R-95-867
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RESOLUTION NO. --ªºL
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CLERMONT, FLORIDA, ACCEPTING THE PROPOSAL OF
FIRST UNION NATIONAL BANK OF FLORIDA TO PROVIDE
THE CITY WITH A $3,000,000 NON-REVOLVING LINE OF
CREDIT TO FINANCE THE COST OF THE ACQUISmON,
CONSTRUCTION AND INSTALLATION OF CERTAIN
ADDITIONS, EXTENSIONS AND IMPROVEMENTS TO THE
MUNICIPAL WATER AND SEWER SYSTEM OF THE CITY;
AUTHORIZING THE EXECUTION AND DELIVERY OF A
LINE OF CREDIT AGREEMENT WITH SAID BANK
PURSUANT TO WHICH THE CITY WILL ISSUE NOTES TO
SECURE THE REPAYMENT OF DRAWS ON THE LINE OF
CREDIT AND WILL PLEDGE CERTAIN PLEDGED FUNDS
TO SECURE THE REPAYMENT OF SUCH NOTES;
AUTHORIZING AN INITIAL DRAW OF NOT EXCEEDING
$3,000,000 ON THE LINE OF CREDIT WITH SAID BANK IN
ORDER TO FINANCE A PORTION OF THE COST OF SAID
PROJECT; AUTHORIZING THE ISSUANCE OF A NOTE
PURSUANT TO THE LINE OF CREDIT AGREEMENT TO
SECURE THE REPAYMENT OF SAID DRAW; DESIGNATING
SUCH 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 DRAW ON THE LINE OF
CREDIT; AND PROVIDING AN EFFECTIVE DATE.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CLERMONT,
FLORIDA:
SECTION 1. AUTHORITY FOR THIS RESOLUTION. This Resolution is
adopted pursuant to the provisions of Chapter 166, Part II, Florida Statutes, as amended, and
other applicable provisions of law.
SECTION 2. FINDINGS. It is hereby ascertained, determined and declared:
(A) The City of Clermont, Florida (the "City") deems it necessary, desirable
and in the best interests of the City that the City undertake the acquisition, construction and
installation of certain additions, extensions and improvements to the municipal water and sewer
system of the City (the "System"), as more particularly described in the Line of Credit
Agreement (as defined herein) and all 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").
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(B) The City has obtained a proposal for a $3,000,000 non-revolving line of
credit (the "Line of Credit") from First Union National Bank of Florida (the "Bank"), the
proceeds of which would be applied to finance the costs of the Project.
(C) The Line of Credit would be secured by the Line of Credit Agreement
pursuant to which the City would issue notes to secure the repayment of draws on the Line of
Credit.
(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 initial note (the "Initial Note")
pursuant to the Line of Credit Agreement by negotiated sale, allowing the City to issue the
Initial 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 Initial
Note and, accordingly, the City Council of the City hereby finds and determines that it is in the
best fmancial interest of the City that a negotiated sale of the Initial Note pursuant to the Line
of Credit Agreement be authorized.
(E) The costs of the Project in an amount not to exceed $3,000,000 shall be
financed from amounts drawn on the Line of Credit.
(F) The amounts drawn on the Line of Credit shall be repaid solely from the
Pledged Funds (as defined in the Line of Credit Agreement). Such Pledged Funds include, but
are not limited to, the net revenues of the System, the proceeds of any indebtedness issued by
the City to refund amounts drawn on the Line of Credit and moneys budgeted and appropriated
pursuant to the Line of Credit Agreement. The ad valorem taxing power of the City will never
be necessary or authorized to pay said amounts.
(G) 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 1995.
SECTION 3. AUTHORIZATION OF THE PROJECT. The City does hereby
authorize the acquisition, construction and installation of the Project.
SECTION 4. ACCEPTANCE OF PROPOSAL. The City hereby accepts the
proposal of the Bank to provide the City with the Line of Credit.
SECTION 5. AUTHORIZATION OF LINE OF CREDIT AGREEMENT.
Draws under the Line of Credit and the repayment of such draws by the City shall be pursuant
to the terms and provisions of a Line of Credit Agreement. The City hereby authorizes the
Mayor and the City Clerk to execute and deliver on behalf of the City the Line of Credit
Agreement by and between the City and the Bank substantially in the form attached hereto as
Exhibit A (the "Line of Credit Agreement"), with such changes, insertions and additions as they
may approve, their execution thereof being evidence of such approval.
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SECTION 10. REPEAL OF INCONSISTENT DOCUMENTS. All ordinances,
resolutions or parts thereof in conflict herewith are hereby superseded and repealed to the extent
of such conflict.
SECTION 9. GENERAL AUTHORIZATION. The Mayor and City Clerk and
other employees or agents of the City 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.
SECTION 8. LIMITED OBLIGATION. The obligation of the City to repay
amounts drawn under the Line of Credit is a limited and special obligation payable solely from
the Pledged Funds in the manner and to the extent set forth in the Line of Credit 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.
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SECTION 7. DESIGNATION OF DRAW AS QUALIFIED TAX-EXEMPT
OBLIGATION. The City hereby designates the draw described in Section 6 hereof as a
"qualified tax-exempt obligation" under Section 265(b)(3) of the Code. This designation is based
upon the findings of the City set forth in Section 2. (G) of this Resolution and the Mayor is
authorized to recertify such finding upon the issuance of the Initial Note securing such draw.
The City acknowledges that any action which adversely impacts the status of the Initial Note
securing such draw as a "qualified tax-exempt obligation" will result in an upward adjustment
to the interest rate on the Initial Note.
SECTION 6. AUTHORIZATION OF A DRAW ON THE LINE OF CREDIT
TO FINANCE A PORTION OF THE COST OF THE PROJECT. The City does hereby
approve a draw on the Line of Credit in the aggregate amount of not exceeding $3,000,000 for
the purpose of providing the City with sufficient funds to finance a portion of the costs of the
Project. The Mayor and City Clerk are hereby authorized to execute, seal and deliver on behalf
of the City the Initial Note and other documents, instruments, agreements and certificates
necessary or desirable to effectuate such draw on the Line of Credit as provided in the Line of
Credit Agreement. The draw shall be made at such time or times as shall be determined by the
City Manager, or his designee. The Initial Note securing the draw for the Project shall bear
interest at the Qualified Rate (as defined in the Line of Credit Agreement) and shall have a Final
Maturity Date (as defined in the Line of Credit Agreement) of not exceeding three years from
the date of the execution and delivery of the Line of Credit Agreement as authorized herein.
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SECTION 11. EFFECTIVE DATE. This Resolution shall take effect
immediately upon its adoption.
