HomeMy WebLinkAboutMUNIZ LLC IN CONNECTION WITH THE DEFEASANCE OF CERTAIN BONDS ISSUED BY THE U S DEPART OF HOUSING AND URBAN DEVELOPMENT MuniZ, LLC
1ll21 Carmel Commons Blvd. .
Suite 250
Charlotte, NC 28226
Ph: 704-248-2607
Fax:800-585-0372
July 10, 2007
City of Augusta, Georgia
530 Greene Street
Room 806
Augusta, Georgia 30911
Dear Borrower:
We are pleased that you are requesting defeasance assistance from MuniZ, LLC ("we" or
"MuniZ") for The City of Augusta, Georgia (" �ou" or `Borrower") in connection with the defeasance of
certain bonds issued by U.S. Department of Housing and Urban Development. ("Issuer") related to a
certain loan from you to Partridge Inn (the `Bonds"). Please indicate your acceptance of the terms and
conditions set forth in the attached Terms of Engagement by signing and completing the Acceptance Page.
���� �r��, �u�b��� �� ���c��.., .�� ���ar�� �#t�aa� c�+e�a�s au� ��'ta���:
❑ Acceptance Page signed by an authorized member of current borrowing entity
❑ Deal Contact information
(*Borrower Counsel contact information is required before we can begin processing the request
Other unknown contact �formation can be obtained at a later time. If distribution list a�ailable,
please forward in lieu of filling out the attached Contact List.)
❑ Deposit Check as described in Section 2 of the Terms of Engagement
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U�on your execution and return of this original letter and the attached Terms of Engagement
(collectively, the "En�a�ement Letter"), together with all deposits required hereunder, this Engagement
Letter will evidence your engagement of MuniZ to assist you in defeasing your Bonds upon the terms and
conditions set forth herein. We thank you in advance for }�our business and appreciate your affording us
this opportunity to serve you.
Sincerely,
Sebronzik Wright
�MuniZ, LLC
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TERMS OF ENGAGEMENT
1. Services
MuniZ will work with you to coordinate the defeasance of the Bonds (the `i�efeasance"}. We
will assist with (1)(a) structuring a sufficient portfolio of securities as defeasance collateral, (b)
preparing requests for proposals ("RFPs") to reasonably competitive securities providers and (c)
bidding the securities costs to close the defeasance (collectively, "Bidding Agent Duties") and
(2)(a) assist you with a letter notifying the trustee of the Bonds (the "Trustee") of your intent to
defease, (b) assemble and distribute a defeasance working party list, (c) host conference calls to
facilitate the transaction, (d) coordinate with you, your attorney, the issuer of the Bonds, the
Trustee, the accountant, the securities broker/dealers, the closing escrow agent (if any), and your
buyer/refinance counterparts, as applicable, (e) provide a single, responsive point of contact for
ycu and everyone else involved in the transaction, and ( fl do our best to shepherd you through
the defeasance process and ensure that the defeasance transaction closes in accordance with your
closing schedule (collectively, "Consulting Duties"). Please be advised that (i) our ability to
effectively assist you in meeting your schedule far closing depends, in part, upon your timely
delivery of accurate and complete documentation and information as required by the Trustee
and/or Bond Counsel (ii) we are not securities principals or broker/dealers, so we will not receive
any compensation or commission in connection with the purchase and delivery of the securities
that ��vill serve as the defeasance collateral, and (iii) we are not attorneys, so you will need to
engage an attorney to �xovide legal services to you in connection with the Defeasance and the
release of the Borrower by the Issuer.
Also note, our only fees are the fixed Bidding Agent Fee and Consulting Fee (defined below),
��vhich we earn by managing and facilitating the defeasance process for you.
2. Deposits, Fees and Expenses
When you return the executed Engagement Letter to us, it must be accompanied by a deposit in
the amount of $5,000 towards the $7,500 fee related to the Consulting Duties (the `�Consultin�
Fee"). $2,500 is expected to be paid at close with the deposit to be paid as follows:
� �$5,000 check or wire payable to MuniZ, LLC (Consultin� Fee Deposit)
�
In addition to the Consulting Fee, upon your execution of the Engagement Letter, you agree to
pay MuniZ a bidding agent fee for the Bidding Agent Duties outlined above in the amount of
$5,000 (the `Biddin� A�ent Fee", together with the Consulting Fee, $12,500 total MuniZ Fee) on
the Closing Date (as defined in Section 3). Based upon our prior experience, other third party
expenses of the Defeasance are likely to include the following fees (collectively, the "Costs"):
Accountant Verification Fee $3,500
Trustee's Fee TBD
Issuer's Fee TBD
The foregoing Costs are estimates based upon preliminary data and our prior experience with the __
defeasance of Bonds of similar size and are subject to change.
