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Resolution No. 21-24RESOLUTION NO. 21-24 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF ATLANTIC BEACH, FLORIDA; SUPPLEMENTING ORDINANCE NO. 15-21-16; AUTHORIZING THE ISSUANCE OF A $5,193,000 UTILITIES SYSTEM REVENUE REFUNDING BOND, SERIES 2021; AUTHORIZING AWARD OF THE BOND TO KEY GOVERNMENT FINANCE, INC. FOLLOWING SOLICITATION OF COMPETITIVE PROPOSALS; AUTHORIZING THE EXECUTION AND DELIVERY OF THE BOND AND THE LOAN AGREEMENT; DESIGNATING THE BOND AS A QUALIFIED TAX-EXEMPT OBLIGATION PURSUANT TO SECTION 265(b)(3)(B) OF THE INTERNAL REVENUE CODE; AUTHORIZING CERTAIN CITY OFFICIALS TO TAKE ALL NECESSARY ACTION IN CONNECTION WITH THE ISSUANCE OF THE BOND AND THE EXECUTION AND DELIVERY OF THE LOAN AGREEMENT AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Commission of the City of Atlantic Beach, Florida (the "City") has determined to refinance certain Refunded Bonds of the City and has enacted Ordinance No. 15- 21-16 (the "Ordinance") for such purpose; and; WHEREAS, the City has received competitive proposals from area financial institutions and has received a recommendation of its financial advisor to accept the proposal of Key Government Finance Inc. (the "Bondholder") as in the best interest of the City; NOW THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF ATLANTIC BEACH, FLORIDA: Section 1. AUTHORITY FOR THIS RESOLUTION. This resolution is adopted pursuant to the provisions of the Act, as defined in the Loan Agreement, and is supplemental to the Ordinance. Section 2. DEFINITIONS. All terms in this resolution shall have the meanings as defined in the Loan Agreement. Section 3. AWARD OF BOND; LOAN AGREEMENT. (A) Findings. The City reaffirms its prior findings that in accordance with the provisions of Part III, Chapter 218, Florida Statutes, a negotiated sale of the Bond is in the best interest of the City because of the flexibility available in structuring the Bond and its terms. (B) Award of Bond and Loan Agreement. The City has solicited proposals for purchase of the Bond and has determined that the proposal of the Bondholder, set forth by letter dated March 29, 2021 and attached hereto as Exhibit A, is the best proposal. Following evaluation of the responses received and negotiation with the offeror of the proposal most advantageous to the City, the City hereby authorizes and awards the sale of the Bond to the Bondholder, upon the terms set forth in the Bond, including but not limited to interest rate, interest payment dates, maturity dates and amounts, and terms of prepayment, as set forth in the 01486651-2 revised form of Loan Agreement attached hereto as Exhibit B, with such modifications to the terms of the Loan Agreement as are set forth therein. The revised form of Loan Agreement, attached hereto as Exhibit B, is hereby approved and the appropriate officials of the City are hereby authorized to execute and deliver the Loan Agreement to the Bondholder. The Bond shall be issued in substantially the form set forth in Exhibit A to the Loan Agreement and the appropriate officials of the City are hereby authorized and directed to execute and deliver the Bond to the Bondholder. Section 4. BANK QUALIFIED ISSUE. The City hereby designates the Bond to be a "qualified tax-exempt obligation" within the meaning of Section 265(b)(3)(B) of the Internal Revenue Code. Section 5. NECESSARY ACTION. The Mayor, City Manager, City Clerk, City Attorney and Bond Counsel are designated as the agents of the City in connection with the issuance and delivery of the Bond and the Loan Agreement and are authorized and empowered to take all actions and steps to execute and deliver any and all instruments, documents or contracts on behalf of the City which are necessary or desirable in connection with the execution and delivery of the Bond and the Loan Agreement, which are not inconsistent with the terms and provisions of the Ordinance and this Resolution. Section 6. EFFECTIVE DATE. This resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED by the City Commission of the City of Atlantic Beach, Florida at a regular meeting duly called and held this 10th day of May, 2021. CITY OF ATLANTIC BEACH, FLORIDA By: �rI4 len Glasser Mayor Approved as to form, sufficiency and correctness: By: V v'j re a M. D City Attorney ATTEST: By: Donna L. Bartle City Clerk 01486651-2 2 EXHIBITS TO RESOLUTION Exhibit A — March 29, 2021 Proposal of Key Government Finance Inc. Exhibit B — Loan Agreement 01486651-2 Exhibit A March 29, 2021 Proposal of Key Government Finance Inc. 01486651-2 EXHIBIT A Ciry of Atlantic Beach, rL M:ffltry System Revenue Refu ndhng Bonds,, Series 2021 Summary of Terms and Conditions Mearrch 29, 2021 This Financing proposal is provided for discussion purposes only and does not represent a commitment from Key Government Finance, Inc. (`KGF'). This proposal and its terms are submitted on a confidential basis and shall not be disclosed to third parties (other than the Borrower's officers, directors, employees and advisors charged with reviewing and/or implementing the transactions contemplated hereby) without KGF's consent. This proposal is intended as an outline of certain material terms of the Facility and does not purport to summarize all of the conditions, covenants, representations, warranties and other provisions which would be contained in definitive documentation for the Facility contemplated hereby. Key Government Finance, Inc., ("Lender") is pleased to provide the following term sheet for a direct purchase financing structure to the City of Atlantic Beach, FL. Lender: Key Government Finance, Inc. ("Lender"). Borrower: City of Atlantic Beach, FL (the "City" or "Borrower"). Issue: Utility System Revenue Refunding Bonds, Series 2021 (the "2021 Bonds"). Facility: Direct Purchase of the 2021 Bonds by the Lender. Tax Treatment: Tax -Exempt. Amount: $5,300,000. Use of Proceeds: The proceeds of the 2021 Bonds will be to used to (1) refund the City's obligations pursuant to the City's Drinking Water and Clean Water State Revolving Fund Construction Loan Agreement WWI 60700 and DW 160710 (2) pay costs of issuance for the 2021 Bonds. Drawdown: All funds will be drawn down at closing. Final Maturity Date: May 15, 2032. Repayment: Principal and interest due semi-annually on May 15 and November 15, commencing on November 15, 2021 to the Final Maturity Date as shown in the RFP. Facility Term: The anticipated closing date for this Facility is by May 17, 2021. KGF will purchase the 2021 Bonds through the Final Maturity Date. /fey Government Finance Page 1 t Interest Rate Lock: At the Borrower's request, the Lender can provide an interest rate lock option ("Interest Rate Lock") good through a May 17, 2021 closing date. The Interest Rate Lock will require a two party e-mail confirmation between Lender and Borrower to confirm the terms of the Interest Rate Lock as provided by Lender, provided however, the Borrower will not be subject to any breakage fees if the Facility does not close for any reason. If the Interest Rate Lock confirmation is not received by Lender within the specified time, or the Facility closes after the agreed upon lock period, the final interest rate will be subject to index between the proposal date and the closing date based on the change in the KeyCorp Cost of Funds index. Based on market conditions as of March 29, 2021, the Interest Rate Lock option is quoted below. Any revision to the amortization that increases the average life of the financing may result in a re -pricing of the Interest Rate Lock provided. This Interest Rate Lock needs to be accepted by the Borrower no later than April 5, 2021 and would be valid for closing on or before May 17, 2021. Interest Rate Lock Final Maturity