PASSED, APPROVED AND ADOPTED this 16th day of May, 1995.
(OFFICIAL SEAL)
CITY COUNCIL OF THE CITY
OF CLERMONT, FLORIDA
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IDOCSISOFT\I631.3106/13/962:14pm
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Exhibit A
LINE OF CREDIT AGREEMENT
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LINE OF CREDIT AGREEMENT
BETWEEN
CITY OF CLERMONT, FLORIDA
AND
FIRST UNION NATIONAL BANK OF FLORIDA
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Dated as of May _, 1995
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Section 1.1
Section 1. 2
Section 1. 3
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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 2.11
Section 3.1
Section 3.2
Section 3.3
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TABLE OF CONTENTS
ARTICLE 1
DEFINITION OF TERMS
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1
Interpretation ................................. 8
Titles and Headings ............................. 8
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS;
SECURITY FOR NOTES; ADDffiONAL OBLIGATIONS
Representations by the City . . . . . . . . . . . . . . . . . . . . . . . .. 8
General Representations, Warranties and Covenants of the Bank .. 10
Establishment of Line of Credit ...................... 10
Tax Covenants ................................ 10
Notes not to be Indebtedness of the City or State ........... 11
Security for Notes .............................. 11
Covenant to Budget and Appropriate . . . . . . . . . . . . . . . . . . . 11
Sale of Utilities Revenue Bonds . . . . . . . . . . . . . . . . . . . . . . 12
Payment Covenant .............................. 12
Issuance of Other Obligations Payable from Pledged Funds ..... 12
Issuance of Parity Obligations ....................... 13
ARTICLE 3
DESCRIPTION OF NOTES; PAYMENT TERMS;
OPTIONAL PREPAYMENT
Description and Payment Terms of the Notes. . . . . . . . . . . . .. 13
Optional Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Adjustments to Interest Rates. . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 4
CONDffiONS FOR DRAWS
Section 4.1 . Conditions for Draws ............................ 20
Section 4.2 Construction Fund .............................. 22
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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
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ARTICLE 5
EVENTS OF DEFAULTS; REMEDIES
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 6
MISCELLANEOUS
Amendments, Changes or Modifications to the Agreement . . . . . . 25
Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Severability .................................. 25
Term of Agreement ............................. 25
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Notice of Changes in Fact ......................... 26
Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . 27
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This LINE OF CREDIT AGREEMENT (the" Agreement") is made and entered
into as of May _, 1995, between the City of Clermont, Florida, a municipality created and
existing under and by virtue of the laws of the State of Florida (the "City"), and First Union
National Bank of Florida, Orlando, Florida, 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, (i) acquire,
construct and install additions and improvements (the "Project," as more particularly described
in Exhibit A attached hereto) to the existing municipal water and sewer system of the City, (ii)
borrow money to finance the costs of such Project and (iii) pledge the funds and credit of the
City for payment of such debts; and
WHEREAS, the City deems it necessary, desirable and in the best interest of the
City that the City undertake the Project; and
WHEREAS, the Bank is willing to make available to the City, and the City is
willing to enter into a non-revolving line of credit arrangement pursuant to the terms and
provisions of this Agreement in an aggregate principal amount of not exceeding $3,000,000
(unless the Bank and the City agree pursuant to Section 4.1(c) hereof to adjust such limit
upward) under which the City may draw moneys from time to time to finance or refinance the
costs of 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, and other
applicable provisions of law.
"Additional Amount" shall have the meaning ascribed to such term in Section
3.1(d) hereof.
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"Additional Parity Obligations" shall have the meaning ascribed to such term in
Section 2.11 hereof.
"Agreement" shall mean this Line of Credit Agreement, dated as of May _,
1995, 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 in the State of Florida which is eligible under the laws of the State
of Florida 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.
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(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 (1) of this definition.
(d) The following investments fully insured by the Federal Deposit Insurance
Corporation or the Federal Savings and Loan Insurance Corporation: (A) certificates of deposit,
(B) savings accounts, (C) deposit accounts, or (D) 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 Corporation.
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(t) Written repurchase agreements with any bank, savings institution or trust
company which is insured by the Federal Deposit Insurance Corporation or the Federal Savings
and Loan 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 (1) above or obligations of any agency
or instrumentality of the United States of America, and provided further that (A) 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, (B) such collateral is not subject to
liens or claims of third parties, (C) such collateral has a market value (determined at least once
every 30 days) at least equal to the amount invested in the repurchase agreement, (D) the entity
holding the collateral has a perfected first security interest in the collateral for the benefit of the
Noteholder, (E) the agreement shall be for a term not longer than 270 days and (F) the failure
to maintain such collateral at the level required in (C) 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 Corporation.
(h) Units of participation in the Local Government Surplus Funds Trust Fund
established pursuant to Part IV, Chapter 218, 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 Corporation.
(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 First Union National Bank of Florida, Orlando, Florida, and
its successors and assigns.
"Bond Counsel" shall mean Foley & Lardner, Jacksonville, 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,
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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 Clermont, Florida.
"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.
"Construction Fund" shall mean the Construction Fund established pursuant to
Section 4.2 hereof.
"Cost" when used in connection with the Project, shall mean the costs of the
Project described in Section 4. 1 (c) hereof.
"Determination of Taxability" shall mean the circumstance of interest paid or
payable on a Tax-Exempt 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 (k) 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 its Tax-Exempt Note is
includable in the gross income of such Noteholder; (I) the issuance of any public or private
ruling of the Internal Revenue Service that any interest payable on such Tax-Exempt Note is
includable in the gross income of the Noteholder; or (m) receipt by the City or a Noteholder of
an opinion of Bond Counsel that any interest on its Tax-Exempt Note has become includable in
the gross income of such 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 Tax-Exempt 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.
"Draw" or "Drawing" shall mean a borrowing of money under this Agreement
in accordance with Article 4 hereof.
"Effective Date" shall have the meaning ascribed thereto in Section 3.1(e) hereof.
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"Final Maturity Date" shall mean, in the case of each Note, the date set forth in
said Note as the date on which the final payment of principal of and interest on said Note is due
and payable. The Final Maturity Date of the Notes shall be determined pursuant to Section 3.1
hereof.
"First Supplemental Loan Agreement" shall mean that certain First Supplemental
Loan Agreement, dated as of July 1, 1993, between SunBank, National Association, as trustee,
Lane Gilchrist, Mayor, as administrator, and the City.
"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.
"Gross Revenues" shall mean all moneys, excluding Impact Fees, received from
rates, fees, rentals or other charges or income received by the City or accruing to it in the
management and operation of the System, all calculated in accordance with sound accounting
principles.
