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Florida Rural Utility Financing Commission .$21,000,000 FLORIDA RURAL UTILITY FINANCING COMMISSION Revenue Notes (Public Projects Construction), Series 2008A (Monroe County Loan) Table of Contents Report S.ou.rc~ ,ar., ~~ Debt Service Schedule 2 $21,000,000 FLORIDA RURAL UTILITY FINANCING COMMISSION Revenue Notes (Public Projects Construction), Series 2008A (Monroe County Loan) Sources & Uses D_ 01/24120081 Delivered 01/2412008 Sources Of Funds Par Amount of Loan $21.()()().I1OO.OO Togl Sources $11,000,000.00 Use. Of Fund. Deposit to. Capitalized In.....t. (CIFtFun~ . _ . Deposit to Project Construction Fund _ 2.589.650.00 18.410.350.00 T.... Uses $11,000,000.00 $21,000,000 FLORIDA RURAL UTILITY FINANCING COMMISSION Revenue Notes (Public Projects Construction). Series 2008A (Monroe County Loan) Debt Service Schedule Date 01/2412008 07/01/2008 01/01/2009 07/0112009 0110112010 07/0112010 01/0112011 Total Principal Coupon Int_st Total P+I 21.000.000.00 $21,1)l!O,ooo.oo 4.201l'11> 384,650.00 441.000.00 441.000.00 441.000.00 441,000.00 441,000.00 $2,589,6S0.00 384.650.00 441.000.00 . 441,000.00 441.000.00 441.000.00 21.441,000.00 $23,589,6S0.oo Yield Statistics Bond Year Dollars AvenS;e Life Av""..COUP"" Net In.....t Cost (NIC) True h1"""tCost{TIC). Bom! Y~klf()l"oArbilJaB.. Purposes All Inclusive Cost (Ale) $61.658.33 2.936 Y.... o 4.2(l()(J(lOfl% 4.200000O'II> 4.20087569& 4.2008756% 4.2008756% IRS Form 8038 Net In...... Cost Weighted Average Maturity 4.2()()()(l(l()'1l 2.936 Y.... NOT TO EXCEED $50,000,000 FLORIDA RURAL UTILITY FINANCING COMMISSION REVENUE NOTES (PUBLIC PROJECTS CONSTRUCTION) SERIES 200SA CLOSING DOCUMENTS I. BOND DOCUMENTS 1. Trust Indenture 2. Form of Loan Agreement 3. a) b) Official Statement Preliminary Official Statement 4. a) b) Note Purchase Agreement Disclosure Statement 5. Specimen Notes 6. a) b) c) Resolution No. 02-3 adopted August 29, 2002 Resolution No. 07-02 adopted June 21,2007 Resolution No. 07-03 adopted December 19, 2007, supplementing Resolution No. 07-02 7. Copy of First Amended and Restated Interlocal Agreement (and amendments) 8. Public Meeting Certificate 9. Signature and No Litigation Certificate 10. Incumbency Certificate 11. Request and Authorization to Authenticate and Deliver Notes 12. Certificate re Preliminary Official Statement with regard to compliance with Rule 15c2-12 13. Compliance Agreement {2500 I/002/00212753.DOCv I} II. TRUSTEE 14. Officer's Certificate of Trustee 15. Certificate of Delivery and Payment III. UNDERWRITER 16. Certificate of Underwriter re: Note Purchase Agreement IV. OPINIONS 17. Bryant Miller Olive P.A. a) Approving Opinion b) Supplemental Opinion c) Reliance Letter 18. Counsel to Issuer 19. Counsel to the Trustee 20. Counsel to the Underwriter 21. Bankruptcy Opinion V. OTHER 22. Representation Letter to DTC 23. IRS Form 8038-G 24. Tax Certificate 25. Notice to Division of Bond Finance 26. BF 2003/2004-B 27. Evidence of Ratings - Moody's 28. Validation a) Final Judgment b) Certificate of No Appeal {2500 1I002/00212753.DOCv I} 2 29. Continuing Disclosure Certificate 30. a) b) c) d) e) Investment Agreement Certificate of Investment Agreement Provider Opinion of Counsel to Investment Agreement Provider Certificate of Bidding Agent Certificate of Commission 31. Closing Memorandum VI. BORROWER DOCUMENTS 32. Monroe County a) Loan Agreement b) Resolution Authorizing Loan c) Borrower's Certificate d) Note e) Tax Certificate f) 8038-G g) Opinion of Borrower's Counsel h) Opinion of Bond Counsel i) Incumbency Certificate 33. City of Chipley a) Loan Agreement b) Resolution Authorizing Loan c) Borrower's Certificate d) Note e) Tax Certificate f) 8038-G g) Opinion of Borrower's Counsel h) Opinion of Bond Counsel i) Incumbency Certificate 34. Town of Yankeetown a) Loan Agreement b) Resolution Authorizing Loan c) Borrower's Certificate d) Note e) Tax Certificate f) 8038-G {2500l/002/00212753.DOCv I} 3 g) Opinion of Borrower's Counsel h) Opinion of Bond Counsel i) Incumbency Certificate 35. Town of Medley a) Loan Agreement b) Resolution Authorizing Loan c) Borrower's Certificate d) Note e) Tax Certificate f) 8038-G g) Opinion of Borrower's Counsel h) Opinion of Bond Counsel i) Incumbency Certificate 36. City of Live Oak j) Loan Agreement k) Resolution Authorizing Loan I) Borrower's Certificate m) Note n) Tax Certificate 0) 8038-G p) Opinion of Borrower's Counsel q) Opinion of Bond Counsel r) Incumbency Certificate {2500 I/002/00212753.DOCv I} 4 Distribution list: (1) Florida Rural Utility Financing Commission (1) Bryant Miller Olive P.A. (1) Rubin & Hays (1) Regions Bank (1) Morgan Keegan & Co., Inc. (1) MBIA Insurance Corporation (1) Monroe County (1) City of Chipley (1) Town of Yankeetown (1) Town of Medley (1) City of Live Oak {25001/002/00212753.DOCvl) 5 Execution Copy LOAN AGREEMENT by and between FLORIDA RURAL UTILITY FINANCING COMMISSION and MONROE COUNTY, FLORIDA Dated as of January 24, 2008 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS Section 1.1. Definitions........................................................................................................................3 ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1. Representations and Warranties of Commission .......................................................7 Section 2.2. Representations and Warranties of Governmental Unit ...........................................7 Section 2.3. Representations and Warranties of the Governmental Unit Concerning the Commitment Letter ..................................................................................................9 Section 2.4. Representations Concerning the Permanent Financing.............................................9 Section 2.5. Representations, Warranties and Covenants Concerning the Permanent Lender ...............................................................................................................................9 ARTICLE III COMMISSION'S AGREEMENT TO MAKE LOAN; TERMS Section 3.1. Determination of Eligibility .........................................................................................11 Section 3.2. Principal Amount Of Loan Established; Loan Payments; DisburseIJ;lent of Funds...............................................................................................................................11 Section 3.3. Commencement of Loan Term....................................................................................11 Section 3.4. Termination of Loan Term...........................................................................................11 Section 3.5. Rebate to Governmental Unit......................................................................................12 Section 3.6. Covenant Regarding Permanent Financing ..............................................................12 ARTICLE IV CONDITIONS PRECEDENT TO DISBURSEMENT; REQUISITION FOR FUNDS Section 4.1. Loan Closing Submissions ...........................................................................................14 Section 4.2. Covenants of Governmental Unit and Conditions of Loan ....................................14 Section 4.3. Disbursements of Loan; Requisition for Funds.........................................................16 ARTICLE V ASSIGNMENT AND GENERAL COVENANTS OF THE GOVERNMENTAL UNIT Section 5.1. Pledge and Assignment................................................................................................17 Section 5.2. Further Assurance .........................................................................................................17 Section 5.3. Completion of Project ...................................................................................................17 Section 5.4. Tax Covenant................................................................................................................ .18 -1- TABLE OF CONTENTS (continued) Page Section 5.5. Accounts and Reports................................................................... ................................18 Section 5.6. General.......................................... ................................................................................. .18 Section 5.7. Indemnity...................................................................................................................... .18 Section 5.8. Further Assurance ............... ..........................................................................................19 Section 5.9. Limited Obligations ......................................................................................................19 ARTICLE VI DEFEASANCE ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Section 7.1. Events of Default Defined ............................................................................................22 Section 7.2. Remedies on Default .....................................................................................................22 Section 7.3. Appointment of Receiver .............................................................................................23 Section 7.4. No Remedy Exclusive...................................................................................................23 Section 7.5. Consent to Powers of Commission Under Act and this Loan Agreement ...........23 Section 7.6. Waivers.......................................................................................................................... .23 Section 7.7. Agreement to Pay Attorneys' Fees and Expenses ....................................................23 ARTICLE VIII MISCELLANEOUS PROVISIONS Section 8.1. Section 8.2. Section 8.3. Section 8.4. Section 8.5. Section 8.6. Section 8.7. Section 8.8. Exhibit A Exhibit B Exhibit C Exhibit D Exhibit E Notices........................................................................................................................... .24 Approval not to be Unreasonably Withheld .............................................................24 Effective Date................................................................................................................ .25 Binding Effect................................................................................................................ .25 Severability................................................................................................................... ..25 Execution in Counterparts...........................................................................................25 Applicable Law ..............................................................................................................25 Captions......................................................................................................................... .25 Requisition Form Form of Loan Note Form of Resolution Form of Opinion of Counsel to Government Unit Permanent Lender Commitment Letter -ll- LOAN AGREEMENT THIS LOAN AGREEMENT (this "Loan Agreement") is made and entered into as of January 24, 2008, by and between the Florida Rural Utility Financing Commission, a legal entity and a public body corporate and politic created pursuant to Chapter 163, Florida Statutes (the "Commission"), and Monroe County, Florida (the "Governmental Unit"). WITNESSETH WHEREAS, the Commission has established its Public Projects Construction Financing Program (the "Program") designed to provide financing of construction to governmental entities under which the Commission has determined to issue its Revenue Notes (Public Projects Construction), Series 2008A, dated January 24, 2008 (the "Notes") pursuant to a Trust Indenture, dated as of January 1, 2008 (the Indenture"), by and between the Commission and Regions Bank, as trustee (the "Trustee"), the net proceeds of which will be applied for the benefit of such governmental entities by making Loans, pursuant to Loan Agreements, for construction of Projects, in order to provide a centralized source of interim construction financing and to reduce interest costs financing expenses of such governmental entities; WHEREAS, the Governmental Unit has obtained a commitment for Permanent Financing for its Project from a Permanent Lender; WHEREAS, the Governmental Unit has determined that it is necessary and desirable that the Project be acquired, constructed, and financed and the Commission has determined that the Project is a project within the meaning of the Act and the Indenture, thereby qualifying for financial assistance from the Commission; WHEREAS, the Permanent Lender has or will appropriate funds in amounts sufficient to enable it to honor said commitments for Permanent Financing of such Project; WHEREAS, the Commission has found and determined that the construction of the Project will be in furtherance of the purposes of the Commission and the Governmental Unit under the Act; WHEREAS, pursuant to this Loan Agreement and the County Interlocal Agreement, the Governmental Unit has caused the commencement of the construction of the Project; WHEREAS, pursuant to this Loan Agreement, the Governmental Unit will irrevocably assign to the Trustee, for the benefit of the Commission, all right, title and interest in and to monies to be received pursuant to the Permanent Financing, which monies will be used by the Trustee to pay principal of and interest on the Notes; WHEREAS, the Commission is willing to cooperate with the Governmental Unit in making available the Loan pursuant to the Act and the Indenture to be applied to the Project upon the conditions hereinafter enumerated and the covenants by the Governmental Unit herein contained; and WHEREAS, the Commission and the Governmental Unit have determined to enter into this Loan Agreement pursuant to the terms of the Act and the Indenture and to set forth their respective duties, rights, covenants, and obligations with respect to the construction and financing of the Project, subject to the repayment of the Loan and the interest thereon and subject to the terms of the commitment for Permanent Financing; NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE MUTUAL COVENANTS HEREIN SET FORTH, THE LOAN HEREBY EFFECTED AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED BY EACH PARTY, THE PARTIES HERETO MUTUALLY COVENANT AND AGREE, EACH WITH THE OTHER AS FOLLOWS: 2 ARTICLE I DEFINITIONS Section 1.1. Definitions. All of the terms utilized in this Loan Agreement will have the same definitions and meaning as ascribed to them in the Act and the Indenture, which Act and Indenture are hereby incorporated in this Loan Agreement by reference, the same as if set forth hereby verbatim provided, however, that those definitions utilized in the Act and the Indenture having general application are hereby modified in certain instances to apply specifically to the Governmental Unit and its Project. "Act" means collectively, Part I of Chapter 163, Part I of Chapter 125, Part II of Chapter 166 or 'Part I of Chapter 159, Florida Statutes, as amended and other applicable provisions of law. "Administrative Cost" means (i) Operating Costs and (ii) any other costs and expenses of the Program. "Authorized Officer" means the Mayor of the Board of County Commissioners of the Governmental Unit, the Clerk of the Circuit Court of the Governmental Unit or County Administrator of the Governmental Unit, and any other of its members, officers, agents, or employees duly authorized by resolution or ordinance of the Commission to perform the act or sign document in question. "Business Day" means any day other than a Saturday, Sunday or other legal holiday on which the main corporate trust office of the Trustee is closed or the New York Stock Exchange is closed. "Code" means the Internal Revenue Code of 1986, including temporary, proposed and final regulations relating thereto. "Commitment Letter" means the Permanent Lender commitment letter evidencing the approval by the Permanent Lender of Permanent Financing for the Project. "Commission" means the Florida Rural Utility Financing Commission, a legal entity and a public body corporate and politic created pursuant to the Interlocal Agreement. "Costs of Issuance" means the costs of issuing the Notes, as designated by the Commission, including, but not limited to, the fees and charges of the underwriters, bond counsel, trustee, rating agencies, bond and official statement printers, credit enhancement charges, and such other fees and expenses normally attendant to an issue of the Commission's Notes. "County" means one of the political subdivisions of the State of Florida. 