Resolution 001-2005
INDUSTRIAL DEVELOPMENT
AUTHORITY
RESOLUTION NO, 001-2005
A RESOLUTION BY THE MONROE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY, PROVIDING FOR THE
ISSUANCE BY THE AUTHORITY OF NOT EXCEEDING
$2,965,000 AGGREGATE PRINCIPAL AMOUNT OF
INDUSTRIAL DEVELOPMENT REVENUE BONDS (NORTH
KEY LARGO UTILITY CORP. PROJECT), SERIES 2005 TO BE
EXCHANGED FOR A LIKE PRINCIPAL AMOUNT OF THE
AUTHORITY'S OUTSTANDING INDUSTRIAL DEVELOPMENT
REVENUE BONDS (NORTH KEY LARGO UTILITY CORP.
PROJECT), SERIES 1995 PURSUANT TO AN OFFER TO
EXCHANGE; PROVIDING FOR THE RIGHTS OF THE OWNERS
OF THE SERIES 2005 BONDS AND FOR THE PAYMENT
THEREOF; MAKING CERTAIN OTHER COVENANTS AND
AGREEMENTS IN CONNECTION WITH THE ISSUANCE OF
THE SERIES 2005 BONDS; AUTHORIZING THE EXECUTION
AND DELIVERY OF A BOND INDENTURE AND A LOAN
AGREEMENT PERTAINING TO THE SERIES 2005 BONDS;
AUTHORIZING THE EXECUTION AND DELIVERY OF THE
SERIES 2005 BONDS; AUTHORIZING ALL OTHER RELATED
INSTRUMENTS AND CERTIFICATES; PROVIDING FOR THE
REDEMPTION OF SERIES 1995 BONDS NOT EXCHANGED
FOR SERIES 2005 BONDS; PROVIDING FOR OTHER
MISCELLANEOUS MATTERS IN CONNECTION THEREWITH;
AND PROVIDING FOR AN EFFECTIVE DATE.
BE IT RESOLVED BY THE MONROE COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY:
SECTION 1. AUTHORITY FOR THIS RESOLUTION, This Resolution is adopted
pursuant to the provisions of the Act.
SECTION 2, DEFINITIONS, Unless the context otherwise requires, the terms used in this
Resolution shall have the meanings specified in this section. Words importing the singular shall
include the plural, words importing the plural shall include the singular, and words importing
persons shall include corporations and other entities or associations.
"Act" means the Florida Industrial Development Financing Act, Parts II and III, Chapter 159,
Florida Statutes, and other applicable provisions of law.
"Authority" means the Monroe County Industrial Development Authority, a public body
corporate and politic and an industrial development authority organized and existing under the
Constitution and laws of the State including, particularly, the Act, its successors and assigns.
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"Bank" means Wachovia Bank, National Association, a national banking association, its
successors and assigns, as bond trustee.
"Bond Counsel" means a nationally recognized bond counsel acceptable to the Company
and the Authority.
"Bond Indenture" means the Bond Trust Indenture to be executed by and between the
Authority and the Bank substantially in the form attached hereto as Appendix A and incorporated
herein by reference.
"Chairman" shall mean the Chairman ofthe Authority, or such other person or persons who
are authorized to act on his or her behalf.
"Company" means North Key Largo Utility Corp., a Florida not-for-profit corporation, and
any successor, surviving, resulting or transferee entity, as provided in the Loan Agreement.
"County" means Monroe County, Florida, a political subdivision ofthe State.
"Loan Agreement" means the Loan Agreement to be executed by and between the
Authority and the Company substantially in the form attached hereto as Appendix Band
incorporated herein by reference.
"Offer to Exchange" means the Offer to Exchange the outstanding Prior 1995 Bonds for a
like principal amount of Series 2005 Bonds substantially in the form attached hereto as Appendix C
and incorporated herein by reference.
"Prior 1995 Bonds" means the Monroe County Industrial Development Authority Industrial
Development Revenue Bonds (North Key Largo Utility Corp. Project), Series 1995, originally issued
in the aggregate principal amount of$3,400,000 and outstanding on the date hereof in the amount of
$2,965,000, to pay that certain loan from the Authority to the Company pursuant to a loan agreement
and mortgage, dated as of March 9, 1995, between the Company and the Authority.
"Private Placement Memorandum" means the Private Placement Memorandum to be
executed by the Company and delivered to owners ofthe Prior 1995 Bonds describing the Offer to
Exchange and the Series 2005 Bonds, substantially in the form attached hereto as Appendix D and
incorporated herein by reference.
"Secretary" means the ex -officio secretary to the Authority, or such other person or persons
who are authorized to act on his or her behalf
"Series 2005 Bonds" means the Authority's Industrial Development Revenue Bonds (North
Key Largo Utility Corp. Project), Series 2005, to be issued in exchange for a like principal amount of
Prior 1995 Bonds pursuant to the Offer to Exchange, the Bond Indenture and Loan Agreement in
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accordance with the terms hereof and thereof in an aggregate principal amount of not exceeding
$2,965,000.
"State" means the State of Florida.
"System" means the complete wastewater system currently owned and operated by the
Company, including all real property and all facilities located thereon and all future acquisitions,
located in the County, a portion of which was acquired, constructed and equipped with proceeds of
the Prior 1995 Bonds.
SECTION 3, FINDINGS, It is hereby ascertained, determined and declared as follows:
A. The Authority is a public body corporate and politic, a public instrumentality and an
industrial development authority, and is duly authorized and empowered by the Act to finance or
refinance the acquisition, construction, reconstruction, improvement, rehabilitation, renovation,
expansion and enlargement, or additions to, furnishing and equipping of any capital projects,
including any "projects" described in the Act including land, rights in land, buildings and other
structures, machinery, equipment, appurtenances and facilities incidental thereto, and other
improvements necessary or convenient therefor.
B. The Company previously incurred the Prior 1995 Bonds to finance a portion of the
costs of acquiring, constructing and equipping portions ofthe System, which constitute "facilities for
the furnishing of sewerage" within the meaning of the Act. The Company has requested that the
Authority issue the Series 2005 Bonds in order to allow the Company to refinance the Prior 1995
Bonds to achieve debt service savings and to change certain covenants regarding additional
indebtedness, all as set forth in the Loan Agreement, the Bond Indenture, that certain Master
Indenture by and between the Company and the Bank, as master trustee, and the Private Placement
Memorandum.
C. The refinancing of the Prior 1995 Bonds by the Authority through the issuance ofthe
Series 2005 Bonds pursuant to the Act, will promote and preserve the economic development and
health, welfare and safety ofthe citizens of Monroe County, will provide and maintain the residents
of the County with wastewater treatment facilities, will promote the general economic structure of
the County, and will otherwise serve the public purposes of the Act.
D. Upon consideration ofthe documents described herein and the information presented
to the Authority at or prior to the adoption of this Resolution, the Authority has made and does
hereby make the following findings and determinations:
(i) The System consists ofthe complete wastewater system currently owned and
operated by the Company, including all real property and all wastewater facilities located
thereon and hereafter acquired. The System is located in the County and is owned and
operated by the Company in its business of providing wastewater treatment in the County.
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(ii) The Company has shown that the System enhances and improves the health,
safety and welfare of the County and the State, and it serves other predominantly public
purposes as set forth in the Act. It is desirable and will further the public purposes of the
Act, and it will most effectively serve the purposes ofthe Act for the Authority to issue the
Series 2005 Bonds for the purpose of providing funds to refinance the Prior 1995 Bonds
pursuant to the Offer to Exchange, all as provided in the Offer to Exchange, the Bond
Indenture, the Loan Agreement and the Private Placement Memorandum, which contain such
provisions as are necessary to effectuate the purposes of the Act.
(iii) The System is appropriate to the needs and circumstances of, and makes a
significant contribution to, the economic growth of the County; provides wastewater
treatment and gainful employment, and serves a public purpose by advancing the economic
prosperity, the public health, or the general welfare of the State and the County and their
people as stated in the Act.
(iv) Based solely on representations made by the Company and information
provided to the Authority by the Company in compliance with the criteria established by the
Act, the Company is fully capable and willing (a) to fulfill its obligations under the Loan
Agreement and any other agreements to be made in connection with the issuance of the
Series 2005 Bonds and the use of the Series 2005 Bond proceeds for refinancing the Prior
1995 Bonds, including the obligation to make loan payments or other payments in amounts
sufficient in the aggregate to pay all ofthe interest, principal, and redemption premiums, if
any, on the Series 2005 Bonds, in the amounts and at the times required, (b) to operate, repair
and maintain at its own expense the System and all other facilities of the Company, and (c) to
serve the purposes ofthe Act and such other responsibilities as may be imposed under such
agreements.
(v) The County and other local agencies have coped satisfactorily with the impact
of the System and provide, or cause to be provided when needed, the public facilities,
including utilities and public services, that are necessary for the operation, repair and
maintenance of the System.
(vi) Adequate provision is made under the Loan Agreement for the operation,
repair and maintenance ofthe System at the expense ofthe Company, for the payment ofthe
principal of, premium, if any, and interest on the Series 2005 Bonds, when and as the same
become due, and payment by the Company of all other costs in connection with the
refinancing and the operation, maintenance and administration of the System.
(vii) The costs of the refinancing whether paid from the proceeds of the Series
2005 Bonds or paid by the Company shall be "costs" of a "project" within the meaning of the
Act.
(viii) The principal of, premium, if any, and interest on the Series 2005 Bonds and
all other pecuniary obligations under the Loan Agreement or otherwise in connection with
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the issuance of the Series 2005 Bonds shall be payable solely from the loan payments and
other revenues and proceeds received under the Loan Agreement or otherwise from the
operation, sale, lease or other disposition ofthe System and other operations of the Company,
including proceeds from insurance condemnation awards and proceeds of any foreclosure or
other realization upon the liens or security interests under the Loan Agreement and all other
related security documents, the proceeds of the Series 2005 Bonds and income from the
temporary investment ofthe proceeds ofthe Series 2005 Bonds or of such other revenues and
proceeds, as pledged for such payment under the Loan Agreement.
(ix) Neither the faith and credit nor the taxing power ofthe County, the State, the
Authority or of any political subdivision or agency thereof is pledged to the payment of the
Series 2005 Bonds and neither the County, the State, the Authority nor any political
subdivision or agency thereof shall ever be required or obligated to levy ad valorem taxes on
any property within their territorial limits to pay the principal of, premium, if any, or interest
on such Series 2005 Bonds or to pay the same from any funds thereof other than such
revenues, receipts and proceeds so pledged, and the Series 2005 Bonds shall not constitute a
lien upon any property owned by the County, the Authority or the State or any political
subdivision or agency thereof, other than the Authority's interest in the Loan Agreement and
the property rights, receipts, revenues and proceeds pledged therefor under and as provided in
the Loan Agreement and any other agreements securing the Series 2005 Bonds.
(x) All requirements precedent to the adoption of this Resolution, of the
Constitution and other laws of the State of Florida, including the Act, have been complied
with.
SECTION 4, AUTHORIZATION OF OFFER OF EXCHANGE OF SERIES 2005
BONDS FOR PRIOR 1995 BONDS, AUTHORIZATION AND DESCRIPTION OF THE
SERIES 2005 BONDS. The Authority hereby authorizes the issuance of a series of bonds to be
known as the "Monroe County Industrial Development Authority Industrial Development Revenue
Bonds (North Key Largo Utility Corp. Project), Series 2005" in the initial aggregate principal amount
of not exceeding $2,965,000 for the principal purpose of providing moneys to refinance the Prior
1995 Bonds by the exchange of said Series 2005 Bonds for a like amount of Prior 1995 Bonds
pursuant to the Offer to Exchange, the form of which is attached hereto as Appendix D. The Offer to
Exchange is hereby authorized and approved. The Series 2005 Bonds shall be issued only in
accordance with the provisions hereof and of the Offer to Exchange, the Bond Indenture, the Loan
Agreement and the Private Placement Memorandum and all provisions hereof, the Offer to
Exchange, the Bond Indenture, the Loan Agreement and the Private Placement Memorandum shall
be applicable thereto. The Series 2005 Bonds shall be issued as set forth in the Bond Indenture and
shall be dated, bear interest payable on the dates at the rate of interest and be subject to redemption,
all as set forth in the Bond Indenture.
SECTION 5, AUTHORIZATION OF EXECUTION AND DELIVERY OF THE
BOND INDENTURE AND THE LOAN AGREEMENT. The Bond Indenture and the Loan
Agreement, substantially in the forms attached hereto as Appendices A and B, respectively, with
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such corrections, insertions and deletions as may be approved by the Chairman ofthe Authority, such
approval to be evidenced conclusively by his or her execution thereof, are hereby approved and
authorized. The Authority hereby authorizes and directs the Chairman to date and execute and the
Secretary to attest the Bond Indenture and the Loan Agreement, and to deliver the Bond Indenture
and the Loan Agreement. All of the provisions of the Bond Indenture and the Loan Agreement,
when executed and delivered by the Authority, as authorized herein, shall be deemed to be a part of
this Resolution as fully and to the same extent as if incorporated verbatim herein.
SECTION 6, AUTHORIZATION OF DELIVERY OF THE PRIVATE PLACEMENT
MEMORANDUM, The Private Placement Memorandum, substantially in the form attached hereto
as Appendix C is hereby approved and authorized. The Authority hereby authorizes the delivery of
the Private Placement Memorandum. All ofthe provisions of the Private Placement Memorandwn,
when delivered as authorized herein and by the Company, shall be deemed to be a part of this
Resolution as fully and to the same extent as if incorporated verbatim herein.
SECTION 7, PAYMENT OF THE SERIES 2005 BONDS. The Series 2005 Bonds shall
be payable as to principal and interest in lawful money of the United States of America at the
designated office of the Bank in accordance with the Loan Agreement.
SECTION 8, AUTHORIZATION OF EXECUTION OF OTHER CERTIFICATES
AND OTHER INSTRUMENTS, The Chairman and the Secretary are hereby authorized and
directed, either alone or jointly, to execute and deliver certificates ofthe Authority certifying such
facts as the County Attorney or Bond Counsel shall require in connection with the issuance and
delivery ofthe Series 2005 Bonds, and to execute and deliver such other instruments, including but
not limited to, deeds, assignments, bills of sale, tax agreements and financing statements, as shall be
necessary or desirable to perform the Authority's obligations under the Bond Indenture, the Loan
Agreement and the Private Placement Memorandum, and to conswnmate the transactions hereby
authorized.
SECTION 9, REDEMPTION OF PRIOR 1995 BONDS NOT EXCHANGED FOR
SERIES 2005 BONDS. Outstanding Prior 1995 Bonds not exchanged for Series 2005 Bonds are
hereby called for redemption prior to the maturity thereof on the first business day in any month
determined by the Company and the Bank in compliance with the terms ofthe indenture authorizing
the issuance of the Prior 1995 Bonds. The Bank is authorized to mail the Notice of Redemption in
substantially the form attached hereto as Appendix E to the holders of the Prior 1995 Bonds.
SECTION 10. NO PERSONAL LIABILITY, No representation, statement,
covenant, warranty, stipulation, obligation or agreement herein contained, or contained in the Series
2005 Bonds, the Bond Indenture, the Loan Agreement, or the Private Placement Memorandwn or
any assignment thereof, or any certificate or other instrument to be executed on behalf of the
Authority in connection with the issuance of the Series 2005 Bonds, shall be deemed to be a
representation, statement, covenant, warranty, stipulation, obligation or agreement of any elected
official, officer, employee or agent ofthe Authority in his or her individual capacity, and none ofthe
foregoing persons nor any elected or appointed official of the Authority executing the Series 2005
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Bonds, the Bond Indenture, the Loan Agreement or the Private Placement Memorandum or any
certificate or other instrument to be executed in connection with the issuance of the Series 2005
Bonds shall be liable personally thereon or be subject to any personal liability of or accountability by
reason of the execution or delivery thereof.
SECTION 11. NO THIRD PARTY BENEFICIARIES, Except as otherwise
expressly provided herein or in the Series 2005 Bonds, the Bond Indenture, the Loan Agreement and
the Private Placement Memorandum nothing in this Resolution, or in the Series 2005 Bonds, the
Bond Indenture, the Loan Agreement and the Private Placement Memorandum, express or implied, is
intended or shall be construed to confer upon any person, firm, corporation or other organization,
other than the Authority, the Company and the Bank any right, remedy or claim, legal or equitable,
under and by reason of this Resolution or any provision hereof, or of the Series 2005 Bonds, the
Bond Indenture, the Loan Agreement and the Private Placement Memorandum, all provisions hereof
and thereof being intended to be and being for the sole and exclusive benefit ofthe Authority, the
Company and the Banle
SECTION 12, PREREQUISITES PERFORMED, All acts, conditions and things
relating to the passage of this Resolution, to the issuance of the Series 2005 Bonds and to the
execution and delivery of the Bond Indenture, Loan Agreement and the Private Placement
Memorandum, required by the Constitution or other laws of the State, to happen, exist and be
performed precedent to the passage hereof, and precedent to the issuance of the Series 2005 Bonds,
to the execution and delivery of the Bond Indenture, Loan Agreement and the Private Placement
Memorandum, have either happened, exist and have been performed as so required or will have
happened, will exist and will have been performed prior to such execution and delivery thereof.
SECTION 13, GENERAL AUTHORITY. The members ofthe Authority and its
directors, officers, attorneys, engineers or other agents or employees are hereby authorized to do all
acts and things required of them by this Resolution, the Series 2005 Bonds, the Bond Indenture, the
Loan Agreement and the Private Placement Memorandum, and to do all acts and things which are
desirable and consistent with the requirements hereof or of the Series 2005 Bonds, the Bond
Indenture, the Loan Agreement and the Private Placement Memorandum, for the full, punctual and
complete performance of all the terms, covenants and agreements contained herein and in the Series
2005 Bonds, the Bond Indenture, the Loan Agreement and the Private Placement Memorandum.
SECTION 14, LIMITED OBLIGATIONS. The Series 2005 Bonds and the interest
thereon shall not constitute an indebtedness or pledge of the general credit or taxing power of the
Authority, Monroe County, the state of Florida or any political subdivision or agency thereof but
shall be payable solely from the revenues pledged therefore pursuant to the Loan Agreement or other
financing agreement entered into by and between the Authority and the Company prior to or
contemporaneously with the issuance ofthe Series 2005 Bonds. The Authority has no taxing power.
SECTION 15, LIMITED APPRO V AL. The approval given herein shall not be
construed as (i) an endorsement of the creditworthiness ofthe Company, (ii) a recommendation to
any prospective purchaser of the Series 2005 Bonds, (iii) an evaluation of the likelihood of the
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repayment of the debt service on the Series 2005 Bonds, or (iv) an approval of any necessary
rezoning applications nor for any other regulatory permits relating to the System.
SECTION 16, THIS RESOLUTION CONSTITUTES A CONTRACT, The
Authority covenants and agrees that this Resolution shall constitute a contract between the Authority
and the Company and that all covenants and agreements set forth herein and in the Series 2005
Bonds, the Bond Indenture, the Loan Agreement and the Private Placement Memorandum, to be
performed by the Authority shall be for the benefit and security ofthe Company.
SECTION 17. SEVERABILITY OF INVALID PROVISIONS. Ifanyoneormore
of the covenants, agreements or provisions herein contained shall be held contrary to any express
provisions oflaw or contrary to the policy of express law, though not expressly prohibited, or against
public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements or
provisions shall be null and void and shall be deemed separable from the remaining covenants,
agreements or provisions, and shall in no way affect the validity of any ofthe other provisions hereof
or of the Series 2005 Bonds.
SECTION 18, REPEALING CLAUSE, All resolutions or parts thereof in conflict
with the provisions herein contained are, to the extent of such conflict, hereby superseded and
repealed.
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SECTION 19,
upon its adoption.
EFFECTIVE DATE, This Resolution shall take effect immediately
Passed and adopted by the MOlioe County Industrial Development Authority at a meeting of
the Authority on this20tMay of April, 2005.
MONROE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
4
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I f;. 7) /. ..jJ,w
Ch!i .~ DIXIE M. SPEHAR
/
APPROVED AS TO FORM
AND LEGAL SUFFICIENCY:
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APPENDIX A
FORM OF BOND INDENTURE
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Draft
3/31/05
BOND TRUST INDENTURE
by and between
MONROE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
and
W ACHOVIA BANK, NATIONAL ASSOCIATION,
as Trustee
Dated as of Aprill, 2005
Relating to
$
Monroe County Industrial Development Authority
Industrial Development Revenue Bonds (North Key Largo Utility Corp, Project)
Series 2005
Section 1.1.
Section 1.2.
Section 2.1.
Section 2,2.
Section 2.3.
Section 2.4.
Section 2.5.
Section 2.6.
Section 2.7.
Section 2.8.
Section 2.9.
Section 2.10.
Section 2.11.
Section 3.1.
Section 4.1.
Section 4.2.
Section 4.3.
Section 4.4.
Section 4.5.
Section 5.1.
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Definitions. .. ,.... .....,.........,..........,.....,....,........... ,. ,........,...........,.,...,..... ,....,.... ,...4
Interpretation. ...,....,....,...,.,............... ,.... .,........... ........... '...,.................. ,....,...... 11
ARTICLE II
THE BONDS
Authorization of Bonds, ....,. ....,.,........,..... ................. ,..... ..,. ,.,........,.,.....,.... ,.... 12
Terms of Bonds. . ,.................... ,................,.....,..... ,.,.. ...... ,.........,. ,.....,.... ,...,..... 12
Validity of Bonds. ....,.... ,.... ,. ,.............. ,................, ..... ......,..........,...,.,...,.,........ 13
Execution of the Bonds. ...... ..... ...........,..... ,.....,..... ,.... ,..... ...... ,.,... ....... ,...,.... ,... 13
Transfer of Bonds. ..... .....,.... ,.....,....,.,.,.,..... ,..... ..... ............,.......... '... ,............,.. 14
Exchange of Bonds. ........,.,........ ,...'...... ,..... ,.,... ..,........ ,.,... ,........... ..... ,..........,.. 14
Bond Register. ..,.............. .....,.....,.... ,.,... ,........... ,.... ,.........,......, .....,.....,............ 14
Bonds Mutilated, Lost, Destroyed or Stolen. ....,................,......................,....,.15
Book-Entry Bonds; Securities Depository. ......,......,.....,.........,......,.......,........,16
Transfers Outside Book-Entry System. .........,............,.........,..........,.....,.......... 16
Payments and Notices to the Nominee. ...,.....,...........,....,.............,................... 16
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Issuance of Bonds.. ,.... ,...... ,......,.,.... ............,..........,...,.,.,...,.....,.... ,................ ,. 17
ARTICLE IV
REDEMPTION OF BONDS
Terms of Redemption. .....,. ,.,....,.....,..........,..... ,.....,.... ...... ,.....,.....,.... ,.....,........ 17
Selection of Bonds for Redemption. ....,.........,.,....,...,.......,.,..........,...,...,.,.......19
Notice of Redemption, .... ,.... ,.,. ,......,..... ..,.........,.... ,.........,.,...,......,.....,.... ,.....,. 19
Effect of Redemption. ......,.... ,.....,..................... '.......... ,...........,.......................21
Partial Redemption of Bonds, ,....,.......... ....................... ....,...,...,.... .,.......... ......21
ARTICLE V
REVENUES AND FUNDS
Establishment of Bond Fund. ,.........,......,...,. 21Error! Bookmark not defined,
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Section 5,2.
Section 5.3.
Section 5.3A.
Section 5.3B.
Section 5.4.
Section 6.1.
Section 6.2.
Section 6.3.
Section 6.4.
Section 6.5.
Section 6,6.
Section 6.7.
Section 6.8,
Section 6.9.
Section 7.1.
Section 7.2.
Section 7.3.
Section 7.4.
Section 7.5.
Section 7.6.
Section 7.7.
Section 7,8.
Section 7.9.
Section 7.10.
Section 8.1.
Section 8.2.
Section 8.3.
Section 8.4.
Section 8.5.
Section 8.6.
Section 8.7.
Section 8.8.
Pledge and Assignment of Revenues and Rights Under Loan
Agreement; Bond Fund. ....,.... ............................. '..... ....,............,.....,............... 21
Application of Bond Fund. ........... ...... ,...........,..... ,..... ,................ '.....,...,. ,........22
Establishment of Reserve Fund. .... ,........... ,..... ,......,....,.,....................,.......,.....22
Application of Reserve Fund. ....,.... ,......,..... ......,.....,....,.......... ,........................22
Investment of Moneys in Funds and Accounts. ,......................,...........,...........24
ARTICLE VI
PARTICULAR COVENANTS
Punctual Payment. .... ,..........,..."............,.,...............,.... ... ........... .... ,....,...,. ....... 24
Extension of Payment of Bonds. ............,...................... ..................,....,...........25
Against Encumbrances, ... ....,.,.............,...,..... ,.........,.................. ......,..........,....25
Power to Issue Bonds and Make Pledge and Assignment.................,....,.,...,...25
Accounting Records and Financial Statements. ...............,.........,.,................,.,25
Tax Certificate. ..,.....,..... ,....,.......................,....,....., ,..... ........... .................,.......26
Amendment of Loan Agreement and Tax Certificate; Other Covenants. .,...... 26
Waiver of Laws. ......,.....,.,.... ......................,............. ,... .......,.....,.........., .....,.....27
Further Assurances. ........,......,.... ,............,....,..........,.,...., ...........,.,........,...,. ,....27
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES OF HOLDERS
Events of Default. ... ..... ....,......................... ...,.. ...,.....,..........,.....,.....,.........., .....28
Acceleration of Maturities. .... ,.....,.....,.,...............,..... ,...,...... ,..... ,.....................28
Application of Revenues and Other Funds After Default. ...............................29
Bond Trustee to Represent Holders........................ ,.......................................,.31
Holders' Direction of Proceedings. ,...... ..............,.............. ,.....,..... ,..... ,.... ,......31
Limitation on Holders' Right to Sue. .......,...,...........,...,.,....,......................,..... 31
Unconditional Right of Holders to Receive Payments,..............,.....,....,...,.,.... 32
Termination of Proceedings, .. ,..... ......,..... ,.,.,.......,.,.........,................,.......... .... 32
Remedies Not Exclusive. ...,....,.....,.,...,.....,.....,.....,.....,..........,.,.,.....................32
No Waiver of Default. ......... ,....,.....,........... ,.,... '.,......... ,..........,....., .......,..........32
ARTICLE VIII
THE BOND TRUSTEE
Duties, Immunities and Liabilities of Bond Trustee. .........,.....,.....,.................33
Merger or Consolidation. ........... ,. .... ..,... ...... ,.....,.....,.....,.... ...... ,.....,.,........ '..... 34
Liability of Bond Trustee. ,.,...,...., ......,.....,.,......... ..... ,.....,....,........... ,.......... ,....34
Right of Bond Trustee to Rely on Documents. .................,...........,..................36
Preservation and Inspection of Documents. ....,.......,...,..........,.....,.....,..........,.. 36
Compensation and Indemnification. ,..... ,....... ... ,.....,..... ,..... .......,...,...,.,.... ........ 36
Employment of Experts. ..... ... ...........,...........,.... ...... ,.......... ,.....,..... ,..........,......37
No Liability for Acts of Master Trustee, .,.............................,...,...........,....,..... 37
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Section 9.1.
Section 9.2.
Section 9.3.
Section 9.4.
Section 10.1.
Section 10.2.
Section 10.3.
Section 10.4.
Section 11.1.
Section 11,2.
Section 11.3.
Section 11.4.
Section 11.5.
Section 11.6.
Section 11.7.
Section 11.8.
Section 11.9.
Section 11.10.
Section 11.11.
Section 11.12.
Section 11.13,
Section 11.14.
Section 11.15.
EXHIBIT A
ARTICLE IX
MODIFICA TION OR AMENDMENT OF THE BOND INDENTURE
Amendments Permitted. ....... ....................... .........,...............,...... ,............... ,.,.. 37
Effect of Supplemental Bond Indenture. ....,..........,...........,...............,.............. 39
Endorsement of Bonds; Preparation of New Bonds.........................................40
Amendment of Particular Bonds. ,.,.,.,.....,.......... ,................,.... ........................40
ARTICLE X
DEFEASANCE
Discharge of Bond Indenture, ..... ,.....,..........,.....,.... ...... ,.....,............................40
Effect of Defeasance. .......,..... ,..... ,. ..,.,.... ...... ...... ,.... ,..... ,............... ,................, 41
Deposit of Money or Securities with Bond Trustee. ...........,......,...............,.....41
Payment of Bonds After Discharge of Bond Indenture. .............................,....42
ARTICLE XI
MISCELLANEOUS
Liability of Issuer Limited to Revenues. .........,.....,....,................,.........,.......... 43
Successor Is Deemed Included in All References to Predecessor................,... 43
Limitation of Rights to Parties, the Borrower and Holders.....,.....................,..43
Waiver of Notice. ............. ........... ,. ...., .,...,.... ......,.....,.......... ,....................,.......43
Destruction of Bonds. .. ,............. ...,...,. ,......... ..................,..... ,....,........ .......,......44
Severability of Invalid Provisions. ...... '..................... ...... ........... ,.... ,..........,..... 44
Notice and Other Information be Given to ACA. ............,..........,...............,....44
Evidence of Rights of Holders. .. ..... ,..... ,..........,.... '..... ................. .......... ,..... ....45
Disqualified Bonds. ... ,..... ,.,..............,................ ,.... ,........ ............. ........ .........,..45
Money Held for Particular Bonds. ....,................,.,........,...............,..........,.....,.46
Funds and Accounts. .........,......,.......... .....,....................................................... 46
Waiver of Personal Liability. ... ,................,.....,.... ,................................,..........46
Execution in Several Counterparts. .,.... ,..... ,..........,...,.......,......... ,.... ,.....,.........46
Governing Law. ,....,...,...."....,.....,.....,.....,.....................,....................,.....,........ 46
Business Days..,..........,.....,.....,..."...........,. ,........ ,............,... ,.... .......... ,....., ..... ,.47
Form of Bond
-lll-
BOND TRUST INDENTURE
THIS BOND TRUST INDENTURE (the "Indenture"), dated as of April 1, 2005, is
between MONROE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, a public body
corporate and politic of the State of Florida, and W ACHOVIA BANK, NATIONAL
ASSOCIA TION, a national banking association (the "Trustee"), duly incorporated and existing
under the laws of the United States of America, with its designated corporate trust office in
Miami, Florida.
PRELIMINARY STATEMENT
WHEREAS, by virtue of the authority of the Constitution and laws of the State of Florida
(the "State"), and particularly Chapter 159, Parts II and III, Florida Statutes, as amended, and
other applicable provisions of law (collectively, the "Act"), the Issuer is empowered to issue its
bonds, to finance the cost of the acquisition, construction and equipping of a "project" under the
Act; and
WHEREAS, pursuant to Section 159.43, Florida Statutes, as amended, the Act mandates
that the provisions of the Act shall be liberally construed to effect the purposes thereof; and
WHEREAS, North Key Largo Utility Corp. (the "Borrower") is a corporation organized
and existing under the laws of the State of Florida and is engaged in the operation of a
wastewater utility system under the laws of the State of Florida; and
WHEREAS, the Borrower has requested the Issuer to issue its Bonds under the Act for
the purpose of exchanging said Bonds with the holders of all or a portion of the outstanding
Industrial Development Revenue Bonds (North Key Largo Utility Corp. Project), Series 1995
(the "1995 Bonds"), issued by the Issuer on March 9, 1995, in order to achieve a savings in debt
service and to restructure the covenants relating to the 1995 Bonds, all as further described in the
Loan Agreement hereinafter referenced; and
WHEREAS, the Issuer is authorized under the Act to issue bonds for the purposes
aforesaid and the Issuer has heretofore determined that the public interest and paramount public
purposes would best be served and that the purposes of the Act of providing modem and efficient
wastewater facilities in northern Monroe County, Florida needed for the welfare and benefit of
the citizens thereof, would be most advantageously obtained by the Issuer's issuance of bonds in
order to accomplish the purposes of the Borrower; and
WHEREAS, it has been determined that for the purposes aforesaid the Issuer will issue
bonds in a principal amount of $ to be known as the "Monroe County Industrial
Development Authority Industrial Development Revenue Bonds (North Key Largo Utility Corp,
Project), Series 2005" (the "Bonds"); and
WHEREAS, the Issuer has entered into a loan agreement dated the date hereof with the
Borrower providing for the payment of principal, premium, if any, and interest on the Bonds as
the same become due and payable (the "Loan Agreement"); and
WHEREAS, simultaneously with the issuance of the Bonds, and as collateral security for
the loan, the Borrower, as an issuer of Master Notes under and pursuant to the Master Trust
Indenture dated as of April 1,2005 by and between the Borrower and Wachovia Bank, National
Association, as master trustee (the "Master Indenture"), will execute and deliver to the Issuer a
Master Note, Series 2005; and
WHEREAS, all things necessary to make the Bonds, when authenticated by the Bond
Trustee and issued as provided in this Indenture, the valid, binding and legal obligations of the
Issuer according to the import thereof; and to constitute this Indenture a valid assignment and
pledge of the payments and prepayments upon the Master Note, Series 2005 and to provide for
the payment of the principal of, premium, if any, and interest on the Bonds and a valid
assignment of the right, title and interest of the Issuer under the Loan Agreement and amounts
payable to the Issuer under the Loan Agreement (except Unassigned Rights, as hereinafter
defined), have been done and performed, and the creation, execution and delivery of this
Indenture, and the creation, execution and issuance of the Bonds, subject to the terms hereof,
have in all respects been duly authorized:
NOW, THEREFORE, WITNESSETH:
That the Issuer in consideration of the premises and of th(, purchase of the Bonds and of
other good and lawful consideration, the receipt of which is hereby acknowledged, and to secure
the payment of the principal of, premium, if any, and interest on the Bonds and the performance
and observance of all of the covenants and conditions herein or therein contained, has executed
and delivered this Indenture and (without recourse or warranty) has conveyed, granted, assigned,
transferred, pledged, set over and confirmed and granted a security interest and a first lien in and
by these presents does hereby (without recourse or warranty) convey, grant, assign, transfer,
pledge, set over and confirm and grant a security interest and a first lien, unto the Bond Trustee,
its successor or successors and its or their assigns forever, in trust with power of sale, all and
singular, the property, real and personal, hereinafter described (said property being herein
sometimes referred to as the "Trust Estate") to wit:
GRANTING CLAUSES
DIVISION I
All right, title and interest of the Issuer in and to the Master Note, Series 2005 and all
sums payable in respect of the indebtedness evidenced thereby;
DIVISION II
All right, title and interest of the Issuer in and to the Loan Agreement and the amounts
payable to the Issuer under the Loan Agreement (excluding Unassigned Rights);
4205-Bond Tmst Indenture
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DIVISION III
Any and all other property of every kind and nature from time to time hereafter, by
delivery or by writing of any kind, conveyed, pledged, assigned or transferred as and for
additional security hereunder by the Issuer, the Borrower or by anyone on their behalf to the
Bond Trustee, including without limitation funds of the Borrower held by the Bond Trustee in
any of the funds established hereunder as security for the Bonds;
EXCEPTED PROPERTY
There is, however, expressly excepted and excluded from the lien and operation of this
Indenture amounts held by the Bond Trustee in any rebate fund created to hold funds to be paid
on behalf of the Issuer to the u.S. Treasury pursuant to Section 148 of the Code;
TO HAVE AND TO HOLD, all and singular, the properties and the rights and privileges
hereby conveyed, assigned and pledged by the Issuer or intended so to be, unto the Bond Trustee
and its successors and assigns forever, in trust, nevertheless, with power of sale for the equal and
pro rata benefit and security of each and every owner of the Bonds issued and to be issued
hereunder, without preference, priority or distinction as to participation in the benefit and
protection hereof of one Bond over or from the others, by reason of priority in the issue or
negotiation or maturity thereof; or for any other reason whatsoever, except as herein otherwise
expressly provided, so that each and all of such Bonds shall have the same right, lien and
privilege under this Indenture and shall be equally secured hereby with the same effect as if the
same had all been made, issued and negotiated simultaneously with the delivery hereof and were
expressed to mature on one and the same date;
PROVIDED, NEVERTHELESS, and these presents are upon the express condition, that
if the Issuer or its successors or assigns shall well and truly payor cause to be paid the principal
of such Bonds with interest according to the provisions set forth in the Bonds or shall provide for
the payment or redemption of such Bonds by depositing or causing to be deposited with the
Bond Trustee the entire amount of funds or securities required for payment or redemption thereof
when and as authorized by the provisions hereof; and shall also payor cause to be paid all other
sums payable hereunder by the Issuer, then these presents and the estate and rights hereby
granted shall cease, terminate and become void, and thereupon the Bond Trustee, on payment of
its lawful charges and disbursements then unpaid, on demand of the Issuer and upon the payment
of the cost and expenses thereof, shall duly execute, acknowledge and deliver to the Issuer such
instruments of satisfaction or release as may be necessary or proper to discharge this Indenture,
including if appropriate any required discharge of record, and if necessary shall grant, reassign
and deliver to the Issuer, its successors or assigns, all and singular the property, rights, privileges
and interests by it hereby granted, conveyed, assigned and delivered, and all substitutes therefor,
or any part thereof, not previously disposed of or released as herein provided; otherwise this
Indenture shall be and remain in full force.
AND IT IS HEREBY COVENANTED, DECLARED AND AGREED by and between
the parties hereto that all Bonds are to be issued, authenticated and delivered, and that all the
Trust Estate is to be held and applied, subject to the further covenants, conditions, releases, uses
and trusts hereinafter set forth, and the Issuer, for itself and its successors, does hereby covenant
4205-Bond Trust Indenture
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and agree to and with the Bond Trustee and its respective successors in said trust, for the benefit
of those who shall own the Bonds, or any of them as follows:
ARTICLE I
DEFINITIONS
Section 1.1.
Definitions.
Unless the context otherwise requires, the terms defined in this Section shall, for all
purposes of this Bond Indenture and of any indenture supplemental hereto and of any certificate,
opinion or other document herein mentioned, have the meanings herein specified, to be equally
applicable to both the singular and plural forms of any of the terms herein defined. Unless
otherwise defined in this Bond Indenture, all terms used herein shall have the meanings assigned
to such terms in the Act or in the Loan Agreement, as the case may be.
"Accountant" means any independent certified public accountant or firm of such
accountants selected by the Borrower.
"Accredited Investor" means an investor who qualifies as an "accredited investor"
under any of the following categories at the time of the sale of the Bonds to that person or entity:
(i) a bank, as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the
"Securities Act"), or any savings and loan association or other institution as defined in Section
3(a) (5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity; (ii) a
broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as
amended. (the "Exchange Act"); (iii) an insurance company, as defined in Section 2(13) of the
Securities Act; (iv) an investment company registered under the Investment Company Act of
1940; (v) an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986,
as amended, corporation, Massachusetts or similar business trust, or partnership not formed for
the specific purpose of acquiring the Bonds, with total assets in excess of $5,000,000; (iv) a
natural person whose individual net worth, or joint net worth with that person's spouse at the
time of purchase, exceeds $1,000,000; (vii) a natural person who had an individual income in
excess of $200,000 in each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and who has a reasonable expectation of reaching
the same income level in the current year; and (viii) a trust with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the Bonds, whose purchase is
directed by a sophisticated person as described in 17 C.F,R. Section 230.506(b )(2)(ii)
promulgated under the Securities Act.
"Act" means Chapters 159, Parts II and III, of the Florida Statutes, as amended, as now in
effect and as it may from time to time hereafter be amended or supplemented,
"Additional Payments" means the payments so designated and required to be made by
the Borrower pursuant to Section 5.3 of the Loan Agreement.
4205-Bond Trust Indenture
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"Administrative Fees and Expenses" means any application, commitment, financing or
similar fee charged, or reimbursement for administrative or other expenses incurred, by the
Issuer or the Bond Trustee, including Additional Payments.
"Applicable Rate" means the interest rate defined in Section 2.2 hereof.
"Authorized Representative" means, with respect to the Borrower, the President, or any
other person or persons designated as an Authorized Representative of the Borrower by a
Certificate of the Borrower signed by the President, and filed with the Bond Trustee.
"Bond Fund" means the fund by that name established pursuant to Section 5.01.
"Bond Indenture" means this Bond Trust Indenture, as originally executed and as it may
from time to time be supplemented, modified or amended by any Supplemental Bond Indenture,
"Bond Trustee" means Wachovia Bank, National Association, a national banking
association, acting in its capacity as Bond Trustee hereunder, having its designated Corporate
Trust Office in Miami, Florida, or its successor as trustee hereunder as provided in Section 8.01.
"Bonds" means the Monroe County Industrial Development Authority Revenue Bonds
(North Key Largo Utility Corp. Project), Series 2005, authorized by, and at any time Outstanding
pursuant to, this Bond Indenture.
"Business Day" means a day which is not (a) a Saturday, Sunday or legal holiday or any
other day on which banking institutions in the State or the State of New York or any city in
which the designated corporate trust office of the Master Trustee or the Bond Trustee is located
are authorized by law to close or (b) a day on which the New York Stock Exchange is closed.
"Certificate," "Statement," "Requisition" and "Order" of the Issuer or the Borrower
mean, respectively, a written certificate, statement, request, requisition or order signed in the
name of the Issuer by the Chairman or other authorized officer, or such other person as may be
designated and authorized to sign for the Issuer or in the name of the Borrower by an Authorized
Representative of the Borrower. Any such instrument and supporting opinions or
representations, if any, may, but need not, be combined in a single instrument with any other
instrument, opinion or representation, and the two or more so combined shall be read and
construed as a single instrument.
"Code" means the Internal Revenue Code of 1986, as amended from time to time. Each
reference to a section of the Code herein shall be deemed to include the United States Treasury
Regulations, including temporary and proposed regulations, relating to such sections which are
applicable to the Bonds or the use of the proceeds thereof.
"Defeasance Securities" means the first three categories of investments provided for
herein under the definition of "Investment Securities".
"Electronic Notice" means (a) notice transmitted through electronic mail ("e-mail") or a
time-sharing terminal or facsimile machine, if operative as between the party sending the notice
4205-Bond Trust Indenture
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and the party that is to receive the notice, and (b) if not so operative between any two parties,
notice given in writing or by telephone (promptly confirmed in writing).
"Escheat Period" means the period of time commencing on the date fixed for the
payment or redemption of the principal of or interest on any Bonds and ending on the date which
is six months prior to the period of time set forth under the governing state statute regarding
escheatment of funds.
"Event of Default" means any ofthe events specified in Section 7.1 hereof.
"Exchange" means the refunding of the 1995 Bonds by the exchange of such 1995
Bonds for the Bonds.
"Governing Body" means, when used with respect to the Borrower, its board of
directors, its board of trustees, or a similar group in which the right to exercise the powers of
corporate directors or trustees is vested, or an executive committee of such board, or any duly
authorized committee of such board to which the relevant powers of such board have been
lawfully delegated.
"Holder" means, whenever used herein with respect to a Bond, the Person in whose
name such Bond is registered.
"Interest Payment Date" means March 1 and September 1 of each year, commencing
September 1, 2005.
"Investment Securities" means the following, to the extent permitted by law, for all
purposes, including Defeasance Securities in refunding escrow accounts:
1. Cash deposits (insured at all times by the Federal Deposit Insurance Corporation or
otherwise collateralized with obligations described in the next paragraph).
2. Direct obligations of (including obligations issued or held in book entry form on the
books of the Department of Treasury) the United States of America. In the event these
securities are used for defeasance, they shall be non-callable and non-prepayable.
3, Obligations of the following federal agencies so long as such obligations are backed by
the full faith and credit of the United States of America (in the event these securities are
used for defeasance, they shall be non-callable and non-prepayable):
a, U,S. Export-Import Bank (Eximbank)
b. Rural Economic Community Development Administration
c. Federal Financing Bank
d. U.S. Maritime Administration
e. U.S. Department of Housing and Urban Development (PHAs)
4205-Bond Trust Indenture
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f. General Services Administration
g, Small Business Administration
h. Government National Mortgage Association (GNMA)
I. Federal Housing Administration
J. Farm Credit System Financial Assistance Corporation
To the extent permitted by law, the following obligations may be used as permitted
investments for all purposes other than defeasance investments in refunding escrow accounts:
I. Direct obligations of any of the following federal agencies which obligations are not fully
guaranteed by the full faith and credit of the United States of America:
a. Senior debt obligations rated in the highest long-term rating category by at least
two nationally recognized rating agencies issued by Fannie Mae (FNMA) or
Freddie Mac (FHLMC).
b. Senior debt obligations of the Federal Home Loan Bank System.