"Impact Fees" shall mean all non-refundable (except at the option of the City)
system development fees, capital expansion fees, utility improvement fees or other similar fees
and charges separately imposed by the City upon new customers of the System as a nonuser
capacity charge for a proportionate share of the cost of the acquisition or construction of
expansion facilities, which are imposed by the City for the purpose of allocating to such
customers a portion of the cost of the additional System capacity made necessary by the
extension or expected extension of System services to such new customers.
"Interest Payment Date" shall have the meaning ascribed thereto in Section 3. 1 (c)
hereof.
"LmOR Rate" shall mean the three months London Interbank Offered Rates, as
published from time to time in the Wall Street Journal.
"Loan" shall mean the loan to the City from the City of Arcadia, Florida, made
pursuant to the Loan Agreement.
"Loan Agreement" shall mean that certain Loan Agreement, dated as of July 1,
1993, among Nationsbank of Florida, N.A., as trustee, the City of Arcadia, Florida and the
City.
"Maximum Annual Debt Service" shall mean as of any date the maximum amount
of principal, interest and other amounts provided for hereunder, under the Loan Agreement,
under the First Supplemental Loan Agreement and under the resolution, agreement or other
instrument pursuant to which any Parity Obligations have been issued, coming due in any year
on the Notes, the Prior Lien Obligations and any Parity Obligations, respectively. In the case
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of Notes, Prior Lien Obligations or Parity Obligations (collectively, "Debt Obligations It) bearing
interest at a variable rate such amount shall be computed at the higher of (i) 11 % per annum or
(ii) the highest variable rate borne by such Debt Obligations, as applicable, during the preceding
24 months, provided that if no such Debt Obligations are then outstanding, the highest rate borne
by variable rate obligations the interest on which is computed according to the same or a similar
index as that to be used for such Debt Obligations, as applicable, to be issued shall be assumed.
For the purpose of this definition, "interest" on the Loan shall include the Reserve Payment (as
defined in the Loan Agreement), if any, for the applicable period. In calculating the Maximum
Annual Debt Service, for the purposes of the Loan Agreement, there shall be excluded from
such calculation in the final year of the Loan an amount equal to the City's Pro Rata Share of
the Debt Service Reserve Requirement (as defined in the Loan Agreement) unless the City shall
have caused a withdrawal of its Pro Rata Share and has failed to restore the amount of such
withdrawal.
"Mayor" shall mean the Mayor of the City and such other person as may be duly
authorized to act on his or her behalf.
"Net Revenues" shall mean Gross Revenues less Operating Expenses.
"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..
"Non-Qualified Rate" shall mean the Taxable Rate divided by 1.21.
"Note" or "Notes" shall mean one or more revenue notes authorized by Resolution
and delivered by the City to the Noteholder in connection with a Drawing in accordance with
the requirements set forth in Article 4 hereof.
"Noteholder" shall mean the Bank as the holder of the Notes, or any other
registered holder of or participant in any Note.
"Noteholder's A4justed 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 bases 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.
"Operating Expenses" shall mean all current expenses, paid or accrued, for the
operation, maintenance and repair of the System and its facilities, as calculated in accordance
with sound accounting practice, and shall include, without limiting the generality of the
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foregoing, insurance premiums, administrative expenses of the City related solely to such
System, labor, cost of materials and supplies used for current operation, and charges for the
accumulation of appropriate reserves for current operation, and charges for the accumulation of
appropriate reserves for current expenses not annually recurrent but which are such as may be
reasonably expected to be incurred in accordance with sound accounting practice. "Operating
Expenses" shall not include any allowance for depreciation or for renewals or replacements of
capital assets of the System.
"Parity Obligations" shall have the meaning ascribed to such term in Section 2.11
hereof.
"Pledged Funds" shall mean (1) the Net Revenues, (2) the proceeds of the Notes
pending the application thereof, (3) the proceeds to be derived from the sale by the City of the
Utilities System Revenue Bonds and (4) moneys budgeted and appropriated pursuant to Section
2.7 hereof.
"Prior Lien Obligations" shall mean the (i) Loan, (ü) any Additional Parity Bonds
(as defined in the Loan Agreement) issued pursuant to and in accordance with the terms of the
Loan Agreement and (ill) the obligations to pay any amounts that may become due under and
pursuant to Sections 3(C), 4 or 5 of the First Supplemental Loan Agreement.
"Project" shall refer to the acquisition, construction and installation of certain
additions, extensions and improvements to the System, as 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.
"Qualified Rate" shall mean the then applicable LIBOR Rate multiplied by .67,
plus 34 basis points (0.34%).
"Resolution" shall mean the resolution adopted by the City on May 16, 1995,
which among other things authorized the execution and delivery of this Line of Credit
Agreement and the issuance of the initial Note or Notes to be issued pursuant to this Agreement.
The term "Resolution" shall also include any and all subsequent resolutions of the City adopted
for the purpose of authorizing the issuance of additional Notes hereunder for the purpose of
financing or refinancing a portion of the costs of the Project; provided, however, the provisions
of Section 6.9 hereof shall not apply to such subsequent resolutions of the City.
"State" shall mean the State of Florida.
"System" shall mean the .City's combined system for the production, treatment
and distribution of water and for the collection, treatment and disposal of sewage.
"Taxable Period" shall have the meaning ascribed to such term in Section 3. 1 (d)
hereof.
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"Tax Certificate" shall have the meaning ascribed to such term in Section 2.4
hereof.
"Tax-Exempt Notes" shall mean those Notes that bear interest at either the
Qualified Rate or the Non-Qualified Rate or at a tax-exempt, fixed rate of interest pursuant to
Section 3. 1 (e) hereof.
"Taxable Rate" shall mean the Qualified Rate multiplied by 1.5.
"Test Period" shall have the meaning ascribed to such term in Section 2.11
hereof.
"Test Period Funds" shall have the meaning ascribed to such term in Section 2.11
hereof.
"Utilities System Revenue Bonds" shall mean the bonds secured by and payable
from, in whole or in part, the Pledged Funds, which bonds are required to be issued by the City
pursuant to Section 2.8 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 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 NOTES; ADDmONAL 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
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and delivery of this Agreement and the performance by the City of all of its obligations
hereunder, and (ii) shall duly authorize all Notes 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 Notes, 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 Notes. The
Agreement and, when issued in accordance with the terms of this Agreement, the Notes will
each constitute legal, valid and binding obligations of the City enforceable in accordance with
their respective 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 Notes.