Date Wei hted Average Life (Months) Tax -Exempt Interest Rate 2021 Bonds I May 15, 2032 70 1.693% Up -Front Fee: $0 Costs of Issuance: Lender plans to use Kutak Rock LLP as outside legal counsel. Lender's Counsel fee to be paid by the Lender. Attorney contact information is provided below: Andrew Romshek Kutak Rock LLP 1650 Famam Street Omaha, NE 68102 (402)231-8797 Andrew.Romshek(&KutakRock.com Bradley Nielsen Kutak Rock LLP 650 Farnam Street Omaha, NE 68102 (402) 231-8780 bradley. nielsen(a)KutakRock. com Prepayment: The Facility may be prepaid in whole or in part at any time at par. Security: The 2021 Bonds will be secured a senior lien upon and pledge of the Net Revenues of the combined and consolidated water and sewer system (the "System"), the System Development Charges (such System Development Charges or impact fees are defined as Capital Facilities Charges in the various Ordinances of the City authorizing the issuance of bonds), the moneys on deposit in the funds and accounts created by the Ordinance, the Investment Earnings and the Special Assessments, all as defined in the Ordinance. Financial Reporting: Borrower shall provide directly to the Lender: 1. Annual audited financial statements including operating data within 270 days of Borrower's fiscal year end. Financial Covenants: DSC ratio of 1.25x. ABT of 1.25x. Rate covenant of 1.25x. All covenants will use the same definitions as currently defined. Default Rate: 3% above the current interest rate for any outstanding payments in default, upon the occurrence of a payment default longer than 90 days, the default interest rate shall apply to all outstanding principal, until the payment default has been cured. Event of Taxability and An Event of Taxability will be based only on action or non -action of County. In the Event of Gross -Up Rate: Taxability, the tax-exempt interest rate would convert to the taxable interest rate of 2.143%. Page 2 Increased Cost: No increased cost provisions will be required by the Lender. Documents: All documents shall be attorney prepared and in a form and substance acceptable to the Lender and its legal counsel, including legal opinions customary for transactions of this nature. Bond counsel will provide a Validity Opinion regarding the legality, validity, and enforceability of the Facility and a Tax Opinion regarding the tax-exempt nature of the interest earnings on the financing. No consent or waiver, express or implied, to or of any breach or default in the performance of any obligation under this Agreement shall constitute a consent or waiver to or of any other breach or default in the performance of the same or any other obligation Credit Approval: Lender has received a positive credit pre-screen for this transaction. The estimated amount of time required to obtain final credit approval is 1-3 business days after receipt of formal award assuming timely receipt of the following information: 1. Total assessed value of the City and the top 10 taxpayers as a percentage of total assessed value for the past 3 years. Conditions Precedent to Borrower's obligation will be subject to such terms and conditions that Lender may require Closing: with respect to this transaction, or as are customarily required with respect to similar credits and as set forth in the facility documents. Without limitation, such terms and conditions shall include: 1. Absence of Default. 2. Accuracy of Representations and Warranties. 3. Negotiation and Execution of satisfactory closing documents. 4. Absence of material adverse change in financial condition of Borrower during the period from the date hereof to the Closing Date. 5. Formal credit approval by the Lender. Violations / Litigation: The Lender is not presently in violation of any statutes or regulatory rules that may impact our operations. The Lender is also not been party to any litigation (previous or pending) over the past three (3) years. Firm Experience: The Lender is a subsidiary of KeyBank, N.A. KGF's portfolio consists of over $4.5 billion of tax-exempt and taxable leases, loans, and bonds for municipalities, not -for -profits, and manufacturers across the United States. Other: The Lender will make a loan by purchasing the 2021 Bonds under the following additional conditions: (i) the 2021 Bonds are not being registered under the Securities Act of 1933 and is not being registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state; (ii) the Lender will hold the 2021 Bonds as one single debt instrument; (iii) no CUSIP numbers will be obtained for the 2021 Bonds; (iv) no final official Statement has been prepared in connection with the private placement of the 2021 Bonds; (v) the 2021 Bonds will not close through the DTC or any similar repository and will not be in book entry form; and (vi) the 2021 Bonds are not listed on any stock or other securities exchange. Expiration Date: April 5, 2021 Page 3 Proposal Acceptance/Expiration This proposal is issued in reliance upon the accuracy of all information presented by you to us and is contingent upon the absence of any material adverse change in your condition, financial or otherwise, from the condition as it was represented to us at the time of this proposal. This proposal is subject to our formal approval and the execution of documentation acceptable to each of us. IT IS NOT A COMMITMENT BY US TO ENGAGE IN THIS TRANSACTION. (a) Key Government Finance ("KGF") is not acting as an advisor to you and does not owe a fiduciary duty pursuant to Section 15B of the Exchange Act to you with respect to the information and material contained in this communication; (b) KGF is acting for its own interests; and (c) you should discuss any information and material contained in this communication with any and all internal or external advisors and experts that you deem appropriate before acting on this information or material. KGF (i) is an entity directly or indirectly controlled by a bank or under common control with a bank, other than a broker, dealer or municipal securities dealer registered under the Securities Exchange Act of 1934, and (ii) the present intent of the KGF, is to hold the municipal securities to maturity or earlier redemption or mandatory tender. Any placement agent, broker or financial advisor may rely upon the representations and warranties contained in this paragraph. Lender notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56, as amended and supplemented) (the "Patriot Act"), that Lender is required to obtain, verify and record all information that identifies Borrower, which information includes the name and address of Borrower and other information that will assist Lender to identify Borrower in accordance with the Patriot Act." Lender acknowledges that, in connection with Borrower's compliance with any continuing disclosure undertakings (each, a "Continuing Disclosure Agreement") entered into by Borrower pursuant to SEC Rule 15c2-12 promulgated pursuant to the Securities and Exchange Act of 1934, as amended (the "Rule"), Borrower may be required to file with the Municipal Securities Rulemaking Board's Electronic Municipal Market Access system, or its successor ("EMMA"), notice of its incurrence of its obligations under this Facility and notice of any accommodation, waiver, amendment, modification of terms or other similar events reflecting financial difficulties in connection with this Facility, in each case including a description of the material terms thereof (each such notice, an `EMMA Notice"). Borrower shall not file or submit or permit the filing or submission of any EMMA Notice that includes any of the following unredacted information regarding Lender or any Escrow Agent: physical or mailing addresses, account information, e-mail addresses, telephone