AGENDA MEMORANDUM

 

 

Meeting Date:           July 24, 2006

 

From:                          Bill Pfeilsticker, Finance Director                                                                              

Subject:                      Resolution authorizing issuance of Bond Anticipation Notes Series 2006A and 2006B in the aggregate amount not to exceed $7,000,000; authorizing execution of the Notes; and setting an effective date.  

 

Staff Recommendation:

Staff recommends approval of the Resolution authorizing issuance of the Bond Anticipation Notes (BAN) Series 2006A and 2006B in the aggregate amount not to exceed $7,000,000 to finance the cost of the acquisition of the Plantation at Leesburg water and sewer systems, and the construction, improvement and/or equipping of improvements, additions or expansions of the City's utility system; authorizing execution of the Series 2006A and 2006B Notes; and, authorizing a future utility system revenue bond issue.

 

Analysis:

On June 12, 2006, Resolution 7656 was adopted authorizing the purchase of water and sewer systems from The Plantation at Leesburg.  The City completed negotiations and proposes to pay the owners of Plantation $4,000,000 down payment with the balance of $8,000,000 to be paid at the end of three years. Interest shall be at the rate of 3% of the unpaid balance per year payable semi-annually.  Revenue from the sale of water and sewer services at The Plantation will be sufficient to make payments.  An additional $3,000,000 will be available to fund the new construction and improvements necessary to facilitate the connection to the City utility systems.

 

It is the City’s intention to prepay this BAN financing prior to the end of the three year term by including it into a larger utility revenue bond issue approved by this Resolution

 

Three responses to the RFP were received: Bank of America, Regions Bank, and SunTrust.  The Finance Director and Financial Advisor, D.A. Davidson & Co. analyzed the proposals and recommend that the financing be awarded to SunTrust. The summary of bank responses is attached hereto.

 

The proposed Resolution authorizes the Mayor, City Clerk and other designated agents to execute BAN  documents, as required, in an aggregate amount not to exceed $7,000,000 consisting of:

Although the construction costs are projected to be approximately $2,000,000, the proposed BAN allows for draw-downs of an amount not exceeding $3,000,000 thereby allowing for increases of material and other costs. All interest is calculated on unpaid principal. 

 

The new construction and improvements will be designed and installed to best serve the newly acquired system, but also to enhance service capabilities to adjoining and future developments in the area.

 

Options:

1.  Approve the Resolution as presented; or

2.  Such alternative action as the Commission may deem appropriate

 

 

Fiscal Impact

This project was not included in the FY2005-06 Budget. Budget adjustments will be necessary to record the revenues and expenditures.

 

Submission Date and Time:    7/21/2006 4:26 PM____

 

Department: ______________________

Prepared by:  ______________________                     

Attachments:         Yes____   No ______

Advertised:   ____Not Required ______                     

Dates:   __________________________                     

Attorney Review :       Yes___  No ____

                                                

_________________________________           

Revised 6/10/04

 

Reviewed by: Dept. Head ________

 

Finance  Dept. __________________                                     

                              

Deputy C.M. ___________________                                                                         

Submitted by:

City Manager ___________________

 

Account No. _________________

 

Project No. ___________________

 

WF No. ______________________

 

Budget  ______________________

 

Available _____________________

 


CITY OF LEESBURG, FLORIDA

Summary of Bank Responses

 

 

Bank of America

Regions Bank

SunTrust

 

Proposal or Commitment

 

Commitment

3 yr Draw, 10 yr Term Out

Proposal (?)

3 yr Draw, 10 yr Term

Commitment

3 yr Line of Credit; 10 yr Term Out

 

Bank Fees

 

N/A

N/A

N/A

 

Bank Counsel

& Fees

(if drafting)

 

$2,500 capped

 

Junior Lien to Series 2004

Waived

 

Junior Lien to Series 2004

$2,000

Joe Stanton, Broad & Cassell

Junior Lien to Series 2004

 

Floating Rate Option

 

 

 

BQ: 67% 1 mo. LIBOR + 27 b.p.

As of 7/17: 3.85%

 

Non-BQ: 77% of 1 mo. LIBOR + 42 b.p.

As of 7/17: 4.54%

BQ: 74.1% of 1 mo. LIBOR

As of 7/17: 3.98%

 

Non-BQ: 90.3% of 1 mo. LIBOR

7/17: 4.85%

BQ: 67% 1 mo. LIBOR + 27 b.p.

As of 7/13: 3.85%

 

Non-BQ: 77% of 1 mo. LIBOR + 26 b.p.

4.39% as of 7/13

Fixed Rate Option

 

 

 

 

BQ: 4.08% if closed by 7/27/06

Or 67% 3 yr Swap + 37 b.p.

 

Non-BQ: 4.86% if by 7/27/06

Or 77% of 3 yr Swap + 57 b.p.

 

BQ: 72.9% of 3 yr SWAP

4.07% as of 7/17/06

 

Non-BQ: 88.5% of 3 yr Swap

4.94% as of 7/17

BQ: 67% of 2 yr SWAP + 25 b.p.

As of 7/13: 4.02%

 

Non-BQ: 77% of 2 yr SWAP + 24 b.p.

4.57% as of 7/13

 

Covenants

 

 

Bi-monthly draws, min. $100,000

Interest semi-annually

Interest quarterly

Need to review Plantation Note

Plantation Note subordinate to 2006 BAN

No additional Senior debt

 

Other

 

No material adverse change since 9/30/04.

Fixed rate locked @ 9.20% thru 2019.

Todd Morley, 407-420-2772

Jerry Stanforth, 407-420-2813

Mkt Acct:  95% of Fed Funds

Prepayment penalty waived

Jerry Heniser, 561-361-5641

Zero Cost Collar offered

No prepayment penalty

1.0X Rate Covenant

?Semi-Annual interest (to be confirmed)

William Jones 407-237-5909

 



RESOLUTION __________

 

A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA AUTHORIZING THE ISSUANCE OF BOND ANTICIPATION NOTES IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $7,000,000 TO FINANCE THE COST OF THE ACQUISITION OF VARIOUS WATER AND/OR SEWER SYSTEMS, INCLUDING THE PLANTATION AT LEESBURG SYSTEM, AND THE CONSTRUCTION, IMPROVEMENT AND/OR EQUIPPING OF IMPROVEMENTS, ADDITIONS OR EXPANSIONS OF THE CITY'S WATER AND/OR SEWER SYSTEMS; PROVIDING THAT SUCH BOND ANTICIPATION NOTES SHALL BE LIMITED OBLIGATIONS OF THE ISSUER PAYABLE FROM PROCEEDS OF SENIOR LIEN UTILITY SYSTEM REVENUE BONDS AND A JUNIOR AND SUBORDINATE LIEN ON UTILITY SYSTEM REVENUES UNDER THE SENIOR BOND RESOLUTION; AUTHORIZING THE ISSUANCE OF SENIOR LIEN UTILITY SYSTEM REVENUE BONDS IN ACCORDANCE WITH THE TERMS OF THE SENIOR BOND RESOLUTION IN ORDER TO PROVIDE FOR THE PAYMENT OF SUCH BOND ANTICIPATION NOTES AND PROVIDE LONG TERM FINANCING FOR SUCH PROJECTS; APPROVING THE FORM AND AUTHORIZING THE EXECUTION AND DELIVERY OF BOND ANTICIPATION NOTES AND A LOAN AGREEMENT BETWEEN THE ISSUER AND SUNTRUST BANK; MAKING CERTAIN COVENANTS AND AGREEMENTS IN CONNECTION THEREWITH; AUTHORIZING AND PROVIDING AN EFFECTIVE DATE FOR THIS RESOLUTION; AND PROVIDING CERTAIN OTHER DETAILS.

BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA, THAT:

Section 1.  Authority for this Resolution.  This Resolution is enacted pursuant to the provisions of the Act, as hereinafter defined.

Section 2.  Definitions.  Capitalized terms used and not defined herein shall have the meanings ascribed thereto in the Senior Bond Resolution (as defined below).  In addition, the following words and phrases shall have the following meanings when used herein:

"Act" means Chapter 166, Part II, Florida Statutes, as amended, the Constitution of the State, Section 215.431, Florida Statutes, as amended, and the Charter of the Issuer, as amended and supplemented.

"Bank" means SunTrust Bank.

"City Clerk" means the City Clerk of the Issuer or any deputy or assistant City Clerk.

"Cost" means any obligation or expense incurred by the Issuer to fund the cost of acquisition of various water and/or sewer systems, including the Plantation at Leesburg system, and the construction, improvement and/or equipping of improvements, additions or expansions of the Issuer's water and/or sewer system, to the extent permitted by the Act.

"Issuer" means the City of Leesburg, Florida, a municipal corporation of the State, and its successors and assigns.

"Loan" means the loan from the Bank to the Issuer in an amount equal to the outstanding principal amount of the Notes authorized and issued hereunder.

"Loan Agreement" shall have the meaning set forth in Section 4 hereof.

"Mayor" means the Mayor of the Issuer or the Mayor Pro Tem of the Issuer.

"Notes" means, collectively, the Series 2006A Note and the Series 2006B Note.

"Series 2006A Note" means the Utility System Subordinated Revenue Bond Anticipation Note, Series 2006A of the Issuer payable to the Bank and authorized by Section 3 hereof.

"Series 2006B Note" means the Utility System Subordinated Revenue Bond Anticipation Note, Series 2006B of the Issuer payable to the Bank and authorized by Section 3 hereof.

"Senior Bonds" means the Issuer's Utility System Revenue Bonds, Series 2004 and any Additional Bonds hereinafter issued pursuant to the Senior Bond Resolution, including, without limitation, those Additional Bonds to be issued in accordance with the Issuer’s covenants set forth in the Loan Agreement.

"Senior Bond Resolution" means Resolution No. 7143 adopted by the City on June 14, 2004, as the same may be supplemented and amended pursuant to its terms.

"State" means the State of Florida.

