city of port st. lucie, florida $64035000 - EMMA

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May 25, 2010 - profit corporation (the "Borrower" or "VGTI Florida") for the purpose ... development, training and educa
NEW ISSUE - BOOK-ENTRY ONLY

RATINGS: Moody's: "Aa3" (See "RATINGS" herein)

In the opinion of Squire, Sanders & Dempsey L.L.P., Bond Counsel, under existing law (i) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Series 2010 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations and (ii) the Series 2010 Bonds and the income thereon are exempt from taxation under the laws of the State of Florida, except estate taxes imposed by Chapter 198, Florida Statutes, as amended, and net income and franchise taxes imposed by Chapter 220, Florida Statutes, as amended. Interest on the Series 2010 Bonds may be subject to certain federal taxes imposed only on certain corporations. For a more complete discussion of the tax aspects, see "TAX MATTERS" herein.

CITY OF PORT ST. LUCIE, FLORIDA $64,035,000 Research Facilities Revenue Bonds, Series 2010 (Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project) Dated: Date of Delivery

Due: May 1, as shown on the inside cover page

The $64,035,000 Research Facilities Revenue Bonds, Series 2010 (Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project) (the "Series 2010 Bonds") of the City of Port St. Lucie, Florida (the "City"), will be issued only as fully registered bonds and will be initially registered only in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), which will act as securities depository for the Series 2010 Bonds. The Series 2010 Bonds will be available to purchasers in denominations of $5,000 and any multiple thereof only under the book-entry system maintained by DTC through brokers and dealers who are or act through, DTC Participants. Purchasers will not receive delivery of the Series 2010 Bonds. So long as any purchaser is the Beneficial Owner (as defined herein) of a Series 2010 Bond, he must maintain an account with a broker or dealer who is, or acts through, a DTC Participant to receive payment of the principal of, premium, if any, and interest on such Series 2010 Bond. See "DESCRIPTION OF THE SERIES 2010 BONDS – Book-Entry Only System" herein. Interest on the Series 2010 Bonds will be payable on May 1 and November 1 of each year, commencing on November 1, 2010. While the Series 2010 Bonds are registered through DTC, principal of and interest on the Series 2010 Bonds will be payable by the Trustee to DTC. TD Bank, National Association will serve as Trustee and registrar for the Series 2010 Bonds. The Series 2010 Bonds are subject to optional, mandatory and extraordinary redemption, prior to maturity as more specifically set forth herein. The Series 2010 Bonds are being issued under the authority of, and in full compliance with, the Constitution and laws of the State of Florida, including particularly Chapter 166, Part II, Florida Statutes, Chapter 159, Parts II and VII, Florida Statutes and Sections 1.01 and 9.09(b) of the Charter of the City, and other applicable provisions of law, and Ordinance 10-18, enacted by the City Council on April 26, 2010, as supplemented by Resolution 10-R29 adopted by the City Council on May 10, 2010 (collectively, the "Bond Ordinance"). The Series 2010 Bonds are being issued to provide funds, together with other available money, to (i) finance a loan to the Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp., a Florida not-forprofit corporation (the "Borrower" or "VGTI Florida") for the purpose of paying or reimbursing the costs of certain land located in the City and the approximately 99,000 gross square foot building to be constructed on such land to be used for purposes of biomedical and other scientific research, development, training and educational facilities, including, without limitation, related office, administrative and ancillary space, laboratory suites, research laboratory office, conference rooms, lecture halls, and associated support systems, parking facilities and infrastructure improvements related thereto, together, without limitation, furniture, fixtures and equipment related thereto (collectively, the "Project"); (ii) fund capitalized interest on the Series 2010 Bonds until November 1, 2012; (iii) fund a deposit to the Debt Service Reserve Fund for the Series 2010 Bonds in the amount of the Reserve Requirement; and (iv) pay certain of the costs of issuance of the Series 2010 Bonds. See "PURPOSE OF THE SERIES 2010 BONDS," "THE SERIES 2010 PROJECT," "ESTIMATED SOURCES AND USES OF FUNDS" and "APPENDIX C – CERTAIN INFORMATION REGARDING THE BORROWER" herein and hereto. Proceeds of the Series 2010 Bonds are being loaned to the Borrower pursuant to a Loan Agreement, dated as of June 1, 2010 (the "Loan Agreement"), between the City and the Borrower. The Series 2010 Bonds are being issued pursuant to a Trust Indenture, dated as of June 1, 2010 (the "Indenture") between the City and TD Bank, National Association (in such capacity, the "Trustee"). The Series 2010 Bonds are special obligations of the City payable solely from and secured by (i) a lien upon and pledge of the Trust Estate created under the Indenture and (ii) a covenant of the City to budget, appropriate and deposit into the Debt Service Reserve Fund, at such times as may be required to cure any deficiency therein within thirty (30) days of receipt of written notice from the Trustee, while the Series 2010 Bonds are outstanding, from all legally available Non-Ad Valorem Revenues (as defined herein) of the City, sufficient Non-Ad Valorem Revenues to supplement the moneys in the Debt Service Reserve Fund to the extent necessary to replenish the amount therein to the amount of the Reserve Requirement as further described herein. See "SECURITY FOR THE SERIES 2010 BONDS" herein. THE SERIES 2010 BONDS ARE LIMITED OBLIGATIONS OF THE CITY, THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON WHICH ARE PAYABLE SOLELY FROM AND SECURED SOLELY BY THE SECURITY DESCRIBED IN THE INDENTURE, INCLUDING PAYMENTS UNDER THE LOAN AGREEMENT, ALL AS DESCRIBED IN AND SUBJECT TO LIMITATIONS SET FORTH IN THE INDENTURE, THE MORTGAGE AND THE LOAN AGREEMENT, FOR THE EQUAL AND RATABLE BENEFIT OF THE REGISTERED OWNERS, FROM TIME TO TIME OF THE SERIES 2010 BONDS. THE SERIES 2010 BONDS AND THE INTEREST THEREON AND PREMIUM, IF ANY, SHALL NOT BE DEEMED TO CONSTITUTE OR CREATE AN INDEBTEDNESS, LIABILITY OR OBLIGATION OF THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION THEREOF, WITHIN THE MEANING OF ANY STATE CONSTITUTIONAL PROVISION OR STATUTORY LIMITATION, OR A PLEDGE OF THE FAITH AND CREDIT OR THE TAXING POWER OF THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE CITY. The Series 2010 Bonds are offered when, as and if issued and accepted by the Underwriter subject to the approval of legality by Squire, Sanders & Dempsey L.L.P., Miami, Florida, Bond Counsel. Certain legal matters will be passed on for the City by Roger G. Orr, City Attorney, and GrayRobinson, P.A., Tampa, Florida, Disclosure Counsel. The Underwriter is being represented by Kutak Rock, Denver, Colorado and Dean, Mead, Minton & Zwemer, Fort Pierce, Florida. The Borrower is being represented by its counsel, McDermott Will & Emery LLP, Miami, Florida. It is expected that settlement for the Series 2010 Bonds will occur through the facilities of DTC in New York, New York, on or about June 3, 2010. This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read this entire Official Statement to obtain information essential to the making of an informed investment decision.