. (e) The City will furnish to the Bank within 180 days of each fiscal year (A)
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 satisfactory to the
Bank and (B) the annual budget of the City for the upcoming fiscal year. Reports shall be
prepared in accordance with generally accepted accounting principles.
(f) Except as provided in Section 4.1 hereof, no authorization, consent,
approval, license, exemption of or registration or tHing with any coun 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 Notes and the related documents, except such as have been obtained, given or
accomplished and copies of which have been provided to the Bank.
(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, '1994, 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.
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Since September 30, 1994, 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, (a) the
financial condition, revenues, properties or operations of the City or (b) the validity or
enforceability of, or the authority or ability of the City to perform its obligations under, this
Agreement, the Notes and the related documents.
(j) The obligations of the City under this Agreement and the Notes 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(4), 215.84 and 687.03, Florida Statutes, as amended.
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.
e Section 2.3 Establishment of Line of Credit. Pursuant to the terms and
provisions of this Agreement, the Bank agrees to establish a non-revolving line of credit on
behalf of the City pursuant to which it will make or underwrite one or more loans to the City
for the purpose of financing or refinancing the costs of the Projects.
Section 2.4 Tax Covenants.
(a) The City hereby covenants with the holder of Tax-Exempt Notes that in
order to maintain the exclusion from gross income for purposes of federal income taxation of
interest on the Tax-Exempt Notes, it shall comply with each requirement of the Code applicable
to the Tax-Exempt Notes. In furtherance of the covenant contained in the preceding sentence,
the City agrees to continually comply with the provisions of each Nonarbitrage and Tax Law
Compliance Certificate to be executed by the City relating to the Tax-Exempt Notes, as such
Certificate or Certificates may be amended from time to time, as a source of guidance for
achieving complianCe with the Code (individually referred to herein as the "Tax Certifica~e").
(b) The City hereby covenants with the holder of the Tax-Exempt Notes that
it shall make any and all payments required to be made to the United States Department of the
Treasury in connection with the Tax-Exempt Notes pursuant to Section 148(t) 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 Tax-Exempt Notes for federal income tax purposes, the covenants contained
in this Section 2.4 shall survive the payments of the Tax-Exempt Notes and the interest thereon,
including any payment or defeasance thereof.
(d) The City hereby covenants with the holder of the Tax-Exempt Notes that
it shall not take or permit any action or fail to take any action which would cause the Tax-
Exempt Notes to be "arbitrage bonds" within the meaning of Section 148(a) of the Code.
Section 2.5 Notes not to be Indebtedness of the City or State. The Notes, when
delivered by the City pursuant to the terms of this Agreement, shall not be or constitute an
indebtedness of the City, 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 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 Notes or the interest thereon. The Notes are special and limited obligations
payable as to principal and interest from the Pledged Funds in the manner and to the extent
provided herein.
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Section 2.6 Security for Notes. The Notes shall be secured by and payable from
the Pledged Funds. The City does hereby irrevocably pledge the Pledged Funds to the payment
of the Notes in accordance with the provisions hereof. The pledge of and lien on the Pledged
Funds shall attach at the time of delivery of each Note.
The lien and pledge of the Net Revenues in favor of the Notes is junior,
subordinate and inferior in every respect to the pledge of and lien on the Net Revenues in favor
of the Prior Lien Obligation.
Section 2.7 Covenant to Budget and Appropriate.
(a) Until all of the Notes are 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 Notes becomes due and payable, amounts sufficient,
together with other available moneys, to pay the principal of and interest on the Notes, 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 Notes 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.
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(b) Except as otherwise provided in Section 2.6 hereof, 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 Noteholdera 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 hereinafter 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 Notes 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 inh-abitants of
the City or which are legally mandated by applicable law.
Section 2.8 Sale of Utilities Revenue Bonds. The City covenants to make timely
sale and delivery of the Utilities Revenue Bonds in order to have funds available to pay the
Notes and the interest thereon as the same become due.
Section 2.9 Payment Covenant. The City covenants that it shall duly and
punctually pay from the Pledged Funds the principal of and interest on the Notes at the dates and
place and in the manner provided herein and in the Notes according to the true intent and
meaning thereof and all other amounts due under this Agreement.
Section 2.10 Issuance of Other Obligations Payable from Pledged Funds. So long
as any Note remains outstanding and unpaid, the City will not issue or consent to the issuance
of any other obligations (except for additional Prior Lien Obligations), except under the
conditions and in the manner provided herein, payable from the Pledged Funds or any portion
thereof, nor voluntarily create or cause to be created any debt, lien, pledge, assignment,
encumbrance or other charge, having priority to or being on a parity with the lien of such Note
or Notes and the interest thereon, upon the -Pledged Funds. Any other obligations issued by the
City, except for Parity Obligations issued pursuant to Section 2.11 hereof, in addition to the
Notes or Prior Lien Obligations, payable from the Pledged Funds, shall contain an express
statement that such obligations are junior and subordinate in all respects to the Notes and the
Prior Lien Obligations, as to lien on and source and security for payment from the Pledged
Funds; provided, however, that the City may also grant to any provider of Local Credit
Enhancement (as defined in the Loan Agreement) with respect to any additional Prior Lien
Obligations, a lien upon the Net Revenues commensurate with the lien granted in respect of such
additional Prior Lien Obligations, pursuant to the terms of the Loan Agreement.
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Section 2.11 Issuance of Parity Obligations. So long as any Note remaining
outstanding and unpaid, the City will not issue or consent to the issuance of any obligations
payable on a parity from the Pledged Funds or any portion thereof (the "Parity Obligations")
with the Notes, except for the acquisition, construction and installation of additions, extensions
and improvements to the System or for refunding purposes and except upon the conditions and
in the manner provided herein. The City shall not issue Parity Obligations unless it first
complies with the following:
(a) There shall have been obtained and filed with the Bank a certificate of an
independent certified public accountant of suitable experience and responsibility; (1) stating that
the books and records of the City relating to the collection and receipt of the Net Revenues have
been audited by him; (2) setting forth the amount of the Net Revenues received by the City for
the twenty-four months immediately preceding the date of delivery of such Parity Obligations
with respect to which the certificate is made; (3) stating that the Net Revenues received by the
City for such twenty-four month period (the "Test Period Funds") equals at least 1.20 times the
Maximum Annual Debt Service on (i) the Notes, (ii) all Prior Lien Obligations then outstanding,
(iii) any Parity Obligations then outstanding and (iv) the Parity Obligations with respect to which
the certificate is made.
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The Test Period Funds may be adjusted on a pro forma basis for rate increases
either adopted or in effect and for additional Net Revenues to be derived from identified
occupied dwellings waiting to be served by the System once the additions, extensions and
improvements to be acquired or constructed with the proceeds of the Parity Obligations are
acquired or completed.