Section 3.  Authorization of Notes.  Subject and pursuant to the provisions of this Resolution, special limited obligations of the Issuer are hereby authorized to be issued in the aggregate principal amount of not to exceed $7,000,000 for the purposes of paying closing costs of the Loan and providing funds to pay certain Costs of the Issuer.  Because of the characteristics of the Notes, prevailing market conditions, and additional savings to be realized from an expeditious sale of the Notes, it is in the best interest of the Issuer to negotiate with the Bank to purchase the Notes at a private negotiated sale.  Prior to the issuance of the Notes, the Bank shall execute and deliver to the Issuer a disclosure statement containing the information required by Section 218.385, Florida Statutes.  Each Note shall be dated the date of its execution and delivery, which shall be a date agreed upon by the Issuer and the Bank, and shall have such other terms and provisions, and maturity date, as stated in the form of each Note attached to the Loan Agreement (hereinafter defined) as Exhibits A and B, respectively, thereto.  Each Note shall be in such principal amount (provided that the aggregate principal amounts of both Notes shall not exceed $7,000,000), shall finally mature not later than July 31, 2009 (unless extended by the City as permitted in the Loan Agreement), and shall have an interest rate or interest rate formula as negotiated with the Bank and approved by the Mayor (not exceeding ten percent (10%) at issuance thereof) and in substantially the forms set forth in Exhibits A and B to the Loan Agreement, the principal amount, the interest rate and any changes to such form to be approved by the Mayor, such approval to be conclusively evidenced by the execution of the Notes by the Mayor.  Each Note shall be executed on behalf of the Issuer with the manual signature of the Mayor and attested by the manual signature of the City Clerk, and the Mayor is hereby authorized to execute each Note on behalf of the Issuer and the City Clerk is hereby authorized to attest to such signature.  The Notes and all payment obligations of the City under the Loan Agreement (hereafter defined) shall constitute "Subordinate Debt" within the meaning and contemplation of the Senior Bond Resolution.

Section 4.  Loan Agreement.  Notwithstanding any other provision hereof, the Notes shall not be issued nor shall the Issuer be obligated to issue the same nor shall the Bank be obligated to purchase the same, unless and until the Issuer and the Bank shall execute a Loan Agreement in substantially the form attached hereto as Attachment “A” (the "Loan Agreement").  The form of the Loan Agreement is hereby approved by the Issuer, and the Mayor is authorized to execute the same, and the City Clerk is hereby authorized to attest to such signature, with such changes as may be approved by the Mayor, such approval to be conclusively evidenced by the execution thereof by the Mayor and the attestation of the City Clerk.

Section 5.  Severability.  If any provision of this Resolution shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable in any context, the same shall not affect any other provision herein or render any other provision (or such provision in any other context) invalid, inoperative or unenforceable to any extent whatever.

Section 6.  Applicable Provisions of Law.  This Resolution shall be governed by and construed in accordance with the laws of the State.

Section 7.  Rules of Interpretation.  Unless expressly indicated otherwise, references to sections or articles are to be construed as references to sections or articles of this instrument as originally executed.  Use of the words "herein," "hereby," "hereunder," "hereof," "hereinbefore," "hereinafter" and other equivalent words refer to this Resolution and not solely to the particular portion in which any such word is used.

Section 8.  Captions.  The captions and headings in this Resolution are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Resolution.

Section 9.  Authorizations.  The Mayor, the City Manager, the Finance Director, and the City Clerk, and such other officials, officers and employees of the Issuer as may be designated by the Mayor are each designated as agents of the Issuer in connection with the issuance and delivery of the Notes and are authorized and empowered, collectively or individually, to take all action and steps and to execute all instruments, documents, and contracts on behalf of the Issuer that are necessary or desirable in connection with the execution and delivery of the Notes, and which are specifically authorized or are not inconsistent with the terms and provisions of this Resolution.  The Mayor, the City Manager and the Finance Director of the Issuer are each authorized to request advances be made under the Notes (provided that the aggregate amount of all such advances under both Notes shall not exceed $7,000,000) pursuant to the terms of the Loan Agreement.  The Mayor and/or the City Manager and/or Finance Director of the Issuer are authorized to use Loan proceeds by requesting Advances under the Loan Agreement to pay Costs as approved by the City Commission of the Issuer, including costs of issuance of the Notes approved by the City Manager or the Finance Director.

Section 10.  Repealer.  All resolutions or parts thereof in conflict herewith are hereby repealed.

Section 11.  Authorization of Senior Bonds.  Senior Bonds meeting all the conditions and tests of the Senior Bond Resolution to qualify as Additional Bonds thereunder, and have such principal amount, interest rates, redemption features and other terms as may be provided by subsequent resolution of the City Commission, are hereby authorized to be issued to fund the payment of the Notes and for such other purposes as may be provided by subsequent resolution of the City Commission.

Section 12.  Effective Date.  This Resolution shall take effect immediately upon its adoption.

Passed and adopted at the regular meeting of the City Commission of the City of Leesburg, Florida, on the 24th day of July, 2006.

THE CITY OF LEESBURG, FLORIDA

 

 

(SEAL)                                                                                                                                             

Mayor

Attest:

 

 

                                                                       

City Clerk

 

 


Attachment “A”

 

[FORM OF LOAN AGREEMENT]

# 3883059_v4

                                                                                                                                                           

LOAN AGREEMENT

Dated as of July 27, 2006

By and Between

THE CITY OF LEESBURG, FLORIDA
(the "City")

and

SUNTRUST BANK
(the "Bank")

                                                                                                                                                           

 

 


TABLE OF CONTENTS

(The Table of Contents for this Loan Agreement is for convenience of reference only and is not intended to define, limit or describe the scope or intent of any provisions of this Loan Agreement.)

Page

ARTICLE I DEFINITION OF TERMS. 1

Section 1.01.   Definitions. 1

Section 1.02.   Interpretation. 5

Section 1.03.   Titles and Headings. 5

ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE PARTIES. 5

Section 2.01.   Representations and Warranties of City. 5

Section 2.02.   Covenants of the City. 6

Section 2.03.   Representations and Warranties of Bank. 6

ARTICLE III THE NOTES. 7

Section 3.01.   Purpose and Use. 7

Section 3.02.   The Notes. 7

Section 3.03.   Adjustments to Note Rate. 8

Section 3.04.   Compliance with Section 215.84. 8

Section 3.05.   Conditions Precedent to Issuance of Notes. 8

Section 3.06.   Registration of Transfer; Assignment of Rights of Bank. 10

Section 3.07.   Ownership of the Notes. 11

Section 3.08.   Use of Proceeds of Notes Permitted Under Applicable Law.. 11

Section 3.09.   Authentication. 11

Section 3.10.   Ten Year Term Out 11

ARTICLE IV COVENANTS OF THE CITY.. 12

Section 4.01.   Performance of Covenants. 12

Section 4.02.   Payment of Notes. 12

Section 4.03.   Tax Covenant 13

Section 4.04.   Commitment to Pay Notes from Pledged Funds. 13

Section 4.05.   Financial Covenants. 14

Section 4.06.   Compliance with Laws and Regulations. 14

Section 4.07.   Covenant Regarding Use of Impact Fees to Pay Debt Service. 14

ARTICLE V EVENTS OF DEFAULT AND REMEDIES. 14

Section 5.01.   Events of Default 14

Section 5.02.   Exercise of Remedies. 15

Section 5.03.   Remedies Not Exclusive. 16

Section 5.04.   Waivers, Etc. 16

ARTICLE VI MISCELLANEOUS PROVISIONS. 16

Section 6.01.   Covenants of City, Etc.; Successors. 16

Section 6.02.   Term of Agreement 16

Section 6.03.   Notice of Changes in Fact 16

Section 6.04.   Amendments and Supplements. 16

Section 6.05.   Notices. 17

Section 6.06.   Benefits Exclusive. 17

Section 6.07.   Severability. 17

Section 6.08.   Payments Due on Saturdays, Sundays and Holidays. 18

Section 6.09.   Counterparts. 18

Section 6.10.   Applicable Law.. 18

Section 6.11.   No Personal Liability. 18

Section 6.12.   Arbitration. 18

Section 6.13.   Incorporation by Reference. 18

 

Exhibit A        Form of Series 2006A Note............................................................................. A-1

Exhibit B        Form of Series 2006B Note............................................................................. B-1

 


LOAN AGREEMENT

THIS LOAN AGREEMENT (the "Agreement"), made and entered into this 27th  day of July, 2006, by and between THE CITY OF LEESBURG, FLORIDA (the "City"), a municipal corporation of the State of Florida and its successors and assigns, and SunTrust Bank, a Georgia corporation authorized to do business in Florida, and its successors and assigns (the "Bank").

W I T N E S S E T H:

WHEREAS, capitalized terms used in these recitals and not otherwise defined shall have the meanings specified in Article I of this Agreement;

WHEREAS, the City, pursuant to the provisions of the Florida Constitution, Chapter 166, Florida Statutes, the Florida Constitution, the City Charter, Section 215.431, Florida Statutes, and any other applicable provisions of law (all of the foregoing, collectively, the "Act"), and Resolution No. _______________, adopted by the City on July 24, 2006, is authorized to borrow money, issue bonds, notes or other obligations for the City's public purpose; and

WHEREAS, in response to a request for proposal by the City regarding an intended borrowing to finance the City's cost of acquisition of water and/or sewer systems, including, without limitation, acquisition of the Plantation at Leesburg water and/or sewer systems, and the improvement, construction and equipping of improvements, additions or expansions (collectively, the "Project") to the City's water system, sewer system, and gas system (collectively, the "System"), and related costs of issuance, the Bank submitted its commitment, dated July 16, 2006, to the City (the "Commitment"); and

WHEREAS, the City has accepted the Commitment and the Bank is willing to purchase the Notes (as hereinafter defined), but only upon the terms and conditions of this Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

DEFINITION OF TERMS

Section 1.01.      Definitions

.  Capitalized terms used in this Agreement and not otherwise defined shall have the respective meanings as follows:

"Act" shall have the meaning assigned to that term in the recitals hereof.

"Additional Amount" shall have the meaning ascribed to such term in Section 3.03 hereof.

"Advance" shall mean the principal amount of each advance of principal of a Note made by the Bank to or on the order of the City pursuant to a Notice of Borrowing made by the City pursuant to Section 3.02(a) hereof.

"Agreement" shall mean this Loan Agreement and all modifications, alterations, amendments and supplements hereto made in accordance with the provisions hereof.

"Available Balance" shall mean $7,000,000, reduced by the aggregate principal amount of Advances previously made by the Bank to the Issuer.

"Bank" shall mean SunTrust Bank, and its successors.

"Bond Counsel" shall mean, Holland & Knight LLP, Lakeland, Florida, or any other attorney at law or firm of attorneys of nationally recognized standing in matters pertaining to the exclusion from gross income for federal income tax purposes of interest on obligations issued by states and political subdivisions hired by the City to render an opinion on such matters with regard to a Note.

"Business Day" shall mean any day other than a Saturday, a Sunday, or a day on which the office of the Bank at which payments on a Note are due is required, or authorized or not prohibited by law to close, and is closed.

"City" shall mean the City of Leesburg, Florida, a municipal corporation.

"City Clerk" shall mean the City Clerk of the City and such other person as may be duly authorized to act on his or her behalf.

"City Manager" shall mean the City Manager of the City and such other person as may be duly authorized to act on his or her behalf.

"Code" means the Internal Revenue Code of 1986, as amended, or any applicable corresponding provisions of any future laws of the United States of America relating to federal income taxation, and, except as otherwise provided herein or required by the context hereof, includes interpretations thereof contained or set forth in applicable regulations of the Department of the Treasury (including applicable final regulations and temporary regulations), the applicable rulings of the Internal Revenue Service (including published Revenue Rulings and private letter rulings) and applicable court decisions.