Dated: May 25, 2010

CITY OF PORT ST. LUCIE, FLORIDA MATURITIES, AMOUNTS, INTEREST RATES, YIELDS AND INITIAL CUSIP NUMBERS*

$64,035,000 Research Facilities Revenue Bonds, Series 2010 (Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project) $17,315,000 Serial Bonds Maturity (May 1) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Amount $1,015,000 1,045,000 1,090,000 1,130,000 1,190,000 1,245,000 1,310,000 1,375,000 1,445,000 1,505,000 1,580,000 1,655,000 1,730,000

Interest Rate 3.000% 4.000 4.000 5.000 5.000 5.000 5.000 5.000 4.125 5.000 5.000 4.375 4.500

Price 102.813 105.783 105.046 108.946 107.734 107.001 106.197 105.514 97.380 103.473* 102.670* 96.111 96.414

Initial CUSIP Numbers** 73541T AA7 73541T AB5 73541T AC3 73541T AD1 73541T AE9 73541T AF6 73541T AG4 73541T AH2 73541T AJ8 73541T AK5 73541T AL3 73541T AM1 73541T AN9

$17,270,000 5.00% Term Bonds due May 1, 2033, Price 98.387; Initial CUSIP Number 73541T AQ2** $5,475,000 5.00% Term Bonds due May 1, 2035, Price 98.316; Initial CUSIP Number 73541T AR0** $23,975,000 5.00% Term Bonds due May 1, 2042, Price 96.144; Initial CUSIP Number 73541T AP4**

_____________________ * Priced to first call date of May 1, 2020. ** The City is not responsible for the use of CUSIP numbers, nor is a representation made as to their correctness. The CUSIP numbers are included solely for the convenience of the readers of this Official Statement.

