change is effective after the first day of the Noteholder's
tax year or if interest on the 2004A Note does not accrue for the entire tax year of the
Noteholder. Adjustments which create a circular calculation because the interest rate on the
2004A Note is affected by the calculation shall be carried out sequentially, increasing the interest
rate on the 2004A Note, until the change on the interest rate on the 2004A Note caused by the
next successive calculation of the adjustment is de minimis. If more than one of paragraphs
numbered (i) through (vi) in Section 3.3(b) apply, then the interest rate on the 2004A Note shall
be adjusted in the order in which listed above.
(d) To the extent an adjustment to the interest rate on the 2004A Note is not
effected within three (3) months of the event giving rise to the adjustment, the additional interest
due as a result of such adjustment shall be paid with interest thereon compounded monthly at the
rate which is equal to the interest rate on the 2004A Note; provided, however, in no event shall
such interest rate exceed the maximum rate permitted by law. Subject to the provisions of
Section 3.3(a) hereof, all unpaid amounts determined to be owing as a result of such calculation
shall be due and payable within ten (10) days after delivery of written notice of the amount of
{OR749842;5}
15
such adjustment, and shall be paid to the Noteholder of record during the period to which the
adjustment relates. This obligation shall survive the payment and cancellation of the 2004A
Note.
(e) In the event the maturity of the 2004A Note is accelerated or prepaid in
accordance with the provisions hereof, then such amounts that constitute payments of interest,
together with any costs or considerations which constitute interest under the laws of the State of
Florida, may never exceed an amount which would result in payment of interest at a rate in
excess of (i) the applicable maximum rate of interest allowed by Sections 215.84 and 159.825(1),
Florida Statutes, as amended, or (ii) the non-usurious interest allowed by the laws of the State of
Florida or the United States of America to the extent applicable, as presently in effect; and
excess interest, if any, shall be cancelled automatically as of the date of such acceleration, or, if
theretofore paid, shall be credited on the principal amount of the 2004A Note unpaid, but such
crediting shall not cure or waive any default under this Agreement.
ARTICLE 4
ISSUANCE OF 2004A NOTE
Section 4.1 Issuance of2004A Note.
(a) The Bank shall not be obligated to make any loan under this Agreement
unless at or prior to the date of issuance of the 2004A Note the City delivers to the Bank the
following items in form and substance acceptable to the Bank:
(i) A certificate of the Mayor, dated as of the date of issuance of the
2004A Note, to the effect that the representations and warranties of the City
contained in Section 2.1 hereof are true and correct as of such date and that there
is currently no Event of Default or event that with notice or lapse of time or both
would become an Event of Default hereunder;
(ii) A fully executed Tax Certificate relating to the 2004A Note;
(iii) A copy of a completed and executed Form 8038-G relating to the
2004A Note to be filed with the Internal Revenue Service;
(iv) An opinion of Bond Counsel in form and substance to the effect that
(A) this Agreement and the 2004A Note have been duly authorized by the City
and are enforceable obligations in accordance with their terms and the Resolution
has been duly adopted and is enforceable in accordance with its terms
(enforceability of such instruments may be subject to standard bankruptcy
exceptions and the like), (B) interest on the 2004A Note shall be excluded from
gross income for federal income tax purposes and shall not be treated as a
preference item for purposes of computing the alternative minimum tax imposed
by the Code (however, the interest on the 2004A Note owned by corporations
{OR749842;5 }
16
may be subject to the federal alternative minimum tax which is based in part on
adjusted current earnings), (C) the 2004A Note is a "qualified tax-exempt
obligation" under Section 265(b)(3)(B) of the Code and (D) the interest on the
2004A Note shall be exempt from present Florida intangible taxes;
(v) A certificate of the Mayor, dated the date of issuance of the 2004A
Note, to the effect that the interest rate on the 2004A Note is in compliance with
the applicable maximum interest rate provisions contained in Sections 215.84 and
159.825(1), Florida Statutes, as amended;
(vi) The fully executed 2004A Note;
(vii) An opinion of counsel to the City regarding the due authorization,
validity and enforceability of this Agreement and the 2004A Note and the due
adoption of the Resolution (enforceability may be subject to standard bankruptcy
exceptions and the like); and
(viii) Such additional certificates, instruments and other documents as the
Bank, or its counselor Bond Counsel, or counsel to the City, may deem necessary
or appropriate.