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3. Closing Policies and Procedures
In order for the closing of the Defeasance to occur on a given day (the `�Closin� Date"j, MuniZ,
Bond Counsel, the Trustee, the Borrower and their respective legal counsel must agree three (3)
days prior to the Closing Date that the conditions to closing have been or will (with certainty) be
satisfied on or before the Closing Date. MuniZ will "circle" the �curities described in the
accountant's report on the Borrower's behalf, only when the borrower has faxed the signed
Securities Purchase Authorization attached hereto as Exhibit Ato MuniZ. Thereafter, MuniZ
will bid the securities cost to reasonably competitive securities providers in preparation of
closing the defeasance. ff the Defeasance fails to close on the Closing Date, the securities
broker/dealer may sell the securities on the open market, which m.ay result in loss, cost and
expense. The Borrower understands and agrees that once the securities are circled, the Borrower
may be liable for any and all loss, cost and expense associated with the purchase of the securities
and arising as a result of the sale of the securities due to the failure of the Ikfeasance to close on
the Closing Date for any reason
4. Limited Recourse
In the event MuniZ breaches or fails to perform its obligations under this Engagement Letter,
MuniZ's only obligation to you shall be, and your sole and exclusive remedy shall be, the refund
of al! fees paid to MuniZ and payment by MuniZ of (i) all out of pocket costs and expenses
incurred by you in connection with the defeasance contemplated by this Engagement Letter,
including, but not limited to, any third party engaged by MuniZ on the Borrower's behalf, and
(ii) any additional out of pocket costs and expenses incurred by you as a result of MuniZ's
breach or failure to perform; provided, however, that MuniZ shall not be liable for lost profits or
consequential damages.
5. Governin� Law/Jurisdiction
This Engagement Letter and all matters relating hereto shall be governed by and construed and
interpreted in accordance with the laws of the State of North Carolina. The Borrower hereby
submits to the j urisdiction of the State and Federal courts located in the State of North Carolina and
agrees that we may, at our option, enforce our rights under this Engagement Letter in such courts.
6. Assignment
This Engagement Letter shall not be assignable or assigned by the Borrower or MuniZ to any
person or entity without the express written consent of the other pariy, which may be given or
withheld in such party's sole and absolute discretion, and any attempted assignment of this
Engagement Letter shall be void.
7. Complete Agreement
This Engagement Letter, when executed by the parties hereto, contains the complete and entire
understanding of the parties with respect to the subject matter hereof, and no changes or waivers
will be recognized as valid unless they are made in writing and similarly executed. No specific
waiver of any of the terms hereof shall be considered as a general waiver.
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WARNING!
PLEASE BE ADVISED THAT NETfHER ISSUER NOR THE TRUSTEE WILL NOT PERMIT A
DEFEASANCE TRANSACTION TO PROCEED IF AN EVENT OF D EFAULT HAS OCCURRm (EVEN A
TECHNICAL, NON-MONETARY DEFAULT�, UNLESS THE DEFAULT IS CURED AND THE BORROWER
HAS PAID DEFAULT INTEREST FROM THE DATE OF THE DEFAULT AND ADDITIONAL FEES, IF ANY.
ANY EVENT OF DEFAULT, EVEN ONE THAT MAY SEEM INCONSEQUENTIAL, WILL RESULT IN
DELAYS AND POTENTIALLY ADDITIONAL LEGAL EXPENSES NOT CONTEMPLATED IN TNIS
ENGAGEMENT LETTER.
[SIGNATURE PAGE FOLLOWS]
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. • ,
ACCEPTANCE PAGE TO
MUNIZ, LLC ENGAGEMENT LETTER
Accepted this � day o , 2007:
SIGN HERE:
Borrower:
By _ � ..� -�" ,
Name: ����7 S - ��✓e-(�v�c�- %�rl�i�.5 e--�/'+7� _��.