CITY OF PORT ST. LUCIE, FLORIDA 121 S.W. Port St. Lucie Boulevard Port St. Lucie, Florida 34984

CITY COUNCIL Patricia Christensen, Mayor Jack Kelly, Vice Mayor Linda Bartz, Councilmember Michelle Berger, Councilmember Christopher S. Cooper, Councilmember CITY MANAGER Jerry A. Bentrott CITY ATTORNEY Roger G. Orr, Esq.

FINANCE DIRECTOR/CITY TREASURER Marcia Dedert

CITY CLERK Karen A. Phillips

BOND COUNSEL Squire, Sanders & Dempsey L.L.P. Miami, Florida DISCLOSURE COUNSEL GrayRobinson, P.A. Tampa, Florida INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS DiBartolomeo, McBee, Hartley & Barnes, P.A. Port St. Lucie, Florida REGISTRAR AND TRUSTEE TD Bank, National Association Jacksonville, Florida

No dealer, broker, salesman or other person has been authorized by the City, the Borrower or the Underwriter to give any information or to make any representations other than those contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement neither constitutes an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2010 Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been furnished by the City, the Borrower and The Depository Trust Company (as to itself and the book-entry only system) and other sources which are believed to be reliable, but such information is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation of, the City, the Borrower or the Underwriter. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create the implication that there has been no change in the affairs of the City or the Borrower since the date hereof. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibility to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

Upon issuance, the Series 2010 Bonds will not be registered under the Securities Act of 1933, as amended, nor will the Indenture be qualified under the Trust Indenture Act of 1939, as amended. The Series 2010 Bonds will not be listed on any stock or other securities exchange, and neither the Securities and Exchange Commission nor any other federal, state, municipal or other governmental entity, other than the City, will have passed upon the accuracy or adequacy of this Official Statement or approved the Series 2010 Bonds for sale. The information in this Official Statement is provided as of the date of this Official Statement. Nothing contained in this Official Statement shall under any circumstances create an implication that there has been no change in such information after the date of this Official Statement. THE ORDER AND PLACEMENT OF MATERIALS IN THIS OFFICIAL STATEMENT INCLUDING THE APPENDICES, ARE NOT TO BE DEEMED TO BE A DETERMINATION OF RELEVANCE, MATERIALITY OR IMPORTANCE, AND THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES, MUST BE CONSIDERED IN ITS ENTIRETY. THE OFFERING OF THE SERIES 2010 BONDS IS MADE ONLY BY MEANS OF THIS ENTIRE OFFICIAL STATEMENT. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE CITY, THE BORROWER, THE SERIES 2010 PROJECT AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THIS OFFICIAL STATEMENT CONTAINS FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES, INCLUDING

THOSE DESCRIBED IN "BONDHOLDERS' RISKS" HEREIN, MANY OF WHICH ARE BEYOND THE CONTROL OF THE CITY AND THE BORROWER. FORWARD-LOOKING STATEMENTS ARE TYPICALLY IDENTIFIED BY WORDS SUCH AS "BELIEVE," "EXPECT," "ANTICIPATE," "INTEND," "ESTIMATE" AND SIMILAR EXPRESSIONS. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF FACTORS ("CAUTIONARY STATEMENTS") SUCH AS THOSE DESCRIBED IN "BONDHOLDERS' RISKS" HEREIN. IN LIGHT OF THESE RISKS AND UNCERTAINTIES, THERE CAN BE NO ASSURANCE THAT THE RESULTS AND EVENTS CONTEMPLATED BY THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT WILL IN FACT TRANSPIRE. YOU ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS. NEITHER THE CITY NOR THE BORROWER UNDERTAKES ANY OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS. ALL SUBSEQUENT WRITTEN OR ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO CITY OR THE BORROWER OR PERSONS ACTING ON THEIR BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. NEITHER THE CITY NOR THE BORROWER PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN CHANGES TO ITS EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED, OCCUR. IN CONNECTION WITH THE OFFERING OF THE SERIES 2010 BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2010 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. References herein to laws, rules, regulations, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to this Official Statement they may be obtained from Karen A. Phillips, City Clerk, 121 S.W. Port St. Lucie Boulevard, Port St. Lucie, Florida 34984, (772) 871-5157, upon prepayment of reproduction costs, postage and handling expenses.