numbers, fax numbers, tax identification numbers, or titles or signatures of officers, employees or other signatories. Borrower acknowledges and agrees that Lender is not responsible in connection with any EMMA Notice relating to this Facility for Borrower's compliance or noncompliance (or any claims, losses or liabilities arising therefrom) with the Rule, any Continuing Disclosure Agreement or any applicable securities laws, including but not limited to those relating to the Rule. If the outlined foregoing proposal is satisfactory, reflects an arrangement that suits the need of your organization and you would like Key to commence its due diligence process, please sign and return this proposal. The terms described in this proposal will expire on April 5, 2021 if we have not received an authorized signed copy on or before such date. Thank you for allowing us the opportunity to present this Proposal. If you have any questions, please call me at 315-470- 5180. Sincerely, Key Government Finance, Inc. By: David Zapata VP & East Region Manager 201 South Warren Street, 4°1 Floor Syracuse, NY 13202 David—Zapata@keybank.com Exhibit B Loan Agreement 01486651-2 EXHIBIT B LOAN AGREEMENT This LOAN AGREEMENT is made and entered into as of May 17, 2021, and is by and between the CITY OF ATLANTIC BEACH, FLORIDA, a municipal corporation created and existing under the laws of the State of Florida, and its successors and assigns (the "Issuer"), and KEY GOVERNMENT FINANCE, INC. and its successors and assigns, as holder(s) of the hereinafter defined Bond (the "Lender"). WHEREAS, the Issuer has, by adoption of Ordinance No. 15-21-16 (the "Ordinance") on April 26, 2021, authorized the refunding of the Issuer's outstanding obligations pursuant to the Issuer's Drinking Water State Revolving Fund Construction Loan Agreement DW160710 and the Issuer's Clean Water State Revolving Fund Construction Loan Agreement WW160700 (collectively, the "Refunded Bonds") by a loan (the "Loan") from the Lender and the issuance of the Bond in the principal amount of $5,300,000 to the Lender to secure the Loan; and WHEREAS, the Issuer has, by Resolution No. 21-24, adopted on May 10, 2021 (the "Resolution") determined to obtain the Loan from the Lender and to issue the Bond to secure the Loan; NOW THEREFORE, in consideration of the premises and the respective representations and covenants herein contained, the parties hereto agree as follows: ARTICLE I DEFINITION OF TERMS Section 1.01 Definitions. The words and terms used in capitalized form in this Agreement shall have the meanings as set forth in the recitals above and the following words and terms as used in this Agreement shall have the following meanings: "Act" means Chapter 166, Florida Statutes, the Ordinance, and other applicable provisions of law. "Agreement" means this Agreement and any and all modifications, alterations, amendments and supplements hereto made in accordance with the provisions hereof. "Bond" means the Issuer's Utilities System Revenue Refunding Bond, Series 2021, issuable in the denomination of a single Bond of $5,300,000 principal amount in the form attached hereto as Exhibit A. "Bond Counsel" means any attorney at law or firm of attorneys retained by the Issuer, of nationally recognized experience in matters pertaining to the validity of, and exclusion from gross income for federal income tax purposes of interest on, the obligations of states and their political subdivisions. "Bond Year" means the annual period beginning on the first day of October of each year 01486238-1 and ending on the last day of the succeeding September. "Business Day" means any day except any Saturday or Sunday or day on which the Principal Office of the Lender is lawfully closed. "City Manager" means the City Manager of the Issuer. "Code" means the Internal Revenue Code of 1986, as amended, and 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 thereof, includes interpretations thereof contained or set forth in the applicable regulations of the Department of Treasury (including applicable final regulations, temporary regulations and proposed regulations), the applicable rulings of the Internal Revenue Service (including published Revenue Rulings and private letter rulings), and applicable court rulings. "Event of Default" means an event of default specified in Article VI of this Agreement. "Fiscal Year" means the period commencing on October 1 of each year and ending on the succeeding September 30, or such other period of twelve consecutive months as may hereafter be designated as the fiscal year of the Issuer by general law. "Loan" means the loan by the Lender to the Issuer contemplated hereby. "Loan Amount" means $5,300,000. "Loan Documents" means this Agreement and the Bond. "Mayor" means the Mayor or, in his or her absence or inability to perform, the Mayor Pro Tem of the Issuer. "Notice Address" means, As to the Issuer: Shane Corbin City Manager City of Atlantic Beach, FL 800 Seminole Road Atlantic Beach, FL 32233-5445 Email address: scorbin@coab.us As to the Lender: or to such other address (or email address for electronic communications) as either party may have specified in writing to the other using the procedures specified in Section 7.06. "Ordinance" means, collectively, Ordinance No. 15-95-7 enacted by the City Commission of the Issuer on November 13, 1995, as supplemented by Ordinance No. 15-96-8, enacted on March 11, 1996, and further supplemented by Ordinance No. 15-14-14, enacted on August 11, 2014, and Ordinance No. 15-21-16, enacted on April 26, 2021, and any ordinance and resolution 01486238-1 2 amendatory thereof or supplemental thereto. "Person" means an individual, corporation, partnership, association, joint stock company, joint venture, trust, limited liability company, unincorporated organization or other judicial entity. "Pledged Revenues" means (a) the Net Revenues; (b) the Capital Facilities Charges; (c) the moneys on deposit in the Funds and Accounts; (d) the Investment Earnings, and (e) the Special Assessments, all as defined in the Ordinance. "Principal Office" means, with respect to the Lender, the office located at , or such other office as the Lender may designate to the Issuer in writing. "Refunded Bonds" means the City's outstanding obligations pursuant to the City's Drinking Water State Revolving Fund Construction Loan Agreement DWI 60710 and the City's Clean Water State Revolving Fund Construction Loan Agreement WWI 60700. "Sinking Fund" means the Utilities System Revenue Refunding Bond, Series 2021, Sinking Fund established by the Ordinance from which the Issuer shall make payments of the principal of, interest on and any redemption or prepayment premiums with respect to the Bond. "State" means the State of Florida. Section 1.02 Titles and Headings. The titles and headings of the articles and sections of this Agreement 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 OF ISSUER The Issuer represents and warrants to the Lender, which representations and warranties shall be deemed made on the date hereof, that: Section 2.01 Powers of Issuer. The Issuer is a municipal corporation, duly organized and validly existing under the laws of the State. The Issuer has the power under the Act to adopt the Ordinance, to borrow the Loan Amount provided for in this Agreement, to execute and deliver the Loan Documents, to secure this Agreement and the Bond in the manner contemplated hereby and to perform and observe all the terms and conditions of the Loan Documents on its part to be performed and observed and to carry out and consummate all other transactions contemplated hereby. The Issuer may lawfully borrow funds hereunder in order to provide funds to refund the Refunded Bonds and to pay costs of issuance of the Loan