(b) The City shall not be in default in performing any of the covenants and
obligations assumed hereunder, under the Loan Agreement or under any resolution, agreement
or other instrument pursuant to which any Parity Obligations have been issued, and all payments
required to have been made hereunder, under the Loan Agreement or under any resolution,
agreement or other instrument pursuant to which any Parity Obligations have been issued, as
provided hereunder and thereunder, shall have been made to the full extent required.
ARTICLE 3
DESCRIPTION OF NOTES; PAYMENT TERMS;
OPTIONAL PREPAYMENT
Section 3.1 Description and Payment Terms of the Notes.
(a) In connection with a Draw pursuant to Article 4 of this Agreement, the
City shall, pursuant to authority granted under the Resolution, issue and deliver a Note or Notes
to the Bank, which Note or Notes, together with all other Notes issued hereunder, regardless
of whether such other Notes remain outstanding, shall not exceed THREE MILLION AND
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00/100 DOLLARS ($3,000,000) in aggregate principal amount; provided, however, the Bank
and the City may agree to increase such maximum amount pursuant to Section 4. 1 (c) hereof.
Each Note shall be designated as "City of Clermont, Florida Line of Credit Revenue Note, Draw
Number _." The text of the Notes 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 each Note. The provisions of the form of the Note are hereby incorporated
in this Agreement.
(b) Each Note shall be dated the date of its delivery and shall bear interest
from its date at the rate or rates set forth below, or as the same may be adjusted pursuant to
Section 3.3 hereof. The Notes 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 any of the Notes, shall cease to be such officer of the City before the Notes so signed and
sealed shall have been actually delivered, such Notes may nevertheless be delivered as herein
provided and may be issued as if the person who signed or sealed such Notes had not ceased to
hold such office. Any Note may be signed and sealed on behalf of the City by such person who
at the actual time of the execution of such Note shall hold the proper office, although at the date
the Notes shall actually be delivered, such person may not have held such office or may have
been so authorized.
(c) Subject to the adjustments set forth in Sections 3.1(d) and 3.3 hereof, the
Notes shall bear interest at the Qualified Rate, the Non-Qualified Rate or the Taxable Rate in
accordanœ with this Section 3.1(c) and the notice given by the City to the Bank pursuant to
Section 4.1 hereof; provided, however, a Note may be converted to a fixed rate of interest
pursuant to Section 3.1(e). A Note shall bear interest at the Qualified Rate if the City has
determined by Resolution that the Note is a "qualified tax-exempt obligation" under Section
265(b )(3)(B) of the Code. If the City has not made such determination, the Note shall bear
interest at the Non-Qualified Rate. The initial rate of interest on each Note shall be determined
as of the date of issuance of such Note. The Qualified Rate, the Non-Qualified Rate or the
Taxable Rate on each Note, as the case may be, shall be adjusted every 90 days after the
issuance thereof to reflect the change, if any, in the LffiOR Rate, except as otherwise provided
in Section 3. 1 (e) hereof. The Bank shall give reasonable notice to the City of such changes and
adjustments. Interest on a Note shall be payable semi-annually on June 1 and December 1 of
each year (the "Interest Payment Date"), and on its Final Maturity Date, commencing on the
June 1 or December 1 which immediately succeeds the date of issuance of such Note, or on such
commencement date as shall be determined by the Bank and the City, provided, however, that
such commencement date for the initial Note shall be December 1, 1995. The Final Maturity
Date of a Note shall be the date provided to the Bank by the City pursuant to Section 4.1 hereof;
provided, however, such Final Maturity Date shall not be later than May _, 1998; provided,
however, if the parties hereto extend the term of this Agreement pursuant to Section 6.4, the
Final Maturity Date of any Note issued after such extension may be as late as the new expiration
date of this Agreement. Principal of a Note shall be payable upon presentment of the Note by
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the Bank to the City at the Final Maturity Date or earlier prepayment. Interest on a Note shall
be calculated on the basis of twelve 30-day months over a 360-day year.
(d) In the event of a Determination of Taxability, the interest rate on any Tax-
Exempt 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 a Tax-
Exempt Note subject to such Determination of Taxability the Additional Amount (as defined
herein). "Additional Amount" means (i) the difference between (A) interest on such Note for
the period commencing on the date on which the interest on such Note (or portion thereof) loses
its tax-exempt status and ending on the earlier of the date such Note ceased to be outstanding
or such adjustment is no longer applicable to such Note (the "Taxable Period ") 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 such Note was or would be adjusted pursuant to the
provisions of such Note, and (B) the aggregate amount of interest payable on such Note for the
Taxable Period under the provisions of such Note without considering the Determination of
Taxability, plus (ü) any penalties and interest paid or payable by such Noteholder to the Internal
Revenue Service by reason of such Determination of Taxability.
(e) Notwithstanding any other provisions of this Agreement to the contrary,
the City may elect to convert the Qualified Rate, the Non-Qualified Rate or the Taxable Rate,
as the case may be, on any Note to a fixed rate of interest at any time by providing the
Noteholder with written notice of such election no later than 3 Business Days prior to the date
set forth in such notice as the effective date (the "Effective Date") of such conversion, provided
that if such Note is a Tax-Exempt Note, such notice must be accompanied by an opinion of Bond
Counsel to the effect that the proposed conversion of the interest rate will not adversely affect
the exclusion from gross income for federal income tax purposes of the interest payable on such
Note. If notice is so provided by the City, and, if necessary, such notice is accompanied by the
required opinion of Bond Counsel, the designated Note shall bear interest from the Effective
Date until the Final Maturity Date of the Note at a fixed rate of interest to be negotiated by the
Noteholder and the City and no further adjustments pursuant to Section 3. I (c) hereof shall be
made with respect to the Note; provided, however, if that in the event the Noteholder and the
City are unable to agree on an acceptable fIxed rate, the Note shall continue to bear interest at
a variable rate as provided herein.
(f) All payments of principal of and interest on the Notes 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, (ü) 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.
(g) There will be no Bank fees to maintain the line of credit and no draw fees
thereunder. The Bank shall pay for all of its costs relating to servicing the line of credit. The
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City agrees to pay the legal fees and costs of Bond Counsel at the earlier of (i) the date the fIrst
Draw is made hereunder and (ii) 60 days from the date hereof.
.