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TABLE OF CONTENTS Page INTRODUCTION .......................................................................................................................... 1 CITY OF PORT ST. LUCIE .......................................................................................................... 2 THE BORROWER ......................................................................................................................... 2 PURPOSE OF THE SERIES 2010 BONDS .................................................................................. 3 THE SERIES 2010 PROJECT........................................................................................................ 3 ESTIMATED SOURCES AND USES OF FUNDS ...................................................................... 4 DESCRIPTION OF THE SERIES 2010 BONDS.......................................................................... 4 General ........................................................................................................................................4 Book-Entry Only System ............................................................................................................5 Discontinuance of Securities Depository ....................................................................................7 Registration, Transfer and Exchange ..........................................................................................8 Redemption Provisions ...............................................................................................................8 Selection of Bonds for Redemption ..........................................................................................10 Notice of Redemption of Bonds................................................................................................11 Series 2010 Bonds No Longer Outstanding on Redemption Date............................................12 BONDHOLDERS' RISKS............................................................................................................ 12 Project Risks..............................................................................................................................12 Investment Risks .......................................................................................................................16 Other Possible Risk Factors ......................................................................................................20 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2010 BONDS .................... 21 Trust Estate................................................................................................................................21 The Loan Agreement, the Mortgage and the Indenture ............................................................21 Acceleration...............................................................................................................................23 Refunding Bonds.......................................................................................................................23 Bond Fund .................................................................................................................................23 Debt Service Reserve Fund .......................................................................................................24 City Covenant to Budget and Appropriate ................................................................................26 Description of Non-Ad Valorem Revenues ..............................................................................27 ESTIMATED DEBT SERVICE SCHEDULE............................................................................. 35 FINANCIAL STATEMENTS ...................................................................................................... 36 TAX MATTERS........................................................................................................................... 36 Original Issue Discount and Original Issue Premium ...............................................................38 LITIGATION................................................................................................................................ 39

LEGAL MATTERS...................................................................................................................... 39 ENFORCEABILITY OF REMEDIES ......................................................................................... 40 RATINGS ..................................................................................................................................... 40 UNDERWRITING ....................................................................................................................... 40 DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATION................................. 41 CONTINUING DISCLOSURE.................................................................................................... 41 ADVISORS AND CONSULTANTS ........................................................................................... 42 MISCELLANEOUS ..................................................................................................................... 42 APPENDIX A

-- GENERAL INFORMATION PERTAINING TO THE CITY OF PORT ST. LUCIE AND ST. LUCIE COUNTY, FLORIDA APPENDIX B -- CITY AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 APPENDIX C -- CERTAIN INFORMATION REGARDING THE BORROWER APPENDIX D -- BORROWER AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 APPENDIX E -- BORROWER OPERATING CASH FLOWS APPENDIX F -- FORM OF TRUST INDENTURE APPENDIX G -- FORM OF LOAN AGREEMENT APPENDIX H -- FORM OF BOND COUNSEL OPINION APPENDIX I-1 -- FORM OF CONTINUING DISCLOSURE CERTIFICATE – BORROWER APPENDIX I-2 -- FORM OF CONTINUING DISCLOSURE CERTIFICATE – CITY