(b) The City shall apply the proceeds of the 2004A Note described in Section 3.1
hereof to pay for the costs of the Prior Note and the Costs of the Project, which Costs of the
Project shall include but not be limited to:
(i) The costs of architectural and engineering services related to the
Project, including, without limitation, the costs of preparation of studies, surveys,
reports, tests, plans and specifications;
(ii) The costs of legal, accounting, financial advisory, consulting,
marketing and other special services related to the Project;
(iii) Costs and fees incurred in connection with the issuance of the 2004A
Note;
(iv) Fees and charges incurred in connection with applications to federal,
state and local governmental agencies for any requisite approval or permits
regarding the construction of the Project;
(v) Costs incurred in connection with the acquisition of the sites for the
Project, including any necessary rights-of-way, easements or other interests in real
or personal property;
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17
(vi) Costs incurred in connection with the acqulSltlOn, construction,
improvement or extension of the buildings, structures and facilities comprising
the Project;
(vii) Costs incurred in connection with the acquisition and installation of
any machines, equipment, vehicles, fixtures, appurtenances or personal property
of any kind or nature, which are to comprise a part of the Project;
(viii) Interest on 2004A Note accruing prior to the completion date of the
Proj ect; and
(ix) To the extent permitted by law, other costs and expenses relating to the
Project which are incurred for the purpose of providing for the Project.
Section 4.2 Proiect Fund.
The City covenants and agrees to establish a separate fund with an Authorized
Depository to be known as the "City of Winter Springs, Florida, Capital Improvement Revenue
2004A Note Project Fund." Any proceeds not expended to retire the Prior Note shall be
deposited into the Project Fund. Moneys in the Project Fund shall be used only for payment of
the Cost of the Project and, until applied in payment of any item of the Cost of the Project in the
manner hereinafter provided, shall be held in trust by the City and shall be subject to a lien and
charge in favor of the Noteholder and for the further security of the Noteholder.
There may be paid into the Project Fund, at the option of the City, any moneys
received for or in connection with the Project by the City from any other source.
The City covenants that the construction of the Project will be completed without
delay and in accordance with sound governmental practices. The City shall make disbursements
or payments from the Project Fund to pay the Cost of the Project upon the filing with the City
Clerk of documents and/or certificates signed by an Authorized City Officer stating with respect
to each disbursement or payment to be made: (a) the item number of the payment, (b) the name
and address of the person to whom payment is due, (c) the amount to be paid, (d) the purpose, by
general classification, for which payment is to be made, and (e) that (i) each obligation, item of
cost or expense mentioned therein has been properly incurred, is in payment of a part of the Cost
of the Project and is a proper charge against the Project Fund and has not been the basis of any
previous disbursement or payment, or (ii) each obligation, item of cost or expense mentioned
therein has been paid by the City, is a reimbursement of a part of the Cost of the Project, is a
proper charge against the Project Fund, has not been theretofore reimbursed to the City or
otherwise been the basis of any previous disbursement or payment and the City is entitled to
reimbursement thereof. The City Clerk shall retain all such documents and/or certificates of the
Authorized City Officers for seven (7) years from the dates of such documents and/or
certificates. The City Clerk shall make available the documents and/or certificates at all
reasonable times for inspection by the Noteholder or the agent or representative of the
Noteholder.
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18
The date of completion of the Project shall be determined by the Authorized City
Officer who shall certify such fact in writing to the City. Promptly after the date of the
completion of the Project, and after paying or making provisions for the payment of all unpaid
items of the Cost of the Project, the City shall deposit any balance of moneys remaining in the
Project Fund in such other fund or account of the City as shall be determined by- the City,
provided the City has received an opinion of Bond Counsel to the effect that such transfer shall
not adversely affect the exclusion, if any, of interest on the 2004A Note from gross income for
federal income tax purposes. The Project Fund shall be continuously secured in the manner by
which the deposit of public funds are authorized to be secured by the laws of the State of Florida.
Moneys on deposit in the Project Fund may be invested and reinvested in Authorized
Investments maturing not later than the date on which the moneys therein will be needed.
