R15-042 1 RESOLUTION NO. R15 -042
2
3 A RESOLUTION OF THE CITY OF BOYNTON BEACH, FLORIDA
4 AUTHORIZING THE CITY TO ENTER INTO A RATE LOCK
5 AGREEMENT WITH RESPECT TO THE PROPOSED PUBLIC
6 SERVICE TAX REVENUE REFUNDING BOND, SERIES 2015;
7 AND PROVIDING AN EFFECTIVE DATE.
8
9 BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF BOYNTON
10 BEACH, FLORIDA, AS FOLLOWS:
11
12 Section 1: The City is preparing to issue its Public Service Tax Revenue Refunding
13 Bond, Series 2015 (the "Bond "). The City has issued a request for proposals for the purchase
14 of the Bond from interested financial institutions and has determined that the proposal of
15 Bank of America, N.A. (the "Bank") provides for the best terms for the City. The City desires
16 to enter into an agreement (the "Rate Lock Agreement ") with either the Bank (or at the
17 discretion of the Bank, its affiliate Banc of America Preferred Funding Corporation) in order
18 to fix the interest rate on the Bond.
19
20 Section 2: The Mayor is hereby authorized and directed to execute the Rate Lock
21 Agreement in the form attached hereto as Exhibit "A ".
22
23 Section 3: This Resolution shall take effect immediately upon its passage.
24
25 PASSED AND ADOPTED this 21 day of April, 2015.
26 CITY OF BOYNTON BEACH, FLORIDA
27
28 YES NO
29
30 Mayor — Jerry Taylor
31
32 Vice Mayor — Joe Casello
33
34 Commissioner — David T. Merker ✓
35
36 Commissioner — Mack McCray
37
38 Commissioner — Michael M. Fitzpatrick I/
39
40 LL
41 VOTE ,,T 0
42 ATTEST:
43
44 ell= `in Atzt
45 a M. Prainito, MMC
46 C - y- o,�
47
48 (C. ,,r.te
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EXHIBIT A
Rate Lock Agreement
1. City of Boynton Beach, Florida, a municipality of the State of Florida (the "City ") has
requested Banc of America Preferred Funding Corporation, a Delaware corporation (the
"Lender ") to make a loan (the "Loan ") to the City in the principal amount $24,210,000.00 (the
"Amount "). The Loan will be made on May 15, 2015 (the "Closing Date "), will bear interest
calculated on the basis of a 360 day year consisting of twelve thirty day months, payable in
arrears on November 1, 2015 and each May 1 and November 1 thereafter, will be repaid in
installments of principal due on November 1 of the years and in the amounts set forth on Exhibit
A attached hereto attached hereto, and will mature on November 1, 2026 (the "Maturity Date ").
The Loan will be issued as an "Additional Bond" pursuant to Resolution R04 -052 (the "Bond
Resolution ") of the City, adopted April 7, 2004, and shall have such other terms and conditions
as set forth in the Summary of Terms and Conditions of the Lender, dated April 10, 2015 (the
"Terms Sheet ") attached hereto as Exhibit B.
2. The City desires to obtain the agreement of the Lender that the Loan will bear an
interest rate locked in by the Lender at this time. In response to the City's request, the Lender
has agreed to lock in a fixed rate (the "Rate ") for the Loan of 1.95% per annum.
3. The City understands that, if the Loan is not funded in the Amount and by 5:00 p.m.
Eastern Time on the Closing Date (such funding and delivery being referred to herein as the
"Closing "), the Lender may suffer breakage costs and other losses, expenses and liabilities,
including lost revenue and lost profits, as a result of having locked in the interest rate in advance.
Accordingly, in consideration of the Lender's agreement to lock in the Rate, the City agrees to
pay to the Lender a breakage fee (the "Breakage Fee ") as provided herein in the event the
Closing does not occur on the Closing Date for any reason other than the Lender's refusal to fund
the Loan pursuant to and in breach of the terms and conditions set forth in the Terms Sheet. Once
the Closing occurs on the Closing Date, this Agreement will terminate.
4. The Breakage Fee will be determined on the assumption that the Loan fully funded on
the Closing Date and was then immediately prepaid by the City in full, and as follows:
(i) The Lender will first determine the amount of interest which would have accrued as of
each scheduled payment date for each Prepaid Installment (hereinafter defined) had it remained
outstanding from the Closing Date until the Original Payment Date (hereinafter defined) using an
interest rate equal to 1.95% (which the parties agree is the Swap Rate (hereinafter defined) as of
April 20, 2015 plus 0.25 %).
(ii) The Lender will then subtract from each interest amount determined in (i), above, the
amount of interest which would have accrued on each respective Prepaid Installment as of each
scheduled payment date if it were reinvested from Closing Date through the Original Payment
Date, using the Swap Rate as of the Closing Date.
(iii) If (i) minus (ii) for a Prepaid Installment is greater than zero, the Lender will discount the
periodic differences to the Closing Date using the Swap Rate as the discount rate. The sum of the
discounted periodic differences for each Prepaid Installment will be the Breakage Fee.
The following defmitions will apply to the calculation of the Breakage Fee:
forth on Exhibit A.
(ii) "Prepaid Installment" means any amount of principal that is paid prior to its Original
Payment Date.
(iii) "Swap Rate" means the fixed rate for an interest rate swap with a floating rate of three
month Libor and having a term of 81 months as reported on the Bloomberg service at or more
recently prior to 5:00 p.m. Eastern Time on the applicable date. If no term exactly corresponding
to 81 months is reported, the Swap Rat, will be determined by linear interpolation between the
reported terms that are the closest shorter and longer terms reported. If for any reason Bloomberg
does not publish thc Swap Rate as of the applicable date, the Lender shall select a comparable
source to determine the Swap Rcte.
5. The City agrees that the Breakage Fee represents a reasonable estimate of the
breakage costs and other losses. expenses and liabilities, including lost revenue and lost profits,
that the Lender may suffer if the Closing does not occur in the Amount on the Clos'eg Date. The
City agrees that the Lender's willingness to lock in the Rate in advance of the Closing Date is
sufficient consideration for the City's agreement to pay the Breakage Fee. Any Breakage Fee will
be due and payable in full on the day immediately following the Closing Date.
6. This Agreement shall be governed by Florida law. Any amount due under this
Agreement which is not paid upon demand by the Lender shall bear interest until paid at the Rate
plus five percentage points. The parties hereby waive trial by jury in any dispute between the
• parties concerning this Agreement. The prevailing party in any litigation (including any appeal)
will be entitled to its reasonable attorneys' fees, including thc allocated cost of in -house counsel.