OFFICIAL STATEMENT relating to the issuance of CITY OF PORT ST. LUCIE, FLORIDA $64,035,000 Research Facilities Revenue Bonds, Series 2010 (Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project) INTRODUCTION The purpose of this Official Statement, which includes the cover page and the Appendices hereto, is to furnish information with respect to the sale by the City of Port St. Lucie, Florida (the "City"), of its Research Facilities Revenue Bonds, Series 2010 (Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project), being issued in the aggregate principal amount of $64,035,000 (the "Series 2010 Bonds"). There follows in this Official Statement a brief description of the Series 2010 Bonds, the security for the Series 2010 Bonds, and information regarding the City and Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp, a Florida not-for-profit corporation (the "Borrower" or "VGTI Florida"). All financial data and other statistical data included herein have been provided by the City and the Borrower, except where other sources are noted. The Series 2010 Bonds are being issued pursuant to the Constitution and laws of the State of Florida, including particularly Chapter 166, Part II, Florida Statutes, Chapter 159, Parts II and VII, Florida Statutes and Sections 1.01 and 9.09(b) of the Charter of the City, and other applicable provisions of law, and Ordinance 10-18, enacted by the City Council on April 26, 2010, and as supplemented by Resolution 10-R29 also adopted by the City Council on May 10, 2010 (collectively, the "Bond Ordinance"). The Series 2010 Bonds are being issued pursuant to a Trust Indenture, dated as of June 1, 2010 (the "Indenture"), between the City and TD Bank, National Association (in such capacity, the "Trustee"). Pursuant to the Indenture, the City will assign and pledge to the Trustee as security for the Series 2010 Bonds, all of its right, title and interest in the Trust Estate (as defined herein). The proceeds of the sale of the Series 2010 Bonds will be used to make a loan (the "Loan") to the Borrower, pursuant to a Loan Agreement, dated as of June 1, 2010 (the "Loan Agreement"), between the City and the Borrower. As security for the repayment of the Loan, the Borrower will execute a Mortgage and Security Agreement, dated as of June 1, 2010 (the "Mortgage") in favor of the Trustee and the City, as mortgagee, to secure the Borrower's obligations under the Loan Agreement. The Borrower is required under the terms of the Loan Agreement to make payments to the Trustee for the account of the City in amounts and at times sufficient to pay the principal of, premium, if any, and interest on the Series 2010 Bonds as well as any Reimbursement Payments to the City for deposits made from Non-Ad Valorem Revenues to the Debt Service Reserve Fund pursuant to the Covenant. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2010 BONDS – City Covenant to Budget and Appropriate." 1

A complete description of the terms and conditions of the Series 2010 Bonds is set forth in the Form of Trust Indenture, a copy of which is included in this Official Statement as APPENDIX F. The description of the Series 2010 Bonds, the documents authorizing and securing the same, and the information from various reports and statements contained herein are not comprehensive or definitive. All references herein to such documents, reports and statements are qualified by their entire, actual content. Capitalized terms used but not defined in this Official Statement have the meaning ascribed thereto in the Form of Trust Indenture, unless the context would clearly indicate otherwise. The applicable definitions are contained in "APPENDIX F –FORM OF TRUST INDENTURE," attached hereto. The assumptions, estimates, projections and matters of opinion contained in this Official Statement, whether or not so expressly stated, are set forth as such and not as matters of fact, and no representation is made that any of the assumptions or matters of opinion herein are valid or that any projections or estimates contained herein will be realized. Neither this Official Statement nor any other statement which may have been made verbally or in writing in connection with the Series 2010 Bonds, other than the Indenture, is to be construed as a contract with the Registered Owners of the Series 2010 Bonds. CITY OF PORT ST. LUCIE The City was incorporated in 1961 and is a primarily residential community in the southern part of St. Lucie County. The City encompasses approximately 115 square miles and is located on the southeastern coastline of the State of Florida, 100 miles north of the City of Miami, 50 miles north of the City of West Palm Beach and about 65 miles south of the City of Melbourne. The City is served by three major north-south Florida highways: Interstate 95, the Florida Turnpike, and U.S. Highway 1. The population reported in the 2000 Census was 88,769 and the estimated population as of September 30, 2009 was 155,251. See "APPENDIX A – GENERAL INFORMATION PERTAINING TO THE CITY OF PORT ST. LUCIE AND ST. LUCIE COUNTY, FLORIDA" attached hereto. THE BORROWER VGTI Florida is a start-up research institute with a focus on immunology and treatment of human disease, including the development of vaccines and therapeutics for infectious disease and identification of defects in the immune system of the elderly. VGTI Florida is a Florida notfor-profit corporation located in the City, and is exempt from federal taxation under Section 501(a) of the Code as an organization described in Section 501(c)(3) of the Code. Pursuant to a written agreement (the "Funding Agreement") between VGTI Florida and the State of Florida, Executive Office of the Governor's Office of Tourism, Trade, and Economic Development ("OTTED") dated April 17, 2008, OTTED has found and determined that the establishment of VGTI Florida in the State of Florida will promote and support cutting edge vaccine and gene therapy research and development independently, as well as in cooperation with State and United States based universities and research institutes.