Section 3.2 Optional Prepayment. The City may prepay and redeem any Note
or all Notes 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 Note to be
prepaid, together with the unpaid interest accrued on the amount of principal so prepaid to the
date of such prepayment; provided, however, the City may not prepay any Note the interest on
which has been converted to a fixed rate pursuant to Section 3. 1 (e) hereof, except upon such
terms as may be negotiated by the Noteholder and the City at the time of such conversion. Each
prepayment of a 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 ninety (90)
Business Days prior thereto specifying the principal amount of the Note or Notes to be prepaid
and the date of such prepayment. Notice having been given as aforesaid, the principal amount
of the 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 any Note is to be prepaid, upon presentation and surrender of such Note at the offIce of the
Bank on the date specifIed for prepayment, and (b) in case only part of the unpaid balance of
principal of any Note is to be paid, upon presentation of such Note at the offIce of the Bank for
notation thereon of the amount of principal and interest on such Note then paid. If on the
prepayment date moneys for the payment of the principal amount to be prepaid on such 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 such Note shall cease to accrue. If said moneys shall not have been so paid on the
prepayment date, such principal amount of such Note shall continue to bear interest until
payment thereof at the rate or rates provided for in this Agreement. The provisions of this
Agreement establish a "non-revolving" line of credit, i.e., amounts that are drawn hereunder and
subsequently repaid may not be reborrowed unless the parties hereto agree to increase the
borrowing limit pursuant to Section 4.1(c) hereof.
Section 3.3 Adjustments to Interest Rates. (a) The interest rates on the Tax-
Exempt Notes shall be subject to adjustment as described in this Section from the date of their
issuance. The Bank shall promptly notify the City in writing of any adjustments for Tax-Exempt
Notes pursuant to this Section. Such adjustments shall become effective as of the effective date
of the event causing such adjustment. Adjustments pursuant to thi~ Section 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.
(b) Subject to the provisions of Section 3.3(a) above, the interest rate on each
Tax-Exempt Note shall be adjusted as follows:
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(1) Alternative Minimum Tax Where Interest on the Tax-Exempt Note
is a Direct Tax Preference Item. If the Noteholder or its parent holding company
pays an alternative minimum tax in any tax year and the interest on the Tax-
Exempt 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 Tax-Exempt Note for
the period during such tax year in which interest is accruing on the Tax-Exempt
Note shall be increased during such accrual period by an amount equal to
(A - B) x C where:
(i) A equals the interest rate on the Tax-Exempt Note
expressed as a percentage;
(ii) B equals the Noteholder's Adjusted Cost of Funds; and
(iii) C equals the maximum marginal rate of the alternative
minimum tax expressed as a decimal (currently .20);
.
(2) Alternative Minimum Tax Where Interest on the Tax-Exempt 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 Tax-
Exempt 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 Tax-Exempt Note for the period during such tax year in which
interest is accruing on the Tax-Exempt Note shall be increased during such
accrual period by an amount equal to (A - B) x C where:
(i) A equals the interest rate on the Tax-Exempt Note
expressed as a percentage;
(ii) B equals the Noteholder's Adjusted Cost of Funds; and
(iii) 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 Tax-Exempt 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.
(3) 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 Tax-Exempt Note during any period is reduced
because of any change in the tax laws or regulations and the Noteholder is then
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subject to payment of state income tax on the interest on the Tax-Exempt Note
then the interest rate on the Tax-Exempt Note shall be increased during such
period by an amount equal to A x B x D where:
(i) A equals the fraction (expressed as a decimal) of the total
state income tax disallowed as a result of such tax law
change;
(ü) B equals the rate of the applicable state mcome tax
(expressed as a decimal);
(iü) C equals the maximum federal corporate tax rate then in
effect for the Noteholder (expressed as a decimal); and
(iv) D equals the interest rate on the Tax-Exempt Note
(expressed as a percentage).
(4) Partial Taxability. If the interest payments received under the Tax-
Exempt 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 Tax-Exempt Note shall be
increased during such period by an amount equal to (A - B) x C where:
.
(i)
A equals the Taxable Rate (expressed as a percentage);
(ii) B equals the interest rate on the Tax-Exempt Note
(expressed as a percentage); and
(iü) C equals the fraction of the interest rate on the Tax-Exempt
Note which has become taxable as the result of such tax
change (expressed as a decimal).
(5) Other Changes in Tax Laws. If the tax laws or regulations are
amended to cause the interest on the Tax-Exempt Notes 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 Tax-Exempt Note to the Noteholder (directly or indirectly, other than a
change described in (1) through (4) above or because of a Determination of
Taxability), then the interest rate on the Tax-Exempt Note shall be adjusted to
cause the yield on the Tax-Exempt Note to equal what the yield on the Tax-
Exempt 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 yield on the Tax-Exempt Note to the Noteholder, then the Bank shall
adjust the interest rate on the Tax-Exempt Note to cause the yield on the Tax-
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Exempt Note to equal what the yield on the Tax-Exempt Note would have been
in the absence of such change or amendment in the tax laws or regulations.
(c) , The above adjustments shall be cumulative~ but in no event shall the
interest rate on a Note exceed the maximum rate permitted by law. Interest on the Tax-Exempt
Notes 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 a Tax-Exempt Note does not accrue for the entire tax year
of the Noteholder. Adjustments which create a circular calculation because the interest rate on
a Tax-Exempt Note is affected by the calculation shall be carried out sequentially, increasing the
interest rate on the Tax-Exempt Note accordingly in each successive rate on the Tax-Exempt
Note, until the change on the interest rate on the Tax-Exempt Note caused by the next successive
calculation of the adjustment is de minimis. If more than one of paragraphs numbered (1)
through (5) in Section 3.3(b) apply, then the interest rate on the Tax-Exempt Note shall be
adjusted in the order in which listed above.
(d) To the extent an adjustment to the interest rate on a Tax-Exempt 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 Tax-Exempt 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 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 Tax-Exempt Notes.
(e) In the event the maturity of any 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(4), Florida Statutes, as amended, or (ii) the nonusurious interest allowed by the laws
of the State of Florida or the United States to the extent applicable, as presently in effect and
to the extent an increase is allowable by such laws; 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 ainount of the Note unpaid, but such crediting shall not cure or waive any default under
this Agreement.