Title: ��}�,✓
Borrower EIN7TIN:
Telephone:
Facsimile:
E- mai1:
This transaction is for a:
� urchase/Sale
Refinance
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[DATE]
U.S. Department of Housing and Urban Development
Attention: Paul Webster, Director
Financial Management Division
451 7�' Street, SW, Room 7180
Washington, DC 20410
City ofAugusta, Georgia
Section I08 Promissory Note Numbered "B-OS MC-13-0003"
In the Maximum CommitmentAmount of $2,500,040
Mr. Webster:
The City of Augusta, Georgia (the "City "), in accordance with Part II, Section 10 of the
Contract for Loan Guarantee Assistance dated as of September 20, 2005, between the City and
the Secretary of Housing and Urban Development, delivered in connection with the execution and
delivery of the above-referenced promissory note (the "Note"), hereby gives notice that it intends
to defease in full the principal amount outstanding under the Note on or around [TARGET
CLOSE DATE] (the "Release Date"). On or befare the Release Date, City will deliver to The
Bank of New York, as trustee (the "Trustee"), the applicable defeasance collateral and satisfy all
conditions required for the defeasance. The City hereby requests that the Trustee open a
defeasance account to hold and administer the defeasance collateral.
The City also hereby gives notice that it intends to redeem on August 1, 2016 each
Principal Amount due after August 1, 2016.
Please be advised that MuniZ, LLC has been engaged as defeasance consultant
("MuniZ") to assist in this defeasance. We hereby authorize you to discuss and disclose relevant
information regarding the Note to MuniZ in their efforts to facilitate the closing of this matter on
our behalf.
Very truly yours,
CITY OF AUGUSTA, GEORGIA
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[Title] l''���� a° � - G � �'� :.��✓�
cc: Sebronzik Wright (via email) � ,�1`'
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EXHIBIT A
SECURITIES PURCHASE INSTRUCTIONS AND AUTIIORIZATION
** (Not to be completed until date of Securities purchase�
Transaction Reference: City of Augusta, Georgia
Closing Date: �
The undersigned borrower (the "Borrower") hereby instructs and authorizes MuniZ, LLC to
initiate the purchase of the securities on Borrower's behalf [on the morning of%in the afternoon
on _, 2007], pursuant to Section 3 of the engagement letter between MuniZ,
LLC and the undersigned dated , 2007 (the "Engagement Letter"), as
Borrower's authorized agent for the limited purpose set forth in Section 3 of the Engagement
Letter. This authorization. and these instructions are irrevocable upon execution and delivery to
MuniZ, LLC by facsimile at (866) 585-0372. A faxed or emailed copy shall have the same force
and effect as an original.
By signing below, the Borrower acknowledges that any securities cost provided to the Borrower,
whether directly or through the MuniZ, LLC website, prior to the issuance of the final closing
statement is an estimate only. Any securities cost estimate is intended to provide the Borrower
with a general indication of cost under prevailing market conditions. However, the market
changes constantly, so the actual cost of the securities portfolio (and the actual cost of any
security in the portfolio) changes constantly and cannot be determined with certainty until the
securities are actually purchased by the broker-dealer. Therefore, the actual securities cost may
be higher or lower than any cost estimate obtained by the borrower prior to the actual purchase
of the securities by the broker-dealer.
BORROWER:
By: (�`� `� � ��
��J Name: y�` A+t'�{� s- C od �-w r-ErEc.y ��L-.-
Title: M �t--Yz��--
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DEAL CONTACT INFORMATION
Title Companv Borrower's Attornev
Closer's Name: Attorney:
Company: Firm:
Address: Address:
Telephone: Telephone:
Facsimile: Facsimile:
E-mail: E-mail:
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Trustee Issuer
Attorney: Lender:
Firm: Contact Person:
Address: Address:
Telephone: Telephone:
Facsimile: Facsimile:
E-mail: E-mail:
Lender'sAttornet�/for refi or sale) Lender(for refi or sale)
Contact Person: Attorney:
Company: Firm:
Address: Address:
Telephone: Telephone:
Facsimile: Facsimile:
E-maiL• E-mail:
Buver (If applicable) Buyer's Attornev(If apnlicable)
Name:
Company: Name:
Address: Company:
Address:
Telephone:
Facsimile: Telephone:
E- mai l: Facsimile:
E-maiL•
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