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For more information regarding the Borrower, see "APPENDIX C – CERTAIN INFORMATION REGARDING THE BORROWER," attached hereto. PURPOSE OF THE SERIES 2010 BONDS The Series 2010 Bonds are being issued to provide funds, together with other available money, to (i) finance a loan to the Borrower to finance or reimburse the acquisition, construction, and equipping of the Series 2010 Project (as described below); (ii) fund capitalized interest until November 1, 2012; (iii) fund a deposit to the Debt Service Reserve Fund for the Series 2010 Bonds in the amount of the Reserve Requirement; and (iv) pay certain of the costs of issuance of the Series 2010 Bonds. THE SERIES 2010 PROJECT Proceeds of the Series 2010 Bonds will be used to finance the acquisition of certain land located in the City and the construction, furnishing and equipping of the approximately 99,000 gross square foot building to be constructed on such land to be used for purposes of biomedical and other scientific research, development, training and educational facilities, including, without limitation, related office, administrative and ancillary space, laboratory suites, research laboratory office, conference rooms, lecture halls, and associated support systems, parking facilities and infrastructure improvements related thereto, together, without limitation, furniture, fixtures and equipment related thereto (collectively, the "Project"). See "PURPOSE OF THE SERIES 2010 BONDS" and "ESTIMATED SOURCES AND USES OF FUNDS" herein. For more information concerning the Series 2010 Project, see "APPENDIX C – CERTAIN INFORMATION REGARDING THE BORROWER – THE SERIES 2010 PROJECT," attached hereto. [Balance of page intentionally left blank.]

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ESTIMATED SOURCES AND USES OF FUNDS The following table sets forth the estimated sources and uses of funds in connection with the issuance of the Series 2010 Bonds: SOURCES OF FUNDS: Principal Amount of Series 2010 Bonds Less: Net Original Issue Discount Borrower Contribution Total Sources

$64,035,000.00 (783,774.45) 208,000.00 $63,459,225.55

USES OF FUNDS: Project Fund: Capitalized Interest Account(1) Project Account Cost of Issuance Account – Series 2010 Bonds Subaccount(2) – Borrower Subaccount(2) Debt Service Reserve Fund City Credit Enhancement Fee Total Uses

$7,543,070.69 45,300,000.00 1,261,942.36 208,000.00 4,146,212.50 5,000,000.00 $63,459,225.55

______________ (1) (2)

Capitalized interest is funded in an amount to cover debt service attributable to the Series 2010 Project until November 1, 2012. Includes Underwriter's Discount, Bond, Disclosure and Underwriter's Counsel fees, City administrative fee, printing costs, Trustee fee, Trustee's Counsel fee, Rating Agencies fees and miscellaneous expenses of issuance.

DESCRIPTION OF THE SERIES 2010 BONDS General The Series 2010 Bonds will be dated their date of issuance, will be issued in fully registered form, in the denominations of $5,000 each or any multiples thereof, and will bear interest from such date at the rates per annum, and mature on the dates and in the amounts as set forth on the inside cover page of this Official Statement. Interest on the Series 2010 Bonds will be payable semiannually on May 1 and November 1 of each year, commencing November 1, 2010. Principal of and interest on the Series 2010 Bonds will be payable in the manner described below under "– Book-Entry Only System." The Series 2010 Bonds will be subject to redemption as described under "– Redemption Provisions" herein. Principal of and premium, if any, on the Series 2010 Bonds shall be payable at the designated office of the Trustee in Jacksonville, Florida. Principal shall be payable upon presentation and surrender of the Series 2010 Bonds as the same become due. Interest on the Series 2010 Bonds shall be paid to the persons in whose name the Series 2010 Bonds are registered at the close of business of the 15th calendar day (whether or not a Business Day) of the calendar month next preceding an Interest Payment Date by check or draft mailed to such persons at their addresses as they appear on the registration books; provided at the written request of an owner of at least $1,000,000 in aggregate principal amount of Series 2010 Bonds, timely submitted to the Trustee, principal and interest shall be payable by wire transfer at an address specified by such owner. If any Series 2010 Bond is not paid upon presentment when 4

due (whether at maturity, by acceleration or call for redemption or otherwise), such Series 2010 Bond shall continue to bear interest until paid at the rate specified thereon. Book-Entry Only System The Depository Trust Company ("DTC"), New York, New York, or its successor, will act as securities depository for the Series 2010 Bonds. The Series 2010 Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representation of DTC. One fully-registered Series 2010 Bond certificate will be issued for each maturity in the aggregate principal amount of such maturity of the Series 2010 Bonds and will be deposited with DTC. References herein to Registered Owners of the Series 2010 Bonds shall mean DTC or Cede & Co., and shall not mean the Beneficial Owners referred to below. Certain portions of the following information have been furnished by DTC. So long as Cede & Co. is the Registered Owner of the Series 2010 Bonds, payments of the principal of and interest due on the Series 2010 Bonds will be payable directly to DTC. DTC, the worlds' largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a whollyowned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. Purchases of the Series 2010 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2010 Bonds on DTC's records. The ownership interest of each actual purchaser of the Series 2010 Bonds (the "Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect 5

Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2010 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of the Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interest in Series 2010 Bonds, except in the event that use of the book-entry system for the Series 2010 Bonds is discontinued. To facilitate subsequent transfers, all Series 2010 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2010 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2010 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2010 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices will be sent to DTC. If less than all of the Series 2010 Bonds are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2010 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series 2010 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Series 2010 Bonds will be made to DTC. DTC's practice is to credit Direct Participants' accounts on the payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on the payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name", and will be the responsibility of such Participant and not of DTC, the Paying Agent or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the City or the Paying Agent, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Series 2010 Bonds at any time by giving reasonable notice to the City or the Paying Agent.

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Under such circumstances, in the event that a successor securities depository is not obtained, Series 2010 Bond certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Series 2010 Bond certificates will be printed and delivered. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. SO LONG AS CEDE & CO., AS NOMINEE FOR DTC, IS THE SOLE REGISTERED OWNER, THE CITY AND THE PAYING AGENT SHALL TREAT CEDE & CO. AS THE ONLY OWNER OF THE SERIES 2010 BONDS FOR ALL PURPOSES UNDER THE BOND ORDINANCE INCLUDING RECEIPT OF ALL PRINCIPAL OF AND INTEREST ON THE SERIES 2010 BONDS, RECEIPT OF NOTICES, VOTING AND REQUESTING OR DIRECTING THE CITY AND THE PAYING AGENT TO TAKE OR NOT TO TAKE, OR CONSENTING TO, CERTAIN ACTIONS UNDER SUCH BOND ORDINANCE. NEITHER THE CITY, THE PAYING AGENT, NOR THE UNDERWRITER WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO THE PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO (A) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY PARTICIPANT; (B) THE PAYMENT BY ANY PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OF, OR PREMIUM, IF ANY, OR INTEREST ON, THE SERIES 2010 BONDS; (C) THE DELIVERY OR TIMELINESS OF DELIVERY BY ANY PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE BOND ORDINANCE TO BE GIVEN TO BONDHOLDERS; (D) THE SELECTION BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY BENEFICIAL OWNER TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL REDEMPTION OF THE SERIES 2010 BONDS; OR (E) OTHER ACTION TAKEN BY DTC OR CEDE & CO., AS REGISTERED OWNER. Discontinuance of Securities Depository DTC may discontinue providing its services with respect to the Series 2010 Bonds at any time by giving notice to the City and discharging its responsibilities with respect thereto under applicable law, or the City may terminate its participation in the system of book-entry transfers through DTC at any time. In the event that the DTC book-entry only system is discontinued and it is not replaced with another book-entry system, the following provisions will apply: principal of the Series 2010 Bonds and redemption premium, if any, thereon will be payable in lawful money of the United States of America at the principal office of TD Bank, National Association, as Paying Agent, in Jacksonville, Florida (the "Paying Agent"). Interest on the Series 2010 Bonds will be payable on each May 1 and November 1 by check or draft mailed to the respective addresses of the Registered Owners thereof as shown on the registration books of the City maintained by the registrar as of 5:00 P.M. Eastern Time on the record date therefor as set forth in the Bond Ordinance; provided, however, that the Registered Owner of any Series 2010 Bond 7