Any and all income received by the City from the investment of moneys in the
Project Fund shall be retained in the Project Fund.
All investments shall be valued at cost. Nothing contained in this Agreement
shall prevent any Authorized Investments acquired as investments of or security for funds in the
Project Fund from being issued or held in book-entry form on the books of the Department of the
Treasury of the United States.
ARTICLE 5
EVENTS OF DEFAULTS; REMEDIES
Section 5.1
Events of Default.
An "Event of Default" shall be deemed to have occurred under this Agreement if:
(a) The City shall fail to make payment of principal or interest then due on the
2004A Note; or
(b) Failure by the City to observe and perform any covenant, condition or
agreement on its part to be observed or performed by it under this Agreement or the Resolution
other than as referred to in clause (a) of this Section, for a period of forty-five (45) days after
written notice specifying such failure and requesting that it be remedied has been given to the
City, unless the Noteholder shall determine in good faith that the delay would materially impair
its likelihood of full repayment; and during such period, the City shall cure the default or
provide to the Noteholder a written plan for curing such default, which may be accepted or
rejected in the Noteholder's discretion; or
(c) There shall occur the dissolution or liquidation of the City, or the filing by the
City of a voluntary petition in bankruptcy, or the commission by the City of any act of
bankruptcy, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of
its creditors, or appointment of a receiver for the City, or the entry by the City into an agreement
of composition with its creditors, or the approval by a court of competent jurisdiction of a
{OR749842;5}
19
petition applicable to the City in any proceeding for its reorganization instituted under the
provisions of the Federal Bankruptcy Act, as amended, or under any similar act in any
jurisdiction which may now be in effect or hereafter amended; or
(d) Any representation or warranty made by the City in connection with the
transactions contemplated hereunder proves to be untrue in any material respect as of the date
made or deemed made; or
(e) Default shall occur in the payment of the principal of or interest on any
obligation of the City for borrowed money, as and when the same shall become due, and which
payment is not subsequently made within ten (10) days after the scheduled payment date, unless
the City shall be contesting its liability therefor in good faith; or
(f) Any judgment in an amount in excess of $1,000,000 shall be entered or filed
against the City and remains unvacated, unpaid, unbonded or unstayed for a period of thirty (30)
days.
Section 5.2 Remedies.
If any such Event of Default shall have occurred, the Noteho1der may seek
enforcement of all remedies available to it under law. The holder of the defaulted 2004A Note
may declare the 2004A Note to be immediately due and payable. Any amounts due on the
2004A Note which shall remain unpaid past the scheduled payment dates, shall bear interest at
the lesser of the Taxable Rate or the maximum rate of interest permitted by law until all amounts
then due under the 2004A Note are paid in full. The Bank shall be entitled to its reasonable costs
and expenses (including reasonable fees and expenses of counsel) incurred in enforcing any of its
rights under this Agreement after an Event of Default.
ARTICLE 6
MISCELLANEOUS
Section 6.1 Arbitration.
IN THE EVENT ANY DISPUTE SHOULD ARISE UNDER THIS
AGREEMENT OR ANY OTHER ASPECT OF THE TRANSACTION REFLECTED IN THIS
AGREEMENT BETWEEN THE BANK AND THE CITY, WHETHER OR NOT
SPECIFICALLY RELATING TO THIS AGREEMENT, SAID DISPUTE WILL BE
RESOLVED THROUGH BINDING ARBITRATION IN ORANGE COUNTY, FLORIDA, IN
ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION.
Section 6.2 Amendments. Changes or Modifications to the Agreement.
This Agreement shall not be amended, changed or modified without the prior
written consent of the Bank and the City.
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Section 6.3
Counterparts.
This Agreement may be executed in any number of counterparts, each of which,
when so executed and delivered, shall be an original; but such counterparts shall together
constitute but one and the same Agreement, and, in making proof of this Agreement, it shall not
be necessary to produce or account for more than one such counterpart.
Section 6.4 Severability.
If any clause, provision or section of this Agreement shall be held illegal or
invalid by any court, the invalidity of such provisions or sections shall not affect any other
provisions or sections hereof, and this Agreement shall be construed and enforced to the end that
the transactions contemplated hereby be effected and the obligations contemplated hereby be
enforced, as if such illegal or invalid clause, provision or section had not been contained herein.