"Default Rate" shall mean _____________ provided such rate shall not exceed the highest rate of interest allowed by applicable law.

"Determination of Taxability" shall mean, with respect to a Note, any determination, decision or decree by the Commissioner or any District Director of the Internal Revenue Service, as such officers are identified by the Code, or any court of competent jurisdiction, or delivery of an opinion of Bond Counsel, that the interest payable under a Note is includable in the gross income (as defined in Section 61 of the Code) of the Holder as a result of the occurrence of a Taxable Event (as hereinafter defined).

"Event of Default" shall mean an Event of Default as defined in Section 5.01 of this Agreement.

"Final Maturity Date" shall mean the date on which all principal and all unpaid interest accrued on a Note shall be due and payable in full, which date shall be, if not sooner due to acceleration or prepayment, October 1, 2009, except as such date is otherwise extended in accordance with the provisions of Section 3.10 hereof.

"Fiscal Year" shall mean the 12-month period commencing October 1 of each year and ending on the succeeding September 30, or such other 12-month period as the City may designate as its "fiscal year" as permitted by law.

"Interest Payment Date", with respect to each Note, shall mean each April 1 and October 1, commencing April 1, 2007.

"Interest Rate Change Date" shall mean the first day of each month; provided, however, that if any such day is not a Business Day, the Interest Rate Change Date shall be the next succeeding Business Day.

"30-Day LIBOR Rate" shall mean the rate of interest equal to the rate per annum equal to the British Bankers Association 30-Day LIBOR Rate ("BBA LIBOR"), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as selected by the Bank from time to time).  The 30-Day LIBOR Rate shall be as determined for each Interest Rate Change Date at approximately 11:00 a.m. London time two (2) Business Days prior to the Interest Rate Change Date.  If such rate is not available at such time for any reason, then the rate for that interest period will be determined by such alternate method as reasonably selected by the Bank.

"Loan" shall refer to an amount equal to the Outstanding Principal Balance of both Notes, which shall not exceed $7,000,000, together with unpaid interest which has accrued thereon.

"Maximum Corporate Tax Rate" shall mean (a) on the date of issuance of the Notes, 35% and (b) thereafter, the maximum marginal rate of income tax imposed on corporations under Section 11 of the Code.

"Notes" shall mean, collectively, the Series 2006A Note and the Series 2006B Note.

"Note Rate" shall mean, with respect to each Note, the relevant Tax Exempt Rate, as modified by any adjustments described in Section 3.03 hereof.  The Note Rate shall be calculated on the basis of a 360-day year of twelve 30-day months.

"Noteholder" or "Holder" shall mean the Bank as the holder of the Notes and any subsequent registered holder of either of the Notes.

"Outstanding Principal Balance" shall mean the sum of all Advances under both Notes, less the sum of all principal payments, whether scheduled or by earlier redemption, on the Notes.

"Pledged Funds" means (i) the Pledged Revenues, junior and subordinate in all respects to the Senior Bonds and all parity payment obligations (including, without limitation, Hedge Obligations (as defined in the Senior Bond Resolution)), issued or incurred under the Senior Bond Resolution, and (ii) the first available proceeds of Senior Bonds issued hereafter, less costs of issuance thereof.

"Pledged Revenues" shall have the meaning ascribed thereto in the Senior Bond Resolution.

"Project" shall have the meaning set forth in the "Whereas" clauses to this Agreement.

"Rebate Amount" means the excess of the future value, as of a computation date, of all receipts on all nonpurpose investments (as defined in Section 1.148-1(b) of the Income Tax Regulations) over the future value, as of that date, of all payments on nonpurpose investments, all as provided in the Income Tax Regulations implementing Section 148 of the Code.

"Resolution" shall mean Resolution No. _______________, adopted at a meeting of the City Commission on July 24, 2006 which, among other things, authorized and confirmed the borrowing of the Loan and execution and delivery of this Agreement and the issuance of the Notes.

"Senior Bond Resolution" means Resolution No. 7143 adopted by the City on June 14, 2004, as the same may be amended and supplemented by its terms.

"Senior Bonds" means the City's Utility System Revenue Bonds, Series 2004 and any Additional Bonds hereafter issued pursuant to the Senior Bond Resolution.

"Series 2006A Note" shall mean the Utility System Subordinated Revenue Bond Anticipation Note, Series 2006A issued by the City under this Agreement in the form attached hereto as Exhibit A.

"Series 2006B Note" shall mean the Utility System Subordinated Revenue Bond Anticipation Note, Series 2006B issued by the City under this Agreement in the form attached hereto as Exhibit B.

"Taxable Event" shall mean an event which shall cause the interest received or payable under a Note to become includable for federal income tax purposes in the gross income of the Holder as a consequence of any act, omission or event whatsoever, other than an act, omission or event caused by the Holder, and regardless of whether the same was within or beyond the control of the City.  A Taxable Event shall be deemed to have occurred as of the earliest date on which interest became includable in the gross income of the Holder for federal income tax purposes.

"Taxable Period" shall have the meaning ascribed to such term in Section 3.03.

"Taxable Rate" shall have the meaning ascribed thereto in Section 3.03 hereof.

"Tax Exempt Rate" shall mean, with respect to the Series 2006A Note, ______% per annum (determined at the close of business three days prior to the date of issuance of the Series 2006A Note based on (i) 77% of the offered side of the 2-year U.S. Dollar Swap Curve, as published on Bloomberg, plus (ii) 0.24%); and with respect to the Series 2006B Note, (i) 77% of the 30-Day LIBOR Rate (determined initially at the close of business three days prior to the date of issuance of the Series 2006B Note and adjusted thereafter on each Interest Rate Change Date as herein provided) plus (ii) 0.26%.

Section 1.02.      Interpretation

.  Unless the context clearly requires otherwise, words of masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa, and words of the singular number shall be construed to include correlative words of the plural number and vice versa.  Any capitalized terms used in this Agreement not herein defined shall have the meaning ascribed to such terms in the Resolution.  This Agreement and all the terms and provisions hereof shall be construed to effectuate the purpose set forth herein and to sustain the validity hereof.

Section 1.03.      Titles and Headings

.  The titles and headings of the Articles and Sections of this Agreement, which have been inserted for convenience of reference only and are not to be considered a part hereof, shall not in any way modify or restrict any of the terms and provisions hereof, and shall not be considered or given any effect in construing this Agreement or any provision hereof or in ascertaining intent, if any question of intent should arise.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE PARTIES

Section 2.01.      Representations and Warranties of City

.  The City represents and warrants to the Bank as follows:

(a)                Existence.  The City is a municipal corporation of the State of Florida, duly created and validly existing under the laws of the State of Florida, with full power to enter into this Agreement, to perform its obligations hereunder and to issue and deliver the Notes to the Bank.  The making, execution and performance of this Agreement on the part of the City and the issuance and delivery of the Notes have been duly authorized by all necessary action on the part of the City and will not violate or conflict with the Act, or any agreement, indenture or other instrument by which the City or any of its material properties is bound.

(b)               Validity, Etc.  This Agreement, the Notes and the Resolution are or will be valid and binding obligations of the City enforceable against the City in accordance with their respective terms, except to the extent that enforceability may be subject to valid bankruptcy, insolvency, financial emergency, reorganization, moratorium or similar laws relating to or from time to time affecting the enforcement of creditors' rights and except to the extent that the availability of certain remedies may be precluded by general principles of equity.

(c)                No Financial Material Adverse Change.  No material adverse change in the financial condition of the City or its System has occurred since the audited financial statements of the City for its year ended September 30, 2004 and the subsequent 2005 unaudited financial statements of the City previously provided to the Bank.

(d)               Powers of City.  The City has the legal power and authority to pledge the Pledged Funds to the repayment of the Loan as described herein and to spend the Loan proceeds drawn hereunder on the Project.  The Notes and the payment obligations of the City hereunder and thereunder shall constitute "Subordinate Debt" within the meaning and contemplation of the Senior Bond Resolution.

(e)       Authorizations, etc.  No authorization, consent, approval, license, exemption of or registration or filing with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, has been or will be necessary for the valid execution, delivery and performance by the City of this Agreement, the Notes and the related documents, except such as have been obtained, given or accomplished.

 

Section 2.02.      Covenants of the City

.  The City covenants as follows:

 

(a)                The City will furnish to the Bank (i) within 270 days following the end of each Fiscal Year, a comprehensive annual financial report of the City for such Fiscal Year, which shall include a balance sheet and income statement as of the end of such Fiscal Year, and an audit report of an independent CPA; provided that, with respect to Fiscal Year 2005, the City will furnish its comprehensive annual financial report and audit report to the Bank within 30 days following the date on which the same are first presented or made available to the City Commission of the City.

(b)               For purposes of complying with the rate covenant set forth in Section 11.05 of the Senior Bond Resolution, the City shall comply with such covenant taking into account for such purposes 100% of the scheduled debt service due under the Notes and this Agreement in the relevant Bond Year (as defined in the Senior Bond Resolution).

Section 2.03.      Representations and Warranties of Bank

.  The Bank represents and warrants to the City as follows:

(a)                Existence.  The Bank is a Georgia banking corporation, authorized to do business in the State of Florida, with full power to enter into this Agreement, to perform its obligations hereunder and to make the Loan.  The performance of this Agreement on the part of the Bank and the making of the Loan have been duly authorized by all necessary action on the part of the Bank and will not violate or conflict with applicable law or any material agreement, indenture or other instrument by which the Bank or any of its material properties is bound.

(b)               Validity.  This Agreement is a valid and binding obligation of the Bank enforceable against the Bank in accordance with its terms, except to the extent that enforceability may be subject to valid bankruptcy, insolvency, financial emergency, reorganization, moratorium or similar laws relating to or from time to time affecting the enforcement of creditors' rights (and specifically creditors' rights as the same relate to banks) and except to the extent that the availability of certain remedies may be precluded by general principles of equity.

(c)                Knowledge and Experience.  The Bank (i) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of making the Loan and investing in the Notes, (ii) has received and reviewed such financial information concerning the City and the City's System as it has needed in order to fairly evaluate the merits and risks of making the Loan and investing in the Notes; and (iii) is purchasing the Notes as an investment for its own account and not with a view toward resale to the public.

ARTICLE III

THE NOTES

Section 3.01.      Purpose and Use

.  On the date of this Agreement, the Bank shall make available to the City the Loan.  The total principal amount of the Loan that may be incurred under this Agreement shall not exceed Seven Million Dollars ($7,000,000).  The proceeds available under this Agreement shall be used solely to finance the Project and to pay costs of issuing the Notes.

