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.~ From: "Edward Einowski" <eeinowski(d3stcel.com> To: GroupWse 4_1.SMTP("kiltz~prestongates.com","RCurt... Date: 9/1 /98 12:31 pm Subject: Re: First Draft Term Shee up~~~,bist ,ri~utior~ List lQu~~-- ~ LKM~~ I've reoeived the term sheet prepared by Scott, Ma~lc and Nancy and wili proceed to prepare the initial drafts of the flnanang documents. In terms of the document structure, here's what I ooMemplate: 1) A Financing and Trust Aereement between the County and a oorporate trustee/paying agent. This will be struc~ured very much abng the lines of a revenue bond trust indenture for governmental purpose bonds, subjed to appropriate modific:ations in light of the CoP finanang structure. 2) A Mortgage from the County to the corporate trustee 3) M authorizing resolution to be adopted by the County Commission I assume that underwriters counsel will prepare the Official Statement and Certificate Purchase AgreemeM for our review and comment. In reviewing the term sheet, I noted the following comments and questions: 1) In order to fully scope out the "private use" portion of the County's faalities, we'll need to get a handle on the number of paricing spaces (if any) that will be reserved for use by the private tenarrt. In a related vein, we'll need toflesh out the sources and uses in order to conflrtn that the County equity is sufficient to cover the costs of the private use space. 2) The term sheet refers to the funding from CoP proceeds of interest on the CoPs for an unspecified number of months after oompletion. Please be advised that the funding of interest after oompletan is viewed as the funding of working capital. As such, it is subjed to severe restrictions unless, in the particular arcumstances of the case, it falls within a very limited number of exceptions. We wili need to explore this matter further to detertnine the extent to which post~ompletion interest can be funded in the present case. 3) I'm a bit puu.led by the proposal to limit completion certificates to $2.25 million. Given that this is a"subjed to appropriation" financing, I would think the Certificateholders would want to make sure that the Counly completes and moves into the faality, since the risk of non-appropriation would seem to increase if the facility is not completed. If we couple this with the comfort the Certificateholders should take from having a fnced price contrad before we sell the Certificate (I assume this is still the plan, based on our last meeting), I would think it makes more sense to have the uniimited right to issue completion certificiates as needed to oomplete the projed in acxordance with the original plans and specs (i.e., the County oould not issue completion certificates to finance the i~cxemental oosts of a revised project). Please consider this approach. 4) I think 1 understand the reasoning behind the limitation on refunding certificates. But if so, 1'm not sure this limitation should appy across the board. Rathe~. it seems to me that the original oertificate holders oniy have a right to limit the issuance of refunding certificates if it is a partial refunding. If the County desires to refund the entire issue (even at higher debt service), I don't see why it should be prevented from doing so. In short, I would propose to restrict the refunding limitations to partial refundings. Please consider. 5) The parity oertificate provisions require some thought. In this case, "parity" (I assume) does not mean other general fund obligations. Rather, it refers ony to future cert~cates that are secured by the Mortgage and any reserve fund on a pari passu basis. Is this what the parties intend? Please advise. Obviously, "parity" could mean any obligation payable out of the General Fund on a parity with the Certificates, but this would encounter various problems (e.g., what do you do with a"true lease", which has just as much impact on the Certificateholders security as any other obligation). If my interpretation is what is intended by "parity" here, then parity certificate provisions would appy ony to certificates issued under the Financing and Trust Agreement for the purpose of financing improvements to and expansions of Courthouse Square. Furthertnore, the County should be aware that if the Cert~cates are not i~sured and consent of the Certificateholders is required to issue additional parity Certificates, then as a practical matter the County will probaby never be able to issued additional parity Certificates since Certificateholders are notorious for not responding to requests for consent. There are at least two ways around this: First, subject the ability to issue parity debt to some kind of oove~age test. Such a coverage test would, in itself, require careful though since we are not dealing with a net revenue pledge (or any other pledge of a revenue stream), but are dealing with a General Fund obligation. Second, we could structure the consent provisions so that