and the Bond. Section 2.02 Authorization of Loan. The Issuer had, has, or will have on the date of the Bond and at all relevant times, full legal right, power and authority to execute and deliver the Loan Documents, to issue the Bond, and to carry out and consummate all other transactions contemplated hereby, and the Issuer has complied and will comply with all provisions of applicable 01486238-1 law in all material matters relating to such transactions. The Issuer has duly authorized the borrowing of the Loan Amount provided for in this Agreement, the execution and delivery of this Agreement, and the issuance and delivery of the Bond to the Lender, and to that end the Issuer warrants that it will, subject to the terms hereof and of the Bond, take all action and do all things which it is authorized by law to take and to do in order to fulfill all covenants on its part to be performed and to provide for and to assure payment of the Bond. The Bond has been duly authorized, executed, issued and delivered to the Lender and constitutes the legal, valid and binding obligation of the Issuer enforceable in accordance with the terms thereof and the terms hereof, and is entitled to the benefits and security of this Agreement, subject to the provisions of the bankruptcy laws of the United States of America and to other applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting creditors' rights, heretofore or hereinafter enacted, to the extent constitutionally applicable, and provided that its enforcement may also be subject to equitable principles that may affect remedies or other equitable relief, or to the exercise of judicial discretion in appropriate cases. All approvals, consents, and orders of and filings with any governmental authority or agency which would constitute a condition precedent to the issuance of the Bond or the execution and delivery of or the performance by the Issuer of its obligations under this Agreement and the Bond have been obtained or made and any consents, approvals, and orders to be received or filings so made are in full force and effect. NOTWITHSTANDING THE FOREGOING, HOWEVER, OR ANYTHING ELSE HEREIN OR IN THE BOND TO THE CONTRARY, NEITHER THIS AGREEMENT NOR THE BOND SHALL CONSTITUTE A GENERAL OBLIGATION OR A PLEDGE OF THE FAITH AND CREDIT OF THE ISSUER, THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL, LEGISLATIVE OR CHARTER PROVISION OR LIMITATION, BUT SHALL BE PAYABLE SOLELY FROM THE PLEDGED REVENUES IN THE MANNER AND TO THE EXTENT PROVIDED HEREIN AND IN THE ORDINANCE. No holder or owner of the Bond shall ever have the right, directly or indirectly, to require or compel the exercise of the ad valorem taxing power of the Issuer or any other political subdivision of the State of Florida or taxation in any form on any real or personal property for any purpose, including, without limitation, for the payment of debt service with respect thereto, or to maintain or continue any activities of the Issuer which generate user service charges, regulatory fees or other non -ad valorem revenues, nor shall any holder or owner of the Bond be entitled to payment of such principal and interest from any other funds of the Issuer other than the Pledged Revenues, all in the manner and to the extent herein and in the Ordinance provided. Section 2.03 Ordinance. The Ordinance has been duly enacted by the Issuer, is in full force and effect and has not been amended, altered, repealed or revoked in any way. The terms and covenants of the Ordinance, except Article V, Section 5.04 thereof, relating to continuing disclosure, are incorporated by reference herein and shall apply to the Loan for the benefit of the Lender as fully as if set forth herein; provided, however, that no amendment or modification of such provisions of the Ordinance or any waiver of compliance therewith shall constitute an amendment, modification or waiver of any provision thereof or incorporated herein unless the Lender shall have received from the Issuer written notification of such amendment, modification or waiver and agreed in writing to such amendment modification or waiver. Pursuant to the Ordinance, the Issuer has the right to establish separate Reserve Accounts for different series of bonds issued thereunder. The Issuer elects to establish a separate Reserve Account for the Bond and the Lender hereby waives the requirement that a separate Reserve Account for the Bond be 01486238-1 4 funded. The Lender hereby consents to the requirement for the Renewal and Replacement Fund to be set at $250,000. Section 2.04 No Violation of Law or Contract. The Issuer is not in default in any material respect under any agreement or other instrument to which it is a party or by which it may be bound, the breach of which could result in a material and adverse impact on the financial condition of the Issuer or the ability of the Issuer to perform its obligations hereunder and under the Bond. The making and performing by the Issuer of this Agreement and the Bond will not violate any applicable provision of law, and will not result in a material breach of any of the terms of any agreement or instrument to which the Issuer is a party or by which the Issuer is bound, the breach of which could result in a material and adverse impact on the financial condition of the Issuer or the ability of the Issuer to perform its obligations hereunder and under the Bond. Section 2.05 Pending or Threatened Litigation. Except as has been disclosed to the Lender in writing, there are no actions or proceedings pending against the Issuer or affecting the Issuer or, to the knowledge of the Issuer, threatened, which, either in any case or in the aggregate, might result in any material adverse change in the financial condition of the Issuer, or which questions the validity of this Agreement or the Bond or of any action taken or to be taken in connection with the transactions contemplated hereby or thereby. Section 2.06 Financial Information. The financial information regarding the Issuer furnished to the Lender by the Issuer in connection with the Loan is complete and accurate, and there has been no material and adverse change in the financial condition of the Issuer from that presented in such information. Section 2.07 Qualified Tax -Exempt Obli ag tion. The Issuer hereby represents and finds that it reasonably anticipates not more than $10,000,000 of tax-exempt obligations (other than certain private activity bonds) will be issued by the Issuer and its subordinate governmental entities in calendar year 2021. The Issuer hereby directs its Mayor, or the City Manager, or their delegates, to recertify these representations upon issuance of the Bond, and the Bond is hereby designated as a "qualified tax-exempt obligation" under Section 265(b)(3) of the Code. ARTICLE III COVENANTS OF THE ISSUER Section 3.01 Affirmative and Negative Covenants. For so long as any of the principal amount of or interest or any redemption or prepayment premium on the Bond is outstanding or any duty or obligation of the Issuer hereunder or under the Bond remains unpaid or unperformed, the Issuer covenants to the Lender as follows: La) Pam The Issuer shall pay the principal of and the interest or any redemption or prepayment premium on the Bond and any other amounts due and payable under this Agreement or the Bond at the time and place and in the manner provided herein and in the Bond. 01486238-1 (b) Use of Proceeds. Proceeds from the Bond will be used only to (i) refund the Refunded Bonds, and (ii) to pay closing costs of the Loan and costs of issuance of the Bond. (c) Maintenance of Existence. The Issuer will take all reasonable legal action within its control in order to maintain its existence until all amounts due and owing from the