Section 3.02.      The Notes

.  The Notes shall each be substantially in the form set forth as Exhibit "A" and "B," respectively, to this Agreement.  The general terms of the Notes shall be as follows:

(a)                Amount of Notes.  The aggregate principal amount of both Notes is expressly limited to not exceeding Seven Million Dollars ($7,000,000).  No Advances shall be made subsequent to October 1, 2009.  Each Advance shall constitute proceeds of the Note under which such Advance was made.  Each Advance shall be provided by the Bank upon receipt of written notice of the City executed by the Mayor or Vice Mayor and the City Manager of the City or other authorized staff of the City in substantially the form of the draw request included as part of the closing transcript for the Notes ("Notice of Borrowing"), and each such Notice of Borrowing shall indicate whether the Advance is to be made under the Series 2006A Note or the Series 2006B Note.  Upon receipt of a Notice of Borrowing, the Bank shall, unless the Advance requested does not comply with the terms of this Agreement or an Event of Default exists hereunder, fund the Advance requested prior to noon not later than the fifth Business Day after receipt of the Notice of Borrowing or such later date as is specified in the Notice of Borrowing (or, in the case of the initial Advance hereunder in an expected amount of $4,000,000, the date of closing of this Agreement and the Notes) (each, an “Advance Date”).  On the Advance Date, the Bank shall make available the amount of the Advance requested in federal or other immediately available funds for the account of the City specified in the Notice of Borrowing.  A Notice of Borrowing may be revoked by the City upon delivery of a written notice revoking such Notice of Borrowing to the Bank not later than 5:00 p.m. on the date preceding the Advance Date.  The amount of any Advance requested shall not exceed the then Available Balance.

(b)               Interest.  Each Note shall bear interest at the applicable Note Rate.  Interest on each Note shall be calculated and shall accrue at the applicable Note Rate only on the Outstanding Principal Balance of the respective Note (with respect to each Advance, from the date of such Advance) and shall be payable on each Interest Payment Date from the most recent date to which interest has been paid, or from the Closing Date in the case of the first interest payment, in arrears.  Upon the occurrence of one or more of the events specified in Section 3.03 of this Agreement, the Note Rate shall be adjusted as therein provided.  Interest on each Note shall be computed on the basis of twelve, 30-day months and a 360-day year.

(c)                Prepayments.  Each Note shall be subject to prepayment at the option of the City, in whole or in part and at any time on any Business Day, from any legally available monies at a prepayment price of 100% of the principal amount to be redeemed, plus accrued interest to the prepayment date.  Any prepayments shall be applied first to accrued interest, then to other amounts owed the Bank and finally to principal last maturing under the relevant Note.

(d)               Principal Payments.  The Outstanding Principal Balance of both Notes shall be due and payable by the City to the Bank on the Final Maturity Date.

Section 3.03.      Adjustments to Note Rate

The Note Rate with respect to each Note shall be subject to adjustment by the Holder only as hereinafter described.  In establishing the interest rate payable on each Note, the Holder has taken into consideration:  (a) the then current Maximum Corporate Tax Rate, (b) that each Note will not be treated as a "qualified tax-exempt obligation" under Section 265 of the Code and (c) other factors which affect after-tax yield to the Holder.  Should there be future changes in the Code or related regulations which affect the after-tax yield to the Holder (a "Yield Adjustment Event") on a Note or if there shall be a Determination of Taxability with respect to a Note, the Holder may adjust the Note Rate for such Note in order to maintain the same after-tax yield as in effect on the dated date of such Note.  Such adjusted Note Rate shall for purposes hereof be the "Taxable Rate".  In the event of a Determination of Taxability, or a Yield Adjustment Event, as the case may be, with respect to a Note, the interest rate on such Note shall be changed to the Taxable Rate effective retroactively to the date on which such Determination of Taxability or Yield Adjustment Event was made.  Immediately upon a Determination of Taxability or Yield Adjustment Event with respect to a Note, the City agrees to pay to any Holder of such Note the Additional Amount (as defined herein). "Additional Amount" means (i) the difference between (A) interest on such Note for the period commencing on the date on which the interest on such Note (or portion thereof) loses its "tax-exempt" status or such change in the Code or related regulations becomes effective to interest on such Note and ending on the earlier of the date such Note ceased to be outstanding or such adjustment is no longer applicable to such Note (the "Taxable Period") at a rate per annum equal to the Taxable Rate as adjusted from time to time on the same dates and in the same manner as the Note Rate on such Note was or would be adjusted pursuant to the provisions of such Note, and (B) the aggregate amount of interest payable on such Note for the Taxable Period under the provisions of such Note without considering the Determination of Taxability or Yield Adjustment Event, as the case may be, plus (ii) any penalties and interest paid or payable by the Noteholder to the Internal Revenue Service by reason of such Determination of Taxability or Yield Adjustment Event with respect to such Note.

Section 3.04.      Compliance with Section 215.84

.  The City represents, warrants, and covenants that the Note Rate for each Note, as currently calculated in accordance with Section 215.84, Florida Statutes, is in compliance with Section 215.84, Florida Statutes.

Section 3.05.      Conditions Precedent to Issuance of Notes

.  Prior to or simultaneously with the initial Advance on the Notes, there shall be filed with the Bank the following, each in form and substance reasonably acceptable to the Bank:

(a)                an opinion of the City Attorney substantially to the effect that (i) the Resolution has been duly adopted and this Agreement and the Notes have been duly authorized, executed and delivered by the City and each constitutes a valid, binding and enforceable agreement of the City in accordance with their respective terms, except to the extent that the enforceability of the rights and remedies set forth herein may be limited by bankruptcy, insolvency, financial emergency or other laws affecting creditors' rights generally or by usual equity principles; (ii) the City's execution, delivery and performance of this Agreement and execution and issuance of the Notes are not subject to any authorization, consent, approval or review of any governmental body, public officer or regulatory authority not heretofore obtained or effected, and no taxes are payable in connection therewith; (iii) the execution, issuance and delivery of the Notes have been duly and validly authorized by the City, and the Notes constitute valid and binding special obligations of the City enforceable in accordance with their terms; (iv) the City (A) is a municipal corporation duly organized and validly existing under the laws of the State of Florida, and (B) has power and authority to adopt the Resolution, to execute and deliver this Agreement, to execute and deliver the Notes, and to consummate the transactions contemplated by such instruments; (v) the execution, delivery and performance of the Notes and this Agreement, and compliance with the terms thereof and hereof, under the circumstances contemplated hereby, do not and will not in any material respect conflict with, or constitute on the part of the City a breach or default under, any indenture, mortgage, deed of trust, agreement or other instrument to which the City or to which its properties are subject or conflict with, violate or result in a breach of any existing law, administrative rule or regulation, judgment, court order or consent decree to which the City or its properties are subject; (vi) to the best of such counsel's knowledge, there is no claim, action, suit, proceeding, inquiry, investigation, litigation or other proceeding, at law or in equity, pending or threatened in any court or other tribunal, state or federal (W) restraining or enjoining, or seeking to restrain or enjoin, the issuance, sale, execution or delivery of either Note, (X) in any way questioning or affecting the validity or enforceability of any provision of this Agreement, the Notes, or the Resolution, (Y) in any way questioning or affecting the validity of any of the proceedings or authority for the authorization, sale, execution or delivery of either Note, or of any provision made or authorized for the payment thereof, or (Z) questioning or affecting the organization or existence of the City or the right of any of its officers to their respective offices; (vii) the City has the legal power to acquire or otherwise make the capital improvements that comprise the Project and to pay associated costs of issuance, to grant a lien on the Pledged Funds as described herein and in the Resolution; and (viii) all conditions contained in the ordinances and resolutions of the City  precedent to the issuance of the Notes have been complied with.

(b)               an opinion of Bond Counsel (who may rely on opinion of the City Attorney), substantially to such effect that such counsel is of the opinion, subject to customary assumptions and limitations, that:  (i) this Loan Agreement constitutes a valid and binding obligation of the City enforceable upon the City in accordance with its terms; (ii) each Note is a valid and binding special obligation of the City enforceable in accordance with its terms, payable solely from the sources provided therefor in this Loan Agreement; and (iii) assuming compliance by the City with certain covenants relating to requirements contained in the Code, interest on each Note is excluded from gross income for federal income tax purposes.

(c)                a copy of a completed and executed Form 8038-G to be filed with the Internal Revenue Service by the City;

(d)               a duly completed and executed Notice of Borrowing from the City, with respect to the initial Advance by the Bank to the City under this Agreement in a currently anticipated amount of $4,000,000, payable at closing;

(e)                the original executed Notes and Agreement and a certified copy of the Resolution and the Senior Bond Resolution; and

(f)                 such other documents as the Bank reasonably may request (including, without limitation, appropriate completed Florida Division of Bond Finance forms).

When the documents and items mentioned in clauses (a) through (e), inclusive, of this Section shall have been filed with the Bank, and when the Notes shall have been executed as required by this Agreement, and all conditions of the Resolution have been met, the City shall deliver the Notes to or upon the order of the Bank, but only against the City's receipt of the initial Advance.

Section 3.06.      Registration of Transfer; Assignment of Rights of Bank

.  The City shall keep at the office of the City Clerk in the City's records the registration of the Notes and the registration of transfers of the Notes as provided in this Agreement.  The transfer of the Notes may be registered only upon the books kept for the registration of the Notes and registration of transfer thereof upon surrender thereof to the City together with an assignment duly executed by the Bank or its attorney or legal representative in the form of the assignment set forth on the form of the Notes attached as Exhibit A to this Agreement; provided, however, that the Notes may be transferred only in whole and not in part.  In the case of any such registration of transfer, the City shall execute and deliver in exchange for such Note a new Note registered in the name of the transferee.  In all cases in which a Note shall be transferred hereunder, the City shall execute and deliver at the earliest practicable time a new Note on the same series in accordance with the provisions of this Agreement.  The City may make a charge for every such registration of transfer of a Note sufficient to reimburse it for any tax or other governmental charges required to be paid with respect to such registration of transfer, but no other charge shall be made for registering the transfer hereinabove granted.  Each Note shall be issued in fully registered form and shall be payable in any lawful coin or currency of the United States.

The registration of transfer of each Note on the registration books of the City shall be deemed to effect a transfer of the rights and obligations of the Bank under this Agreement to the transferee.  Thereafter, such transferee shall be deemed to be the Bank under this Agreement and shall be bound by all provisions of this Agreement that are binding upon the Bank.  The City and the transferor shall execute and record such instruments and take such other actions as the City and such transferee may reasonably request in order to confirm that such transferee has succeeded to the capacity of Bank under this Agreement and the Notes.