3 "County Interlocal Agreement" means the Interlocal Agreement between Momoe County and the Florida Keys Aqueduct Authority effective September 6, 2005 relating to the construction of the Project, as originally executed or as it may from time to time be amended or supplemented in accordance with its terms. "Fiduciaries" means the Trustee, any Paying Agent, Registrar or any of them, as may be appropriate. "Engineers" means the firms of consulting engineers employed in connection with the Project pursuant to the County Interlocal Agreement. "Governmental Unit" means any Public Agency, Municipality or County, or any combination thereof, participating in the Program. Notwithstanding the foregoing, Public Agencies, Municipalities, Counties and public purpose non-profit corporations may participate in the Program and borrow proceeds of the notes, regardless of whether such Goverrunental Units become members of the Commission; and for the purposes of this Loan Agreement means the Goverrunental Unit designated in the first paragraph herein. "Governmental Unit's Account" means the separate accounts within the Program Fund under the Indenture, established for each particular Project. "Indenture" means the Trust Indenture dated as of January 1, 2008, between the Commission and the Trustee, pursuant to which the Notes have been issued and are secured. "Interlocal Agreement" means the First Amended and Restated Interlocal Agreement, dated as of February 1, 2001, by and among Jackson County, Florida, Gadsden County, Florida and Wakulla County, Florida, as originally executed or as it may from time to time be amended or supplemented in accordance with its terms. "Interest Payment Date" means the January 1 and July 1 of each year, commencing July 1, 2008. "Investment Earnings" means interest earned on amounts on deposit in the Governmental Unit's Account established for the Governmental Unit. "Loan" means the loan effected under this Loan Agreement from the Commission to the Governmental Unit in the principal amount set forth in Section 3.2 hereof, for the principal purpose of paying certain costs of the construction of the Project. "Loan Agreement" means this agreement made and entered into by and between a Governmental Unit and the Commission, providing for a Loan to the Governmental Unit by the Commission, and for the repayment thereof to the Commission by the Governmental Unit. 4 "Loan Note" means the note of the Governmental Unit to the Commission dated as of its date assigned to the Trustee evidencing the loan obligations of the Governmental Unit set forth in this Loan Agreement. "Loan Payment Date" means the Business Day agreed to by the Trustee which day shall be the earlier of the date which is no more than three Business Days after receipt by the Governmental Unit of the proceeds of the Permanent Financing or the Maturity Date. "Loan Payments" means all payments to the Commission by the Governmental Unit under this Loan Agreement and the Loan Note. "Maturity Date" means February 1, 2011. "Municipality" means a duly constituted municipality in the State of Florida. "Notes" means the Florida Rural Utility Financing Commission Revenue Notes (Public Projects Construction), Series 2008A, authenticated and delivered under the Indenture. "Operating Costs" means, as of any particular date, the Commission's operating expenses and all other expenses, if any, of carrying out and administering the Program under the Indenture and shall include, without limiting the generality of the foregoing, salaries, supplies, utilities, mailing, labor, materials, office rent, maintenance, furnishings, equipment, machinery and apparatus, insurance premiums, legal, accounting, management, consulting and banking services and expenses, the fees and expenses of the Fiduciaries, including Costs of Issuance, if any, other than Costs of Issuance paid from proceeds of Notes. "Paying Agent and Registrar" means Regions Bank, Jacksonville, Florida and its successors and assigns. "Permanent Financing" means bonds, notes or other obligations issued by the Governmental Unit and delivered to the Permanent Lender as purchaser. "Permanent Lender" means (i) the Rural Development, (ii) SRF Lender, or (iii) any lender approved by Moody's Investors Service and which has given written intent to provide Permanent Financing for the Governmental Unit's Project. "Person" means any individual, firm, partnership, association, corporation or Governmental Unit. "Project" means, when used generally, a governmental undertaking approved by the governing body of a Governmental Unit for a public purpose and, when used in specific reference to the Governmental Unit, wastewater capital improvement described in the loan application submitted to the Permanent Lender. 5 "Public Agency" shall have the same meaning as set forth in Section 163.01(3)(b), Florida Statutes, as amended from time to time. "Rural Development" means the Rural Development of the United States Department of Agriculture or its successors or assigns. "Requisition for Funds" means the form attached hereto as Exhibit A to be utilized by the Governmental Unit in obtaining disbursements of the Loan from the Commission as construction of the Project progresses. "SRF Lender" means the State of Florida Department of Environmental Protection through its State Revolving Fund loan program. "State" means the State of Florida. "Trustee" means Regions Bank, Jacksonville, Florida, and its successor or successors, and any other corporation acting at any time as Trustee under the Indenture. 6 ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1. Representations and Warranties of Commission. The Commission represents and warrants for the benefit of the Governmental Unit as follows: (i) The Commission is a legal entity and a public body corporate and politic created pursuant to Chapter 163, Florida Statutes, has all necessary power and authority to enter into, and perform its obligations under, this Loan Agreement, and has duly authorized the execution and delivery of this Loan Agreement. (ii) Neither the execution and delivery hereof, nor the fulfillment of or compliance with the terms and conditions hereof, nor the consummation of the transactions contemplated hereby, conflicts with or results in a breach of the terms, conditions and provisions of any restriction or any agreement or instrument to which the Commission is now a party or by which the Commission is bound, or constitutes a default under any of the foregoing. (iii) To the knowledge of the Commission, there is no litigation or proceeding pending or threatened against the Commission or any other person affecting the right of the Commission to execute or deliver this Loan Agreement or to comply with its obligations under this Loan Agreement. Neither the execution and delivery of this Loan Agreement by the Commission, nor compliance by the Commission with its obligations under this Loan Agreement, require the approval of any regulatory body, or any other entity, which approval has not been obtained. (iv) The authorization, execution and delivery of this Loan Agreement and all actions of the Commission with respect thereto, are in compliance with the Act and any regulations issued thereunder. Section 2.2. Representations Governmental Unit hereby represents follows: and Warranties of Governmental Unit. The and warrants for the benefit of the Commission as (i) The Governmental Unit is a political subdivision of the State of Florida, with full power to own its properties, conduct its affairs, enter into this Loan Agreement and consummate the transactions contemplated hereby. (ii) The negotiation, execution and delivery of this Loan Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite action of the governing body of the Governmental Unit. (iii) This Loan Agreement and the Loan Note have been duly executed and delivered by the Governmental Unit and are valid and binding obligations of the 7 Governmental Unit enforceable in accordance with their terms, except to the extent that the enforceability thereof may be limited by equitable principles and by bankruptcy, reorganization, moratorium, insolvency or similar laws heretofore or hereafter enacted relating to or affecting the enforcement of creditors' rights or remedies generally. (iv) There is no controversy, proceedings or litigation of any nature pending or threatened, to the knowledge of the Governmental Unit, in any court or before any board, tribunal or administrative body, to challenge in any manner the authority of the Governmental Unit or its governing body to make payments under this Loan Agreement, or to challenge in any manner the authority of the Governmental Unit or its governing body to take any of the actions which have been taken in the ,authorization or delivery of this Loan Agreement, or in any way contesting or affecting the validity of this Loan Agreement, or in any way questioning any proceedings taken with respect to the authorization or delivery by the Governmental Unit of this Loan Agreement, or the application of the proceeds thereof or the pledge or application of any monies or security provided therefor, or in any way questioning the due existence or powers of the Governmental Unit, or otherwise wherein an unfavorable decision would have an adverse impact on the transactions authorized in connection with this Loan Agreement, except as specifically described in writing to the Commission. (v) There is no fact the Governmental Unit knows of which has not been specifically disclosed in writing to the Commission that materially and aqversely affects or, except for pending or proposed litigation or regulations that are a matter of general public information affecting Governmental Units generally, that will materially affect adversely the properties, activities, prospects or condition (financial or otherwise) of the Governmental Unit or the ability of the Governmental Unit to perform its obligations under this Loan Agreement. (vi) The authorization and delivery of this Loan Agreement and the consummation of the transactions contemplated hereby will not constitute an event of default or violation or breach, nor an event which, with the giving of notice or the passage of time or both, would constitute an event of default or violation or breach, under any contract, agreement, instrument, indenture, lease, judicial or administrative order, decree, rule or regulation or other document or law affecting the Governmental Unit or its governing body. (vii) Attached hereto as Exhibit C is a true, accurate and complete copy of the resolution of the governing body of the Governmental Unit approving and authorizing the execution and delivery of this Loan Agreement. Such resolution was duly enacted or adopted at a meeting of the governing body of the Governmental Unit at which a quorum was present and acting throughout; such resolution is in full force and effect and has not been superseded, altered, amended or repealed as of the date hereof; and such meeting was duly called and held in accordance with law. 8 (viii) All actions taken by the Governmental Unit in connection with this Loan Agreement, the Loan Note and the Loan described herein and the Project have been in full compliance with all laws, ordinances, governmental rules and regulations to which it is subject and which are material to its properties, operations, finances or status as a Governmental Unit. (ix) The Governmental Unit has all licenses, permits and other governmental approvals required to enter into this Loan Agreement, and has full right, power and authority to perform the acts and things as provided for in this Loan Agreement. (x) Legal counsel to the Governmental Unit has duly executed and delivered the opinion of legal counsel substantially in the form set forth in Exhibit D hereto. (xi) No event has occurred and no condition exists that constitutes an Event of Default, or which upon the execution and delivery of this Loan Agreement and/or passage of time or giving of notice or both, would constitute an Event of Default. Section 2.3. Representations and Warranties of the Governmental Unit Concerning the Commitment Letter. The Governmental Unit additionally represents and warrants that the Governmental Unit has (i) received all preliminary approvals of the Permanent Lender required in connection with the Project, and (ii) received a commitment for Permanent Financing of the Project. Section 2.4. Representations Concerning the Permanent Financing. The Governmental Unit acknowledges and agrees that the Commission has relied upon the commitment for the establishment of the Permanent Financing by the Governmental Unit and the Permanent Lender, and that the Commission and its officers, agents and employees have not made an independent investigation thereof or otherwise attempted to verify the circumstances regarding the Permanent Financing. The Governmental Unit further represents to the Commission that such Permanent Financing has been established by the Governmental Unit and the Permanent Lender with all due regard for the character and nature of the Project, including the potential impact of foreseeable occurrences that reasonably might be expected to delay the scheduled completion of the Project. Section 2.5. Representations, Warranties and Covenants Concerning the Permanent Lender. The Governmental Unit further represents, warrants or covenants, as follows: (i) The Governmental Unit will not breach or default under any of the provisions of the loan documents or any instruments, proceedings or other documentation authorizing the issuance of or securing the payment of the Permanent Financing. 9 (ii) The execution and delivery of the Permanent Lender loan documents and the compliance with the provisions thereof, will not in any material respect conflict with or constitute on the part of the Governmental Unit a breach of or default under any contract, agreement, instrument, indenture or proceedings or any law, regulation, court order or consent decree to which the Governmental Unit is now subject. (iii) The Permanent Lender loan documents will be duly authorized, executed and delivered by the Governmental Unit and will be valid and binding obligations of the Governmental Unit. (iv) The Permanent Financing will be duly authorized pursuant to law and shall constitute a valid and binding obligation of the Governmental Unit upon execution and delivery. (v) There is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body known to be pending or threatened against the Governmental Unit in any way contesting or affecting any commitment for the issuance of or the validity of the Permanent Financing or in any way adversely affecting the transactions contemplated thereby. (vi) The Governmental Unit will comply in all respects with the terms and provisions of the Permanent Lender loan documents. (vii) The Governmental Unit will promptly remit, in accordance with the provisions of the Permanent Lender loan documents, each disbursement from its Governmental Unit's Account to the person or persons to whom payment is then due and owing. (viii) The Governmental Unit will not unilaterally terminate, or enter into any agreement to terminate, any of the Permanent Lender loan documents and will give to the Commission and the Trustee prompt written notice, appropriately documented, of any amendment to or modification of any of the Permanent Lender loan documents. 10 ARTICLE III COMMISSION'S AGREEMENT TO MAKE LOAN; TERMS Section 3.1. Determination of Eligibility. Pursuant to the terms of the Act and the Indenture, the Commission has determined that the Project is a project under the Act and the Governmental Unit is entitled to receive a loan from the Commission in connection with financing the construction of the Project. Section 3.2. Principal Amount Of Loan Established; Loan Payments; Disbursement of Funds. The principal amount of the Loan shall be $21,000,000 (the "Loan Amount"). Principal shall be paid in full on or before the Loan Payment Date. The Loan shall bear interest at a per annum rate equal to 4.200% and shall accrue from the loan closing date on the outstanding principal amount of the Loan and shall be payable on each Interest Payment Date. A portion of the proceeds of the Loan in the amount of $18,410,350.00 (designated as project funds) and $2,589,650.00 (designated as capitalized interest) shall be deposited in a Governmental Unit's Account established under the Indenture for the Governmental Unit. Subject to the provisions of the Indenture (which the Governmental Unit hereby acknowledges and agrees to), the Commission shall disburse amounts from such Governmental Unit's Account as construction of the Project progresses upon the submission by the Governmental Unit of a Requisition for Funds in substantially the same form as Exhibit A hereto; Payment of principal of the Loan shall be made at the principal corporate trust office of the Trustee on the Loan Payment Date. In addition to the payment of principal of and interest on the Loan, the Governmental Unit shall pay all Administrative Costs to the Commission, including any share of investment earnings required to be rebated to the United States of America pursuant to the Code, arising from the making of the Loan by the Commission to the Governmental Unit. The Governmental Unit shall receive a credit against its payment of the Loan hereunder in an amount equal to amounts remaining in its Governmental Unit's Account on the Loan Payment Date. The Governmental Unit's obligation hereunder to repay amounts advanced pursuant to this Section 3.2, together with interest thereon, and any other payments required under this Loan Agreement, shall be evidenced by the execution by the Governmental Unit of this Loan Agreement and the Loan Note. Section 3.3. Commencement of Loan Term. The Governmental Unit's obligations under this Loan Agreement shall commence on the date hereof unless otherwise provided in this Loan Agreement. Section 3.4. Termination of Loan Term. The Governmental Unit's obligations under this Loan Agreement shall terminate after payment in full of all amounts due under this Loan Agreement and all amounts not theretofore paid shall be due and payable at the times and in the amounts set forth herein; provided, however, that all covenants and all obligations provided 11 hereunder specified to so survive shall survive the termination of this Loan Agreement and the payment in full of principal and interest hereunder. Upon termination of the Loan term and payment in full of the Loan and all other amounts due hereunder as provided herein, the Commission and the Trustee shall deliver, or cause to be delivered, to the Governmental Unit an acknowledgment thereof. Notwithstanding the foregoing, the Governmental Unit shall not prepay the Loan in full prior to February 1, 2009. Notwithstanding the foregoing, the Governmental Unit may pay such amounts as are required to pay the Loan in full (with accrued interest to January 1, 2011) to the Trustee to be held in irrevocable escrow on behalf of the Governmental Unit on or before January 1, 2011. Such amount required to pay the Loan in full shall be calculated on the date of payme):lt. Any interest or portion thereof earned on the escrow account may be rebated back to the Governmental Unit. Section 3.5. Rebate to Governmental Unit. Within 90 days following the payment in full of the Notes, the Commission shall rebate or cause to be rebated to the Governmental Unit such Governmental Unit's portion of the monies remaining in the accounts held by the Trustee under the Indenture after repayment of or provision for repayment of all necessary fees, costs and expenses of the Trustee and the Administrative Costs of the Program, including the Rebate Requirement (as defined in the Tax Certificate) and the Provisional Rebate Amount (as defined in the Compliance Agreement) (collectively, the "Rebate Amount"), on the following basis: all interest paid on the Loans, provided, however, that if the remaining Rebate Amount is not sufficient to rebate all interest paid on all Loans, the rebate will be equal to the remaining Rebate Amount multiplied by a ratio whose numerator is the Governmental Unit's Loan amount and whose denominator is the total Loan amounts on all Governmental Unit's Accounts; provided further, however, that no such amount shall be rebated to the Governmental Unit unless and until the Governmental Unit certifies that such amount shall only be expended on "capital projects" within the meaning of Section 163.01, Florida Statutes. Section 3.6. Covenant Regarding Permanent Financing. The Governmental Unit does hereby separately covenant that if for any reason the Permanent Lender fails to provide the Permanent Financing by accepting delivery thereof on or before the Maturity Date, the Governmental Unit shall continue to pay interest on the Loan at the rate set forth in Section 3.2 from amounts in its Governmental Unit's Account, and if the Permanent Lender has not provided for the Permanent Financing by January 1, 2011, the Governmental Unit will use reasonable efforts to take in a timely manner all necessary actions and adopt all necessary proceedings in order to obtain other temporary or Permanent Financing or other borrowing of whatever nature in order to repay the Loan or to repay the Loan from any other legally available non-ad valorem funds of the Governmental Unit budgeted and appropriated in the same manner and on the same basis as the Permanent Financing on the Loan Payment Date. The Loan shall not be or constitute a general obligation or indebtedness of the Governmental Unit as "bonds" within the meaning of any constitutional or statutory provision, but shall be special obligations of the Governmental unit, payable from proceeds of the 12 Permanent Financing in accordance with the term of the Loan Agreement. The Commission shall never have the right to compel the exercise of any ad valorem taxing power to pay this Loan, or be entitled to payment of such Loan form any moneys of the Governmental Unit except from such funds described herein, and if required, legally available non ad valorem revenues, in the manner provided herein and in the Permanent Financing documentation. The Governmental Unit will give to the Commission and the Trustee prompt written notice, appropriately documented, of any modification, suspension, termination, annulment or other change in status of the Permanent Lender commitment for Permanent Financing. In such event the Commission shall provide express written instructions to the Trustee specifically detailing to the Trustee the manner in which the duties of the Trustee under the Indenture will chang~ as a result of such modification, suspension, annulment or other change. 