Section 6.5
Term of Agreement.
This Agreement shall be in full force and effect from the date hereof and shall
continue in effect as long as the 2004A Note is outstanding. Notwithstanding the other
provisions set forth herein, to the extent any law or regulation enacted subsequent to the
termination of this Agreement retroactively reduces the Bank's yield on the 2004A Note, the
provisions regarding adjustments to interest rates shall survive the repayment of the 2004A Note
hereunder for a period not to exceed two (2) years after such repayment.
Section 6.6 Assignment.
The Bank acknowledges and agrees that it is treating the transactions
contemplated hereunder as loan transactions and not as the sale and purchase of securities. The
Bank further acknowledges and agrees that it presently intends to hold the 2004A Note issued
hereunder through its respective final maturity date. The Bank may assign the 2004A Note or its
obligations hereunder; provided, however, the Bank shall give the City ten (10) days prior
written notice of any such assignment and, provided further, the Bank shall comply with all
applicable securities laws at the time of such assignment.
Section 6.7 Notice of Changes in Fact.
Promptly after the City becomes aware of the same, the City will notify the Bank
of (a) any change in any material fact or circumstance represented or warranted by the City in
this Agreement or in connection with the issuance of the 2004A Note, and (b) any default or
event which, with notice or lapse of time or both, could become a default under the Agreement,
specifying in each case the nature thereof and what action the City has taken, is taking and/or
proposed to take with respect thereto.
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Section 6.8 Notices.
Any notices or other communications required or permitted hereunder shall be
sufficiently given if delivered personally or sent registered or certified mail, postage prepaid, to
the City, City of Winter Springs, 1126 East State Road 434, Winter Springs, Florida 32708,
Attention: City Manager, and to the Bank, Bank of America, N.A., 390 N. Orange Avenue, ih
Floor, Orlando, Florida 32801, Attention: Mark W. Irby, with a copy to Bank of America, N.A.,
9000 Southside Blvd., Attn: Notice Desk, Building 100, Jacksonville, FL 32256, or at such
other address as shall be furnished in writing by any such party to the other, and shall be deemed
to have been given as of the date so delivered or deposited in the United States mail.
Section 6.9 Applicable Law.
The substantive laws of the State of Florida shall govern this Agreement.
Section 6.10 Incorporation by Reference.
All of the terms and obligations of the Resolution are hereby incorporated herein
by reference as if said Resolution was fully set forth in this Agreement.
[Remainder of Page Left Intentionally Blank;
Signature Page Follows]
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22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first set forth herein.
CITY OF WINTER SPRINGS, FLORIDA
(OFFICIAL SEAL)
By Mayor
ATTEST:
By
City Clerk
BANK OF AMERICA, N.A.
By
Title: Authorized Officer
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23
EXHIBIT A
THE PROJECT
The Project consists of the completion of construction of the Oak Forest
subdivision wall, in and for the City of Winter Springs, Florida, in accordance with the plans and
specifications on file or to be on file with the City.
{OR749842;5 }
A-I
EXHIBIT B
Principal
Sum
UNITED STATES OF AMERICA
STATE OF FLORIDA
CITY OF WINTER SPRINGS
CAPITAL IMPROVEMENT REVENUE NOTE, SERIES 2004A
Interest
Rate Date of Issuance Maturity Date
$575,907
%
June 2, 2004
July I, 2010
The CITY OF WINTER SPRINGS, FLORIDA (the "City"), for value received,
hereby promises to pay, solely from the Pledged Funds described in the within mentioned
Agreement, to the order of BANK OF AMERICA, N. A., or its successors or assigns (the
"Noteholder"), the Principal Sum specified above loaned to the City pursuant to that certain
Loan Agreement by and between Bank of America, N. A., and the City, dated as of June 2, 2004
(the "Agreement"), and to pay interest on such Principal Sum from the Date of Issuance
specified above or from the most recent date to which interest has been paid at the Interest Rate
per annum specified above (subject to adjustment as hereinafter provided) on June I and
December 1 of each year, commencing December 1, 2004, until such Principal Sum shall have
been paid. The Principal Sum hereof shall be due and payable on the maturity date hereof. Such
Principal Sum and interest is payable in any coin or currency of the United States of America
which, at the time of payment, is legal tender for the payment of public and private debts. This
Note may not be issued in denominations less than the lesser of $100,000.00 or the remaining
principal amount of the Note.