7. To secure the obligations of the City to the Lender hereunder, the City grants to the
Lender a lien upon and sect;rity interest in the Public Service Tax Revenues and the
Discretionary Communication Services Tax Revenues, as defined in the Bond Resolution,
provided that such lien and pledge is subordinate in all respects to the lien on a pledge of Pledged
Funds as defined in and pursuant to the E3ond Resolution.
8. The addresses of the Le °.idcr and City are set forth below.
Dated April 22, 2015.
Banc of America Preferred Funding Corporation City of Boynton, Florida
f
By: ( C v7 By: _.
Name: ,v ►ke Bowen Name: Jerry Taylor
Title: Authorized Agent Title: Mayor
Address: 150 N. College St Address: 100 East Boynton Beach Blvd.
NC 1- 028 -17 -06 Boynton Beach, FL 33425
Charlotte, NC 28255
2
forth on Exhibit A.
(ii) "Prepaid Installment" means any amount of principal that is paid prior to its Original
Payment Date.
(iii) "Swap Rate" means the fixed rate for an interest rate swap with a floating rate of three
month Libor and having a term of 81 months as reported on the Bloomberg service at or more
recently prior to 5:00 p.m. Eastern Time on the applicable date. If no term exactly corresponding
to 81 months is reported, the Swap Rate will be determined by linear interpolation between the
reported terms that are the closest shorter and longer terms reported. If for any reason Bloomberg
does not publish the Swap Rate as of the applicable date, the Lender shall select a comparable
source to determine the Swap Rate.
5. The City agrees that the Breakage Fee represents a reasonable estimate of the
breakage costs and other losses, expenses and liabilities, including lost revenue and lost profits,
that the Lender may suffer if the Closing does not occur in the Amount on the Closing Date. The
City agrees that the Lender's willingness to lock in the Rate in advance of the Closing Date is
sufficient consideration for the City's agreement to pay the Breakage Fee. Any Breakage Fee will
be due and payable in full on the day immediately following the Closing Date.
6. This Agreement shall be governed by Florida law. Any amount due under this
Agreement which is not paid upon demand by the Lender shall bear interest until paid at the Rate
plus five percentage points. The parties hereby waive trial by jury in any dispute between the
parties concerning this Agreement. The prevailing party in any litigation (including any appeal)
will be entitled to its reasonable attorneys' fees, including the allocated cost of in -house counsel.
7. To secure the obligations of the City to the Lender hereunder, the City grants to the _
Lender a lien upon and security interest in the Public Service Tax Revenues and the
Discretionary Communication Services Tax Revenues, as defined in the Bond Resolution,
provided that such lien and pledge is subordinate in all respects to the lien on a pledge of Pledged
Funds as defined in and pursuant to the Bond Resolution.
8. The addresses of the Lender and City are set forth below.
Dated April 22, 2015. .
Banc of America Preferred Funding Corporation City of Boynton, Florida
By: By: .
Name: Mike Bowen Nat• - : Jerry '.ylo
Title: Authorized Agent Title: Mayor
Address: 150 N. College St Address: 100 East Boynton Beach Blvd.
NC 1- 028 -17 -06 Boynton Beach, FL 33425
Charlotte, NC 28255
2
EXHIBIT A TO RATE LOCK AGREEMENT
$24,210,000.00
CITY OF BOYNTON BEACH, FLORIDA
PUBLIC SERVICE TAX REVENUE REFUNDING BOND, SERIES 2015
Interest Rate Maturity Date Date of Original Issue
1.95% November 1, 2026 May 15, 2015
Registered Holder: Banc of America Preferred Funding Corporation
Principal Amount: Twenty -Four Million Two Hundred Ten Thousand and 00 /100ths Dollars
KNOW ALL MEN BY THESE PRESENTS, that the City of Boynton Beach, Florida (the
"Issuer "), a municipal corporation and political subdivision created and existing under and by
virtue of the laws of the State of Florida, for value received, hereby promises to pay, solely from
the sources of payment provided for in the hereinafter described Resolution, to the Registered
Holder identified above, or registered assigns as hereinafter provided, the Principal Amount
identified above on the Maturity Date identified above, subject to prior prepayment as hereinafter
provided, together with interest on such Principal Amount from the Date of Original Issue
identified above or from the most recent Interest Payment Date (hereinafter defined) to which
interest has been paid, at the Interest Rate per annum (calculated on the basis of a 360 -day year of
twelve 30 -day months) identified above (subject to adjustment as herein provided) payable on
May 1 and November 1 of each year (the "Interest Payment Dates ") commencing November 1,
2015 until such Principal Amount shall have been paid or provided for.
The principal hereof shall be repaid in installments, due on November 1 of the years and in
the amounts set forth in the following table:
Year Principal Due
2015 $805,000.00
2016 1,575,000.00
2017 1,940,000.00
2018 1,970,000.00
2019 2,095,000.00
2020 2,130,000.00
2021 2,170,000.00
2022 2,215,000.00
2023 2,260,000.00
2024 2,305,000.00
2025 2,350,000.00
2026 All remaining principal
Such Principal Amount and interest and the prepayment penalty, if any, on this Bond are
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payable in any coin or currency of the United States of America which, on the respective dates of
payment thereof, shall be legal tender for the payment of public and private debts, and shall be
made by wire transfer by the Issuer to the Registered Holder in accordance with written
instructions provided by the Registered Holder to the Issuer, or in such other manner as may be
agreed upon by the Issuer and the Registered Holder. Notwithstanding anything herein or in the
Resolution to the contrary, the Registered Holder of this Bond is not required to present or
surrender this Bond in order to receive payments hereon.
As used in this Bond,
(1) "Code" means the Internal Revenue Code of 1986, as amended; and
(2) "Determination of Taxability" shall mean the circumstance that interest paid or
payable on the this Bond becomes includable for federal income tax purposes in the gross income
of the Registered Holder as a consequence of any act, omission or event whatsoever, and
regardless of whether the same was within or beyond the control of the Issuer. A Determination of
Taxability will be deemed to have occurred upon (a) the receipt by the Issuer or the Registered
Holder 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 this Bond is includable in
the gross income of the Registered Holder or (b) the issuance of any public or private ruling of the
Internal Revenue Service that any interest payable on this Bond is includable in the gross income
of the Registered Holder. For all purposes of this definition, a Determination of Taxability will be
deemed to occur on the date as of which the interest on this Bond is deemed includable in the gross
income of the Registered Holder. A Determination of Taxability shall not occur solely as a result
of such interest being taken into account in determining adjusted current earnings for the purpose
of the alternative minimum tax imposed on corporations.