The registered owner of each Note is hereby granted power to transfer absolute title thereof by assignment thereof to a bona fide purchaser for value (present or antecedent) without notice of prior defenses or equities or claims of ownership enforceable against such owner's assignor or any person in the chain of title and before the maturity of each Note; provided, however, that a Note may be transferred only in whole and not in part and provided further, that no transfer shall be permitted absent the City's (and the Bank's) receipt of a certificate in form and substance similar to the one included as part of Exhibit A hereto from such proposed transferee.  Every prior registered owner of a Note shall be deemed to have waived and renounced all of such owner's equities or rights therein in favor of every such bona fide purchaser, and every such bona fide purchaser shall acquire absolute title thereto and to all rights represented thereby.

In the event any Note is mutilated, lost, stolen, or destroyed, the City shall execute a new Note of like series, date, and denomination as that mutilated, lost, stolen or destroyed, provided that, in the case of any mutilated Note, such mutilated Note shall first be surrendered to the City, and in the case of any lost, stolen, or destroyed Note, there first shall be furnished to the City evidence of such loss, theft or destruction together with an indemnity satisfactory to it.

Section 3.07.      Ownership of the Notes

.  The person in whose name a Note is registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of a Note shall be made only to the registered owner thereof or such owner's legal representative.  All such payments shall be valid and effectual to satisfy and discharge the liability upon a Note, and interest thereon, to the extent of the sum or sums so paid.

Section 3.08.      Use of Proceeds of Notes Permitted Under Applicable Law

.  The City represents, warrants and covenants that the proceeds of the Notes will be used solely for the Project and costs of issuance of the Notes, and that such use is permitted by applicable law.

Section 3.09.      Authentication

.  Until each Note shall have endorsed thereon a certificate of authentication substantially in the form set forth in Exhibit A or Exhibit B, respectively, duly executed by the manual signature of the registrar as authenticating agent, it shall not be entitled to any benefit or security under this Loan Agreement.  Each Note shall not be valid or obligatory for any purpose unless and until such certificate of authentication shall have been duly adopted by the registrar, and such certificate of the registrar upon such Note shall be conclusive evidence that such Note has been duly authenticated and delivered under this Loan Agreement.

Section 3.10.      Ten Year Term Out

.  (a)  In the event that the Outstanding Principal Balance of both Notes has not been repaid in full (whether through the issuance of Senior Bonds and application of related proceeds or otherwise) by October 1, 2009, the City shall have the option (exercised by written notice delivered to the Bank) to extend the Final Maturity Date of both Notes to October 1, 2019 (any such extension of the Notes, an “Extension Event”).

            (b)       Notwithstanding anything in this Agreement or either Note to the contrary, following the occurrence of an Extension Event, effective as of October 1, 2009:

(i)         The Final Maturity Date of each Note shall be extended to October 1, 2019.

(ii)        The definition of “Pledged Funds” in this Agreement shall be deemed amended and restated to read as follows in its entirety:

"Pledged Funds" means the Pledged Revenues, junior and subordinate in all respects to the Senior Bonds and all parity payment obligations (including, without limitation, Hedge Obligations (as defined in the Senior Bond Resolution)), incurred under the Senior Bond Resolution.

(iii)       Section 4.04 of this Agreement shall be deemed amended and restated to read as follows in its entirety:

Section 4.04.  Covenant to Not Issue Senior Bonds.  The City hereby covenants that it shall not issue Senior Bonds (other than Senior Bonds issued solely to refund other Senior Bonds in order to realize debt service savings) under the Senior Bond Resolution unless prior thereto, or concurrently therewith, the City shall have repaid in full all amounts due to the Bank under the Notes and this Agreement.

(iv)       The definition of “Tax Exempt Rate” in this Agreement shall be deemed amended and restated to read as follows in its entirety:

"Tax Exempt Rate" shall mean, with respect to the Series 2006A Note, the fixed rate per annum (determined at the close of business three days prior to October 1, 2009 based on (i) 77% of the offered side of the 5-year U.S. Dollar Swap Curve, as published on Bloomberg, plus (ii) 0.64%); and with respect to the Series 2006B Note, (i) 77% of the 30-Day LIBOR Rate (determined at the close of business three days prior to October 1, 2009 and adjusted thereafter on each Interest Rate Change Date as herein provided) plus (ii) 0.51%.

(c)        Following the occurrence of an Extension Event, the City and the Bank shall cooperate in good faith to issue replacement notes pursuant to this Agreement, in substitution for the originally issued Notes, reflecting the new terms of the Notes consistent with the amendments and modifications thereto deemed effective pursuant to this Section 3.10.

ARTICLE IV

COVENANTS OF THE CITY

Section 4.01.      Performance of Covenants

.  The City covenants that it will perform faithfully at all times its covenants, undertakings and agreements contained in this Agreement and the Notes or in any proceedings of the City relating to the Loan.

Section 4.02.      Payment of Notes

(a)                The City covenants that it will promptly pay the principal of and interest on the Notes at the place, on the dates and in the manner provided herein and in the Notes, in accordance with the terms thereof.  The City does hereby irrevocably pledge (until repayment) the Pledged Funds as security for the repayment of the Notes.

(b)               The Notes will be special obligations of the City secured solely by the Pledged Funds and is payable from the Pledged Funds as provided in this Agreement.  The Notes will not constitute a general debt, liability or obligation of the City or the State of Florida or any political subdivision thereof within the meaning of any constitutional or statutory provision.  Neither the faith and credit nor the taxing power of the City or of the State of Florida or any political subdivision thereof is pledged to the payment of the principal of or interest on the Notes and no Noteholder shall never have the right to compel any exercise of any ad valorem taxing power of the City or of the State of Florida or any political subdivision thereof, directly or indirectly to enforce such payment.  The Notes shall not constitute a lien upon any property of the City except upon the Pledged Funds.  The lien on the Pledged Revenues granted herein securing the Notes and the other obligations of the City contained in this Agreement and the Resolution shall be junior and subordinate in all respects to the Senior Bonds and all parity payment obligations (including, without limitation, Hedge Obligations) incurred under the Senior Bond Resolution.  The Notes and the payment obligations of the City under this Agreement and the Resolution shall constitute "Subordinate Debt" within the meaning and contemplation of the Senior Bond Resolution.

Section 4.03.      Tax Covenant

.  In addition to any other requirements contained in this Loan Agreement, the City hereby covenants and agrees, for the benefit of the Holders from time to time of the Notes to comply with the requirements contained in Section 103 and Part IV of Subchapter B of Chapter 1 of Subtitle A of the Code to the extent necessary to preserve the exclusion from gross income for federal income tax purposes of interest on the Notes.  Specifically, without intending to limit in any way the generality of the foregoing, the City covenants and agrees:

(a)        to make or cause to be made all necessary determinations and calculations of the Rebate Amount and required payments of the Rebate Amount;

(b)        to set aside sufficient moneys from the Pledged Funds or other legally available funds of the City, to timely pay the Rebate Amount to the United States of America;

(c)        to pay the Rebate Amount to the United States of America from the Pledged Funds or from any other legally available funds, at the times and to the extent required pursuant to Section 148(f) of the Code;

(d)        to maintain and retain all records pertaining to the Rebate Amount with respect to the Notes and required payments of the Rebate Amount with respect to the Notes for at least six years after the final maturity of the Notes or such other period as shall be necessary to comply with the Code;

(e)        to refrain from taking any action that would cause the Notes to be classified as private activity bond under Section 141(a) of the Code;

(f)         to refrain from taking any action that would cause the Notes to become arbitrage bond under Section 148 of the Code.

The City understands and acknowledges that the foregoing covenants impose continuing obligations on the City that will exist as long as the requirements of Section 103 and Part IV of Subchapter B of Chapter 1 of Subtitle A of the Code are applicable to the Notes.

Notwithstanding, any other provision of this Loan Agreement, the obligation of the City to pay the Rebate Amount to the United States of America and to comply with the other requirements of this provision shall survive the payment in full of the Notes.

Section 4.04.      Commitment to Pay Notes from Pledged Funds

.  The City hereby covenants to apply the first legally available proceeds, less costs of issuance, received by the City from the issuance of Senior Bonds (other than Senior Bonds issued solely to refund other Senior Bonds in order to realize debt service savings) to the payment of the Notes.

Section 4.05.      Financial Covenants

.  The City will not without the prior written approval of the Bank issue any debt payable on a parity from the Pledged Funds with the Notes.

Section 4.06.      Compliance with Laws and Regulations

.  The City shall maintain compliance with all federal, state and local laws and regulations regarding the acquisition, construction and maintenance of the Project.

Section 4.07.      Covenant Regarding Use of Impact Fees to Pay Debt Service

.  Notwithstanding any provisions of this Agreement to the contrary, the amount of Capacity Charges, as that term is defined in the Senior Bond Resolution, used to pay debt service on the Notes shall never exceed the maximum amount thereof permitted by law to be used for such purpose.

ARTICLE V

EVENTS OF DEFAULT AND REMEDIES

Section 5.01.      Events of Default

.  Each of the following is hereby declared an "Event of Default:"

(a)                payment of the principal of the Notes shall not be made within five (5) Business Days of the date when the same shall become due and payable;

(b)               payment of any installment of interest on the Notes shall not be made within five (5) Business Days of the date when the same shall become due and payable; or

(c)                the City shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Notes or in this Agreement and such default shall continue for 30 days after written notice shall have been given to the City by the Noteholder specifying such default and requiring the same to be remedied; provided, however, that if, in the reasonable judgment of the Noteholder, the City shall proceed to take such curative action which, if begun and prosecuted with due diligence, cannot be completed within a period of 30 days, then such period shall be increased to such extent as shall be reasonably necessary in the reasonable judgment of the Noteholder to enable the City to diligently complete such curative action; or

(d)               the City defaults in the due and punctual payment of any other obligation or evidence of indebtedness which is secured in whole or in part by a pledge of or payable from the Pledged Funds or that is a general obligation of the City; or

(e)                any representation or warranty of the City contained in this Agreement or in any certificate or other closing document executed and delivered by the City in connection with the closing of the Loan shall prove to have been untrue in any material respect when executed and delivered, thereby adversely impairing the security for the Notes; or

(f)                 any proceedings are instituted with the consent or acquiescence of the City, for the purpose of effecting a compromise between the City and its creditors or for the purpose of adjusting the claims of such creditors, pursuant to any federal or state statute now or hereinafter enacted; or

(g)                the City admits in writing its inability to pay its debts generally as they become due, or files a petition in bankruptcy or makes an assignment for the benefit of its creditors, declares a financial emergency or consents to the appointment of a receiver or trustee for itself or shall file a petition or answer seeking reorganization or any arrangement under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state thereof; or

(h)                the City is adjudged insolvent by a court of competent jurisdiction or is adjudged bankrupt on a petition of bankruptcy filed against the City, or an order, judgment or decree is entered by any court of competent jurisdiction appointing, without the consent of the City, a receiver or trustee of the City or of the whole or any part of its property and any of the aforesaid adjudications, orders, judgments or decrees shall not be vacated or set aside or stayed within 60 days from the date of entry thereof; or

(i)                  if, under the provisions of any law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the City or of the whole or any substantial part of its property and such custody or control shall not be terminated within 90 days from the date of assumption of such custody or control.