This Note is authorized to be issued in the principal amount of $575,907 under the
authority of and in full compliance with the Constitution and laws of the State of Florida,
including, particularly, Chapter 166, Part II, Florida Statutes, as amended, the Charter of the City
and other applicable provisions of law, and a resolution duly adopted by the City on May 24,
2004 (the "Resolution"), as such resolution may be amended and supplemented from time to
time, and is subject to all terms and conditions of the Resolution and the Agreement. Any term
used in this Note and not otherwise defined shall have the meaning ascribed to such term in the
Agreement.
This Note is being issued to refinance the Prior Note and to finance the cost of
completing the construction of the Oak Forest subdivision wall, as described in the Agreement
and the Resolution. This Note is payable from the Pledged Funds as described in and in
accordance with the Agreement.
Pursuant to the Agreement, the City has covenanted to appropriate in its annual
budget, by amendment, if necessary, from Non-Ad Valorem Funds lawfully available amounts
sufficient, together with other available moneys, to pay the principal of and interest on this Note,
as the same become due (whether by redemption, at maturity or otherwise). Such covenant and
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B-1
agreement on the part of the City to budget and appropriate such amounts of Non-Ad Valorem
Funds shall be cumulative to the extent not paid, and shall continue until such Non-Ad Valorem
Funds or other legally available funds in amounts sufficient to make all such required payments
under this Note shall have been budgeted, appropriated and actually paid. Notwithstanding the
foregoing, the City has not covenanted to maintain any services or programs, now provided or
maintained by the City, which generate Non-Ad Valorem Funds. Such covenant and agreement
on the part of the City to budget and appropriate such amounts of Non-Ad Valorem Funds is
subject, however, in all respects to certain appropriation constraints contained in Section
166.241(3), Florida Statutes, as amended, and to the payment of services and programs which are
for essential public purposes affecting the health, welfare and safety of the inhabitants of the City
or which are legally mandated by applicable law.
This Note shall bear interest from its Date of Issuance at the Interest Rate
specified above on the basis of a 365/366-day year. The Interest Rate specified above is subject
to adjustment as provided in Section 3.1 (d) of the Agreement in the event of a Determination of
Taxability. In addition, this Note is subject to adjustment in accordance with the provisions in
Section 3.3 of the Agreement. The Noteholder shall provide to the City upon request such
documentation to evidence the amount of interest due on this Note.
Notwithstanding any provision in this Note to the contrary, in no event shall the
interest contracted for, charged or received in connection with this Note (including any other
costs or considerations that constitute interest under the laws of the State of Florida which are
contracted for, charged or received) exceed the maximum rate of interest allowed under the laws
of the State of Florida as presently in effect. In the event the maturity of this Note is accelerated
or prepaid in accordance with the provisions hereof or of the Agreement, then such amounts that
constitute payments of interest, together with any costs or considerations which constitute
interest under the laws of the State of Florida, may never exceed an amount which would result
in payment of interest at a rate in excess of (a) the applicable maximum rate of interest allowed
by Sections 215.84 and 159.825(1), Florida Statutes, as amended, or (b) the non-usurious interest
allowed by the laws of the State of Florida or the United States, to the extent applicable, as
presently in effect; and excess interest, if any, shall be cancelled automatically as of the date of
such acceleration, or, if theretofore paid, shall be credited on the principal amount of this Note
unpaid, but such crediting shall not cure or waive any default under this Note.
All payments made by the City hereon shall apply first to accrued interest, and
then to the principal amount then due on this Note.
The City may prepay this Note as a whole or in part, at any time or from time to
time, without premium (except as otherwise provided in the Agreement), by paying to the
Noteholder all or part of the Principal Sum of the Note, together with the unpaid interest accrued
on the amount of principal so prepaid to the date of such prepayment. Each prepayment of this
Note shall be made on such date and in such principal amount as shall be specified by the City in
a written notice delivered to the Noteholder not less than five (5) Business Days prior thereto.