(3) "Maximum Corporate Tax Rate" shall mean the highest marginal rate of United
States federal income tax applicable to the taxable income of corporations, without regard to any
increase in tax designed to normalize the rate for all income at the highest marginal tax rate, which
rate on the date hereof is 35 %.
Upon the occurrence of a Determination of Taxability (hereinafter defined), the Interest
Rate shall be adjusted to a rate per annum equal to the rate otherwise borne hereby divided by one
minus the Maximum Corporate Tax Rate in effect as of the date of the Determination of Taxability
(the "Adjusted Interest Rate "), as of and from the date such determination would be applicable
with respect to this Bond (the "Accrual Date ") and (i) the Issuer shall, from the sources hereinafter
provided and not otherwise, immediately pay on demand to the Registered Holder an amount equal
to the sum of (1) the difference between (A) the total interest that would have accrued on this Bond
at the Adjusted Interest Rate from the Accrual Date to the date of such demand for payment, and
(B) the actual interest paid by the Issuer on this Bond from the Accrual Date to the date of such
demand for payment, and (2) any loss, cost, charge or expense suffered by such Registered Holder
arising out of the Determination of Taxability, including without limitation amounts of interest and
penalties required to be paid as a result of any additional state and federal income taxes by such
Registered Holder as a result of such Determination of Taxability; and (ii) from and after the date
of such demand for payment, this Bond shall continue to bear interest at the Adjusted Interest Rate
for the period such determination continues to be applicable with respect to this Bond. The
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Iii
adjustment provided for in this paragraph shall survive the payment of this Bond until the
expiration of the statute of limitations under which the interest on this Bond could be required to be
included in the gross income of the registered owner thereof for federal income taxes purposes.
Upon the occurrence of and during the continuance of an Event of Default or Series 2015
Default, the Interest Rate otherwise borne hereby shall increase to the maximum rate permitted by
law (the "Default Rate ").
If any payment due hereon is not made within fifteen days after the due date, the Issuer
shall on demand pay the Registered Holder a late payment fee (the "Late Payment Fee ") in the
amount of 4% of the late payment.
For so long as any of the Issuer's Public Service Tax Revenue Bonds, Series 2006 (the
"Series 2006 Bonds ") shall be Outstanding, any obligation of the Issuer to pay interest hereon at a
rate in excess of the initial rate borne hereby and any obligation to pay any Late Payment Fee, shall
be subordinate to the obligation of the Issuer to pay principal and interest on such Outstanding
Series 2006 Bonds.
This Bond is subject to optional prepayment prior to the due dates set forth above at the
option of the Issuer, at any time and from time to time, but only upon at least five Business Days'
prior notice from the Issuer to the Registered Holder and only on or after November 1, 2016. The
prepayment shall include the principal being prepaid and the interest accrued thereon to the
prepayment date, and any Prepayment Fee due as hereinafter provided. Prepayments of principal
shall be applied to the scheduled payments due hereon in the inverse order of their due dates, or in
such other manner as the Issuer and Registered Holder may agree in writing.
For purposes hereof, the Prepayment Fee will be the sum of fees calculated separately for
each Prepaid Installment, as follows:
(i) The Registered Holder will first determine the amount of interest which would have
accrued as of each Interest Payment Date from the date of the prepayment at the Taxable
Equivalent Rate for the Prepaid Installment had it remained outstanding until the applicable
Original Payment Date.
(ii) The Registered Holder will then subtract from each interest amount determined in (i),
above, the amount of interest which would accrue for that Prepaid Installment as of each Interest
Payment Date from the date of the prepayment if it were reinvested at the Treasury Rate from the
date of prepayment through the Original Payment Date.
(iii) If (i) minus (ii) for the Prepaid Installment is greater than zero, the Registered Holder
will calculate the present value of the differences to the date of prepayment using the Treasury
Rate as the discount rate. The Registered Holder will then add together all of the discounted
differences and the result will be the Prepayment Fee for the Prepaid Installment.
The following definitions will apply to the calculation of the Prepayment Fee:
(i) "Original Payment Dates" mean the dates on which the prepaid principal would have
A -3
been paid if there had been no prepayment.
(ii) "Prepaid Installment" means the amount of the prepaid principal which would have
been paid on a single Original Payment Date.
(iii) "Taxable Equivalent Rate" means the interest rate per annum derived by dividing
1.95% by the difference of 1 minus the Maximum Corporate Income Tax Rate as of the date of the
prepayment.
(iv) "Treasury Rate" means the yield on the Treasury Constant Maturity Series with
maturity equal to the Original Payment Date of the Prepaid Installment (calculated as of the date of
prepayment in accordance with accepted financial practice and rounded to the nearest
quarter- year), as reported in Federal Reserve Statistical Release H.15, Selected Interest Rates of
the Board of Governors of the Federal Reserve System, or any successor publication. If no
maturity exactly corresponding to such Original Payment Date appears in Release H.15, the
Treasury Rate will be determined by linear interpolation between the yields reported in Release
H.15. If for any reason Release H.15 is no longer published, the Registered Holder shall select a
comparable publication to determine the Treasury Rate.
This Bond is issued under the authority of and in full compliance with the Constitution and
laws of the State of Florida, particularly Chapter 166, Part II, Florida Statutes, Article VIII, Section
2 of the Constitution of the State of Florida, the Charter of the Issuer, and other applicable
provisions of law, and Resolution No. R04 -052, duly adopted by the City Commission of the
Issuer on April 7, 2004, as amended and supplemented, particularly as supplemented by
Resolution No. R15- adopted on May 5, 2015 (collectively, the "Resolution "), and is subject to
all the terms and conditions of the Resolution, including but not limited to those provisions which
specify the source of payment and security for this Bond.
Capitalized terms not defined herein shall have the meaning assigned to such terms in the
Resolution. This Bond constitutes an Additional Bond under the Resolution, the principal,
prepayment fee, if any, and interest (except as provided herein with respect to certain interest and
the Late Payment Fee) of which is payable on a parity with the Series 2006 Bonds and any other
Additional Bonds that may be issued from time to time in accordance with the provision of the
Resolution.
It is hereby certified and recited that all acts, conditions and prerequisites required to exist,
to happen and to be performed precedent to and in connection with the issuance of this bond, exist,
have happened and have been performed, in regular and due form and time as required by the
Constitution and laws of the State of Florida applicable thereto, and that the issuance of the Bonds
does not violate any constitutional or statutory limitations or provisions.
This bond shall not be valid or become obligatory for any purpose until the certificate of
authentication hereon shall have been manually signed by the Registrar.