Issuer to the Lender under this Agreement and the Bond have been paid in full. (d,) Records. The Issuer agrees that any and all records of the Issuer with respect to the Loan shall be open to inspection by the Lender or its representatives at all reasonable times and after receipt by the Issuer of reasonable notice from the Lender at the offices the Issuer. (e) Financial Statements and Budget. The Issuer will cause an audit to be completed of its books and accounts and shall make available electronically to the Lender audited year-end financial statements of the Issuer, including a balance sheet as of the end of such Fiscal Year and related statements of revenues, expenses and changes in net assets, certified by an independent certified public accountant to the effect that such audit has been conducted in accordance with generally accepted auditing standards and stating whether such financial statements present fairly in all material respects the financial position of the Issuer and the results of its operations and cash flows for the periods covered by the audit report, all in conformity with generally accepted accounting principles applied on a consistent basis. The Issuer shall make available electronically to the Lender the audited financial statements for each Fiscal Year ending on or after September 30, 2021, within 270 days after the end thereof and shall make available electronically to the Lender an annual budget within 60 days after the same shall have been approved by the City Commission of the Issuer. The Issuer shall also provide to the Lender, together with the annual audited financial statements referred to in this paragraph, a certificate of an officer of the Issuer to the effect that the Issuer is not in breach of any of the covenants set forth in this Article III. (f) Insurance. The Issuer shall maintain such liability, casualty and other insurance as, or shall self -insure in a manner as, is reasonable and prudent for similarly situated governmental entities of the State of Florida. (g) Compliance with Laws. The Issuer shall comply with all applicable federal, state and local laws and regulatory requirements, the violation of which could reasonably be expected to have a material and adverse effect upon the financial condition of the Issuer or upon the ability of the Issuer to perform its obligation hereunder or under the Bond. (i) Payment of Document Taxes. In the event the Bond or this Agreement should be subject to the excise tax on documents of the State, the Issuer shall promptly upon the Lender's written demand for same pay such taxes or reimburse the Lender for any such taxes paid by it. Section 3.02 Registration and Exchange of Bond. The Bond shall initially be owned by the Lender. The ownership of the Bond may only be transferred, and the Issuer will transfer the ownership of the Bond, upon written request of the Lender to the Issuer specifying the name, address and taxpayer identification number of the transferee, and the Issuer will keep and maintain at all times a record setting forth the identification of the owner of the Bond. For every such exchange or transfer of the Bond, the Issuer may make a charge sufficient to reimburse it for any tax, fee, expense or other governmental charge required to be paid with respect to such exchange 01486238-1 6 or transfer. The Bond may only be sold, assigned or otherwise transferred to an "accredited investor," as defined in Rule 501(A)(1), (2) or (3) under Regulation D of the Securities Act of 1933, as amended, or a "qualified institutional buyer" within the meaning of Rule 144A promulgated under the Securities Act of 1933, as amended. The Person in whose name the Bond shall be registered shall be deemed and regarded the absolute owner thereof for all purposes, and payment of principal and interest on such Bond shall be made only to or upon the written order of such Person. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. Section 3.03 Bond Mutilated, Destroyed, Stolen or Lost. In case the Bond shall become mutilated, or be destroyed, stolen or lost, the Issuer shall issue and deliver a new Bond, in exchange and in substitution for such mutilated Bond, or in lieu of and in substitution for the Bond destroyed, stolen or lost and upon the Lender furnishing the Issuer proof of ownership thereof, an affidavit of lost or stolen instrument and indemnity reasonably satisfactory to the Issuer and paying such expenses as the Issuer may reasonably incur in connection therewith. Section 3.04 Payment of Principal and Interest; Limited Obligation. The Issuer promises that it will promptly pay the principal of and interest on and any prepayment or redemption premium or fee on the Bond, at the place, on the dates and in the manner provided therein according to the true intent and meaning hereof and of the Bond, provided that the Issuer may be compelled to pay the principal of and interest on and any prepayment premium or fee with respect to the Bond solely from the Pledged Revenues, and nothing in the Bond, this Agreement or the Ordinance shall be construed as pledging any other funds or assets of the Issuer to such payment or as authorizing such payment to be made from any other source. The Issuer is not and shall not be liable for the payment of the principal of and interest on the Bond and any prepayment premium or fee with respect to or for the performance of any pledge, obligation or agreement for payment undertaken by the Issuer hereunder, under the Bond or under the Ordinance from any property other than the Pledged Revenues. The Lender shall not have any right to resort to legal or equitable action to require or compel the Issuer to make any payment required by the Bond or this Agreement from any source other than the Pledged Revenues and only to the extent and in the manner provided herein. Section 3.05 Pledge. The payment of the principal of, premium, if any, and interest on the Bond and all other amounts due and payable under this Agreement and the Bond shall be secured by an irrevocable lien on the Pledged Revenues, all in the manner and to the extent provided herein and in the Ordinance. The Issuer does hereby pledge such Pledged Revenues to the principal of, premium, if any, and interest on the Bond and for all other payments provided for herein. Section 3.06 Sinking Fund. The Issuer shall apply all moneys on deposit in the Sinking Fund to the timely payment of the principal of, premium, if any, and interest on the Bond and other amounts due and payable under this Agreement and the Bond. The Issuer shall deposit the proceeds of the Bond in an amount sufficient with other available funds of the Issuer to defease the Refunded Bonds with the Escrow Agent under the Escrow Deposit Agreement and the remainder shall be applied to pay the costs of the Loan and costs of issuance of the Bond. Section 3.07 Officers and Employees of the Issuer Exempt from Personal Liability. No 01486238-1 7 personal recourse under or upon any obligation, covenant or agreement of this Agreement or the Bond or for any claim based hereon or thereon or otherwise in respect thereof, shall be had against any officer, agent or employee, as such, of the Issuer, past, present or future, it being expressly understood (a) that the obligation of the Issuer under this Agreement and under the Bond is solely a corporate one, limited as provided herein, (b) that no personal liability whatsoever shall attach to, or is or shall be incurred by, the officers, agents, or employees, as such, of the Issuer, or any of them, under or by reason of the obligations, covenants or agreements contained in this Agreement or implied therefrom, and (c) that any and all such personal liability of, and any and all such rights and claims