Section 5.02.      Exercise of Remedies

.  Upon the occurrence and during the continuance of an Event of Default, the Notes shall bear interest at the Default Rate and all payments made on a Note during any such period shall be applied first to interest and then to principal.  Upon the occurrence and during the continuance of an Event of Default, a Noteholder may proceed to protect and enforce its rights under the laws of the State of Florida or under this Agreement by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board or officer having jurisdiction, either for the specific performance of any covenant or agreement contained herein or in aid or execution of any power herein granted or for the enforcement of any proper legal or equitable remedy, as a Noteholder shall deem most effective to protect and enforce such rights.  Without limiting the generality of the foregoing, the Noteholder shall have the right to bring a mandamus action to require the City to perform its obligations under this Agreement.

In the enforcement of any remedy under this Agreement, to the extent permitted by law, a Noteholder shall be entitled to sue for, enforce payment of and receive any and all amounts then or during any default becoming, and at any time remaining, due from the City for principal, interest or otherwise under any of the provisions of this Agreement or of the Notes then unpaid, within interest on overdue payments of principal and interest (to the extent permitted by law) at the Default Rate, together with any and all costs and expenses of collection and of all proceedings hereunder and under the Notes (including, without limitation, reasonable legal fees in all proceedings, including administrative, appellate and bankruptcy proceedings), but payable from the Pledged Funds, without prejudice to any other right or remedy of the Noteholder, and to recover and enforce any judgment or decree against the City, but solely as provided herein and in a Note, for any portion of such amounts remaining unpaid and interest, costs, and expenses as above provided, and to collect (but only from the Pledged Funds) in any manner provided by law, the moneys adjudged or decreed to be payable.

Section 5.03.      Remedies Not Exclusive

.  No remedy herein conferred upon or reserved to a Noteholder is intended to be exclusive of any other remedy or remedies herein provided, and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder.

Section 5.04.      Waivers, Etc

.  No delay or omission of a Noteholder to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or any acquiescence therein; and every power and remedy given by this Agreement to a Noteholder may be exercised from time to time and as often as may be deemed expedient.

A Noteholder may waive any default which in its opinion shall have been remedied before the entry of final judgment or decree in any suit, action or proceeding instituted by it under the provisions of this Agreement or before the completion of the enforcement of any other remedy under this Agreement, but no such waiver shall be effective unless in writing and no such waiver shall extend to or affect any other existing or any subsequent default or defaults or impair any rights or remedies consequent thereon.

ARTICLE VI

MISCELLANEOUS PROVISIONS

Section 6.01.      Covenants of City, Etc.; Successors

.  All of the covenants, stipulations, obligations and agreements contained in this Agreement shall be deemed to be covenants, stipulations, obligations and agreements of the City to the full extent authorized or permitted by law, and all such covenants, stipulations, obligations and agreements shall be binding upon the successor or successors thereof from time to time, and upon any officer, board, commission, authority, agency or instrumentality to whom or to which any power or duty affecting such covenants, stipulations, obligations and agreements shall be transferred by or in accordance with law.

Section 6.02.      Term of Agreement

.  This Agreement shall be in full force and effect from the date hereof until the Notes and all other sums payable to the Bank hereunder have been paid in full.

Section 6.03.      Notice of Changes in Fact

.  Promptly after the City becomes aware of the same, the City will notify the Bank of (a) any changes in any material fact or circumstance represented or warranted by the City in this Agreement or in connection with the issuance of the Notes, and (b) any Event of Default or event which, with the passage of time, will become an Event of Default, under this Agreement, specifying in each case the nature thereof and what action the City has taken, is taking and/or proposes to take with respect thereto.

Section 6.04.      Amendments and Supplements

.  This Agreement may be amended or supplemented from time to time only by a writing duly executed by each of the City and the Noteholders.

Section 6.05.      Notices

.  Any notice, demand, direction, request or other instrument authorized or required by this Agreement to be given to or filed with the City or the Bank, shall be deemed to have been sufficiently given or filed for all purposes of this Agreement  if and when sent by certified mail, return receipt requested:

(a)                As to the City:

City of Leesburg, Florida

Post Office Box 490630 (34749)

501 West Meadow Street

Leesburg, Florida  34748

Attn:  City Manager

(b)               As to the Bank:

SunTrust Bank

Institutional and Governmental Lending Group

200 S. Orange Avenue, Tower 10
Orlando, Florida 32801

Attn: William C. Jones

or at such other address as shall be furnished in writing by any such party to the other, and shall be deemed to have been given as of the date so delivered or deposited in the United States mail.

Either party may, by notice sent to the other, designate a different or additional address to which notices under this Agreement are to be sent.

Section 6.06.      Benefits Exclusive

.  Except as herein otherwise provided, nothing in this Agreement, expressed or implied, is intended or shall be construed to confer upon any person, firm or corporation, other than the City and the Noteholder, any right, remedy or claim, legal or equitable, under or by reason of this Agreement or any provision hereof, this Agreement and all its provisions being intended to be and being for the sole and exclusive benefit of the City and the Noteholder.

Section 6.07.      Severability

.  In case any one or more of the provisions of this Agreement, any amendment or supplement hereto or of a Note shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of this Agreement, any amendment or supplement hereto or the Notes, but this Agreement, any amendment or supplement hereto and such Note shall be construed and enforced at the time as if such illegal or invalid provisions had not been contained therein, nor shall such illegality or invalidity or any application thereof affect any legal and valid application thereof from time to time.  In case any covenant, stipulation, obligation or agreement contained in such Note or in this Agreement shall for any reason be held to be in violation of law, then such covenant, stipulation, obligation, or agreement shall be deemed to be the covenant, stipulation, obligation or agreement of the City to the full extent from time to time permitted by law.

Section 6.08.      Payments Due on Saturdays, Sundays and Holidays

.  In any case where the maturity date or other due date for payment of interest on or principal of a Note shall not be a Business Day, then payment of such interest or principal shall be made on the next succeeding Business Day with the same force and effect as if paid on the maturity date or other due date of payment, and no interest on any such principal amount shall accrue for the period after such maturity date or other due date of payment.

Section 6.09.      Counterparts

.  This Agreement may be executed in any number of counterparts, each of which when so executed and delivered, shall be an original; but such counterparts shall together constitute but one and the same Agreement, and, in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart.

Section 6.10.      Applicable Law

.  This Agreement shall be governed exclusively by and construed in accordance with the applicable laws of the State of Florida.

Section 6.11.      No Personal Liability

.  Notwithstanding anything to the contrary contained herein or in a Note, or in any other instrument or document executed by or on behalf of the City in connection herewith, no stipulation, covenant, agreement or obligation of any present or future member of the City Council, officer, employee or agent of the City, officer, employee or agent of a successor to the City, in any such person's individual capacity, and no such person, in his or her individual capacity, shall be liable personally for any breach or non-observance of or for any failure to perform, fulfill or comply with any such stipulations, covenants, agreements or obligations, nor shall any recourse be had for the payment of the principal of or interest on the Notes or for any claim based thereon or on any such stipulation, covenant, agreement or obligation, against any such person, in his or her individual capacity, either directly or through the City or any successor to the City, under any rule or law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise and all such liability of any such person, in his or her individual capacity, is hereby expressly waived and released.

Section 6.12.      Arbitration

.  IN THE EVENT ANY DISPUTE SHOULD ARISE UNDER THIS AGREEMENT OR ANY OTHER ASPECT OF THE TRANSACTION REFLECTED IN THIS AGREEMENT BETWEEN THE BANK AND THE CITY, WHETHER OR NOT SPECIFICALLY RELATING TO THIS AGREEMENT, SAID DISPUTE WILL BE RESOLVED THROUGH BINDING ARBITRATION IN ORANGE COUNTY, FLORIDA, IN ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION.

Section 6.13.      Incorporation by Reference

.  All of the terms and obligations of the Resolution and the Exhibits hereto are hereby incorporated herein by reference as if all of the foregoing were fully set forth in this Agreement.  All recitals appearing at the beginning of this Agreement are hereby incorporated herein by reference.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first set forth herein.

 

SUNTRUST BANK

 

 

 

By:                                                              

Authorized Signatory

 

(SEAL)

 

 

 

 

ATTEST:


 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

City Clerk

 

 

CITY OF LEESBURG, FLORIDA

 

 

 

By:                                                              

Mayor

 

Approved as to form and correctness:

 

 

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

City Attorney

 

 

 

__________________________

 

 

 

By:                                                                   

Title:  Authorized Officer

 

 


EXHIBIT A

FORM OF SERIES 2006A NOTE

ANY HOLDER SHALL, PRIOR TO BECOMING A HOLDER, EXECUTE A PURCHASER'S CERTIFICATE IN THE FORM ATTACHED HERETO CERTIFYING, AMONG OTHER THINGS, THAT SUCH HOLDER IS AN "ACCREDITED INVESTOR" AS SUCH TERM IS DEFINED IN THE SECURITIES ACT OF 1933, AS AMENDED, AND REGULATION D THEREUNDER.

CITY OF LEESBURG, FLORIDA
UTILITY SYSTEM SUBORDINATED REVENUE

BOND ANTICIPATION NOTE, SERIES 2006A

Principal

Final Maturity Date

Note Rate

Dated Date

Not Exceeding $4,000,000

October 1, 2009, subject to extension under the Agreement

________%

July 27, 2006

The CITY OF LEESBURG, FLORIDA (the "City"), for value received, hereby promises to pay, solely from the Pledged Funds described in the within mentioned Agreement, to the order of SunTrust Bank, a Georgia banking corporation, or its successors or assigns (the "Holder"), at __________________________, ______________________________, Orlando, Florida, or at such other place as the Holder may from time to time designate in writing, all Principal advanced pursuant to this Note, together with interest thereon as hereinafter provided until the Final Maturity Date stated above or the date the principal amount of this Note is paid in the manner hereinafter set forth in any coin or currency of the United States of America which, at the time of payment, is legal tender for the payment of public and private debts, which payments shall be made to the Holder hereof by check mailed to the Holder at the address designated in writing by the Holder for purposes of payment or by bank wire or bank transfer as such Holder may specify in writing to the City or otherwise as the City and the Holder may agree.

All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement dated as of July 27, 2006, by and between the Holder and the City (as amended and supplemented, the "Agreement").

Interest on this Note shall be calculated and shall accrue at the Note Rate only on the Outstanding Principal Balance of the Note (with respect to each Advance, from the date of such Advance) and shall be payable on each Interest Payment Date from the most recent date to which interest has been paid, or from the Dated Date in the case of the first interest payment date, in arrears, on each April 1 and October 1, commencing April 1, 2007.  The aggregate Advances that are permitted under this Note are expressly limited in amount to not exceeding Four Million Dollars ($4,000,000).  The Note Rate may be adjusted in accordance with Section 3.03 of the Agreement.