13 ARTICLE IV CONDITIONS PRECEDENT TO DISBURSEMENT; REQUISITION FOR FUNDS Section 4.1. Loan Closing Submissions. Concurrently with the execution and delivery of this Loan Agreement, the Governmental Unit is providing to the Commission the following documents each dated the date of such execution and delivery unless otherwise provided below or unless waived by the Commission and the Trustee: (i) Certified resolution of the Governmental Unit; (ii) An opinion on the Governmental Unit's Counsel in the form of Exhibit D hereto to the effect that the Loan Agreement is duly authorized and executed, and is a valid, binding and enforceable obligation of the Governmental Unit and opining to such other matters as may be reasonably required by Bond Counsel; (iii) A certificate of the Authorized Officer of the Governmental Unit to the effect that the representations and warranties of the Governmental Unit are true and correct; (iv) The audited financial statements of the Governmental Unit for the past three fiscal years; (v) This executed Loan Agreement; (vi) An opinion (addressed to, and in form and substance acceptable to, the Commission and the Trustee) of Bond Counsel; (vii) An incumbency certificate and a signature certificate in form and substance acceptable to the Commission and Bond Counsel; (viii) An executed Form 8038-G; and (Ix) Such other certificates, documents and information as the Commission, the Trustee or Bond Counsel may require. All opinions and certificates shall be dated the date of the closing of the Loan. Section 4.2. Covenants of Governmental Unit and Conditions of Loan. By the execution of this Loan Agreement, the Governmental Unit agrees that prior to any requests for the disbursement of all or a portion of the Loan made hereunder, the Governmental Unit shall supply the Commission, if requested, appropriate documentation, satisfactory to the Commission, in its sole discretion, indicating the following: 14 (i) Governmental Unit shall abide by the covenants in the County Interlocal Agreement. (ii) All real estate and interest in real estate and all personal property constituting the Project and the Project sites heretofore or hereafter acquired shall at all times be and remain the property of the Governmental Unit. (iii) In the event the Governmental Unit is required to provide financing for the Project from sources other than the Commission, the Commission shall have the right to receive such reasonable proofs as it may require of the ability of the Governmental Unit to finance the costs of construction of the Project over and above the Loan, prior to the disbursement by the Commission of any portion of the Loan. (iv) Actual construction and installation incident to the Project shall be performed by either the lump-sum (fixed price) or unit price contract method, and adequate legal methods of obtaining public, competitive bidding will be employed prior to the awarding of the construction contract for the Project in accordance with Florida law. (v) Duly authorized representatives of the Commission and such other agencies of the State as may be charged with responsibility will have reasonable access to the construction work whenever it is in preparation or progress, and the Governmental Unit will assure that the contractor or contractors will provide facilities for such access and inspection. (vi) A work progress schedule utilizing a method of standard acceptance in the engineering community shall be prepared prior to the institution of construction in connection with each construction contract, or, if construction has already been initiated as of the date of this Loan Agreement, at the earliest practicable date, to indicate the proposed schedule as to completion of the Project, and same shall be maintained monthly thereafter to indicate the actual construction progress of the Project. (vii) The construction, including the letting of contracts in connection therewith, will conform in all respects to applicable requirements of federal, state and local laws, ordinances, rules and regulations. (viii) The Governmental Unit will cause the Project to proceed expeditiously and cause the completion of the Project in accordance with the approved surveys, plans specifications and designs or amendments thereto, prepared by the Engineers and approved by state and federal agencies, but only to the extent such approvals may be required. (ix) The Governmental Unit shall require that each of the contractors and all subcontractors maintain during the life of the construction contract, worker's compensation insurance, public liability insurance, property damage insurance and 15 vehicle liability insurance in amounts and on terms satisfactory to the Commission. Until the Project facilities are completed and accepted by the Governmental Unit, the contractor shall maintain builders risk insurance (fire and extended coverage) on a 100% basis (completed value form) on the insurable portion of the Project, such insurance to be made payable to the order of the Commission, the Governmental Unit, the prime contractor, and all subcontractors, as their interests may appear. (x) The Governmental Unit shall provide or cause to be provided and maintained competent and adequate engineering services covering the supervision and inspection of the development and construction of the Project, and bearing the responsibility of assuring that construction conforms to the approved plans, . specifications and designs prepared by the Engineers. Such engineer shall certify to the Commission, any involved state or federal agencies, and the Governmental Unit at the completion of construction that construction is in accordance with the approved plans, specifications and designs, or, approved amendments thereto. Section 4.3. Disbursements of Loan; Requisition for Funds. The Governmental Unit shall submit to the Trustee a Requisition for Funds during the first five days of each month (or such other designated period as is acceptable to the Trustee). The Requisition of Funds shall be in substantially the form as that attached to this Loan Agreement as Exhibit A and made a part hereof. Subject to the prOVISIOns of the Indenture, upon the Commission's receipt of a Requisition for Funds, and such additional documentation as it may require, the Commission will promptly direct the Trustee to remit the amount requested to the Governmental Unit. 16 ARTICLE V ASSIGNMENT AND GENERAL COVENANTS OF THE GOVERNMENTAL UNIT Section 5.1. Pledge and Assignment. The Governmental Unit does hereby irrevocably assign and pledge to the Commission, and its successors or assigns, for the benefit of the owners of all Notes issued under the Indenture, all right, title and interest of the Governmental Unit in and to the proceeds of the Permanent Financing and all monies to be received from the Permanent Lender, as applicable, pursuant to the Permanent Lender's expressed intention to provide Permanent Financing for the Project. The Governmental Unit acknO\yledges and agrees that the Commission pursuant to the Indenture has assigned and pledged to the Trustee for the benefit and security of the owners of the Notes all of its rights under the provisions of this Loan Agreement and the Loan Note. Accordingly, this Loan Agreement shall not be terminated, modified or changed by the Commission or the Governmental Unit except with the consent of the Trustee in the manner and subject to the conditions permitted by the terms and provisions of the Indenture. THE NOTES ARE LIMITED OBLIGATIONS OF THE COMMISSION PAYABLE BY THE COMMISSION SOLELY FROM AND SECURED BY THE TRUST ESTATE. THE NOTES ARE EQUALLY SECURED BY AN IRREVOCABLE PLEDGE OF THE TRUST ESTATE, WITHOUT PRIORITY FOR NUMBER, DATE OF SALE, DATE OF EXECUTION, OR DATE OF DELIVERY. The Notes and the obligations and covenants of the Commission under the Indenture shall not be deemed to constitute a debt, liability, or obligation of the State, or any political subdivision or municipality thereof (excluding the governmental entities to the extent of their respective obligations under their respective Loan Agreements), or a pledge of the faith and credit of the State or any political subdivision or municipality thereof, but shall constitute special obligations payable solely from the pledge of those funds, accounts and sources as set forth in this Loan Agreement and the Indenture. The issuance of the Notes pursuant to the Act shall not directly, indirectly, or contingently obligate the Commission, the State or any other political subdivision or municipality thereof (excluding the governmental entities to the extent otherwise provided in their respective Loan Agreements) to levy or to pledge any form of taxation or assessments whatsoever therefor. Section 5.2. Further Assurance. At any time and all times the Governmental Unit shall, so far as it maybe authorized by law, pass, make, do, execute, acknowledge and deliver, all and every such further resolutions, acts, deeds, conveyances, assignments, transfers and assurances as may be necessary or desirable for the better assuring, conveying, granting, assigning and confirming all and singular the rights, assets and revenues herein pledged or assigned, or intended so to be, or which the Governmental Unit may hereafter become bound to pledge or assign. Section 5.3. Completion of Project. Governmental Unit hereby convenants and agrees to do all things within its power under the County Interlocal Agreement to cause the 17 completion of the Project in accordance with the plans, designs and specifications prepared by the Engineers so that the Permanent Financing can be delivered on or prior to the Maturity Date. Section 5.4. Tax Covenant. The Governmental Unit shall at all times do and perform all acts and things permitted by law and necessary or desirable in order to assure that interest paid by the Commission on the Notes shall, for the purposes of federal income taxation, be excludable from gross income under any valid provision of law, and shall take such actions as may be directed by the Commission in order to accomplish the foregoing. The Governmental Unit shall not permit (i) the proceeds of the Loan to be used directly or indirectly in any trade or business of any non-governmental entity, (ii) its payments hereunder to be secured directly or indirectly by property to be used in a trade or business of any non-governmental entity, or (ill) any federal guarantee of its obligations hereunder without the prior written consent of the Commission. The Governmental Unit will not acquire or pledge any obligations which would cause the Notes to be "arbitrage bonds" within the meaning of the Code. Section 5.5. Accounts and Reports. The Governmental Unit shall at all times keep, or cause to be kept, proper books of record and account in accordance with generally accepted accounting principles in which complete and accurate entries shall be made of all its transactions relating to the Project. Section 5.6. General. The Governmental Unit shall do and perform ,or cause to be done and performed all acts and things required to be done or performed by or on behalf of the Governmental Unit under the provisions of any agreements regarding the Permanent Financing and under any provisions of the Act and this Loan Agreement in accordance with the terms of such provisions. Section 5.7. Indemnity. To the extent permitted by law within the limits provided by F.s 768.28, the Governmental Unit will pay, and will protect, indemnify and save, the Commission, each member, officer, commissioner, employee and agent of any of the Commission, harmless from and against, any and all liabilities, losses, damages, costs and expenses (including reasonable attorneys' fees), suits, claims and judgments of whatsoever kind and nature (including those in any manner directly or indirectly arising or resulting from, out of, or in connection with, any injury to, or death of, any person or any damage to property resulting from the use or operation of the Project), whether arising directly or indirectly (in any case, whether or not by way of the Governmental Unit), its successors and assigns, agents, contractors, employees, licensees or otherwise of the Governmental Unit or resulting from, out of, or in connection with, the Project or this Loan Agreement as a result of the breach or violation of any agreement, covenant, representations or warranty by the Governmental Unit set forth in this Loan Agreement or any document delivered in connection herewith, but not including an action arising from the gross negligence or willful misconduct of the Commission or the alleged invalidity of the Notes except to the extent that such invalidity is caused by an act or omission of the Governmental Unit or is caused by the invalidity of this Loan Agreement. The Commission shall also use counsel reasonably acceptable to the Governmental Unit in 18 carrying out its obligations under this paragraph, except as a result of the breach or violation of any agreement, covenant, representations or warranty by the Governmental Unit set forth in this Loan Agreement or any document delivered pursuant hereto. The Commission shall give to the Governmental Unit prompt notice of any such suits or claims. To the extent permitted by law within the limits provided by F.5. 768.28, the Governmental Unit hereby agrees to indemnify and hold harmless the Trustee from and against any and all costs, liabilities, losses or damages whatsoever (including reasonable costs and fees of counsel, auditors or other experts), asserted or arising out of or in connection with the acceptance or administration of the trusts established pursuant to the Indenture, except costs, claims, liabilities, losses or damages resulting from the negligence or willful misconduct of the Trustee. The foregoing notwithstanding, nothing herein contained shall be construed, and neither the Trustee, the Commission, the State or the owners of the Notes shall have the right to compel the exercise of the taxing power of the Governmental Unit in any form for the payment by the Governmental Unit of its obligations, if any, hereunder. The provisions of this paragraph shall survive the termination of this Loan Agreement and the resignation or removal of the Trustee. Section 5.8. Further Assurance. The Governmental Unit shall execute and deliver to the Trustee all such documents and instruments and do all such other acts and things as may be reasonably necessary to enable the Trustee to exercise and enforce its rights under this Loan Agreement and to realize thereon, and record and file and re-record and re-file all such documents and instruments, at such time or times, in such manner and at such place or places, all as may be reasonably necessary or required by the Trustee to validate, preserve and protect the position of the Trustee under this Loan Agreement. Section 5.9. Limited Obligations. Anything in this Loan Agreement to the contrary notwithstanding, it is understood and agreed that all obligations of the Governmental Unit hereunder shall be payable only from proceeds of Permanent Financing as provided for hereunder and nothing herein shall be deemed to pledge ad valorem taxation revenues or to permit or constitute a mortgage or lien upon any assets owned by the Governmental Unit and no Owner of any Note or any other person, including the Commission or the Trustee, may compel the levy of ad valorem taxes on real or personal property within the boundaries of the Governmental Unit. The obligations hereunder do not constitute an indebtedness of the Governmental Unit within the meaning of any constitutional, statutory or charter provision or limitation, and neither the Trustee, the Commission, or the Owner of any Note or any other person shall have the right to compel the exercise of the ad valorem taxing power of the Governmental Unit or taxation of any real or personal property therein for the payment by the Governmental Unit of its obligations hereunder. Except to the extent expressly set forth in this Loan Agreement, this Loan Agreement and the obligations of the Governmental Unit hereunder shall not be construed as a limitation on the ability of the Governmental Unit to pledge or 19 covenant to pledge said revenues or any revenues or taxes of the Governmental Unit for other legally permissible purposes. 