2. U.S. dollar denominated deposit accounts, federal funds and bankers' acceptances with
domestic commercial banks which either (a) have a rating on their short-term certificates
of deposit on the date of purchase in the highest short-term rating category of at least two
nationally recognized rating agencies, (b) are insured at all times by the Federal Deposit
Insurance Corporation, or (c) are collateralized with direct obligations of the United
States of America at one hundred two percent (102%) valued daily. All such certificates
must mature no more than three hundred sixty (360) days after the date of purchase.
(Ratings on holding companies are not considered as the rating of the bank).
3. Commercial paper which is rated at the time of purchase in the highest short-term rating
category of at least two (2) nationally recognized rating agencies and which matures not
more than two hundred seventy (270) days after the date of purchase.
4. Investments in (a) money market funds subject to SEC Rule 2a-7 and rated in the highest
short-term rating category of at least two nationally recognized rating agencies and (b)
public sector investment pools operated pursuant to SEC Rule 2a-7 in which the Issuer's
deposit shall not exceed 5% of the aggregate pool balance at any time and such pool is
rated in one of the two highest short-term rating categories of at least two nationally
recognized rating agencies,
5. Pre-refunded municipal obligations defined as follows: Any bonds or other obligations of
any state of the United States of America or of any agency, instrumentality or local
governmental unit of any such state which are not callable at the option of the borrower
prior to maturity or as to which irrevocable instructions have been given by the borrower
to call on the date specified in the notice; and,
4205-Bond Trusllndenlure
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a. which are rated, based on an irrevocable escrow account or fund (the "escrow"),
in the highest long-term rating category of at least two (2) nationally recognized
rating agencies; or
b. (i) which are fully secured as to principal and interest and redemption premium, if
any, by an escrow consisting only of cash or direct obligations of the United
States of America, which escrow may be applied only to the payment of such
principal of and interest and redemption premium, if any, on such bonds or other
obligations on the maturity date or dates thereof or the specified redemption date
or dates pursuant to such irrevocable instructions, as appropriate, and (ii) which
escrow is sufficient, as verified by a nationally recognized independent certified
public accountant, to pay principal of and interest and redemption premium, if
any, on the bonds or other obligations described in this paragraph on the maturity
date or dates specified in the irrevocable instructions referred to above, as
appropriate.
6. General obligations of states with a short-term rating in one of the two (2) highest rating
categories and a long-term rating in one (1) of the two (2) highest rating categories of at
least two (2) nationally recognized rating agencies. In the event such obligations are
variable rate obligations, the interest rate on such obligations must be reset not less
frequently than annually.
The value of the above investments, other than cash, shall be determined as follows:
"Value," which shall be determined as of the end of each fiscal year, means that the value
of any investments shall be calculated as follows:
1. As to investments the bid and asked prices of which are published on a regular basis in
The Wall Street Journal (or, if not there, then in The New York Times): the average of
the bid and asked prices for such investments so published on or most recently prior to
such time of determination;
2. As to investments the bid and asked prices of which are not published on a regular basis
in The Wall Street Journal or The New York Times: the average bid price at such price at
such time of determination for such investments by any two nationally recognized
government securities dealers (selected by the Bond Trustee in its absolute discretion) at
the time making a market in such investments or the bid price published by a nationally
recognized pricing service;
3. As to certificates of deposit and bankers acceptances, the face amount thereof, plus
accrued interest; and
4, As to any investment not specified above, the value thereof established by pnor
agreement among the Issuer and the Bond Trustee.
"Issuer" means the Monroe County Industrial Development Authority, a public body
corporate and politic organized under the laws of the State of Florida.
4205-Bond Trust Indenture
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"Loan Agreement" means that certain Loan Agreement dated as of April 1, 2005, by and
between the Issuer and the Borrower relating to the Bonds, as originally executed and as it may
from time to time be supplemented, modified or amended in accordance with the terms thereof
and of this Bond Indenture.
"Loan Default Event" means any of the events specified in Section 7.1 of the Loan
Agreement.
"Loan Repayments" means the payments required to be made by the Borrower pursuant
to Section 5.1 of the Loan Agreement.
"Mandatory Amortization Installments" means, with respect to Term Bonds of any
maturity, the amount required by this Bond Indenture to be paid by the Issuer on any single date
for the retirement of Bonds of such maturity pursuant to Section 4.1 (Q hereof.
"Master Trust Indenture" means that certain Master Trust Indenture dated as of April
1, 2005, by and between the Borrower and the Master Trustee, as originally executed and as
amended from time to time.
"Master Trustee" means Wachovia Bank, National Association, a national banking
association, or its successor, as trustee under the Master Trust Indenture.
"Nominee" means the nominee of the Securities Depository (currently Cede & Co.),
which may be the Securities Depository, or any nominee substituted by the Securities Depository
pursuant to Section 2.9 hereof.
"Opinion of Bond Counsel" means a written opinion of an attorney or firm of attorneys
experienced in the field of municipal bonds whose opinions are generally accepted by purchasers
of municipal bonds.
"Opinion of Counsel" means a written opinion of counsel (who may be counsel for the
Issuer or the Borrower) selected by the Borrower, the Issuer or the Bond Trustee.
"Outstanding," when used as of any particular time with reference to Bonds, means
(subject to the provisions of Section 10.1) all Bonds theretofore, or thereupon being,
authenticated and delivered by the Bond Trustee under this Bond Indenture except:
1. Bonds theretofore canceled by the Bond Trustee or delivered to the Bond Trustee for
cancellation;
2. Bonds with respect to which all liability of the Issuer shall have been discharged In
accordance with Section 10.2, including Bonds (or portions of Bonds) referred to In
Section 11.10; and
3. Bonds for the transfer or exchange of, or in lieu of or in substitution for, which other
Bonds shall have been authenticated and delivered by the Bond Trustee pursuant to this
Bond Indenture.
4205-Bond Trust Indenture
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"Person" means any natural person, firm, joint venture, association, partnership, business
trust, corporation, corporation, public body, agency or political subdivision thereof or any other
similar entity.
"Principal Payment Date" means each date on which principal of the Bonds is required
to be paid (whether by reason of maturity, redemption or acceleration).
"Private Placement Memorandum" means the Private Placement Memorandum
relating to the Bonds.
"Record Date" means, with respect to any Interest Payment Date, the fifteenth (15th) day
of the calendar month immediately preceding such Interest Payment Date.
"Redemption Price" means, with respect to any Bond (or portion thereof), the principal
amount of such Bond (or portion thereof) payable upon redemption thereof pursuant to the
provisions of such Bond and this Bond Indenture.
"Refunding" means the refunding of the Issuer's outstanding Industrial Development
Revenue Bonds (North Key Largo Utility Corp. Project), Series 1995, by the issuance of the
Bonds pursuant to an Exchange offer by the Borrower.
"Regular Rate" means the interest rate defined in Section 2.2 hereof.
"Reserve Fund Requirement" means, as of any date of calculation, the lesser of
(a) maximum annual debt service for the Bonds, (b) ten percent (10%) of the aggregate principal
amount of the Bonds or ( c) 125% of average annual debt service of the Bonds.
"Revenues" means all amounts received by the Issuer or the Bond Trustee pursuant or
with respect to the Loan Agreement or the Series 2005 Master Note, including, without limiting
the generality of the foregoing:
(1) Loan Repayments (including both timely and delinquent payments, and
any late charges) regardless of the source of payment;
(2) prepayments of all or any part of the Loan Repayments; and
(3) all interest, profits or other income derived from the investment of
amounts in any fund or account established pursuant to this Bond Indenture;
but not including any Administrative Fees and Expenses or proceeds of any right of
indemnification under Section 5.4 or 5,5 ofthe Loan Agreement.
"Securities Depository" means The Depository Trust Company, and its successors and
assigns, or if the then-acting Securities Depository ceases to serve in such capacity, as described
in Section 2.9 hereof, any other securities depository which agrees to follow the procedures
required to be followed by a securities depository in connection with the Bonds that is selected
by the Issuer, with the consent of the Borrower.
4205-Bond TJUst Indenture
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"Securities Depository Participants" means those financial institutions for whom the
Securities Depository effects book-entry transfers and pledges of securities deposited with the
Securities Depository, as such listing of Securities Depository Participants exists at the time of
such reference,
"Series 2005 Master Note" means the Master Note, Series 2005, dated as of April 1,
2005, issued under the Master Trust Indenture and the Supplement, evidencing the Borrower's
obligation to make payments sufficient to pay the principal of and interest on the Bonds.
"Special Record Date" means the date established by the Bond Trustee pursuant to
Section 2.02 as a record date for the payment of defaulted interest on Bonds.
"Standard & Poor's" means Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., a corporation organized and existing under the laws of the State of New York,
and its successors and their assigns.
"State" means the State of Florida,
"Supplement" means the First Supplemental Master Trust indenture dated as of April 1,
2005, by and between the Borrower and the Master Trustee, pursuant to which the Series 2005
Master Note is issued.
"Supplemental Bond Indenture" means any indenture hereafter duly authorized and
entered into between the Issuer and the Bond Trustee, supplementing, modifying or amending
this Bond Indenture in accordance with Article IX of this Bond Indenture.
"Tax Certificate" means the Tax Certificate dated the date of delivery of the Bonds,
concerning certain matters pertaining to the use and investment of proceeds of the Bonds, by and
among the Borrower, the Bond Trustee and the Issuer, including any and all exhibits attached
thereto, as originally executed and as it may be amended or supplemented from time to time in
accordance with its terms.
"Taxable Rate" means the interest rate defined in Section 2.2 hereof.
"Term Bonds" means the Bonds payable at or before their specified maturity date or
dates from Mandatory Amortization Installments established for that purpose and calculated to
retire such Bonds on or before their specified maturity date or dates,
Section 1.2.
Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular shall
include the plural and vice versa, and the use of the neuter, masculine, or feminine gender is for
convenience only and shall be deemed to mean and include the neuter, masculine or feminine
gender, as appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are solely
for convenience of reference, do not constitute a part hereof and shall not affect the meaning,
construction or effect hereof. All references herein to "Articles," "Sections" and other
4205-Bond Trust Indenture
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subsections are to the corresponding Articles, Sections or subsections of this Bond Indenture,
and the words "herein," "hereof," "hereby," "hereunder" and other words of similar import refer
to this Bond Indenture as a whole and not to any particular Article, Section or subsection hereof.
ARTICLE II
THE BONDS
Section 2.1. Authorization of Bonds. The Bonds shall be designated as "Monroe
County Industrial Development Authority Industrial Development Revenue Bonds (North Key
Largo Utility Corp, Project), Series 2005". The aggregate principal amount of Bonds which may
be issued and Outstanding under this Bond Indenture shall not exceed $2,965,000. This Bond
Indenture constitutes a continuing agreement of the Issuer with the Holders from time to time of
the Bonds to secure the full payment of the principal of and interest on the Bonds, subject to, and
in accordance with, the covenants, provisions and conditions herein contained.
Section 2.2. Terms of Bonds. The Bonds shall be issued only as registered Term
Bonds in the denomination of $1 00,000 or any integral multiple thereof on original issuance and
thereafter shall be in multiples of $1,000; shall be dated the date of delivery, shall mature on
March 1, 2025, subject to Mandatory Amortization Installment redemption on March 1 in the
years 2006 to 2025, both inclusive, and shall have such other terms as more particularly set forth
in the form of the Bond. The Bonds shall bear interest from the date of delivery, payable on
September 1, 2005, and on each March 1 and September 1 thereafter, computed on the basis of a
year of 360 days and twelve 30-day months at the Applicable Rate which on any day with
respect to which interest on the Bonds is calculated shall be the regular Rate, which, subject to
adjustment as specified below or the Taxable Rate, whichever is applicable, as follows:
(a) Regular Rate, Except as otherwise provided herein, the interest rate (the "Regular
Rate") shall be 6.00%.
(b) Adjustments to Regular Rate, In the event a Determination of Taxability shall have
occurred, the rate of interest on each Bond shall be increase to a "Taxable Rate" which shall
equal 150% of the Regular Rate, effective retroactively to the date of the Event of Taxability,
and thereafter through the Inclusion Period (the period commencing with the date of the Event
of Taxability and ending with the date such Bond ceases to be outstanding). The Trustee shall
give notice to each Person who was the Holder of each Bond during the Inclusion Period of the
occurrence of a Determination of Taxability and within 90 days thereafter, each Holder or
former Holder of each Bond shall be paid the Additional Amount such Holder or former Holder
shall be entitled to receive with respect to such Bond. "Additional Amount" means that amount
of money payable to a Holder or former Holder of any Bond which shall equal interest accrued
at the Taxable Rate throughout that portion of the Inclusion Period during which such person
held such Bond, reduced by interest accrued at the Regular Rate which was paid to such Holder
or former Holder or to any subsequent Holder of such Bond. Such Additional Amount shall
constitute additional interest on the Bonds and shall be payable solely from the sources specified
in such Bond and in the Bond Indenture.
In each case, the Applicable Rate shall be rounded to the nearest one-hundredth of one
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percent.
Upon the occurrence of an Event of the Default (as defined in the Master Indenture,
Bond Indenture, Loan Agreement and Mortgage), interest shall accrue at the following rate (the
"Default Rate"):
(1) while the Bonds bear interest at the Taxable Rate, as provided above, a rate which
is equal to 200% of the Regular Rate.
(2) while the Bonds bear interest at the Regular Rate as provided above, a rate which is
equal to 150% of the Regular Rate.
Notwithstanding the foregoing, the Applicable Rate shall never exceed the maximum
interest rate per annum allowed by law.
The principal of the Bonds shall be payable in lawful money of the United States of
America at the designated Corporate Trust Office of the Bond Trustee. Payment of the interest
on any Bond shall be made to the person whose name appears on the registration books of the
Bond Trustee as the Holder thereof as of the close of business on the Record Date for such
Interest Payment Date, except as provided below. Interest shall be paid in lawful money of the
United States of America by check or draft mailed to each Holder at the address shown on the
registration books maintained by the Bond Trustee pursuant to Section 2.07 or, at the option of
the Holder of at least $1,000,000 in aggregate principal amount of the Bonds, by wire transfer to
such address as may have been filed with the Bond Trustee for such purpose.
The Bonds shall be numbered in consecutive numerical order from 1 upwards, and each
such Bond shall bear interest from the date thereof.
Any such interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Holder on the Record Date and shall be paid to the person in whose name the
Bond is registered at the close of business on a Special Record Date for the payment of such
defaulted interest to be fixed by the Bond Trustee, notice of which shall be given to the Holders
not less than ten (l0) days prior to such Special Record Date.
The Bonds shall be subject to redemption as provided in Article IV.
Section 2.3. Validity of Bonds. The validity of the authorization and issuance of
the Bonds is not dependent on and shall not be affected in any way by any proceedings taken by
the Issuer or the Bond Trustee with respect to or in connection with the Loan Agreement. The
recital contained in the Bonds that the same are issued pursuant to the Act and the Constitution
and laws of the State shall be conclusive evidence of their validity and of compliance with the
provisions of the law in their issuance.
Section 2.4. Execution of the Bonds. The Bonds shall be executed in the name and
on behalf of the Issuer with the manual or facsimile signature of its Chairman and attested by the
manual or facsimile signature of its Clerk or Secretary. The Bonds shall then be delivered to the
Bond Trustee for authentication by it. In case any of the officers of the Issuer who shall have
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signed or attested any of the Bonds shall cease to be such officer before the Bonds, so signed or
attested, shall have been authenticated or delivered by the Bond Trustee or issued by the Issuer,
such Bonds may nevertheless be authenticated, delivered and issued and, upon such
authentication, delivery and issue, shall be as binding upon the Issuer as though such person who
signed and attested the same had continued to be such officer of the Issuer. In addition, any
Bond may be signed and attested on behalf of the Issuer by any person who as at the actual date
of execution of such Bond, shall be an officer of the Issuer even though, on the nominal date of
such Bond, such person was not such officer.
Only such of the Bonds as shall bear thereon a certificate of authentication substantially
in the form hereinbefore recited, manually executed by the Bond Trustee, shall be valid or
obligatory for any purpose or entitled to the benefits of this Bond Indenture, and such certificate
of the Bond Trustee shall be conclusive evidence that the Bonds so authenticated have been duly
executed, authenticated and delivered hereunder and are entitled to the benefits of this Bond
Indenture.
Section 2.5. Transfer of Bonds. Any Bond may, in accordance with its terms, be
transferred upon the registration books required to be kept pursuant to the provisions of
Section 2.7, by the person in whose name it is registered, in person or by his attorney duly
authorized in writing, upon surrender of such Bond for cancellation at the designated Corporate
Trust Office of the Bond Trustee, accompanied by delivery of a written instrument of transfer,
duly executed in a form approved by the Bond Trustee.
Whenever any Bond or Bonds shall be surrendered for transfer, the Issuer shall execute
and the Bond Trustee shall authenticate and deliver, a new Bond or Bonds of any authorized
denomination or denominations of the same maturity and for a like aggregate principal amount.
The Bond Trustee shall require the Holder requesting such transfer to pay any tax or other
governmental charge required to be paid with respect to such transfer.
Bonds may be reissued following transfers to subsequent Holders in denominations
smaller than $100,000 only if the transferer so requests and provides to the Bond Trustee an
Opinion of Counselor other evidence satisfactory to the Bond Trustee that the transferee is an
Accredited Investor.
In no event shall any Bond selected by the Bond Trustee for redemption be transferred
under this Section.
Section 2.6. Exchange of Bonds. Bonds may be exchanged at the designated
Corporate Trust Office of the Bond Trustee for a like aggregate principal amount of Bonds of
any authorized denomination or denominations of the same maturity. The Bond Trustee shall
require the Holder requesting such exchange to pay any tax or other governmental charge
required to be paid with respect to such exchange,
In no event shall any Bond selected by the Bond Trustee for redemption be exchanged
under this Section.
Section 2.7. Bond Register. The Bond Trustee will keep or cause to be kept
sufficient books for the registration, transfer and exchange of the Bonds, which shall be open to
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inspection by the Issuer and the Borrower during normal business hours; and, upon presentation
of any Bonds for such purpose, the Bond Trustee shall, under such reasonable procedures as it
may prescribe, register, transfer or exchange, or cause to be registered, transferred or exchanged,
such Bonds on such books, as hereinabove provided. The Issuer and the Bond Trustee may treat
and consider the Person in whose name each Bond is registered in the registration books kept by
the Bond Trustee as the absolute Holder of such Bond for the purpose of payment of the
principal of or interest on such Bond, for the purpose of giving notices of redemption and other
matters with respect to such Bond, for the purposes of registering transfers with respect to such
Bond and for all other purposes whatsoever, and the Issuer and the Bond Trustee shall not be
affected by any notice to the contrary.
The Bond Trustee shall pay the principal or Redemption Price of or interest on the Bonds
only to or upon the order of the Holders thereof, as shown in the registration books kept by the
Bond Trustee, or their respective attorneys duly authorized in writing, and all such payments
shall be valid and effective to fully satisfy and discharge the Issuer's obligations with respect to
payment of the principal of or interest on the Bonds to the extent of the sum or sums so paid, No
person other than a Holder, as shown in the registration books kept by the Bond Trustee, shall
receive a Bond evidencing the obligation of the Issuer to make payments of principal or interest
pursuant to this Bond Indenture.
Section 2.8. Bonds Mutilated, Lost. Destroyed or Stolen. If any Bond shall become
mutilated, the Issuer, at the expense of the Holder of said Bond, shall execute, and the Bond
Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange and
substitution for the Bond so mutilated, but only upon surrender to the Bond Trustee of the Bond
so mutilated. Every mutilated Bond so surrendered to the Bond Trustee shall be canceled by it
and delivered to, or upon the Order of, the Issuer. If any Bond shall be lost, destroyed or stolen,
evidence of such loss, destruction or theft may be submitted to the Bond Trustee and the Issuer,
and if such evidence is satisfactory to each of them and indemnity satisfactory to each of them
shall be given, then, at the expense of the Holder, the Issuer shall execute and the Bond Trustee
shall authenticate and deliver a new Bond of like tenor in lieu of and in substitution for the Bond
so lost, destroyed or stolen; provided that if any such Bond shall have matured or shall be about
to mature, instead of issuing a substitute Bond, the Bond Trustee may pay the same without
surrender thereof. The Issuer may require payment by the Holder of a sum not exceeding the
actual cost of preparing each new Bond issued under this Section and of the expenses (including
fees of counsel) which may be incurred by the Issuer and the Bond Trustee. Any Bond issued
under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen
shall constitute an original additional contractual obligation on the part of the Issuer, whether or
not the Bond so alleged to be lost, destroyed or stolen is at any time enforceable by anyone, and
shall be entitled to the benefits of this Bond Indenture with all other Bonds secured by this Bond
Indenture.
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Section 2.9. Book-Entry Bonds; Securities Depository. The Bonds shall be issued
initially in the form of a separate single fully registered Bond for each maturity of the Bonds,
which may be typewritten, and shall be registered in the registration books kept by the Bond
Trustee in the name of the Nominee as nominee of the Securities Depository.
With respect to Bonds registered in the registration books kept by the Bond Trustee in the
name of the Nominee, the Issuer and the Bond Trustee shall have no responsibility or obligation
to any Securities Depository Participant or to any Person on behalf of which a Securities
Depository Participant holds an interest in the Bonds. Without limiting the foregoing, the Issuer
and the Bond Trustee shall have no responsibility or obligation with respect to (i) the accuracy of
the records of the Securities Depository, the Nominee, or any Securities Depository Participant
with respect to any ownership interest in the Bonds, (ii) the delivery to any Securities Depository
Participant or any other Person, other than as shown in the registration books kept by the Bond
Trustee, of any notice with respect to the Bonds, including any notice of redemption, (iii) the
selection by the Securities Depository and its Securities Depository Participants of the beneficial
interests in the Bonds to be redeemed in the event the Bonds are redeemed in part, or (iv) the
payment to any Securities Depository Participant or any other Person, other than a Nominee as
shown in the registration books kept by the Bond Trustee, the principal of or Redemption Price
of or interest on the Bonds.
Upon delivery by the Securities Depository to the Nominee, the Bond Trustee and the
Issuer of written notice to the effect that the Securities Depository has determined to substitute a
new nominee in place of the Nominee, and subject to the provisions herein with respect to
Record Dates, the word "Nominee" in this Bond Indenture shall refer to such new nominee of
the Securities Depository.
Section 2.10. Transfers Outside Book-Entry System. The Issuer may, with the
consent of the Borrower, by written notice, at any time or for any reason, remove the Securities
Depository and appoint a successor or successors thereto. In the event that (i) the Securities
Depository determines not to continue to act as securities depository for the Bonds, or (ii) the
Issuer determines that the Securities Depository will no longer so act, then the Issuer shall
discontinue the book-entry system with the Securities Depository. If the Issuer fails to identify
another qualified securities depository to replace the Securities Depository, then the Bonds shall
no longer be restricted to being registered in the registration books kept by the Bond Trustee in
the name of the Nominee, but shall be registered in whatever name or names the Holders of such
Bonds transferring or exchanging such Bonds shall designate, in accordance with the provisions
of Section 2.5 and Section 2.6 hereof.
Section 2.1 1. Pavrnents and Notices to the Nominee. Notwithstanding any other
provision of this Bond Indenture to the contrary, so long as any Bond is registered in the name of
the Nominee, all payments of principal of and interest on such Bond and all notices with respect
to such Bond shall be made and given, respectively, as provided in the representation letter with
the Securities Depository or as otherwise instructed in writing by the Securities Depository.
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ARTICLE III
ISSUANCE OF BONDS
Section 3.1. Issuance of Bonds, At any time after the execution of this Bond
Indenture, the Issuer may execute and the Bond Trustee shall authenticate and, upon the direction
of the Issuer, deliver the Bonds to the Holders of the 1995 Bonds in exchange for 1995 Bonds
tendered pursuant to the Borrower's exchange offer.
ARTICLE IV
REDEMPTION OF BONDS
Section 4.1.
Terms of Redemption.
(a) The Bonds are subject to optional redemption prior to their respective stated
maturities, by the Issuer, at the direction of the Borrower, from funds deposited for such purpose
in the Bond Fund, on the first Business Day of any month, as a whole or in part in such
maturities as are designated by the Borrower (or if the Borrower fails to designate such
maturities, in inverse order of maturity) and by random selection within a maturity, at
redemption prices set forth below (expressed as percentages of the principal amount to be
redeemed) in each case together with interest accrued thereon to the date fixed for redemption
Redemption Period
Redemption Price
Date ofIssue through February 28,2006
March 1, 2006 through February 28, 2007
March 1,2007 through February 29,2008
March 1,2008 through February 28,2009
March 1, 2009 and thereafter
102.0%
101.5%
101,0%
100.5%
100.0%
(b) The Bonds are callable for redemption, in whole, prior to maturity in the event of
a sale of the System, on the earliest practicable date after the Borrower shall prepay in full the
Master Notes outstanding under the Master Indenture at a price of 100% of the principal amount
of Bonds so redeemed, plus accrued interest to the redemption date, and without premium.
(c) The Bonds shall be subject to redemption, in whole but not in part, at any time, at
a redemption price of 100% of the principal amount of Bonds so redeemed, plus accrued interest
to the redemption date, and without premium, if within one year after the occurrence of any of
the following events, the Borrower shall elect to prepay the Loan pursuant to Section 5.9 of the
Loan Agreement:
A. The System shall have been damaged or destroyed to such extent
that, in the opinion of the Borrower expressed in a Borrower's Certificate filed
with the Issuer and the Trustee following such damage or destruction (A) it is not
practicable or desirable to rebuild, repair or restore the System within a period of
six consecutive months following such damage or destruction, or (B) the
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Borrower is or will be thereby prevented from carrying on its normal operations at
the System for a period of at least six consecutive months; or
B. Title to or the temporary use of all or substantially all the System
shall have been taken under the exercise of the power of eminent domain, or
threat in lieu thereof, by any governmental authority to such extent that, in the
opinion of the Borrower expressed in a Borrower's Certificate filed with the
Issuer and the Trustee (A) the Borrower is or will be thereby prevented from
carrying on the normal operations of the System for a period of at least six
consecutive months; or
C. Any court or administrative body of competent jurisdiction shall
enter a judgment, order or decree requiring the Borrower to cease all or any
substantial part of its operations of the System to such extent that, in the opinion
of the Borrower expressed in a Borrower's Certificate filed with the Issuer and the
Trustee, the Borrower is or will be thereby prevented from carrying on the normal
operations of the System for a period of at least six consecutive months; or
D. As a result of any changes in the Constitution of the State or the
Constitution of the United States of America or of legislative or administrative
action (whether state or federal) or by final decree, judgment or order of any court
or administrative body (whether state or federal) of competent jurisdiction, the
Loan Agreement shall have become void or unenforceable or impossible of
performance in accordance with the intent and purposes of the parties as
expressed in the Loan Agreement or unreasonable burdens or excessive liabilities
shall have been imposed on the Issuer or the Borrower including without
limitation, federal, state or other ad valorem, property, income or other taxes not
being imposed on the date of the Loan Agreement.
(d) If the Borrower exercises its option to prepay the Loan in full as provided in
Section 5.10 of the Loan Agreement, the Bonds are required to be redeemed in whole on any
date, by the Issuer at the direction of the Borrower, at a redemption price equal to 100% of the
principal amount thereof, with the premiums as set forth in subsection (a) above, plus accrued
interest to the redemption date.
( e) The Bonds maturing on March I, 2025, are also subject to redemption prior to
their stated maturities in part, from Mandatory Amortization Installments deposited in the Bond
Fund, on any March 1 on or after March 1, 2006, at the principal amount thereof, plus interest
accrued thereon to the date fixed for redemption, and without premium, as follows:
Year
Amount
2006
2007
2008
2009
2010
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2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
(f) Each check or other transfer of funds issued by the Bond Trustee for the purpose
of redeeming Bonds shall identify, to the extent practicable, the Bonds being redeemed with the
proceeds of such check or other transfer.
Section 4.2. Selection of Bonds for Redemption. Whenever provision is made in
this Bond Indenture for the redemption of less than all of the Bonds of any maturity, the Bond
Trustee, as directed by the Borrower, shall select the Bonds to be redeemed from all Bonds
subject to redemption in such manner as may be designated by the Borrower or, if the Borrower
shall have failed to so designate, in any manner which the Bond Trustee in its sole discretion
shall deem appropriate and fair. The Bond Trustee shall promptly notify the Issuer and the
Borrower in writing of the Bonds or portions thereof so selected for redemption.
Section 4.3. Notice of Redemption, Each notice of redemption shall state (i) the
maturities of the Bonds or portions thereof which are to be redeemed, (ii) the date of redemption,
(iii) the place or places where the redemption will be made, including the name and address of
the Bond Trustee, (iv) the Redemption Price, (v) the CUSIP numbers assigned to the Bonds to be
redeemed, (vi) in case of any Bonds to be redeemed in part only, the amount of such Bonds to
be redeemed, and (vii) the original dated date, interest rate and stated maturity date of each Bond
to be redeemed. Each such notice shall also (a) state that if, on the date of redemption, the Bond
Trustee holds sufficient moneys therefor, then, on the date of redemption, the Redemption Price
of the Bonds to be redeemed, plus interest accrued thereon (if any) to the date fixed for
redemption, shall become due and payable and from and after said date, interest on such Bonds
shall cease to accrue and be payable, and (b) require that on said date such Bonds shall be
surrendered.
The Bond Trustee shall take the following actions with respect to such notice of
redemption:
(a) At least 30 but not more than 60 days prior to the redemption date, such notice
shall be given to the respective Holders of Bonds designated for redemption by first class mail,
postage prepaid at their addresses appearing on the registration books maintained by the Bond
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Trustee pursuant to Section 2.7 as of the close of business on the day before such notice is given,
provided that failure of the Bond Trustee to give such notice to a Holder of Bonds or any defect
in such notice shall not affect the validity of the redemption of any other Bonds.
(b) A second notice of redemption shall be mailed no more than 60 days after the
redemption date, by the same means as the first notice, to a Holder of Bonds who has not turned
Bonds in for redemption within 30 days after the redemption date, provided that failure of the
Bond Trustee to give such notice to any Holder of Bonds or any defect in such notice shall not
affect the validity of the redemption of such Bonds.
(c) At least two Business Days before the date of the notice given pursuant to clause
(a) of this Section 4.3, such notice shall be given by (i) Electronic Notice or (ii) overnight
delivery service to the Securities Depository at the address and transmission number given
below, or such other address or transmission number as may have been delivered in writing to
the Bond Trustee for such purpose not later than the close of business on the day before such
notice is given, provided, however, that failure by the Bond Trustee to give such notice shall not
affect the sufficiency of the proceedings for redemption:
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530
Facsimile transmission:
(516) 227-4039
(516) 227-4190
(d) At least two Business Days before the date of notice given pursuant to clause (a)
of this Section 4.03, such notice shall be given by overnight delivery service to the following
services, provided, however, that if both services cease to exist, such notice shall be given to a
service recognized by the bond industry, and provided further, however, that failure by the Bond
Trustee to give such notice shall not affect the sufficiency of the proceedings for redemption:
Financial Information, Inc.
Daily Called Bond Service
30 Montgomery Street, 10th Floor
Attn: Bond Redemption
Jersey City, New Jersey 07302
Any notice of redemption (other than a notice of redemption from Mandatory Sinking
Fund Payments pursuant to Section 4.1 (c) hereof) given pursuant to this Section 4.3 may be
rescinded by written notice given to the Bond Trustee by the Borrower no later than five (5)
Business Days prior to the date fixed for redemption. The Bond Trustee shall give notice of such
rescission as soon thereafter as practicable in the same manner, and to the same persons, as
notice of such redemption was given pursuant to this Section 4.3.
Notice of redemption of Bonds shall be given by the Bond Trustee, at the expense of the
Borrower, for and on behalf of the Issuer.
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Section 4.4. Effect of Redemption, Unless rescinded in accordance with Section
4.3 hereof, notice of the redemption of Bonds (or portions thereof) having been duly given as
aforesaid, and moneys for payment of the Redemption Price of such Bonds, plus interest accrued
thereon to the redemption date, being held by the Bond Trustee, the Bonds (or portions thereof)
so called for redemption shall become due and payable on the redemption date specified in such
notice, and on such date interest on the Bonds so called for redemption shall cease to accrue,
such Bonds shall cease to be entitled to any benefit or security under this Bond Indenture, and
the Holders of such Bonds shall have no rights in respect thereof except to receive payment of
said Redemption Price and accrued interest.
All Bonds redeemed pursuant to the provisions of this Article if any, shall be canceled
upon surrender thereof and delivered upon the request of the Issuer.
Section 4.5. Partial Redemption of Bonds. Upon surrender of any Bond redeemed
in part only, the Issuer shall execute and the Bond Trustee shall authenticate and deliver to the
Holder thereof, at the expense of the Borrower, a new Bond or Bonds of authorized
denominations, and of the same maturity, equal in aggregate principal amount to the unredeemed
portion of the Bond surrendered.
ARTICLE V
REVENUES AND FUNDS
Section 5.1. Pledge and Assignment of Revenues and Rights Under Loan
Agreement; Bond Fund.
(a) Subject only to the provisions of this Bond Indenture permitting the application
thereof for the purposes and on the terms and conditions set forth herein, there are hereby
pledged to secure the payment of the principal of and interest on the Bonds in accordance with
their terms and the provisions of this Bond Indenture, all of the Revenues and any other amounts
(including proceeds of the sale of the Bonds) held in any fund or account established pursuant to
this Bond Indenture, excepting only any amounts paid by the Borrower to the Issuer pursuant to
the terms of the Loan Agreement. Said pledge shall constitute a lien on and security interest in
such assets and shall attach, be perfected and be valid and binding from and after delivery by the
Bond Trustee of the Bonds, without any physical delivery thereof or further act.
(b) The Issuer hereby transfers in trust, grants a security interest in and assigns to the
Bond Trustee, for the benefit of the Holders of the Bonds, as security for the payment of the
principal of and interest on the Bonds, all of the Revenues and other assets pledged in subsection
(a) of this Section and all of the right, title and interest of the Issuer in, to and under (i) the Loan
Agreement (except for the Unassigned Rights) and (ii) the Series 2005 Master Note. The Bond
Trustee shall be entitled to and shall collect and receive all of the Revenues, and any Revenues
collected or received by the Issuer shall be deemed to be held, and to have been collected or
received, by the Issuer as the agent of the Bond Trustee and shall forthwith be paid by the Issuer
to the Bond Trustee. The Bond Trustee also shall be entitled to and shall (subject to the
provisions of Section 8.3(d) hereof) take all steps, actions and proceedings reasonably necessary
in its judgment to enforce all of the rights of the Issuer so assigned and all of the obligations of
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the Borrower under the Loan Agreement and the Series 2005 Master Note that are assigned and
pledged to the payment and security of the Bonds pursuant to this Bond Indenture.
(c) All Revenues shall be promptly deposited by the Bond Trustee upon receipt
thereof in the Funds established in this Bond Indenture; provided, however, that Revenues
comprised of all interest, profits and other income received from the investment of funds
established pursuant hereto shall be credited, as received, to such fund, as provided in Section
5.4 hereof. All Revenues deposited with the Bond Trustee shall be held, disbursed, allocated and
applied by the Bond Trustee only as provided in this Bond Indenture.
(d) If by 10:00 a,m., Miami, Florida, time on any Principal Payment Date (with
respect to payments of principal and Mandatory Amortization Installments), or any Interest
Payment Date (with respect to payments of interest), the Bond Trustee has not received
Revenues that are sufficient and available to make the payments on the Bonds required
hereunder, the Bond Trustee shall immediately notify the Borrower and the Issuer of such
insufficiency by telephone or telecopy and confirm such notification by written notice.
Section 5,2(a) Establishment of Bond Fund. There is hereby established a fund to be
designated the Monroe County Industrial Development Authority Industrial Development
Revenue Bonds (North Key Largo Utility Corp. Project), Series 2005 Bond Fund (the "Bond
Fund"). The money in the Bond Fund shall be held by the Bond Trustee in trust and applied as
hereinafter provided and, pending such application, the Bond Fund and the money therein shall
be subject to a lien and charge in favor of the Bond Trustee for the benefit of the Holders and for
the security of the Holders. The Bond Trustee shall also create such other funds and accounts
hereunder as shall be requested in writing by the Borrower from time to time as necessary to
facilitate proper administration hereunder but the establishment of any such fund or account shall
not alter or modify any of the requirements of this Bond Indenture with respect to a deposit or
use of money in the Bond Fund or result in commingling of funds not permitted hereunder.
Section 5,2(b) Application of Bond Fund. All amounts in the Bond Fund shall be used
and withdrawn by the Bond Trustee solely for the purpose of paying the principal of and interest
on the Bonds as the same shall become due and payable, whether at maturity or upon
acceleration or redemption prior to maturity,
At any time prior to giving of notice of redemption, the Bond Trustee may apply
Mandatory Amortization Installments in the Bond Fund to the purchase of the applicable Term
Bonds at public or private sale, as and when and at such prices (including brokerage and other
charges) as the Bond Trustee may be directed by the Issuer, upon the written direction of the
Borrower, except that the purchase price (excluding accrued interest) shall not exceed the par
value of such Bonds. If, during the twelve-month period immediately preceding said Mandatory
Amortization Installments date, the Bond Trustee has purchased Term Bonds with moneys in the
Bond Fund, or, during said period and prior to the selection of Bonds for redemption, the
Borrower has deposited Term Bonds with the Bond Trustee, or Term Bonds were at any time
purchased or redeemed by the Bond Trustee from the Bond Fund which are allocable to said
Mandatory Amortization Installments, such Bonds so purchased, deposited or redeemed shall be
applied, to the extent of the full principal amount thereof, first to reduce said Mandatory
Amortization Installments, and then as a credit against such future Mandatory Amortization
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Installments as the Borrower may direct. All Bonds purchased or deposited pursuant to this
Section shall be canceled and delivered by the Bond Trustee to or upon the order of the Issuer.
At any time prior to selection of the Bonds for redemption, the Bond Trustee shall apply
amounts on deposit in the Bond Fund for the optional or special redemption of Bonds to the
purchase of Bonds at public or private sale, as and when and at such prices (including brokerage
and other charges) as shall be directed by the Borrower; provided that the purchase price
(exclusive of accrued interest) may not exceed the Redemption Price then applicable to such
Bonds; and provided further that in the case of optional redemption, in lieu of redemption on the
next succeeding date of redemption, or in combination therewith, amounts in the Bond Fund for
optional redemption may be credited against Loan Repayments, in order of their due dates, as set
forth in the direction of the Borrower delivered to the Bond Trustee and the Issuer and used for
the purposes for which such Loan Payments are required to be made.
Section 5.2(c) Establishment of Reserve Fund, There is hereby established a fund to be
designated the Monroe County Industrial Development Authority Industrial Development
Revenue Bonds (North Key Largo Utility Corp. Project), Series 2005 Reserve Fund (the
"Reserve Fund"). The money in the Reserve Fund shall be held by the Bond Trustee in trust and
applied as hereinafter provided and, pending such application, the Reserve Fund and the money
therein shall be subject to a lien in favor of the Bond Trustee for the benefit of the Holders and
for the security of the Holders.
Section 5.2(d) Application of Reserve Fund. The Reserve Fund for the Bonds shall be
maintained in an amount equal to the Reserve Fund Requirement. Such sum shall initially be
deposited therein either (l) from the proceeds of the Bonds, (2) from the money in the reserve
accounts for any refunded Bonds or (3) from a combination of the foregoing. Any withdrawals
from the Reserve Fund shall be restored within 12 months. No further payments shall be required
to be made into the Reserve Fund when there has been deposited therein and as long as there shall
remain on deposit therein a sum equal to the Reserve Fund Requirement. The Investment
Securities on deposit in the Reserve Fund shall be valued annually by the Bond Trustee at their fair
market value, excluding accrued interest, in accordance with generally accepted accounting
practice, and the Borrower shall be furnished a statement of such valuation. Any deficiency due
to market fluctuation in the amount of Investment Securities on deposit in the Reserve Fund shall be
restored by the Borrower no later than the succeeding valuation date.
Full capitalization of the Reserve Fund on the date of issuance of the Bonds from proceeds of
the Bonds, or from money in the reserve accounts for any refunded Bonds, shall not be required if
the Borrower provides on the date of issuance of the Bonds (1) a bond reserve insurance policy issued
to the Bond Trustee by a licensed municipal bond insurer whose claims-paying ability is rated at least
"AA" or "Aa" by Standard & Poor's or Moody's, respectively, or (2) an unconditional irrevocable
letter of credit ("LaC") issued to the Trustee by any bank or national banking association insured
by FDIC, in an amount equal to the difference between the Reserve Fund Requirement and the
amount otherwise deposited therein pursuant to the preceding paragraph.
At any time after the issuance of the Bonds, the Bond Trustee shall, at the request of the
Borrower, withdraw the amount of money on deposit in the Reserve Fund and substitute in its
place, a bond reserve insurance policy or LaC as described in (1) or (2) of the preceding
4205-Bond Trust Indenture
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paragraph, supplied by the Borrower, in the face amount of such withdrawal, and deposit the
surplus money so withdrawn into the Bond Fund.
Section 5.3 Investment of Moneys in Funds and Accounts. All moneys in any of the
funds and accounts established pursuant to this Bond Indenture shall be invested by the Bond
Trustee upon the direction of the Borrower, solely in Investment Securities. In directing
investments, the Borrower shall comply with the limitations as set forth in the Tax Agreement,
the limitations set forth under the laws of the State, the limitations as to maturities hereinafter set
forth in this Section and such additional limitations or requirements consistent with the foregoing
as may be established by the direction of the Borrower.
Notwithstanding any other provision herein, in the absence of written investment
directions delivered to the Bond Trustee by noon on the Business Day preceding the day when
investments are to be made, the Bond Trustee shall (without further direction) invest available
funds in a money market fund rated in the highest rating category of Standard & Poor's.
Investments shall be made so as to mature on or prior to the date or dates that moneys
therefrom are anticipated to be required.
All interest, profits and income received from the investment of moneys in any fund shall
be credited to such fund. Notwithstanding anything to the contrary contained in this paragraph,
any amount of interest received with respect to an Investment Security equal to the amount of
accrued interest, if any, paid as part of the purchase price of such Investment Security shall be
credited to the fund or account from which such accrued interest was paid.
For the purpose of determining the amount on deposit in any fund or account established
hereunder, all Investment Securities credited to such funds shall be valued as provided in the
definition of "Investment Securities" herein.
The Bond Trustee may commingle any of the funds or accounts established pursuant to
this Bond Indenture into a separate fund or funds for investment purposes only, provided that all
funds or accounts held by the Bond Trustee hereunder shall be accounted for separately as
required by this Bond Indenture. The Bond Trustee may purchase from or sell to itself or any
affiliate of it as principal or agent in the making or disposing of any investment. The Bond
Trustee shall sell at the best price reasonably obtainable, or present for redemption, any
Investment Securities so purchased whenever it shall be necessary to provide moneys to meet
any required payment, transfer, withdrawal or disbursement from the fund or account to which
such Investment Security is credited, and the Bond Trustee shall not be liable or responsible for
any loss resulting from investments pursuant to the direction of the Borrower or pursuant to
Section 5.4 hereof or Section 8.3 hereof.