against, every such officer, agent, or employee, as such, of the Issuer under or by reason of the obligations, covenants or agreements contained in this Agreement and under the Bond, or implied therefrom, are waived and released as a condition of, and as a consideration for, the execution of this Agreement and the issuance of the Bond on the part of the Issuer. Section 3.08 Business Days. In any case where the due date of interest on or principal of the Bond is not a Business Day, then payment of such principal or interest need not be made on such date but may be made on the next succeeding Business Day, provided that credit for payments made shall not be given until the payment is actually received by the Lender. Section 3.09 Tax Representations, Warranties and Covenants of the Issuer. It is the intention of the Issuer that the interest on the Bond be and remain excluded from gross income of the holders and owners of the Bond for federal income tax purposes. The Issuer hereby covenants and represents that it has taken and caused to be taken and shall make and take and cause to be made and taken all actions that may be required of it for the interest on the Bond to be and remain excluded from the gross income of the registered owner and holder thereof for federal income tax purposes to the extent set forth in the Code, and that to the best of its knowledge it has not taken or permitted to be taken on its behalf, and covenants that to the best of its ability and within its control, it shall not make or take, or permit to be made or taken on its behalf, any action which, if made or taken, would adversely affect such exclusion under the provisions of the Code. The Issuer acknowledges that the continued exclusion of interest on the Bond from gross income for federal income tax purposes depends, in part, upon compliance with the arbitrage limitations imposed by Sections 103(b)(2) and 148 of the Code. The Issuer hereby acknowledges responsibility to take all reasonable actions necessary to comply with these requirements. The Issuer hereby agrees and covenants that it shall not permit at any time or times any of the proceeds of the Bond or other funds of the Issuer to be intentionally used, directly or indirectly, to acquire or to replace funds which were used directly or indirectly to acquire any higher yielding investments (as defined in Section 148 of the Code), the acquisition of which would cause the Bond to be an arbitrage bond for purposes of Sections 103(b)(2) and 148 of the Code. The Issuer further agrees and covenants that it shall do and perform all acts and things necessary in order to assure that the requirements of Section 103(b)(2) and Part IV of Subchapter B of Chapter 1 of Subtitle A of the Code are met. Specifically, without intending to limit in any way the generality of the foregoing, the Issuer covenants and agrees: (1) to make or cause to be made all necessary determinations and calculations of the excess of the amount earned on all non -purpose investments (as defined in 26 C.F.R. § 01486238-1 1.148-3) over the amount which would have been earned if such non -purpose -investments were invested at a rate equal to the yield on the Bond, plus any income attributable to such excess, but not including any amount exempted under 26 C.F.R. § 1.148-3 of the Code (the "Rebate Amount"); (2) to pay the Rebate Amount to the United States of America from legally available funds of the Issuer at the times and to the extent required pursuant to Section 148(f) of the Code; (3) to maintain and retain all records pertaining to and to be responsible for making or causing to be made all determinations and calculations of the Rebate Amount and required payments of the Rebate Amount for at least six years after the final maturity of the Bond or such other period as shall be necessary to comply with the Code; (4) to refrain from taking any action that would cause the Bond to be classified as "private activity bond" under Section 141(a) of the Code; and (5) to refrain from taking any action that would cause the Bond to become an arbitrage bond under Section 148 of the Code. The Issuer understands that the foregoing covenants impose continuing obligations on it to comply with the requirements of Section 103 and Part IV of Subchapter 13 of Subpart A of Chapter 1 of the Code so long as such requirements are applicable. The terms "debt service," "gross proceeds," "net proceeds," "proceeds," and "yield" have the meanings assigned to them for purposes of Section 148 of the Code. Section 3.10 Separate Accounts. The moneys required to be accounted for the foregoing funds established herein may be deposited in a single bank account, and funds allocable to any fund or account established herein may be invested in a common investment pool, provided that adequate accounting records are maintained to reflect and control the restricted allocation of the moneys on deposit therein and such investments for the various purposes of such funds and accounts as herein provided. The designation and establishment of any funds or accounts and by this Agreement shall not be construed to require the establishment of any completely independent, self -balancing funds as such term is commonly defined and used in governmental accounting, but rather is intended solely to constitute an earmarking of certain revenues for certain purposes and to establish certain priorities for application of such revenues as herein provided. ARTICLE IV CONDITIONS OF LENDING The obligations of the Lender to lend hereunder are subject to the following conditions precedent: Section 4.01 Representations and Warranties. The representations and warranties of the 01486238-1 9 Issuer set forth in this Agreement and the Bond are true and correct on and as of the date hereof. Section 4.02 No Default. On the date hereof, the Issuer shall be in compliance with all the terms and provisions set forth in this Agreement and the Bond on its part to be observed or performed, and no Event of Default or any event that, upon notice or lapse of time or both, would constitute such an Event of Default, shall have occurred and be continuing at such time. Section 4.03 Supporting Documents. On or prior to the date hereof, the Lender shall have received the following supporting documents, all of which shall be satisfactory in form and substance to the Lender (such satisfaction to be evidenced by the purchase of the Bond by the Lender): (a) The opinion of the attorney for the Issuer and/or Bond Counsel to the Issuer, regarding the due authorization, execution, delivery, validity and enforceability of the Ordinance authorizing this Agreement and the Bond, the Bond constituting an Additional Parity Bond, as such term is defined in the Ordinance, and such other items as the Lender shall reasonably request; (b) The opinion of Bond Counsel to the Issuer to the effect that (i) the interest on the Bond is excluded from gross income for federal income tax purposes and the Bond is not an item of tax preference under Section 57 of the Code, (ii) the Bond is an exempt security within the meaning of the Securities Act of 1933, as amended, and it is not necessary in connection with the sale of the Bond to register the Bond under the Securities Act of 1933, as amended, or qualify the Ordinance under the Trust Indenture Act of 1939, as amended, and (iii) such other items as the Lender shall reasonably request; and (c) Such additional supporting documents as the Lender may reasonably request. ARTICLE V FUNDING THE LOAN Section 5.01 The Loan. The Lender hereby agrees to lend to the Issuer the Loan Amount to provide funds for the purposes described herein upon the terms and conditions set forth in this Agreement. The Issuer agrees to repay the principal amount