20 ARTICLE VI DEFEASANCE This Loan Agreement shall continue to be obligatory and binding upon the Governmental Unit in the performance of the obligations imposed by this Loan Agreement and the repayment of all sums due by the Governmental Unit under this Loan Agreement shall continue to be secured by this Loan Agreement as provided herein until all of the indebtedness and all of the payments required to be made by the Governmental Unit shall be fully paid to the Commission or the Trustee; provided, however, if, at any time, the Governmental Unit shall have paid, or shall have made provision for payment of, the principal amount of the Loan, interes~ thereon and redemption premiums, if any, payable with respect to the Notes in connection with such payment and all other amounts due hereunder, then, and in that event, the pledge of and lien on the proceed of the Permanent Financing pledged to the Commission for the benefit of the Owners of the Notes shall be no longer in effect and all future obligations of the Governmental Unit under this Loan Agreement shall cease. For purposes of the preceding sentence, deposit of sufficient cash and/or United States Treasury obligations in irrevocable trust with a banking institution or trust company, for the sole benefit of the Commission in respect to which such United States Treasury obligations, the principal and interest received will be sufficient to make timely payment of the principal amount of the Loan and interest thereon and redemption premiums, if any, on the outstanding Notes, shall be considered "provision for payment." Nothing herein shall be deemed to require the Commission to call any of the outstanding Notes for redemption prior to maturity pursuant to any applicable optional redemption provisions, or to impair the discretion of the Commission in determining whether to exercise any such option for early redemption. If the Governmental Unit shall make advance payments to the Commission in an amount sufficient to retire the Loan of the Governmental Unit, including redemption premium and accrued interest to the next succeeding redemption date of the Notes, all future obligations of the Governmental Unit under this Loan Agreement shall cease, except as otherwise provided herein. The Governmental Unit shall give a 30 day notice to the Commission prior to the making of any advance payment on a date other than on the Maturity Date. 21 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Section 7.1. Events of Default Defined. The following will be "Events of Default" under this Loan Agreement and the term "Event of Default" or "Default" will mean, whenever it is used in this Loan Agreement, anyone or more of the following events: (i) Failure by the Governmental Unit to pay any Loan Payments at the times specified herein including the principal and interest due on the Loan Note. (ii) Failure by the Governmental Unit to observe or perform any covenant, . condition or agreement on its part to be observed or performed, other than as referred to in subsection (i) of this Section, for a period of 30 days after written notice specifying such failure and requesting that it be remedied will have been given to the Governmental Unit by the Commission unless the Commission agrees in writing to an extension of such time prior to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Commission will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by the Governmental Unit within the applicable period and diligently pursued until such failure is corrected. (iii) The dissolution or liquidation of the Governmental Unit, or the voluntary initiation by the Governmental Unit of any proceeding under any federal or state law relating to bankruptcy, insolvency, arrangement, reorganization, readjustment of debt or any other form of debtor relief, or the initiation against the Governmental Unit of any such proceeding which will remain undisrnissed for 60 days, or the entry by the Governmental Unit into an agreement of composition with creditors or the failure generally by the Governmental Unit to pay its debts as they become due. (iv) Failure of the Commission to disburse proceeds of the Loan, if the Governmental Unit has complied with all its obligations under this Loan Agreement. Section 7.2. Remedies on Default. Whenever any Event of Default referred to in Section 7.1 has occurred and is continuing, the Commission may, without any further demand or notice, take one or any combination of the following remedial steps: (i) Declare all payments due hereunder, as set forth in the Schedule of Payments, to be immediately due and payable. (ii) Exercise all the rights and remedies of the Commission set forth in the Act. (ill) Take whatever action at law or in equity appear necessary or desirable to enforce its rights under this Loan Agreement. 22 Section 7.3. Appointment of Receiver. Upon the occurrence of an Event of Default, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Commission under this Loan Agreement, the Commission shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Project and all receipts therefrom, subject to outstanding existing debt with a first lien on such receipts, pending such proceedings, with such power as the court making such appointment shall confer; provided, however, that the Commission may, with or without action under this Section, pursue any available remedy to enforce the payment obligations hereunder, or to remedy any Event of Default. Section 7.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to the CO)Ilmission is intended to be exclusive, and every such remedy will be cumulative and will be in addition to every other remedy given hereunder and every remedy now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default will impair any such right or power and any such right and power may be exercised from time to time and as often as may be deemed expedient. Section 7.5. Consent to Powers of Commission Under Act and this Loan Agreement. The Governmental Unit hereby acknowledges to the Commission its understanding of the provisions of the Act and this Loan Agreement, vesting in the Commission certain powers, rights and privileges upon the occurrence of an Event of Default, and the Governmental Unit hereby covenants and agrees that if the Commission should in the future have r~course to said rights and powers, the Governmental Unit shall take no action of any nature whatsoever calculated to inhibit, nullify, void, delay or render nugatory such actions of the Commission in the due and prompt implementation of the provisions of this Loan Agreement. Section 7.6. Waivers. In the event that any agreement contained herein should be breached by either party and thereafter waived by the other party, such waiver will be limited to the particular breach so waived and will not be deemed to waive any other breach hereunder. Section 7.7. Agreement to Pay Attorneys' Fees and Expenses. In the event that either party hereto is in default under any of the provisions hereof and the nondefaulting party employs attorneys or incurs other expenses for the enforcement of performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party agrees that it will pay on demand therefor to the nondefaulting party the fees of such attorneys and such other expenses so incurred by the nondefaulting party. 23 ARTICLE VIII MISCELLANEOUS PROVISIONS Section 8.1. Notices. All notices, certificates or other communication hereunder shall be sufficiently given and shall be deemed given when hand delivered or mailed by registered or certified mail, postage prepaid, to the parties at the following addresses: Commission: Florida Rural Utility Financing Commission 2970 Wellington Circle W., Suite 101 Tallahassee, Florida 32308 Attn: Gary Williams, Executive Director Trustee, Paying Agent and Registrar: Regions Bank Corporate Trust Services Attn: Vladimir Munoz 10245 Centurion Parkway, 2nd Floor Jacksonville, FL 32256 Tel: (904) 565-7970 Fax: (904)564-8588 Governmental Unit: Momoe County Board of County Commissicmers County Administrator 1100 Simonton Street, Suite 2-213 Key West, FL 33040 With copy to: County Attorney 1111 12th Street, Suite 408 Key West, Florida 33040 Any of the above parties may, by notice in writing given to the others, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Section 8.2. Approval not to be Unreasonably Withheld. Any approval of the Commission required by this Loan Agreement shall not be umeasonably withheld and shall be deemed to have been given on the 30th day following the submission of any matter requiring approval to the Commission, unless disapproved in writing prior to such 30th day. Any provision of this Loan Agreement requiring the approval of the Commission or the satisfaction or the evidence of satisfaction of the Commission shall be interpreted as requiring action by an authorized officer of the Commission granting, authorizing or expressing such approval or satisfaction, as the case may be, unless such provision expressly provides otherwise. Disbursements of proceeds of the Loan shall be governed by Section 4.3 of this Loan Agreement. 24 Section 8.3. Effective Date. This Loan Agreement shall become effective as of the date first set forth herein above and shall continue to full force and effect until the date the obligations of the Governmental Unit pursuant to the provisions of this Loan Agreement have been fully satisfied. Section 8.4. Binding Effect. This Loan Agreement shall be binding upon, and shall inure to the benefit of the parties hereto, and to any person, officer, board, department, agency, municipal agency, or body politic and corporate succeeding by operation of law to the powers and duties of either of the parties hereto. This Loan Agreement shall not be revocable by either of the parties, nor assignable by either parties without the written consent of the other party. The Governmental Unit hereby consents to the assignment of this Loan Agreement by the Commission to the Trustee. Section 8.5. Severability. In the event that any provision of this Loan Agreement will be held invalid or unenforceable by any court of competent jurisdiction, such holding will not invalidate or render unenforceable any other provision hereof. Section 8.6. Execution in Counterparts. This Loan Agreement may be simultaneously executed in several counterparts, each of which will be an original and all of which will constitute but one and the same instrument. Section 8.7. Applicable Law. This Loan Agreement will be governed by and construed in accordance with the laws of the State. Section 8.8. Captions. The captions or headings herein are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Loan Agreement. [Remainder of page intentionally left blank.] 25 IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be executed by their respective duly authorized officers as of the day and year above written. FLORIDA RURAL UTILITY FINANCING COMMISSION By 1~ IdfPr ATTEST: B; ~ Secretary 26 LOAN AGREEMENT ATTEST: of ircuit Court of Momoe County, Florida and Ex Officio Clerk Of the Board of County Commissioners Approved as to form and legality: By~oIff;L ty Attorney By: Mayor, Board of Co 27 EXHIBIT A REQUEST FOR PAYMENT WITH RESPECT TO FLORIDA RURAL UTILITY FINANCING COMMISSION (PUBLIC PROJECTS CONSTRUCTION FINANCING PROGRAM) Request No. Dated To: Regions Bank . Corporate Trust Services 10245 Centurion Parkway, 2nd Floor Jacksonville, FL 32256 From: Monroe County, Florida ("Governmental Unit") Contact Person: Address: Ladies and Gentlemen: The above identified Governmental Unit has entered into a Loan Agreement with the Florida Rural Utility Financing Commission (the "Commission") for the acquisition and construction of facilities described in the Loan Agreement as the "Project." Pursuant to the Loan Agreement, the undersigned hereby certifies that the following expenses have been incurred in connection with the Project and that the Commission's funding share of these expenses is in the amount so denoted in this request totaling $ and is set forth in Exhibit A attached hereto. Respectfully submitted, MONROECOUNTY,FLORlDA By: Title: A-I Certificate of Consulting Engineers as to Payment Request The undersigned, a duly qualified and licensed Engineer hereby certifies that that all expenses represented in this request were duly incurred for the Construction of the "Project," and that such expenses have not been the subject of any request for disbursement previously submitted. Engineer/Consultant Firm Name: By: Title: APPROVED: By: Title: A-2 EXHIBIT B FORM OF LOAN NOTE UNITED STATES OF AMERICA STATE OF FLORIDA COUNTY OF MONROE_ LOAN NOTE Dated: $ For value received, Monroe County, Florida (the "Issuer"), acting by and through its Board of County Commissioners (the "Governing Body"), hereby acknowledges itself indebted to and promises to pay to the order of: FLORIDA RURAL UTILITY FINANCING COMMlSSION the principal sum of ($ , 2011 with interest thereon payable on prepayment) from the dated date hereof at the rate of ) on or the date of maturity % per annum, before (or prior This Note represents the authorized aggregate principal amount of $ authorized to be issued by the Issuer for the purpose of obtaining funds to finance on an interim basis the cost (not otherwise provided) of the construction of various wastewater extensions, additions and improvements within the Issuer (the "Project") of the Issuer, pending the issuance and delivery of $ of SRF Fund monies (the "Permanent Financing"), authorized by resolution of the Governing Body of the Issuer, adopted on 2007 (the "Resolution"). Disbursements of the proceeds of this Note shall be made in accordance with the Loan Agreement by and between the Issuer and the Florida Rural Utility Financing Commission dated the date hereof. Interest shall accrue on the principal amount of this Note from the date of this Note until the date of maturity of this Note. This Note is a special obligation of the Issuer, payable solely from the proceeds of the Permanent Financing, which Permanent Financing proceeds are hereby irrevocably pledged to the payment of this Note, and, in the event of a deficiency, from legally available non-ad valorem revenues of the Issuer budgeted and appropriated by the Governing Body in accordance with the Loan Agreement. This Note is issued pursuant to Chapter 125, Florida Statutes (the "Act") and in anticipation of the issuance of the aforesaid Permanent Financing and neither this Note, nor the interest hereon, constitutes or evidences an indebtedness of the Issuer. B-1 It is hereby certified that the proceeds of this Note will be disbursed in accordance with the Resolution, authorizing the issuance of the Loan, and that the proceeds of this Note will be subject to all of the conditions of said Resolution. It is further certified that the undersigned is the Mayor of said Issuer, that he is duly authorized to execute this Note on behalf of said Issuer, and that this Note represents a liability of said Issuer only, payable out of the first proceeds of said sources, herein above mentioned, and that the undersigned, by executing this Note, does not become personally and/or individually liable hereon as his personal or individual debt. IN WITNESS WHEREOF, said Momoe County, in the State of Florida, by its Governing Body, has caused this Note to be executed by the Mayor of the Board of County Commissioners and its' Seal to be hereunto affixed, on the date of this Note, which is ,2008. MONROE COUNTY, FLORIDA By: Mayor, Board of County Commissioners (Seal of Issuer) B-2 EXHIBIT C FORM OF RESOLUTION See Document No. 32(b) in the Transcript C.l EXHIBIT D FORM OF OPINION OF COUNSEL [Letterhead of Counsel to Governmental Unit] January 24, 2008 Florida Rural Utility Financing Commission Tallahassee, Florida Regions Bank Jacksonville, Florida Loan Agreement by and between Florida Rural Utility Financing Commission and Monroe County Florida dated as of , 2008 Ladies and Gentlemen: The undersigned is an attorney at law duly admitted to the practice of la"';" in the State of Florida and is County Attorney to Monroe County, Florida (the "Governmental Unit"). I am familiar with the organization and existence of the Governmental Unit and the laws of the State of Florida applicable thereto. Additionally, I am familiar with the project (the "Project") with respect to which the Loan Agreement (the "Loan Agreement") by and between the Florida Rural Utility Financing Commission ("Commission") and the Governmental Unit is being authorized, executed and delivered and the Loan Note (the "Loan Note") from the Governmental Unit to the Commission is being authorized, and which may be executed and delivered. I have reviewed the form of Loan Agreement, the Loan Note, the resolution of the Governmental Unit authorizing the execution and delivery of said Loan Agreement and Loan Note. Based upon my review I am of the opinion that: (1) The Governmental Unit is a duly organized and existing political subdivision of the State of Florida validly existing under the Constitution and statutes of the State of Florida. (2) The Loan Agreement and the Loan Note have been duly executed and delivered by the Governmental Unit and each is a valid and binding obligation of the Governmental Unit enforceable in accordance with their terms, except to the extent that D-l the enforceability thereof may be limited by equitable principles and by bankruptcy, reorganization, moratorium, insolvency or similar laws heretofore or hereafter enacted relating to or affecting the enforcement of creditors rights or remedies generally. (3) The Governmental Unit has all necessary power and authority to enter into, perform and consummate all transactions contemplated by the Loan Agreement and the Loan Note, and to execute and deliver the documents and instruments to be executed and delivered by it in connection with the construction