ARTICLE VI
PARTICULAR COVENANTS
Section 6.1. Punctual Payment. The Issuer shall punctually payor cause to be paid
the principal or Redemption Price and interest to become due in respect of all the Bonds, in strict
4205-Bond Trust Indenture
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conformity with the terms of the Bonds and of thIs Bond Indenture, according to the true intent
and meaning thereof, and shall punctually payor cause to be paid all Mandatory Amortization
Installments, but only out of Revenues and other assets pledged for such payment as provided in
this Bond Indenture,
Section 6.2. Extension of Payment of Bonds, The Issuer shall not directly or
indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of
payment of interest on any of the Bonds (or any claims for such interest), and in case the
maturity of any of the Bonds or the time of payment of interest on any of the Bonds (or any
claims for such interest) shall be extended, such Bonds (or such claims for interest) shall not be
entitled, in case of any Event of Default hereunder, to the benefits of this Bond Indenture, except
subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of
interest thereon (and all claims for interest thereon) which shall not have been so extended.
Nothing in this Section shall be deemed to limit the right of the Issuer to issue bonds for the
purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to
constitute an extension of maturity of Bonds.
Section 6.3. Against Encumbrances. The Issuer shall not create, or permit parties
within its control to create, any pledge, lien, charge or other encumbrance upon the Revenues
and other assets pledged or assigned under this Bond Indenture while any of the Bonds are
Outstanding, except for the pledge and assignment created by this Bond Indenture. In addition,
if the Issuer receives notice from the Bond Trustee or the Borrower of the creation of any such
pledge, lien, charge or other encumbrance, the Issuer, at the sole cost of the Borrower, shall take
action to resist such creation of any pledge, lien, charge or other encumbrance upon the request
of the Bond Trustee or the Borrower. Subject to this limitation, the Issuer expressly reserves the
right to enter into one or more other indentures for any of its corporate purposes, including other
programs under the Act, and reserves the right to issue other obligations for such purposes.
Section 6.4. Power to Issue Bonds and Make Pledge and Assignment. The Issuer is
duly authorized pursuant to law to issue the Bonds, and to enter into this Bond Indenture, and to
pledge and assign the Revenues and other assets purported to be pledged and assigned under this
Bond Indenture, in the manner and to the extent provided in this Bond Indenture. The Bonds and
the provisions of this Bond Indenture are and will be the legal, valid and binding limited
obligations of the Issuer, enforceable in accordance with their terms, and the Issuer and the Bond
Trustee shall at all times, to the extent permitted by law, defend, preserve and protect said pledge
and assignment of Revenues and other assets and all the rights of the Holders under this Bond
Indenture against all claims and demands of all persons whomsoever.
Section 6.5.
Accounting Records and Financial Statements.
(a) The Bond Trustee shall at all times keep, or cause to be kept, proper books of
record and account, prepared in accordance with the Bond Trustee's accounting practices for
books of record and account relating to similar trust accounts and in accordance with the
customary standards of the corporate trust industry for such books of record and account, in
which complete and accurate entries shall be made of all transactions relating to the proceeds of
the Bonds, the Revenues, the Loan Agreement and all funds and accounts established pursuant to
this Bond Indenture, Such books of record and account shall be available for inspection by the
4205-Bond Tmst Indenture
-25-
Issuer, the Borrower and any Holder, or its agent or representative duly authorized in writing, at
reasonable hours and under reasonable circumstances.
(b) The Bond Trustee shall furnish to the Borrower on or before the 15th Business
Day of each month a complete financial statement (which need not be audited) covering receipts,
disbursements, allocation and application of Revenues and any other moneys (including Bond
proceeds) in any of the funds and accounts established pursuant to this Bond Indenture for the
preceding month.
Section 6.6. Tax Certificate. The Issuer covenants and agrees that it will at all
times do and perform all actions and things permitted by law and this Indenture which are
necessary for the Bonds to satisfy the requirements of Section 103 and 141 through 150 of the
Code in order to assure that interest on the Bonds will be excluded from gross income for federal
income tax purposes and will take no action that would result in failure of the Bonds to satisfy
the requirements of Section 103 and 141 through 150 of the Code. The Issuer, in reliance upon
the Borrower, covenants that it will comply with the provisions of the Tax Agreement, which are
incorporated herein as if fully set forth herein. The covenants contained in this Section 6.6 shall
survive payment in full or defeasance of the Bonds.
Section 6.7.
Covenants.
Amendment of Loan Agreement and Tax Certificate; Other
(a) The Loan Agreement may be amended, modified or terminated only pursuant to a
written instrument signed by the Issuer and the Borrower with the prior written consent of the
Bond Trustee.
(b) The Bond Trustee shall consent to any amendment, modification or termination of
the Loan Agreement, if in the opinion of the Bond Trustee, which opinion may be based on an
Opinion of Counsel, such amendment, modification or termination will not materially adversely
affect the interests of the Holders or result in any material impairment of the security hereby
given for the payment of the Bonds; provided, however, that no such amendment, modification
or termination shall reduce the amount of Loan Repayments to be made to the Issuer or the Bond
Trustee by the Borrower pursuant to the Loan Agreement, or extend the time for making such
payments, without the written consent of all of the Holders of the Bonds then Outstanding.
(c) The Issuer, at the direction and sole cost of the Borrower, with the prior written
consent of the Bond Trustee (given as provided in Section 6.7(b)(i)), but without the necessity of
obtaining the consent of any of the Holders, may enter into amendments or modifications of the
Loan Agreement, only to the extent permitted by law and only for anyone or more of the
following purposes:
(i) to add to the covenants and agreements of the Issuer or the Borrower
contained in the Loan Agreement other covenants and agreements thereafter to be
observed, to pledge or assign additional security for the Bonds (or any portion thereof), or
to surrender any right or power therein reserved to or conferred upon the Issuer or the
Borrower, provided, that no such covenant, agreement, pledge, assignment or surrender
shall materially adversely affect the interests ofthe Holders of the Bonds;
4205-Bond Trust Indenture
-26-
(ii) to make such provIsIons for the purpose of curing any ambiguity,
inconsistency or omission, or of curing or correcting any defective provision, contained
in the Loan Agreement, or in regard to such matters or questions arising under the Loan
Agreement, as the Issuer, at the direction of the Borrower, may deem necessary or
desirable and not inconsistent with the Loan Agreement or this Bond Indenture, and
which shall not materially adversely affect the interests of the Holders of the Bonds;
(iii) to maintain the exclusion from gross income of interest payable with
respect to the Bonds; or
(iv) for any other purpose that does not (i) affect rights of the Issuer under the
Loan Agreement that are not pledged hereunder or (ii) materially adversely affect the
interests of the Holders of the Bonds.
(d) The Tax Certificate may be amended or modified without the consent of or notice
to the Holders upon compliance with the applicable provisions of the Tax Certificate.
(e) The Bond Trustee shall promptly collect all amounts due from the Borrower
pursuant to the Loan Agreement and the Series 2005 Master Note, shall perform all duties
imposed upon it pursuant to the Loan Agreement and the Tax Certificate and shall (subject to the
provisions of Section 8.3( d) hereof) diligently enforce, and take all steps, actions and
proceedings reasonably necessary for the enforcement of, all of the rights of the Issuer and all of
the obligations of the Borrower under the Loan Agreement and the Series 2005 Master Note that
are assigned and pledged to the payment and security of the Bonds pursuant to this Bond
Indenture.
Section 6.8. Waiver of Laws, To the extent permitted by law, (i) the Issuer shall
not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or
advantage of, any stay or extension law now or at any time hereafter in force that may affect the
covenants and agreements contained in this Bond Indenture or in the Bonds, and (ii) all benefit
or advantage of any such law or laws is hereby expressly waived by the Issuer to the extent
permitted by law.
Section 6.9. Further Assurances. The Issuer will make, execute and deliver any
and all such further indentures, instruments and assurances as may be reasonably necessary or
proper to carry out the intention or to facilitate the performance of this Bond Indenture and for
the better assuring and confirming unto the Holders of the Bonds all of the rights and benefits
provided in this Bond Indenture.
4205-Bond Trust Indenture
-27-
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Trustee (other than in the payment of principal of and interest on the Bonds due and payable
solely by reason of such declaration) shall have been made good or cured to the satisfaction of
the Bond Trustee, or provision deemed by the Bond Trustee to be adequate shall have been made
therefor, then, and in every such case, the Holders of more than 50% in aggregate principal
amount of the Bonds then Outstanding, by written notice to the Issuer, the Borrower and the
Bond Trustee, or the Bond Trustee may, on behalf of the Holders of all of the Bonds, rescind and
annul such declaration and its consequences and waive such default, but no such rescission and
annulment shall extend to or affect any subsequent default, or shall impair or exhaust any right or
power consequent thereon.
Upon the occurrence and during the continuation of an Event of Default, the Bond
Trustee shall, upon the written direction of the Holders of more than 50% in aggregate principal
amount of the Bonds then Outstanding and receipt of indemnity satisfactory to the Bond Trustee,
shall take whatever action at law or in equity it deems, or such Holders deem, necessary or
desirable (i) to collect any amounts then due under this Bond Indenture, the Bonds, the Loan
Agreement or the Series 2005 Master Note, (ii) to enforce performance of any obligation,
agreement or covenant of the Issuer under this Bond Indenture or the Bonds or of the Borrower
under the Loan Agreement, the Tax Certificate or the Series 2005 Master Note, or (iii) to
otherwise enforce any of its rights.
In the event that the Master Trustee has accelerated the Series 2005 Master Note and is
pursuing its available remedies under the Master Trust Indenture, the Bond Trustee, without
waiving any Event of Default under this Bond Indenture, agrees not to pursue its available
remedies under this Bond Indenture or the Loan Agreement in a manner that would hinder or
frustrate the pursuit by the Master Trustee of its remedies under the Master Trust Indenture;
provided, however, that the Bond Trustee may take any action permitted to be taken by a Series
2005 Master Note holder under the Master Trust Indenture.
Notwithstanding the foregoing or any other provision of this Bond Indenture or the
Master Trust Indenture, the right of the Bond Trustee to receive payment of the Series 2005
Master Note on and after the respective due dates expressed in the Series 2005 Master Note, or to
bring suit for the enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Bond Trustee.
Section 7.3. Application of Revenues and Other Funds After Default. If an Event
of Default shall occur and be continuing, all Revenues and any other funds then held or
thereafter received by the Bond Trustee under any of the provisions of this Bond Indenture
(subject to Section 7.11) shall be applied by the Bond Trustee as follows and in the following
order:
(i) To the payment of any expenses necessary in the opinion of the Bond
Trustee to protect the interests of the Holders of the Bonds and payment of reasonable
fees, charges and expenses of the Bond Trustee (including reasonable fees and
disbursements of its counsel) incurred in and about the performance of its powers and
duties under this Bond Indenture;
4205-Bond Trust Indenture
-29-
(ii) To the payment of the principal or Redemption Price of and interest then
due on the Bonds (upon presentation of the Bonds to be paid, and stamping thereon of the
payment, if only partially paid, or surrender thereof, if fully paid), subject to the
provisions of this Bond Indenture (including Section 6.2), as follows:
A. Unless the principal of all the Bonds shall have become or have
been declared due and payable:
First: To the payment to the persons entitled thereto of all
installments of interest then due and payable in the order of the maturity of such
installments, and, if the amount available shall not be sufficient to pay in full any
installment or installments maturing on the same date, then to the payment thereof
ratably, according to the amounts due thereon, to the persons entitled thereto,
without any discrimination or preference, except as to any difference in the
respective rates of interest specified in the Bonds;
Second: To the payment to the persons entitled thereto of the
unpaid principal or Redemption Price of any Bonds which shall have become due
and payable, whether at maturity or by call for redemption, in the order of their
due dates, with interest on the overdue principal at the rate borne by the respective
Bonds from the respective dates upon which such Bonds became due and payable,
and, if the amount available shall not be sufficient to pay in full all the principal
or Redemption Price of the Bonds due on any date, together with such interest,
then to the payment first of such interest, ratably, according to the amount of
interest due on such date, and then to the payment of such principal or
Redemption Price, ratably, according to the amounts of principal or Redemption
Price due on such date to the persons entitled thereto, without any discrimination
or preference, except as to any difference in the respective rates of interest
specified in the Bonds; and
Third: To the payment of the interest on and the principal or
Redemption Price of the Bonds, the purchase and retirement of the Bonds and the
redemption of the Bonds, all in accordance with the provisions of this Bond
Indenture.
B. If the principal of all of the Bonds shall have become or have been
declared due and payable, to the payment of the principal and interest then due
and unpaid upon the Bonds, with interest on the overdue principal at the rate
borne by the respective Bonds, and, if the amount available shall not be sufficient
to pay in full the whole amount so due and unpaid, then to the payment thereof
ratably, without preference or priority of principal over interest, or of interest over
principal, or of any installment of interest over any other installment of interest, or
of any Bond over any other Bond, according to the amounts due respectively for
principal and interest, to the persons entitled thereto without any discrimination or
preference, except as to any difference in the respective rates of interest specified
in the Bonds.
4205-Bond Trust Indenture
-30-
Section 7.4. Bond Trustee to Represent Holders. The Bond Trustee is hereby
irrevocably appointed (and the successive respective Holders of the Bonds, by taking and
holding the same, shall be conclusively deemed to have so appointed the Bond Trustee) as
trustee and true and lawful attorney-in-fact of the Holders of the Bonds for the purpose of
exercising and prosecuting on their behalf such rights and remedies as may be available to such
Holders under the provisions of the Bonds, this Bond Indenture, the Loan Agreement, the Series
2005 Master Note, the Act and applicable provisions of any other law. Upon the occurrence and
continuance of an Event of Default or other occasion giving rise to a right in the Bond Trustee to
represent the Holders, the Bond Trustee in its discretion may, and upon the written request of the
Holders of more than 50% in aggregate principal amount of the Bonds then Outstanding, and
upon being indemnified to its reasonable satisfaction therefor, shall, proceed to protect or enforce
its rights or the rights of the Holders of the Bonds by such appropriate action, suit, mandamus or
other proceedings as it or the Holders of more than 50% in aggregate principal amount of the
Bonds then Outstanding shall deem most effectual to protect and enforce any such right, at law
or in equity, either for the specific performance of any covenant or agreement contained herein,
or in aid of the execution of any power herein granted, or for the enforcement of any other
appropriate legal or equitable right or remedy vested in the Bond Trustee or the Holders of the
Bonds under this Bond Indenture, the Loan Agreement, the Series 2005 Master Note, the Act or
any other law; and the Bond Trustee shall be entitled, as a matter of right, to the appointment of a
receiver of the Revenues and other assets pledged under this Bond Indenture or the Bonds. If
more than one such request is received by the Bond Trustee from Holders, the Bond Trustee
shall follow the written request executed by the Holders of the greater percentage of Bonds then
Outstanding in excess of 50%. All rights of action under this Bond Indenture or the Bonds or
otherwise may be prosecuted and enforced by the Bond Trustee without the possession of any of
the Bonds or the production thereof in any proceeding relating thereto, and any such suit, action
or proceeding instituted by the Bond Trustee shall be brought in the name of the Bond Trustee
for the benefit and protection of all the Holders of such Bonds, subject to the provisions of this
Bond Indenture (including Section 6.2).
Section 7.5. Holders' Direction of Proceedings. The Holders of more than 50% in
aggregate principal amount of the Bonds then Outstanding, shall be entitled (provided that the
Bond Trustee shall have the right to decline to follow any such direction which in the opinion of
the Bond Trustee would be unjustly prejudicial to Holders not parties to such direction or would
subject the Bond Trustee to liability or for which it hasn't received indemnity required under
Section 8.3(d) hereof), by an instrument or concurrent instruments in writing executed and
delivered to the Bond Trustee, to control and direct the enforcement of all rights and remedies
granted to the Holders or the Bond Trustee for the benefit of the Holders under this Bond
Indenture, including, without limitation, (i) the right to accelerate the principal of the Bonds as
described in this Bond Indenture, and (ii) the right to annul any declaration of acceleration.
Section 7.6. Limitation on Holders' Right to Sue. No Holder of any Bond shall
have the right to institute any suit, action or proceeding, at law or in equity, for the protection or
enforcement of any right or remedy under this Bond Indenture, the Loan Agreement, the Series
2005 Master Note, the Act or any other applicable law with respect to such Bond unless (1) such
Holder previously shall have given to the Bond Trustee written notice of the occurrence of an
Event of Default; (2) the Holders of more than 50% in aggregate principal amount of the Bonds
then Outstanding shall have made a written request upon the Bond Trustee to exercise the
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powers hereinbefore granted or to institute such suit, action or proceeding in its own name;
(3) such Holders shall have tendered to the Bond Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such request; and (4) the Bond Trustee
shall have refused or omitted to comply with such request for a period of 60 days after such
written request shall have been received by, and said tender of indemnity shall have been made
to, the Bond Trustee.
Such notification, request, tender of indemnity and refusal or omISSIOn are hereby
declared, in every case, to be conditions precedent to the exercise by any Holder of Bonds of any
remedy hereunder or under law, it being understood and intended that no one or more Holders of
Bonds shall have any right in any manner whatever by his or their action to affect, disturb or
prejudice the security of this Bond Indenture or the rights of any other Holders of Bonds, or to
enforce any right under this Bond Indenture, the Loan Agreement, the Series 2005 Master Note,
the Act or other applicable law with respect to the Bonds, except in the manner herein provided,
and that all proceedings at law or in equity to enforce any such right shall be instituted, had and
maintained in the manner herein provided and for the benefit and protection of all Holders of the
Outstanding Bonds, subject to the provisions of this Bond Indenture (including Section 6.2).
Section 7.7.
Unconditional Right of Holders to Receive Payments.
Nothing in Section 7.6 or in any other provision of this Bond Indenture, or in the Bonds
shall affect or impair the obligation of the Issuer, which is absolute and unconditional, to pay the
principal or Redemption Price of and interest on the Bonds to the respective Holders of the
Bonds at their respective dates of maturity, or upon call for redemption, as herein provided, but
only out of the Revenues and other assets herein pledged therefor, or affect or impair the right of
such Holders, which is also absolute and unconditional, to enforce such payment by virtue of the
contract embodied in the Bonds.
Section 7.8. Termination of Proceedings. In case any proceedings taken by the
Bond Trustee or anyone or more Holders on account of any Event of Default shall have been
discontinued or abandoned for any reason or shall have been determined adversely to the Bond
Trustee or the Holders, then in every such case the Issuer, the Bond Trustee and the Holders,
subject to any determination in such proceedings, shall be restored to their former positions and
rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the
Issuer, the Bond Trustee and the Holders shall continue as though no such proceedings had been
taken.
Section 7.9. Remedies Not Exclusive, No remedy herein conferred upon or
reserved to the Bond Trustee or to the Holders of the Bonds is intended to be exclusive of any
other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall
be cumulative and in addition to any other remedy given hereunder or now or hereafter existing
at law or in equity or otherwise.
Section 7.10. No Waiver of Default. No delay or omission by the Bond Trustee or
by any Holder of the Bonds to exercise any right or power arising upon the occurrence of any
default shall impair any such right or power or shall be construed to be a waiver of any such
default or an acquiescence therein; and every power and remedy given by this Bond Indenture to
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the Bond Trustee or to the Holders of the Bonds may be exercised from time to time and as often
as may be deemed expedient.
ARTICLE VIII
THE BOND TRUSTEE
Section 8.1.
Duties, Immunities and Liabilities of Bond Trustee.
(a) The Bond Trustee shall, prior to an Event of Default, and after the curing of all
Events of Default which may have occurred, perform such duties and only such duties as are
specifically set forth in this Bond Indenture. The Bond Trustee shall, during the existence of any
Event of Default (which has not been cured), exercise such of the rights and powers vested in it
by this Bond Indenture, and shall use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances then prevailing in the conduct of
such person's own affairs.
(b) The Issuer may, and upon the written direction of the Borrower unless an Event of
Default shall have occurred and then be continuing, shall, remove the Bond Trustee at any time
and shall remove the Bond Trustee if at any time requested to do so by an instrument or
concurrent instruments in writing signed by the Holders of not less than a majority in aggregate
principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing) or
if at any time the Bond Trustee shall cease to be eligible in accordance with subsection (e) of this
Section, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or if a
receiver of the Bond Trustee or its property shall be appointed, or any public officer shall take
control or charge of the Bond Trustee or its property or affairs for the purpose of rehabilitation,
conservation or liquidation, in each case, by giving written notice of such removal to the Bond
Trustee, and thereupon the Issuer shall appoint, at the prior written direction of the Borrower, a
successor trustee by an instrument in writing. The Bond Trustee shall not be relieved of its
duties until such successor trustee has accepted appointment.
(c) The Bond Trustee may at any time resign by giving prior written notice of such
resignation to the Issuer and the Borrower and by giving the Holders notice of such resignation
by mail at their addresses appearing on the registration books maintained by the Bond Trustee.
Upon receiving such notice of resignation, the Issuer shall, at the prior written direction of the
Borrower, promptly appoint a successor trustee by an instrument in writing. The Bond Trustee
shall not be relieved of its duties until such successor trustee has accepted appointment.
(d) Any removal or resignation of the Bond Trustee and appointment of a successor
trustee shall become effective upon acceptance of appointment by the successor trustee. If no
successor trustee shall have been appointed and have accepted appointment within 45 days of
giving notice of removal or notice of resignation as aforesaid, the resigning Bond Trustee may
petition any court of competent jurisdiction for the appointment of a successor trustee, and such
court may thereupon, after such notice (if any) as it may deem proper, appoint such successor
trustee. Any successor trustee appointed under this Bond Indenture shall signify its acceptance
of such appointment by executing and delivering to the Issuer, to the Borrower and to the
predecessor Bond Trustee a written acceptance thereof, and thereupon such successor trustee,
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without any further act, deed or conveyance, shall become vested with all the moneys, estates,
properties, rights, powers, trusts, duties and obligations of such predecessor Bond Trustee, with
like effect as if originally named Bond Trustee herein; provided that, at the direction of the
Issuer, the Borrower or the successor trustee, such predecessor Bond Trustee, after payment of
all amounts owned to it, shall execute and deliver any and all instruments of conveyance or
further assurance and do such other things as may reasonably be required for more fully and
certainly vesting in and confirming to such successor trustee all the right, title and interest of
such predecessor Bond Trustee in and to any property held by it under this Bond Indenture and
shall pay over, transfer, assign and deliver to the successor trustee any money or other property
subject to the trusts and conditions herein set forth. Upon request of the successor trustee, the
Issuer shall execute and deliver any and all instruments as may be reasonably required for more
fully and certainly vesting in and confirming to such successor trustee all such moneys, estates,
properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a
successor trustee as provided in this subsection, the successor Bond Trustee, at the expense of
the Borrower, shall mail to each Rating Agency which is then rating the Bonds and to the
Holders of all Outstanding Bonds at their addresses appearing on the registration books
maintained by the Bond Trustee notice of the succession of such trustee to the trusts hereunder.
( e) Any trustee appointed under the provisions of this Section as the successor Bond
Trustee shall be a trust company or bank having the powers of a trust company having a
combined capital and surplus of at least fifty million dollars ($50,000,000), and shall be subject
to supervision or examination by federal or state authority. If such bank or trust company
publishes a report of condition at least annually, pursuant to law or to the requirements of any
supervising or examining authority above referred to, then, for the purposes of this subsection,
the combined capital and surplus of such bank or trust company shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition so published. In
case at any time the Bond Trustee or any successor trustee shall cease to be eligible in
accordance with the provisions of this subsection (e), the Bond Trustee shall resign immediately
in the manner and with the effect specified in this Section.
Section 8.2. Merger or Consolidation. Any Person into which the Bond Trustee
may be merged or converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which it shall be a party, or any Person to which the
Bond Trustee may sell or transfer all or substantially all of its corporate trust business, provided
such company shall be eligible under subsection ( e) of Section 8. I, shall be the successor Bond
Trustee, without the execution or filing of any paper or any further act, anything herein to the
contrary notwithstanding. Upon any such merger or consolidation, the successor Bond Trustee
shall notify the Issuer, the Borrower and shall thereafter mail to the Holders of all Outstanding
Bonds, at their addresses appearing on the bond registration books maintained by the Bond
Trustee, notice of the succession of such trustee to the trusts hereunder.
Section 8.3.
Liability of Bond Trustee.
(a) The recitals of facts herein and in the Bonds shall be taken as statements of the
Issuer, and the Bond Trustee assumes no responsibility for the correctness of the same, and
makes no representations as to the validity, enforceability or sufficiency of this Bond Indenture
or of the Bonds and shall incur no responsibility in respect thereof, other than in connection with
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the duties or obligations herein or in the Bonds assigned to or imposed upon it. The Bond
Trustee shall, however, be responsible for its representations contained in its certificate of
authentication on the Bonds. The Bond Trustee shall not be liable in connection with the
performance of its duties hereunder, except for its own negligence or willful misconduct. The
Bond Trustee may become the Holder of Bonds with the same rights it would have if it were not
Bond Trustee, and, to the extent permitted by law, may act as depository for and permit any of its
officers or directors to act as a member of, or in any other capacity with respect to, any
committee formed to protect the rights of Holders, whether or not such committee shall represent
the Holders of a majority in principal amount of the Bonds then Outstanding.
(b) The Bond Trustee shall not be liable for any error of judgment made in good faith
by a responsible officer, unless it shall be proved that the Bond Trustee was negligent in
ascertaining the pertinent facts, or that the Bond Trustee acted in bad faith or with willful
misconduct.
(c) The Bond Trustee shall not be liable with respect to any action taken or omitted to
be taken by it in good faith, in accordance with the direction of the Holders of more than 50% in
aggregate principal amount of the Bonds at the time Outstanding, relating to the time, method
and place of conducting any proceeding for any remedy available to the Bond Trustee, or
exercising any trust or power conferred upon the Bond Trustee under this Bond Indenture.
(d) The Bond Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Bond Indenture at the request, order or direction of any of the Holders
pursuant to the provisions of this Bond Indenture unless such Holders shall have offered to the
Bond Trustee reasonable security or indemnity against the costs, expenses and liabilities which
may be incurred therein or thereby. The permissive right of the Bond Trustee to do things
enumerated in this Bond Indenture shall not be construed as a duty, and the Bond Trustee shall
not be answerable for other than its negligence or willful misconduct.
(e) The Bond Trustee shall not be liable for any action taken by it in good faith and
believed by it to be authorized or within the discretion or the rights and powers conferred upon it
by this Bond Indenture, unless it shall be proved that the Bond Trustee was negligent or acted
with willful misconduct in taking such action.
(f) The Bond Trustee shall not be deemed to have knowledge of any Loan Default
Event or any Event of Default hereunder, except for failure by the Borrower to make Loan
Repayments as required by the Loan Agreement, unless and until it shall have actual knowledge
thereof, or shall have received written notice thereof, at its designated Corporate Trust Office.
Except as otherwise expressly provided herein, the Bond Trustee shall not be bound to ascertain
or inquire as to the performance or observance of any of the terms, conditions, covenants or
agreements herein or of any of the documents executed in connection with the Bonds, or as to the
existence of an Event of Default hereunder, except for failure by the Borrower to make Loan
Repayments as required by the Loan Agreement.
(g) The Bond Trustee shall not be bound to ascertain or inquire as to the validity or
genuineness of any collateral given to or held by it.
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(h) The Bond Trustee shall not be concerned with or accountable to anyone for the
use or application of any moneys which shall be released or withdrawn in accordance with the
provisions hereof.
Section 8.4. Right of Bond Trustee to Relv on Documents. The Bond Trustee shall
be protected in acting upon any notice, resolution, requisition, request, consent, order, certificate,
report, opinion, bond or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties. The Bond Trustee may consult with counsel,
who may be counsel of or to the Issuer or the Borrower, with regard to legal questions, and the
opinion of such counsel shall be full and complete authorization and protection in respect of any
action taken or suffered by it hereunder in good faith and in accordance therewith.
The Bond Trustee shall not be bound to recognize any person as the Holder of a Bond
unless and until such Bond is submitted for inspection, if required, and his title thereto is
satisfactorily established, if disputed.
Whenever in the administration of the trusts imposed upon it by this Bond Indenture, the
Bond Trustee shall deem it necessary or desirable that a matter be proved or established prior to
taking or suffering any action hereunder, such matter (unless other evidence in respect thereof is
specifically prescribed hereby) may be deemed to be conclusively proved and established by a
Certificate of the Issuer or a Certificate of the Borrower, and such Certificate shall be full
warrant to the Bond Trustee for any action taken or suffered in good faith under the provisions of
this Bond Indenture in reliance upon such Certificate, but in its discretion the Bond Trustee may,
in lieu thereof, accept other evidence of such matter or may require such additional evidence as
to it may deem reasonable.
Section 8.5. Preservation and Inspection of Documents. All documents received by
the Bond Trustee under the provisions of this Bond Indenture shall be retained in its possession
and shall be subject at all reasonable times to the inspection of the Issuer, the Borrower and any
Holder, and their agents and representatives duly authorized in writing, at reasonable hours and
under reasonable conditions.
Section 8.6. Compensation and Indemnification. The Issuer shall cause to be paid
(solely from Additional Payments) or upon the occurrence of an Event of Default, as provided in
Section 7.3 hereof, to the Bond Trustee reasonable compensation for all services rendered under
this Bond Indenture, and also all reasonable expenses, charges, legal and consulting fees and
other disbursements, and those of its attorneys, agents and employees, which are incurred in and
about the performance of its powers and duties under this Bond Indenture. The agreement of the
Borrower to pay such fees as set forth in the Loan Agreement fully satisfies the Issuer's
obligation described in the previous sentence. The obligations of the Issuer under this Section
shall survive resignation or removal of the Bond Trustee under this Bond Indenture and payment
of the Bonds and discharge of this Bond Indenture.
No provision of this Bond Indenture shall require the Bond Trustee to expend or risk its
own funds or otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for
4205-Bond Trust Indenture
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believing that repayment of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
Section 8.7. Employment of Experts. The Bond Trustee is hereby authorized to
employ as its agents such attorneys at law, certified public accountants, consulting engineers and
recognized authorities in their fields (who are not employees of the Bond Trustee) as it
reasonably may deem necessary to assist it to carry out any of its obligations hereunder, and it
shall be reimbursed by the Borrower for all reasonable expenses and charges in so doing.
Section 8.8. No Liability for Acts of Master Trustee. The Bond Trustee shall not
be personally liable by reason of any act or omission of the Master Trustee, nor will the act or
omission of the Master Trustee be imputed to the Bond Trustee. Anything herein to the contrary
notwithstanding, whenever it is provided that the Bond Trustee shall take any action, including
the giving of any notice, or refraining from taking any action upon the happening or continuation
of a specified event, or upon the fulfillment of any condition, or upon the request of the Holders,
the Bond Trustee shall have no liability for failure to take such action or for failure to refrain
from taking such action if by the terms of the Master Trust Indenture, the Supplement, or the
Series 2005 Master Note, or because of the failure to act or refrain from action on the part of the
Master Trustee, it is unable to take such action or to refrain from taking such action.
ARTICLE IX
MODIFICA TION OR AMENDMENT OF THE BOND INDENTURE
Section 9.1.
Amendments Permitted.
(a) This Bond Indenture and the rights and obligations of the Issuer, the Holders of
the Bonds and the Bond Trustee may be modified or amended from time to time and at any time
by an indenture or indentures supplemental hereto, which the Issuer and the Bond Trustee may
enter into when there shall have been filed with the Bond Trustee the written consent of the
Holders of more than 50% in aggregate principal amount of the Bonds then Outstanding;
provided that if such modification or amendment will, by its terms, not take effect so long as any
Bonds of any particular maturity remain Outstanding, the consent of the Holders of such Bonds
shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose of
calculation of Bonds Outstanding under this Section. No such modification or amendment shall
(I) extend the maturity of any Bond, or reduce the amount of principal thereof, or extend the
time of payment or reduce the amount of any Mandatory Amortization Installments required by
this Bond Indenture for the payment of any Bond, or reduce the rate of interest thereon, or extend
the time of payment of interest thereon, or change the transferability provisions with respect to
the Bonds, without the consent of the Holder of each Bond so affected, or (2) reduce the
percentage of Bonds the consent of the Holders of which is required to effect any such
modification or amendment, or (3) permit the creation of any lien on the Revenues and other
assets pledged under this Bond Indenture prior to or on a parity with the lien created by this
Bond Indenture, or deprive the Holders of the Bonds of the lien created by this Bond Indenture
on such Revenues and other assets (except as expressly provided in this Bond Indenture),
without the consent of the Holders of all of the Bonds then Outstanding.
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It shall not be necessary for the consent of the Holders to approve the particular form of
any Supplemental Bond Indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
If at any time the Issuer or the Borrower shall request the Bond Trustee to enter into any
supplement or amendment to this Bond Indenture for any of the purposes of this Section 9.1 (a),
the Bond Trustee shall, at the expense of the Borrower, cause notice of the proposed execution of
such supplement or amendment to be mailed, by first class mail, postage prepaid, to all Holders
of record at their addresses appearing on the registration books maintained by the Bond Trustee.
Such notice shall briefly set forth the nature of the proposed supplement or amendment and shall
state that copies thereof are on file at the designated Corporate Trust Office of the Bond Trustee
for inspection by all Holders.
Whenever, at any time within one year after the date of the mailing of such notice, the
Issuer or the Borrower shall deliver to the Bond Trustee an instrument or instruments in writing
purporting to be executed by the Holders of more than 50% in aggregate principal amount of the
Bonds then Outstanding, which instrument or instruments shall refer to the proposed supplement
or amendment described in such notice and shall specifically consent to and approve the
execution thereof in substantially the form of the copy thereof referred to in such notice,
thereupon, but not otherwise, the Bond Trustee may execute such supplement or amendment in
substantially such form, without liability or responsibility to any Holder of any Bond, whether or
not such Holder shall have consented thereto.
If the Holders of more than 50% in aggregate principal amount of the Bonds Outstanding,
at the time of execution of such Supplemental Bond Indenture shall have consented to and
approved the execution thereof in accordance with this Section 9.1 (a), no Holder of any Bond
shall have any right to object to the execution of such Supplemental Bond Indenture, or to object
to any of the terms and provisions contained therein or the operation thereof or in any manner to
question the propriety of the execution thereof, or to enjoin or restrain the Bond Trustee or the
Issuer from executing the same or from taking any action pursuant to the provisions thereof.
Nothing contained in this Section 9.1 (a) shall, or shall be construed to, alter, limit or
restrict in any manner or to any extent the rights of the Issuer and the Bond Trustee to enter into
an indenture or indentures supplemental hereto pursuant to and in accordance with Section 9.1 (b)
hereof.
(b) This Bond Indenture may be modified or amended from time to time and at any
time by an indenture or indentures supplemental hereto, which the Issuer and the Bond Trustee
may enter into, without the consent of any Holders, but only for anyone or more of the following
purposes:
(i) to add to the covenants and agreements of the Issuer in this Bond
Indenture other covenants and agreements thereafter to be observed, by the Issuer which
are not contrary to or inconsistent with this Bond Indenture as then in effect, or to pledge
or assign additional security for the Bonds (or any portion thereof), or to surrender any
right or power herein reserved to or conferred upon the Issuer if the surrender of such
right or power is not contrary to or inconsistent with the covenants and agreements of the
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Issuer contained in this Bond Indenture as then in effect, provided, further, that no such
covenant, agreement, pledge, assignment or surrender shall materially adversely affect
the interests of the Holders of the Bonds;
(ii) to make such provisions for purposes of curing any ambiguity,
inconsistency or omission in or from this Bond Indenture, or to cure or correct any
defective provision contained in this Bond Indenture, or to add or to modify provisions of
this Bond Indenture in regard to matters or questions arising under this Bond Indenture,
as the Issuer or the Borrower may deem necessary or desirable and as are not contrary to
or inconsistent with this Bond Indenture as then in effect, and which shall not materially
adversely affect the interests of the Holders of the Bonds;
(iii) to modify, amend or supplement this Bond Indenture in such manner as to
permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any
similar federal statute hereafter in effect, and to add such other terms, conditions and
provisions as may be permitted by said act or similar federal statute, and which shall not
materially adversely affect the interests of the Holders of the Bonds;
(iv) to provide for the issuance of coupon Bonds, if at such time federal law
shall permit the issuance of coupon Bonds; provided that prior to such issuance the Issuer
shall have obtained the Opinion of Bond Counsel to the effect that such issuance will not
affect the exclusion of the interest on the Bonds from gross income of the Holders for
purposes of federal income taxation;
(v) to preserve the status of the interest on the Bonds as excluded from gross
income of the Holders for purposes of federal income taxation; or
(vi) to make any other change which shall not materially adversely affect the
rights or the interests of the Holders of the Bonds.
The Bond Trustee may consult with counsel, who may be counsel to the Issuer or the
Borrower, prior to entering into any Supplemental Bond Indenture pursuant to this
subsection (b), and the opinion of such counsel shall be full and complete authorization and
protection in respect of the execution and delivery by the Bond Trustee of any such
Supplemental Bond Indenture in good faith in accordance therewith.
( c) The Bond Trustee may in its discretion, but shall not be obligated to, enter into a
Supplemental Bond Indenture authorized by this Section which materially adversely affects the
Bond Trustee's own rights, duties or immunities under this Bond Indenture.
(d) No such Supplemental Bond Indenture shall become effective unless and until the
Borrower shall have consented thereto in writing.
Section 9.2. Effect of Supplemental Bond Indenture. Upon the execution of any
Supplemental Bond Indenture pursuant to this Article, this Bond Indenture shall be deemed to be
modified and amended in accordance therewith, and the respective rights, duties and obligations
under this Bond Indenture of the Issuer, the Bond Trustee and all Holders of Bonds Outstanding
shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such
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modification and amendment, and all the terms and conditions of any such Supplemental Bond
Indenture shall be deemed to be part of the terms and conditions of this Bond Indenture for any
and all purposes,
Section 9.3. Endorsement of Bonds; Preparation of New Bonds. Bonds delivered
after the execution of any Supplemental Bond Indenture pursuant to this Article may, and if the
Bond Trustee so determines shall, bear a notation by endorsement or otherwise in form approved
by the Issuer and the Bond Trustee as to any modification or amendment provided for in such
Supplemental Bond Indenture, and, in that case, a suitable notation shall be made on any Bond at
the request of the Holder thereof upon the presentation of such Bond for such purpose at the
designated Corporate Trust Office of the Bond Trustee or at such additional offices as the Bond
Trustee may select and designate for that purpose. If the Supplemental Bond Indenture shall so
provide, new Bonds so modified as to conform, in the opinion of the Issuer and the Bond
Trustee, to any modification or amendment contained in such Supplemental Bond Indenture,
shall be prepared and executed by the Issuer and authenticated by the Bond Trustee and shall be
exchanged at the designated Corporate Trust Office of the Bond Trustee for the Bonds then
Outstanding, without cost to the Holders, upon surrender of such Bonds for cancellation.
Section 9.4. Amendment of Particular Bonds. The provisions of this Article shall
not prevent any Holder from accepting any amendment as to the particular Bonds held by him,
provided that due notation thereof is made on such Bonds.
ARTICLE X
DEFEASANCE
Section 10.1. Discharge of Bond Indenture. Bonds may be paid or caused to be paid
by the Issuer in any of the following ways, provided that the Issuer also pays or causes to be paid
any other sums payable hereunder by the Issuer and related to such Bonds:
(a) by paying or causing to be paid the principal of and interest on Outstanding
Bonds, as and when the same become due and payable;
(b) by depositing with the Bond Trustee, in trust at or before maturity, money or
Defeasance Securities in the amount necessary (as provided in Section 10.3), in the opinion of an
Accountant (or other verification professional) delivered to the Bond Trustee, to payor redeem
Outstanding Bonds all as more fully described in Section 10,3; or
(c) by delivering to the Bond Trustee, for cancellation by it, Outstanding Bonds.
If the Issuer shall payor cause to be paid all Outstanding Bonds and shall also payor
cause to be paid all other sums payable hereunder by the Issuer, and notwithstanding that any
Bonds shall not have been surrendered for payment, this Bond Indenture and the pledge of
Revenues and other assets made under this Bond Indenture, and all covenants, agreements and
other obligations of the Issuer under this Bond Indenture, shall cease, terminate, become void
and be completely discharged and satisfied, except with respect to the transfer or exchange of
Bonds provided for herein or therein, the payment of principal of and interest on the Bonds when
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due, the redemption of the Bonds provided for in Article IV hereof and the obligations of the
Issuer under Section 6.6 and Section 8.6 hereof. In such event, upon the direction of the Issuer,
the Bond Trustee shall cause an accounting for such period or periods as may be requested by the
Issuer to be prepared and filed with the Issuer and shall execute and deliver to the Issuer all such
instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the
Bond Trustee shall pay over, transfer, assign or deliver all moneys or securities or other property
held by it pursuant to this Bond Indenture to the Borrower, which are not required for the
payment or redemption of Bonds not theretofore surrendered for such payment or redemption.
Section 10.2. Effect of Defeasance. Upon the deposit with the Bond Trustee, in
trust, at or before maturity, of money or securities in the amount necessary (as provided in
Section 10.3) to payor redeem any Outstanding Bond (whether upon or prior to its maturity or
the redemption date of such Bond), provided that, if such Bond is to be redeemed prior to
maturity, notice of such redemption shall have been given as in Article IV provided or provision
satisfactory to the Bond Trustee shall have been made for the giving of such notice and payment
of all fees due and owing to the Issuer hereunder and under the Loan Agreement, this Bond
Indenture shall be released and discharged with respect to such Bond, but the liability of the
Issuer in respect of such Bond and the rights of the Holder thereunder shall continue, provided
that thereafter the Holder thereof shall be entitled only to the payment of such Bond out of such
money or securities deposited with the Bond Trustee as aforesaid for its payment, and provided,
further, that the provisions of Section 10.4 shall apply in any event.
The Issuer or the Borrower may at any time surrender to the Bond Trustee for
cancellation by it any Bonds previously issued and delivered, which the Issuer or the Borrower
may have acquired in any manner whatsoever, and such Bonds, upon such surrender and
cancellation, shall be deemed to be paid and retired.
Section 10.3. Deposit of Money or Securities with Bond Trustee. Whenever in this
Bond Indenture it is provided or permitted that there be deposited with or held in trust by the
Bond Trustee money or securities in the amount necessary to payor redeem any Bonds, the
money or securities to be so deposited or held may include money or securities held by the Bond
Trustee in the funds and accounts established pursuant to this Bond Indenture and shall be:
(a) Lawful money of the United States of America in an amount equal to the principal
amount of such Bonds and all unpaid interest thereon to maturity, except that, in the case of
Bonds which are to be redeemed prior to maturity and in respect of which notice of such
redemption shall have been given as in Article IV provided or provision satisfactory to the Bond
Trustee shall have been made for the giving of such notice, the amount to be deposited or held
shall be the Redemption Price of such Bonds and all unpaid interest thereon to the redemption
date; or
(b) Defeasance Securities not subject to call and redemption by the issuer thereof the
principal of and interest on which when due will provide money sufficient to pay the principal or
Redemption Price of, and all unpaid interest to maturity, or to the redemption date, as the case
may be, on the Bonds to be paid or redeemed, as such principal or Redemption Price and interest
become due, provided that, in the case of Bonds which are to be redeemed prior to the maturity
thereof, notice of such redemption shall have been given as in Article IV provided or provision
4205-Bond Trust Indenture
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satisfactory to the Bond Trustee shall have been made for the giving of such notice; provided, in
each case, that the Bond Trustee shall have been irrevocably instructed (by the terms of this
Bond Indenture or by the direction of the Issuer) to apply such money to the payment of such
principal or Redemption Price and interest with respect to such Bonds.
On or prior to the deposit of money or securities with the Bond Trustee, there also shall
be delivered to the Bond Trustee the following:
(a) Opinion of counsel that refunding and defeasance will not adversely impact the
exclusion from gross income for federal income tax purposes of interest on the
Bonds or refunded bonds.
(b) Opinion of counsel that (A) the escrow deposit will not constitute a voidable
preference or transfer under the Federal Bankruptcy Code or any other similar
state or federal statute in the event the Issuer or the Borrower becomes a debtor
within the meaning of the Federal Bankruptcy Code or comes within the
protection of such similar state or federal statute ("Insolvency Event"), and (B) in
such Insolvency Event, the escrow deposit will not be treated as part of the estate
of the Issuer or the Borrower.