The Holder shall provide to the City documentation to evidence any adjustment to the Note Rate and the calculations made in connection therewith.  Following the occurrence and during the continuance of any Event of Default, as defined in the Agreement, this Note shall bear interest at the Default Rate, as defined in the Agreement.  Interest on this Note shall be computed on the basis of a 360 day year of twelve, 30-day months.

The Note may be prepaid by the City in whole or in part at any time on any Business Day in such manner as shall be determined by the City from any legally available monies and as otherwise provided in Section 3.02(c) of the Agreement.  Any prepayments shall be applied as provided in the Agreement to the sums last maturing hereunder.

Notice having been given as aforesaid, the principal amount stated in such notice or the whole thereof, as the case may be, shall become due and payable on the prepayment date stated in such notice, together with interest accrued and unpaid to the prepayment date on the principal amount then being paid and the amount of principal and interest then due and payable shall be paid (i) in case the entire unpaid balance of the principal of this Note is to be paid, upon presentation and surrender of this Note to the office of the Holder, and (ii) in case only part of the unpaid balance of principal of this Note is to be paid, upon presentation of such Note at the office of the Holder, for notation thereon of the amount of principal and interest on this Note then paid.  If, on the prepayment date, funds for the payment of the principal amount to be prepaid, together with interest to the prepayment date on such principal amount, shall have been given to the Holder, as above provided, then from and after the prepayment date interest on such principal amount of this Note shall cease to accrue.  If said funds shall not have been so paid on the prepayment date, the principal amount of this Note shall continue to bear interest until payment thereof at the applicable Note Rate provided for herein and in the Agreement.

All payments made by the City hereon shall apply first to accrued interest, then to other charges due the Holder, and the balance thereof shall apply to the principal amount then due on this Note as provided in the Agreement.

This Note is authorized to be issued under the authority of and in full compliance with the Constitution and statutes of the State of Florida, including, particularly, Chapter 166, Florida Statutes, the Florida Constitution, the City Charter, Section 215.431, Florida Statutes, and other applicable provisions of law (collectively, the "Act"), the City's Resolution No. _______________ adopted on July 24, 2006 (the "Resolution"), and is subject to all terms and conditions of the Agreement and the Resolution.  Any term used in this Note and not otherwise defined shall have the meaning ascribed to such term in the Resolution or the Agreement, as the case may be.  This Note constitutes "Subordinate Debt" within the meaning and contemplation of the Senior Bond Resolution.  This Note is issued on a parity with the City’s Utility System Subordinated Revenue Bond Anticipation Note, Series 2006B.

Notwithstanding any provision in this Note to the contrary, in no event shall the interest contracted for, charged or received in connection with this Note (including any other costs or considerations that constitute interest under the laws of the State of Florida which are contracted for, charged or received) exceed the maximum rate of non-usurious interest allowed under the State of Florida as presently in effect and to the extent an increase is allowable by such laws, but in no event shall any amount ever be paid or payable by the City greater than the amount contracted for herein.  In the event the maturity of this Note is accelerated or prepaid in accordance with the provisions hereof, then such amounts that constitute payments of interest, together with any costs or considerations which constitute interest under the laws of the State of Florida, may never exceed an amount which would result in payment of interest at a rate in excess of that permitted by Section 215.84, Florida Statutes, as presently in effect and to the extent an increase is allowable by such laws; and excess interest, if any, shall be cancelled automatically as of the date of such acceleration, or, if theretofore paid, shall be credited on the principal amount of this Note unpaid, but such crediting shall not cure or waive any default under the Agreement or Resolution.

THIS NOTE, WHEN DELIVERED BY THE CITY PURSUANT TO THE TERMS OF THE AGREEMENT AND THE RESOLUTION, SHALL NOT BE OR CONSTITUTE AN INDEBTEDNESS OF THE CITY OR THE STATE OF FLORIDA (THE "STATE"), WITHIN THE MEANING OF ANY CONSTITUTIONAL, STATUTORY OR CHARTER LIMITATIONS OF INDEBTEDNESS, BUT SHALL BE PAYABLE SOLELY FROM THE PLEDGED FUNDS TO THE EXTENT AND IN THE MANNER PROVIDED IN THE AGREEMENT AND THE RESOLUTION.  THE HOLDER SHALL NEVER HAVE THE RIGHT TO COMPEL THE EXERCISE OF THE AD VALOREM TAXING POWER OF THE CITY OR THE STATE, OR TAXATION IN ANY FORM OF ANY PROPERTY THEREIN TO PAY THIS NOTE OR THE INTEREST THEREON.

Upon the occurrence of an Event of Default the Holder shall have such remedies as described in the Agreement.

The City hereby waives presentment, demand, protest and notice of dishonor.  This Note is governed and controlled by the Agreement and reference is hereby made thereto regarding interest rate adjustments, acceleration, and other matters.

[Remainder of Page Intentionally Left Blank]


IN WITNESS WHEREOF, the City has caused this Note to be signed by its Mayor, either manually or with facsimile signature, and the seal of the City to be affixed hereto or imprinted or reproduced hereon, and attested and countersigned by the City Clerk of the City, either manually or with facsimile signature, and this Note to be dated the Date of Issuance set forth above.

(SEAL)

 

 

 

 

ATTESTED AND COUNTERSIGNED:

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

City Clerk

 

 

CITY OF LEESBURG, FLORIDA

 

 

 

By:                                                              

Mayor

 

Approved as to form and correctness:

 

 

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

City Attorney

 

 

 


FORM OF CERTIFICATE OF AUTHENTICATION

Date of Authentication:

This Note is being delivered pursuant to the within mentioned Agreement.

 

CITY OF LEESBURG, FLORIDA

as Registrar

 

 

 

By:                                                                      

City Clerk

 


ASSIGNMENT

FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto ___________________________________________ (please print or typewrite name, address and tax identification number of assignee) _________________________________________ the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints ____________________________ Attorney to transfer the within Note on the books kept for registration thereof, with full power of substitution in the premises.

 

Name of Noteholder:                                                           

By:                                                                                          

 


PURCHASER'S CERTIFICATE

____________

 

City of Leesburg, Florida (the "City")

Leesburg, Florida

 

Holland & Knight LLP

Lakeland, Florida

 

Ladies and Gentlemen:

 

The undersigned, as a purchaser of the not exceeding $4,000,000 City of Leesburg, Florida Utility System Subordinated Revenue Bond Anticipation Note, Series 2006A (the "Note") dated July 27, 2006, consisting of one typewritten Note, hereby certifies that we have been provided (a) a copy of City of Leesburg Resolution No. _______________, adopted by the City on July 24, 2006, authorizing the issuance of the Note and awarding the sale of the Note to us (the "Resolution"), (b) the Loan Agreement dated as of July 27, 2006 between the City and us (the "Agreement"), (c) the legal opinions of Holland & Knight LLP ("Bond Counsel") and Fred Morrison ("City Attorney") of even date, and (d) such financial and general information respecting the Pledged Funds (as such term is defined in the Agreement) and the City, and the Note described above as we deem necessary to enable us to make an informed investment judgment with respect to the purchase of said Note and no inference should be drawn that we are relying on Bond Counsel or the City Attorney as to any such matters other than their respective legal opinions.

 

We hereby make the following representations, which representations may be relied upon by the City, the City Attorney, and by Bond Counsel:

 

A.        We are aware:

 

(i)         that investment in the Note involves various risks;

 

(ii)        that the Note is not a general obligation of the City; and

 

(iii)       that the principal or premium, if any, and interest on the Note is payable solely from the sources specified in the Resolution and in the Agreement.

 

B.        We understand that no official statement, offering memorandum or other form of offering document has been prepared or is being used in connection with the offering or sale of the Note (collectively, "Disclosure Documents"), but we have been afforded access to all documents and information we have requested in making our decision to purchase the Note and have had sufficient opportunity to discuss the business of the City with its officers, employees and others.  We have not requested any Disclosure Documents in connection with the sale of the Note.  We do not require any further information or data incident to our purchase of the Note.

 

C.        In purchasing the Note, we have relied solely upon our own investigation, examination, and evaluation of the City, the Pledged Funds and other relevant matters.

 

D.        We have knowledge and experience in financial and business matters and are capable of evaluating the merits and risks of our investment in the Note and have determined that we can bear the economic risk of our investment in the Note.

 

E.        We acknowledge the understanding that the Note is not being registered under the Securities Act of 1933, as amended or Chapter 517, Florida Statutes, and that the Resolution and Agreement are not being qualified under the Trust Indenture Act of 1939, as amended, and that the City shall have no obligation to effect any such registration or qualification.  We also acknowledge that we are an "accredited investor" within the meaning of Chapter 517, Florida Statutes and Regulation D of the 1933 Act.

 

F.         We are not acting as a bond house, broker or other intermediary, and are purchasing the Note as an investment for our own account and not with a present view to a resale or other distribution to the public.  The City may rely on this representation in its federal tax certificate.  Although we retain the right to transfer the Note in the future, we understand that the Note may not be readily tradable.

 

G.        The terms of the Note, as forth in the Note and the Agreement accurately reflect the terms of the Note we have agreed to purchase.

 

H.        We acknowledge that Bond Counsel and the City Attorney have not represented us on this transaction and that we are relying on them solely for the matters stated in their respective legal opinions of even date.

 

I.          We acknowledge that the Note will not be treated as a "qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the Code.

 

Signed as of the _____ day of __________, _____.

 

 

SUNTRUST BANK

 

 

By:                                                                              

       Authorized Officer


EXHIBIT B

FORM OF SERIES 2006B NOTE

ANY HOLDER SHALL, PRIOR TO BECOMING A HOLDER, EXECUTE A PURCHASER'S CERTIFICATE IN THE FORM ATTACHED HERETO CERTIFYING, AMONG OTHER THINGS, THAT SUCH HOLDER IS AN "ACCREDITED INVESTOR" AS SUCH TERM IS DEFINED IN THE SECURITIES ACT OF 1933, AS AMENDED, AND REGULATION D THEREUNDER.