of the Project. (4) The execution and delivery of the Loan Agreement and the Loan Note and the performance by the Governmental Unit of its obligations thereunder does not and will not conflict with, violate or constitute a default under any court or , administrative order, decree or ruling, or any law, statute, ordinance or regulation, or any agreement, indenture, mortgage, lease, note or other obligation or instrument, binding upon the Governmental Unit, or any of its properties or assets. The Governmental Unit has obtained each and every authorization, consent, permit, approval or license. of, or filing or registration with, any court or governmental department, commission, board, bureau, unit or instrumentality, or any specifically granted exemption from any of the foregoing, that is necessary to the valid execution, delivery or performance by the Governmental Unit of the Loan Agreement and the Loan Note. (5) To the best of my knowledge after due inquiry there is no action, suit, proceedings or investigation at law or in equity before any court, public board or body pending or threatened against, affecting or questioning (i) the valid existence of the Governmental Unit, (ii) the right or title of the members and officers of the Governmental Unit to their respective positions, (iii) the authorization, execution, delivery or enforceability of the Loan Agreement, the Loan Note or the application of any monies or security therefor, (iv) the construction of the Project, or (v) that would have a material adverse impact on the ability of the Governmental Unit to perform its obligations under the Loan Agreement or the Loan Note. (6) None of the proceedings taken by the Governmental Unit for the authorization, execution or delivery of the Loan Agreement or the Loan Note has or have been repealed, rescinded, or revoked. (7) All proceedings and actions of the Governmental Unit with respect to which the Loan Agreement or the Loan Note is to be delivered were had or taken at meetings properly convened and held in substantial compliance with the applicable provisions of the laws of the State of Florida. Very truly yours, D-2 EXHIBIT E PERMANENT LENDER COMMITMENT LETTER E-l Florida Department of Environmental Protection Chmlie Crist Governor leff Koltk,",p U _ Governor -':::~~-~-L~-'~~ Bob Marlinez Center 2600 Blair Stone Road Tallahassee Florida 32399-2400 ,vlich,c1 IV Sole Secretary January 3, 2008 Mr Gary Williams Executive Director Florida Rural Utility Financing Commission 2970 Wellington Circle W , Suite 101 Tallahassee, Florida 32308-6885 RE: Funding Commitment for MonI'Oe County Dear Mr Williams: This letter is to confirm funding commitments made by the Department of EnviI'Onmental Protection's Bureau of Water Facilities Funding (the "Department") to Monroe County (the "County") for the Wastewater Facilities in the Big Coppitt service area We have given the County written authority to incur costs for the construction of Clean Water State Revolving Fund (CWSRF) project WW602090 (attached) based on the approved facilities plan and' plans and specifications Additionally, the County has submitted all required permits, the site certificate, and all required bid documents It has been determined by the Department that conditions for executing the assistance agreements can be reasonably achieved As such, funds will be obligated for the County by the Department, as they become available This project is on the contingency portion of the draft Pliority list in the amount of$21,977,OOO This Pliority list will be adopted by the Department on January 9,2008. We understand that the Florida Rural Utility Financing Commission (the "Commission") expects to make a loan to the County for intexim financing in the amount of $21,440,000, which includes capitalized intex.est ("Intexim Financing") tluough its Construction Funding Program aIld that such loan will be made in accordance with stalldard terms and conditions stated in the Construction Funding Program 10all agreexnent The Commission, with approval from the Department, is permitted to advance construction funds to the County for the Project I\;/orc Protectiol1. l('5.~' Process IHl1vd{p,st,JI(',If us Mr. Gary Williams January 3, 2008 Page Two Following the formal adoption of the fundable list which elevates these contingency list projects, the COWlty should submit the assistance application to the Department. Funds will then be available to the County upon execution of the agreement. The first installment of these funds is expected to be available on or about August 2008. Actual closing for the Clean Water State Revolving Fund assistance agreement is conditioned upon receipt of executed loan documents in a fomi satisfactory to the Department In addition, the Department may require confirmation that information provided through fmal plans and specifications have not changed nor has the fmancial position ofthe sponsor changed adversely. The loan will be closed when construction is substantially complete or at a date mutually agreed to by the Department, the County, and the Commission We appreciate your assistance and look forward to working with you on the Project Sincerely, Robert E. Holmden, P..E., Chief Bureau of Water Facilities FWlding -1l#/tJ CERTIFICATE OF RECORDING OFFICER 1. I am the duly appointed, qualified and acting Clerk of the Circuit Court of Monroe County, Florida and Ex Officio Clerk of the Board of County Commissioners and keeper of the records thereof; 2. I am duly authorized to execute this Certificate; and 3. The copy of Resolution No. 559-2007 attached hereto is a true, correct and compared copy of the original instrument adopted December 19, 2007, is in full force and effect and has not been modified and, to the extent required by law, has been duly signed or approved by the proper officer or officers and is on file and of record. DATED this 24th day of January, 2008. [SEAL] MONROE COUNTY, FLORIDA B0 ff1~ Name: Danny L. Kolhage Title: Clerk of the Circuit Court of Monroe County, Florida and Ex Officio Clerk of the Board of County Commissioners No. 32 (b) RESOLUTION NO. 559 - 2007 A RESOLUTION OF THE BOARD OF COUNTY COMMISSIONERS OF MONROE COUNTY, FLORIDA, AumORlZING THE NEGOTIATION OF A LOAN IN AN AGGREGATE AMOUNT NOT TO EXCEED $11,000,000 FROM THE FLORIDA RURAL UTIL1TY FINANCING COMMISSION FOR THE PURPOSE OF FINANCING THE COST OF CERTAIN WASTEWATER IMPROVEMENTS WITHIN MONROE COUNTY; APPROVING THE EXECUTION OF A LOAN AGREEMENT BETWEEN MONROE COUNTY, FLORIDA AND THE FLORIDA RURAL UTILTIY FINANCING COMMISSION TO PROVIDE INTERIM FINANCING TO MONROE COUNTY, FLORIDA; PROVIDING CERTAIN OTHER MATTERS IN CONNECTION THEREWITH; AND PROVIDING AN EFFECTIVE DATE. BE IT RESOLVED BY TIlE BOARD OF COUNTY COMMISSIONERS OF MONROE COUNTY, FLORIDA: SECfION 1. A UTHORTIY FOR RESOLUTION. This Resolution is adopted pursuant to the provisions of the Constitution of Florida, Chapter 125, Florida Statutes, and other applicable provisions oflaw. SECTION 2. FINDINGS. It is hereby found and determined that: (A) Certain participating counties (the "Members") have created the Florida Rural Utility Financing Commission (the "Commission") pursuant to a certain Interlocal Agreement and Chapter 163, Part 1, Florida Statutes, for the purpose of issuing its notes to make loans to governmental units for qualified projects. (B) Monroe County, Florida (the "County") desires to receive such a loan. (C) For the benefit of the County's inhabitants, the County finds, determines and declares that it is necessary for the continued preservation of the health, welfare, convenience and safety of the County and its inhabitants for certain wastewater improvements be constructed within the County (the "Project"). (D) It is necessary for the County to raise a portion of the cost of the Project by obtaining a commitment for permanent financing in the principal amount of at least Twenty One Million Dollars ($21,000,000). The County intends to obtain permanent financing through the Clean Water State Revolving Fund loan program of the Florida Department of Environmental Protection ("DEP"). (E) On November 20, 2007, DEP authorized the County to incur construction costs. The authorization letter and procurement approval letter are attached as Exhibit<< p,:'. To ensure continued aIlowability of the Project costs for financing, the County must satisfy certain loan program requirements. (F) It is necessary and urgent that funds be made immediately available in order to continue construction of the Project at this time. The County intends to obtain interim financing from the Florida Rural Utility Financing Commission and has made application to the Commission for the purpose of borrowing monies to provide for the interim financing of the construction of the Project. In order to obtain such monies, the County is required to enter into a Loan Agreement with the Commission. SECTION 3. APPROVAL OF PROJECT. The financing of the acquisition, construction and equipping of the Project is hereby approved. SECTION 4. LOAN AGREEMENT. The Mayor and Clerk or any other appropriate officers of the County are hereby authorized to execute and deliver a Loan Agreement, to be entered into by and between the County and the Commission in substantially the form attached hereto as Exhibit "B" with such additional changes, insertions and omissions thereto as may be approved by the County Administrator (or interim County Administrator) and County Attorney, the execution thereof being conclusive evidence of such approval. Such Loan Agreement shall be secured in the marmer set forth therein SECTION 5. AUTHORIZED OFFICERS. The Mayor, the Clerk, the County Administrator or any other appropriate officers of the County are hereby authorized to arrange the interim financing to pay the costs of the Project in anticipation of the issuance of the long-term financing. The Mayor, County Administrator, Clerk or any other appropriate officers bfthe County are hereby authorized to execute and deliver on the County's behalf such instruments, documents or certificates required by this Resolution, the Loan Agreement or any other document required by the Commission as a prerequisite or precondition to making the Loan, and any such representation made therein shall be deemed to be made on behalf of the County. All action taken to date by the officers of the County in furtherance of the Loan is hereby approved, confirmed and ratified. SECTION 6. DELEGATION. The Mayor and the Clerk are authorized to approve: (i) the interest rate at not to exceed 5.50%, (ii) maturity of the financing not to exceed three (3) years from the date ofissuance, (iii) principal amount of the Loan not to exceed $21,000,000 and (iv) any other terms of the fmancing, without further approval of the Board of County Commissioners. The interim financing may be secured as provided in the Loan Agreement. SECTION 7. DISCLOSURE. No such Loan Agreement shall be executed unti1 the County shall have received all disclosure information required by Chapter 218, Florida Statutes. SECTION 8. SALE. In accordance with the provisions of Section 218.385, Florida Statutes, the County hereby determines that a negotiated sale is in the best interest of the County and hereby approves the negotiation of the Loan with the Commission. Negotiation of the Loan will allow the County to access markets not otherwise accessible to the County at total costs and rates favorable to the County. SECflON 9. EXPENDITURE OF PROCEEDS. The County expects to expend the proceeds of the Loan within three (3) years from the date of receipt of such proceeds. SECTION 10. SEVERABaITY. If anyone or more of the provisions of this Resolution should be held contrary to any express provision of law or contrary to the policy of express law, though not expressly prohibited, or against public policy, or shall for any reasons whatsoever be held invalid, then such provisions shall be null and void and shall be deemed separate from the remaining provisions, and in no way affect the validity of all the other provisions of this Resolution. SECTION 11. EFFECTIVE DATE. This Resolution shall take effect immediately upon its enactinent. PASSED AND ADOPTED by the Board of County Commissioners of Monroe County, Florida at a regular meeting of said Board held on the 19th day of December, 2007. c... I.:;:; c) '-:: 1'_' (~ . Mayor McCoy Mayor Pro Tern Di Gennaro Commissioner Murphy Commissioner Neugent <"i::ommissioner Spehar o ,. "'"= N ;..;: 1-;:' x: :-:;: Q.. -~ h' I ~' ". C.:. w_: _I l... ~G;:; - .w '"-~~w *uo ........ a::. <': :1': c::l 0 :!: :z - -, "" = = ..... .."::::-~. 4~; !~'- /., ~~ -~, r." --.- ; \: :.-;-;1 It~.}~;..,:..:. i ; tl"',. ' \\"'- -' (Seal)'i;:;-. , ",' '~"-",-'". ',/,~'.' ATTEST: D~'t':X~t~, Clerk By: j)..,,,W c. IJvstJ~ Deputy Clerk I Not Present Yes Yes Yes Yes BOARD OF COUNTY COMMISSIONERS OF MONROE COUNTY, FLORIDA By: , MONROE COUNTY ATT RNEY VEO AS TO Date CERTIFICATE OF BORROWER We, the undersigned Clerk and Mayor of the Board of County Commissioners of Monroe County, Florida (the "Borrower"), hereby represent, warrant and covenant to the Florida Rural Utility Financing Commission (the "Commission"): (1) The Borrower has duly authorized, executed and delivered the Loan Agreement dated as of January 24, 2008, by and between the Borrower and the Commission (the "Loan Agreement"). . (2) The Borrower has complied or is presently in compliance with all agreements and has satisfied all conditions on its part to be observed or satisfied under the Resolution adopted by the Borrower on December 19, 2007 (the "Resolution"). (3) The Resolution has been duly passed and adopted, and has not been repealed, revoked, rescinded or altered in any manner. (4) As of the date of this Certificate, all representations and warranties of the Borrower contained in Section 2.2 of the Loan Agreement are true and correct and the Borrower is in compliance with all covenants contained in the Loan Agreement. (5) The Loan proceeds will be used in a manner that does not violate the terms and provisions set forth in Section 5.4 of the Loan Agreement. The Project, as defined in the Loan Agreement, being financed with the Loan constitutes a "capital project" within the meaning of Section 163.01(7)(d), Florida Statutes, as amended, and has a useful life of not less than five years. (6) The amount borrowed pursuant to the Loan Agreement, together with accrued interest, does not exceed the amounts needed for the Project. It is reasonably anticipated by the Borrower that the proceeds of the Loan will be fully expended by the Borrower prior to January 24, 2011. The Borrower will cause the construction of the Project to proceed with" due diligence". (7) No litigation of any nature is now pending or, to our knowledge, threatened, restraining or enjoining the issuance, sale, execution or delivery of said Loan Agreement and Loan Note, affecting in any way the interest thereon or otherwise carrying out the terms and provisions of the Resolution and the covenants and agreements therein, and each or any of them with respect to said Loan Agreement and Loan Note, or in any manner affecting the proceedings and authority for the Loan or affecting directly or indirectly the validity of the Loan Note or of any provisions made or authorized for their payment, or the corporate existence or boundaries of said Borrower, or the title to his office of any officer whose signature appears on the Loan Agreement and Loan Note. None of the proceedings or authority for the issuance of such Loan Agreement or Loan Note has been repealed, revoked, rescinded or altered in any manner. No. 32(c) Executed this 24th day of January, 2008. Approved as to form and legal sufficiency: By~a- zanne Hutton County Attorney ~~~, Danny L. Ko e Clerk of Circuit Court of Monroe County, Florida and Ex Officio C of the Board of County Commissio Charles "Sonny" McCo Mayor of the Board of Co ty Commissioners UNITED STATES OF AMERICA STATE OF FLORIDA COUNTY OF MONROE LOAN NOTE Dated: January 24, 2008 $21,000,000 For value received, Monroe County, Florida (the "Issuer"), acting by and through its County Commission (the "Governing Body"), hereby acknowledges itself indebted to and promises to pay to the order of: FLORIDA RURAL UTILITY FINANCING COMMISSION the principal sum of TWENTY ONE MILLION DOLLARS ($21,000,000) on or before January 1, 2011, with interest thereon payable on the date of maturity (or prior prepayment) from the dated date hereof at the rate of 4.200% per annum. This Note represents the authorized aggregate principal amount of $21,000,000, authorized to be issued by the Issuer for the purpose of obtaining funds to finance on an interim basis the cost (not otherwise provided) of the construction of various wastewater extensions, additions and improvements within suer (the "Project"), pending the issuance and delivery of $21,977,000 of S 'es (the "Permanent Financing"), authorized by resolution of the Gov uer, adopted on December 19, 2007 (the "Resolution"). Disbursements of the te shall be made in accordance with the Loan Agreement by and betw uer and the Florida Rural Utility Financing Commission dated the date here terest shall accrue on the principal amount of this Note from the date of this Note until the date of maturity of this Note. This Note is a special obligation of the Issuer, payable solely from the proceeds of the Permanent Financing, which current Permanent Financing proceeds are hereby irrevocably pledged to the payment of this Note. This Note is a special obligation of the Issuer, payable solely from the proceeds of the Permanent Financing, which Permanent Financing proceeds are hereby irrevocably pledged to the payment of this Note, and, in the event of a deficiency, from legally available non-ad valorem revenues of the Issuer budgeted and appropriated by the Governing Body in accordance with the Loan Agreement. This N?te. isissu.ed purstla.nt to Chapter 125, Florida Statutes (the" Act") and in anticipatioIl pf !h~. iSsuanc~ of the aforesaid Permanent Financing and neither this Note, nor the interest hereon, constitutes or evidences an indebtedness of the Issuer. Page 1 of 2 It is hereby certified that the proceeds of this Note will be disbursed in accordance with the Resolution, authorizing the issuance of the Loan, and that the proceeds of this Note will be subject to all of the conditions of said Resolution. It is further certified that the undersigned is the Mayor of said Issuer, that he is duly authorized to execute this Note on behalf of said Issuer, and that this Note represents a liability of said Issuer only, payable out of the first proceeds of said sources, herein above mentioned, and that the undersigned, by executing this Note, does not become personally and/or individually liable hereon as his personal or individual debt. IN WITNESS WHEREOF, said Monroe County, in the State of Florida, by its Governing Body, has caused this Note to be executed by the Mayor and attested by the Clerk of the Board of County Commissioners and its seal to be hereunto affixed, on the date of this Note, which is January 24, 2008. (Seal) Attest: Brd gq4'? Danny . olhage Clerk of the Circuit Court of Monroe County, Florida and Ex Officio of the Board of County Commissioners Page 2 of 2 $45,920,000 Florida Rural Utility Financing Commission Revenue Notes (Public Projects Construction) Series 2008A $21,000,000 Monroe County, Florida Loan TAX CERTIFICATE AS TO ARBITRAGE AND THE PROVISIONS OF SECTIONS 141-150 OF THE INTERNAL REVENUE CODE OF 1986. AS AMENDED The undersigned, J. Milton Pittman, Chairman of the Florida Rural Utility Financing Commission (the "Commission"), and Danny L. Kolhage as Clerk for Monroe County, Florida (the "County") make and enter into the following Tax Certificate as to Arbitrage and the Provisions of Sections 141-150 of the Internal Revenue Code of 1986, as amended (the "Code") and the Income Tax Regulations thereunder (the "Regulations") with respe'ct to the Commission's $45,920,000 Revenue Notes (Public Projects Construction), Series 2008A (the "Series 2008A Notes") and the loan of a portion of the proceeds of the Series 2008A Notes to the County (the "Monroe County Loan"). The Commission and the County understand that the opmlOn of Bond Counsel regarding the exclusion of interest on the Series 2008A Notes from gross income under Section 103(a) and Section 141-150 of the Code is rendered in reliance upon the representations and statements of fact and expectations contained herein and assumes the Commission's and the County's continued compliance with the provisions of this Certificate. 