(c) The escrow agreement shall provide that:
(i) Any substitution of securities shall reqUIre a CPA verification by a
nationally-recognized firm.
(ii) The Issuer and the Borrower will not exercise any optional redemption of
Bonds secured by the escrow agreement or any other redemption other than mandatory
sinking fund redemptions unless (i) the right to make any such redemption has been
expressly reserved in the escrow agreement and such reservation has been disclosed in
detail in the official statement for the refunding bonds, and (ii) as a condition of any such
redemption there shall be provided a CPA verification by a nationally-recognized firm as
to the sufficiency of escrow receipts without reinvestment to meet the escrow
requirements remaining following such redemption.
Section 10.4. Payment of Bonds After Discharge of Bond Indenture.
Notwithstanding any provisions of this Bond Indenture, any moneys held by the Bond Trustee in
trust for the payment of the principal or Redemption Price of, or interest on, any Bonds and
remaining unclaimed at the end of the Escheat Period shall, upon the direction of the Borrower,
be repaid to the Borrower free from the trusts created by this Bond Indenture, and all liability of
the Bond Trustee with respect to such moneys shall thereupon cease. Thereafter, the Holders of
the Bonds so payable shall be entitled to look only to the Borrower for payment thereof.
4205-Bond Trust Indenture
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ARTICLE XI
MISCELLANEOUS
Section 11.1. Liability of Issuer Limited to Revenues. Notwithstanding anything in
this Bond Indenture or in the Bonds, the Issuer shall not be required to advance any moneys
derived from any source other than the Revenues and other assets pledged under this Bond
Indenture for any of the purposes in this Bond Indenture mentioned, whether for the payment of
the principal or Redemption Price of or interest on the Bonds or for any other purpose of this
Bond Indenture.
No provision, covenant or agreement contained in this Bond Indenture or in the Bonds, or
any obligations herein or therein imposed upon the Issuer, or the breach thereof, shall constitute
or give rise to or impose upon the Issuer a pecuniary liability or a charge upon their general
credit or a pecuniary liability of a member or commissioner of the Issuer or their officers and
employees on the Bonds or for any act or omission related to the authorization and issuance of
the Bonds. The Issuer has no taxing powers. In making the agreements, provisions and
covenants set forth in this Bond Indenture, the Issuer has not obligated itself except with respect
to the application of the Revenues and other assets pledged hereunder.
Section 11.2. Successor Is Deemed Included in All References to Predecessor.
Whenever in this Bond Indenture either the Issuer or the Bond Trustee is named or referred to,
such reference shall be deemed to include the successors or assigns thereof, and all the covenants
and agreements in this Bond Indenture contained by or on behalf of the Issuer or the Bond
Trustee shall bind and inure to the benefit of the respective successors and assigns thereof,
whether so expressed or not.
Section 11.3. Limitation of Rights to Parties, the Borrower and Holders. Nothing in
this Bond Indenture or in the Bonds, expressed or implied, is intended or shall be construed to
confer upon, or to give or grant to any person or entity other than the Issuer, the Bond Trustee,
the Borrower and the Holders of the Bonds any legal or equitable right, remedy or claim under or
in respect of this Bond Indenture or the Bonds, or any covenant, condition or provision therein or
herein contained, or any stipulation thereof or hereof; and all such covenants, stipulations,
conditions and provisions are and shall be held to be for the sole and exclusive benefit of the
Issuer, the Bond Trustee, the Borrower and the Holders of the Bonds.
Section 11.4, Waiver of Notice. Whenever in this Bond Indenture the giving of
notice by mail or otherwise is required, the giving of such notice may be waived in writing by
the Person entitled to receive such notice, and in any such case the giving or receipt of such
notice shall not be a condition precedent to the validity of any action taken in reliance upon such
WaIver.
4205-Bond Trust Indenture
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Section 11,5. Destruction of Bonds. Whenever in this Bond Indenture provision is
made for the cancellation by the Bond Trustee and the delivery to the Issuer or the Bond Trustee
of any Bond, the Bond Trustee shall, in lieu of such cancellation and delivery, destroy such Bond
(in the presence of an officer of the Issuer if the Issuer shall so require) and, if requested, deliver
a certificate of such destruction to the Issuer and the Borrower.
Section 11.6. Severability of Invalid Provisions. If anyone or more of the
provisions contained in this Bond Indenture or the Bonds shall for any reason be held to be
invalid, illegal or unenforceable in any respect, then such provision or provisions shall be
deemed severable from the remaining provisions contained in this Bond Indenture, and such
invalidity, illegality or unenforceability shall not affect any other provision of this Bond
Indenture, and this Bond Indenture shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein. The Issuer and the Bond Trustee each
hereby declares that it would have entered into this Bond Indenture and each and every other
Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of the Bonds
pursuant hereto, irrespective of the fact that anyone or more Sections, paragraphs, sentences,
clauses or phrases of this Bond Indenture may be held illegal, invalid or unenforceable.
Section 11.7.
Notice and Other Information.
(a) Unless otherwise expressly specified or permitted by the terms hereof, all notices
or other communications required or permitted hereunder shall be deemed sufficiently given or
served if delivered by facsimile transmission with prompt telephonic or electronic confirmation
of receipt, or personally by hand, or sent by nationally recognized overnight courier service, or
by certified or registered mail, postage prepaid, and return receipt requested, addressed as
follows:
(i) If to the Issuer:
Monroe County Industrial Development Authority
5100 College Road
Key West, Florida 33040
Attention: Chairman
Telephone No,: (305) 292-3470
(ii) If to the Bond Trustee:
Wachovia Bank, National Association
200 South Biscayne Boulevard, 14th Floor
Miami, Florida 33131
Attention: Corporate Trust Department
Telephone: (305) 789-4685
Facsimile: (305) 789-4678
(iii) If to the Borrower:
North Key Largo Utility Corp.
24 Dockside Lane, Suite 550
4205-Bond Trust Indenture
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Key Largo, Florida 33037
Attention: President
Telephone: (305) 367-3067
Facsimile: (305) 367-4246
(iv) If to the Master Trustee:
Wachovia Bank, National Association
200 South Biscayne Boulevard, 14th Floor
Miami, Florida 33131
Attention: Corporate Trust Department
Telephone: (305) 789-4685
Facsimile: (305) 789-4678
Any of the parties listed above may at any time and from time to time by notice in writing
to the others designate a different address or addresses for notices under this Bond Indenture.
Section 11.8. Evidence of Rights of Holders. Any request, consent or other
instrument required or permitted by this Bond Indenture to be signed and executed by Holders
may be in any number of concurrent instruments of substantially similar tenor and shall be
signed or executed by such Holders in person or by an agent or agents duly appointed in writing.
Proof of the execution of any such request, consent or other instrument, or of a writing
appointing any such agent, shall be sufficient for any purpose of this Bond Indenture and shall be
conclusive in favor of the Bond Trustee and the Issuer if made in the manner provided in this
Section.
The fact and date of the execution by any person of any such request, consent or other
instrument or writing may be proved by the certificate of any notary public or other officer of
any jurisdiction authorized by the laws thereof to take acknowledgments of deeds, certifying that
the person signing such request, consent or other instrument acknowledged to him the execution
thereof or by an affidavit of a witness of such execution duly sworn to before such notary public
or other officer.
The ownership of the Bonds shall be proved by the registration books held by the Bond
Trustee.
Any request, consent or other instrument or writing of the Holder of any Bond shall bind
every future Holder of the same Bond, and the Holder of every Bond issued in exchange therefor
or in lieu thereof, in respect of anything done or suffered to be done by the Bond Trustee or the
Issuer in accordance therewith or reliance thereon.
Section 11.9. Disqualified Bonds. In determining whether the Holders of the
requisite aggregate principal amount of Bonds have concurred in any demand, request, direction,
consent or waiver under this Bond Indenture, Bonds which are owned or held by or for the
account of the Issuer or the Borrower, or by any other Borrower on the Bonds or on the Series
2005 Master Note, or by any person directly or indirectly controlling or controlled by, or under
direct or indirect common control with, the Issuer or the Borrower, or any other Borrower on the
4205-Bond Trust Indenture
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Bonds or on the Series 2005 Master Note, shall be disregarded and deemed not to be Outstanding
for the purpose of any such determination. Bonds so owned which have been pledged in good
faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall
establish to the satisfaction of the Bond Trustee the pledgee's right to vote such Bonds and that
the pledgee is not a person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, the Issuer or the Borrower, or any other Borrower on the Bonds or
on the Series 2005 Master Note. In case of a dispute as to such right, any decision by the Bond
Trustee taken upon the advice of counsel shall be full protection to the Bond Trustee.
Section 11.10. Money Held for Particular Bonds. Money held by the Bond Trustee
for the payment of the interest, principal or Redemption Price due on any date with respect to
particular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall, on and
after such date and pending such payment, be set aside on its books and held in trust by it for the
Holders of the Bonds entitled thereto, subject, however, to the provisions of Section 10.4.
Section 11.11. Funds and Accounts. Any fund required by this Bond Indenture to be
established and maintained by the Bond Trustee may be established and maintained in the
accounting records of the Bond Trustee either as a fund or an account and may, for the purposes
of such records, any audits thereof and any reports or statements with respect thereto, be treated
either as a fund or as an account; but all such records with respect to all such funds shall at all
times be maintained in accordance with corporate trust industry standards, to the extent
practicable, and with due regard for the requirements of Section 6.5 and for the protection of the
security of the Bonds and the rights of every Holder thereof
Section 11.12. Waiver of Personal Liability. No member, officer, agent or employee
of the Issuer shall be individually or personally liable for the payment of the principal or
Redemption Price of or interest on the Bonds or be subject to any personal liability or
accountability by reason of the issuance thereof, but nothing herein contained shall relieve any
such member, officer, agent or employee from the performance of any official duty provided by
law or by this Bond Indenture. Notwithstanding the foregoing, no recourse shall be had for the
payment of the principal of or interest on any of the Bonds or for any claim based thereon or
upon any obligation, covenant or agreement contained in this Bond Indenture against any past,
present or future member, officer, agent or employee of the Issuer, either directly or through the
Issuer, under any rule of law or equity, statute or constitution or by the enforcement of any
assessment or penalty or otherwise, and all such liability of any such members, officers, agents
or employees of the Issuer is expressly waived and released as a condition of and in
consideration for the execution of this Bond Indenture and the issuance of the Bonds.
Section 11.13. Execution in Several Counterparts.
executed in several counterparts, each of which shall be an
together constitute one instrument.
This Bond Indenture may be
original and all of which shall
Section 11.14. Governing Law. This Bond Indenture shall be construed in
accordance with and governed by the Constitution and laws of the State. This Bond Indenture
shall be enforceable in the State and any action arising out of this Bond Indenture shall be filed
and maintained in Monroe County, unless the Issuer waives this requirement or except as may
otherwise be required to provide jurisdiction or venue over any matter involving real property.
4205-Bond Trust Indenture
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Section 11.15. Business Days, Except as herein provided, if any date specified herein
shall not be a Business Day, any action required on such date may be made on the next
succeeding Business Day with the same effect as if made on such date.
4205-Bond Trust Indenture
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IN WITNESS WHEREOF, the Issuer has caused this Bond Indenture to be signed in its
name by its Chairman, and attested by its Clerk or Secretary, and Wachovia Bank, National
Association, as Bond Trustee, in token of its acceptance of the trusts created hereunder, has
caused this Bond Indenture to be signed in its corporate name by its authorized officers, all as of
the day and year first above written.
MONROE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By: JL m ,#J
Its: ~ DIXIE . SPEHAR
By:
Its:
4205-Bond Trust Indenture
-48-
(SEAL)
4205-Bond Trust Indenture
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W ACHOVIA BANK, NATIONAL
ASSOCIA TION, as Trustee
By:
Its:
EXHIBIT A
FORM OF SERIES 2005 BONDS
R-
$
MONROE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
INDUSTRIAL DEVELOPMENT REVENUE BOND
(NORTH KEY LARGO UTILITY CORP, PROJECT)
SERIES 2005
Maturity Date
Interest Rate
Dated
CUSIP
March 1, 2025
6.00%
,2005
Principal Amount:
Registered Owner:
The Monroe County Industrial Development Authority, a public body corporate and
politic organized and existing under the laws of the State of Florida (herein called the "Issuer"),
for value received, hereby promises to pay (but only out of the Revenues and other assets
pledged therefor as hereinafter described) to the Holder named above or registered assigns, on
the Maturity Date set forth above (subject to any right of prior redemption), the principal amount
stated above, in lawful money of the United States of America, and to pay interest thereon in like
lawful money from the Interest Payment Date next preceding the date of registration of this Bond
(unless this Bond is registered as of an Interest Payment Date, in which event it shall bear
interest from the date of registration hereof, or unless this Bond is registered prior to March 1,
2005 in which event it shall bear interest from the date hereof) until payment of such principal
sum shall be discharged as provided in the Bond Indenture hereinafter described, at the rate per
annum set forth above (subject to adjustment as set forth below), payable on March 1 and
September I in each year commencing September 1, 2005; provided, however, that if interest is
in default on outstanding Bonds; this Bond shall bear interest from the Interest Payment Date on
which interest has previously been paid or made available for payment on outstanding Bonds.
The principal hereof is payable at the designated Corporate Trust Office of Wachovia Bank,
National Association (the "Bond Trustee"), in Miami, Florida. Interest is payable by check or
draft mailed on each Interest Payment Date to the Holder hereof, registered as of the close of
business on the fifteenth day of the calendar month immediately preceding such Interest Payment
Date (except with respect to defaulted interest) (each a "Record Date"), at the address shown on
the registration books maintained by the Bond Trustee; provided, however, that at the option of
any Holder of at least $1,000,000 in aggregate principal amount of Bonds, interest may be paid
by wire transfer to such address as may have been filed with the Bond Trustee for such purpose.
Interest is calculated based on a 360-day year with twelve 30-day months. As used in this Bond,
"Interest Payment Date" shall mean March 1 and September 1 of each year, commencing
September 1,2005.
A-I
The Bonds are limited obligations of the Issuer and are not a lien or charge upon the
funds or property of the Issuer, except to the extent of the Revenues and other assets hereinafter
described. Neither the State of Florida (the "State") nor the Issuer shall be obligated to pay the
principal of the Bonds, or the interest thereon, except from Revenues received by the Issuer, and
neither the faith and credit nor the taxing power of the State or of any political subdivision
thereof is pledged to the payment of the principal of or interest on the Bonds. The Bonds are not
a debt of the State and the State is not liable for the payment thereof
This Bond is one of a duly authorized issue of bonds of the Issuer designated as "Monroe
County Industrial Development Authority Industrial Development Revenue Bonds (North Key
Largo Utility Corp. Project), Series 2005" (the "Bonds"), issued in the aggregate principal
amount of $[ ], pursuant to the laws of the State of Florida, and particularly Chapter
159 of the Florida Statutes, as amended (herein called the "Act"), and pursuant to a Bond Trust
Indenture dated as of April 1, 2005, between the Issuer and the Bond Trustee (the "Bond
Indenture"). The Bonds are issued for the purpose of making a loan to North Key Largo Utility
Corp. (the "Borrower") for the purposes and on the terms and conditions set forth in a Loan
Agreement dated as of April 1, 2005, between the Issuer and the Borrower (the "Loan
Agreement").
No member, officer, agent or employee of the Issuer shall be individually or personally
liable for the payment of the principal or Redemption Price of or interest on the Bonds or be
subject to any personal liability or accountability by reason of the issuance thereof, but nothing
herein contained shall relieve any such member, officer, agent or employee from the
performance of any official duty provided by law or by the Bond Indenture. Notwithstanding the
foregoing, no recourse shall be had for the payment of the principal of or interest on any of the
Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained
in the Bond Indenture against any past, present or future member, officer, agent or employee of
the Issuer, either directly or through the Issuer, under any rule of law or equity, statute or
constitution or by the enforcement of any assessment or penalty or otherwise, and all such
liability of any such members, officers, agents or employees of the Issuer is expressly waived
and released as a condition of and in consideration for the execution of the Bond Indenture and
the issuance of the Bonds.
This Bond bears interest, computed on the basis of a 360-day year, at the applicable rate
per annum, computed as specified below (the "Applicable Rate").
The Applicable Rate on any date with respect to which interest on this Bond is calculated
shall be the Regular Rate (as defined below), subject to adjustment as specified below, or the
Taxable Rate (as defined below), whichever is applicable.
(a) Regular Rate. Except as otherwise provided herein, this Bond will bear interest at the
rate per annum set forth above (the "Regular Rate").
In the event a Determination of Taxability (as defined in the Bond Indenture) shall have
occurred, the rate of interest on this Bond shall be increased to a "Taxable Rate" which shall
equal 150% of the Regular Rate, effective retroactively to the date of the Event of Taxability (as
defined in the Bond Indenture), and thereafter through the Inclusion Period (the period
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commencing with the date of the Event of Taxability and ending with the date such Bond ceases
to be outstanding). The Bond Trustee shall give notice to each person who was the Holder of
this Bond during the Inclusion Period of the occurrence of a Determination of Taxability and
within 90 days thereafter, each Holder or former Holder of this Bond shall be paid the Additional
Amount such Registered Owner or former Holder shall be entitled to receive with respect to this
Bond. "Additional Amount" means that amount of money payable to a Holder or former Holder
of this Bond which shall equal interest accrued at the Taxable Rate throughout that portion of the
Inclusion Period during which such person held such Bond (such Holder's "Holding Period"),
reduced by interest accrued at the Applicable Rate in effect from time to time during such
Holder's Holding Period which was paid to such Holder or former Holder or to any subsequent
Holder of this Bond. Such Additional Amount shall constitute additional interest on this Bond
and shall be payable solely from the sources specified in this Bond and in the Bond Indenture.
Any claim of the Holder hereof for the payment of Additional Amounts shall survive the
payment and/or cancellation of this Bond, pursuant to the Loan Agreement and the Bond
Indenture.
In each case the Applicable rate shall be rounded to the nearest one-hundredth of one
percent.
Upon the occurrence of an "Event of Default," as defined in the Loan Agreement, interest
shall accrue at the following rate (the "Default Rate");
(1) while this Bond bears interest at the Taxable Rate as provided above, a rate which
is equal to 200% of the Regular Rate.
(2) while this Bond bears interest at the Regular Rate as provided above, a rate which
is equal to 150% of the Regular Rate.
Notwithstanding the foregoing, the Applicable Rate shall never exceed the maximum
interest rate per annum allowed by law.
Reference is hereby made to the Bond Indenture (a copy of which is on file at the
designated Corporate Trust Office of the Bond Trustee in Miami, Florida), and all indentures
supplemental thereto and to the Act for a description of the rights of the Holders of the Bonds
thereunder, of the nature and extent of the security, of the rights, duties and immunities of the
Bond Trustee and of the rights and obligations of the Issuer thereunder, to all the provisions of
which Bond Indenture the Holder of this Bond, by acceptance hereof, assents and agrees.
The Loan Agreement provides that the Borrower shall make payments at the times
required and in amounts sufficient to pay the principal of and interest on all Bonds outstanding
under the Bond Indenture, as the same shall become due and payable, and certain fees and
expenses of the Issuer and the Bond Trustee. The Loan Agreement provides that the payments in
respect of the Bonds shall be made directly to the Bond Trustee for the account of the Issuer, and
that the Borrower's obligation to make such payments shall be absolute and unconditional.
The principal of and interest on the Bonds are payable from Revenues and are secured by
a pledge and assignment of Revenues and of amounts held in the funds and accounts established
pursuant to the Bond Indenture, subject only to the provisions of the Bond Indenture permitting
A-3
the application thereof for the purposes and on the terms and conditions set forth in the Bond
Indenture. The Bonds are further secured by an assignment of the right, title and interest of the
Issuer in the Loan Agreement (to the extent and as more particularly described in the Bond
Indenture) and the Series 2005 Master Note, dated as of April I, 2005 (the "Series 2005 Master
Note"), issued pursuant to a Master Trust Indenture dated as of April I, 2005, as heretofore
supplemented (the "Master Trust Indenture"), between the Borrower and Wachovia Bank,
National Association, as master trustee (the "Master Trustee"), as supplemented by a First
Supplemental Master Trust Indenture dated as of April I, 2005 (the "Supplement"), between the
Borrower and the Master Trustee.
The Bonds subject to redemption prior to their respective stated maturities, by the Issuer,
at the direction of the Borrower, from funds deposited for such purpose in the Bond Fund, on any
date as a whole or in part in such maturities as are designated by the Borrower (or if the
Borrower fails to designate such maturities, in inverse order of maturity) and by random
selection within a maturity, at the Redemption Price (expressed as a percentage of the principal
amount to be redeemed) in each case together with interest accrued thereon to the date fixed for
redemption:
Redemption Period
Redemption Price
Date ofIssue through February 28,2006
March I, 2006 through February 28, 2007
March 1,2007 through February 29,2008
March 1,2008 through February 28,2009
March 1, 2009 and thereafter
102.0%
101.5%
101.0%
100.5%
100.0%
The Bonds shall be subject to redemption, in whole but not in part, at any time, at a
redemption price of 100% of the principal amount of Bonds so redeemed, plus accrued interest to
the redemption date, and without premium, if within one year after the occurrence of certain
events, the Borrower shall elect to prepay the Loan pursuant to Section 5.9 of the Loan
Agreement.
If the Borrower exercises its option to prepay the Loan in full as provided in Section 5.1 0
of the Loan Agreement, the Bonds are required to be redeemed in whole on any date, by the
Issuer at the direction of the Borrower, at a redemption price equal to 100% of the principal
amount thereof; and the premiums set forth along plus accrued interest to the redemption date.
The Bonds maturing on March 1, 2006, are also subject to redemption prior to their
respective stated maturities in part, from Mandatory Amortization Installments (as defined in the
Bond Indenture) deposited in the Bond Fund, as provided in the Bond Indenture, on any March 1
thereafter, at the principal amount thereof, plus interest accrued thereon to the date fixed for
redemption, without premium as follows:
Year
Amount
Year
Amount
A-4
2006 $ 2016 $
2007 2017
2008 2018
2009 2019
2010 2020
2011 2021
2012 2022
2013 2023
2014 2024
2015 2025
If this Bond is called for redemption and payment is duly provided therefor as specified
in the Bond Indenture, interest shall cease to accrue hereon from and after the date fixed for
redemption.
Any such redemption, either in whole or in part, shall be made upon not less than 30 nor
more than 60 days notice given by first class mail to all Holders of Bonds designated for
redemption, all in the manner described in the Bond Indenture. Failure by the Bond Trustee to
give such notice to a Holder or any defect in such notice shall not affect the validity of the
redemption of any other Bonds.
If an Event of Default (as defined in the Bond Indenture) shall occur and be continuing,
the principal of all Bonds may be declared due and payable upon the conditions, in the manner
and with the effect provided in the Bond Indenture. The Bond Indenture provides that in certain
events such declaration and its consequences may be rescinded by the Holders of more than 50%
in aggregate principal amount of the Bonds then outstanding or by the Bond Trustee.
The Bonds are issuable as fully registered Bonds, without coupons, in denominations of
$100,000 or any integral multiple thereof. Subject to the limitations and upon payment of the
charges, if any, provided in the Bond Indenture, Bonds may be exchanged, at the designated
Corporate Trust Office of the Bond Trustee, for a like aggregate principal amount of Bonds of
the same maturity of any authorized denomination or denominations.
This Bond is transferable by the Holder hereof, in person or by his attorney duly
authorized in writing, but only in the manner, subject to the limitations and upon payment of the
charges, if any, provided in the Bond Indenture, and only upon surrender and cancellation of this
Bond. Upon such transfer, a new registered Bond or Bonds, of any authorized denomination or
denominations of the same maturity and a like aggregate principal amount, will be issued to the
transferee in exchange therefor. The Issuer and the Bond Trustee may treat the Holder hereof as
the absolute owner hereof for all purposes, and the Issuer and the Bond Trustee shall not be
affected by any notice to the contrary.
The Bond Indenture and the rights and obligations of the Issuer and of the Holders of the
Bonds and of the Bond Trustee may be modified or amended from time to time and at any time
in the manner, to the extent and upon the terms provided in the Bond Indenture; provided that no
such modification or amendment shall (i) extend the maturity of this Bond, or reduce the amount
A-5
of principal hereof, or extend the time of payment or reduce the amount of any Mandatory
Amortization Installments provided for in the Bond Indenture for the payment of this maturity of
Bonds, or reduce the rate of interest hereon, or extend the time of payment of interest hereon, or
change the transferability provisions of this Bond, without the consent of the Holder hereof, or
(ii) reduce the percentage of Bonds the consent of the Holders of which is required to effect any
such modification or amendment, or (iii) permit the creation of any lien on the Revenues and
other assets pledged under the Bond Indenture prior to or on a parity with the lien created by the
Bond Indenture, or deprive the Holders of the Bonds of the lien created by the Bond Indenture on
such Revenues and other assets (except as expressly provided in the Bond Indenture), without
the consent of the Holders of all Bonds then outstanding, all as more fully set forth in the Bond
Indenture.
So long as all of the Bonds shall be maintained in book-entry form with a Securities
Depository in accordance with the Bond Indenture, in the event that part, but not all, of this Bond
shall be called for redemption, the Holder of this Bond may elect not to surrender this Bond in
exchange for a new Bond. For all purposes, the principal amount of this Bond outstanding at any
time shall be equal to the Principal Amount shown on the face hereof reduced by the principal
amount of any partial redemption of this Bond following which the Holder of this Bond has
elected not to surrender this Bond. The failure of the Holder hereof to note the principal amount
of any partial redemption, or any inaccuracy therein, shall not affect the payment obligation of
the Issuer hereunder, AND THEREFORE, IT CANNOT BE DETERMINED FROM THE
FACE OF THIS BOND WHETHER A PART OF THE PRINCIPAL OF THIS BOND HAS
BEEN PAID.
It is hereby certified and recited that any and all conditions, things and acts required to
exist, to have happened and to have been performed, precedent to and in connection with the
issuance of this Bond, do exist, have happened and have been performed in due time, form and
manner as required by the Act and by the Constitution and laws of the State, and that the amount
of this Bond, together with all other indebtedness of the Issuer, does not exceed any limit
prescribed by the Act or by the Constitution and laws of the State and is not in excess of the
amount of Bonds permitted to be issued under the Bond Indenture.
Terms used, but not otherwise defined, herein which are defined in the Bond Indenture
shall have the respective meanings assigned thereto in the Bond Indenture,
This Bond shall be governed by and construed in accordance with the laws of the State of
Florida.
No recourse shall be had for the payment of the principal or Redemption Price of and
interest on this Bond, or for any claims based thereon or on the Bond Indenture, against any
member or other officer of the Issuer or any person executing this Bond, all such liability, if any,
being expressly waived and released by the Holder of this Bond by the acceptance of this Bond.
This Bond shall not be entitled to any benefit under the Bond Indenture, or become valid
or obligatory for any purpose, until the certificate of authentication and registration hereon
endorsed shall have been signed by the Bond Trustee.
A-6
IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed in its name
and on its behalfby the manual or facsimile signature of its Chairman and attested by the manual
or facsimile signature of its Secretary, all as of the date set forth above.
MONROE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By: i~ J?; ~
Its C air DIX E K. SPEHAR
Attest:
By:
Its
A-7
Dated:
(FORM OF BOND TRUSTEE'S CERTIFICATE OF
AUTHENTICA TION AND REGISTRATION]
This is one of the Bonds described in the within mentioned Bond Indenture.
W ACHOVIA BANK, NATIONAL
ASSOCIA TION
as Bond Trustee
,2005
By:
Authorized Signatory
A-8
(FORM OF ASSIGNMENT]
For value received, the undersigned do(es) hereby sell, assign and transfer unto
the within-mentioned registered Bond and hereby irrevocably constitute(s)
and appoint(s) to transfer the same on the books of the Bond Trustee with full power of
substitution in the premises.
Dated:
PLEASE INSERT SOCIAL SECURITY NUMBER, T AXP A YER IDENTIFICATION
NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
NOTICE: The signature on this Assignment must correspond with the name as it appears on the
face of the within Bond in every particular, without alteration or enlargement or any change
whatsoever.
Signature Guaranteed:
(Signature must be guaranteed by an eligible guarantor institution.)
..
A-9
APPENDIX B
FORM OF LOAN AGREEMENT
4205-R-Res-Authority with apps
11
Draft
3/31/05
MONROE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
and
NORTH KEY LARGO UTILITY CORP.
LOAN AGREEMENT
Dated as of April 1, 2005
Relating to
$
MONROE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
INDUSTRIAL DEVELOPMENT REVENUE BONDS
(NORTH KEY LARGO UTILITY CORP. PROJECT)
SERIES 2005
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS...... ........... ............. ......... ........ ................................ ..................................1
Page
Section 1.1
Section 1.2
Section 1.3
Defini ti ons...................................................................................................................l
Headings..................................................................................................................... .3
Use of Phrases..... ............ ......... ... .... ...... ........... .......... .... ... ................ ......... ......... ........4
ARTICLE 2 REPRESENTATIONS. .......... ................ ......... .......... .... ... ......................... ............. .... ......4
Section 2.1
Section 2.2
Representations by the Issuer. ...... ......... ............................... .... ....... ..... ....... ..... ..... .....4
Representations and Warranties by the Borrower. .....................................................5
ARTICLE 3 ISSUANCE OF BONDS; LOAN; SECURITY..............................................................6
Section 3.1
Section 3.2
Agreement to Issue Bonds; Authority's Liability Under the Bonds. .........................6
Loan.... ........ .......... ................ ...... ....................... ........... ................ ......... ....... .......... ... ..6
AR TIC LE 4 THE EXCHANGE ............... ........ ............... ........................ ....................... ................. ..... 7
Section 4.1
Section 4.2
Section 4.3
Completion of Exchange.. ....................... .... ...... ..................... ................ .................... 7
Compliance with Regulatory Requirements...... ........... .... ............................. .............7
Payment of Expenses. .. ........... ...... ........................... ...................... ................ ............. 7
ARTICLE 5 LOAN REPAyMENTS.... ................... ..... ............................ ....... ..................... ....... ........ 7
Section 5.1
Section 5.2
Section 5.3
Section 5.4
Section 5.5
Section 5.6
Section 5.7
Section 5.8
Section 5.9
Section 5.10
Section 5.11
Section 5.12
Loan Repayments .... ............ ............... .............................. ... ... ....................................7
Credits....................................................................................................................... ..9
Additional Payments... .............. ... .... .............. ............ ................. .... ................... .........9
No Defense or Set-Off........ .................... .................................... .... ........ ..... ...............9
Assignment and Reservation of Authority's Rights................................................ 10
Prepayment of Loan Repayments; Credit for Bonds Surrendered.......................... 10
Effect of Partial Prepayment..... ............................. ...... .................. .......................... 10
Amortization Schedules...... ..... ...... ........................... ....................... ......... .... ........... 11
Extraordinary Prepayment. . ..... ............. .................................... ...... ......................... 11
Special Prepayment......... .................... .............................. ...... .......................... ....... 12
Surplus Funds..... ............. .... ............. .................................. ..... ................................. 12
Borrower's Obligations Unconditional.......... ............. ........................ .................... 12
ARTICLE 6 SPECIAL COVENANTS OF BORROWER ............................................................... 12
Section 6.1
Section 6.2
Section 6.3
Section 6.4
Section 6.5
Compliance with Covenants, Conditions and Agreements in Master
Indenture ..... ........ ........ ..................... ...................... ...................... .... ........................ 12
Examination of Books and Records ofthe Borrower ............................................. 13
Further Assurances and Corrective Instruments...................................................... 13
Recording and Filing; Other Instruments. ............................................................... 13
Inspections; Reports; Repairs ... .......... ...... ...... ..... ...................... ........ ..... ................. 13
Section 6.6
Section 6.7
Corporate Status. ......................... ........... ........... ............ ............... ......... ..... .............. 14
Tax-Exempt Status.. ................... ................... .................... ...................... ................. 14
ARTICLE 7 EVENTS OF DEFAULT AND REMEDIES ............................................................... 15
Section 7.1
Section 7.2
Section 7.3
Section 7.4
Section 7.5
Section 7.6
Section 7.7
Section 7.8
Events of Default Defined................................................................ ....................... 15
Remedi es on Default................................................................................................ 16
Application of Amounts Realized in Enforcement of Remedies ............................ 16
No Remedy Ex clusive ............................................................................................. 1 7
Agreement to Pay Attorneys' Fees and Expenses................................................... 17
Authority and Borrower to Give Notice of Default................................................. 18
Correlative Waivers................................................................................................. 18
No Waiver of Rights........ .... ............... ................ ....................... .............................. 18
ARTICLE 8 INDEMNIFICATION AND NON-LIABILITY OF THE ISSUER AND THE
TRUSTEE. ........... .......................... ..................... ........... ......... ............................. ......... 19
Section 8.1
Section 8.2
Hold Harmless Provisions. ........ ..................... .................... ............ ......................... 19
Payment of Costs upon Default ............................................................................... 19
ARTICLE 9 TERMINATION OF AGREEMENT ........................................................................... 20
Section 9.1
Termination of Agreement ................................. ....... ........................... ........... ........ 20
ARTICLE 10 MISCELLANEOUS... ................................................... ........................ .............. ........ 20
Section 10.1
Section 10.2
Section 10.3
Section 10.4
Section 10.5
Section 10.6
Section 10.7
Section 10.8
Section 10.9
Section 10.1 0
Section 10.11
Section 10.12
Section 10.13
EXHIBITS
Members, Officers and Employees of the Issuer and Borrower Not
Liable........................................................................................................................ 20
Amendment of Agreement.. ........... ........ ............................ ..................................... 20
Redemption of Bonds .................... ......... ........... .......... ................................. ........... 21
Surplus Funds..... ........... .......... ..... ... ............. ........................... ................................. 21
Limitation on the Issuer's Liability......................................................................... 21
Borrower's Remedies.............................................................................................. 21
Consents and Approvals....... .............. .............. ......................... ........... ................... 22
Extent of Covenants................................................................................................. 22
Notices; Demands; Requests ..................... .................. ................................ ............ 22
Multipl e Counterparts......................................................... ..................................... 23
Severability ...................................................................................... ........................ 23
State Law Controlling.............................................................................................. 23
Bond Indenture......................................................................................................... 23
EXHIBIT A - Description of System
EXHIBIT B - Master Note, Series 2005
11
LOAN AGREEMENT
This LOAN AGREEMENT, made and entered into as of April 1, 2005, is by and
between MONROE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY (the "Issuer")
and NORTH KEY LARGO UTILITY CORP., a not-for-profit corporation organized and
existing under and by virtue of the laws ofthe State of Florida (the "Borrower").
WIT N E SSE T H:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions Unless the context or use indicates another meaning or intent,
the following words and terms as used in this Agreement shall have the following meanings, and
any other words and terms which are defined in the Bond Indenture or the Master Indenture shall
have the meanings as therein defined:
"Accountant" or "Accountants" means a nationally recognized firm of certified public
accountants knowledgeable in the operation of parking garage facilities employed by the
Borrower.
"Act" means Chapter 159, Part II and Part III, Florida Statutes, as from time to time
amended, and other applicable provisions oflaw.
"Agreement" or "Loan Agreement" means this Agreement by and between the Issuer and
the Borrower.
"Bonds" means the not exceeding $2,965,000 aggregate principal amount of Monroe
County Industrial Development Authority Industrial Development Revenue Bonds (North Key
Largo Utility Corp. Project), Series 2005.
"Bond Indenture" means the Bond Trust Indenture of even date herewith, entered into by
and between the Issuer and the Trustee, as amended and supplemented from time to time.
"Bond Fund" means the fund created by Section 5.2 of the Bond Indenture.
"Borrower" means North Key Largo Utility Corp., a not-for-profit corporation organized
and existing under the laws of the State of Florida, its successors and assigns.
"Borrower Documents" shall mean this Agreement, the Master Indenture, the Master
Note, Series 2005, the Supplement and the Tax Certificate, and each other document relating to
the Bonds to which the Borrower is a party.
"Borrower Representative" means each of the persons at the time designated to act on
behalf of the Borrower in a written certificate furnished to the Issuer and the Trustee, which
certificate shall contain the specimen signature(s) of such person(s) and shall be signed on behalf
of the Borrower by its President.
"Closing Date" means the date on which the Bonds are delivered to the original purchaser
or purchasers thereof, or to DTC on behalf of the purchasers, and on which payment is received
by the Issuer.
"Code" means the Internal Revenue Code of 1986, as amended, and the regulations from
time to time issued pursuant thereto.
"Cost" shall have the meaning assigned to such term in the Bond Indenture.
"Event of Default" means any of the events of default specified in Article 7 hereof.
"Exchange" shall mean the refunding of the 1995 Bonds by the exchange of such 1995
Bonds for the Bonds.
"Facilities" means all land, leasehold interests and buildings and all fixtures and
equipment (as defined in the Florida Uniform Commercial Code) comprising a part of the
System.
"Financial Statements" means the financial statements of the Borrower.
"Fiscal Year" means the Borrower's fiscal year which is the period commencing on the
first day of January of any year and ending on the last day of December in the next calendar year
or such other period of time consisting of 12 consecutive calendar months as shall be determined
by the Borrower upon notification of such determination to the Trustee and the Master Trustee.
"Issuer" means (i) the Monroe County Industrial Development Authority, its successors
and assigns and (ii) any local governmental body resulting from or surviving any consolidation
or merger to which the Issuer or its successors may be a party.
"Issuer Documents" shall mean the Bond Indenture, this Agreement and the Tax
Certificate.
"Issuer Representative" means each of the persons at the time designated to act on behalf
of the Issuer in a written certificate furnished to the Borrower and the Trustee, which certificate
shall contain the specimen signature(s) of such person(s) and shall be signed on behalf of the
Issuer by its Chairman,r Vice Chairman or Secretary.
"Loan" means the loan of the proceeds of the Bonds made by the Issuer to the Borrower
pursuant to Section 3.2 of this Agreement.
"Loan Repayment Date" means the dates set for Loan Repayments in Section 5.1 of this
Agreement
"Loan Repayments" means the payments set forth in Section 5.1 of this Agreement.
4205- Loan Agreement
2
"Master Indenture" shall have the meaning assigned to such term in the Bond Indenture.
"Master Note, Series 2005" means Master Note, Series 2005 issued and delivered by the
Borrower under the Master Indenture and the Supplemental Indenture for Master Note, Series
2005, and delivered to the Issuer as collateral security for the repayment of the Loan and the
performance of the Borrower's obligations under this Agreement and which was assigned by the
Issuer to the Trustee as security for the Bonds, a copy of which is attached hereto as Exhibit B.
"Master Trustee" shall have the meaning assigned to such term in the Bond Indenture.
"Permitted Liens" shall have the meaning assigned to such term in the Master Indenture.
"Private Placement Memorandum" means the Private Placement Memorandum relating
to the Bonds.
"Property" means any and all rights, title and interests of the Borrower in and to any and
all property (including cash) whether real or personal, tangible or intangible and wherever
situated.
"Redemption Requirements" for any Bond Year means the mandatory principal
redemption requirements payable from the Bond Sinking Fund.
"System" means the wastewater system currently owned and operated by the Borrower,
a portion of which was financed with the proceeds of the 1995 Bonds.
"State" means the State of Florida.
"Supplemental Indenture for Master Note, Series 2005" shall have the meaning assigned
to such term in the Bond Indenture.
'Tax Certificate" means the Tax Certificate dated the date of issuance of the Bonds, by
and among the Issuer, the Borrower and the Trustee.
"Trustee" shall mean Wachovia Bank, National Association, a national banking
association with a designated corporate trust office located in Miami, Florida, and its successors
in interest as trustee under the Bond Indenture and any indenture supplemental thereto.
"Unassigned Rights" means those rights reserved to and by the Issuer under Section 5.5
hereof.
"1995 Bonds" shall mean the Monroe County Industrial Development Authority
Industrial Development Revenue Bonds (North Key Largo Utility Corp. Project), Series 1995,
issued on March 9, 1995, to finance the cost of improvements to the System.
Section 1.2 Headings. Article and Section headings are furnished for convenience
only and do not constitute a part of this Agreement.
4205- Loan Agreement
3
Section 1.3 Use of Phrases. "Herein", "hereby", "hereunder", "hereof',
"hereinbefore", "hereinafter" and other equivalent words refer to this Agreement as an entirety
and not solely to a particular portion in which any such word is used. The definitions set forth in
Section 1.1 hereof include both singular and plural. Whenever used herein, any pronoun shall be
deemed to include both singular and plural and to cover all genders. Provisions calling for or
referring to the delivery by the Borrower of financial statements for any given period shall be
deemed satisfied if the combined or consolidated financial statements for such period, prepared
in accordance with GAAP, of such entities are so delivered.
ARTICLE 2
REPRESENTATIONS
Section 2.1 Representations by the Issuer. The Issuer makes the following
representations and covenants as the basis for the undertakings on its part herein contained:
(a) The Issuer is duly established and validly existing under State law and has full
legal right, power and authority to execute, deliver and perform each of the Issuer Documents
and the other documents contemplated thereby. Each of the Issuer Documents and the other
documents contemplated thereby have been duly authorized, executed and delivered by the
Issuer.
(b) The Issuer will issue not exceeding $2,965,000 aggregate principal amount of
Industrial Development Revenue Bonds (North Key Largo Utility Corp. Project), Series 2005, in
exchange for a like principal amount of 1995 Bonds transmitted pursuant to the Exchange. The
Bonds will be issued, mature, bear interest, be redeemable and have other terms and provisions
as provided for therein and in the Bond Indenture.
(c)
Exchange.
The Issuer duly adopted its resolution on April
-'
2005, to approve the
(d) On April , 2005, the Board of County Commissioners of Monroe County,
Florida approved the issuance of the Bonds.
( e) The Issuer has previously determined that the issuance ofthe 1995 Bonds and the
loan of the proceeds thereof to the Borrower for the purpose of providing wastewater treatment
in the northern part of Monroe County serves a paramount public purpose.
(f)
meeting.
The Issuer duly adopted its resolution at a duly called and publicly noticed
(g) Neither the execution and delivery of any of the Issuer Documents and the other
documents contemplated thereby or the consummation of the transactions contemplated thereby
nor the fulfillment of or compliance with the provisions of any of the Issuer Documents and the
other documents contemplated thereby, will conflict with or result in a breach of or constitute a
default under any of the terms, conditions or provisions of the Act, any other law or ordinance of
the State or any political subdivision thereof, or of any restriction or any agreement or instrument
to which the Issuer is a party or by which it is bound, or result in the creation or imposition of
4205- Loan Agreement
4
any Lien of any nature upon any of the Property of the Issuer under the terms of the Act or any
such law, ordinance, restriction, agreement or instrument.
(h) Each of the Issuer Documents and the other documents contemplated thereby
constitutes a legal, valid and binding obligation of the Issuer enforceable against the Issuer in
accordance with its terms.
Section 2.2 Representations and Warranties by the Borrower. The Borrower makes
the following representations, warranties and covenants as the basis for the undertakings on its
part herein contained:
(a) The Borrower is a not-for-profit corporation duly organized and validly existing
under the laws of the State of Florida, is in good standing under the laws of the State and has
received a determination letter from the Internal Revenue Service that it qualifies as a tax-exempt
entity under Section 501(c)(12) of the Code. The Borrower has full legal right, power and
authority to execute, deliver and perform each of the Borrower Documents and the other
documents contemplated thereby. Each of the Borrower Documents and the other documents
contemplated thereby has been duly authorized, executed and delivered by the Borrower.
(b) Neither the execution and delivery of any of the Borrower Documents and the
other documents contemplated thereby or the consummation of the transactions contemplated
thereby nor the fulfillment of or compliance with the provisions of any of the Borrower
Documents and the other documents contemplated thereby, will conflict with or result in a
breach of or constitute a default under any of the terms, conditions or provisions of any
applicable law or ordinance of the State or any political subdivision thereof or of the Borrower's
operating agreement or Articles of Incorporation, or any restriction or any agreement or
instrument to which the Borrower is a party or by which it is bound, or result in the creation or
imposition of any Lien of any nature upon any of the Property of the Borrower under the terms
of any such law, ordinance, operating agreement, Articles of Incorporation or By laws,
restriction, agreement or instrument, except for Permitted Liens.