CITY OF LEESBURG, FLORIDA
UTILITY SYSTEM SUBORDINATED REVENUE

BOND ANTICIPATION NOTE, SERIES 2006B

Principal

Final Maturity Date

Note Rate

Dated Date

Not Exceeding $3,000,000

October 1, 2009, subject to extension under the Agreement

Adjustable, as described below

July 27, 2006

The CITY OF LEESBURG, FLORIDA (the "City"), for value received, hereby promises to pay, solely from the Pledged Funds described in the within mentioned Agreement, to the order of SunTrust Bank, a Georgia banking corporation, or its successors or assigns (the "Holder"), at __________________________, ______________________________, Orlando, Florida, or at such other place as the Holder may from time to time designate in writing, all Principal advanced pursuant to this Note, together with interest thereon as hereinafter provided until the Final Maturity Date stated above or the date the principal amount of this Note is paid in the manner hereinafter set forth in any coin or currency of the United States of America which, at the time of payment, is legal tender for the payment of public and private debts, which payments shall be made to the Holder hereof by check mailed to the Holder at the address designated in writing by the Holder for purposes of payment or by bank wire or bank transfer as such Holder may specify in writing to the City or otherwise as the City and the Holder may agree.

All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement dated as of July 27, 2006, by and between the Holder and the City (as amended and supplemented, the "Agreement").

Interest on this Note shall be calculated and shall accrue at the Note Rate only on the Outstanding Principal Balance of the Note (with respect to each Advance, from the date of such Advance) and shall be payable on each Interest Payment Date from the most recent date to which interest has been paid, or from the Dated Date in the case of the first interest payment date, in arrears, on each April 1 and October 1, commencing April 1, 2007.  The aggregate Advances that are permitted under this Note are expressly limited in amount to not exceeding Three Million Dollars ($3,000,000).  The Note Rate may be adjusted in accordance with Section 3.03 of the Agreement.

The Holder shall provide to the City documentation to evidence any adjustment to the Note Rate and the calculations made in connection therewith.  Following the occurrence and during the continuance of any Event of Default, as defined in the Agreement, this Note shall bear interest at the Default Rate, as defined in the Agreement.  Interest on this Note shall be computed on the basis of a 360 day year of twelve, 30-day months.

The Note may be prepaid by the City in whole or in part at any time on any Business Day in such manner as shall be determined by the City from any legally available monies and as otherwise provided in Section 3.02(c) of the Agreement.  Any prepayments shall be applied as provided in the Agreement to the sums last maturing hereunder.

Notice having been given as aforesaid, the principal amount stated in such notice or the whole thereof, as the case may be, shall become due and payable on the prepayment date stated in such notice, together with interest accrued and unpaid to the prepayment date on the principal amount then being paid and the amount of principal and interest then due and payable shall be paid (i) in case the entire unpaid balance of the principal of this Note is to be paid, upon presentation and surrender of this Note to the office of the Holder, and (ii) in case only part of the unpaid balance of principal of this Note is to be paid, upon presentation of such Note at the office of the Holder, for notation thereon of the amount of principal and interest on this Note then paid.  If, on the prepayment date, funds for the payment of the principal amount to be prepaid, together with interest to the prepayment date on such principal amount, shall have been given to the Holder, as above provided, then from and after the prepayment date interest on such principal amount of this Note shall cease to accrue.  If said funds shall not have been so paid on the prepayment date, the principal amount of this Note shall continue to bear interest until payment thereof at the applicable Note Rate provided for herein and in the Agreement.

All payments made by the City hereon shall apply first to accrued interest, then to other charges due the Holder, and the balance thereof shall apply to the principal amount then due on this Note as provided in the Agreement.

This Note is authorized to be issued under the authority of and in full compliance with the Constitution and statutes of the State of Florida, including, particularly, Chapter 166, Florida Statutes, the Florida Constitution, the City Charter, Section 215.431, Florida Statutes, and other applicable provisions of law (collectively, the "Act"), the City's Resolution No. _______________ adopted on July 24, 2006 (the "Resolution"), and is subject to all terms and conditions of the Agreement and the Resolution.  Any term used in this Note and not otherwise defined shall have the meaning ascribed to such term in the Resolution or the Agreement, as the case may be.  This Note constitutes "Subordinate Debt" within the meaning and contemplation of the Senior Bond Resolution. This Note is issued on a parity with the City’s Utility System Subordinated Revenue Bond Anticipation Note, Series 2006A.

Notwithstanding any provision in this Note to the contrary, in no event shall the interest contracted for, charged or received in connection with this Note (including any other costs or considerations that constitute interest under the laws of the State of Florida which are contracted for, charged or received) exceed the maximum rate of non-usurious interest allowed under the State of Florida as presently in effect and to the extent an increase is allowable by such laws, but in no event shall any amount ever be paid or payable by the City greater than the amount contracted for herein.  In the event the maturity of this Note is accelerated or prepaid in accordance with the provisions hereof, then such amounts that constitute payments of interest, together with any costs or considerations which constitute interest under the laws of the State of Florida, may never exceed an amount which would result in payment of interest at a rate in excess of that permitted by Section 215.84, Florida Statutes, as presently in effect and to the extent an increase is allowable by such laws; and excess interest, if any, shall be cancelled automatically as of the date of such acceleration, or, if theretofore paid, shall be credited on the principal amount of this Note unpaid, but such crediting shall not cure or waive any default under the Agreement or Resolution.

THIS NOTE, WHEN DELIVERED BY THE CITY PURSUANT TO THE TERMS OF THE AGREEMENT AND THE RESOLUTION, SHALL NOT BE OR CONSTITUTE AN INDEBTEDNESS OF THE CITY OR THE STATE OF FLORIDA (THE "STATE"), WITHIN THE MEANING OF ANY CONSTITUTIONAL, STATUTORY OR CHARTER LIMITATIONS OF INDEBTEDNESS, BUT SHALL BE PAYABLE SOLELY FROM THE PLEDGED FUNDS TO THE EXTENT AND IN THE MANNER PROVIDED IN THE AGREEMENT AND THE RESOLUTION.  THE HOLDER SHALL NEVER HAVE THE RIGHT TO COMPEL THE EXERCISE OF THE AD VALOREM TAXING POWER OF THE CITY OR THE STATE, OR TAXATION IN ANY FORM OF ANY PROPERTY THEREIN TO PAY THIS NOTE OR THE INTEREST THEREON.

Upon the occurrence of an Event of Default the Holder shall have such remedies as described in the Agreement.

The City hereby waives presentment, demand, protest and notice of dishonor.  This Note is governed and controlled by the Agreement and reference is hereby made thereto regarding interest rate adjustments, acceleration, and other matters.

[Remainder of Page Intentionally Left Blank]


IN WITNESS WHEREOF, the City has caused this Note to be signed by its Mayor, either manually or with facsimile signature, and the seal of the City to be affixed hereto or imprinted or reproduced hereon, and attested and countersigned by the City Clerk of the City, either manually or with facsimile signature, and this Note to be dated the Date of Issuance set forth above.

(SEAL)

 

 

 

 

ATTESTED AND COUNTERSIGNED:

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

City Clerk

 

 

CITY OF LEESBURG, FLORIDA

 

 

 

By:                                                              

Mayor

 

Approved as to form and correctness:

 

 

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

City Attorney

 

 

 


FORM OF CERTIFICATE OF AUTHENTICATION

Date of Authentication:

This Note is being delivered pursuant to the within mentioned Agreement.

 

CITY OF LEESBURG, FLORIDA

as Registrar

 

 

 

By:                                                                      

City Clerk

 


ASSIGNMENT

FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto ___________________________________________ (please print or typewrite name, address and tax identification number of assignee) _________________________________________ the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints ____________________________ Attorney to transfer the within Note on the books kept for registration thereof, with full power of substitution in the premises.

 

Name of Noteholder:                                                           

By:                                                                                          

 


PURCHASER'S CERTIFICATE

____________

 

City of Leesburg, Florida (the "City")

Leesburg, Florida

 

Holland & Knight LLP

Lakeland, Florida

 

Ladies and Gentlemen:

 

The undersigned, as a purchaser of the not exceeding $3,000,000 City of Leesburg, Florida Utility System Subordinated Revenue Bond Anticipation Note, Series 2006B (the "Note") dated July 27, 2006, consisting of one typewritten Note, hereby certifies that we have been provided (a) a copy of City of Leesburg Resolution No. _______________, adopted by the City on July 24, 2006, authorizing the issuance of the Note and awarding the sale of the Note to us (the "Resolution"), (b) the Loan Agreement dated as of July 27, 2006 between the City and us (the "Agreement"), (c) the legal opinions of Holland & Knight LLP ("Bond Counsel") and Fred Morrison ("City Attorney") of even date, and (d) such financial and general information respecting the Pledged Funds (as such term is defined in the Agreement) and the City, and the Note described above as we deem necessary to enable us to make an informed investment judgment with respect to the purchase of said Note and no inference should be drawn that we are relying on Bond Counsel or the City Attorney as to any such matters other than their respective legal opinions.

 

We hereby make the following representations, which representations may be relied upon by the City, the City Attorney, and by Bond Counsel:

 

A.        We are aware:

 

(i)         that investment in the Note involves various risks;

 

(ii)        that the Note is not a general obligation of the City; and

 

(iii)       that the principal or premium, if any, and interest on the Note is payable solely from the sources specified in the Resolution and in the Agreement.

 

B.        We understand that no official statement, offering memorandum or other form of offering document has been prepared or is being used in connection with the offering or sale of the Note (collectively, "Disclosure Documents"), but we have been afforded access to all documents and information we have requested in making our decision to purchase the Note and have had sufficient opportunity to discuss the business of the City with its officers, employees and others.  We have not requested any Disclosure Documents in connection with the sale of the Note.  We do not require any further information or data incident to our purchase of the Note.

 

C.        In purchasing the Note, we have relied solely upon our own investigation, examination, and evaluation of the City, the Pledged Funds and other relevant matters.

 

D.        We have knowledge and experience in financial and business matters and are capable of evaluating the merits and risks of our investment in the Note and have determined that we can bear the economic risk of our investment in the Note.

 

E.        We acknowledge the understanding that the Note is not being registered under the Securities Act of 1933, as amended or Chapter 517, Florida Statutes, and that the Resolution and Agreement are not being qualified under the Trust Indenture Act of 1939, as amended, and that the City shall have no obligation to effect any such registration or qualification.  We also acknowledge that we are an "accredited investor" within the meaning of Chapter 517, Florida Statutes and Regulation D of the 1933 Act.

 

F.         We are not acting as a bond house, broker or other intermediary, and are purchasing the Note as an investment for our own account and not with a present view to a resale or other distribution to the public.  The City may rely on this representation in its federal tax certificate.  Although we retain the right to transfer the Note in the future, we understand that the Note may not be readily tradable.

 

G.        The terms of the Note, as forth in the Note and the Agreement accurately reflect the terms of the Note we have agreed to purchase.

 

H.        We acknowledge that Bond Counsel and the City Attorney have not represented us on this transaction and that we are relying on them solely for the matters stated in their respective legal opinions of even date.

 

I.          We acknowledge that the Note will not be treated as a "qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the Code.

 

Signed as of the _____ day of __________, _____.

 

 

SUNTRUST BANK

 

 

By:                                                                              

       Authorized Officer

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