borrowed plus interest thereon upon the terms and conditions set forth in this Agreement and the Bond. Section 5.02 Description and Payment Terms of the Bond. To evidence the obligation of the Issuer to repay the Loan, the Issuer shall issue and deliver to the Lender the Bond in the form attached hereto as Exhibit "A." Prepayment of principal may be made only as provided in the Bond and the rate of interest on the Bond, including any adjustments thereto, shall be as provided in the Bond. ARTICLE VI EVENTS OF DEFAULT Section 6.01 General. An "Event of Default" shall be deemed to have occurred under this Agreement if - 01486238 -1 10 (a) The Issuer shall fail to make any payment of the principal of premium, if any, or interest on the Bond when the same shall become due and payable; or (b) The Issuer shall default in the performance of or compliance with any term or covenant contained in this Agreement or the Bond, other than a term or covenant a default in the performance of which or noncompliance with which is elsewhere specifically dealt with in this Section 6.01, which default or non-compliance shall continue and not be cured within thirty (30) days after written notice thereof to the Issuer by the Lender; or (c) Any representation or warranty made in writing by or on behalf of the Issuer in this Agreement or the Bond shall prove to have been false or incorrect in any material respect on the date made or reaffirmed; or (d) The Issuer 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 or consents to the appointment of a receiver or trustee for itself; or (e) The Issuer is adjudged insolvent by a court of competent jurisdiction, or it is adjudged a bankrupt on a petition in bankruptcy filed by the Issuer, or an order, judgment or decree is entered by any court of competent jurisdiction appointing, without the consent of the Issuer, a receiver or trustee of the Issuer or of the whole or any part of its property, and if the aforesaid adjudications, orders, judgments or decrees shall not be vacated or set aside or stayed within ninety (90) days from the date of entry thereof, or (f) The Issuer 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 the State. Notwithstanding the provisions of clause (b) above or anything to the contrary in Section 6.02 below, a default of any of the covenants contained in Section 3.09 hereof shall not be an "Event of Default" hereunder and the sole remedy of the Lender shall be an adjustment of the interest rate on the Bond to the Taxable Rate (as defined in the Bond) and the payment of the Additional Amount (as defined in the Bond) to the extent and in the manner described in the Bond. Section 6.02 Effect of Event of Default. The Lender may either at law or in equity, by suit, mandamus or other proceedings in any court of competent jurisdiction, protect and enforce any and all rights under the laws of the State, or granted or contained in the Bond and this Agreement, and may enforce and compel the performance of all duties required by the Bond, this Agreement or by any applicable statute to be performed by the Issuer for performance hereunder or under the Bond. All payments made on the Bond, after an Event of Default, shall be first applied to accrued interest then to any reasonable costs or expenses, including reasonable legal fees and expenses, that the Lender may have incurred in protecting or exercising its rights under the Loan Documents and the balance thereof shall apply to the principal sum due. ARTICLE VII MISCELLANEOUS 01486238-1 Section 7.01 No Waiver,• Cumulative Remedies. No failure or delay on the part of the Lender in exercising any right, power, remedy hereunder or under the Bond shall operate as a waiver of the Lender's rights, powers and remedies hereunder, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof, or the exercise of any other right, power or remedy hereunder or thereunder. The remedies herein and therein provided are cumulative and not exclusive of any remedies provided by law or in equity. Section 7.02 Amendments Changes or Modifications to this Agreement. This Agreement shall not be amended, changed or modified except in writing signed by the Lender and the Issuer. The Issuer agrees to pay all of the Lender's costs and reasonable attorneys' fees incurred in modifying and/or amending this Agreement at the Issuer's request or behest. Section 7.03 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 7.04 Severability. If any clause, provision or section of this Agreement shall be held illegal or invalid by any court, the Invalidity of such clause, provision or section shall not affect any other provisions or sections hereof, and this Agreement shall be construed and enforced to the end that the transactions contemplated hereby be effected and the obligations contemplated hereby be enforced, as if such illegal or invalid clause, provision or section had not been contained herein. Section 7.05 Term of Agreement. Except as otherwise specified in this Agreement, this Agreement and all representations, warranties, covenants and agreements contained herein or made in writing by the Issuer in connection herewith shall be in full force and effect from the date hereof and shall continue in effect until as long as the Bond is outstanding. Section 7.06 Notices. All notices, requests, demands and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given when received if personally delivered; when transmitted if transmitted by telecopy, electronic telephone line facsimile transmission or other similar electronic or digital transmission method (provided customary evidence of receipt is obtained); the day after it is sent, if sent by overnight common carrier service; and five days after it is sent, if mailed, certified mail, return receipt requested, postage prepaid. In each case notice shall be sent to the Notice Address. Section 7.07 Applicable Law; Venue. This Agreement shall be construed pursuant to and governed by the substantive laws of the State. The Issuer and the Lender waive any objection either might otherwise have to venue in any judicial proceeding brought in connection herewith lying in Duval County, Florida. Section 7.08 Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the successors in interest and permitted assigns of the parties. The Issuer shall have no rights to assign any of its rights or obligations hereunder without the prior written consent of the Lender. Section 7.09 No Third Party Beneficiaries. It is the intent and agreement of the parties 01486238-1 12 hereto that this Agreement is solely for the benefit of the parties hereto and no person not a party hereto shall have any rights or privileges hereunder. Section 7.10 Attorneys Fees. To the extent legally permissible, the Issuer and the Lender agree that in any suit, action or proceeding brought in connection with this Agreement or the Bond (including any appeal(s)), the prevailing party shall be entitled to recover costs and reasonable attorneys' fees from the other party. Section 7.11 Entire Agreement. Except as otherwise expressly provided, this Agreement and the Bond embody the entire agreement and understanding between the parties hereto and supersede all prior agreements and understandings relating to the subject matter hereof. Section 7.12 Further Assurances. The parties to this Agreement will execute and deliver, or cause to be executed and delivered, such additional or further documents, agreements or instruments and shall cooperate with one another in all respects for the purpose of carrying out the transactions contemplated by this Agreement. Section 7.13 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE BOND AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT. 01486238-1 13 IN WITNESS WHEREOF, the