(c) The System conforms with all applicable zoning, planning, building and
environmental laws, ordinances, rules and regulations of governmental authorities having
jurisdiction over the System. The Borrower will use its best efforts to operate the System in a
manner that will conform with all applicable environmental laws, ordinances, rules and
regulations of governmental authorities having jurisdiction over the System.
(d) The Borrower shall perform or cause to be performed, for and on behalf of the
Issuer each and every obligation of the Issuer under and pursuant to the Bond Indenture which,
by its terms, is required to be performed by the Borrower and shall not fail to take any other
action which is necessary to enable the Issuer to discharge its duties under the Bond Indenture.
(e) Each of the Borrower Documents and the other documents contemplated thereby
constitutes a legal, valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms, except as such enforcement may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar
statutes, rules, regulations or other laws affecting the enforcement of creditors' rights and
4205- Loan Agreement
5
remedies generally or (ii) the unavailability of, or limitation on the availability of, a particular
right or remedy (whether in a proceeding in equity or at law) because of an equitable principle or
a requirement as to commercial reasonableness, conscionability or good faith.
(t) The Borrower agrees that it (i) shall not perform any act, enter into any agreement
or use or permit the System, or any portion thereof, to be used in any manner, or for any trade or
business or other non-exempt use related to the purposes of the Borrower, which would
adversely affect the exclusion of interest on the Bonds from federal gross income pursuant to
Section 103 of the Code, and (ii) shall not do or fail to do any act or undertaking which may give
rise to unrelated trade or business income with respect to its operations at the System.
(g) The acquisition of and the improvements to the System financed with the
proceeds of the 1995 Bonds was a "project" within the meaning of the Act.
(h) The Borrower agrees that neither it nor any related party to the Borrower (as
defined in Treas. Reg. ~ 1.150-1(b)) will purchase any of the Bonds in an amount related to the
obligation represented by this Agreement.
(i) The Borrower will use due diligence to cause the System to be operated in
accordance with the laws, rulings, regulations and ordinances of the State and the departments,
agencies and political subdivisions thereof. The Borrower will cause to be obtained all requisite
approvals of the State and of other federal, state, regional and local governmental bodies required
for the Borrower's operation of the System.
ARTICLE 3
ISSUANCE OF BONDS; LOAN; SECURITY
Section 3.1
Agreement to Issue Bonds; Authority's Liability Under the Bonds.
( a) As provided in Section 3.2 of this Agreement, the Issuer will, at the request of the
Borrower, issue and cause to be delivered to the holders of the 1995 Bonds, the Bonds pursuant
to the provisions of the Bond Indenture. Such Bonds will bear interest and mature as set forth in
the Bond Indenture.
(b) The Bonds shall be limited obligations of the Issuer, the principal, interest and
redemption premium, if any, on which shall be payable solely out of the moneys to be derived by
the Issuer pursuant to this Loan Agreement and the Master Note, Series 2005.
Section 3.2 Loan. Concurrently with the issuance and delivery of the Bonds, the
Issuer will, upon the terms and conditions of this Agreement, lend to the Borrower the proceeds
derived by the Issuer from the issuance of the Bonds, in the amount of $ (the
"Loan"), for the purposes of the Exchange, and the Borrower hereby acknowledges such Loan
and that the same shall be paid to the Trustee and applied as provided in Article III of the Bond
Indenture.
The Borrower hereby accepts the Loan and as collateral security therefor, shall deliver to
the Issuer herewith the Master Note, Series 2005 described on the attached Exhibit B. The
4205- Loan Agreement
6
Borrower shall repay the Loan in accordance with the provisions of the Master Note, Series 2005
and this Agreement. The Master Note, Series 2005 is issued under and secured by the Master
Indenture and the Supplemental Indenture for Master Note, Series 2005. The Master Indenture
provides that the Borrower may issue additional indebtedness secured by the security for the
Master Note, Series 2005 on a pari passu basis for the purposes, under the terms and conditions
and to the extent described in the Master Indenture.
ARTICLE 4
THE EXCHANGE
Section 4.1 Completion of Exchange. The Borrower shall complete or cause to be
completed the Exchange within ninety (90) days of the issuance of the Bonds.
Section 4.2 Compliance with Regulatory Requirements. The Borrower agrees that the
System is in compliance with all applicable ordinances and statutes and the requirements of all
regulatory authorities having jurisdiction. Notwithstanding the foregoing, the Borrower shall not
be deprived of the right to contest the validity or application of any such ordinance, statute or
requirement provided that such contest shall not impede the operation of the System or subject
the Property of the Borrower to danger of loss or forfeiture or other materially adverse affect or
impair the Property ofthe Borrower.
Section 4.3 Payment of Expenses. The Borrower agrees to pay from legally available
moneys which are not derived from the proceeds of a tax-exempt borrowing, when due, all fees
and expenses for inspections, appraisals, all recording fees and documentary taxes, if any, and all
legal fees related to this Agreement, the Bond Indenture, the Master Indenture, the Master Note,
Series 2005, the Supplement and all costs, fees and expenses related to the Bonds, including but
not limited to, the Bond Trustee's fees and expenses, printing costs, accounting fees, consulting
fees, financial feasibility study fees, and legal fees to the extent not paid by the Bond Trustee
pursuant to Article III and Section 8.6 of the Bond Indenture and Section 6.7 of the Master Trust
Indenture, and the reasonable and necessary fees and expenses, including legal and certified
public accountant fees, of the Issuer relating to the System or to the Property of the Borrower or
to the Issuer's rights or obligations hereunder or under the Bond Indenture or the Master
Indenture, whether or not such fees or expenses are payable before the commencement of or
during the term of this Agreement. The Borrower also agrees to pay from legally available
moneys which are not derived from the proceeds of a tax-exempt borrowing all fees and
expenses in connection with the 1995 Bonds redeemed and not exchanged for the Bonds.
ARTICLE 5
LOAN REPAYMENTS
Section 5.1 Loan Repayments. The Borrower shall pay to the Trustee, in such manner
as shall be acceptable to the Trustee, for the account of the Issuer without notice or demand, in
such coin or currency of the United States of America as at the time of payment shall be legal
tender for public and private debts, payments in amounts sufficient to timely pay in full the
principal of (whether at maturity, by acceleration, by call for redemption or otherwise),
4205- Loan Agreement
7
redemption premium, if any, and interest on the Bonds from time to time outstanding under the
Bond Indenture less the amount of other funds available for such payment as provided in the
Bond Indenture ("Loan Repayments"). Without limiting the foregoing, Loan Repayments shall
be due and payable in the following amounts, less the amount of credit to which the Borrower
may be entitled in accordance with the Bond Indenture and Section 5.2 hereof, and at the
following times (each a "Loan Repayment Date"), but if the date of required payment shall not
be a Business Day, then on the next preceding Business Day:
(a) Semiannually, two Business Days prior to the date it is due, an amount which will
be not less than the interest to become due on the next succeeding Interest Payment Date of the
Bonds; and provided, that the Borrower shall be entitled to certain credits on such payments as
permitted under this Loan Agreement;
(b) Annually, two Business Days prior to the date it is due, an amount which will be
not less than the next installment of principal becoming due on the Bonds by maturity or
mandatory redemption; and provided, that the Borrower shall be entitled to certain credits on
such payments as permitted under this Loan Agreement;
(c) Any amount necessary to fund or replenish the Reserve Fund under Section 3.2 of
the Master Indenture. The Borrower agrees to restore the amount on deposit in the Reserve Fund
to an amount equal to the Reserve Fund Requirement within not more than 120 days following
the date the Borrower receives notice of such deficiency If as a result of the Reserve Fund
having been drawn upon the amount in the account established for the Bonds within the Reserve
Fund is less than 100% of the Reserve Fund Requirement, the Borrower agrees to restore the
amount on deposit in the account established for the Bonds within the Reserve Fund to an
amount equal to the Reserve Fund Requirement by the deposit with the Master Trustee of an
amount equal to such deficiency in not more than 12 substantially equal monthly installments
beginning with the first day of the first month after the month in which such draw occurred; and
(d) Any rebate amount required to be paid on behalf of the Issuer to the U.S. Treasury
pursuant to Section 148 of the Code and the Tax Agreement.
(e) If (i) there is a Determination of Taxability (as defined in the Bond Indenture)
with respect to any of the Bonds, and (ii) any of such Bonds, the Bond Indenture, this Loan
Agreement or any other instrument provides for the Holder or former Holder thereof to receive
any additional payment ("Additional Amount") on account of such Determination of Taxability
(including, but not limited, to any additional interest, additional premium, liquidated damages or
indemnity), the Borrower shall at the time provided in such instrument pay all such Additional
Amounts to the Trustee for the benefit of the Holders or former Holders of such Bonds who are
entitled to receive such Additional Amount (or if the Bond Indenture has been discharged it shall
make such payment directly to such Holders or former Holders). The obligation of the
Borrower to pay such Additional Amounts shall survive the termination of this Agreement.
To the extent moneys are deposited in the Bond Fund pursuant to Section 5.4 of the Bond
Indenture, the Borrower's obligation to make Loan Repayments under the foregoing clauses (a),
(b), (c) and (d), respectively, shall be reduced by the amounts so transferred.
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Section 5.2 Credits. Notwithstanding any provision contained in this Loan Agreement
or in the Bond Indenture to the contrary, in addition to any credits on the Loan resulting from the
payment or prepayment thereof from other sources:
(a) any moneys deposited by the Borrower or the Master Trustee on behalf of the
Borrower in any funds or accounts under the Master Indenture and available for payment of the
Master Note, Series 2005 shall be credited against the obligation of the Borrower to pay
principal, interest and Amortization Installments on the Loan as the same becomes due; and
(b) the principal amount of Bonds purchased by the Borrower and delivered to the
Trustee, or purchased by the Trustee on behalf of the Borrower and canceled, shall be credited
against the obligation of the Borrower to pay the principal of the Loan (including installment
payments corresponding to Mandatory Amortization Installment on the Bonds which are Term
Bonds).
Section 5.3 Additional Payments. The Borrower agrees to pay the following items to
the following persons as Additional Payments under this Loan Agreement:
(a) To the Trustee, when due, all reasonable fees and expenses of the Trustee for
services rendered under the Bond Indenture and all reasonable fees and charges of any paying
agent, registrars, counsel, accountants, consultants, engineers and other persons incurred in the
performance of services under the Bond Indenture on request of the Trustee for which the
Trustee and such other persons are entitled to payment or reimbursement and, to the extent
incurred, upon request or with the approval of the Trustee, the reasonable fees and expenses of
the Master Trustee;
(b) To the Issuer, on demand, all fees, expenses and disbursements incurred by the
Issuer in relation to the obligations pledged under the Bond Indenture or the Bonds which are not
otherwise required to be paid by the Borrower under the terms of this Loan Agreement, and all
fees, expenses, taxes and assessments of the Issuer as provided for under the Act;
(c) To the Master Trustee or the Trustee, as the case may be, the amount of all
advances of funds made by either of them under the provisions of the Master Indenture or the
Bond Indenture, with interest thereon from the date of each such advance at the Master Trustee's
or Trustee's, as the case may be, announced prime rate per annum from time to time in effect;
and
(d) To any other Person entitled to fees, expenses and reimbursement of
disbursements with respect to the Bonds, the Bond Indenture and this Loan Agreement.
Section 5.4 No Defense or Set-Off. The obligations of the Borrower to make the
payments required hereunder shall be absolute and unconditional without defense or setoff by
reason of any default by the Issuer under this Agreement or under any other agreement by and
between the Borrower and the Issuer or for any other reason, including, without limitation, any
acts or circumstances that may constitute failure of consideration, destruction of or damage to the
Property of the Borrower, commercial frustration of purpose or failure of the Issuer to perform
and observe any agreement, whether express or implied, or any duty, liability or obligation
arising out of or connected with this Agreement, it being the intention of the parties that the
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payments required hereunder will be paid in full when due without any delay or diminution
whatsoever. The foregoing notwithstanding, nothing in this Section shall preclude the Borrower
from instituting separate proceedings against the Issuer or the Trustee for any claims it may have
against the Issuer or the Trustee.
Section 5.5 Assignment and Reservation of Authority's Rights. Concurrently with the
execution of this Agreement, the Issuer will enter into the Bond Indenture with the Trustee and
assign to the Trustee the Issuer's rights under this Agreement and under the Master Note, Series
2005 as security for the payment of the Bonds. The Issuer specifically reserves from this
assignment the following rights: (a) to receive all notices, opinions, certificates, copies of
documents, instruments, reports and correspondence, and evidence of certain actions by the
Borrower required to be delivered to the Issuer under this Agreement; (b) to grant approvals and
consents and make determinations when required under this Agreement; (c) to make requests for
information and inspections where allowed under this Agreement; (d) to receive payments under
Section 4.3, 5.3, 7.5 and 8.2 of this Agreement; (e) the rights conferred upon the Issuer in
Section 10.1, 10.5 and 10.6 of this Agreement, and (f) to be indemnified pursuant to Section 8.1
of this Agreement; provided that the reservation of the aforementioned rights shall not prevent
the Trustee from enforcing the same on behalf of the Issuer and the Bondholders. The Borrower
hereby consents to such assignments. The Borrower will make payment required hereunder
directly to the Trustee or to the Issuer, as the case may be, without defense or set-off by reason of
any dispute between the Borrower and the Trustee or the Issuer. The Borrower further agrees
that in the event of a default under the Bond Indenture, the Trustee shall be entitled to enforce
the provisions of this Agreement.
Section 5.6
Prepayment of Loan Repayments; Credit for Bonds Surrendered.
(a) The Borrower shall have the right from time to time to make Loan Repayments in
advance which shall be paid to the Trustee and shall, as directed by the Borrower, be applied as
credits upon the next ensuing Loan Repayments or, upon payment by the Borrower of the
amount required to pay the redemption premiums (if any), be used to redeem or to purchase
Bonds in the open market prior to maturity. The Borrower shall also have the right to surrender
Bonds acquired by it to the Trustee. Bonds so redeemed, purchased or surrendered shall be
forthwith canceled and the principal amounts thereof shall be applied as credits to the Borrower
upon the next ensuing Loan Repayments due and payable with respect to the date or dates upon
which any such Bonds become due and payable pursuant to the Redemption Requirements
applicable thereto.
(b) To make a prepayment pursuant to this Section, the Borrower shall give the
Trustee not less than 60 days prior written notice of any prepayment, which notice shall
designate the date of prepayment and the amount thereof and direct the redemption of Bonds in
the amounts corresponding to the amount of the Loan to be prepaid.
Section 5.7 Effect of Partial Prepayment. Upon any partial prepayment of the Loan,
each installment of principal which shall thereafter be payable on such obligation shall be
reduced in a manner consistent with the reduction in the amount of principal payable on the
Bonds to which such installment of principal corresponds. In addition, upon each such
prepayment of the Loan, each installment of interest which shall thereafter be payable on the
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Loan shall be reduced, taking into account the interest rate or rates on the Bonds remaining
outstanding after the redemption of Bonds from the proceeds of such partial prepayment and
after the purchase and delivery and cancellation of Bonds described in Section 5.2 hereof so that
the interest remaining payable on the Loan shall be sufficient to pay the interest on the
outstanding Bonds when due.
Section 5.8 Amortization Schedules. On the date of any partial prepayment of the
Loan, the Borrower, upon consultation with the Trustee, shall deliver to the Trustee a revised
amortization schedule with respect to the Loan then outstanding setting forth the amount of the
installments to be paid on such Loan after the date of such partial prepayment and the unpaid
principal balance of such Loan after payment of each such installment.
Section 5.9 Extraordinary Prepayment. The Borrower shall have the option to prepay
the unpaid aggregate amount of the Loan in whole but not in part, on any date, upon not less than
45 days prior notice to the Trustee, together with accrued interest to the date of prepayment of
the Bonds, in the event that:
(i) Facilities of the System shall have been damaged or destroyed to such
extent that, in the opinion of the Borrower expressed in a Borrower's Certificate filed
with the Issuer and the Trustee following such damage or destruction it is not practicable
or desirable to rebuild, repair or restore such facilities within a period of six consecutive
months following such damage or destruction, or the Borrower is or will be thereby
prevented from carrying on its normal operations of such facilities for a period of at least
six consecutive months; or
(ii) Title to or the temporary use of all or substantially all the facilities of the
System shall have been taken under the exercise of the power of eminent domain, or the
threat in lieu thereof, by any governmental authority to such extent that, in the opinion of
the Borrower expressed in a Borrower's Certificate filed with the Issuer and the Trustee,
the Borrower is or will be thereby prevented from carrying on its normal operations of
the facilities for a period of at least six consecutive months; or
(iii) Any court or administrative body of competent jurisdiction shall enter a
judgment, order or decree requiring the Borrower to cease all or any substantial part of its
operations of the System to such extent that, in the opinion of the Borrower expressed in
a Borrower's Certificate filed with the Issuer and the Trustee, the Borrower is or will be
thereby prevented from carrying on its normal operations of the System for a period of at
least six consecutive months; or
(iv) As a result of any changes in the Constitution of the State or the
Constitution of the United States of America or of legislative or administrative action
(whether state or federal) or by final decree, judgment or order of any court or
administrative body (whether state or federal) of competent jurisdiction, the Loan
Agreement shall have become void or unenforceable or impossible of performance in
accordance with the intent and purposes of the parties as expressed in the Loan
Agreement, or unreasonable burdens or excessive liabilities shall have been imposed on
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the Issuer or the Borrower including without limitation, federal, state or other ad valorem,
property, income or other taxes not being imposed on the date of the Loan Agreement.
Subject to the provisions of the Supplemental Indenture for Master Note, Series 2005,
this Section shall not be construed to prohibit the Borrower from applying insurance proceeds
with respect to any casualty loss or condemnation awards or payments in lieu thereof to the
optional prepayment of the Loan in accordance with the provisions of Section 5.6 of this
Agreement.
Section 5.10 Special Prepayment. Borrower shall prepay all of the unpaid aggregate
principal amount under this Agreement, together with accrued interest to the date of prepayment,
by redeeming Bonds in accordance with the provisions of Section 4.1 of the Bond Indenture, in
the event of the sale, lease or other disposition of any of Borrower's property to any person if the
Borrower Representative determines, based on an Opinion of Bond Counsel, that unless remedial
measures are taken pursuant to any revenue procedure, revenue ruling or regulation of the
Internal Revenue Service, the exclusion from gross income of the interest on the Bonds for
federal income tax purposes will be adversely affected.
Section 5.11 Surplus Funds. When all the Bonds shall have been redeemed or retired,
and all other obligations incurred or to be incurred by the Borrower, or by the Issuer in
connection with the Borrower, under the Bond Indenture and this Agreement shall have been
paid, or the Bond Indenture shall have been defeased pursuant to Article XI of the Bond
Indenture, any surplus funds remaining to the credit of the Borrower in the funds or accounts
established under the Bond Indenture other than any rebate fund shall be paid to the Borrower as
a reimbursement for overpayment of Loan Repayments.
Section 5.12 Borrower's Obligations Unconditional. The Issuer and the Borrower
agree that the Borrower shall bear all risk of damage, destruction or loss of title in whole or in
part to its Property or any part thereof including without limitation any loss, complete or partial,
or interruption in the use, occupancy or operation of such Property, or any manner or thing which
for any reason interferes with, prevents or renders burdensome, the use or occupancy of its
Property or the compliance by the Borrower with any of the terms of this Loan Agreement. In
furtherance of the foregoing, but without limiting any of the other provisions of this Loan
Agreement, the Borrower agrees that its obligations to pay the principal, premium, if any, and
interest on the Loan, to pay the other sums herein provided for and to perform and observe its
other agreements contained herein shall be absolute and unconditional and that the Borrower
shall not be entitled to any abatement or diminution thereof nor to any termination of this Loan
Agreement for any reason whatsoever.
ARTICLE 6
SPECIAL COVENANTS OF BORROWER
Section 6.1 Compliance with Covenants, Conditions and Agreements in Master
Indenture. The Borrower covenants that so long as the Bonds are outstanding it shall comply
with, each and every covenant, condition and agreement in the Master Indenture and each of the
Related Documents and in this Agreement that is applicable to it.
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Section 6.2 Examination of Books and Records of the Borrower. The Issuer and the
Trustee shall be permitted, during normal business hours and upon reasonable notice, to examine
the books and records of the Borrower, including any accountants' work papers with respect to
compliance with the obligations of the Borrower hereunder, subject to the terms of the Master
Indenture.
Section 6.3 Further Assurances and Corrective Instruments. Subject to the provisions
of Section 10.2 hereof and upon receipt by the Issuer of its reasonable expenses in connection
therewith and such indemnity and hold harmless assurances as the Issuer may require, the Issuer
and the Borrower agree that they will, from time to time, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, such supplements and amendments hereto
and such further instruments as may reasonably be required for correcting any inadequate or
incorrect description of the System and for carrying out the intention or facilitating the
performance of this Agreement.
Section 6.4
Recording and Filing; Other Instruments.
(a) The Borrower covenants that it will deliver to the Trustee a written statement not
earlier than 60 nor later than 30 days prior to each fifth anniversary date after the issuance of the
Bonds to the effect that all financing statements and continuation statements have been recorded
or filed or rerecorded or refiled in such manner and in such places in order to continue in effect
the financing statements previously filed or recorded in connection therewith, or that no such
filing is required, and to fully preserve and protect to the extent possible under applicable law the
rights of the Trustee in the assignment to the Trustee of certain rights of the Issuer under this
Agreement as against creditors of, or purchasers for value from, the Issuer or the Borrower.
(b) The Borrower shall file and refile and record and rerecord or cause to be filed and
refiled and recorded and rerecorded all instruments required to be filed and refiled and recorded
or rerecorded and shall continue or cause to be continued the liens of such instruments for so
long as the Bonds shall be outstanding, except as otherwise in this Agreement required.
Section 6.5 Inspections; Reports; Repairs. During normal business hours and upon
reasonable notice, the Issuer and the Trustee through their respective officers, employees,
consultants and other authorized representatives, shall have free and unobstructed access at all
reasonable times to make an inspection of the System for purposes of ascertaining whether the
Borrower has complied with its agreements and obligations under this Agreement; provided,
however, that such inspections shall not interfere with Borrower's ordinary operation of the
System. Upon the request from time to time of the Issuer or the Trustee, which request shall not
be made unless any such inspection referred to above shall disclose that the Borrower may have
violated any of its agreements under the provisions of this Agreement, the Borrower shall cause
an inspection of the System to be made by an independent wastewater consultant or an engineer
acceptable to the Trustee and shall file with the Issuer and the Trustee immediately following
each such inspection the report of such independent wastewater consultant or engineer setting
forth (a) findings as to whether the System has been maintained in good repair, working order
and condition and (b) recommendations as to the proper maintenance and repair of the System
during the remaining life of the Bonds then Outstanding. If such report concludes that the
Project has not been maintained in good repair, working order and condition, the Borrower shall
4205- Loan Agreement
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restore the System promptly to good repair, working order and condition with all expedition
practicable.
Section 6.6 Corporate Status. The Borrower hereby represents, warrants, covenants
and agrees that it (i) will not amend or repeal its articles of incorporation that are in effect as of
the date hereof or (ii) will not make any material amendments to any other organizational
document that is currently in effect as of the date hereof, without prior written notice to the Bond
Trustee.
Section 6.7 Tax-Exempt Status. The Borrower and, as provided below, the Issuer
hereby represent, warrant, covenant and agree that:
(a) It will not take or permit, or omit to take or cause to be taken, any action that
would adversely affect the excludability from gross income for purposes of federal income
taxation of the interest on the Bonds, and if it should take or permit, or omit to take or cause to
be taken, any such action, the Borrower shall take all lawful actions necessary to rescind or
correct such actions or omissions promptly upon having knowledge thereof.
(b) Upon the request of the Issuer or the Trustee, the Borrower will take such action
or actions as may be reasonably necessary, in the written opinion of Bond Counsel, to comply
fully with all applicable rules, rulings, policies, procedures, regulations or other official
statements promulgated, proposed or made by the Department of the Treasury or the Internal
Revenue Service pertaining to obligations issued under Section 103 of the Code.
( c) The Borrower and the Issuer agree that they will not make any use of the proceeds
from the sale of the Bonds in any manner which will cause the Bonds to be "arbitrage bonds"
within the meaning of Section 148 of the Code and the applicable regulations thereunder.
(d) The Borrower represents that the "average maturity" of the Bonds does not
exceed 120% of the remaining "average reasonably expected economic life" of the facilities of
the System financed with the proceeds of the 1995 Bonds within the meaning of Section 147(b)
of the Code, with such percentage to be computed pursuant to the requirements of Section 14 7(b)
of the Code.
(e) The Borrower and the Issuer (to the extent of the Issuer's control) represent that
they each will comply fully, during the term of this Agreement, with all effective rules, rulings
and regulations promulgated by the Department of Treasury or the Internal Revenue Service with
respect to the Bonds issued under the Code and the Borrower will take all action necessary to
maintain the federal tax-exempt status of the interest payable on the Bonds. The Issuer will
provide reasonable assistance to the Borrower as may be necessary to maintain the federal tax-
exempt status of the interest payable on the Bonds.
(f) The information furnished by the Borrower to the Issuer and used in preparing the
Information Return to be filed with the Internal Revenue Service pursuant to Section 149(e) of
the Code, is true and correct.
(g) The Borrower covenants that the net proceeds of the Bonds will not be used to
provide a facility the primary purpose of which is the provision of retail food and beverage
4205- Loan Agreement
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services, automobile sales or service, recreation or entertainment; and none of the proceeds of the
Bonds will be used to provide any private or commercial golf course, country club, massage
parlor, tennis club, skating facility (including roller skating, skateboard and ice skating), racquet
sports facilities (including any handball or racquetball court), hot tub facility, suntan facility,
racetrack, airplane, skybox or other private luxury box, any health club facility, any facility used
primarily for gambling, or any store the principal business of which is the sale of alcoholic
beverages for consumption off the premises.
(h) The Borrower will comply with each of the covenants and agreements of the
Borrower set forth in the Tax Certificate.
The Borrower and the Issuer each agree to take no action which would (or omit to take
any action which would) cause the Bonds to become "arbitrage bonds" or otherwise in violation
of this Section or the provisions and covenants of the Tax Agreement executed by them in
connection with the issuance of the Bonds, provided, however, that the sole obligation of the
Issuer in this respect shall be to adhere to reasonable directions received from the Borrower.
ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default Defined. The term "Event of Default" shall mean any
one or more of the following events:
(a) The Borrower shall fail to pay, or cause to be paid, in full any payment required
under this Agreement or under the Master Note, Series 2005 when due, whether at maturity,
redemption, acceleration or otherwise pursuant to the terms hereof; or
(b) The Borrower shall fail duly to perform, observe or comply with any covenant,
condition or agreement on its part under this Agreement (other than a failure to make any
payment under Section 7.1(a)), including any covenant, condition or agreement in the Master
Indenture, and such failure continues for a period of 30 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given to the Borrower
by the Trustee or the Issuer; provided, however, that if such performance, observation or
compliance requires work to be done, action to be taken, or conditions to be remedied, which by
their nature cannot reasonably be done, taken or remedied, as the case may be, within such
30-day period, no Event of Default shall be deemed to have occurred or to exist if, and so long
as, the Borrower shall commence such performance, observation or compliance within such
period and shall diligently and continuously prosecute the same to completion; or
(c) The Master Trustee shall have declared the aggregate principal amount of either
of the Master Note, Series 2005 and all interest due thereon immediately due and payable in
accordance with Section 4.2 of the Master Indenture; or
(d) If a default shall have occurred and be continuing under any bond, debenture, note
or other evidence of indebtedness for money borrowed in excess of $500,000 by the Borrower or
under any mortgage, indenture or instrument under which there may be issued or by which there
may be secured or evidenced any indebtedness for money borrowed in excess of $500,000 by the
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Borrower, whether such indebtedness now exists or shall hereafter be created, after the
expiration of any applicable grace period with respect thereto; provided, however, a default shall
not be deemed to have occurred pursuant to this clause (d) if the Borrower shall within 30 days
of such "default" commence a contest in good faith and by appropriate legal proceedings unless
(i) the Borrower fails to pursue such contest diligently and in good faith or (ii) such contest
results in a final order or judgment of a court or administrative body of competent jurisdiction
against the Borrower; or
( e) The occurrence of an "Event of Default" under Section 7.1 of the Bond Indenture
and any other Related Document.
Section 7.2 Remedies on Default. Whenever any Event of Default shall have
happened and be continuing, the Trustee or the Issuer with the consent of the Trustee may take
one or more of the following remedial steps:
(a) Subject to the provisions of Sections 7.2 and 7.11 of the Bond Indenture, in the
case of an Event of Default described in Section 7.1 (a) of this Agreement, take whatever action
at law or in equity is necessary or desirable to collect the payments then due hereunder and under
the Master Note, Series 2005, whether by installment payment, at maturity, with respect to
proceedings for redemption, by acceleration of the Loan and the Bonds, or otherwise; or
(b) Subject to the provisions of Sections 7.2 and 7.11 of the Bond Indenture, in the
case of any other Event of Default described in Section 7.1 of this Agreement, take whatever
action at law or in equity that is necessary or desirable to enforce the performance, observance or
compliance by the Borrower with any covenant, condition or agreement by the Borrower under
this Agreement; or
(c) Subject to the provisions of Sections 7.2 and 7.11 of the Bond Indenture, in the
case of any Event of Default described in Section 7.1 of this Agreement, and pursuant to the
limitations of Section 4.2 of the Master Indenture declare all obligations outstanding and
payments due under this Agreement, immediately due and payable, whereupon such obligations
and payments due under this Agreement shall become and be immediately due and payable,
separately and independently, with or without an acceleration of the Bonds.
With respect to clause (b) above, the Issuer need not obtain the consent of the Trustee with
respect to the enforcement of the Issuer's rights hereunder which have not been assigned to the
Trustee.
Section 7.3 Application of Amounts Realized in Enforcement of Remedies. The
proceeds or avails resulting from the exercise of any remedies under Section 7.2 hereof, together
with any other sums which then may be held by the Trustee under this Agreement, whether
under the provisions of this Article or otherwise, and which are available for such application,
shall be applied as follows:
FIRST --
To the payment of the costs and expenses of the exercise of such remedies,
including reasonable compensation to the Issuer, the Master Trustee and the
Trustee, their agents, attorneys and counsel, and the expenses of any judicial
proceedings wherein the same may be made, and of all expenses, liabilities,
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advances made or incurred by any thereof as permitted by this Agreement,
together with interest at the Trustee's or Master Trustee's, as the case may be,
announced prime rate per annum from time to time in effect, on all such advances,
and to the payment of all taxes, assessments or claims prior to the claim of this
Agreement, except any taxes, assessments, liens or other charges, subject to
which Property may have been sold;
SECOND -- To the payment of the whole amount then due and owing and unpaid upon the
Master Note, Series 2005 for principal, interest and premium, if any; in case such
proceeds shall be insufficient to pay in full the whole amount so due, owing or
unpaid upon the Master Note, Series 2005, then ratably according to the aggregate
of such principal and accrued and unpaid interest and premium, if any, without
preference or priority as between principal, interest or premium; such application
to be made upon presentation of the Master Note, Series 2005 and the notation
thereon of the payment, if partially paid, or the surrender and cancellation thereof,
if fully paid;
THIRD -- To any rebate fund, to the extent of any deficiencies therein.
FOURTH -- To the payment of any other sums required to be paid by the Borrower pursuant to
any provisions of this Agreement or the Master Note, Series 2005;
FIFTH -- To the payment of any other sums required to be paid by the Borrower pursuant to
any provision of the Master Indenture; and
SIXTH -- To the payment of the surplus, if any, to the Borrower, its successors or assigns,
upon the written request of the Borrower or to whomever may be lawfully entitled
to receive the same upon its written request, or as any court of competent
jurisdiction may direct.
Section 7.4 No Remedy Exclusive. Subject to Section 7.2 of this Agreement, no
remedy herein conferred upon or reserved to the Issuer is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be cumulative and shall be
in addition to every other remedy given under this Agreement or now or hereafter existing at law
or in equity or by statute. No delay or omission to exercise any right or power accruing upon
default shall impair any such right or power or shall be construed to be a waiver thereof, but any
such right and power may be exercised from time to time and as often as may be deemed
expedient.
Section 7.5 Agreement to Pay Attorneys' Fees and Expenses. In any event of default,
if the Issuer or the Trustee employs attorneys or incurs other expenses for the collection of
amounts payable hereunder or the enforcement of the performance or observance of any
covenants or agreements on the part of the Borrower herein contained, whether or not suit is
commenced, the Borrower agrees that it will on demand therefor pay to the Issuer or the Trustee
the reasonable fees of such attorneys and such other reasonable expenses so incurred by the
Issuer or the Trustee.
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Section 7.6 Authority and Borrower to Give Notice of Default. The Issuer and the
Borrower severally covenant that they will, at the expense of the Borrower, promptly give to the
Trustee written notice of any Event of Default under this Agreement of which they shall have
actual knowledge or written notice, but the Issuer shall not be liable for failing to give such
notice.
Section 7.7 Correlative Waivers. Ifan event of default under Section 7.1 of the Bond
Indenture or Section 5.1 of the Master Indenture shall be cured or waived and any remedial
action by the Trustee rescinded, any correlative default under this Agreement shall, ipso facto, be
deemed to have been cured or waived.
Section 7.8 No Waiver of Rights. No failure by the Issuer, the Trustee or the holders
or owners of the Bonds to insist upon the strict performance of any term, covenant, condition or
provision of this Agreement or any other agreement or collateral document given in connection
herewith, or to exercise any right or remedy consequent upon a breach hereof, and no acceptance
of any Loan Repayment or other sum during the continuance of any such breach, shall constitute
a waiver of any such breach or of such term, covenant, condition or provision or a waiver or
relinquishment for the future of the right to insist upon and to enforce by any appropriate legal
remedy strict compliance with all other terms, covenants, conditions and provisions of this
Agreement, or of the right to exercise any such rights or remedies, if any breach by the Borrower
be continued or repeated.
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ARTICLE 8
INDEMNIFICA TION AND NON-LIABILITY OF
THE ISSUER AND THE TRUSTEE
Section 8.1 Hold Harmless Provisions. (a) The Borrower agrees that the Issuer and
the Trustee shall not be liable for and agrees to defend, indemnify, release and hold the Issuer
and the Trustee harmless from and against any and all (i) liability for loss or damage to Property
or injury to or death of any and all Persons that may be occasioned by, directly or indirectly, any
cause whatsoever pertaining to the System or arising by reason of or in connection with the
occupation or the use thereof or the presence of any Person or Property on, in or about the
System, (ii) liability arising from or expense incurred by the Issuer's financing or refinancing of
the System, including without limiting the generality of the foregoing, all claims arising from the
breach by the Borrower of any of its covenants contained herein, and all causes of action and
reasonable attorneys' fees and any other expenses incurred in defending any suits or actions
which may arise as a result of any of the foregoing, and (iii) liability arising from or expense
incurred by the Trustee and the Issuer by reason of any act or omission of the Borrower by
reason of this Agreement or the exercise of the Trustee's or the Issuer's rights and remedies
under this Agreement, provided that any such losses, damages, liabilities or expenses of the
Issuer or the Trustee are not incurred or do not result from the gross negligence or intentional or
willful wrongdoing of the Issuer or the Trustee or their respective members, agents or
employees. The foregoing indemnities shall apply notwithstanding the fault or negligence in part
of the Issuer or the Trustee, or their respective members, directors, officers, agents or employees
and irrespective of the breach of a statutory obligation or the application of any rule of
comparative or apportioned liability. The foregoing indemnities are limited only to the extent of
any prohibitions imposed by law.
(b) Notwithstanding any other provisions of this Agreement, the obligations of the
Borrower pursuant to this Section 8.1 shall remain in full force and effect after the termination of
this Agreement and the resignation or removal of the Trustee, until the expiration of the period
stated in the applicable statute of limitations during which a claim, cause of action or prosecution
relating to the matters herein described may be brought and payment in full or the satisfaction of
such claim, cause of action or prosecution relating to the matters herein described and the
payment of all expenses and charges incurred by the Issuer or the Trustee or their respective
members, directors, officers, agents and employees, relating to the enforcement of the provisions
herein specified.
(c) In the event of any claim against the Issuer or the Trustee or their respective
members, directors, officers, agents or employees by any employee or contractor of the Borrower
or anyone directly or indirectly employed by any of them or anyone for whose acts any of them
may be liable, the obligations of the Borrower hereunder shall not be limited in any way by any
limitation on the amount or type of damages, compensation, disability benefits or other employee
benefit acts.
Section 8.2 Payment of Costs upon Default. The Borrower shall pay, shall provide
indemnity for, and shall indemnify the Issuer, the Master Trustee, and the Trustee against, all
costs and charges, including reasonable counsel fees, lawfully and reasonably incurred in
4205- Loan Agreement
19
enforcing any covenant or agreement of the Borrower contained in this Agreement or In
performing their respective duties under the Bond Indenture or the Master Indenture.
ARTICLE 9
TERMINA TION OF AGREEMENT
Section 9.1 Termination of Agreement. When the Trustee certifies to the Issuer that
all Bonds and the interest thereon have been defeased in accordance with Section 10.1 of the
Bond Indenture and that all other obligations incurred by the Issuer and the Borrower under the
Bond Indenture, this Agreement and the Master Note, Series 2005 have been paid or that
sufficient funds for such payment are held in trust by the Trustee for such purposes, this
Agreement shall terminate and the Trustee shall deliver the Master Note, Series 2005 to the
Master Trustee for cancellation. After cancellation, the Master Trustee shall deliver the same,
along with appropriate Uniform Commercial Code termination statements, to the Borrower;
provided, however, that the rights to indemnification set forth in Section 8.1 hereof shall survive
the termination of this Agreement.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Members, Officers and Employees of the Issuer and Borrower Not Liable.
Neither the members, officers, agents and employees of the Issuer nor the officers or employees
of the Borrower shall be personally liable for any costs, losses, damages or liabilities caused or
subsequently incurred by the Borrower or any officer, director, agent or employee thereof in
connection with or as a result of this Agreement.
Section 10.2 Amendment of Agreement. This Agreement may, with the consent of the
Trustee but without the consent of or notice to any of the Bondholders, be amended by an
instrument executed by the Borrower and the Issuer, from time to time, to:
(a) cure any ambiguity or formal defect or omission in this Agreement or in any
supplement thereto;
(b) grant to or confer upon the Trustee for the benefit of the Bondholders any
additional rights, remedies, powers, authority or security that may lawfully be granted to or
conferred upon the Bondholders or the Trustee;
(c)
thereafter;
add conditions, limitations and restrictions on the Borrower to be observed
(d) in connection with any other change therein which, in the judgment of the
Trustee, is not to the material prejudice of the Trustee or Bondholders; or
(e)
Indenture.
make any other amendment otherwise permitted by Section 9.1(b) of the Bond
4205- Loan Agreement
20
Other than amendments referred to in the preceding paragraph of this Section and
subject to the terms and provisions and limitations contained in Section 10.2 of the Bond
Indenture and not otherwise or the Holders of not less than 51 % in aggregate principal amount of
the Bonds then Outstanding shall have the right, but only with the consent of the Trustee from
time to time, to approve the execution by the Borrower and the Issuer of such supplements and
amendments hereto as shall be deemed necessary and desirable for the purpose of modifying,
altering, amending, adding to or rescinding, in any particular, any of the terms or provisions
contained herein; provided, however, nothing in this Section shall permit or be construed as
permitting a supplement or amendment which would:
(i) Extend the stated maturity of or time for paying interest on the Bonds or
reduce the principal amount of or the redemption premium or rate of interest payable on
the Bonds without the consent of the Holders of all Bonds then Outstanding;
(ii) Except as permitted in the Master Indenture, grant to the holder of any
Indebtedness a security interest in Pledged Assets (as defined in the Master Indenture)
superior to that of the Holders without the consent of the Holders of all Bonds then
Outstanding; or
(iii) Reduce the aggregate principal amount of Bonds then Outstanding the
consent of the Holders of which is required to authorize such supplement or amendment
without the consent of the Holders of all Bonds then Outstanding.
Section 10.3 Redemption of Bonds. Upon the request of the Borrower made in
accordance with this Agreement, the Issuer, or the Trustee, on behalf of the Issuer, shall take all
steps that may be proper and necessary under the applicable redemption provisions of the Bond
Indenture to effect the redemption of all or part of the then Outstanding Bonds in such principal
amount and on such redemption date as the Borrower shall direct. All expenses of such
redemption shall be paid from money in the hands of the Trustee or by the Borrower and not
from funds of the Issuer.
Section 10.4 Surplus Funds. When all Bonds shall have been redeemed or retired and
the Bonds and all other obligations incurred or to be incurred by the Issuer and the Trustee under
the Bond Indenture or this Agreement shall have been paid, or sufficient funds or Defeasance
Obligations shall be held in trust pursuant to the Bond Indenture for the payment of all such
obligations, any surplus funds from or for the account of the Borrower remaining to the credit of
any fund or account established under the Bond Indenture for the security of Bonds shall be paid
to the Borrower as an overpayment of the Loan Repayments.
Section 10.5 Limitation on the Issuer's Liability. All obligations of the Issuer under
this Agreement shall be payable solely from the Loan Repayments, the Master Note, Series
2005, and other revenues derived and to be derived from the Borrower. Neither the members,
officers, agents nor employees of the Issuer shall be personally liable for the payment of any sum
or for the performance of any obligation under this Agreement.
Section 10.6 Borrower's Remedies. In the event the Issuer should fail to perform any
of its obligations under this Agreement, the Borrower may institute such action against the Issuer
4205- Loan Agreement
21
as the Borrower may deem necessary to compel performance; provided, however, that no such
action shall seek to impose, or impose, any pecuniary liability upon the Issuer other than from
Loan Repayments and other revenues derived from the Borrower, or any personal or pecuniary
liability upon any member, officer, agent or employee thereof.
Section 10.7 Consents and Approvals. Whenever the written consent or approval of the
Issuer, the Borrower, or the Trustee shall be required under the provisions of this Agreement,
such consent or approval shall not be unreasonably withheld or delayed. Unless otherwise
specified herein, consents of the Issuer shall be executed and delivered on behalf of the Issuer by
the Issuer Representative and consents of the Borrower shall be executed and delivered on behalf
of the Borrower by the Borrower Representative.
Section 10.8 Extent of Covenants. All covenants, stipulations, obligations and
agreements of the Issuer and the Borrower contained in this Agreement shall be effective to the
extent authorized and permitted by applicable law.
Section 10.9 Notices; Demands; Requests. All notices, demands and requests to be
given to or made hereunder by the Borrower, the Issuer, or the Trustee shall be given or made in
writing and shall be deemed to be properly given or made if sent by United States registered
mail, return receipt requested, postage prepaid, addressed as follows:
(a) As to the Borrower:
North Key Largo Utility Corp.
24 Dockside Lane, Suite 505
Key Largo, Florida 33037
Attention:
Tel: (305) 367-3067
Fax: (305) 367-4246
(b) As to the Issuer:
Monroe County Industrial Development Authority
500 College Road
Key West, Florida
Attention: County Attorney
Tel: (305) 292-3470
Fax: (305)292-3516
( c) As to the Trustee:
Wachovia Bank, National Association
200 South Biscayne Boulevard, 14th Floor
Miami, Florida 33131
Attention: Corporate Trust Department
Tel: (305) 789-4685
Fax: (305) 789-4678
4205- Loan Agreement
22
Any such notice, demand or request may also be transmitted to the appropriate above
mentioned party by telegram or telephone and shall be deemed to be properly given or made at
the time of such transmission if, and only if, such transmission of notice shall be confirmed in
writing and sent as specified above.
Any of such addresses may be changed at any time upon written notice of such change
sent by United States registered mail, postage prepaid, to the other parties by the party effecting
the change.
Section 10.10 Multiple Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be regarded for all purposes as an original constituting but one
and the same instrument.