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ARTICLE 4
CONDnITONSFORDRAWS
Section 4.1 Conditions for Draws. (a) In connection with a Draw, the Bank
shall not be obligated to make any loan under this Agreement unless at or prior to the date
specified for the making thereof the City delivers to the Bank:
(i) Notice of the City's intention to make a Draw at least five (5) days
prior to the date specified for such Draw, except that such notice may be
delivered for the initial Draw on the date of the closing of the initial Draw. Such
notice shall state (A) the amount of the proposed Draw, which amount must be
in an amount at least equal to $5,000, (B) whether the Note shall bear interest at
the Qualified Rate, the Non-Qualified Rate, or the Taxable Rate, (C) the portion
of the Project or costs associated therewith to be financed with the proceeds of
the Draw, and (D) the Final Maturity Date of the Note securing such Draw;
. (ii) A certificate of the City Manager, dated as of the date of such
Draw, 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;
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(ill) A certificate of the City Manager, dated as of the date of such
Draw, setting forth the aggregate amount of all Notes of the City which have
been issued hereunder after the issuance of the Note then being issued, the
aggregate amount of the Notes which remain outstanding after the issuance of the
Note then being issued and stating 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;
(iv) In the case of a Tax-Exempt Note, a fully executed Tax Certificate
relating to the Tax-Exempt Note to be issued;
(v) In the case of a Tax-Exempt Note, a copy of a completed and
executed Form 8038-G relating to the Tax-Exempt Note to be filed with the
Internal Revenue Service;
(vi) An opinion of Bond Counsel in form and substance to the effect that
(A) the Agreement and the Note have been duly authorized by the City and are
enforceable obligations in accordance with their terms and the Resolution relating
to . such Note 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) in the case of a Tax-Exempt Note, interest on the
Tax-Exempt Note shall be excluded from gross income for federal income tax
purposes and will not be treated as a preference item for purposes of computing
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the alternative minimum tax imposed by Section 55 of the Code (however, the
interest on the Tax-Exempt Notes owned by corporations may be subject to the
federal alternative minimum tax which is based in part on adjusted current
earnings), (C) if the Tax-Exempt Note is a "qualified tax-exempt obligation"
under Section 265(b)(3)(B) of the Code, an opinion to that effect, and (D) the
interest on the Tax-Exempt Note shall be exempt from present Florida intangible
taxes;
(vii) A certificate of the City Manager, dated the date of such Draw, to
the effect that the interest rate on the Note is in compliance with the applicable
maximum interest rate provisions contained in Sections 215.84 and 159.825(4),
Florida Statutes, as amended; and
(viii) A fully executed Note, dated the date of the Draw, in the principal
amount of such Draw.
(b) On or before the execution of this Agreement, the City shall have caused
to be delivered to the Bank the following items in form and substance acceptable to the Bank:
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(i) An opinion of counsel regarding the due authorization, validity and
enforceability of this Agreement and the due adoption of the Resolution
(enforceability may be subject to standard bankruptcy exceptions and the like)
(such opinion may, however, be delivered at the time of the initial Draw); and
(ii) 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.
(c) Upon satisfaction of the conditions set forth in paragraphs (a) and (b)
above, the City may borrow up to $3,000,000 from the Bank pursuant to one or more Draws.
After such time as $3,000,000 in cumulative principal amount (irrespective of any prepayments
on the principal balance then outstanding) of Draws shall have been issued hereunder, the Bank
shall not be required to honor any further Draws; provided, however, that if the Bank and the
City agree in writing to increase the amount available to be drawn by the City on the line of
credit provided by the Bank pursuant to this Agreement, such $3,000,000 limitation shall be
increased to such agreed upon amount. The date the last Draw can be made under this
Agreement shall be May _, 1998, unless otherwise extended pursuant to Section 6.4 of this
Agreement. The City shall apply the proceeds of each Draw to pay for, or reimburse itself for
prior expenditures incurred for, the costs of the Project which 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;
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(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
Notes;
(iv) Fees and charges incurred in connection with applications to federal,
state and local governmental agencies for any requisite approval or permits
regarding the acquisition and 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;
(vi) Costs incurred in connection with the acquisition, 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, fixtures, appurtenances or personal property of any
kind or nature, which are to comprise a part of the Project;
(viii) Interest on Notes accruing prior to the completion date of the
Project; 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,
including the administrative and maintenance costs associated with the
management of the Project, and other facilities functionally related and
subordinate thereto.
Section 4.2 Construction Fund. The City covenants and agrees to establish a
separate fund with an Authorized Depository to be known as the "City of Clermont, Florida,
Line of Credit Revenue Note Construction Fund, " which shall be used only for payment of the
Cost of the Project. Moneys in the Construction Fund, until applied in payment of any item of
the Cost of a 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 shall be paid into the Construction Fund the proceeds derived from a Draw
simultaneously with the delivery of a Note to the Noteholder, and there may be paid into the
Construction Fund, at the option of the City, any moneys received for or in connection with the
Project by the City from any other source.
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The City covenants that the acquisition and construction of the Project will be
completed without delay and in accordance with sound engineering practices. The City shall
make disbursements or payments from the Construction 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: (1) the item number
of the payment, (2) the name and address of the person to whom payment is due, (3) the amount
to be paid, (4) the purpose, by general classification, for which payment is to be made, and (5)
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 Construction
Fund and has not been the basis of any previous disbursement or payment, or (ü) 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 Construction
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 Issuer 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.
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
Construction 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 Notes from gross income for federal
income tax purposes. The Construction 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 Construction 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
Construction Fund shall be retained in the Construction 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
Construction Fund from being issued or held in book-entry form on the books of the Department
of the Treasury of the United States.
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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
any Note and such payment is not subsequently made within five (5) days after the scheduled
payment date; 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 imp~r
its likelihood of full repayment. 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 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 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 un stayed for a period of 30
days; or
(g) The City shall fail to observe and perform any covenant, condition or
agreement on its part to be observed or performed by it under the Loan Agreement, the First
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Supplemental Loan Agreement or under any resolution, agreement or other instrument pursuant
to which the Prior Lien Obligations or any Parity Obligations have been issued, and such failure
constitutes an event of default thereunder.
Section 5.2 Remedies. If any such Event of Default shall have occurred, the
Noteholder may seek enforcement of all remedies available to it under law. The holder of a
defaulted Note may declare such Note to be immediately due and payable. Any amounts due
on the Notes 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 such Notes are paid in full. Occurrence of an Event of Default or notice of any
event described in Section 5 .1 (c) above shall suspend the obligation of the Bank to honor
additional Draws until such time as such Event of Default or item giving rise to the notice under
Section 5 .1 (c) above has been cured to the satisfaction of the Bank. 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 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.
Section 6.2 CounteijJarts. 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 6.3 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 6.4 Term of Agreement. This Agreement shall be in full force and
effect from the date hereof and shall continue in effect as long as any Notes are outstanding.