1. The Series 2008A Notes are being issued pursuant to the Constitution and laws of the State of Florida, particularly Chapter 163, Part I, Florida Statutes, and other applicable provisions of law, and a Trust Indenture, dated as of January 1, 2008 (the "Indenture"), by and between the Commission and Regions Bank, Jacksonville, Florida, as trustee (the "Trustee"). The Monroe County Loan is being issued by the County under the terms of a Loan Agreement, dated as of January 24, 2008 (the "Loan Agreement"), pursuant to which the proceeds of a portion of the Series 2008A Notes (the "Monroe County Portion") will be loaned to the County for the purpose of financing the construction of improvements to the wastewater system located within the County (the "Project"). In addition, a portion of the proceeds of the Series 2008A Notes allocated to the Monroe County Loan will be used to pay the interest on the Monroe County Loan (the "Capitalized Interest"). Unless otherwise specifically defined, all capitalized terms used in this Certificate shall have the meanings as those set forth in the Indenture or the Loan Agreement. 2. On the date hereof proceeds of the Series 2008A Notes will be used to acquire loan obligations of certain governmental units, including the Monroe County Loan, the interest on which is excluded from gross income under Section 103(a) of the Code (the "Tax-Exempt Loans"). As provided in Section 1.148-9(h) of the Regulations, for certain purposes of this Certificate, the portions of the Series 2008A Notes issued to finance the acquisition of each Tax- Exempt Loan, including the Monroe County Loan, shall be treated as separate issues of bonds. An allocation of the Series 2008A Notes and the proceeds thereof among the Monroe County P~rtion and the portions of the Series 2008A Notes allocated to the other Tax-Exempt Loans will be made in the manner set forth in Section 1.148-9(h) of the Regulations. 3. On the basis of the facts, estimates and circumstances in existence on the date hereof, we reasonably expect the following with respect to the Monroe County Portion, the Monroe County Loan, and the use of the proceeds thereof: (a) The Sale Proceeds of the Monroe County Portion in the amount of $21,000,000.00 will be used by the Commission to fund the acquisition of the Monroe County Loan. (b) Proceeds of the Monroe County Loan in the amount of $21,'000,000.00 (the "Loan Proceeds") are expected to be needed and fully expended as follows: (i) $2,589,650.00 of said proceeds will be deposited in the Construction Interest Account of the Proceeds Fund and, together with the investment earnings thereon, used to pay Capitalized Interest with respect to the Monroe County Loan; and (it) $18,410,350.00 of said proceeds will be deposited in the Monroe County subaccount of the Proceeds Account and, together with the investment earnings thereon, used to pay costs of the Project. (c) The total proceeds received by the County from the issuance of the Monroe County Loan, together with anticipated earnings thereon, do not exceed the total of the amounts necessary for the purposes described above. (d) The County does not expect to sell or otherwise dispose of any property comprising a part of the Project financed with the proceeds of the Monroe County Loan prior to its final maturity date. 4. Binding contracts or commitments obligating the expenditure of not less than five percent of the proceeds of the Monroe County Loan toward the cost of the Project will be 2 entered into by the County within six months from the date hereof. Work on the acquisition and construction of the Project and the allocation of the proceeds of the Monroe County Loan to the costs of the Project will proceed with due diligence. It is expected that the Project will be completed and at least 85 percent of the proceeds of the Monroe County Loan will be allocated to Project expenditures (including Capitalized Interest) within three years of the date hereof. 5. Not more than 50 percent of the proceeds of the Monroe County Loan will be invested in obligations having a substantially guaranteed yield for 4 years or more. 6. The Receipts Account of the Program Fund and the Debt Service Fund will be used primarily to achieve a proper matching of the revenues of the Commission (in the form of Loan Repayments) and the debt service on the Series 2008A Notes within each bond year, and amounts deposited in such funds will be depleted at least once a year except for a reasonable carryover amount not to exceed the greater of (A) the earnings on such funds for the immediately preceding Bond Year, or (B) 1/12 of the debt service on the Series 2008A Notes for the immediately preceding Bond Year. 7. Other than the Construction Interest Account and the Receipts Account of the Program Fund and the Debt Service Fund, there are no other funds or accounts of the Commission or the County established pursuant to the Indenture, the Loan Agreement or otherwise that are reasonably expected to be used to pay debt service on the Monroe County Loan or the Monroe County Portion, or which are pledged as collateral (or subject to 'a negative pledge) for the Monroe County Loan or the Monroe County Portion and for which there is a reasonable assurance on the part of the noteholders that amounts therein would be available to pay debt service on the Monroe County Loan or the Monroe County Portion if the Commission or the County encounters financial difficulties. 8. Pursuant to the terms of the Loan Agreement, the County agrees to make payments to the Trustee in amounts sufficient to pay the principal of, premium, if any, and interest on the Monroe County Loan, as well as ongoing administrative costs allocable to the Monroe County Loan and the Monroe County Portion. 9. The following represents the expectations of the Commission and the County with respect to the investment of the proceeds of the Monroe County Portion and the Monroe County Loan and other amounts on deposit in the aforementioned funds and accounts: (a) Proceeds deposited in the Construction Interest Account to be applied to pay Capitalized Interest may be invested at an unrestricted yield for a period not to exceed 3 years from the date hereof. (b) Proceeds deposited in the Monroe County subaccount of the Proceeds Account to pay Project costs may be invested at an unrestricted yield for a period not to exceed three years from the date hereof. 3 (c) Investment earnings on obligations described in subparagraphs (a) and (b) may be invested at an unrestricted yield for a period of three years from the date hereof or one year from the date of receipt, whichever period is longer. It is expected that all such investment earnings will be expended within such periods of unrestricted investment. (d) Amounts described in subparagraphs (a) through (c) that may not be invested pursuant at an unrestricted yield pursuant to such subparagraphs shall be invested at a yield not in excess of the yield on the Monroe County Loan plus 1/8 of one percentage point. (e) Amounts deposited in the Receipts Account and the Debt Service Fund allocable to the Monroe County Loan may be invested at an unrestricted yield for a period of 13 months from the date of deposit of such amounts. Earnings on such amounts which are retained in the Receipts Account or the Debt Service Fund may be invested at an unrestricted yield for a period not exceeding 13 months from the date of receipt of the amount earned. (f) Amounts described in subparagraph (e) not invested at an unrestricted yield pursuant to such subparagraph shall be invested at a yield not in ex~ess of the yield on the Monroe County Loan or invested in tax-exempt obligations under Section 103(a) of the Code the interest on which is not an item of tax preference within the meaning of Section 57(a)(5) of the Code. 10. For purposes of this Certificate, "yield" means that yield which when used in computing the present worth of all payments of principal and interest to be paid on an obligation produces an amount equal to the purchase price of such obligation. As required by Section 1.148-4(a) of the Regulations, the yield of the Monroe County Loan shall be equal to the yield of the Series 2008A Notes. The yields on obligations acquired with amounts described in Paragraph 9 and the yield of the Series 2008A Notes are calculated by the use of the same frequency interval of compounding interest. For purposes of calculating the yield of the Series 2008A Notes, the purchase price is the initial offering price to the public (excluding bond houses, brokers, and other intermediaries) at which price at least 10% of such notes was sold. The initial offering price for the Series 2008A Notes is, in the aggregate, $46,226,270.00, based upon certain representations made in a letter from the Morgan Keegan & Company, Inc. (the "Underwriter") attached as Exhibit A hereto. Any investments acquired with amounts which may not be invested at an unrestricted yield pursuant to Paragraph 9 or which are subject to the rebate requirement described in Paragraph 16 hereof shall be purchased at prevailing market prices and shall be limited to securities for which there is an established market or shall be invested in tax-exempt obligations under Section 103(a) of the Code the interest on which is not an item of tax preference within the meaning of Section 57(a)(5) of the Code. In accordance 4 with such meaning of the term "yield", the yield of the Series 2008A Notes has been determined by the Underwriter to be not less than 3.1460199%. 11. No portion of the Loan Proceeds will be used as a substitute for other funds of the County which were otherwise to be used to acquire or construct the Project and which will be used to acquire, directly or indirectly, securities producing a yield in excess of the yield of the Monroe County Loan. 12. The weighted average maturity of the Monroe County Loan does not exceed 120 percent of the reasonably expected average economic life of the Project (within the meaning of S~ction 147(b) of the Code). 13. Neither the County nor the Commission (or any person related to the County or the Commission) has entered or is expected to enter into any hedging transaction (such as an interest rate swap, cap or collar transaction) with respect to the Monroe County Loan or the Monroe County Portion. 14. There are no other obligations of the County which (A) are being sold at substantially the same time as the Monroe County Loan (within 15 days), (B) sold pursuant to a common plan of financing together with the Monroe County Loan, and (C) will be paid out of substantially the same source of funds (or will have substantially the same claim to be paid out of substantially the same source of funds) as the Monroe County Loan. ' 15. Neither the County nor the Commission is aware of any facts or circumstances that would cause it to question the accuracy of the representations made by the Underwriter in its letter attached as Exhibit A or of the accuracy of the computations performed by the Underwriter. 16. The Commission and the County hereby covenant that so long as the Series 2008A Notes remain outstanding, the moneys on deposit in any fund or account maintained in connection with the Monroe County Loan or the Monroe County Portion will not be used in any manner that would cause the Series 2008A Notes to be "arbitrage bonds" within the meaning of Section 148 of the Code or bonds not described under Section 103(a) of the Code and the applicable regulations promulgated from time to time thereunder. Accordingly, the Commission, the County, and the Trustee shall comply with the guidelines and instructions in the Arbitrage Letter of Instructions from Bond Counsel, dated the date hereof, by which the Commission shall, except as otherwise provided in such Letter of Instructions, payor cause to be paid to the United States an amount equal to the sum of (i) the excess of the aggregate amount earned from the investment of "Gross Proceeds" of the Monroe County Loan from the date of issue over the amount that would have been earned if such amounts had been invested at a yield equal to the yield of the Monroe County Loan, plus (ii) the income or earnings attributable to the excess amount described in (i). The County has agreed in the Loan Agreement to provide the funds necessary to make such rebate. See Exhibit B attached hereto. 5 17. None of the proceeds of the Monroe County Loan will be used (directly or indirectly) to acquire any "nongovernmental output property" as defined in Section 141(d) of the Code or to make or finance loans to any persons. 18. No portion of the proceeds of the Monroe County Loan will be used to finance "output facilities" (as that term is used in Section 141(b)(4) of the Code). 19. Not more than 10% of the proceeds of the Monroe County Loan will be used (directly or indirectly) in a trade or business (or to finance facilities which are used in a trade or business) carried on by any person other than a state or local governmental unit. Not more than 5% of the proceeds of the Monroe County Loan will be used (directly or indirectly) in trade or business (or to finance facilities which are used in a trade or business) carried on by any person other than a state or local governmental unit which private business use is not related to any governmental use or is disproportionate to governmental use, all as described in Section 141(b)(3) of the Code ("Unrelated or Disproportional Use"). For the purpose of this Paragraph, use by a nongovernmental person as a member of the general public shall not be taken into account. 20. Paragraph 19 shall apply only if the payment of 10% or more (5% or more in the case of Unrelated or Disproportional Use) of the principal of or interest on the Monroe County Loan is (under the terms of such Loan or any underlying arrangement) directly or'indirectly secured by any interest in property used or to be used for a private business use or in payments in respect of such property or derived from payments whether or not to the County in respect of property or borrowed money used or to be used for a private business use. 21. The County reasonably expects that the Project will be owned and operated throughout the term of the Monroe County Loan in a manner which complies with the requirements set forth in Paragraph 19 above. The County will not change the ownership or use of all or any portion of the Project in a manner that fails to comply with Paragraph 19 above, unless the it receives an opinion of Bond Counsel that such change of ownership or use will not adversely affect the exclusion of interest on the Series 2008A Notes from gross income for federal income tax purposes. 22. The payment of the principal of and interest on the Monroe County Loan is not and will not be guaranteed directly or indirectly by the federal government within the meaning of Section 149(b) of the Code. 23. This Certificate is, in part, to serve as a gUideline in implementing the requirements of Sections 141 to 150 of the Code. If regulations, rulings, announcements and notices validly promulgated under the Code contain requirements which differ from those outlined here which must be satisfied for the Monroe County Loan and the Series 2008A Notes to be tax-exempt or in order to avoid the imposition of penalties under Section 148 of the Code, 6 Commission and the County shall not be obligated to comply with that requirement. The Commission and the County have been advised to seek the advice of competent counsel with a nationally recognized expertise in matters affecting exclusion of interest on municipal bonds from gross income in fulfilling its obligations under the Code to take all steps as are necessary to maintain the tax-exempt status of the Monroe County Loan and the Series 2008A Notes. 24. To the best of our knowledge, information and belief, the above expectations are reasonable. 