Section 10.11 Severability. If anyone or more of the covenants, agreements or
provisions of this Agreement shall be determined by a court of competent jurisdiction to be
invalid, the invalidity of such covenants, agreements and provisions shall in no way affect the
validity or effectiveness of the remainder of this Agreement, and this Agreement shall continue
in force to the fullest extent permitted by law.
Section 10.12 State Law Controlling. This Agreement shall be construed and enforced
in accordance with the laws of the State of Florida.
Section 10.13 Bond Indenture. The Borrower consents to the execution of the Bond
Indenture by the parties thereto and the Borrower agrees to be bound by the terms and provisions
therein that pertain to the Borrower.
IN WITNESS WHEREOF, the Monroe County Industrial Development Authority has
caused these presents to be signed in its name and on its behalf by its Chairman and attested by
its Secretary and North Key Largo Utility Corp. has caused these presents to be signed in its
name and on its behalf by its President and its corporate seal to be hereunto affixed and attested
by its Secretary, all as of April 1, 2005.
MONROE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By: fJ;t; 7JJ, ~
C air DIXl K. SPEHAR
4205- Loan Agreement
23
4205- Loan Agreement
NORTH KEY LARGO UTILITY CORP.
By:
24
Its: President
STATE OF FLORIDA
COUNTY OF MONROE
The foregoing instrument was acknowledged before me this day of
, 2005, by and , the Chairman and the
Secretary, respectively, of the Monroe County Industrial Development Authority, a public body
corporate and politic of the State of Florida, on behalf of the Issuer. Such person did not take an
oath and: (notary must check applicable box)
o is/are personally known to me.
o produced a current Florida driver's license as identification.
o
produced
as identification.
{Notary Seal must be affixed}
Signature of Notary
Name of Notary (Typed, Printed or Stamped)
Commission Number (if not legible on seal):
My Commission Expires (if not legible on seal):
4205- Loan Agreement
25
STATE OF FLORIDA
COUNTY OF MONROE
The foregoing instrument was acknowledged before me this _ day of
2005, by David Ritz, the President of North Key Largo Utility Corp., a not-for-profit corporation
organized and existing under the laws of the State of Florida, on behalf of the corporation. Such
person did not take an oath and: (notary must check applicable box)
o is/are personally known to me.
o produced a current Florida driver's license as identification.
o
produced
as identification.
{Notary Seal must be affixed}
Signature of Notary
Name of Notary (Typed, Printed or Stamped)
Commission Number (if not legible on seal):
My Commission Expires (ifnot legible on seal):
4205- Loan Agreement
26
EXHIBIT A
DESCRIPTION OF SYSTEM
A-I
EXHIBIT B
MASTER NOTE, SERIES 2005
B-1
APPENDIX C
FORM OF PRIVATE PLACEMENT MEMORANDUM
4205-R-Res-Authority with apps
12
Dra ft
March 31, 2005
PRIVATE PLACEMENT MEMORANDUM DATED APRIL _,2005
New Issue
Unrated
THESE BONDS INVOLVE A HIGH DEGREE OF RISK. SEE "BONDHOLDERS' RISK
FACTORS AND INVESTMENT CONSIDERATIONS" HEREIN.
In the opinion of Livermore, Freeman & McWilliams, P.A., Bond Counsel, under existing law
interest on the Bonds is excluded from gross income for federal income tax purposes under Section
103(a) of the Code, except for interest on any Bond for any period during which it is held by a
"substantial user" or a "related person" as those terms are used in Section 147(a) of the Code, and interest
on the Bonds is an item of tax preference under Section 57 of the Code and therefore maybe subject to the
alternative minimum tax imposed on individuals and certain corporations under the Code. Bond Counsel
will express no opinion as to any other tax consequences regarding the Bonds. The Bonds and the interest
thereon are exempt from all taxation under the laws of the State of Florida except estate taxes and taxes
measured by income which are imposed by Chapter 220, Florida Statutes, on "corporations", "banks" and
"savings associations" as such terms are defined in Chapter 220. See "TAX EXEMPTION" herein.
$2,965,000*
MONROE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
Industrial Development Revenue Bonds
(North Key Largo Utility Corp. System) Series 2005
Dated: Date of Delivery
Due: March 1,2025
The Monroe County Industrial Development Authority, Industrial Development Revenue Bonds
(North Key Largo Utility Corp. System) Series 2005 (the "Bonds") are issued in exchange for a like
principal amount of Monroe County Industrial Development Authority Industrial Development Revenue
Bonds (North Key Largo Utility Corp. System), Series 1995 (the "1995 Bonds"), and are initially issued
only as fully registered bonds, without coupons, in denominations of $100,000 and integral multiples
thereof.
Interest on the Bonds is payable on September 1, 2005, and semiannually thereafter on each
March 1 and September 1, by check or draft of Wachovia Bank, National Association, Miami, Florida
("Wachovia"), as paying agent, or any successor paying agent (the "Paying Agent") mailed to each
registered owner thereof at his address as it appears on the fifteenth day of the month (whether or not a
business day) on the bond register ("Bond Register") maintained by Wachovia Bank, National
Association, Miami, Florida, as bond registrar, or any successor bond registrar ("Bond Registrar").
Principal of and premium, if any, on the Bonds is payable upon presentation thereof at the principal office
of the Paying Agent. Upon request of a registered owner and consent of the Paying Agent, payments of
interest on such Bonds may be made by wire transfer in immediately available funds or by other means.
The Bonds will be offered to the all owners of the 1995 Bonds and exchanged for 1995 Bonds
held by said owners pursuant to an Offer to Exchange dated April_, 2005.
THE BONDS ARE NOT DEEMED TO BE SUITABLE INVESTMENTS TO ANYONE
OTHER THAN AN ACCREDITED INVESTOR. TRANSFER OF THE BONDS IN
DENOMINATIONS OF LESS THAN $100,000 IS RESTRICTED TO ACCREDITED
INVESTORS.
AN INVESTMENT IN THE BONDS INVOLVES CERTAIN RISKS. PROSPECTIVE
BONDHOLDERS ARE ADVISED TO READ THE SECTIONS "SECURITY FOR THE BONDS" AND
"BONDHOLDERS' RISK FACTORS AND INVESTMENT CONSIDERATIONS" HEREIN FOR A
DISCUSSION OF CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED IN
CONNECTION WITH AN INVESTMENT IN THE BONDS.
The Bonds are being issued by the Monroe County Industrial Development Authority (the
"Issuer"), under a Bond Trust Indenture dated as of April 1, 2005 (the "Bond Indenture") between the
Issuer and Wachovia Bank, National Association, Miami, Florida, as trustee (the "Trustee"), and the
proceeds thereof will be loaned by the Issuer to North Key Largo Utility Corp., a Florida not-for-profit
corporation (the "Company") under a Loan Agreement dated as of April 1, 2005 (the "Loan Agreement")
by and between the Issuer and the Company. The Bonds will be used solely for the exchange of a like
principal amount of 1995 Bonds. The Company will pay for all costs related to the issuance of the Bonds
from legally available monies that are not derived from the proceeds of this or any other tax-exempt
borrowing. The obligation of the Company to make the payments pursuant to the Loan Agreement is
secured by a Master Note, Series 2005, to be issued by the Company pursuant to a Master Trust
Indenture, dated as of April1, 2005 (the "Master Indenture"), between the Company and Wachovia Bank,
National Association, Miami, Florida, as Master Trustee.
The Loan Agreement requires repayments from the Company to be calculated so as to fully fund
payment of the principal of, premium, if any, and interest on the Bonds, when due, and certain other
amounts due under the Loan Agreement. The Bonds are also secured by the Mortgage and Security
Agreement dated as of April1, 2005, from the Company to the Master Trustee (the "Mortgage") pursuant
to which the Company will, subject to Permitted Encumbrances (herein defined), grant a mortgage on and
security interest in the Mortgaged Property (herein defined). The revenues and income derived by or for
the account of the Company pursuant to the Loan Agreement, the Mortgage and the Bond Indenture are
collectively referred to herein as the "Revenues." The Bonds are subject to optional redemption,
extraordinary optional redemption, and mandatory sinking fund redemption, as specified herein.
MATURITY SCHEDULE
$2,965,000* 6.00% Term Bonds, due March 1, 2025, Price 100%
THE BONDS AND ALL OTHER OBLIGATIONS OF THE ISSUER UNDER THE LOAN
AGREEMENT AND THE BOND INDENTURE AND THE TRANSACTIONS CONTEMPLATED
THEREBY SHALL NOT CONSTITUTE AN INDEBTEDNESS OF THE ISSUER, MONROE
COUNTY, FLORIDA, THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION OR
AGENCY THEREOF WITHIN THE MEANING OF ANY STATE CONSTITUTIONAL
PROVISION OR STATUTORY LIMITATION. ANYTHING IN THE BOND INDENTURE OR
IN THE BONDS TO THE CONTRARY NOTWITHSTANDING, (A) NEITHER THE ISSUER
NOR MONROE COUNTY, FLORIDA, SHALL NEVER BE REQUIRED TO (I) LEVY ANY AD
VALOREM TAXES ON ANY PROPERTY TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY,
OR INTEREST ON THE BONDS OR TO MAKE ANY OTHER PAYMENTS PROVIDED FOR
UNDER THE LOAN AGREEMENT OR THE BOND INDENTURE, (2) PAY THE SAME FROM
ANY FUNDS OF THE ISSUER OTHER THAN THE REVENUES OF THE COMPANY, OR (3)
REQUIRE OR ENFORCE ANY PAYMENT OR PERFORMANCE BY THE COMPANY AS
PROVIDED IN TIlE BOND INDENTURE, THE LOAN AGREEMENT OR THE MORTGAGE
UNLESS TIlE ISSUER'S EXPENSES IN RESPECT THEREOF SHALL BE A V AILABLE FROM
ANY MONEYS DERIVED UNDER THE LOAN AGREEMENT OR THE MORTGAGE OR
SHALL BE ADVANCED TO THE ISSUER FOR SUCH PURPOSE AND THE ISSUER SHALL
RECEIVE INDEMNITY TO ITS SATISFACTION, AND (B) THE BONDS SHALL NOT
CONSTITUTE A LIEN UPON ANY PROPERTY OWNED BY THE ISSUER OR MONROE
COUNTY, FLORIDA, EXCEPT TO THE EXTENT, IF ANY, OF THE ISSUER'S RIGHTS IN
THE COMPANY'S PROPERTY, THE LOAN AGREEMENT, THE MORTGAGE AND THE
PROPERTY RIGIITS, RECEIPTS, REVENUES AND PROCEEDS PLEDGED UNDER THE
MASTER INDENTURE.
The Bonds are offered for delivery when, as and if issued subject to the approval of legality by
Livermore, Freeman & McWilliams, P.A., Jacksonville, Florida, Bond Counsel. Certain legal matters will
be passed upon for the Issuer by its counsel, J. Richard Collins, Esq., County Attorney, Key West,
Florida, and for the Company by its counsel, Rose, Sundstrom & Bentley, Tallahassee, Florida. First
Southwest Company, Orlando, Florida, is serving as Financial Advisor to the Company. It is expected
that the Bonds will be delivered in exchange for 1995 Bonds on or about May ,2005.
*Estimated, subject to change depending upon the principal amount
of 1995 Bonds submitted in response to the Offer to Exchange,
described herein.
MONROE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
Murray Nelson, Chairman
David P. Rice, Secretary
Charles "Sonny" McCoy, Member
George Nugent, Member
Dixie Spehar, Member
COUNTY ATTORNEY
J. Richard Collins, Esq.
FINANCIAL ADVISOR
First Southwest Company
Orlando, Florida
BOND COUNSEL
Livermore, Freeman & McWilliams, P.A.
Jacksonville, Florida
NORTH KEY LARGO UTILITY CORP.
Alan Goldstein Chairman
Bruce Gilbert Vice Chairman
David Ritz President
Jeff Oeltjen Vice President
Patty Jacobson Secretary
Suzy Arnold Treasurer
Rita Greathead Director of Accounting
Susie Ptomey Recording Secretary
INDEPENDENT ACCOUNTANTS
McGladrey & Pullen
Fort Lauderdale, Florida
COMPANY'S COUNSEL
Rose, Sundstrom & Bentley
Tallahassee, Florida
The information contained in this Private Placement Memorandum has been obtained from
the Company, the Issuer and other sources which are believed to be reliable, but is not guaranteed
as to accuracy or completeness and is not to be construed as a representation. The information and
expressions of opinion contained herein are subject to change without notice, and neither the
delivery of this Private Placement Memorandum nor any sale made hereunder, shall under any
circumstances, create any implication that there has been no change in the affairs of the Issuer or
the Company since the date hereof. This Private Placement Memorandum is submitted in
connection with the exchange of securities referred to herein, and may not be reproduced or used,
in whole or in part, for any other purpose.
No dealer, broker, salesman or other person has been authorized by the Issuer or the
Company, to give any information or to make any representation other than as contained in this
Private Placement Memorandum in connection with the offering described herein, and if given or
made, such other information or representation must not be relied upon as having been authorized
by any of the foregoing. This Private Placement Memorandum does not constitute an offer of any
securities, other than those described on the cover page, or an offer to sell or a solicitation of an
offer to buy in any jurisdiction in which it is unlawful to make such offer, solicitation or sale.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, NOR HAS THE BOND INDENTURE BEEN QUALIFIED UNDER THE TRUST
INDENTURE ACT OF 1939, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH
ACTS. THE REGISTRATION OR QUALIFICATION OF THE BONDS IN ACCORDANCE
WITH APPLICABLE PROVISIONS OF SECURITIES LAWS OF THE STATES IN WHICH
THE BONDS HAVE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM
REGISTRATION OR QUALIFICATION IN OTHER STATES CANNOT BE REGARDED AS A
RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF THEIR
AGENCIES HAVE PASSED UPON THE MERITS OF THE BONDS OR THE ACCURACY OR
COMPLETENESS OF THIS PRIVATE PLACEMENT MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE.
TABLE OF CONTENTS
Pa2,e
INTRODUCTION .. ..... ....... ..... ..... .......... ... .... ................ ........ ....... ... ..... ....... ...... ......... ....... ... ... .......... ...... ...... 1
THE ISSUER/COUNTY ........................ ........ ........................ ....... .............. ...... ...................... .... .................. 3
THE BONDS ........................................ ......................................................................................................... 4
General .............................................................................................................................. ............... 4
Redemption....... ...................................... ...................... ...... ............. ....................... ......... ................. 5
Acceleration .............................................................................................................................. ........ 8
Registration, Transfer and Exchange ............ .......... ............. ..... ....... ........ ..... ........ ...... ........ .... .......... 8
THE EXCHANGE OFFER .............. ......................................... ........ .................... ........................................ 9
ANNUAL DEBT SERVICE REQUIREMENTS ......................................................................................... 9
SECURITY FOR THE BONDS . ..................... ......... .............. ........................................................... ............ 9
Limited Obligations; No Pledge of Credit ........................................................................................9
The Loan Agreement ........ ...... ...................................... .............. ............... ....... ........... ............... ...... 9
The Bond Indenture ...... .................. ................... ........... .......... ............. ...... .............. ..... .......... ........ 10
The Series 2005 Note ............. ........ ...... .................................... ........................... ........ ............ ....... 10
The Master Indenture.................................................. ..... .......... ...................................... ............... 10
The Mortgage......... ............ .................. ................. ................................ ...... .................. .................. 16
THE COMPANY ................. .................... ....................... ....... ...... ........... ........................ ........ ........... .... ..... 16
Company Background ..... ................................................... ........... ..... ......... ......... ........... ......... ...... 16
Exemption from Federal Income Taxes ......................................................................................... 16
Management .................. ................. ......... .......... ........ ...... ........ ....... ...... .............. ...... ........ .............. 16
SYSTEM DESCRIPTION ............... ................................ ...... ... ............ ..... ........................... .............. ........ 17
Service Area ...... .................................... ... ............................................................... ....................... 17
System Operations ....... ..................... .......... ..... ................. ........ .................. ........ ...... ................ ...... 17
Regulatory Approvals ...... ........................................... ....... ...................... ....... ......... ......... ...... ... ..... 18
Future System Improvements ....... .......... .................... ...... ........ ...................... ... ........ .......... ........... 18
SCHEDULE OF RATES AND CHARGES ........................................................... ....... ............................ 18
RESULTS OF OPERATIONS .. ............. ...... .................................. ....... .................... ....... ........... .... ....... ..... 19
LETTER OF CREDIT ........................................... ............ ..................... ................... ............. ................ ..... 19
BONDHOLDERS' RISK FACTORS AND INVESTMENT CONSIDERATIONS .................................. 19
TAX EXEMPTION ............................. ....... .................................... ..................... ..................... .... ............... 22
Federal Tax Matters; the Bonds ..... ............. ................ ....... ............. ..................... ..... ........... .......... 22
Florida Taxes .... ............... ................................ .................. ...... ................................. ..................... 23
ACCREDITED INVESTOR ............. ....... .... ........... .................. ....... .... ....... .......... ..................................... 23
LITIGATION ... ............... ......... ...... ........................ ... ... ......... .................... ...... ................ .... ............ ............ 24
FINANCIAL ADVISOR .... ................. ................. .... ..... .......... ......... .......................... ............... ...... ............ 24
INDEPENDENT ACCOUNTANTS . ............. ............. ........ ........ .......... ...... ...... ................ ....... ......... ...... .... 24
DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULA nONS ............................................. 24
ENFORCEABILITY OF REMEDIES .................. ..................... ............................... ........ ..... ....... .............. 24
APPROVAL OF LEGALITY ................. ... ........ ........... ............. ....................... ................. ............ ........ ..... 25
CONTINUING DISCLOSURE............ ............................................... ........ .......... ............... ..... ...... ............ 25
CERTIFICATE CONCERNING PRIVATE PLACEMENT MEMORANDUM ...........................25
MISCELLANEOUS ...... ............... ...................................................... ........... ............... ..... ...... .................... 25
APPENDIX A
AUDITED FINANCIAL STATEMENTS OF THE COMPANY FOR THE
FISCAL YEARS ENDED DECEMBER 31, 2003 AND 2004.
APPENDIX B
FORM OF ACCREDITED INVESTOR LETTER
APPENDIX C
FORMS OF MASTER TRUST INDENTURE, BOND INDENTURE, LOAN
AGREEMENT AND MORTGAGE.
APPENDIX D
FORM OF OPINION OF LIVERMORE, FREEMAN & MCWILLIAMS, P.A.,
AS BOND COUNSEL WITH RESPECT TO THE BONDS.
PRIVATE PLACEMENT MEMORANDUM
$2,965,000*
MONROE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
Industrial Development Revenue Bonds
(North Key Largo Utility Corp. System) Series 2005
INTRODUCTION
This Private Placement Memorandum, including the cover page and the appendices hereto, is
provided to set forth certain information concerning the issuance by Monroe County Industrial
Development Authority (the "Issuer") of its Industrial Development Revenue Bonds, (North Key Largo
Utility Corp. System) Series 2005 (the "Bonds") issued in exchange for a like amount of the Issuer's
outstanding Industrial Development Revenue Bonds (North Key Largo Utility Corp. System), Series
1995, (the "1995 Bonds"), pursuant to an Offer to Exchange, dated April _, 2005. The purpose for the
Offer to Exchange is to achieve a debt service savings and to consent to the new basic documents,
including the Master Trust Indenture, Bond Indenture, Loan Agreement and Mortgage and Security
Agreement, all as more particularly described herein.
North Key Largo Utility Corp., a not-for-profit corporation organized and existing under the laws
of the State of Florida (the "Company"), is a member-owned cooperative in the business of acquiring,
owning, operating and managing a wastewater collection, treatment and disposal system (the "System")
to its customers who are the members of the Company.
The prospective investor should be aware of certain risk factors anyone of which, if it
materialized to a sufficient degree, could delay or prevent payment of principal and/or interest on the
Bonds. See "BONDHOLDERS' RISKS FACTORS AND INVESTMENT CONSIDERATIONS" for a
summary of certain of these risks. This Private Placement Memorandum, including all appendices, should
be read in its entirety.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
ANY PURCHASE OF THE BONDS SHOULD BE FOR INVESTMENT AND NOT WITH THE
INTENT TO EFFECT A DISTRIBUTION. THE SALE OR TRANSFER BONDS IN
DENOMINATIONS OF LESS THAN $100,000 IS RESTRICTED TO ACCREDITED INVESTORS.
The Company will use the proceeds of the Bonds solely for the exchange of a like principal
amount of 1995 Bonds. Costs related to the issuance of the Bonds will be paid by the Company from
legally available funds not derived from the proceeds of this or any other tax-exempt borrowing. The
1995 Bonds were issued on March 9, 1995 and the proceeds thereof were loaned by the Issuer to the
Company pursuant to a loan agreement in order to finance (1) the acquisition of the 450,000 gpd central
wastewater collection, transmission, treatment and disposal system then owned by Ocean Reef Club, Inc.,
located in Key Largo, Florida,; (2) the costs of improvements thereto; (3) interest on the 1995 Bonds
during construction of the improvements and (4) costs related to the issuance of the 1995 Bonds. The
facilities acquired with the proceeds of the 1995 Bonds, the improvements thereto and additional
improvements since 1995 are owned and operated by the Company and are herein collectively called the
"System" .
The Issuer is a public body corporate and politic of the State of Florida (the "State"). The Issuer is
issuing the Bonds pursuant to the Constitution and laws of the State, particularly Chapter 159, Parts II and
III, Florida Statutes (the "Act").
Concurrently with the issuance of the Bonds, the Issuer and the Company will enter into a Loan
Agreement dated as of April 1, 2005 (the "Loan Agreement"), pursuant to which the Issuer will loan the
proceeds of the Bonds to the Company. The Company will agree to make loan payments directly to the
Bond Trustee at the times and in the amounts sufficient to pay the principal of, premium, if any, and
interest on the Bonds. The obligations under the Loan Agreement are secured by a Master Note issued
under the Master Trust Indenture dated as of April 1, 2005 (the "Master Indenture") between the
Company and Wachovia Bank, National Association, as Master Trustee (the "Master Trustee") and
Supplemental Indenture dated as of April 1, 2005 (the "Supplemental Indenture") between the Company
and the Master Trustee. Obligations of the Company under the Master Indenture are secured by a pledge
of and lien on Revenues, which include a Mortgage and Security Agreement (the "Mortgage") granting
the Master Trustee a lien on the Mortgaged Land and Property, as defined in the Mortgage.
The Company will issue its Master Note, Series 2005 (the "Series 2005 Note") pursuant to the
Master Indenture in the aggregate principal amount equal to the aggregate principal amount of the Bonds
in order to collateralize the Company's obligations under the Loan Agreement with respect to the Bonds.
THE BONDS AND ALL OTHER OBLIGATIONS OF THE ISSUER UNDER THE LOAN
AGREEMENT AND THE INDENTURE AND THE TRANSACTIONS CONTEMPLATED
THEREBY SHALL NOT CONSTITUTE AN INDEBTEDNESS OF THE ISSUER, MONROE
COUNTY, FLORIDA, THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION OR
AGENCY THEREOF WITHIN THE MEANING OF ANY STATE CONSTITUTIONAL PROVISION
OR STATUTORY LIMITATION. THE BONDS AND ALL OTHER OBLIGATIONS OF THE
ISSUER UNDER THE LOAN AGREEMENT AND THE BOND INDENTURE AND THE
TRANSACTIONS CONTEMPLATED THEREBY SHALL NOT BE A CHARGE AGAINST THE
GENERAL CREDIT OF THE ISSUER, MONROE COUNTY, FLORIDA, OR AGAINST THE
GENERAL CREDIT OR TAXING POWERS OF THE AUTHORITY, MONROE COUNTY,
FLORIDA, THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION OR AGENCY
THEREOF.
ANYTHING IN THE BOND INDENTURE OR IN THE BONDS TO THE CONTRARY
NOTWITHSTANDING, (A) THE ISSUER AND/OR MONROE COUNTY, FLORIDA, AS
APPLICABLE, SHALL NEVER BE REQUIRED TO (1) LEVY ANY AD V ALOREM TAXES ON
ANY PROPERTY TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE
BONDS OR TO MAKE ANY OTHER PAYMENTS PROVIDED FOR UNDER THE LOAN
AGREEMENT OR THE BOND INDENTURE, (2) PAY THE SAME FROM ANY FUNDS OF THE
ISSUER OTHER THAN THE REVENUES, OR (3) REQUIRE OR ENFORCE ANY PAYMENT OR
PERFORMANCE BY THE COMPANY AS PROVIDED IN THE BOND INDENTURE, THE LOAN
AGREEMENT OR THE MORTGAGE UNLESS THE ISSUER'S EXPENSES IN RESPECT
THEREOF SHALL BE AVAILABLE FROM ANY MONEYS DERIVED UNDER THE LOAN
AGREEMENT OR THE MORTGAGE OR SHALL BE ADVANCED TO THE ISSUER FOR SUCH
PURPOSE AND THE ISSUER SHALL RECEIVE INDEMNITY TO ITS SATISFACTION; AND (B)
THE BONDS SHALL NOT CONSTITUTE A LIEN UPON ANY PROPERTY OWNED BY OR
SITUATED WITHIN THE TERRITORIAL LIMITS OF THE ISSUER OR MONROE COUNTY,
FLORIDA, EXCEPT TO THE EXTENT (IF ANY) OF THE ISSUER'S RIGHTS IN THE SYSTEM,
THE LOAN AGREEMENT, THE MORTGAGE AND THE PROPERTY RIGHTS, RECEIPTS,
REVENUES AND PROCEEDS PLEDGED UNDER THE MASTER INDENTURE AND THE BOND
INDENTURE. THE ISSUER HAS NO AD VALOREM TAXING POWER.
2
Brief descriptions of the Bonds, the Master Indenture, the Bond Indenture, the Loan Agreement,
the Mortgage, the System, the Company, the Issuer, and certain provisions of the Act are set forth herein,
together with other information set forth in the appendices hereto. Such descriptions do not purport to be
comprehensive or definitive. All references herein to the Master Indenture, the Bond Indenture, the Loan
Agreement, the Mortgage, other relevant instruments, provisions of the Act and other applicable laws of
the State are qualified in their entirety by reference to each such document or statutory provision. The
forms of the Master Indenture, Bond Indenture, Loan Agreement and Mortgage are attached hereto as
Appendix A. Any other document not reproduced herein may be obtained from the Company at: North
Key Largo Utility Corp., 35 Ocean Reef Drive, Suite 220, Key Largo, Florida 33037. References herein
to the Bonds are qualified in their entity by reference to the form thereof included in the Bond Indenture
and the information with respect thereto included in the aforesaid documents.
Certain capitalized terms used herein have the same meanings assigned to such terms in the
Master Indenture, Bond Indenture, Loan Agreement and Mortgage.
THE ISSUER/COUNTY
The Issuer is a public body corporate and politic of the State of Florida. The Issuer's membership
consists of five (5) persons appointed by the County Commission to four-year terms. Currently, the
members of the Board of County Commissioners of the County serve as the members of the Authority.
Monroe County, Florida, was constitutionally formed in 1823. It is comprised primarily of the
Florida Keys, which are a string of coral islands extending in a southwesterly arc from Biscayne Bay to
the Dry Tortugas. The Keys separate the Atlantic Ocean on the south and the east from the Gulf of
Mexico on the north and west, and extend approximately 100 miles south from the United States
mainland. The County seat, Key West, is located on the southernmost of the Florida Keys, and lies 98
miles north of Cuba, approximately 160 miles southwest of Miami and 66 nautical miles north of the
Tropic of Cancer.
The County has a mild, sub-tropical climate. The average annual temperature is 77.7 degrees,
with an average temperature during the winter of 69.9 degrees and a summer average of 83.9 degrees.
The highest temperature recorded was 95 degrees in 1957, and the lowest temperature recorded was 41
degrees in 1981. Precipitation (39-40 inches per year) is characterized by dry and wet seasons in June
through October and December through March, respectively.
The issuance of the Bonds was approved by the adoption of a resolution of the Issuer on April
21,2005.
THE BONDS WILL BE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER PAYABLE
SOLELY FROM THE SOURCES PROVIDED FOR UNDER THE BOND INDENTURE. THE BONDS
AND ALL OTHER OBLIGATIONS OF THE ISSUER UNDER THE LOAN AGREEMENT AND
BOND INDENTURE AND THE TRANSACTIONS CONTEMPLATED THEREBY SHALL NOT
CONSTITUTE ANY INDEBTEDNESS OF THE ISSUER, MONROE COUNTY, FLORIDA, THE
STATE OF FLORIDA, OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF, WITHIN
THE MEANING OF ANY STATE CONSTITUTIONAL PROVISION OR STATUTORY
LIMITATION. (SEE "SECURITY FOR THE BONDS" HEREIN.)
3
THE BONDS
General
The Bonds will be issuable only as a single term Bond maturing on March 1, 2025 in fully
registered form; shall be numbered in such manner as determined by the Bond Trustee in order to
distinguish each Bond from any other Bond; shall be in the denomination of $100,000 each, or multiples
thereof, on original issuance, and thereafter shall be in multiples of $1,000; shall be dated the date of
delivery; shall bear interest from said date, payable on September 1, 2005, and on each March 1 and
September 1 thereafter; subject to mandatory Bond Amortization Account redemption on March 1 in the
years 2006 to 2025, both inclusive; and shall have such other terms as more particularly set forth in form
of the Bond.
The Bonds shall bear interest, computed on the basis of a 360-day year, at the Applicable Rate
(as hereinafter defined).
The Applicable Rate on any day with respect to which interest on the Bonds is calculated shall
be the Regular Rate (defined below), subject to adjustment as specified below or the Taxable Rate
(defined below), whichever is applicable ("Applicable Rate"), as follows:
(a) Regular Rate. Except as otherwise provided herein, the interest rate (the "Regular Rate")
shall be 6.00%.
(b) Adiustments to Regular Rate. In the event a Determination of Taxability shall have
occurred, the rate of interest on each Bond shall be increase to a "Taxable Rate" which shall equal 150%
of the Regular Rate, effective retroactively to the date of the Event of Taxability, and thereafter through
the Inclusion Period (the period commencing with the date of the Event of Taxability and ending with
the date such Bond ceases to be outstanding). The Trustee shall give notice to each Person who was the
Holder of each Bond during the Inclusion Period of the occurrence of a Determination of Taxability and
within 90 days thereafter, each Holder or former Holder of each Bond shall be paid the Additional
Amount such Holder or former Holder shall be entitled to receive with respect to such Bond. "Additional
Amount" means that amount of money payable to a Holder or former Holder of any Bond which shall
equal interest accrued at the Taxable Rate throughout that portion of the Inclusion Period during which
such person held such Bond, reduced by interest accrued at the Regular Rate which was paid to such
Holder or former Holder or to any subsequent Holder of such Bond. Such Additional Amount shall
constitute additional interest on the Bonds and shall be payable solely from the sources specified in such
Bond and in the Bond Indenture.
In each case the Applicable Rate shall be rounded to the nearest one-hundredth of one percent.
Upon the occurrence of an Event of the Default (as defined in the Master Indenture, Bond
Indenture, Loan Agreement and Mortgage), interest shall accrue at the following rate (the "Default
Rate"):
(1) while the Bonds bear interest at the Taxable Rate, as provided above, a rate which is equal
to 200% of the Regular Rate.
(2) while the Bonds bear interest at the Regular Rate as provided above, a rate which is equal
to 150% of the Regular Rate.
4
Notwithstanding the foregoing, the Applicable Rate shall never exceed the maximum interest
rate per annum allowed by law.
The principal of the Bonds shall be payable in lawful money of the United States of America at
the designated Corporate Trust Office of the Bond Trustee. Payment of the interest on any Bond shall be
made to the person whose name appears on the registration books of the Bond Trustee as the Holder
thereof as of the close of business on the fifteenth day of the calendar month immediately proceeding the
month in which the interest payment occurs (the "Record Date"). Interest shall be paid in lawful money
of the United States of America by check or draft mailed to each Holder at the address shown on the
Bond Trustee's registration books or, at the option of the Holder of at least $1,000,000 in aggregate
principal amount of Bonds, interest shall be paid by wire transfer to the address filed with the Bond
Trustee.
Any such interest not so punctually paid or duly provided for shall cease to be payable to the
Holder on the applicable Record Date and shall be paid to the person in whose name the Bond is
registered at the close of business on a Special Record Date for the payment of such defaulted interest.
The Special Record Date will be fixed by the Bond Trustee and notice will be given to the Holders not
less than ten (l0) days prior to such Special Record Date.
Interest shall be calculated based on a year of 360 days and twelve 30-day months.
Redemption
Optional Redemption. The Bonds are subject to optional redemption prior to their stated
maturity, by the Issuer, upon the direction of the Company, from funds deposited for such purpose in the
Bond Fund under the Bond Indenture, on the first Business Day of any month, as a whole or in part, in
such maturities as are designated by the Company (or if the Company fails to designate such maturities,
in inverse order of maturity) and by random selection within a maturity, at the redemption prices set forth
below (expressed as percentages of the principal amount to be redeemed) in each case together with
accrued interest thereon to the date fixed for redemption:
Redemption Period Redemption Price
Date ofIssue through February 28,2006
March 1, 2006 through February 28, 2007
March 1,2007 through February 28, 2008
March 1, 2008 through February 28,2009
March 1, 2009 and thereafter
102.0%
101.5%
101.0%
100.5%
100.0%
Mandatory Redemption. The Bonds are subject to redemption prior to their stated maturity, in
part, from Mandatory Amortization Installments deposited in the Bond Fund under the Bond Indenture,
on any March 1 at the principal amount thereof and interest accrued thereon to the date fixed for
redemption, without premium, in the amounts indicated below.
Mandatory Redemption
Payment Dates
(March 1)
Mandatory Amortization
Installments
2006
2007
5
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
* Maturity_
Extraordinary Redemption. (a) The Bonds are callable for redemption prior to maturity in the
event of a sale of the System, in whole, on the earliest practicable date after the Company shall prepay in
full the Master Notes outstanding under the Master Indenture at a price of 100% of the principal amount
of Bonds so redeemed, plus accrued interest to the redemption date, and without premium.
(b) The Bonds shall also be subject to redemption, in whole but not in part, at any time, at a
redemption price of 100% of the principal amount of Bonds so redeemed, plus accrued interest to the
redemption date, and without premium, if within one year after the occurrence of any of the following
events, the Company shall elect to prepay the Loan pursuant to the Loan Agreement:
1. The System shall have been damaged or destroyed to such extent that, in the
opinion of the Company expressed in a Company's Certificate filed with the Issuer and the Bond
Trustee following such damage or destruction (A) the completion of the System will be delayed
for at least six months, (B) it is not practicable or desirable to rebuild, repair or restore the System
within a period of six consecutive months following such damage or destruction, or (C) the
Company is or will be thereby prevented from carrying on the normal operations of the System
for a period of at least six consecutive months; or
2. Title to or the temporary use of all or substantially all the System shall have been
taken under the exercise of the power of eminent domain by any governmental authority to such
extent that, in the opinion of the Company expressed in a Company's Certificate filed with the
Issuer and the Bond Trustee (A) the completion of the System will be delayed for at least six
months, or (B) the Company is or will be thereby prevented from carrying on the normal
operations of the System for a period of at least six consecutive months; or
3. Any court or administrative body of competent jurisdiction shall enter a
judgment, order or decree requiring the Company to cease all or any substantial part of its
operations of the System to such extent that, in the opinion of the Company expressed in a
Company's Certificate filed with the Issuer and the Bond Trustee, the Company is or will be
6
thereby prevented from canying on its normal operations at the System for a period of at least six
consecutive months; or
4. As a result of any changes in the Constitution of the State or the Constitution of
the United States of America or of legislative or administrative action (whether state or federal)
or by final decree, judgment or order of any court or administrative body (whether state or
federal) of competent jurisdiction, the Loan Agreement shall have become void or unenforceable
or impossible of performance in accordance with the intent and purposes of the parties as
expressed in the Loan Agreement, or unreasonable burdens or excessive liabilities shall have
been imposed on the Issuer or the Company including without limitation, federal, state or other ad
valorem, property, income or other taxes not being imposed on the date of the Loan Agreement.
Special Redemption. If the Company exercises its option to prepay the Loan in full, which
option shall be exercised (i) in the event of the sale, lease or other disposition of any of the Company's
property to any person or (ii) in the event of the sale of all of the equity interests of the Company, if the
Company detennines, based on an Opinion of Bond Counsel, that unless remedial measures are taken
pursuant to any revenue procedure, revenue ruling or regulation of the Internal Revenue Service, the
exclusion from gross income of the interest on the Bonds for federal income tax purposes will be
adversely affected, which option shall be exercised if the above events occur, all as more fully provided
in the Loan Agreement, the Bonds are required to be redeemed in whole on any date, by the Issuer at the
direction of the Company, at a redemption price equal to 100% of the principal amount thereof, plus the
premiums as set forth with respect to optional redemption, and accrued interest to the redemption date.
Selection of Bonds for Redemption. Whenever provision is made in the Bond Indenture for the
redemption of less than all of the Bonds of any maturity, the Bond Trustee, as directed by the Company,
shall select the Bonds to be redeemed from all Bonds of such maturity subject to redemption in such
manner as may be designated by the Company, or if the Company shall have failed to so designate, in any
manner which such Bond Trustee in its sole discretion shall deem appropriate and fair. Such Bond
Trustee shall promptly notify the Issuer and the Company in writing of the Bonds or portions thereof so
selected for redemption.
Notice and Effect of Redemption. Each notice of redemption shall state (i) the maturities or
portions of maturities (in the case of partial redemption) which are to be redeemed, (ii) the date of
redemption, (iii) the place or places where the redemption will be made, including the name and address
of the Bond Trustee, (iv) the Redemption Price, (v) the CUSIP numbers assigned to the Bonds to be
redeemed, (vi) in the case of any Bonds to be redeemed in part only, the amount of such Bonds to be
redeemed and (vii) the original dated date, interest rate and stated maturity date of each Bond to be
redeemed. Each notice shall also (a) state that if, on the date of redemption, the Bond Trustee holds
sufficient moneys therefor, then, on the date of redemption, the Redemption Price, together with accrued
interest, if any, shall become due and payable, and that from and after the redemption date interest
thereon shall cease to accrue and be payable, and (b) require that on the Redemption Date such Bonds
shall be surrendered.
At least thirty but not more than sixty days prior to the redemption date, notice shall be given to
the Holders of Bonds designated for redemption by first-class mail, postage prepaid at their addresses
appearing on the registration books maintained by the Bond Trustee as of the close of business on the day
before the notice is given. A second notice of redemption shall be mailed no more than 60 days after the
redemption date to any Holder of Bonds who has not turned Bonds in for redemption within 30 days after
the redemption date. Notice shall also be given to each of the Securities Depositories and securities
information services designated in the Bond Indenture. Failure to give notice to a Bondholder, or any
defect therein, shall not affect the validity of the redemption of any other Bonds.
7
Any notice of redemption (other than a notice of redemption from Mandatory Sinking Account
Payments) may be rescinded by written notice given to the Bond Trustee by the Company no later than
five Business Days prior to the date specified for redemption. The Bond Trustee shall give notice of
rescission as soon thereafter as practicable in the same manner, and to the same persons, as notice of such
redemption was given.
Unless rescinded as described in the prior paragraph, notice of redemption having been given,
and moneys for payment of the Redemption Price of, together with interest accrued to the redemption
date on, the Bonds (or portions thereof) so called for redemption being held by the Bond Trustee, on the
redemption date designated in the redemption notice, the Bonds (or portions thereof) called for
redemption shall become due and payable at the Redemption Price specified in the redemption notice,
interest on the Bonds called for redemption shall cease to accrue, those Bonds (or portions thereof) shall
cease to be entitled to any benefit or security under the Bond Indenture, and the Holders of those Series
shall have no rights in respect thereof except to receive payment of the Redemption Price and accrued
interest.
Partial Redemption of Bonds. Upon surrender of any Bond redeemed in part only, the Issuer
shall execute and the Bond Trustee shall authenticate and deliver to the Holder thereof, at the expense of
the Company, a new Bond or Bonds of authorized denominations and of the same maturity, equal in
aggregate principal amount to the unredeemed portion of the Bond surrendered.
Acceleration
Upon the occurrence of certain events of default under the Maser Indenture, Bond Indenture,
Loan Agreement or Mortgage, including, but not limited to, nonpayment of the principal of or interest on
the outstanding Bonds when the same shall become due and payable, the principal of and accrued interest
on the Bonds are subject to acceleration. For a description of the Events of Default and the circumstances
under which acceleration may occur and other remedies available to the Bond Trustee and the Holders of
the Bonds, see "Forms of Master Indenture, Bond Indenture, Loan Agreement and Mortgage" in
Appendix A hereto.
Registration, Transfer and Exchange
Upon surrender for transfer of any Bond at the designated corporate trust office of the Bond
Trustee together with a written instrument of transfer, duly executed or such Holder's in a form
satisfactory to the Bond Trustee, the Issuer shall execute and the Bond Trustee shall authenticate and
deliver in the name of the transferee or transferees a new Bond or Bonds of any authorized denomination
or denominations of the same maturity and for alike in the aggregate principle amount. Bonds may be
exchanged at the designated corporate trust office of the Bond Trustee for a like aggregate principal
amount of Bonds of any authorized denomination or denominations of the same maturity.
The Bond Trustee in connection with such transfer or exchange shall require the payment, by the
registered owner requesting exchange or transfer, of any tax or other governmental charge required to be
paid with respect to such exchange or transfer.
THE EXCHANGE OFFER
By the Offer to Exchange, the Company offers to exchange all of the outstanding $2,965,000
aggregate principal amount of 1995 Bonds upon the terms set forth in the Offer to Exchange and in the
8
related Letter of Transmittal (which together constitute the "Offer") for a like aggregate principal amount
of 2005 Bonds maturing on the same date and year and having the same redemption provisions as the
1995 Bonds. The Company has undertaken the Offer for the purpose of achieving a reduction in debt
service and, further, providing for the issuance of indebtedness in the future on a parity with the 2005
Bonds by executing and delivering new basic documents authorizing the issuance of the 2005 Bonds and
any future indebtedness. Owners tendering their 1995 Bonds in exchange for 2005 Bonds will, thereby,
consent to the new basic documents.
The 1995 Bonds are subject to redemption, at the option of the Company, in whole or in part on
the first business day of any month, and in the case of any 1995 Bonds redeemed prior to February 28,
2006, at a redemption price of 102% of the principal amount thereof, plus accrued interest. Any 1995
Bonds not tendered pursuant to the Offer will be redeemed on the earliest redemption date in compliance
with the terms of the trust indenture (the "Indenture") dated as of March 1, 1995, between the Authority,
as Grantor and First Union National Bank of Florida, as trustee (the "Original Trustee"). Said Original
Trustee is now known as Wachovia Bank, National Association.
Owners may tender their 1995 Bonds for exchange, on or before April _, 2005, which is the
initial Expiration Date, by delivery of such 1995 Bonds to Wachovia Bank, National Association (the
"Depository"), as the depository for the tendering Owners. The Company may extend the Expiration Date
for up to 60 days, in the manner described in the Offer. Following the Expiration Date, the 1995 Bonds
will be held by the Depository for a period up to 90 days, during which period 1995 Bonds that have been
tendered may not be withdrawn. Not later than the end of this 90-day period (the "No-Rescission Period"),
which period commences on the Expiration Date, the Company must issue Owners of duly tendered 1995
Bonds, the 2005 Bonds, or the tender of Bonds may be withdrawn or rescinded by the Owners. Following
the Expiration Date, if sufficient quantities of 1995 Bonds have been tendered, the Company intends to
cause the Authority to issue 2005 Bonds in the same amounts and maturities as the tendered 1995 Bonds to
the holders of the 1995 tendered Bonds. The Company will pay for all costs of the tender and exchange
from funds that are not derived from the proceeds of a tax-exempt borrowing. If not all 1995 Bonds are
tendered, the Company intends to cause the Authority to redeem all outstanding 1995 Bonds, and the
Company will pay for all costs of redemption of the untendered 1995 Bonds from funds that are not
derived from the proceeds of a tax-exempt borrowing. The purpose of the No-Rescission Period is to
enable the structuring of the redemption of the untendered 1995 Bonds to take place in circumstances in
which the amount of 1995 Bonds being tendered can definitely be ascertained.