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IN WITNESS WHEREOF, the City of Boynton Beach, Florida, has issued this bond and
has caused the same to be executed by the manual signature of its Mayor and attested and
countersigned by the manual signature of its CIerk and its official seal to be affixed hereon, all as
ofMay15,2015. .
(SEAL) CITY OF BOYNTON BEACH, FLORIDA
•
1
By v / ` / _ �•
Mar,
ATTESTED: /
CERTIFICATE OF AUTHENTICATION
This bond is the Bond of the issue described in the within- mentioned Resolution.
DATE OF AUTHENTICATION: May 15, 2015
Office of the Director of Financial Services, as Registrar
By_ 743 `
Authorized Officer
5
EXHIBIT B TO RATE LOCK AGREEMENT
Bank of America
'��I
Merrill Lynch
April 10, 2015
Mr. Tim W. Howard, Director of Financial Services Mark E. Raymond
City of Boynton Beach Law Offices of Mark E. Raymond
100 E. Boynton Beach Blvd. 4360 Northlake Boulevard, Suite 204
Boynton Beach, Florida 33425 Palm Beach Gardens, FL 33410
Mr. Jay Glover, Managing Director
Public Financial Management, Inc.
300 South Orange Ave., Suite 1170
Orlando, FL 32801
Dear Messrs. Howard, Glover and Raymond:
In response to City of Boynton Beach, Florida's ("City") Request For Bank Loan Proposals — Public Service Tax
Refunding Revenue Bond, Series 2015 ( "Series 2015 PST Bonds ") distributed via email March 25, 2015 (the "RFP "),
Bank of America, N.A., through itself or its affiliate Banc of America Preferred Funding Corporation ( "Bank" or
"BANA "), is pleased to provide this proposal for up to a $25,000,000 bank direct purchase of City's Series 2015 PST
Bonds, for its consideration.
Following this cover letter, we have included a summary response table with the information requested in the RFP
and then our typical Summary Terms and Conditions document that further outlines the proposed terms (the
"Term Sheet ").
This Term Sheet does not represent or imply a commitment to lend by the Bank. Any such commitment shall be
subject to the Bank's final credit approval, including completion of a review of all documents which shall be
acceptable to the Bank and its counsel at their sole discretion. As of the date of this proposal, the Bank has
completed its initial credit underwriting and has received required approvals to provide this Term Sheet.
We truly appreciate the opportunity to provide this financing proposal and potentially expand upon our already
strong and valued banking relationship with the City of Boynton Beach, Florida. We look forward to discussing
this Term Sheet further with the City and its advisors. Please do not hesitate to call or email us with any questions
or comments you might have. Mike Romano, on our Municipal Credit Products team, will serve as your primary
contact to discuss this Term Sheet.
Sincerely,
Stephen B. Lenehan Michael J. Romano
Senior Vice President Senior Vice President
561 - 838 -2256 770 - 510 -4046
"Bank of America Merrill Lyndi" is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other
commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic
advisory, and other hvestment bankhg activities are performed globally by investment banking affiliates of Bank of America Corporation ( "hvestment Banking Affiliates "),
includhg, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lyndi Professional Clearing Corp., both of which are registered broker dealers and
members of FINRA and SIPC, and, in other jurisdictions, by locally registered entities. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured * May
Lose Value * Are Not BankGuaranteed.
Series Public Service Tax Refunding Revenue Bond, Series 2015
Bank Contact Information Michael (Mi ke) J. Romano
Senior Vice President
Ba nk of America, N.A.
3700 Crestwood Parkway, Suite 1050
Mail Code: GA7 -430 -10-01
Duluth, Georgia 30096
Office: 770 - 510 -4046
Fax: 404 - 260 -9681
Cell: 404 - 307 -9261
Rate Proposal Indicative Non Bank Qualified Rate: 2.00%
The actual rate shall be set up to two business days prior to closing utilizing the 81 month
interest rate swap rate, as determined by linear interpolation, plus a credit spread. The
actual rateshall beset utilizing the interest rate swap rate as of the day the rate is set. The
Bank shall use Bloomberg, or a comparable platform, to establish such a rate. The credit
spread is 25 basis points.
The indicative rate and pricing formula is based on 1) the transaction as described herein
including the close date, term, weighted average maturity of the loan amortization schedule
and 2) legal opinions acceptable to the Ba nk and its counsel regarding the tax exempt status
of the loans. The pricing formula will be good through [June 10, 2015], a date that is 60 days
from the RFP response date, so long as written acceptance of this proposal is provided by the
expiration of the term sheet. After that date or if the amount or repayment terms change,
the formula may besubject to adjustment at Bank's sole discretion.
Bank is willing to enter into a rate lock agreement which would fix the interest rate more
than two business days prior to closing. Under any such rate lock agreement, a failure of the
City to fund the loan (other than as a result of the Bank's wrongful action), then the City
would be subject to a potential breakage penalty calculated in the same manner as if the
loan fully funded and was then immediately prepaid per Exhi bit A. Any breakage fee due
under any rate lock agreement would be secured by and payable from the Public Service
Taxes a nd Discretionary Communications Services Taxes pledged.
Rate Adjustment Provision If there is a Determination of Taxability as it relates to the Series 2015 PST Bonds, the Bank's
standard "gross up" provision will apply, and among other things, theinterestrate will increase to
the rate154 %of the otherwise applicable rate (assuming highest margin federal tax rate is 35 %).
The interest rate may also be subject to adjustment to the Default Rate, if there is an Event of
Defaultas further outlined on page 7 of this Term Sheet.
Note, the Bank's proposed pricing does not include any adjustments or increases for regulatory
cost increases, changes in law, rules, capi tal adequacy orreserverequirements.
Default Rate Maximum rate allowed by law.
Bank Counsel Fees Legal fees and related expenses for Bank Counsel are not to exceed $5,500.
Prepayment Provisions Prepayment are permitted at any ti me on or after November 1, 2016 with five business days
prior written notice, subject to a potential prepayment penalty as set forth i n Exhibit A.
Financial Reporting: As soon as available but no later than 270 days after the close of each fiscal year of the City,
the City shall providecompleteaudited fina ncial statements of the City. In addition,
Borrower shall provide or cause to be provided to Bank such information respect ng the
affairs, condition and /or operations, financial or otherwise, of the City as the Bank may from
time to time reason bly request (i.e., annual budget, amount of Pledged Funds collected).
Conditions See attached Summary Terms and Conditions
e " 4
; . BankofAmerica -4 i
-�,v, & Page 2 _Merrill Lynch
I II
Confidential Notice to Recipient
"Bank of America Merrill Lynch" is the marketing name for the global banking and global markets businesses of Bank of America Corporation.
Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including
Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment
banking affiliates of Bank of America Corporation ( "Investment Banking Affiliates "), including, in the United States, Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Merrill Lynch Professional Clea ring Corp., which are both registered broker dealers and members of FIN RAand SIPC, and, in
other jurisdictions, by locally registered entities.
Investment products offered by Investment Banking Affiliates:
Are Not FDIC Insured * May Lose Value * Are Not Bank Guaranteed.
These materials have been prepared by one or more subsidiaries of Bank of America Corporation for the client or potential client to whom such
materials are directly addressed and delivered (the "Company') in connection with an actual or potential mandate or engagemen t and may not be
used or relied upon for any purpose other than as specifically contemplated by a written agreement with us. These materials are based on
information provided by or on behalf of the Company and /or other potential transaction participants, from public sources or otherwise reviewed
by us. We assume no responsibility for independent investigation or verification ofsuch information (including without limitation, data from third
party suppliers) and have relied on such information being complete and accurate in all material respects. To the extent suc h information includes
estimates and forecasts of future financial performance prepared by or reviewed with the managements of the Company and /or other potential
transaction participants or obtained from public sources, we have assumed that such estimates and forecasts have been reasonably prepared on
bases reflecting the best currently available estimates and judgments ofsuch managements (or, with respect to estimates and forecasts obtained
from public sources, represent reasonable estimates). No representation or warranty, express or implied, is made as to the accuracy or
completeness ofsuch information and nothing contained herein is, or shall be relied upon as, a representation, whether as to the past, the present
or the future. These materials were designed for use by specific persons familiar with the business and affairs of the Company and are being
furnished and should be considered only in connection with otherinformation, oral or written, being provided by us in connection herewith. These
materials are not intended to provide the sole basis for evaluating, and should not be considered a recommendation with respect to, any
transaction or other matter. These materials do not constitute an offer orsolicitation to sell or purchase a ny securities a nd a re not a commitment
by Bank of America Corporation or any of its affiliates to provide or arrange any financing for any transaction or to purchase any security in
connection therewith. These materials are for discussion purposes only and are subject to our review and assessment from a legal, compliance,
accounting policy and risk perspective, as appropriate, following our discussion with the Company. We assume no obligation to update or
otherwise revise these materials. These materials have not been prepared with a view toward public disclosure under applicable securities laws or
otherwise, are intended for the benefit and use of the Company, and may not be reproduced, disseminated, quoted or referred t o, in whole or in
part, without our prior written consent. These materials may not reflect information known to other professionals in other business areas of Bank
of America Corporation and its affiliates.
Bank of America Corporation a nd its affiliates (collectively, the "BAC Group ") comprise a full service securities firm and commercial bank engaged in
securities, commodities and derivatives trading, foreign exchange and other brokerage activities, and principal investing as well as providing
investment, corporate and private banking, asset and investment management, financing and strategic advisory services and other commercial
services and products toa wide range of corporations, governments and individuals, domestically and offshore, from which conflicting interests or
duties, or a perception thereof, may arise. In the ordinary course of these activities, parts of the BAC Group at anytime may invest on a principal
basis or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect trans actions, for their own
accounts or the accounts of customers, in debt, equity or other securities or financial instruments (including derivatives, bank loans or other
obligations) of the Company, potential counterparties or any other company that may be involved ina transaction. Productsa nd services that may
be referenced in the accompanying materials may be provided through one or more affiliates of Bank of America Corporation. W e have adopted
policies and guidelines designed to preserve the independence of our research analysts. The BAC Group prohibits employees from, directly or
indirectly, offering a favorable research rating or specific price target, or offering to change a rating or price target to a subject company as
consideration or inducement for the receipt of business or for compensation and the BAC Group prohibits research analysts from being directly
compensated for involvement in investment banking transactions. We are required to obtain, verifyand record certain information that identifies
the Company, which information indudes the name and address of the Company and other information that will allow us to identify the Company
in accordance, as applicable, with the USA Patriot Act (Title III of Pub. L. 107 -56 (signed into law October 26, 2001)) and such other laws, rules and
regulations as applicable within and outside the United States.
We do not provide legal, compliance, tax or accounting advice. Accordingly, any statements contained herein as to tax matters were neither
written nor intended by us to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on
such taxpayer. If any person uses or refers to any such tax statement in promoting, marketing or recommending a partnership o r other entity,
investment plan or arrangement to any taxpayer, then the statement expressed herein is being delivered to support the promotion or
marketing of the transaction or matter addressed and the recipient should seek advice based on its particular circumstances from an
independent tax advisor. Notwithstanding anything that may appear herein or in other materials to the contrary, the Company shall be
permitted to disclose the tax treatment and tax structure of a transaction (including any materials, opinions or analyses rel ating to such tax
treatment or tax structure, but without disclosure of identifying information or, except to the extent relating to such tax structure or tax
treatment, any nonpublic commercial or financial information) on and after the earliest to occur of the date of (i) public announcement of
discussions relating to such transaction, (ii) public announcement of such transaction or (iii) execution ofa definitive agreement (with or without
conditions) to enter into such transaction; provided, however, that if such transaction isnot consummated for any reason, the provisions of this
sentence shall cease to apply. Copyright 2014 Bank of America Corporation
BankofAmerica�'
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Summary of Terms and Conditions Submission date: April 10, 2015
Parties to the Transaction
Borrower: City of Boynton Beach, Florida (also, the "City ")
Lender: Bank of America, N.A. or another affiliate of Bank of America Corporation ( "BANA" or the "Bank ").
The Facility
Facility City of Boynton Beach, Florida Public Service Tax Revenue Refunding Bond, Series 2015 (the
"Series 2015 PST Bonds")
The Series 2015 PST Bonds shall not be rated and will not be marketed pursuant to an official
statement. Bank will accept the Series 2015 PST Bonds as a physical certificate registered in the
nameof the Bank.
Par Amount: Up to $25,000,000 fully drawn at closing.
Use of Proceeds: To current refund in full the outstanding City of Boynton Beach, Florida Public Service Tax
Revenue Bonds, Series 2004 ($5,425,000) and a portion of the Gty's Public Service Tax Revenue
Bonds, Series 2006 ($18,190,000, maturing November 1, 2017 -2026) and pay cost of issuance of
the Series 2015 PST Bonds.