Notice having been given as aforesaid, the Principal Sum of this Note stated in such notice or the
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B-2
whole thereof, as the case may be, shall become due and payable on the prepayment date stated
in such notice, together with interest accrued and unpaid to the prepayment date on the principal
amount then being paid; and the amount of principal and interest then due and payable shall be
paid (a) in case the entire unpaid balance of the principal of this Note is to be paid, upon
presentation and surrender of this Note at the office of the City, and (b) in case only part of the
unpaid balance of principal of this Note is to be paid, upon presentation of this Note at the office
of the City for notation thereon of the amount of principal and interest on this Note then paid. If
on the prepayment date moneys for the payment of the principal amount to be prepaid on this
Note, together with interest to the prepayment date on such principal amount, shall have been
paid to the Noteholder as above provided and if notice of prepayment shall have been given to
the Noteholder as above provided, then from and after the prepayment date interest on such
principal amount of this Note shall cease to accrue. If said moneys shall not have been so paid
on the prepayment date, such principal amount of this Note shall continue to bear interest until
payment thereof at the rate or rates provided for in the Agreement.
This Note, when delivered by the City pursuant to the terms of the Agreement and
the Resolution, shall not be or constitute an indebtedness of the City or of the State of Florida or
any political subdivision or agency thereof, within the meaning of any constitutional, statutory or
charter limitations of indebtedness, but shall be payable solely from the Pledged Funds, as
provided in the Agreement and the Resolution. No Noteholder shall ever have the right to
compel the exercise of the ad valorem taxing power of the City or the State of Florida, or
taxation in any form on any property therein to pay this Note or the interest thereon.
Upon the occurrence of an Event of Default relating to this Note, the Principal
Sum of this Note may become or be declared due and payable before the maturity date hereof in
the manner, with the effect and subject to the conditions set forth in the Agreement and the
Resolution. The Noteholder shall also have such other remedies as described in the Agreement.
If this Note shall be declared to be immediately due and payable or any amounts
due on this Note shall remain unpaid past any scheduled payment date, this Note shall bear
interest at the lesser of the Taxable Rate (as defined in the Agreement) or the maximum rate
permitted by law until all amounts then due under this Note are paid in full.
The City hereby waives demand, protest and notice of dishonor.
No obligation under the Agreement or this Note shall be or be deemed to be an
obligation of any member of the City Commission or any officer, employee or agent of the City
in his or her individual capacity, and none of such persons executing the Agreement or this Note
shall be liable personally thereon or hereon by reason thereof.
It is certified, recited and declared that all acts, conditions and things required to
exist, happen and be performed precedent to and in connection with the execution and delivery
of the Agreement 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,
{OR749842;5}
B-3
together with all other obligations of the City under the Agreement, does not exceed or violate
any constitutional or statutory limitation.
IN WITNESS WHEREOF, the City of Winter Springs, Florida, caused this Note
to be signed by the manual signature of its Mayor and its official seal to be affixed hereto or
imprinted or reproduced hereon, and attested by the manual signature of its City Clerk, and this
Note to be dated the Date of Issuance set forth above.
CITY OF WINTER SPRINGS, FLORIDA
(OFFICIAL SEAL)
By Mayor
ATTEST:
City Clerk
CERTIFICATE OF AUTHENTICATION
This Note is the Note described in the within-mentioned Resolution and Agreement.
Dated: June 2,2004
City Clerk of Winter Springs, as Registrar
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[CITY OF WINTER SPRINGS LETTERHEAD]
May 24, 2004
Banc of America, N.A.
390 N. Orange Avenue, ih Floor
Orlando, FL 32801
Attn: Mark W. Irby
Re: City of Winter Springs, Florida, Capital Improvement Revenue Note,
Series 2000B
Dear Mr. Irby:
Pursuant to Section 3.2 of that certain Loan Agreement dated as of June 16, 2000,
between the City of Winter Springs, Florida, and Bank of America, N.A., please be
advised that the City of Winter Springs, Florida, has elected to prepay the above-
referenced note in full on June 2, 2004.
Sincerely,
CITY OF WINTER SPRINGS
By: City Clerk
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