The Company reserves the right, in its sole discretion, to terminate, amend, or withdraw the Offer
at any time. Unless the Company has previously withdrawn or amended the Offer, the Company will be
obligated to exchange all 1995 Bonds properly tendered, subject only to the conditions set forth in the
Offer. One of those conditions is that the Authority issue 2005 Bonds in an amount sufficient to
exchange such 2005 Bonds for all tendered 1995 Bonds. The Company reserves the right to waive any
and all conditions to its obligation to the exchange of tendered 1995 Bonds.
9
ANNUAL DEBT SERVICE REQUIREMENTS
Assuming that all outstanding 1995 Bonds are exchanged for Bonds and that the Bonds bear
interest at the Regular Rate until their maturity on March l, 2025, the estimated annual debt service
requirements of the Bonds are provided below.
Period Ending
March 1
Principal
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
$65,000
70,000
76,000
82,000
88,000
95,000
103,000
111,000
120,000
129,000
140,000
151,000
163,000
176,000
190,000
205,000
222,000
240,000
259,000
280,000
Total
$2.96~.000
Interest
Total Annual
Debt Service
$
$
L
$---
SECURITY FOR THE BONDS
Limited Obligations; No Pledge of Credit
The Bonds are special and limited obligations of the Issuer. No covenant or agreement in the
Bonds or in the Bond Indenture and no obligation therein imposes upon the Issuer and no breach thereof
shall constitute or give rise to or impose upon the Issuer a general liability or charge upon its general
credit or property other than the trust estate created by the Bond Indenture. The Issuer has no power at
any time or in any manner to pledge its faith and credit, or the taxing power of any political subdivision or
agency thereof to the payment of the principal of, premium, if any, or interest on the Bonds, nor shall any
of the obligations of the Issuer be deemed to be obligations of the Authority, the State of Florida or any
other political subdivision or agency thereof, and none of the Authority, the State of Florida or any
political subdivision or agency thereof shall be liable for the payment of the principal of, premium, if any,
or interest on the Bonds. The Issuer has no taxing power.
The Loan Agreement
Pursuant to the Loan Agreement, the Company will agree, among other things, to make loan
payments to the Bond Trustee, on behalf of the Issuer, in such amounts and at such times as will be
10
sufficient to pay, when due, the principal of, premium, if any, and interest on the Bonds and all other
amounts due under the Loan Agreement.
The Bond Indenture
Pursuant to the Bond Indenture, the Issuer will assIgn to the Bond Trustee as security for
repayment of the Bonds the following:
(i) All right, title and interest of the Issuer in and to the Series 2005 Note and all sums
payable in respect of the indebtedness evidenced thereby;
(ii) All right, title and interest of the Issuer in and to the Loan Agreement and the amounts
payable to the Issuer thereunder (except for certain rights retained by the Issuer, including the Issuer's
rights to indemnification, to receive notices and payment of its expenses); and
(iii) Any and all other property of every kind, conveyed, pledged, assigned or transferred as
and for additional security thereunder by the Issuer or the Company, to the Bond Trustee, including
without limitation, funds held by the Bond Trustee in any of the funds established under the Bond
Indenture (but excluding any funds held for the payment of rebate pursuant to Section 148 of the Code).
Upon the occurrence of certain "events of default" under the Bond Indenture, the Bonds shall be
subject to acceleration in accordance with the provisions of the Bond Indenture.
The Series 2005 Note
To secure the Company's obligations under the Loan Agreement, the Company will issue and
deliver the Series 2005 Note pursuant to the Master Indenture, in the aggregate principal amount equal to
the principal amount of Bonds issued to the Issuer for assignment to the Bond Trustee pursuant to the
Bond Indenture. The Series 2005 Note will be payable in the same amounts and at the same times as the
loan payments are due under the Loan Agreement, and such payments on the Series 2005 Note will
constitute payment under the Loan Agreement.
The Master Indenture
Notes. The Master Indenture permits the Company to issue Master Notes in addition to the Series
2005 Note and to secure all Master Notes on parity with one another.
Pledged Assets. Each Master Note issued pursuant to the Master Indenture, including the Series 2005
Note, shall be a general obligation of the Company and shall be entitled to the benefits of security of the
Master Indenture. To secure payment and performance of all obligations of the Company in respect to
the principal and interest on the Master Notes, all payment obligations and all Other Obligations (as such
terms are defined in the Master Indenture) the Company pledges, assigns and grants to the Master Trustee
a security interest in all of its rights, title and interest in the Pledged Assets. "Pledged Assets" are
defined in the Master Indenture to include (a) the Gross Revenues, (b) all other funds held under the
Master Indenture, together with any amounts and investments, if any, on deposit in such funds from time
to time and all investment income thereon; provided, however, that any Reserve Fund created, established
and maintained pursuant to any Supplement shall only secure the Related Indebtedness for which such
Fund was created, (c) any and all other real or personal property of every name and nature from time to
time hereafter by delivery or by writing of any kind assigned, pledged or transferred and delivered to the
Master Trustee by the Company or by anyone on behalf of the Company with its written consent, as and
for additional security for the Secured Obligations, and (d) proceeds of the foregoing. The Company has
11
covenanted pursuant to the provisions of the Master Indenture, not to create any Liens upon the Pledged
Assets, now owned or hereafter acquired by it, other than Permitted Liens. "Gross Revenues" are defined
in the Master Indenture to mean all income, fees, rentals, earnings or other charges derived by the
Company from the operation of the System, including physical connection charges. "Pennitted Liens"
are defined in the Master Trust Indenture as:
(i) The Lien on the Pledged Assets in favor of the Master Trustee to secure all Master Notes
on a parity basis.
(ii) Liens arising by reason of good faith deposits with the Company in connection with
leases of real estate, bids or contracts (other than contracts for the payment of money), deposits by the
Company to secure public or statutory obligations, or to secure, or in lieu of, surety, stay or appeal bonds,
and deposits as security for the payment of taxes or assessments or other similar charges.
(iii) Any non-consensual Lien against the Company so long as such Lien is being contested in
good faith and execution thereon is stayed.
(iv) Liens existing on the date of authentication and delivery of the initial Master Note issued
under the Master Indenture, provided that such Liens may not be increased, extended, renewed or
modified to apply to any Property of the Company not subject to such Lien on such date or to secure
Indebtedness not outstanding as of the date of the issuance of the Bonds.
(v) Any Lien in favor of a trustee or lender on the proceeds of Indebtedness prior to the
application of such proceeds.
Any Lien subordinate to the Lien described in clause (i) above.
Amount of Indebtedness. The Company may incur Indebtedness by causing the issuance of one
or more Master Notes under the Master Indenture or by creating Indebtedness under any other document
in accordance with the Master Indenture. The principal amount of Indebtedness that may be so incurred
and the number and principal amount of Master Notes securing such Indebtedness are not limited, except
as set forth in the Master Indenture and in any Supplement.
Payment. Payment Obligations and Other Obligations with respect to Indebtedness shall be
payable in any currency of the United States of America which, at the respective dates of payment
thereof, is legal tender for the payment of public and private debts, unless contrary provision is made in
the Supplement pursuant to which such Indebtedness is issued, such principal, premium, if any, and
interest shall be payable at the Corporate Trust Office or at the office of any alternate paying agent named
in any such Indebtedness or in any Related Documents. Unless contrary provision is made in the
Supplement to which such Indebtedness is issued or incurred, payments of interest on the Indebtedness
shall be made to the Person appearing on the registration books of the Company kept in the Corporate
Trust Office of the Master Trustee, as registrar, as the Holder thereof and shall be paid by check or draft
mailed to the Holder at his address as it appears on such registration books or at such other address as is
furnished to the Master Trustee in writing by such Holder; provided, however, that any Supplement
creating Indebtedness may provide that interest be paid, at the request of the Holder, by wire transfer.
The foregoing notwithstanding, if the Company so elects, payments on such Indebtedness shall be made
directly by the Company, by check or draft delivered to the holders of such Indebtedness or their
designees or shall be made by the Company by wire transfer to such holder, in either case delivered on or
prior to the date on which such Payment Obligation or Other Obligation is due. Except with respect to
Payment Obligations and Other Obligations directly paid, the Company agrees to deposit with the Master
Trustee at least 2 Business Days prior to each due date a sum sufficient to pay the principal of, premium,
if any, and interest on Indebtedness becoming due. Such money shall, upon the written direction of the
Company, be invested as provided in the Supplement or Related Documents pursuant to which the
Indebtedness was created. The Master Trustee shall not be liable or responsible for any loss resulting
from such investments made in accordance with the terms hereof. Supplements may create such security,
12
including reserve funds and other funds as necessary to provide for payment or to hold moneys deposited
for payment or as security for Indebtedness and the payments due on such Indebtedness and the payments
due on such Indebtedness hereunder shall include such additional amounts.
Security; Restrictions on Encumbering Pledged Assets; Payment of Principal and Interest.
(a) Any Master Note issued pursuant to the Master Indenture shall be a general obligation of
the Company and shall also be entitled to the benefits and security of the Master Indenture.
(b) To secure the prompt payment and performance of the Secured Obligations, the
Company pledges, assigns and grants to the Master Trustee a lien on and security interest in all of its right
title and interest in and to the Pledged Assets in each case, except as provided otherwise in the Master
Indenture, without preference, priority or distinction, as to lien or otherwise, of any Secured Obligation
over any other Secured Obligation, by reason of designation, number, date of the Master Notes issued
under any Supplement relating thereto or the date of authorization, issuance, sale, execution,
authentication, delivery or maturity of such Master Note, or otherwise, or the date any Supplement is
executed, so that, except as otherwise provided herein, all Secured Obligations shall have the same right,
lien and privilege under this Master Indenture and shall be secured equally and ratably hereby; it being
intended that the lien and security of this Master Indenture shall take effect from the date hereof, without
regard to the date of the actual issue, sale or disposition of any Master Note or the incurrence of any
Related Indebtedness, as though upon that date all of the Master Notes were actually issued, sold and
delivered to purchasers for value.
(c) (i) At least one business day prior to the delivery of the first Master Note, there shall
be delivered to the Master Trustee filed copies of financing statements and such other
documents as shall be required in the Opinion of Counsel, to perfect the security interest
of the Master Trustee in such of the Gross Revenues in which a security interest may be
perfected by the filing of a financing statement, control agreement or such other
documents in the State of Florida.
(ii) The Company shall also execute and deliver to the Master Trustee from time to
time such additional documents and instruments (including amendments or supplements
to this Master Indenture) as in the Opinion of Counsel, shall be necessary or appropriate
to create or perfect the security interest intended to be created hereunder in the Pledged
Assets or to maintain such security interest or the perfection and priority thereof. In
particular, the Company covenants that it will, at least ninety (90) days prior to the
expiration of any financing statement, prepare and file such continuation statements of
existing financing statements as shall, in the Opinion of Counsel, be necessary to comply
with applicable law and shall provide to the Master Trustee written notice of such filing.
If the Master Trustee shall not have received such notice at least twenty-five (25) days
prior to the expiration date of any such financing statement, the Master Trustee shall
notify the Company in writing and shall remind the Company of its obligations to prepare
and file such continuation statements in a timely manner to assure that the security
interest in Pledged Assets shall remain perfected. Notwithstanding the foregoing, the
Company authorizes the Master Trustee to file continuation statements on its behalf and
without its signature as necessary to perfect or continue the perfection of any security
interest provided under the Master Indenture and the Master Trustee shall have no
liability for such filings.
(iii) The Company may from time to time pledge additional Property as security for
the Secured Obligations by execution of a Supplement containing appropriate granting
13
language and delivery of such additional documents and instruments as shall be required
in the Opinion of Counsel to effectuate such grant and to perfect the liens intended to be
created thereby. Simultaneously with such pledge, the Company shall deliver an Opinion
of Bond Counsel, if any Related Tax-Exempt Indebtedness shall remain outstanding, to
the effect that the pledge of such additional security will not adversely affect the
exclusion of interest paid on such Indebtedness from the gross income of the holder
thereof.
(d) The Company covenants that it will not pledge or grant a security interest in or permit to
exist any Lien on any of its Pledged Assets, except for Permitted Liens.
(e) The Company covenants to promptly pay, or cause to be paid, the Secured Obligations at
the place, on the dates and in the manner provided herein, in the Supplement and in the Master Note
issued to secure the same according to the terms thereof whether at maturity, upon proceedings for
redemption, by acceleration or otherwise and to perform and observe, or cause to be performed and
observed, each and every covenant agreement and obligation of the Company contained or incorporated
in any Master Note or Supplement.
(f) The Company covenants that, if an Event of Default shall have occurred and be
continuing, it will promptly and without any request of the Master Trustee, deliver or direct to be
delivered to the Master Trustee all Gross Revenues until such Event of Default has been cured.
(g) The Company covenants and agrees to fully perform all of its obligations under the
Related Documents and to enforce its rights thereunder.
Limitations on Creation of Liens. The Company agrees that it will not create or suffer to be
created or pennit the existence of any Lien upon Property now owned or hereafter acquired by it other than
Pennitted Liens.
Limitations on Indebtedness. So long as any Indebtedness is outstanding, and provided that no
Event of Default exists (unless cured) with respect to such Indebtedness and all payments due hereunder and
under any Supplement are current, the Company will not incur any Indebtedness other than:
(a) Long-Term Indebtedness, if prior to incurrence of the Long-Term Indebtedness
the following conditions are met:
(i) There shall have been obtained and filed with the Master Trustee a
certificate of an independent certified public accountant: (a) stating that the books and records of the
Company relating to the collection and receipt of Gross Revenues have been reviewed by him; (b) stating
that the Net Revenues for the most recent Fiscal Year for which audited financial statements are available,
equal at least 1.10 times the Maximum Annual Debt Service Requirement on (i) all Long-Term
Indebtedness, then outstanding and (ii) the additional Long-Term Indebtedness with respect to which such
certificate is made. If desirable, the Net Revenues for such latest Fiscal Year period may be adjusted by
the certified public accountants as follows: (a) to reflect for such period changes made in rates, fees,
rentals or other charges for the operation of the System during such period; and (b) to reflect any change
in such Net Revenues caused by any new customers of the System having been provided service
subsequent to the date of commencement of such period and prior to the date of such certification
provided for in paragraph (l) above.
14
(ii) The issuance of additional Long-Term Indebtedness shall further be
conditioned on the annual average of Net Revenues, as estimated in writing by the certified public
accountants, to be derived by the Company from the operation of the System in each of the 3 Fiscal Years
immediately succeeding the estimated date of completion and placing in operation of the project to be
financed by the issuance of such additional Long-Term Indebtedness, will equal at least 1.10 times the
Maximum Debt Service Requirement on (a) all Long-Term Indebtedness then outstanding and (b) the
additional Long-Term Indebtedness with respect to which such certificate is made.
(iii) The Borrower need not comply with the provisions for the issuance of
additional Long-Term Indebtedness described above if such additional Long-Term Indebtedness is issued
to refund any outstanding Long-Term Indebtedness; provided, the issuance of such additional Long-Term
Indebtedness does not result in an increase in the aggregate amount of principal and interest coming due
on the outstanding Long-Term Indebtedness in the current and in all subsequent Fiscal Years.
(b) Short-Term Indebtedness, if immediately after the incurrence of such Short-Term
Indebtedness and the application of the proceeds thereof, the aggregate Outstanding principal amount of all
such Short-Term Indebtedness does not exceed $250,000.
(c) Non-Recourse Indebtedness, without limitation.
(d) Guaranties of a sum certain; provided that the conditions set forth in this Section are
satisfied if it is assumed that the Indebtedness guaranteed is Indebtedness of the Company.
(e) Subordinated Indebtedness, without limitation.
Sale, Lease or Other Disposition of Property. The Company agrees that it will not transfer in
any Fiscal Year any of its Property except for transfers:
(i) In return for other Property of equal or greater value and usefulness;
(ii) Upon fair and reasonable terms no less favorable to the Company than would
obtain in a comparable arms-length transaction;
(iii) Of Property, the book value of which does not exceed 10% of the net book value
of the property, plant and equipment of the Company, as shown on the most recent audited fmancial
statements of the Company, or if such book value is in excess of 10% of the net book value of the property,
plant and equipment of the Company, there shall be filed with the Master Trustee a written report
demonstrating that the projected Maximum Annual Debt Service Requirement for each of the two full
succeeding Fiscal Years immediately following the date of such transfer would not be reduced by more than
20%.
Consolidation, Merger, Sale or Conveyance (a) The Company covenants that it will not merge
or consolidate with, or sell or convey all or substantially all of its assets to, any Person unless:
(i) If all amounts due or to become due on any Indebtedness have not been fully paid
to the holder thereof, there shall have been delivered to the Master Trustee an Opinion of Counsel, in form
and substance satisfactory to the Master Trustee, to the effect that under then existing law the consummation
of such merger, consolidation, sale or conveyance, whether or not contemplated on the date of the delivery of
such Indebtedness, would not adversely affect the validity of such Indebtedness and the exemption from
federal income taxation of interest payable on such Indebtedness if such Indebtedness is Related Tax-Exempt
Indebtedness; and
15
(ii)There shall be filed with the Master Trustee a Certificate of the Company
demonstrating that the Borrower, immediately after such merger or consolidation, or such sale or
conveyance, would be in compliance with all covenants and conditions of this Indenture.
Rate Covenant. The Company will fix, establish and maintain such rates and will collect such
fees, rentals and other charges for the services and facilities of the System and revise the same from time
to time, whenever necessary, as will always provide Gross Revenues in each year sufficient to pay 100%
of the Cost of Operation and Maintenance, 110% of the Maximum Annual Debt Service Requirement
with respect to outstanding Long-Term Indebtedness, and 100% of Other Obligations due under this
Master Indenture, any Supplement and any Related Documents. Such rates fees, rentals or other charges
shall not be reduced so as to be insufficient to provide Gross Revenues for such purposes. The Company
will not reduce its schedule of rates, fees, rentals and other charges unless (a) the Company is not in
breach of any covenant or provision of the Master Indenture, (b) all required payments under the Master
Indenture, have been made in full, and ( c) an independent certified public accountant or consultant
certifies that the proposed reduced schedule will provide sufficient Gross Revenues to comply with all
covenants and required payments under the Master Indenture.
Covenants as to Corporate Existence and Maintenance of System. The Company hereby
covenants:
(a) Except as otherwise expressly provided herein, to preserve its corporate or other legal
existence and all its rights and licenses to the extent deemed necessary or desirable, in the good faith
judgment of its Governing Body, in the operation of its business and affairs and be qualified to do business in
any jurisdiction where its ownership of the System or the conduct of its business requires such qualification.
(b) At all times to cause the System to be maintained, preserved and kept in good repair,
working order and condition and all needed and proper repairs, renewals and replacements thereof to be
made; provided, however, that nothing contained herein shall be construed (i) to prevent it from ceasing to
operate any immaterial portion of the System, (ii) to prevent it from ceasing to operate any material portion of
the System, if in the good faith judgment of its Governing Body, it is advisable not to operate the same, or if
it intends to sell or otherwise dispose of the same in accordance herewith and within a reasonable time
endeavors to effect such sale or other disposition in accordance herewith, or (iii) to obligate it to retain,
preserve, repair, renew or replace any part of the System, leases, rights, privileges or licenses no longer used
or, in the good faith judgment of its Governing Body, useful in the conduct of its business.
(c) To do all things reasonably necessary to conduct its affairs and cany on its business and
operations in such manner as to comply with any and all applicable laws of the United States, the State and
the subdivisions thereof and duly observe and conform to all valid orders, regulations or requirements of any
governmental authority relative to the conduct of its business and the ownership of the System.
(d) To pay promptly all lawful taxes, governmental charges and assessments at any time
levied or assessed upon or against it or the System.
( e) To pay promptly or otherwise satisfy and discharge all of its Indebtedness and all demands
and claims against it as and when the same become due and payable.
(f) At all times to comply with all terms, covenants and provisions of any Liens at such time
existing upon the System or any part thereof or securing any of its Indebtedness.
16
(g) To procure and maintain all necessary licenses and permits for the ownership and
operation of the System and the conduct of its business.
(h) So long as this Indenture shall remain in force and effect, the Company, which is a
tax-exempt organization, agrees, so long as all amounts due or to become due on any Related Tax-Exempt
Indebtedness have not been fully paid to the holder thereof, to take no action or suffer any action to be taken
by others, including any action which would result in the alteration or loss of its status as a tax-exempt
organization, which, in the Opinion of Bond Counsel, would result in the interest on any Related
Indebtedness which is otheIWise exempt from federal income taxation, becoming subject to federal income
taxes.
The Company shall not be required to pay any tax, levy, charge, fee, rate, assessment or
imposition referred to herein, to remove any Lien required to be removed under this Section, to payor
otheIWise satisfY and discharge its obligations, Indebtedness (other than any Payment Obligations or Other
Obligations), demands and claims against it or to comply with any lien, law, ordinance, rule, order, decree,
decision, regulation or requirement referred to herein, so long as the Company shall contest, in good faith and
at its cost and expense, in its own name and behalf, the amount or validity thereof, in an appropriate manner
or by appropriate proceedings which shall operate during the pendency thereof to prevent the collection of or
other realization upon the tax, levy, charge, fee, rate, assessment, imposition, Indebtedness, demand, claim or
Lien so contested, and the sale, forfeiture, or loss of its Property or any part thereof, provided, that no such
contest shall subject any Holder or the Master Trustee to the risk of any liability. While any such matters are
pending, the Company shall not be required to pay, remove or cause to be discharged the tax, levy, charge,
fee, rate, assessment, imposition, Indebtedness, demand, claim or Lien being contested unless the Company
agrees to settle such contest. Each such contest shall be promptly prosecuted to final conclusion (subject to
the right of the Company engaging in such a contest to settle such contest), and in any event the Company
will save all Indebtedness holders, bond trustees and the Master Trustee hannless from and against all losses,
judgments, decrees and costs (including reasonable attorneys' fees and expenses in connection therewith) as a
result of such contest and will, promptly after the final determination of such contest or settlement thereof,
pay and discharge the amounts which shall be levied, assessed or imposed or determined to be payable
therein, together with all penalties, fines, interests, costs and expenses thereon or incurred in connection
therewith. If the Master Trustee shall notifY the Company that, according to an Opinion of Counsel, by
nonpayment of any of the foregoing items the Property or any substantial part thereof will be subject to
imminent loss or forfeiture, then the Company shall promptly pay all such unpaid items and cause them to be
satisfied and discharged.
Insurance. The Company agrees that it will maintain, or cause to be maintained, insurance
(including one or more self-insurance or shared or pooled-insurance programs considered to be adequate) of
such types and in such amounts as are adequate to protect the System and the Company's Property and its
operations.
Insurance, Condemnation and Sale Proceeds Amounts received by the Company as net
proceeds with respect to any casualty loss, condemnation awards or as proceeds of sale under the threat of
condemnation may be used in such manner as the Company may determine, including, without limitation,
applying such moneys to the payment or prepayment of Indebtedness in accordance with the terms thereof
and of any pertinent Supplement; provided that if the amount of such net proceeds received exceeds 10% of
the net book value of the System, the Company agrees that it will immediately notifY the Master Trustee and
that it will, within 12 months after the receipt of such net proceeds, apply such moneys only to either the
prepayment of Indebtedness or to the repair or replacement of the damaged, destroyed or condemned
Property.
17
The Mortgage
The Company's obligations under the Master Indenture and the payment of the principal of and
interest on the Master Notes are further secured by a mortgage of the property pursuant to a Mortgage and
Security Agreement dated as of April 1, 2005, from the Company to the Master Trustee. The Mortgage
secures future advances and readvances that may subsequently be evidenced by a Master Note. The
Mortgage is subject to certain Permitted Liens (as defined in the Master Indenture).
THE COMPANY
Company Background
The Company is a not-for-profit corporation, organized on August 1, 1994, and existing under the
laws of the State of Florida. The Company's offices are located at 24 Dockside Lane, Suite 512, Key
Largo, Florida 33037. The Company was formed as a cooperative for the purpose of acquiring,
constructing, maintaining and operating a central wastewater system for the provision of service to its
members and to engage in any activity relating thereto.
The members, residents and businesses of the Ocean Reef Club comprise a large majority of the
System's customers and are members of the Cooperative. Utility customers, as members of the
Cooperative, are entitled to vote on matters affecting the System, and to participate in the election of
Directors. Utility service is provided to members in a nondiscriminatory manner.
Exemption from Federal Income Taxes
In 1995 the Company received an exemption determination from the Internal Revenue Service
confirming its tax-exempt status under Internal Revenue Code section 501 (c )(12). This section generally
provides that a mutual ditch or irrigation company, mutual or cooperative telephone company, or like
organization can qualify for tax-exempt status if 85% or more of the income of the company consists of
amounts collected from members for the sole purpose of meeting losses and expenses of the operations of
the company. Company, a cooperative in which all customers, and only customers, are members, is a
"like organization" under Section 501 (c)(12).
Management
The Company is administered by a nine member Board of Directors elected by the customers or
members. The officers of the not-for-profit Corporation are as follows:
Officers
Office
Alan Goldstein
Bruce Gilbert
David Ritz
Jeff Oeltjen
Patty Jacobson
Suzy Anderson
Rita Greathead
Susie Ptomey
Chairman
V ice Chairman
President
Vice President
Secretary
Treasurer
Director of Accounting
Recording Secretary
18
David Ritz is the Company's President (BIO TO COME]
Jeff Oeltjen is the Company's Vice President and is responsible for the day-to-day management
of the Company including operations, regulatory compliance, customer service and finances. Jeff Oeltjen
has over 18 years experience in the water and wastewater business and is licensed as a Professional
Engineer in the State of Florida.
Mark MaIka is the Superintendent of water and wastewater plants. Mr. MaIka has over 30 years
in the water and wastewater business and holds Florida Department of Environmental Regulation licenses
as a class "C" wastewater system operator and a class "A" water system operator. Mr. MaIka is
responsible for the day-to-day operation and maintenance of the System.
Rita Greathead is the Company's Director of Accounting. She has over 17 years of experience in
accounting and is responsible for the Company's financial statements, budget, rate setting, payables and
other fiscal services.
On January 19, 2004 the Company entered into an agreement with Ocean Reef Community
Association, Inc. ("ORCA") for the provision of certain management services. ORCA has been
intimately involved in the provision of services to residents and guests of the Ocean Reef Club for many
years and has extensive knowledge of the Company and the System.
SYSTEM DESCRIPTION
Service Area
The service area of the System consists of approximately 4,000 acres located on the northern end
of Key Largo in Monroe County, Florida. Approximately 2,000 acres are dedicated to wilderness and
wildlife preservation and will remain undeveloped. Within the service area, wastewater collection,
treatment and disposal services are provided to various types of residential and commercial land uses.
Virtually all development within the service area is connected to the System. Residential uses consist of
larger than average single and multi-family dwellings. Commercial land uses include restaurants,
marinas, shopping areas, a school, a medical center, and a golf course. Some new connections are
expected as residential and commercial development continues in the service area, although historical
growth rates are very low.
The Florida Keys Aqueduct Authority provides potable water service within the Company's
wastewater service area.
System Operations
The System is comprised of a wastewater collection and transmission system, a 550,000 gallons
per day ("gpd") wastewater treatment plant located on a 1.17 acre plant site, a shallow injection effluent
disposal well system and appurtenant facilities. The System currently serves approximately 735 single
family, 856 multi-family and 40 commercial units, in the North Key Largo area, processing over
100,000,000 gallons of wastewater annually.
Wastewater is collected for treatment through a collection and transmission system consisting of
gravity sewers, manholes, force mains and wastewater lift stations. There are currently 37 satellite
lift/pump stations and 375 concrete manholes. The existing collection/transmission system consists of
over 89,000 feet of gravity wastewater mains and 28,000 feet of force main throughout the service area.
19
The treatment plant has a design capacity of 550,000 gpd. Initial screening removes large debris
and trash. Waste is then biologically treated through one of two treatment processes: (i) a 250,000 gpd
concrete facility manufactured by Marolf which provides treatment through a process of contact
stabilization; or (ii) a 300,000 gpd poured-in-place concrete plant which following secondary treatment,
wastewater undergoes chlorination. Reject water storage facilities are located on site. Aerobic mixing
tanks are used to chemically stabilize the residual byproduct of the treatment process. Residuals are then
hauled off-site by a contract operator and land applied at a qualified site. This treatment process results in
effluent that meets or exceeds all Florida Department of Environmental Protection ("DEP") permit and
rule requirements for this System.
Effluent, the liquid by-product of the treatment process, is disposed of by injection into a series of
four Class IV injection wells with a depth of approximately 90 feet, located adjacent to the treatment
plant. Each well has been inspected and individually permitted by the DEP. This is the preferred method
of effluent disposal on the Island due to limited space, permeable soil conditions, proximity to
environmentally sensitive waters and other factors.
Regulatory Approvals
DEP is the primary environmental regulatory agency for the System. The Plant is permitted to
operate by the DEP pursuant to Permit No. FLA015009. This operating permit expires January 22, 2009.
All plant and line construction is undertaken pursuant to DEP permits, following review of plans and
specifications, and completed with professional engineering certification. The effluent disposal system is
operated pursuant to its own permits and approvals. The System maintains all necessary regulatory
permits to operate and is operating in compliance with those permits.
The rates and charges of privately owned, water and wastewater utilities in Florida are regulated
by the Florida Public Service Commission ("PSC"). Individual counties have the option of taking back
jurisdiction over water and wastewater utilities from the PSC. A not-for-profit corporation, association,
or cooperative providing service solely to members who own or control it is exempt from PSC
jurisdiction pursuant to Section 367.022(7), Florida Statutes. The Company qualifies for such an
exemption. Monroe County has not exercised its jurisdiction in the area of utility regulation.
Future System Improvements
Pursuant to DEP rule and the Monroe County Growth Management PIan, wastewater service
providers are required to meet "advanced wastewater treatment" standards by 2010. In order to meet
these standards, it is anticipated that the Company will be required to make certain system improvements
including the following: converting the existing aeration basins into membrane tanks. converting a
secondary clarifier into a clean in place tank, converting remaining clarifiers to additional chlorine contact
and sludge storage, pumps, blowers and appurtenances ("System Upgrades"). The Company expects to
file the permit application with DEP for the System Upgrades by January, 2007 and to begin construction
of the System Upgrades by January 2008. The current cost estimate for the System Upgrades is
$2,000,000. It is anticipated that the Company will issue additional debt in order to finance the System
Upgrade.
As the System Upgrades will benefit all customers, any rate increase required to support
repayment of debt incurred for this project will be applied uniformly to all System customers. As all
central wastewater systems in the Florida Keys (Monroe County) are required to meet the advanced
wastewater treatment water quality standards, it is not expected that the System upgrade will create any
competitive disadvantage for the Company.
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SCHEDULE OF RATES AND CHARGES
The Company's rates and charges are set forth as follows:
Residential Customers
Annual Flat Rate:
Single Family Home
Multi Family Per Unit
Marina
$ 597
400
203
Commercial Customers
Monthly Rate
Meter Size:
5/8"
1"
1-1/2"
2"
3"
$ 116
293
584
935
1 ,993
Gallonage charge (Commercial only)
$ 4.78 per 1000 gallons
The Company collects a one-time connection or service availability charge as a condition of
providing service in the amount of $2,400 per unit, or $9.80 per gallon for commercial customers.
The Company experienced average daily flows over the past year ranging from a minimum of
203,000 gallons per day ("gpd") to a maximum of 600,000 gpd. Due to seasonal nature of the System's
customer base, the Company has implemented a flat rate structure to normalize revenue on an annual
basis.
Due to excellent payment histories, and lack of historical bad debt expense write-off, the
Company has not found it necessary to collect customer deposits.
RESULTS OF OPERATIONS
The principal source of revenue for the Company is service rates and charges collected pursuant
to its operation of the System. The Company's operations are audited each year by the Certified Public
Accounting firm of McGladrey & Pullen, Ft. Lauderdale, Florida. The Company's audited financial
statements for the period ending December 31, 2004 are attached hereto as Appendix "A". The
Company's revenue and expenses have been very consistent in recent years and that is expected to
continue into the future.
The Company prepares an annual budget for the upcoming fiscal year based on management's
recommendations, which is presented to the Board of Directors and made available to the membership.
While the Company believes the budget to be representative of future operations, it is dependant on
assumptions of future conditions and events which cannot be assured.
21
LETTER OF CREDIT
[to be provided]
BONDHOLDERS' RISK FACTORS AND INVESTMENT CONSIDERATIONS
AN INVESTMENT IN THE BONDS INVOLVES A HIGH DEGREE OF RISK. A
BONDHOLDER IS ADVISED TO READ THE SECTIONS "SECURITY FOR THE BONDS" AND
THIS HEADING FOR A DISCUSSION OF CERTAIN RISK FACTORS WHICH SHOULD BE
CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE BONDS. THE FACTORS
LISTED BELOW, AMONG OTHERS, COULD ADVERSELY AFFECT THE COMPANY'S
OPERATION AND REVENUES AND EXPENSES OF THE SYSTEM TO AN EXTENT WHICH
CANNOT BE DETERMINED AT THIS TIME. ANY PURCHASER OF THE BONDS MUST MAKE
AN INDEPENDENT DECISION AS TO THE CREDIT-WORTHINESS OF THE COMPANY.
The following represents a summary of certain of the risks associated with the Bonds. This list
should not be considered all-inclusive and any risk not listed should not be presumed to be immaterial.
1 . Except for amounts on deposit in the Reserve Account, or Letter of Credit in lieu thereof, the
payments received pursuant to the Loan Agreement and the Mortgage, primarily rates, fees and charges
for services of the System, provide the only security for payment of the Bonds. The income of the
Company is dependent on the rates which it is authorized to charge its customers. The inability of the
Company to secure rates it believes are compensatory, or a delay in securing rate relief, could result in the
Company being unable to meet coverage requirements or debt service payments on the Bonds.
2. The environmental aspects of the Company's operations are regulated primarily by (a) the
U.S. Environmental Protection Agency ("EPAtt), and (b) the Florida Department of Environmental
Protection (ttDEptt) under Chapter 403 Florida Statutes and the rules and regulations promulgated by DEP
thereunder. There are no assurances that these agencies will not increase their present environmental
standards, which could require additional unexpected capital expenditures and permits to operate. While
the Company would seek to increase its approved rates and charges to support such additional costs, there
is no assurance that such rate increases would be granted, or that such permits required to operate the
Wastewater System could be obtained.
3. If all, substantially all or any portion, of the System is damaged or destroyed by any casualty
or condemned by appropriate governmental authority, there is no assurance that casualty insurance
proceeds or pollution liability insurance proceeds (if available),., and other available monies of the
Company will be sufficient either to repair or replace the damaged or destroyed or condemned property,
or to pay the redemption price of the Bonds if called for redemption as a result of such casualty. Even if
applicable casualty insurance coverages are adequate, there is no assurance that such damage or
destruction would not have a material adverse effect on the ability of the Company to provide wastewater
service to its customers or on the revenues of the Company. In the event of condemnation, there is no
assurance that the resulting purchase price will be sufficient to refund or defease the Bonds, although
Florida law requires payment of full compensation to owners of property taken by eminent domain.
4. If any cost factor of the expenses of the Company should experience an extraordinary
increase, the debt service coverage could be negatively impacted. These expenses will be significantly
influenced by the performance of management and by extemal circumstances such as the existence of
litigation, changes in regulatory policy or legislation or the necessity to carry out unexpected repairs or
replacements any of which could have a material adverse financial effect on the Company.
22
5. In the event of a default by the Company and the LOC Provider, the ability of the Master
Trustee and the Bond Trustee to raise sufficient funds to pay the principal and interest on the Bonds will
depend upon the exercise of various remedies specified by the Master Indenture, Bond Indenture and the
Mortgage. Under existing law (including, without limitation, the Federal Bankruptcy Code), those
remedies are often subject to discretion and delay and may not be readily available or maybe limited. The
legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified as to the
enforceability of the various legal instruments by limitations imposed by state and federal laws, rulings
and decisions affecting remedies, and by bankruptcy, reorganization or other laws affecting enforcement
of creditors' rights generally. Bankruptcy proceedings and equity principles may delay or otherwise
adversely affect the enforcement of Bondholders' rights in the property granted as security for the Bonds.
Foreclosure of a mortgage is an equitable proceeding. Furthermore, if the security for payment of the
Bonds is inadequate for payment in full of the Bonds, bankruptcy proceedings and equity principles may
limit any attempt by the Master Trustee to seek payment from other property of the Company, if any.
6. The Company has obtained a Letter of Credit to secure the availability of funds in the
Reserve Account as that term is defined in the Master Indenture. The LOC Provider will issue the Letter
of Credit pursuant to which it will guarantee availability of funds in the Reserve Account when due. The
ongoing stability and financial condition of the LOC Provider, and the LOC Provider's ability to pay on
the LOC and otherwise perform its obligations under the LOC is the primary source of funding for the
Reserve Account. In the event the LOC Provider defaults on the LOC, there can be no assurance that the
funds will be available in the Reserve Account. No rating has been assigned to the LOC or the LOC
Bank and the Company has not independently verified the financial condition of the LOC Provider and
no statements herein can be relied upon as though subject to an independent certified public accountant
audit of the LOC Provider.
7. The ability of the Company to repay the Bonds is conditioned on Revenues obtained
from existing customers of the System. The addition of future customers to the System may provide
additional Revenue for repayment of the Bonds, although there can be no assurance that growth in the
customer base will occur or at what rate it will occur. If for any reason customers leave the North Key
Largo service area, the Revenues generated by such customers will no longer be available to the
Company which will affect Company's ability to repay the Bonds. There can be no assurance that
restrictive State and 10cal building and development laws will permit any significant growth in customers
within the Company's service area to replace any existing customers who leave the System.
8. No application has been made for a credit rating for the Bonds. The absence of a rating
adversely affects the market for the Bonds. There can be no assurance that there will be a secondary
market for the Bonds, depending upon prevailing market conditions, the financial condition or market
position of firms who may make a secondary market and the financial condition and results of operations
of the Company. The Bonds should therefore be considered long-term investments in which funds are
committed to maturity.
9. The ability of the Issuer and the Master Trustee to exercise rights under the Loan
Agreement, the Mortgage, the Master Indenture and the Bond Indenture may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization or other laws or equitable principles related to or
affecting the enforcement of creditors' rights.
10. If the Company were to file a petItIOn for relief under Chapter 11 of the Federal
Bankruptcy Code, its Revenues and certain of its accounts receivable and other property created or
otherwise acquired after the filing would not be subject to the security interests of the Master Trustee
created under the Bond Indenture for the benefit of the holders of the Bonds. The filing would operate as
23
an automatic stay of the commencement or continuation of any judicial or other proceeding against the
Company, and its property, and as an automatic stay of any act or proceeding to enforce a lien upon its
property. If the bankruptcy court so ordered, the property of the Company could be used for the benefit
of the Company in its financial rehabilitation efforts despite the security interest of the Master Trustee
therein. In a Chapter 11 proceeding, the Company could file a plan of reorganization for the adjustment
of its debts and thereby attempt to modify or alter the rights of its creditors generally, or of any class of
them secured or unsecured. Such plan if confirmed by the bankruptcy court, binds all creditors who had
notice or knowledge of the bankruptcy proceeding. No plan may be confirmed unless certain conditions
are met, among which are that the plan is in the best interests of creditors, is feasible and has been
accepted by each class of claims impaired if at least two-thirds in dollar amount and more than one-half
in number of the class are cast in its favor. Even if the plan is not so accepted, it may be confirmed if the
court finds that the plan is fair and equitable with respect to each non-accepting class of creditors
impaired thereunder and does not discriminate unfairly.
The Revenues are subject to and may be limited by the laws of the United States and the State of
Florida, with respect to bankruptcy, insolvency and creditors' rights generally. For example, all or
substantially all of the Revenues received by the Company after the commencement of a bankruptcy
proceeding by the Company may not be subject to the foregoing pledge or security interest. Revenues
which arise after the date of the filing of a petition in bankruptcy may be used for the benefit of the
Company in its financial rehabilitation efforts despite the security interest of the Master Trustee therein.
The extent of the Master Trustee's lien in the Revenues will be limited to the lower of the value of the
Revenues existing on the date of filing of the bankruptcy petition and on the day 90 days prior to the day
of filing. In addition, since it may not be possible for the Trustee to perfect a security interest in any
manner whatsoever in certain types of revenues (e.g., gifts, donations, insurance proceeds and medical
reimbursement program payments) prior to actual receipt thereof by the Company, upon the filing of a
bankruptcy petition by the Company, the Master Trustee may be determined not to have a lien in these
types of revenues.
11. The service area of the Company is 10cated on Key Largo in the Florida Keys, an
archipelago off the southern tip of Florida, an area subject to tropical storms and hurricanes. If such a
storm were to make landfall at or near the Company's service area the System, and customers' homes and
businesses, may experience substantial damage and a resulting interruption in service. Such events may
materially adversely affect the Company's ability to provide service and collect System Revenues. The
Company and it's customer base are less susceptible to such damage than other areas in Florida due to
high quality construction standards. The Company has taken steps to mitigate the impact of such a storm
including implementation of a hurricane preparedness plan and securing insurance coverage where
available.
TAX EXEMPTION
Federal Tax Matters; the Bonds
In the opinion of Livermore, Freeman & McWilliams, P.A., Bond Counsel, under existing law
interest on the Bonds is excluded from gross income for federal income tax purposes under Section
103(a) of the Code, except for interest on any Bond for any period during which it is held by a
"substantial user" or a "related person" as those terms are used in Section I 47(a) of the Code, and interest
on the Bonds is an item of tax preference under Section 57 of the Code and therefore may be subject to
the alternative minimum tax imposed on individuals and certain corporations under the Code. Bond
Counsel will express no opinion as to any other tax consequences regarding the Bonds. Reference is
made to the proposed form of the opinion of Bond Counsel attached as an appendix hereto for the
24
complete text thereof.
The opinion on tax matters will be based on and will assume the accuracy of certain
representations and certifications and compliance with certain covenants of the Company and the Issuer
to be contained in the transcript of proceedings and which are intended to evidence and assure the
foregoing, including that the Bonds are and will remain obligations the interest on which is excluded
from gross income for federal income tax purposes. Bond Counsel will not independently verify the
accuracy of the certifications and representations made by the Company and the Issuer.
The Code prescribes a number of qualifications and conditions for the interest on state and local
government obligations to be and to remain excluded from gross income for federal income tax
purposes, some of which, including provisions for potential payments by the issuer to the federal
government, require future or continued compliance after issuance of the Bonds in order for the interest
to be and to continue to be so excluded from the date of issuance. Noncompliance with these
requirements by the Company or the Issuer could cause the interest on the Bonds to be included in gross
income for federal income tax purposes and to be subject to federal income taxation retroactively to the
date of their issuance. The Company and the Issuer will each covenant to take all actions required of it
for the interest on the Bonds to be and to remain excluded from gross income for federal income tax
purposes, and not to take any actions that would adversely affect that exclusion.
Under the Code, interest on the Bonds may be subject to a branch of profits tax imposed on
certain foreign corporations doing business in the United States and a tax imposed on excess net passive
income of certain S corporations.
Under the Code, the exclusion of interest from gross income for federal income tax purposes can
have certain adverse federal income tax consequences on items of income or deductions for certain
taxpayers, including financial institutions, certain insurance companies, recipients of Social Security and
Railroad Retirement benefits, and those that are deemed to incur or continue indebtedness to acquire or
carry tax-exempt obligations. The applicability and extent of these or other tax consequences will depend
upon the particular tax status or other tax items of the owner of the Bonds. Bond Counsel will express no
opinion regarding such consequences.
From time to time, there are legislative proposals in Congress which, if enacted, could alter or
amend one or more of the federal tax matters referred to above or could adversely affect the market value
of the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or
whether, if enacted, it would apply to obligations (such as the Bonds) issued prior to enactment.