The commitment of the Bank to honor Draws in accordance with the têrms'hereof shall expire
on May _, 1998; provid"ed, however, that such commitment period to draw on the line of credit
may be extended upon the written mutual agreement of the City and the Bank. Any extension
of the commitment period shall be on the same terms as expressed herein. Notwithstanding the
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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 any Note or Notes, the
provisions regarding adjustments to interest rates shall survive the repayment of any Note
hereunder for a period not to exceed two (2) years after such repayment.
Section 6.5 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 each Note
issued hereunder through its respective Final Maturity Date. The Bank may assign any of the
Notes or its obligations hereunder; provided, however, the Bank shall give the City 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 6.6 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
Notes, 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.
Section 6.7 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 Clermont, 1 Westgate Plaza, P.O. Box 120219, Clermont,
Florida 34712-0219, Attention: Mayor, and to the Bank, First Union National Bank of Florida,
8th Floor, 800 North Magnolia Avenue, Orlando, Florida 32803, Attention: Bart Bishop, 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 6.8 Applicable Law. The substantive laws of the State of Florida shall
govern this Agreement.
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Section 6.9 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first set forth herein.
CITY COUNCIL OF THE CITY OF
CLERMONT, FLORIDA
(OFFICIAL SEAL)
By:
Mayor
ATIEST:
By:
City Clerk
FIRST UNION NATIONAL BANK
OF FLORIDA
By:
Title:
ATTEST:
By:
Title:
IDocS\som 1611.3106/13/96 2:28pm
990301000 IJAXA 10 CINII:gt
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EXHIBIT A
THE PROJECT
The Project consists of the acquisition, construction and installation of certain additions,
extensions and improvements to the municipal water and sewer system of the City of Clermont,
Florida, including, but not limited to, (i) acquisition of an existing water system from Lake Hills
Utilities, Inc., (ii) construction of an elevated storage tank, (ill) modifications to the acquired
water system, (iv) construction and equipment of the Hancock Well, (v) construction and
equipment of a temporary sewage treatment plant and (vi) construction of a lift station and
associated forced mains.
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EXHIBIT B
UNITED STATES OF AMERICA
STATE OF FLORIDA
CITY OF CLERMONT, FLORIDA
LINE OF CREDIT REVENUE NOTE, DRAW NUMBER
Principal
Sum
Mode of
Interest
Date of Issuance
Final
Maturity Date
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'-
CITY OF CLERMONT, 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 First Union National Bank of Florida, Orlando, Florida, or its successors or assigns
(the "Noteholdertl), the Principal Sum specified above advanced pursuant to that certain Line of
Credit Agreement by and between First Union National Bank of Florida and the City, dated as
of May _, 1995 (the tlAgreementtl), 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
Rate (as defined in the Agreement) per annum (subject to adjustment as
hereinafter provided) on June 1 and December 1 of each year, commencing , _,
until such Principal Sum shall have been paid. The Principal Sum hereof shall be payable upon
the Final Maturity Date specified above or earlier prepayment upon presentation 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 is one of an authorized issue of Notes authorized to be issued in the aggregate
principal amount of not exceeding $3,000,000 of like tenor and effect, issued under the authority
of and in full compliance with the Constitution and statutes of the State of Florida, including,
particularly, Chapter 166, Part II, Florida Statutes, as amended, and other applicable provisions
of law, and a resolution duly adopted by the City on May _, 1995 (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
defmed shall have the meaning ascribed to such term in the Agreement.
This Note is being issued to finance or refinance a portion of the costs of acquiring,
constructing and installing certain additions, extensions and improvements to the municipal water
and sewer system of the City, as described in the Agreement and the Resolution. This Note is
secured by and shall be payable from the Pledged Funds as described in and in accordance with
the Agreement.
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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 the Notes, 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
under the 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 on the basis
of twelve 30-day months over a 360-day year. Such Interest Rate is subject to adjustment every
90 days to reflect changes in the LffiOR Rate (as defined in the Agreement). The Interest Rate
is also subject to adjustment as provided in Section 3.1(d) of the Agreement in the event of a
Determination of Taxability (as defined in the Resolution). 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 the Note. The City also has the right to convert the Interest Rate on this Note to a fixed rate
of interest as provided in the Agreement.
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 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 (i) the applicable maximum rate of interest allowed by Sections
215.~4'and 159.825(4), Florida Statutes, as amended, or (ii) the nonusurious interest allowed
by the laws of the State of Florida or the United States to the extent applicable, as presently in
effect and to, the extent an increase is allowable by such laws; and excess interest, if any, shall
be cancelled automatical1yas of the date of such acceleration, or, if theretofore paid, shall be
credited on the principal amount of the Note unpaid, but such crediting shall not cure or waive
any default under the Agreement.
All payments made by the City hereon shall apply first to accrued interest, and then to
the principal amount then due on this Note.
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The City may prepay this Note as a whole or in part, at any time or from time to time,
without premium, 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; [provided, however, no repayment of this Note may be made if the Interest
Rate hereon has been converted to a fixed rate, except upon such terms as may be negotiated
by the Noteholder and the City at the time of such conversion]. [If this Note is issued upon a
conversion to a fixed rate, insert repayment provisions, if applicable.] Each prepayment of a
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 ninety (90) Business Days prior
thereto. Notice having been given as aforesaid, the Principal Sum of the 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 (i) in case the entire unpaid balance of the principal
of any Note is to be paid, upon presentation and surrender of such Note at the office of the
Noteholder, and (ii) in case only part of the unpaid balance of principal of the Note is to be
paid, upon presentation of such Note at the office of the Noteholder for notation thereon of the
amount of principal and interest on such Note then paid. If on the prepayment date moneys for
the payment of the principal amount to be prepaid on such 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 such Note shall
cease to accrue. If said moneys shall not have been so paid on the prepayment date, such
principal. amount of such 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, or taxation in any
form on any property therein to pay the 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 Final Maturity Date 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 the Note shall be declared to be immediately due and payable or any amounts due on
the Note shall remain unpaid past any scheduled payment date, the 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 therl due under the Note are paid in full.
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The City hereby waives demand, protest and notice of dishonor.
No obligation the Agreement or this Note shall be or be deemed to be an obligation of
any member of the City Council 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 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, 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 Clermont, Florida, caused this Note to be signed
by the manual signature of the Mayor and its official seal to be affixed hereto or imprinted or
reproduced hereon, and attested by the manual signature of the City Clerk, and this Note to be
dated the Date of Issuance set forth above.
CITY COUNCIL OF THE CITY OF
CLERMONT, FLORIDA
(OFFICIAL SEAL)
By: /Ø ¿J/ ~
Mayor..
ATTEST:
By:
City Clerk
IDOCS\SOFT\1611.3106/13/962:28pm
990301000 IJAXA 10 IJHM:gt
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