Expected Closing: The Series 2015 PST Bonds are expected to close on or a bout May 13, 2015
Maturity Date: November 1, 2026
Repayment, Principal due on the Series 2015 PST Bonds shall be paid annually each November 1 starting
Amortization: November 1, 2015. Pricing herein is based on the amortization schedule below provided in the
RFP and any changes made shall be acceptable to the Bank in its sole discretion.
Maturity Date Balance Principal Due
5/13/2015 $24,170,000 Closing
11/1/2015 $23,410,000 $760,000
11/1/2016 $21,870,000 $1,540,000
11/1/2017 $19,960,000 $1,910,000
11/1/2018 $18,005,000 $1,955,000
11/1/2019 $15,930,000 $2,075,000
11/1/2020 $13,815,000 $2,115,000
11/1/2021 $11,650,000 $2,165,000
11/1/2022 $9,430,000 $2,220,000
11/1/2023 $7,155,000 $2,275,000
11/1/2024 $4,825,000 $2,330,000
11/1/2025 $2,440,000 $2,385,000
11/1/2026 $0 $2,440,000
Security: Principal, interest and prepayment fee, if any, for the Series 2015 PST Bonds shall be secured
equally and ratably by a pledge of and lien upon the Pledged Funds, that includes City's Public
Service Tax Revenues, Discretionary Communications Services Tax Revenues and any Pledged
Accounts, all as defined in Resolution No. R04 -052, as amended and supplemented ( "2004
Resolution."
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The City covenants to continue to impose and collect the Public Service Tax and Discretionary
Communications Services Tax while the Series 2015 PST Bonds are outstanding and shall not take
any action or fail to take any action that would cause a suspension or termi nation of the receipt of
the Pledged Revenues or take any action or enter into any agreement that s hall result in reducing
the level of taxes levied by the City from the level prevailing at the time of this Term Sheet.
The Reserve Account Requirement for the Series 2015 PST Bonds will be $0.00.
Optional Prepayment: Prepayments are permitted at any lime on or after November 1, 2016 with five business days
prior written notice, subject to a potential prepayment penalty as set forth in Exhibit A.
Interest Rate, Fees
Interest Rate: See summary table on page 2.
Payment Date, Day Interest on the Series 2015 PST Bonds will be paid semi annually in arrears on each May 1 and
Count: November 1, start ng November 1, 2015. Interest of the Series 2015 PST Bonds will be calculated
on the basis of twelve 30 day months and a 360 day year.
Determination of Upon a Determination of Taxability with respect to the Series 2015 PST Bonds and until the
Taxability: earliest of (i) a subsequent tax exempt qualifying date, (ii) a prepayment date (if any) and (iii) the
Maturity Date, the Series 2015 PST Bonds will bear interest from the date that taxability
commences at a rate equal to the product of the tax - exempt rate of interest otherwise in effect
and the Taxable Rate Factor (currently 1.54).
The Taxable Rate Factor is the amount by which the tax - exempt rate must be mulitplied to
achieve the equivenlant taxable ate given the highest margin federal corporate tax rate, currently
35 %. The Taxable Rate Factore is subject to change should the highest marginal federal
corporate tax rate change.
The Borrower is also responsible for payment of any interest, penalties or charges owed by the
Bank as a result of interest on the Series 2015 PST Bonds that accrues from becoming includable
in the gross income fo the Bank, together with any and all attorneys' fees, court costs, or other
out -of- pocket cost incurred by the Bank in connection therewith.
A change in the interest rate due to this provision will NOT trigger an exception for the
prepayment penalty provision.
Default Rate: During the conti nuance of any default under the Series 2015 PST Bonds, the interest rate shall be
increased to the maximum rate allowed under law.
Bank Counsel Fee: Bank proposes to engage Emily F. Magee with Foley & Lardner LLP, to represent the Bank in this
transaction (Email: emagee @foley.com PH: 904.359.8735 Fax: 9043592700).
Bank legal fees are to be paid for by Borrower directly ID Bank Counsel, at Closing. The $5,500 fee
level quoted assumes that documentation and legal opinions are prepared by the City's bond
counsel. All such documents shall be acceptable to the Bank. The Bank will not be responsible for
the payment of bond counsel fees; such fees shall be paid for by the Borrower.
Fees and Expenses Valid All fees and expenses, including those of Bank Counsel, may increase if the transaction is not
Through Date: closed by June 10, 2015.
Expenses The City will be responsible for all costs and expenses relating to the Facility, including fees and
disbursements of Bank's counsel, Bond Counsel, and the City's financial advisor and any other
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4'2 04- Page 5 ,Merrill Lynch
expenses incidental to the transaction contemplated by the Facility or this term sheet.
The City will also pay the expenses of Ba nk i n connection with the enforcement of any loan
documentation.
Other Standard Provisions
Indemnification: To the extent permitted by law, customary Bank indemnification in all cases except where the
Bank is proven to have been guilty of gross negligence or willful misconduct.
Assignments and The Bank reserves the right in its sole discretion to make assignments to other financial
Participations: institutions and will be permitted to sell participations in the Series 2015 PST Bonds without the
consent of the City.
Waivers/ Amendments and waivers of the provisions of the Series 2015 PST Bonds documentation,
Amendments: including the Resolution, will require approval of the Bank.
Choice of Law / Jury Trial / Venue
Governing Law: This proposed Term Sheet and any other documents to which the Bank shall become a party shall
be construed according to the laws of the State of Florida.
Jury Trial: The Borrower agrees to waive any right to a trial by jury in any action or proceeding with respect
to any dispute or controversy under the Series 2015 PST Bonds documents.
Venue: Any litigation involving the Bank shall be brought in the appropriate Florida court having
jurisdiction over the matter.
Description of the Basic Documentary Terms and Conditions
Documentation: Legal documentation will be provided by Mark E. Raymond, Bond Counsel to the City.
Documentation will include a Resolution, Bond, Purchaser's Certificate(s) and other documents
typical for transactions of this nature. The documentation will include, but not be li mited to, the
terms and conditions outlined herein, as well as provisions that are customary and standard with
respect to conditions precedent, representations and warranties, covens nts, events of default and
remedies.
Conditions Precedent To Closing:
Standard for facilities of this type, including but not limited to:
The negotiation, execution and delivery of definitive documentation (including, without limitation,
satisfactory legal opinions and other customary closing documents) for the Series 2015 PST Bonds
satisfactory to Bank.
There shall not have occurred any event or condition that has had or could be reasonably
expected, either individually or in the aggregate, to have a Material Adverse Effect. "Material
Adverse Effect" means (A) a material adverse change in, or a material adverse effect on, the
operations, business, assets, properties, liabilities (actual or contingent), condition (financial or
otherwise) or prospects of the Gty, taken as a whole; (B) a material impairment of the rights and
remedies of Bank under any loan documentation, or of the ability of the City to perform its
obligations under any loan documentation to which it is a party; or (C) a material adverse effect
upon the legality, validity, binding effect or enforceability against the City of any Facility
documentation to which itisa party, in each case as determined in thesolediscretion of Bank.