Florida Taxes
The Bonds and the interest thereon are exempt from all taxation under the laws of the State of
Florida except estate taxes and taxes measured by income which are imposed by Chapter 220, Florida
Statutes, on "corporations", "banks" and "savings associations" as such terms are defined in Chapter 220.
ACCREDITED INVESTOR
The Bonds will be offered for exchange only to certain Accredited Investors that are Holders of
the 1995 Bonds. "Accredited Investor" means an investor who qualifies as an "accredited investor" under
any of the following categories at the time of the sale of the Bonds to that person or entity: (i) a bank, as
defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), or any
savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act,
25
whether acting in its individual or fiduciary capacity; (ii) a broker or dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (iii) an insurance
company, as defined in Section 2(13) of the Securities Act; (iv) an investment company registered under
the investment Company Act of 1940; (v) an organization described in Section 501 (c)(3) of the Internal
Revenue Code of 1986, as amended, corporation, Massachusetts or similar business trust, or partnership
not formed for the specific purpose of acquiring the Bonds, with total assets in excess of $5,000,000; (iv)
a natural person whose individual net worth, or joint net worth with that person's spouse at the time of
purchase, exceeds $1,000,000; (vii) a natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in
each of those years and who has a reasonable expectation of reaching the same income level in the
current year; and (viii) a trust with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the Bonds, whose purchase is directed by a sophisticated person as described in 17
C.F.R Section 230.506(b)(2)(ii) promulgated under the Securities Act. The Bonds are not deemed to be
suitable investments for anyone other than an "accredited investor." Anyone interested in purchasing any
or all of the Bonds will be required to execute and deliver an "Accredited Investor Letter" in
substantially the proposed form attached as Appendix C hereto.
LITIGATION
There is no litigation or other proceeding pending or, to the knowledge of the Issuer or the
Company, threatened to restrain or enjoin the issuance, sale, or delivery of the Bonds, or in any way
contesting the validity or enforceability of the Bonds, the proceedings pursuant to which the Bonds are
issued, or the collection, application or pledge of the revenues and receipts and other moneys purported
to be pledged by the Indenture.
FINANCIAL ADVISOR
First Southwest Company, Orlando, Florida, has acted as Financial Advisor to the Company in
connection with the Offer to Exchange and the issuance of the Bonds.
INDEPENDENT ACCOUNTANTS
The financial statements of the Company for the years ending December 31, 2003 and 2004,
have been prepared by McGladrey & Pullen, C.P.A., which report is included as Appendix D hereto with
their consent.
DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS
Section 517.051, Florida Statutes, and the regulations promulgated thereunder require that the
Issuer make full and fair disclosure of any bonds or other debt obligations of such entity that have been
in default as to payment of principal or interest at any time after December 31, 1975 (including bonds or
other debt obligations for which it has served only as a conduit issuer such as industrial development or
private activity bonds issued on behalf of private businesses).
There has been a default with respect to one issue of industrial development revenue bonds
issued by the Authority. The Authority served only as a conduit issuer and the Authority has been
informed by its advisors that the borrower is in default under the indenture pursuant to which such bonds
26
were issued. Under the indenture and other pertinent documents the Authority is not liable for the
payment of the principal of or interest on such bonds, except from payments made to the Authority by
the borrower on whose behalf such bonds were issued.
ENFORCEABILITY OF REMEDIES
The remedies available to the owners of the Bonds upon an event of default under the Master
Indenture, the Bond Indenture, the Loan Agreement or the Mortgage are in many respects dependent
upon judicial actions which are often subject to discretion and delay. Under existing constitutional and
statutory law and judicial decisions, including specifically Title 11 of the United States Code, the
remedies specified by the Federal bankruptcy code, the Master Indenture, the Bond Indenture, the Loan
Agreement, or the Mortgage, the Bonds may not be readily available or may be limited. The various
legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel's
approving opinion) will be qualified, as to the enforceability of the remedies provided in the various
legal instruments, by limitations imposed by bankruptcy, reorganization, moratorium, insolvency or
other similar laws affecting the rights of creditors enacted before or after such delivery and by general
principle of equity.
APPROVAL OF LEGALITY
Certain legal matters incident to the issuance of the Bonds and with regard to the tax-exempt
status of the interest on the Bonds are subject to the legal opinion of Livermore, Freeman & McWilliams,
P.A., Bond Counsel. The signed legal opinion, dated and premised on law in effect as of the date of
issuance of the Bonds, will be delivered upon the issuance of the Bonds. Other legal matters are subject
to the opinion of J. Richard Collins, County Attorney, Key West, Florida, and the opinion of Rose,
Sundstrom & Bentley, Tallahassee, Florida, Counsel to the Company.
The proposed text of the legal opinion of Bond Counsel is set forth as Appendix B hereto. The
actual legal opinion to be delivered may vary from that text if necessary to reflect facts and law on the
date of delivery. The opinion will speak only as of its date, and subsequent distribution of it by
recirculation of this Private Placement Memorandum or otherwise shall create no implication that Bond
Counsel has reviewed or expresses any opinion concerning any of the matters referenced in the opinion
subsequent to its date.
While Bond Counsel has participated in the preparation of certain portions of this Private
Placement Memorandum, it has not been engaged by the Issuer to confirm or verify, and expresses and
will express no opinion as to, the accuracy, completeness or fairness of any statements in this Private
Placement Memorandum, or in any other reports, financial information, offering or disclosure documents
or other information pertaining to the Issuer, the Company, the Master and Bond Trustee, the LOC
provider or the Bonds that may be prepared or made available by the Issuer, the Company, the Trustee,
the LOC provider or others to the holders of the Bonds or other parties.
CONTINUING DISCLOSURE
Pursuant to SEC Rule 15c2-12( d)(2) (the "Rule"), the Company is not an obligated person with
respect to more than $10 million aggregate amount of outstanding municipal securities. The Company
has undertaken in a written agreement for the benefit of the Holders of the Bonds to provide (A) upon
request, to any Person, as defined in the Master Indenture, financial information and operating data,
including audited financial statements, customarily prepared by the Company, and (B) in a timely manner
27
to each nationally recognized municipal securities information repository or to the Municipal Securities
Rulemaking Board notice of events specified in Section (b )(5)(i)(C), of the Rule with respect to the
Bonds, if material.
CERTIFICA TE CONCERNING
PRIVATE PLACEMENT MEMORANDUM
This Private Placement Memorandum has been authorized (but not "deemed final" or otherwise
represented as being a "final official statement" as described in SEC Rule 15c2-12(b)) by the Issuer, and
has been approved by the Company. Concurrently with the delivery of the Bonds, the Company will
furnish its certificate to the effect that, to the best of its knowledge, this Private Placement Memorandum
did not as of its date and does not as of the date of delivery of the Bonds, contain any untrue statement of
a material fact or omit to state a material fact which is necessary in order to make the statements
contained herein, in the light of the circumstances in which they were made, not misleading.
MISCELLANEOUS
All estimates and assumptions herein have been made upon the best information available and
are believed by the Company to be reliable, but no representation whatsoever is made that such estimates
or assumptions are correct or will be realized. Statements involving matters of opinion, whether or not so
expressly stated, are set forth as opinions and are not representations of fact.
The agreement of the Company with the registered owners of the Bonds is fully set forth in the
Indenture, and this Private Placement Memorandum is not to be construed as constituting any agreement
with the purchasers of the Bonds. The forms of the basic documents including the Master Indenture,
Bond Indenture, Loan Agreement and Mortgage are attached as Appendix A. The attached appendices
are integral parts of this Private Placement Memorandum and must be read together with all of the
foregoing statements.
NORTH KEY LARGO UTILITY CORP.
By: David Ritz, President
4205-Private Placement Memorandum
28
APPENDIX A
AUDITED FINANCIAL STATEMENTS OF THE COMPANY
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004
A-I
APPENDIX B
FORM OF ACCREDITED INVESTOR LETTER
B-1
,2005
Chairman and Members
Monroe County Industrial Development
Authority
Livermore, Freeman & McWilliams, P.A.
Jacksonville, Florida
Re: $ Monroe County Industrial Development Authority
Industrial Development Revenue Bonds (North Key Largo Utility Corp.
Project), Series 2005
Ladies and Gentlemen:
In connection with the issuance of $ of the above-styled Bonds (the "Bonds") of Monroe
County Industrial Development Authority (the "Issuer"), for the benefit of North Key Largo Utility Corp.
(the "Company"), to the undersigned owner (the "Owner"), the Owner hereby makes the following
representations, which are solely for the benefit of the persons to whom this letter is addressed and are
not to be relied upon by any other person for any other purpose:
I. He or she, as applicable (herein "he"), is an "accredited investor," within the meaning of
9230.50I(a) of Regulation D under the Securities Act of 1933, as amended (collectively, the "Act"),
since he is a natural person (a) whose individual net worth, or joint net worth with that person's spouse,
at the time of purchase exceeds $1,000,000; or (b) who had an individual income in excess of $200,000
in each of the 2 most recent years or joint income with that person's spouse in excess of $300,000 in each
of those years, and has a reasonable expectation of reaching the same income level in the current year.
2. He has been offered copies of or full access to all documents related to the Bonds and all
records, reports, financial statements and other information pertinent to the source of payment for the
Bonds to which a reasonable investor would attach significance in making investment decisions, and
which have been requested by him (provided that he does not waive any rights he may have against the
Company or its representatives, with respect to any information so supplied or any misstatements or
omissions).
3. He is sufficiently knowledgeable and experienced in financial and business matters,
including the purchase and ownership of municipal and other tax-exempt and taxable obligations, to be
able to evaluate the risks and merits of the investment represented by the Bonds, and he is aware of the
intended use of the proceeds of the Bonds and the risks involved therein.
4. He is accepting the Bonds solely for his own account and not on behalf of others, and
with no present intent to resell or otherwise to distribute all or any part of or interest in the Bonds.
5. He has been informed by the Company and agrees that the Bonds (a) are not being
registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state, (b) will
not be listed on any stock or other securities exchange, (c) will cany no rating from any rating service
and (d) are not likely to be readily marketable.
B-2
6. He will not offer, sell or otherwise dispose of all or any part of or interest in the Bonds,
except (a) in full good faith compliance with all applicable securities registration, broker-dealer, antifraud
and other applicable provisions of state and federal laws; (b) either under effective federal and state
registration statements (which neither the Issuer nor the Company shall in any way be obligated to
provide) or upon delivery of an opinion of recognized counsel to the effect that the Bonds are being
offered, sold or otherwise disposed or pursuant to exemptions from such registrations; and (c) in
denominations of $100,000 or integral multiples thereof, or as otherwise permitted by the Bond Trust
Indenture with respect to the Bonds.
7. He is not acting as a bond house, broker or other intermediary with respect to any
offering of the Bonds; he is not an underwriter for the Bonds; and he has not paid and will not pay any
bonus, fee or gratuity to any "finder," within the meaning of Section 218.386, Florida Statutes, in
connection with the delivery of the Bonds to him by the Issuer.
8. The Owner acknowledges and agrees that (a) the Issuer is acting only as a conduit in
connection with the issuance of the Bonds; (b) no revenues or money of the Issuer, other than the right to
receive loan payments from the Company with respect to the Bonds, or mortgage foreclosure proceeds,
have been pledged to the repayment of the Bonds; (c) the Issuer makes no representation or warranty
whatsoever with respect to the sufficiency of future revenues to pay debt service on the Bonds; and (d)
the Issuer makes no representation or warranty regarding the accuracy or completeness of the information
supplied to the Owner by the Company or any other person regarding the Bonds or the facilities financed
thereby.
9. He agrees to indemnify and hold harmless the Issuer and the Company, their respective
officers, employees, agents and counsel" from any and all losses, claims, damages, liabilities and
expenses arising out of violations of any of the statements, waivers, covenants or representations of the
Owner contained in this letter; and waives any cause of action it might otherwise have against the Issuer
for information contained in, or omissions from, any offering documents or any other information
supplied to the Owner regarding the Bonds.
Witnesses:
Signature
Print name:
Contact address and phone number:
B-3
APPENDIX C
FORMS OF MASTER TRUST INDENTURE, BOND INDENTURE,
LOAN AGREEMENT AND MORTGAGE
C-l
APPENDIX D
FORM OF OPINION OF LIVERMORE, FREEMAN & McWILLIAMS, P.A.
AS BOND COUNSEL WITH RESPECT TO THE BONDS
D-l
4205-R-Res-Authority with apps
APPENDIX D
FORM OF OFFER TO EXCHANGE
13
Draft
March 31, 2005
OFFER TO EXCHANGE
by
NORTH KEY LARGO UTILITY CORP.
of
MONROE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
$2,965,000 Industrial Development Revenue Bonds
(North Key Largo Utility Corp. Project),
Series 1995 (the "1995 Bonds")
for
Monroe County Industrial Development Authority
$2,965,000 Industrial Revenue Bonds
(North Key Largo Utility Corp. Project),
Series 2005 (the "2005 Bonds")
THE OFFER WILL EXPIRE AT 5:00 P.M., EASTERN TIME, ON MAY _,2005,
UNLESS EXTENDED (THE "EXPIRATION DATE").
IMPORTANT
Any Owner of the above-captioned 1995 Bonds wishing to accept the Offer should
either (a) request a broker, dealer, bank, or trust company to effect the transaction on his
behalf as set forth herein, or (b) complete and sign the Letter of Transmittal, have the
signature guaranteed as required by the Letter of Transmittal, and fonuard the Letter of
Transmittal together with the 1995 Bonds and any other required documents to the
Depository, at the address listed 0 n the back page of this Offer to Exchange. Owners of
1995 Bonds registered in the name of a broker, dealer, bank, trust company, or other
nominee should contact such nominee if they desire to tender their 1995 Bonds.
Bondholders whose 1995 Bonds are not immediately available may tender such 1995
Bonds by following the procedures for guaranteed delivery set forth in Section 7 hereof
THIS OFFER IS CONTINGENT UPON CERTAIN CONDITIONS TO OFFER SET
FORTH HEREIN. IT IS NOT AN OFFER OR SALE OF ANY 2005 BONDS. THIS
OFFER TO EXCHANGE CONTAINS NO INFORMATION OR REPRESENTATION
CONCERNING THE CHARACTERISTICS OR SUITABILITY FOR INVESTMENT OF
ANY SUCH 2005 BONDS.
NEITHER MONROE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY,
WACHOVIA BANK, NATIONAL ASSOCIATION, AS DEPOSITORY, OR WACHOVIA
BANK, NATIONAL ASSOCIATION, AS TRUSTEE, MAKES ANY RECOMMENDATION
AS TO WHETHER AN OWNER OF 1995 BONDS SHOULD TENDER OR REFRAIN
FROM TENDERING ALL OR ANY 1995 BONDS. NO PERSON HAS BEEN
AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION ON BEHALF OF
MONROE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, WACHOVIA BANK,
NATIONAL ASSOCIATION, AS DEPOSITORY, OR WACHOVIA BANK, NATIONAL
ASSOCIATION, AS TRUSTEE, AND, IF MADE, NO SUCH RECOMMENDATION MAY
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY MONROE COUNTY
INDUSTRIAL DEVELOPMENT AUTHORITY.
4205-0ffer to Exchange
Questions and requests for assistance should be directed to your broker.
Requests for additional copies of the Offer to Exchange and the Letter of
Transmittal or additional questions may be directed to the Depository at its
address set forth on the back page hereof.
4205-0ffer to Exchange
Section
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
TABLE OF CONTENTS
Introduction to the Offer
Information Conceming the 1995 Bonds and the 2005 Bonds
Security for the 2005 Bonds
Expiration of Offer
Extension of Offer; Termination; Amendment
Acceptance for Exchange
Rights of Withdrawal
Procedure for Accepting the Offer and Tendering 1995 Bonds
Income Tax Consequences
Liquidity of 1995 Bonds
Certain Conditions of the Offer
Fees
Miscellaneou s
Pae:e
1
2
4
5
6
6
6
7
8
8
8
9
9
4205-0fTer to Exchange
To The Owners of Monroe County Industrial Development Authority's
Industrial Development Revenue Bonds (North Key Largo Utility Corp. Project),
Series 1995 (the "Owners"):
1. Introduction to the Offer. North Key Largo Utility Corp. (the "Company")
hereby offers to exchange all of the outstanding $2,965,000 aggregate principal
amount of Industrial Development Revenue Bonds, Series 1995 (the "1995 Bonds"),
upon the terms set forth in this Offer to Exchange (the "Offer to Exchange") and in the
related Letter of Transmittal (which together constitute the "Offer") for a like aggregate
principal amount of Industrial Development Bonds (North Key Largo Utility Corp.
Project), Series 2005 (the "2005 Bonds") maturing on the same date and year and
having the same redemption provisions as the 1995 Bonds. The Company has
undertaken this Offer for the purpose of achieving a reduction in debt service on the
2005 Bonds and, further, providing for the issuance of indebtedness in the future on a
parity with the 2005 Bonds by executing and delivering new basic documents
authorizing the issuance of the 2005 Bonds and any future indebtedness. Owners
tendering their 1995 Bonds in exchange for 2005 Bonds will, thereby, consent to the
new basic documents, as further described herein.
The 1995 Bonds are subject to redemption, at the option of the Company, in
whole or in part on the first business day of any month on or after March 1, 2005, and
in the case of any 1995 Bonds redeemed between March 1, 2005 through February
28, 2006, at a redemption price of (a) 102% of the principal amount thereof, plus (b)
accrued interest. Any 1995 Bonds not tendered pursuant to this Offer will be
redeemed on the earliest redemption date in compliance with the terms of the trust
indenture (the "Indenture") dated as of March 1, 1995, between the Authority, as
Grantor and First Union National Bank of Florida, as trustee (the "Original Trustee").
Said Original Trustee is now known as Wachovia Bank, National Association. See
Section 2 below, "Certain Information Concerning the 1995 Bonds, Background."
Owners may tender their 1995 Bonds for exchange, on or before April _, 2005,
which is the initial Expiration Date, by delivery of such 1995 Bonds to Wachovia
Bank, National Association (the "Depository"), as the depository for the tendering
Owners. The Company may extend the Expiration Date for up to 60 days, in the
manner described in Section 4 below, Expiration of Offer. Following the Expiration
Date, the 1995 Bonds will be held by the Depository for a period up to 90 days, during
which period 1995 Bonds that have been tendered may not be withdrawn. Not later
than the end of this 90-day period (the "No-Rescission Period"), which period
commences on the Expiration Date, the Company must issue Owners of duly tendered
Bonds the 2005 Bonds (as described below), or the tender of Bonds may thereafter be
withdrawn or rescinded by the Owners.
The Company is expected to cause the Monroe County Industrial Development
Authority (the "Authority") to issue and deliver 2005 Bonds in a principal amount
sufficient to exchange said 2005 Bonds for all 1995 Bonds tendered by Owners.
Following the Expiration Date, if sufficient quantities of 1995 Bonds have been
tendered, the Company intends to cause the Authority to issue 2005 Bonds in the same
amounts and maturities as the tendered 1995 Bonds to the holders of the 1995
tendered Bonds. The Company will pay for all costs of the tender and exchange from
4205-0ffer to Exchange
1
funds that are not derived from the proceeds of a tax-exempt borrowing. If not all 1995
Bonds are tendered, the Company intends to cause the Authority to redeem all
outstanding 1995 Bonds, and the Company will pay for all costs of redemption of the
untendered 1995 Bonds from funds that are not derived from the proceeds of a tax-
exempt borrowing. The purpose of the No-Rescission Period is to enable the
structuring of the redemption of the untendered 1995 Bonds to take place in
circumstances in which the amount of 1995 Bonds being tendered can definitely be
ascertained.
The 2005 Bonds issued by the Authority will constitute limited obligations of
the Authority payable solely from revenues derived from the Company and will not
constitute an indebtedness of the Authority or of Monroe County, Florida, the State of
Florida or any political subdivision or agency thereof within the meaning of any State
of Florida constitutional or statutory provision.
The Company reserves the right, in its sole discretion, to terminate, amend, or
withdraw the Offer at any time. Unless the Company has previously withdrawn or
amended the Offer, the Company will be obligated to exchange all 1995 Bonds
properly tendered, subject only to the conditions set forth in Section 10 of this Offer.
One of those conditions is that the Authority issue 2005 Bonds in an amount
sufficient to exchange such 2005 Bonds for all tendered 1995 Bonds. An unqualified
legal opinion of Livermore, Freeman & McWilliams, P.A., Jacksonville, Florida, will be
delivered to the effect that interest on the 2005 Bonds issued in exchange for 1995
Bonds is excluded from gross income for purposes of federal income taxation. The
Company reserves the right to waive any and all conditions to its obligation to the
exchange of tendered 1995 Bonds. See Section 10 "Certain Conditions of the Offer" for
details relating to the conditions of the Offer.
2. Information Concerning the 1995 Bonds. (a) Background. The 1995
Bonds were issued on March 9, 1995, by the Authority in the original aggregate
principal amount of $3,400,000 pursuant to the Indenture.
The Authority loaned the proceeds of the 1995 Bonds to the Company pursuant
to a Loan Agreement, dated as of March 1, 1995 (the "Loan Agreement"), between the
Authority and the Company, in order to (i) finance the cost of the acquisition of the
450,000 gpd central wastewater collection, transmission, treatment and disposal
system then owned by Ocean Reef Club, Inc., located in Key Largo, Monroe County,
Florida, (ii) finance the cost of certain improvements to said facilities, (iii) fund an
account capitalizing a portion of interest accruing on the 1995 Bonds, and (iv) pay
certain costs of issuance and delivery of the 1995 Bonds.
The 1995 Bonds consist of a single term bond maturing March 1, 2025 in
denominations of $100,000 each or integral multiples thereof, and bearing interest at
the rate of 8.00% per annum.
In addition to optional redemption, described in Section 1, above, the 1995
Bonds are subject to mandatory sinking fund redemption in the years and amounts
set forth below.
4205-0ffer to Exchange
2
March 1
Principal Amount to
be Redeemed
March 1
Principal Amount to
be Redeemed
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
$65,000
70,000
76,000
82,000
88,000
95,000
103,000
111,000
120,000
129,000
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
$140,000
151,000
163,000
176,000
190,000
205,000
222,000
240,000
259,000
280,000
(b) Security for the 1995 Bonds.
The 1995 Bonds are payable solely from and secured solely by the revenues and
receipts derived from the Loan Agreement, the Promissory Note and the Mortgage. To
secure the payment of the principal of, premium, if any, and interest on the 1995
Bonds and to secure the performance and observance by the Issuer of its obligations
under the Indenture, the Issuer has pledged to the Trustee, for the equal and
proportionate benefit of all owners of the 1995 Bonds all of the rights and interests of
the Issuer in and to the Promissory Note; the Loan Agreement (except for the
Unassigned Issuer's Rights and amounts on deposit in the Rebate Fund and the
investment income thereon); the Mortgage and the Mortgaged Property; and the
Pledged Funds.
The Indenture defines Pledged Funds as, collectively, the Revenues and the
proceeds derived from the foreclosure (or in lieu of foreclosure) of the first mortgage
lien on and security interest in all real and personal property of the Company,
including the Project, created by the Mortgage. Revenues means (a) the Loan
Payments; (b) all other moneys received or to be received by the Issuer or the Trustee
in respect to repayment of the Loan, including without limitation, moneys in the Bond
Fund; (c) Utility Revenues (all income, fees, rentals, earnings or other charges derived
by the Company from the operation of the System, including connection charges); (d)
any moneys in the Project Fund; and (e) all income and profit from the investment of
the foregoing moneys. The term "Revenues" does not include any moneys or
investments in the Rebate Fund.
All Loan Payments and receipts derived from the Loan Agreement or the
Promissory Note are to be deposited with the Trustee in the Bond Fund created
pursuant to the Indenture. Pursuant to the Loan Agreement, the Company has
unconditionally agreed to provide the Issuer sufficient moneys from the Pledged Funds
to pay the Amortization Installments, principal of, premium, if any, and interest on the
Bonds when due.
Pursuant to the Indenture, the Trustee established an account within the Bond
Fund designated as the Reserve Account. Full capitalization of the Reserve Account
on the date of issuance of the Bonds from proceeds of the sale of the Bonds was not
4205-0ffer to Exchange
3
required because the Company had provided for an irrevocable letter of credit issued
by Community Bank of Homestead, Homestead, Florida, to be deposited in the Reserve
Account.
The Indenture requires the Company to fIx, establish and maintain such rates
and will collect such fees, rentals and other charges for the use of the services and
facilities of the System and revise the same from time to time, whenever necessary, as
will always provide Utility Revenues in each Bond Year sufficient to pay 100% of the
Cost of Operation and Maintenance, 110% of the current Debt Service Requirement,
and 100% of all reserve and renewal and replacement payments. Such rates, fees,
rentals or other charges shall not be reduced so as to be insufficient to provide Utility
Revenues for such purposes.
Pursuant to the Mortgage, the Company granted a first lien, subject to
Permitted Encumbrances (as defined in the Mortgage), on the Mortgaged Real Estate
(as defined in the Mortgage), which Mortgaged Real Estate includes the real estate on
which the wastewater collection and treatment facility is and will be located and all
buildings, fIxtures, licenses, easements and other rights or interests of the Company
located on the real estate encumbered by the Mortgage. The Mortgage also grants a
security interest in, subject to Permitted Encumbrances, all fIxtures and other
property located on the Mortgaged Real Estate, including replacements or additions
thereto. An ALTA title insurance policy on the mortgaged property in an amount not
less than the purchase price for the System was delivered at the time of delivery of
the 1995 Bonds.
3. Security for the 2005 Bonds.
Pursuant to the Loan Agreement, the Company will agree, among other things,
to make loan payments to the Bond Trustee, on behalf of the Authority, in such
amounts and at such times as will be sufficient to pay, when due, the principal of,
premium, if any, and interest on the Bonds and all other amounts due under the Loan
Agreement.
Pursuant to the Bond Indenture, the Authority will assign to the Bond Trustee
as security for repayment of the 2005 Bonds the following:
(i) All right, title and interest of the Authority in and to the 2005 Note and
all sums payable in respect of the indebtedness evidenced thereby;
(ii) All right, title and interest of the Authority in and to the Loan Agreement
and the amounts payable to the Authority thereunder (except for certain rights
retained by the Authority, including the Authority's rights to indemnification, to
receive notices and payment of its expenses); and
(iii) Any and all other property of every kind, conveyed, pledged, assigned or
transferred as and for additional security thereunder by the Authority or the
Company, to the Bond Trustee, including without limitation, funds held by the Bond
Trustee in any of the funds established under the Bond Indenture (but excluding any
funds held for the payment of rebate pursuant to Section 148 of the Code).
4205-0ffer to Exchange
4
Upon the occurrence of certain "events of default" under the Bond Indenture,
the 2005 Bonds shall be subject to acceleration in accordance with the provisions of
the Bond Indenture.
To secure the Company's obligations under the Loan Agreement, the Company
will issue and deliver the 2005 Note pursuant to the Master Indenture, in an amount
equal to the principal amount of the 2005 Bonds to the Authority for assignment to
the Bond Trustee pursuant to the Bond Indenture. The 2005 Note will be payable in
the same amounts and at the same times as the loan payments are due under the
Loan Agreement, and such payments on the 2005 Note will constitute payment under
the Loan Agreement.
The Master Indenture permits the Company to issue Master Notes in addition to
the 2005 Note and to secure all Master Notes on parity with one another.
Each Master Note issued pursuant to the Master Indenture, including the 2005
Note shall be a general obligation of the Company and shall be entitled to the benefits
of security of the Master Indenture. To secure payment and performance of all
obligations of the Company in respect to the principal and interest on the Master
Notes, all payment obligations and all Other Obligations (as such terms are defined in
the Master Indenture) the Company pledges, assigns and grants to the Master Trustee
a security interest in all of its rights, title and interest in the Pledged Assets. "Pledged
Assets" are defined in the Master Indenture to include (a) the Gross Revenues, (b) all
other funds held under the Master Indenture, together with any amounts and
investments, if any, on deposit in such funds from time to time and all investment
income thereon; provided, however, that any Reserve Fund created, established and
maintained pursuant to any Supplement shall only secure the Related Indebtedness
for which such Fund was created, (c) any and all other real or personal property of
every name and nature from time to time hereafter by delivery or by writing of any
kind assigned, pledged or transferred and delivered to the Master Trustee by the
Company or by anyone on behalf of the Company with its written consent, as and for
additional security for the Secured Obligations and (d) proceeds of the foregoing. The
Company has covenanted, and pursuant to the provisions of the Master Indenture,
not to create any Liens upon the Pledged Assets, now owned or hereafter acquired by
it, other than Permitted Liens.
"Gross Revenues" are defined in the Master Indenture to mean all income, fees,
rentals, earnings or other charges derived by the Company from the operation of the
System, including connection charges.
The Company's obligations under the Master Indenture and the payment of the
principal of and interest on the Master Notes are further secured by a mortgage of the
property pursuant to a Mortgage and Security Agreement dated as of April 1, 2005,
from the Company to the Master Trustee. The Mortgage secures future advances and
readvances that may subsequently be evidenced by a Master Note. The Mortgage is
subject to certain Permitted Liens (as defined in the Master Indenture).
4. Expiration of Offer. The Offer will expire on the Expiration Date. The
term "Expiration Date" means 5:00 p.m., Eastern Time on April _, 2005, unless the
4205-0ffer to Exchange
5
Company, in its sole discretion, shall have extended the period of time for which the
Offer is open, in which event the term "Expiration Date" means the time and date to
which the Offer is so extended by the Company. The Company may extend the
Expiration Date, one or more times, for up to 60 days by giving notice by mail or other
written means to the holders of the 1995 Bonds. Any tender of 1995 Bonds as of the
Expiration Date may not be rescinded or otherwise revoked during the No-Rescission
Period (that is, from and after the Expiration Date to a date 90 days thereafter). The
investment and credit risk associated with tendered 1995 Bonds continues to be that of
Bond Owners from the time of tender to the exchange, including during the No-
Rescission Period. See Section 6 for a discussion of rights of withdrawal. For a
description of the Company's rights to extend the period of time during which the
Offer is open or to terminate or amend the Offer, see Section 4.
The Company reserves the right, in its sole discretion at any time to terminate,
amend, or withdraw the Offer. Unless and until the Company withdraws the Offer, the
Company will be obligated to exchange all 1995 Bonds tendered by Owners in
accordance with the terms of this Offer for 2005 Bonds, subject only to the conditions
set forth in Section 10 of this Offer to Exchange.
5. Extension of Offer; Termination; Amendment. The Company reserves the
right, at any time and from time to time prior to the Expiration Date, to extend the
Expiration Date, the period of time during which the offer is open, by giving oral or
written notice of such extension to the Depository. If the period is so extended for a
period or periods that aggregate up to 60 days, then the No-Rescission Period shall
commence on the Expiration Date as so extended and terminate 90 days thereafter.
No such extension shall be for a period of time that is shorter than 10 business days.
The Company also reserves the right (i) to terminate the Offer at any time upon the
occurrence of any of the conditions specified in clauses (a) through (c) of Section 10,
by giving oral or written notice of such termination to the Depository, or (ii) to amend
the Offer in any respect at any time or from time to time.
6. Acceptance for Exchange. Unless the Company has previously withdrawn
its Offer, then, upon the terms and subject to the conditions of the Offer, 1995 Bonds
properly tendered and not withdrawn before the Expiration Date will be exchanged for
2005 Bonds being the same principal amount and maturity date, subject only to the
conditions set forth in Section 10 of this Offer.
7. Rights of Withdrawal. Tenders of 1995 Bonds are irrevocable, except
that tendered 1995 Bonds may be withdrawn at or prior to the Expiration Date. To be
effective, a written, telegraphic, telex, or facsimile transmission notice of withdrawal
must be timely received by the Depository at its address specified on the back page of
this Offer to Exchange. Any notice of withdrawal must specify the person named in the
Letter of Transmittal, the principal amount of 1995 Bonds to be withdrawn, and the
name of the registered owner and (if the 1995 Bonds have been delivered to the
Depository) the certificate numbers shown on the particular 1995 Bonds to be
withdrawn. All questions as to the validity of notices of withdrawal, including time of
receipt, will be determined by the Company, in its sole discretion, whose determination
shall be final and binding. Any withdrawn 1995 Bonds will be deemed not properly
tendered for purposes of the Offer. However, withdrawn Bonds may be retendered, by
following any of the procedures described in Section 7, at any subsequent time prior to
4205-0ffer to Exchange
6
the Expiration Date.
8. Procedure for Accepting the Offer and Tendering 1995 Bonds. (a)
In General. For an Owner to tender 1995 Bonds: (i) the 1995 Bonds, together with a
properly completed and executed Letter of Transmittal and any other required
documents, must be transmitted to and received by the Depository at its address listed
on the back page of the Offer to Exchange prior to the Expiration Date, or in accordance
with one of the procedures set forth below, or (ii) for 1995 Bonds that are not
immediately available, the guaranteed delivery procedures described below, must be
satisfied.
The authenticity of the signature on the Letter of Transmittal must be
guaranteed by an eligible guarantor institution (such as banks, stockbrokers, savings
and loan associations, and credit unions) with membership in an approved Signature
Guarantee Medallion Program pursuant to S.E.C. Rule 17Ad-15 (each, an "Eligible
Guarantor Institution"). If 1995 Bonds are registered in the name of a person other
than the signer of the Letter of Transmittal, the 1995 Bonds must be endorsed, or
accompanied by a bond power signed by the registered owner, with the signature on the
endorsement or bond power guaranteed by an Eligible Guarantor Institution. If the
1995 Bonds are sent by mail, the Company recommends that the 1995 Bonds be sent
by registered mail with retum receipt requested, properly insured.
(b) Guaranteed Delivery Procedure. For the convenience of Owners whose
1995 Bonds are not immediately available, tenders may be made without the
concurrent deposit of 1995 Bonds if such tenders are made by or through commercial
bank or trust company having an office or branch in the United States, a firm which is
a member of a registered national securities exchange, or is a registered municipal
securities dealer, in the United States under the Securities Exchange Act of 1934, as
amended, or a member in the United States of the National Association of Securities
Dealers, Inc. (each an "Eligible Institution"). In such cases, a Notice of Guaranteed
Delivery, duly executed, must be received by the Depository prior to the Expiration Date
and the guaranty of delivery contained in the Notice of Guaranteed Delivery must have
been executed by an Eligible Institution. The 1995 Bonds, a properly completed and
duly executed Letter of Transmittal, and all other documents required by the Letter of
Transmittal must be received by the Depository within ten business days after the date
of receipt by the Depository of the Notice of Guaranteed Delivery.
If an Owner wishes to tender his 1995 Bonds and time will not permit such
Owner's Letter of Transmittal, 1995 Bonds or other required documents to reach the
Depository before the Expiration Date, such Owner's tender may be effected if a
properly executed Letter of Transmittal has been deposited with an Eligible Institution,
and (a) the Depository has received, prior to the Expiration Date, notice in writing from
an Eligible Institution setting forth the name and address of the Owner and the face
amount and the certificate numbers of 1995 Bonds tendered and stating that the tender
is being made thereby pursuant to the terms of the Offer and guaranteeing that, within
ten business days after the date of receipt by the Depository of such written notice, the
Letter of Transmittal, together with the 1995 Bonds and any other documents
required by the Letter of Transmittal will be deposited by such Eligible Institution
Depository; and (b) a properly completed and duly executed Letter of Transmittal, and
such 1995 Bonds and other documents are received by the Depository within ten
4205-0ffer to Exchange
7
business days after the date of receipt by the Depository of such written notice.
Inasmuch as the risk for the method of delivery of 1995 Bonds rests with the
Owner, any failure to timely deliver the above notice, document or Bonds likewise
rests with the Owners.
Any Owner who is unable to locate his 1995 Bond should write to or call
Wachovia Bank, National Association, the Registrar for the 1995 Bonds, to inquire
about the possibility of obtaining a replacement. The address and telephone number
for making inquiries with respect to replacement of 1995 Bonds or any other matter
which requires handling by the Registrar is: Wachovia Bank, National Association,
Corporate Trust Operations, 200 South Biscayne Boulevard, 14th Floor, Miami, Florida
33131, Attn: Ednora Linares, Telephone Number (305) 789-4685, Facsimile Number
(305) 789-4678.
. .
The exchange of 2005 Bonds for 1995 Bonds tendered pursuant to the Offer
will be made only after receipt by the Depository of such 1995 Bonds, a properly
completed and executed Letter of Transmittal, and any other required documents. If
other than the registered owner is to receive a Bond, the Depository must receive a
separate assignment by the registered owner guaranteed, in the manner set forth
above for Letters of Transmittal.
All questions as to the form of all documents and the validity (including time of
receipt) of all tenders will be determined by the Company, whose determination shall
be final and binding. The Company reserves the right to reject any or all tenders of
1995 Bonds not in proper form, or the acceptance of which would, in the opinion of
the company's counsel, be inconsistent with the terms of the Offer. The Compapy also
reserves the right to waive any of the conditions of the Offer or any defect in thetenHer
of any 1995 Bonds. The Company's interpretation of the terms and conditions of the
Offer (including the Instructions in the Letter of Transmittal) shall be final and
binding. Any irregularities in connection with tenders must be cured within such time
as the Company shall determine, unless waived by it. Tenders of 1995 Bonds shall
not be deemed to have been made until all irregularities have been cured or waived.
Neither the Company nor the Depository will be obligated to give notice of any defects
or irregularities in tenders, and neither of them shall incur any liabilities for failure to
give any such notice.
9. Income Tax Consequences.
In the opinion of Livermore, Freeman & McWilliams, P.A., Bond Counsel, under
existing law interest on the Bonds is excluded from gross income for federal income
tax purposes under Section 103(a) of the Code, except for interest on any Bond for any
period during which it is held by a "substantial user" or a "related person" as those
terms are used in Section 147(a) of the Code, and interest on the Bonds is an item of
tax preference under Section 57 of the Code and therefore maybe subject to the
alternative minimum tax imposed on individuals and certain corporations under the
Code. Bond Counsel will express no opinion as to any other tax consequences
regarding the Bonds. The Bonds and the interest thereon are exempt from all taxation
under the laws of the State of Florida except estate taxes and taxes measured by
income which are imposed by Chapter 220, Florida Statutes, on "corporations",
"banks" and "savings associations" as such terms are defined in Chapter 220.
4205-0ffer to Exchange
8
10. Liquidity of 1995 Bonds. The 1995 Bonds are not listed on any
securities exchange nor actively traded in any market known to the Company. The
Company is aware of no information relating to any rating of the 1995 Bonds.
11. Certain Conditions of the Offer. The Company reserves the right, in its
sole discretion at any time to terminate, amend, or withdraw the Offer without liability
to any person tendering 1995 Bonds. The Company shall not be required to
exchange 2005 Bonds for tendered 1995 Bonds and may terminate or amend the Offer
or postpone the exchange of the 1995 Bonds if, at any time prior to such exchange:
(a) there shall have been instituted or threatened any action or
proceeding before or by any court or governmental, regulatory, or administrative
agency or instrumentality, or by any other person, which challenges the making of
the Offer or the acquisition of 1995 Bonds pursuant to the Offer or otherwise directly
or indirectly relates to the Offer or, in the opinion of the Company, otherwise directly
or indirectly materially adversely affects the Company; or
(b) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading a securities on the New York Stock Exchange or the
over-the-counter market, (ii) a commencement of war or armed hostilities or other
international or national calamity directly or indirectly involving the United States,
or, if any such war, hostilities or calamity shall have commenced at or prior to the
date of this Offer to Exchange, any material increase in the level of such war,
hostilities or calamity, or (iii) a declaration of banking moratorium or any suspension
of payments in respect of banks in the United States, the State of New York, or the
State of Florida on, or any other event which might affect, the extension of credit for
banks or other lending institutions;
which, in the sole opinion of the Company, and regardless of the circumstances
(including any action by the Company giving rise to such event), makes it inadvisable
to proceed with the Offer and with such Exchange. The foregoing conditions are for
the sole benefit of the Company and may be waived by the Company, in whole or in
part. Any determination by the Company concerning the events described in this
Section 10 shall be final and binding upon all parties.
Until the Expiration Date, the Company cannot estimate with any degree of
accuracy the aggregate amount of 1995 Bonds that will be tendered for exchange
pursuant to the Offer. The Company anticipates that, after the Expiration Date, it will
determine the aggregate amount of the 2005 Bonds necessary to issue to exchange for
1995 Bonds tendered by the tendering Owners pursuant to the Offer and will proceed
with the exchange of the 2005 Bonds. The Company expects to withdraw the Offer if, in
its sole judgment, a sufficient amount of 1995 Bonds has not been tendered to justify
the time, effort, and expense of consummating the exchange of the 2005 Bonds.
12. Fees. Wachovia Bank, National Association, as Depository, and First
Southwest Company, as Financial Advisor to the Company will receive reasonable and
customary compensation for their services in connection with the Offer and will be
reimbursed for their reasonable out-of-pocket expenses.
4205-0ffer to Exchange
9
The Company will not pay any fees or commissions to any broker, dealer, or
other person in connection with the solicitation of tenders of 1995 Bonds pursuant to
the Offer. No broker, dealer, commercial bank, trust company, or fiduciary shall be
deemed to be the agent of the Company, the Depository, or the Financial Advisor for
purposes of the Offer.
13. Miscellaneous. The Offer is not being made to, nor will the Company
accept tenders from, Owners of 1995 Bonds in any jurisdiction in which the Offer or
the acceptance thereof would not be in compliance with law. No person has been
authorized to give any information or make any representation on behalf of or with
respect to the Company not contained herein, 'and if given or made, such information
or representation must not be relied upon as having been authorized.
The delivery of this Offer to Exchange has been authorized by the Board of
Directors of North Key Largo Utility Corp.
NORTH KEY LARGO UTILITY CORP.
Letters of Transmittal and 1995 Bonds should be sent or delivered by you or
your broker, dealer, bank, or trust company to the Depository as follows:
The Depository:
Wachovia Bank, National Association
200 South Biscayne Boulevard,
14th Floor
Miami, Florida 33131
Attn: Ednora Linares
Telephone: (305) 789-4685
Facsimile Number: (305) 789-4678
(Eligible Instructions Only)
4205-0ffer to Exchange
10
Any questions or requests for assistance may be directed to the Depository or the
Financial Advisor. Owners may also contact their brokers, banks, or trust
companies for assistance concerning the Offer.
The Financial Advisor for the Offer is:
First Southwest Company
20 N. Orange Avenue,
Suite 1209
Orlando, Florida 32801
Attn: John E. White
Senior Vice President
Telephone: (407) 426-9611
FAX: (407) 426-7835
EmaiI: jwhite@firstsw.com
4205-0ffer to Exchange
11
APPENDIX E
NOTICE OF REDEMPTION
MONROE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
INDUSTRIAL DEVELOPMENT REVENUE BONDS
(NORTH KEY LARGO UTILITY CORP. PROJECT), SERIES 1995
NOTICE IS HEREBY GNEN by the Monroe County Industrial Development
Authority, that all of its outstanding Industrial Development Revenue Bonds (North Key Largo Utility
Corp. Project), Series 1995, dated March 9,1995, originally issued on March 9, 1995, which mature on
March 1,2025, bearing interest at the rate of 8.00% per annum and CUSIP No. 610506 AB3, and
which are redeemable on March 1,2005, or on any date thereafter, at the option ofthe Authority, at the
redemption price of the principal amount of each bond to be redeemed, together with interest accrued
thereon to the date fixed for redemption, plus a premium equal to 2% of the par value thereof, will
become due and payable and will be redeemed on
Payment ofthe redemption price, plus accrued interest, of such bonds will be made on
, the redemption date, at the office of Wachovia Bank, National Association,
Miami, Florida, as successor to First Union National Bank of Florida, the paying agent for the
Bonds, upon surrender thereof. Interest on such Bonds being redeemed will cease to accrue from and
after such redemption date.
Under the provisions of the Interest and Dividend Tax Compliance Act of 1983 (the
"Act"), all holders submitting their Bonds for redemption must submit a W -9 (Certificate of Taxpayer
Identification Number) in order to avoid 31 % backup withholding required under the Act.
Dated and mailed this _ day of
MONROE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By Is/
Chair
4205-R-Res-Authority with apps
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