Issuer and the Lender have executed and delivered this Loan Agreement as of May 17, 2021. (SEAL) ATTEST: By: Donna Bartle City Clerk APPROVED AS TO FORM AND LEGALITY: IN Brenna M. Durden City Attorney 01486238-1 14 CITY OF ATLANTIC BEACH, FLORIDA ME Ellen Glasser Mayor KEY GOVERNMENT FINANCE, INC. IN Its: EXHIBIT "A" FORM OF BOND THIS BOND IS SUBJECT TO TRANSFER RESTRICTIONS, MORE FULLY DESCRIBED IN THE LOAN AGREEMENT REFERRED TO HEREIN, AND MAY NOT BE TRANSFERRED EXCEPT TO AN ACCREDITED INVESTOR WITHIN THE MEANING OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933, OR A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PROMULGATED UNDER THE SECURITIES ACT OF 1933. $5,300,000 CITY OF ATLANTIC BEACH, FLORIDA UTILITIES SYSTEM REVENUE REFUNDING BOND, SERIES 2021 The CITY OF ATLANTIC BEACH, FLORIDA (the "Issuer"), a municipal corporation duly created and existing under the laws of the State of Florida, for value received, promises to pay, but solely from the sources hereinafter provided, to the order of KEY GOVERNMENT FINANCE, INC. or registered assigns (together with any other registered owner of this Bond, hereinafter, the "Lender"), the principal sum of Five Million Three Hundred Thousand Dollars ($5,300,000) or such lesser amount as shall be outstanding hereunder, together with interest on the principal balance outstanding at the Interest Rate (defined below), calculated based upon a year of 360 days consisting of twelve 30 -day months, such amounts to be payable as provided herein. This Utilities System Revenue Refunding Bond, Series 2021 (this 'Bond"), is issued pursuant to the Ordinance enacted by the City Commission of the Issuer on November 13, 1995, as amended and supplemented (collectively, the "Ordinance") and in conjunction with a Loan Agreement, dated of even date herewith, between the Issuer and the Lender (the "Loan Agreement") and is subject to all the terms and conditions of the Loan Agreement. All terms used herein in capitalized form and not otherwise defined herein shall have the meanings ascribed thereto, or referenced, in the Loan Agreement. Principal of and interest on this Bond are payable in immediately available funds constituting lawful money of the United States of America at the Principal Office or such place as the Lender may designate in writing to the Issuer and shall be settled via wire transfer. The Issuer shall pay the Lender interest on the outstanding principal balance of this Bond in arrears, on November 15, 2021, and on May 15 and November 15 of each year thereafter, to and including the Final Maturity Date (hereinafter defined). The principal amount of this Bond shall be payable in annual installments in the amounts set forth on Schedule A hereto, payable on May 15 of each year, commencing May 15, 2022, with the final installment payable May 15, 2032 (the "Final Maturity Date"). If any date for the payment of principal or interest is not a Business Day, such payment shall be due on the next succeeding Business Day in the manner provided in the Loan Agreement. All payments by the Issuer pursuant to this Bond shall apply first to accrued interest, then to other charges due the Lender, and the balance thereof shall apply to the principal sum due; 01486622-1 provided, however, in an Event of Default, payment shall be applied in accordance with Section 6.02 of the Loan Agreement. If any payment of principal or interest due hereunder is not paid within fifteen (15) days after the date due hereunder, the Issuer shall pay the Lender upon demand a late payment fee equal to six percent (6%) of the amount not paid when due. The foregoing right to a late payment fee is in addition to and not in limitation of any right the Lender may have upon the Issuer's failure to timely pay such scheduled payment on the Bond. The "Interest Rate," as used herein, shall mean 1.693% per annum unless adjusted as provided herein. In the event of a Determination of Taxability, the Interest Rate shall convert to the rate of 2.143% (the "Taxable Rate"), effective retroactively to the date on which such Determination of Taxability was made. As used herein, "Determination of Taxability" means a final decree or judgment of any federal court or a final action of the Internal Revenue Service or of the United States Treasury Department determining that any interest payable on this Bond is includable in the gross income of the Lender for federal income tax purposes. No such decree or action shall be considered final for the purposes of this paragraph unless the Issuer has been given written notice thereof and, if it is so desired by the Issuer and is legally permissible, the Issuer has been afforded the opportunity to contest the same, at its own expense, either directly or in the name of the Lender and until the conclusion of any appellate review, if sought. Upon the occurrence and during the continuance of a payment Event of Default longer than ninety days under the Loan Agreement, the Interest Rate shall be equal to the Interest Rate that was applicable prior to such Event of Default plus three percent (3%) per annum (the "Default Rate"). Notwithstanding the foregoing, in no event shall the Interest Rate exceed the maximum rate permitted by applicable law. This Bond shall be prepayable at any time, in whole or in part, upon five (5) days' prior written notice from the Issuer to the Lender, at the amount of principal of this Bond being prepaid, plus interest accrued on the principal being prepaid to the date of prepayment. The Issuer to the extent permitted by law hereby waives presentment, demand, protest and notice of dishonor. This Bond is payable solely from the Pledged Revenues to the extent provided in the Loan Agreement and subject to the pledge of the Pledged Revenues as more specifically provided in the Ordinance and the Loan Agreement. Notwithstanding any other provision of this Bond, the Issuer is not and shall not be liable for the payment of the principal of and interest on this Bond or otherwise monetarily liable in connection herewith from any property other than as provided in the Loan Agreement and the Ordinance. NOTWITHSTANDING ANYTHING HEREIN OR IN THE LOAN AGREEMENT OR THE ORDINANCE TO THE CONTRARY, THIS BOND AND THE INTEREST HEREON DOES NOT AND SHALL NOT CONSTITUTE A GENERAL OBLIGATION OF THE ISSUER BUT SHALL BE PAYABLE SOLELY FROM THE MONEYS AND SOURCES DESIGNATED THEREFORE PURSUANT TO THE LOAN AGREEMENT, THIS BOND AND THE 01486622-1 ORDINANCE. NEITHER THE FAITH AND CREDIT NOR ANY AD VALOREM TAXING POWER OF THE ISSUER IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THIS BOND OR OTHER COSTS INCIDENTAL HERETO. All terms, conditions and provisions of the Loan Agreement are by this reference thereto incorporated herein as a part of this Bond. This Bond may be exchanged or transferred but only as provided in the Loan Agreement. It is hereby certified, recited and declared that all acts, conditions and prerequisites required to exist, happen and be performed precedent to and in connection with the execution, delivery and the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law, and that the issuance of this Bond is in full compliance with and does not exceed or violate any constitutional or statutory limitation. IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed in its name as of the date hereinafter set forth. The date of this Bond is May 17, 2021. CITY OF ATLANTIC BEACH, FLORIDA By: _ Mayor (SEAL) ATTESTED AND COUNTERSIGNED: By: City Clerk APPROVED AS TO FORM AND LEGALITY: By: City Attorney 01486622-I SCHEDULE A City of Atlantic Beach, Florida Utilities System Revenues Refunding Bond, Series 2021 Date Principal Amount (May 15) 2022 $ 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 TOTAL $5,300,000 01486622-1