2008. IN WITNESS WHEREOF, we have hereunto set our hands on this 24th day of January, FLORIDA RURAL UTILITY FINANCING COMMISSION ~ MONROE COUNTY, FLORIDA By: Clerk of the Circuit Court of Monroe County, Florida and Ex Officio Clerk of the Board of County Commissioners 7 pursuant to the covenants contained in the Indenture and the Loan Agreement, the Commission and the County are obligated to take such steps as are necessary to comply with such requirements. If under those pronouncements, compliance with any of the requirements of this Certificate is not necessary to maintain the exclusion of interest on the Monroe County Loan and the Series 2008A Notes from gross income and alternative minimum taxable income (except to the extent of certain adjustments applicable to corporations) or to avoid the imposition of penalties on the Commission or the County under Section 148 of the Code, the Commission and the County shall not be obligated to comply with that requirement, The Commission and the County have been advised to seek the advice of competent counsel with a nationally recognized expertise in matters affecting exclusion of interest on municipal bonds from gross income in fulfilling its obligations under the Code to take all steps as are necessary to maintain the tax-exempt status of the Monroe County Loan and the Series 2008A Notes. 24. To the best of our knowledge, information and belief, the above expectations are reasonable. 2008. IN WITNESS WHEREOF, we have hereunto set our hands on this 24th day of January, FLORIDA RURAL UTILITY FINANCING COMMISSION By: Chairman MONROE COUNTY, FLORIDA By. r of the rcuit Court of nroe County, Florida and Ex Officio Clerk of the Board of County Commissioners 7 EXHIBIT A January 24, 2008 Florida Rural Utility Financing Commission Tallahassee, Florida Monroe County Key West, Florida Re: $45,920,000 Florida Rural Utility Financing Commission Revenue Notes (Public Projects Construction), Series 2008A ($21,000,000 Monroe County Loan) Ladies and Gentlemen: The undersigned, as the Underwriter in connection with the sale of the above-referenced Series 2008A Notes, hereby represents that: 1. All of the Series 2008A Notes have been the subject of an initial offering to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers), made pursuant to the Note Purchase Agreement between the Florida Rural Utility Financing Commission (the "Commission") and the Underwriter, at prices no higher than, or yields no lower than, those shown on the inside cover of the Official Statement relating to the Series 2008A Notes. To the best of our knowledge, based on our records and other information available to us which we believe to be correct, at least 10% of the Series 2008A Notes of each maturity were sold to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at such prices. For this purpose, Series 2008A Notes bearing interest at different rates shall be treated as separate maturities. We understand that Bond Counsel may rely upon the representations contained in this letter, among other things, in rendering its opinion that interest on the Series 2008A Notes is excluded from gross income for Federal income tax purposes. MORGAN KEEGAN & COMPANY, INC. By: /Z/JL/ Nick Roederer Vice President - A-I Section 8. Survival of Defeasance. Notwithstanding anything in this Letter to the contrary, the obligation of the Commission to remit the Rebate Requirement to the United States Department of the Treasury and to comply with all other requirements contained in this Letter must survive the defeasance or payment of the Series 2008A Notes. Very truly yours, BRYANT MILLER OLIVE P.A. tJ~~ ~ fit. Received and acknowledged: Florida Rural Utility Financing Commission MONROECOUNTY,FLOmDA By: Clerk of the Circuit Court of Monroe County, Florida and Ex Officio Clerk of the Board of County Commissioners Regions Bank, as Trustee By: Name: Title: Dated: January 24,2008 B-1O Section 8. Survival of Defeasance. Notwithstanding anything in this Letter to the contrary, the obligation of the Commission to remit the Rebate Requirement to the United States Department of the Treasury and to comply with all other requirements contained in this Letter must survive the defeasance or payment of the Series 2008A Notes. Very truly yours, BRYANT MILLER OLIVE P.A. Received and acknowledged: Florida Rural Utility Financing Commission By: Chairman MONROE COUNTY, FLORIDA B~ ~~~__ er ;f the ~uit Court of Mo~e County, Florida and Ex Officio Clerk of the Board of County Commissioners Regions Bank, as Trustee By: Name: Title: Dated: January 24,2008 B-lO Section 8. Survival of Defeasance. Notwithstanding anything in this Letter to the contrary, the obligation of the Commission to remit the Rebate Requirement to the United States Department of the Treasury and to comply with all other requirements contained in this Letter must survive the defeasance or payment of the Series 2008A Notes. Very truly yours, BRYANT MILLER OLIVE PA Received and acknowledged: Florida Rural Utility Financing Commission By: Chairman MONROECOUNTY,FLOmDA By: Clerk of the Circuit Court of Monroe County, Florida and Ex Officio Clerk of the Board of County Commissioners Regions Bank, as Trustee BY~ Name: \.) 'w- - . Title:" ~lC~ Dated: January 24,2008 B-lO Appendix I Spendin,: Exceptions to Rebate (a) Generally. All, or certain discrete portions, of an issue are treated as meeting the Rebate Requirement of Section I48(f) of the Code if one or more of the spending exceptions set forth in this Appendix are satisfied. Use of the spending exceptions is not mandatory, except that where an issuer elects to apply the 1-1/2 percent penalty (as described below) the issuer ~ust apply that penalty to the Construction Issue. An issuer may apply the Rebate Requirement to an issue that otherwise satisfies a spending exception. Special definitions relating to the spending exceptions are contained in section (h) of this Appendix. Where several obligations that otherwise constitute a single issue are used to finance two or more separate governmental purposes, the issue constitutes a "multipurpose issue" and the bonds, as well as their respective proceeds, allocated to each separate purpose may be treated as separate issues for purposes of the spending exceptions. In allocating an issue among its several separate governmental purposes, "common costs" are generally not treated as separate governmental purposes and must be allocated ratably among the discrete separate purposes unless some other allocation method more accurately reflects the extent to which any particular separate discrete purpose enjoys the economic benefit (or bears the. economic burden) of the certain common costs (e.g., a newly funded reserve for a parity issue that is partially new money and partially a refunding for savings on prior bonds). Separate purposes include refunding a separate prior issue, financing a separate Purpose Investment (e.g., a separate loan), financing a Construction Issue, and any clearly discrete governmental purpose reasonably expected to be financed by the issue. In addition, as a general rule, all integrated or functionally related capital projects qualifying for the same initial temporary period (e.g., 3 years) are treated as having a single governmental purpose. Finally, separate purposes may be combined and treated as a single purpose if the proceeds are eligible for the same initial temporary period (e.g., advance refundings of several separate prior issues could be combined, or several non-integrated and functionally unrelated capital projects such as airport runway improvements and a water distribution system). The spending exceptions described in this Appendix are applied separately to each separate issue component of a multipurpose issue unless otherwise specifically noted. (b) Six-Month Exception. An issue is treated as meeting the Rebate Requirement under this exception if (i) the gross proceeds of the issue are allocated to expenditures for the governmental purposes of the issue within the six-month period beginning on the issue date (the "six-month spending period") and (ii) the Rebate Requirement is met for amounts not required to be spent within the six-month spending period (excluding earnings on a bona fide debt service fund). For purposes of the six-month exception, "gross proceeds" means Gross I-I Proceeds other than amounts (i) in a bona fide debt service fund, (ii) in a reasonably required reserve or replacement fund, (iii) that, as of the issue date, are not reasonably expected to be Gross Proceeds but that become Gross Proceeds after the end of the six-month spending period, (iv) that represent Sale Proceeds or Investment Proceeds derived from payments under any Purpose Investment of the issue and (v) that represent repayments of grants (as defined in Treasury Regulation Section l.l48-6(d)(4)) financed by the issue. In the case of an issue no bond of which is a private activity bond (other than a qualified 50l(c)(3) bond) or a tax or revenue anticipation bond, the six-month spending period is extended for an additional six months for the portion of the proceeds of the issue which are not expended within the six- month spending period if such portion does not exceed the lesser of five percent of the P~oceeds of the issue or $100,000. (c) l8-Month Exception. An issue is treated as meeting the Rebate Requirement under this exception if all of the following requirements are satisfied: (i) the gross proceeds are allocated to expenditures for a governmental purpose of the issue in accordance with the following schedule (the "18-month expenditure schedule") measured from the issue date: (A) at least 15 percent within six months, (B) at least 60 percent within 12 months and (C) 100 percent within 18 months; (ii) the Rebate Requirement is met for all amounts not required to be spent in accordance with the l8-month expenditure schedule (other than earnings on a bona fide debt service fund); and (iii) all of the gross proceeds of the issue qualify for the initial temporary period under Treasury Regulation Section l.l48-2(e)(2). For purposes of the l8-month exception, "gross proceeds" means Gross Proceeds other than amounts (i) in a bona fide debt service fund, (ii) in a reasonably required reserve or replacement fund, (iii) that, as of the issue date, are not reasonably expected to be Gross Proceeds but that become Gross Proceeds after the end of the l8-month expenditure schedule, (iv) that represent Sale Proceeds or Investment Proceeds derived from payments under any Purpose Investment of the issue and (v) that represent repayments of grants (as defined in Treasury Regulation Section 1.l48-6(d)(4)) financed by the issue. In addition, for purposes of determining compliance with the first two spending periods, the investment proceeds included in gross proceeds are based on the issuer's reasonable expectations as of the issue date rather than the actual Investment Proceeds; for the third, final period, actual Investment Proceeds earned to date are used in place of the reasonably expected earnings. An issue does not fail to satisfy the spending requirement for the third spending period above as a result of a Reasonable Retainage if the Reasonable Retainage is allocated to expenditures within 30 months of the issue date. The l8-month exception does not apply to an issue any portion of which is treated as meeting the Rebate Requirement as a result of satisfying the two-year exception. 1-2 (d) Two-Year Exception. A Construction Issue is treated as meeting the Rebate Requirement for Available Construction Proceeds under this exception if those proceeds are allocated to expenditures for governmental purposes of the issue in accordance with the following schedule (the "two-year expenditure schedule"), measured from the issue date: (i) at least 1O percent within six months; (ii) at least 45 percent within one year; (iii) at least 75 percent within 18 months; and (iv) 100 percent within two years. An issue does not fail to satisfy the spending requirement for the fourth spending period above as a result of unspent amounts for Reasonable Retainage if those amounts are allocated to expenditures within three years of the issue date. (e) Expenditures for Governmental Purposes of the Issue. For purposes of the spending exceptions, expenditures for the governmental purposes of an issue include payments for interest, but not principal, on the issue and for principal or interest on another issue of obligations. The preceding sentence does not apply for purposes of the I8-'1"'onth and two-year exceptions if those payments cause the issue to be a refunding issue. . (f) De Minimis Rule. Any failure to satisfy the final spending requirement of the I8-month exception or the two-year exception is disregarded if the issuer exercises due diligence to complete the project financed and the amount of the failure does not exceed the lesser of three percent of the issue price of the issue or $250,000. (g) to make one exception: Elections Applicable to the Two-Year Exception. An issuer may elect separately or more of the following elections with respect to the two-year spending (1) Earnings on Reasonably Required Reserve or Replacement Fund. An issuer may elect on or before the issue date to exclude from Available Construction Proceeds the earnings on any reasonably required reserve or replacement fund. If the election is made, the Rebate Requirement applies to the excluded amounts from the issue date. (2) Actual Facts. For the provisions relating to the two-year exception that apply based on the issuer's reasonable expectations, an issuer may elect on or before the issue date to apply all of those provisions based on actual facts. This election does not apply for purposes of determining whether an issue is a Construction Issue and if the 1-1/2 percent penalty election is made. 1-3 (3) Separate Issue. For purposes of the two-year exception, if any proceeds of any issue are to be used for Construction Expenditures, the issuer may elect on or before the issue date to treat the portion of the issue that is not a refunding issue as two, and only two, separate issues, if (i) one of the separate issues is a Construction Issue, (ii) the issuer reasonably expects, as of the issue date, that such Construction Issue will finance alJ of the Construction Expenditures to be financed by the issue and (iii) the issuer makes an election to apportion the issue in which it identifies the amount of the issue price of the issue alJocable to the Construction Issue. (4) Penalty in Lieu of Rebate. An issuer of a Construction Issue may i;revocably elect on or before the issue date to pay a penalty (the "1-1/2 percent penalty") to the United States in lieu of the obligation to pay the rebate amount on Available Construction Proceeds upon failure to satisfy the spending requirements of the two-year expenditure schedule. The 1-1/2 percent penalty is calculated separately for each spending period, including each semiannual period after the end of the fourth spending period, and is equal to 1.5 percent times the underexpended proceeds as of the end of the spending period. For each spending period, underexpended proceeds equal the amount of Available Construction Proceeds required to be spent by the end of the spending period, less the amount actualJy alJocated to expenditures for the governmental purposes of the issue by that date. The 1-1/2 percent penalty must be paid to the United States no later than 90 days after the end of the spending period to which it relates. The 1-1/2 percent penalty continues to apply at the end of each spending period and each semiannual period thereafter until the earliest of the 'folJowing: (i) the termination of the penalty under Treasury Regulation Section 1.148-7(1), (ii) the expenditure of alJ of the Available Construction Proceeds or (iii) the last stated final maturity date of bonds that are part of the issue and any bonds that refund those bonds. If an issue meets the exception for Reasonable Retainage except that alJ retainage is not spent within three years of the issue date, the issuer must pay the 1-1/2 percent penalty to the United States for any Reasonable Retainage that was not so spent as of the close of the three-year period and each later spending period. 