BankofAmerica'
"' Page 6 _ Lynch
Certified copies of relevant ordinances, resolutions, agreements, contracts, certificates, etc. as
requested by Bank or its counsel.
Recei pt of satisfactory financial information, budgets, projections, etc. as requested by the Bank.
Other conditions precedent as are customary for a financing of the type contemplated, including
payment of fees at closing.
Representations and Usual and customary for transactions of this type including, without limitation, the following: (i)
Warranties legal existence, qualification and power; (ii) due authorization and no contravention of law,
contracts or organizational documents; (iii) governmental and third party approvals and consents;
(iv) enforceability; (v) accuracy and completeness of specified financial statements and no event
or circumstance, either individually or in the aggregate, that has had or could reasonably be
expected to have a Material Adverse Effect; (vi) no material litigation; (vii) no default; (viii)
ownership of property; (ix) insurance matters; (x) tax matters; (xi) use of proceeds; (xii) accuracy
of disclosure; (xiii) no bankruptcy or insolvency; and (xiv) no proposed legal changes which may
adversely affect the Facility, the obligations of the Borrower thereunder or the transaction.
Covenants: Usual and customary for transactions of this type, including, without limitation, the following: (i)
timely delivery of audited financial statements, compliance certificates and other information, (ii)
notices of default, material litigation, material governmental proceedings or investigations,
ineligibility to levy and collect the Public Service Tax Revenues and Discretionary Communications
Services Tax Revenues and material changes in accounting or financial reporting practices; (iii)
payment of obligations; (iv) preservation of existence; (v) maintenance of properties and
insurance; (vi) compliance with laws; (vii) maintenance of books and records; (viii) inspection
rights; (ix) use of proceeds; (x) limitations on (A) liens and investments (B) mergers and other
fundamental changes, (C) sales and other dispositions of property or assets, (D) amendments to
transaction documents without consent of Bank and (xi)subordination of swap termination
payments and restrictions on collateral i zati on of swap obligations
Investment I n connection with purchasing the Series 2015 PST Bonds, the Bank will make usual and customary
Representations: representations to the Gty, including (a) its knowledge and experience in financial and business
matters so as to be capable of evaluating the merits and risks of purchasing the Series 2015 PST
Bonds; (b) its receipt of, or access to, all information from the City or otherwise that it deems
necessary to make such purchase; and (c) purchasing the Series 2015 PST Bonds for its own
account or for resale to an affiliated entity in which Bank of America Corporation will retain an
interest, and not with a view to, or for resale in connection with, any distribution of the Series
2015 PST Bonds. Bank will follow up with its preferred form of Investment Letter for further
review by Cityand its advisors upon request.
Financial Covenants: Subject to the Additional Bonds Test of 1.25x or better as defined in Section 5.02 of City's
Resol uti on.
Reporting As soon as available but no later than 270 days after the close of each fiscal year, the City shall
Requirements provide complete audited financial statements of the City and information on the amount of
Public Service Tax Revenues and, Discretionary Communications Services Tax Revenues collected.
In addition, City shall provide or cause to be provided to City such information respecting the
affairs, condition and /or operations, financial or otherwise, of the City as the Bank may from time
to time reasonably request (i.e., annual budget).
Events of Default: Usual and customary in transactions of this type including, without limitation, the following: (i)
nonpayment of principal, interest, fees or other amounts; (ii) failure to perform or observe
covenants set forth in the Series 2015 PST Bonds documentation after applicable grace periods;
(iii) any representation or warranty proving to have been incorrect when made or confirmed; (iv)
cross - default to other parity debt or subordinate debt secured by Pledged Revenues; (v)
BankofAmerica'
4 ' 1. 0 N Page 7 _Merrill Lynch
bankruptcy, insolvency, debt moratorium, etc.; (vi) actual or asserted invalidity or impairment of
any documentation; and ( vii) downgrade on parity debt below Baa3 /BBB - /BBB - (or the equivalent)
by Moody's, S&P or Fitch, respectively or withdrawal or suspension of those ratings for credit
related reasons.*
* To the extent that there is neither a rating on the Seri 2015 PST Bonds nor on parity debt,
then a ninimum debt service coverage Event of Default will apply, set at 1.0x MADS for parity and
subordinated debt secured by Pledged Revenues, if any, based on pledged revenue collected
during the fiscal year end computation period. To the extent this test becomes applicable, City to
providea compliance certificate incl udingits calculation with the annual audit.
Remedies: The Bank may, among other things, cause the Default Rate to apply to all outstanding obligations
of the City to the Bank and pursue any other remedies to which it is entitled under the
documents, at law or in equity. For any payment that is more than 15 days late, the Bank may
i mpose a late fee equal to 4% of the a mount of the late payment.
The City will agree that no other parity debt (excluding the $640,000 in aggregate of the City's
Public Service Tax Revenue Bonds, Series 2006 that will remain outstanding) nor subordinate debt
secured by Pledged Revenues shall contain a right to accelerate payment of amounts due with
respect thereto unless a similar right is also granted to the Bank.
Proposed Terms and Conditions Subject to Certain Events
This Summary of Terms is intended only as an outline of certain of the material terms of the Facility and does not purport to
summarize all of the conditions, covenants, representations, warranties and other provisions that would be contained in
definitive documentation for the Facility contemplated hereby. This Summary of Terms is not a commitment. It represents a
willingness on the part of Bank to seek approval to provide the commitment indicated herein and consummate a transaction
based upon the terms and conditions outlined in this term sheet and is subiect to:
Final credit approval (see "Credit Process Timeframe" below),
Absence of any material adverse change in the financial condition, operations or prospects of
the Gty, or in any law, rule or regulation (or their interpretation or administration), that, in
each case, may adversely affect the consummation of the transaction, to be determined in
the sole discretion of Bank,
Such additional due diligence as Bank may require, and
Agreement as to all final terms and conditions and satisfactory documentation thereof
(includingsatisfactory legal opinions).
Credit Process Timeframe: The credit process will take 5 business days from the point at which the Bank is awarded the
transaction (subject to District approval), and has in its possession all materials necessary to
complete its final credit analysis. As of this date, initial credit underwriting has been
completed and required prdi urinary approvals have been received to make this proposal.
Expiration: Consideration ofa financing based on the terms and conditions presented in this term sheet
shall automatically expire May 13, 2015 unless the Bank has received a signed acceptance by
such date.
If the Bank issues a commitment, the Bank reserves the right to terminate, reduce or
otherwise a mend its commitment i f the subject transact on is not cl osed by Ju ne 10, 2015.
Future Modifications: The terms, conditions, pricing levels and fees (including legal fees and expenses) cited herein
reference the financing and the Facility Amount as described in this Term Sheet and are
Bank ofAmerica,
44. vfr .. Page 8 _Merrill Lynch
subject to revision in the event that (i) the Facility Amount changes, (ii) the security or
transaction structure is modified, (iii) the transaction deviates materially from what was
initially described in the RFP or in conjunction therewith, (iv) the proposed financing does not
close by June 10,2015.
Confidentiality
This Term Sheet contains confidential and proprietary structuring and pricing information.
Except for disclosure on a confidential basis to your accountants, attorneys and other
professional advisors retained by you in connection with the Facility or as may be required by
law, the contents of this Term Sheet may not be disclosed in whole or in part to any other
person or entity without our prior written consent, provided that nothing herei n shall restrict
disclosure of information relating to the tax structure or tax treatment of the proposed
Facility.
No Advisory or Fiduciary Role
The Borrower acknowledges and agrees that: (i) the transaction contemplated by this Term
Sheet is an arm's length, commercial transaction between the Borrower and the Bank in
which the Bank is acting solely as a principal and for its own interest; (ii) the Bank is not acting
as a municipal advisor or financial advisor to the Issuer or the Borrower; (iii) the Bank has no
fiduciary duty pursuant to Section 15B of the Securities Exchange Act of 1934 to the Borrower
with respect to the transaction contemplated hereby and the discussions, undertakings and
procedures leading thereto (irrespective of whether the Bank has provided other services or
is currently providing other services to the Borrower on other matters); (iv) the only
obligations the Bank has to the Borrower with respect to the transaction contemplated
hereby expressly are set forth in this Term Sheet; and (v) the Bank is not recommending that
the Borrower ta ke an action with res pect to the transaction contemplated by this Term Sheet,
and before taking any action with respect to the contemplated transaction, Borrower should
discuss the information contained herein with its own legal, accounting, tax, financial and
other advisors, as it deems appropriate. If Borrower would like a municipal advisor in this
transaction that has legal fiduciary duties to Borrower respectively, Borrower is free to
engagea municipal advisor to serve in that capacity. This Term Sheet is provided to Borrower
pursuant to and in reliance upon the "RFP exemption" and the "bank exemption" provided
under the municipal advisor rules of the Securities and Exchange Commission, Rule 15Ba1 -1
et seq.
Agreement by the Borrower
The Borrower hereby agrees to engage Bank to provide the Facility checked below, which is
the subject hereof, pursuant to the terms and conditions stated herein.
Please have an authorized officer of the Borrower, evidence their agreement with the
foregoing by signing and returning a copy of the document to Bank of America (email
acceptable).
Accepted and Agreed to:
CITY OF BOYNTON BEACH, FLORIDA
By: Date: _
Printed Name:
� Ot
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Exhibit A
The [Bonds, Notes, Certificates, Borrower Note - *conform to defined terms] may be [prepaid, redeemed - *Use Applicable
Language] in whole, or in part, on November 1, 2016 or any business day thereafter, with five (5) business days prior written
notice to the [Bondholder, Noteholder, Certificate Holder, Bank, Lender - *conform to defined terms] by payment in an
amount equal to the principal amount to be [prepaid/ redeemed - *Use Applicable Language] plus accrued interest thereon
to the date of [prepayment /redemption - *Use Applicable Language] plus the Prepayment Fee. For purposes hereof, the
Prepayment Fee will be the sum of fees calculated separately for each Prepaid Installment, as follows:
(i) The Lender will first determine the amount of interest which would have accrued each month at the Taxable Equivalent
Rate for the Prepaid Installment had it remained outstanding until the applicable Original Payment Date, using the interest
rate applicable to the Prepaid Installment under this Agreement.
(ii) The Lender will then subtract from each monthly i nterest amount determined in (i), above, the amount of interest which
would accrue for that Prepaid Installment if it were reinvested from the date of prepayment or redemption through the
Original Payment Date, using the Treasury Rate.
(iii) If (i) minus (ii) for the Prepaid Installment is greater than zero, the Lender will discount the monthly differences to the
date of prepayment or redemption by the Treasury Rate. The Lender will then add together all of the discounted monthly
differences for the Prepaid Installment.
The followi ng definitions will apply to the calculation of the Prepayment Fee:
(i) "Original Payment Dates" mean the dates on which the prepaid or redeemed principal would have been paid if there had
been no prepayment or redemption. If any of the princi pal would have been paid later than the end of the fixed rate i nterest
period in effect at the time of prepayment or redemption, then the Original Payment Date for that amount will be the last
day of the interest period.
(ii) "Prepaid Installment" means the amount of the prepaid or redeemed principal which would have been paid on a single
Original Payment Date.
(iii) "Taxable Equivalent Rate" means the interest rate per annum derived from the following formula: [interest rate on the
Bond, Note, Certificate, Borrower Note - *Use Applicable Term] divided by the difference of (1 minus the Maximum
Corporate Income Tax Rate). The "Maximum Corporate Income Tax Rate" is the highest marginal federal income tax rate
charged to U.S. corporations in effect at the time of the prepayment calculation. The "Maximum Corporate Income Tax Rate"
is currently 35% (or 035 i n numerical terms).
"Tax Rate" is the highest marginal federal income tax rate charged to U.S. corporations in effect at the time of the
prepayment calculation. The "Maximum Corporate Income Tax Rate" is currently 35% (or 0.35 in numerical terms).
(iv) "Treasury Rate" means the yield on the Treasury Constant Maturity Series with maturity equal to the Original
Payment Date of the Prepaid Installment which are principal payments (calculated as of the [date of redemption /prepayment
- *Use Applicable Language] in accordance with accepted financial practice and rounded to the nea rest quarter-year), as
reported in Federal Reserve Statistical Release H.15, Selected Interest Rates of the Board of Governors of the Federal Reserve
System, oranysuccessor publication. If no maturity exactly corresponding to such Original Payment Date appears in Release
H.15, the Treasury Rate will be determined by linear interpolation between the yields reported in Release H.15. If forany
reason Release H.15 is no longer published, the [Bondholder, Noteholder, Certificate Holder, Bank, Lender, *conform to
defined terms] shall select a comparable publication to determi ne the Treasury Rate.
2.
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