1-4 (h) Special Definitions Relating to Spendinl( Expenditures. (1) Available Construction Proceeds shall mean, with respect to an issue, the amount equal to the sum of the issue price of the issue, earnings on such issue price, earnings on amounts in any reasonably required reserve or replacement fund not funded from the issue and earnings on all of the foregoing earnings, less the amount of such issue price in any reasonably required reserve or replacement fund and less the issuance costs financed by the issue. For purposes of this definition, earnings include earnings on any tax-exempt bond. For the first three spending periods of the two-year expenditure schedule described in Treasury Regulation Section 1.148-7(e), Available Construction Proceeds include the amount of future earnings that the issuer reasonably expected as of the issue date. For the fourth spending period described in Treasury Regulation Section 1.148-7(e), Available Construction Proceeds include the actual earnings received. Earnings on any reasonably required reserve or replacement fund are Available Construction Proceeds only to the extent that those earnings accrue before the earlier of (i) the date construction is substantially completed or (Ii) the date that is two years after the issue date. For this purpose, construction may be treated as substantially completed when the issuer abandons construction or when at least 90 percent of the total costs of the construction that the issuer reasonably expects as of such date will be financed with proceeds of the issue have been allocated to expenditures. If only a portion of the construction is abandoned, the date of substantial completion is the date the non- abandoned portion of the construction is substantially completed. (2) Construction Expenditures shall mean capital expenditures (as defined in Treasury Regulation Section 1.150-1) that are allocable to the cost of Real Property or Constructed Personal Property. Construction Expenditures do not include expenditures for acquisitions of interest in land or other existing Real Property. (3) Construction Issue shall mean any issue that is not a refunding issue if (i) the issuer reasonably expects, as of the issue date, that at least 75 percent of the Available Construction Proceeds of the issue will be allocated to Construction Expenditures for property owned by a governmental unit or a 501(c)(3) organization and (ii) any private activity bonds that are part of the issue are qualified 501(c)(3) bonds or private activity bonds issued to financed property to be owned by a governmental unit or a 501( c)(3) organization. (4) Constructed Personal Property shall mean Tangible Personal Property or Specially Developed Computer Software if (i) a substantial portion of the property is completed more than six months after the earlier of the date construction or rehabilitation commenced and the date the issuer entered into an acquisition contract; (ii) based on the reasonable expectations of the issuer, if any, or representations of the person constructing the property, with the exercise of due diligence, completion of construction or rehabilitation (and delivery to the issuer) could not have occurred within that six-month period; and (iii) if the issuer itself 1-5 builds or rehabilitates the property, not more than 75 percent of the capitalizable cost is attributable to property acquired by the issuer. (5) Real Property shall mean land and improvements to land, such as buildings or other inherently permanent structures, including interests in real property. For example, Real Property includes wiring in a building, plumbing systems, central heating or air- conditioning systems, pipes or ducts, elevators, escalators installed in a building, paved parking areas, roads, wharves and docks, bridges, and sewage lines. (6) Reasonable Retainage shall mean an amount, not to exceed five percent of (i) Available Construction Proceeds as of the end of the two-year expenditure schedule (in the case of the two-year exception to the Rebate Requirement) or (il) Net Sale Proceeds as of the end of the I8-month expenditure schedule (in the case of the I8-month exception to the Rebate Requirement), that is retained for reasonable business purposes relating to the property financed with the issue. For example, a Reasonable Retainage may include a retention to ensure or promote compliance with a construction contract in circumstances in which the retained amount is not yet payable, or in which the issuer reasonably determines that a dispute exists regarding completion or payment. (7) Specially Developed Computer Software shall mean any programs or routines used to cause a computer to perform a desired task or set of tasks, and the documentation required to describe and maintain those programs, provided that the software is specially developed and is functionally related and subordinate to Real Property or other Constructed Personal Property. (8) Tangible Personal Property shall mean any tangible property other than Real Property, including interests in tangible personal property. For example, Tangible Personal Property includes machinery that is not a structural component of a building, subway cars, fire trucks, automobiles, office equipment, testing equipment, and furnishings. 1-6 (i) Special Rules Relatin~ to Refundings. (1) Transferred Proceeds. In the event that a prior issue that might otherwise qualify for one of the spending exceptions is refunded, then for purposes of applying the spending exceptions to the prior issue, proceeds of the prior issue that become transferred proceeds of the refunding issue continue to be treated as unspent proceeds of the prior issue; if such unspent proceeds satisfy the requirements of one of the spending exceptions then they are not subject to rebate either as proceeds of the prior issue or of the refunding issue. Generally, the only spending exception applicable to refunding issues is the six-month exception. In applying the six-month exception to a refunding of a prior issue, only transferred proceeds of the refunding issue from a taxable prior issue and other amounts excluded from the definition of gross proceeds of the prior issue under the special definition of gross proceeds contained in section (b) above are treated as gross proceeds of the refunding issue and so are subject to the six-month exception applicable to the refunding issue. (2) Series of Refundings. In the event that an issuer undertakes a series of refundings for a principal purpose of exploiting the difference between taxable and tax-exempt interest rates, the six-month spending exception is measured for all issues in the series commencing on the date the first bond of the series is issued. (j) Elections Applicable to Pool Bonds. An issuer of a pooled financing issue can elect to apply the spending exceptions separately to each loan from the date such lo,m is made or, if earlier, on the date one year after the date the pool bonds are issued. In the event this election is made, no spending exceptions are available and the normal Rebate Requirement applies to Gross Proceeds prior to the date on which the applicable spending periods begin. In the event this election is made, the issuer may also elect to make all elections applicable to the two-year spending exception, described in section (g) above, separately for each loan; any such elections that must ordinarily be made prior to the issue date must then be made by the issuer before the earlier of the date the loan is made or one year after the issue date. 1-7 Form 8038-G Information Return for Tax-Exempt Governmental Obligations ... Under Internal Revenue Code section 149(e) .... See separate Instructions. Caution: If the issue price is under $100,000, use Form B038-GC. If Amended Return, check here ~ 0 2 Issuer's employer identification number 59 : (Rev. November 2000) Department of the Treasury Intemal Revenue Service OMS No. 1545-0720 Re ortin Authorit 1 Issuer's name Monroe Count ,Florida Number and street (or P.O. box if mail is not delivered to street address) 1100 Simonton Street 4 Report number 301 3 Room/suite 2-213 5 City, town, or post office, state, and ZIP code 6 Date of issue Key West, Florida 33040 Janaury 24, 2008 7 Name of issue 8 CUSIP number Florida Rural Utility Financing Commission Revenue Notes, Series 2008A 341141 AU 9 Name and title of officer or legal representative whom the IRS may call for more information 10 Telephone number of officer or legal representative JoLinda Herrin ,Bond Counsel I 305 ) 374-7349 T e of Issue (check a licable box(es) and enter the issue rice) See instructions and attach schedule o Education 11 o Health and hospital 12 o Transportation . . 13 o Public safety. . . 14 o Environment (including sewage bonds) . 15 o Housing . . . . 16 ill Utilities . . . . . . . . . . . 17 21,000,000 o Other. Describe ~ 18 If obligations are TANs or RANs. check box ~ 0 If obligations are BANs. check box ~ 0 If obli ations are in the form of a lease or installment sale, check box , . . . . . ... D Oescri tion of Obli ations. Com lete for the entire issue for which this form is bein (e) Stated redemption price at maturity (d) Weighted average maturity (b) Issue price (e) Yield 22 23 24 25 26 27 28 29 30 01/01/2011 $ 21 000 000 $ 21000 000 2.936 Uses of Proceeds of Bond Issue includin underwriters' discount Proceeds used for accrued interest . . . . , , . . , . . . Issue price of entire issue (enter amount from line 21, column (b)). , Proceeds used for bond issuance costs (including underwriters' discount) 24 Proceeds used for credit enhancement. . . . . . . . .. 25 Proceeds allocated to reasonably required reserve or replacement fund 26 Proceeds used to currently refund prior issues 27 Proceeds used to advance refund prior issues . . . . , .. 28 Total (add lines 24 through 28). . . . . . . . . . . . . . . . . . Nonrefundin roceeds of the issue subtract line 29 from line 23 and enter amount here Oescri tion of Refunded Bonds Com lete this art onl for refundin 21,000,000 3.1460 % ears -0- 21000000 -0- -0- -0- -0- -0- bonds. .~ ~ ~ 31 32 33 34 Enter the remaining weighted average maturity of the bonds to be currently refunded Enter the remaining weighted average maturity of the bonds to be advance refunded Enter the last date on which the refunded bonds will be called. . . . . . . . Enter the date(s) the refunded bonds were issued ~ N/ A Miscellaneous Enter the amount of the state volume cap allocated to the issue under section 141 (b)(5) Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (see instructions) Enter the final maturity date of the guaranteed investment contract ~ 02/0] 120 II Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units 37a If this issu~l.s ~ loan macj~ JrQQ1 the, proce~ds Q.f anot~er .tax-exempt issue, check box ... ~ and enter the name of the issuer ~ 1" onda Rural UttlIty FInanCIng Commlsslil; and the date of the issue ~ 01124/?,()OR If the issuer has designated the issue under section 265(b)(3)(B)(i)(lll) (small issuer exception), check box ~ 0 If the issuer has elected to pay a penalty in' f arbitrage rebate, check box . . . . . . . . . ~ 0 If the issuer has identified a hed e, che 0 .................... ~ 0 Under penalties of perjury, I declare t I hav examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, a camp e. N/ A years N/A N/A years N/A 35 36a b 37 b 38 39 40 Sign Here 1/24/2008 II It. Charles "Sonny" McCoy, Mayor , Type or print name and title Cat. No. 63773S Form 8038.G (Rev. 11-2000) Date ge 2 of the Instructions. <D Suzanne A. Hutton, County Attorney" Robert B. Shillinger, Chief Assistant County Attorney ** Pedro J. Mercado, Assistant County Attorney Susan M. Grimsley, Assistant County Attorney ** Natileene W. Cassel, Assistant County Attorney Cynthia L. Hall, Assistant County Attorney Christine Limbert-Barrows, Assistant County Attorney (~".---- BOARD OF COUNTY COMMISSIONERS Mayor, Charles "Sonny" McCoy, District 3 Mayor Pro Tem Mario Oi Gennaro, District 4 Dixie M. Spehar, District 1 George Neugent, District 2 Sylvia J. Murphy, District 5 OK~~ErY ~o9,~~~E (305) 294-4641 e Office of the County Attorney 1111 12th Street, Suite 408 Key West, FL 33040 (305) 292-3470 - Phone (305) 292-3516 - Fax ** Board Certified in City, County & Local Govt. Law January 24, 2008 Florida Rural Utility Financing Commission Tallahassee, Florida Loan Agreement by and between Florida Rural Utility Financing Commission and Monroe County, Florida dated as of January 24, 2008 Ladies and Gentlemen: The undersigned is an attorney at law duly admitted to the practice of law in the State of Florida and is legal counsel to Monroe County, Florida (the "Governmental Unit"). I am familiar with the organization and existence of the Governmental Unit and the laws of the State of Florida applicable thereto. Additionally, I am familiar with the project (the "Project") with respect to which the Loan Agreement (the "Loan Agreement") by and between the Florida Rural Utility Financing Commission ("Commission") and the Governmental Unit is being authorized, executed and delivered and the Loan Note (the "Loan Note") from the Governmental Unit to the Commission is being authorized, and which may be executed and delivered. I have reviewed the form of Loan Agreement, the Loan Note, the resolution of the Governmental Unit authorizing the execution and delivery of said Loan Agreement and Loan Note (the "Resolution"). Based upon my review I am of the opinion that: (1) The Governmental Unit is a county duly organized and existing under the laws of the State of Florida validly existing under the Constitution and statutes of the State of Florida. (2) The Resolution has been duly authorized and has not been modified or amended as of the date hereof. (3) The Loan Agreement and the Loan Note have been duly executed and delivered by the Governmental Unit and are valid and binding obligations of the Governmental Unit enforceable in accordance with their terms, except to the extent that the enforceability thereof may be limited by equitable principles and by bankruptcy, reorganization, moratorium, insolvency or similar laws heretofore or hereafter enacted relating to or affecting the enforcement of creditors rights or remedies generally. (4) The Governmental Unit has all necessary power and authority to enter into, perform and consummate all transactions contemplated by the Loan Agreement and the Loan Note, and to execute and deliver the documents and instruments to be executed and delivered by it in connection with the construction of the Project. (5) The execution and delivery of the Loan Agreement and the Loan Note and the performance by the Governmental Unit of its obligations thereunder does not and will not conflict with, violate or constitute a default under any court or administrative order, decree or ruling, or any law, statute, ordinance or regulation, or any agreement, indenture, mortgage, lease, note or other obligation or instrument, binding upon the Governmental Unit, or any of its properties or assets. The Governmental Unit has obtained each and every authorization, consent, permit, approval or license of, or filing or registration with, any court or governmental department, commission, board, bureau, unit or instrumentality, or any specifically granted exemption from any of the foregoing, that is necessary to the valid execution, delivery or performance by the Governmental Unit of the Loan Agreement and the Loan Note. (6) To the best of my knowledge after due inquiry there is no action, suit, proceedings or investigation at law or in equity before any court, public board or body pending or threatened against, affecting or questioning (i) the valid existence of the Governmental Unit, (ii) the right or title of the members and officers of the Governmental Unit to their respective positions, (iii) the authorization, execution, delivery or enforceability of the Loan Agreement, the Loan Note or the application of any monies or security therefor, (iv) the construction of the Project, or (v) that would have a material adverse impact on the ability of the Governmental Unit to perform its obligations under the Loan Agreement or the Loan Note. (7) None of the proceedings taken by the Governmental Unit for the authorization, execution or delivery of the Loan Agreement or the Loan Note has or have been repealed, rescinded, or revoked. (8) All proceedings and actions of the Governmental Unit with respect to which the Loan Agreement or the Loan Note is to be delivered were had or taken at meetings properly convened and held in substantial compliance with the applicable provisions of the laws of the State of Florida. ~~trulY~ ~J~tonr County Attorney Monroe County 2 Bryant · Miller · Olive ATTORNEYS AT LAW January 24, 2008 Florida Rural Utility Financing Commission Tallahassee, Florida Re: Loan Agreement by and between Florida Rural Utility Financing Commission and Monroe County, Florida dated as of January 24, 2008 Ladies and Gentlemen: We hereby certify that we have reviewed and are familiar with the proceedings of the County Commission (the "Governing Body") of Monroe County, Florida (the "Governmental Unit"), in connection with the authorization, execution and delivery of a Loan Agreement between the Florida Rural Utility Financing Commission, (the "Commission") and the Governmental Unit, dated January 24, 2008 (the "Loan Agreement") and the form of the Loan Note from the Governmental Unit to the Commission (the "Loan Note") evidencing the loan in the amount not to exceed $21,000,000 being issued by the Commission to the Governmental Unit pursuant to the Loan Agreement and the Loan Note to provide interim financing (the "Loan") for the construction of a project (the "Project") consisting of improvements to the wastewater system located in Monroe County, Florida (the "System"). Our examination of such proceedings includes the proceedings of the Governing Body held on December 19, 2007, adopting a resolution authorizing the Loan Agreement (the "Resolution") and the commitment letter for permanent financing from the Department of Environmental Protection's, Bureau of Water Facilities Funding (the "Permanent Lender"). Based upon our examination of the aforesaid proceedings, we are of the opinion that the Governmental Unit has a valid commitment with the Permanent Lender, in which the Governmental Unit will receive Permanent Financing from the Permanent Lender. Based upon our review of such proceedings and applicable laws, an in reliance on the opinion of the County Attorney of even date hereof, it is our opinion that the One Biscayne Tower. 2 South Biscayne Boulevard. Suite 1480 . Miami, Florida 33131 . TEL 305.374.7349. FAX 305.374.0895. www.bmoJaw.com ATLANTA. JACKSONVILLE. MIAMI. ORLANDO ST. PETERSBURG. TALLAHASSEE. TAMPA WASHINGTON, D.C. Loan Agreement has been validly authorized, executed and delivered by and on behalf of the Governmental Unit. The rights and remedies of the Commission under the Loan Agreement may be limited by any applicable bankruptcy, insolvency, reorganization, or similar laws, or judicial decisions affecting the rights of creditors generally, and by the application of equitable principles where equitable remedies are sought. This opinion letter is issued to, and solely for the benefit and reliance of, the Commission and may not be relied upon by any persons other than the Commission. Respectfully Submitted, BRYANT MILLER OLIVE PA fi~ ~ ~ //1. INCUMBENCY CERTIFICATE The undersigned Clerk of the Circuit Court of Monroe County, Florida and Ex Officio Clerk of the Board of County Commissioners (the "County") does hereby certify that the individuals listed below are qualified and acting officers of the County as set forth below opposite their respective names and the signatures appearing below opposite the name of each such officer is a true specimen of the genuine signature of such officer and such individuals have the authority to provide written or oral directions, confirmations and execution of documents to be delivered to, or upon the request of, Regions Bank, as trustee, paying agent and registrar under the Trust Indenture dated as of January 1, 2008. Name Title (SO-- Charles "Sonny" McCoy Mayor, Board of County Commissioners Mario Di Gennaro MayorPro Tem/ Commissione George Neugent Commissioner Dixie Spehar Commissioner Sylvia Murphy Commissioner Danny 1. KoIhage Clerk of the Circuit Coutt 0 Monroe County, Florida and Ex Officio Clerk of the Board of County Commissioners IN WITNESS HEREOF, the undersigned has duly executed and delivered this certificate as of the 24th day of January, 2008. B~ tt04~ Danny . oIhage Clerk of the Circuit Court of Monroe County, Florida and Ex Officio Clerk of the Board of County Commissioners No. 32(i) ---.-..-........--..-.."..-......