in the principal amount of $1,000,000 or more may, upon written request made to the registrar and at the expense of such Registered Owner, direct that payment of interest thereon be made by wire transfer or any other medium acceptable to the City and to such Registered Owner, all as more specifically provided in the Bond Ordinance. The transfer of the Series 2010 Bonds will be registrable and they may be exchanged at the principal office of the registrar, upon the payment of any taxes, fees or other governmental charges required to be paid with respect to such transfer or exchange. Registration, Transfer and Exchange The Trustee shall act as the registrar and shall maintain registration books for the registration and the registration of transfer of the Series 2010 Bonds. The transfer of any Series 2010 Bond shall be in Authorized Denominations and may be registered only upon the books kept for the registration and registration of transfer of the Series 2010 Bonds upon surrender thereof to the registrar together with an assignment duly executed by the registered owner in person or by his duly authorized attorney or legal representative. Upon any such transfer the City shall execute and the Trustee shall authenticate and deliver in exchange for such Series 2010 Bond a new registered bond or bonds, registered in the name of the transferee, of an Authorized Denomination. Prior to due presentment for registration of transfer, the registrar shall treat the registered owner as the person exclusively entitled to payment of principal and the exercise of all other rights and powers of the owner, except that all interest payments shall be made to the registered owner as of the Record Date. Upon surrender thereof at the principal corporate trust office of the Trustee, together with an assignment duly executed by the registered owner or his duly authorized attorney or legal representative, Series 2010 Bonds may, at the option of the owner, be exchanged for an equal aggregate principal amount of Series 2010 Bonds of the same maturity of Authorized Denominations as requested by the owner thereof or his duly authorized attorney or legal representative. Any exchange or registration of transfer of any Series 2010 Bond by any owner thereof shall be at the expense of the City, except that the Trustee as registrar shall make a charge to any bondholder requesting such exchange, registration or discharge in the amount of any tax or other governmental charge required to be paid with respect thereto. Redemption Provisions Optional Redemption. The Series 2010 Bonds maturing prior to May 1, 2021 are not subject to optional redemption prior to maturity. The Series 2010 Bonds maturing on or after May 1, 2021 shall be subject to redemption upon the option and direction of the Borrower in whole or in part on any date on or after May 1, 2020, at redemption prices of 100% of the principal amount to be redeemed, plus accrued interest thereon to the redemption date. Mandatory Sinking Fund Redemption. The Series 2010 Bonds maturing on May 1, 2033 are subject to mandatory sinking fund redemption in part at a redemption price equal to 100% of the Amortization Amount on the Series 2010 Bonds to be redeemed plus accrued interest thereon 8

to the redemption date, on May 1 of the years set forth below and in the following principal amounts of Series 2010 Bonds after credit as described below: Year 2026 2027 2028 2029 2030 2031 2032 2033*

Amortization Amount $1,810,000 1,900,000 1,995,000 2,095,000 2,200,000 2,305,000 2,420,000 2,545,000

___________ *Final Maturity.

The Series 2010 Bonds maturing on May 1, 2035 are subject to mandatory sinking fund redemption in part at a redemption price equal to 100% of the Amortization Amount on the Series 2010 Bonds to be redeemed plus accrued interest thereon to the redemption date, on May 1 of the years set forth below and in the following principal amounts of Series 2010 Bonds after credit as described below: Year 2034 2035*

Amortization Amount $2,670,000 2,805,000

___________ *Final Maturity.

The Series 2010 Bonds maturing on May 1, 2042 are subject to mandatory sinking fund redemption in part at a redemption price equal to 100% of the Amortization Amount on the Series 2010 Bonds to be redeemed plus accrued interest thereon to the redemption date, on May 1 of the years set forth below and in the following principal amounts of Series 2010 Bonds after credit as described below: Year 2036 2037 2038 2039 2040 2041 2042*

Amortization Amount $2,945,000 3,090,000 3,245,000 3,410,000 3,580,000 3,760,000 3,945,000

___________ *Final Maturity.

Credit Against Mandatory Sinking Fund Redemptions. The City, at its option, to be exercised on or before the forty-fifth day next preceding any mandatory sinking fund redemption date, at the direction of the Borrower, may cause to be paid to the Trustee for deposit in the Bond Fund such amount as the City may determine and to apply such amount on or before such fortyfifth day to the purchase of Series 2010 Bonds subject to mandatory sinking fund redemption on 9

such date. The Trustee shall use all reasonable efforts to expend such funds as nearly as may be practicable in the purchase of such Series 2010 Bonds as directed by the Borrower at a price not exceeding the principal amount thereof plus accrued interest to such mandatory sinking fund redemption date, without premium, and receive a credit against its mandatory sinking fund redemption obligation for such Series 2010 Bonds, which prior to such date have been redeemed (otherwise than through the operation of any sinking fund) and canceled by the Trustee and not theretofore applied as a credit against any sinking fund redemption obligation. Each Series 2010 Bond so purchased, delivered or previously redeemed shall be credited by the Trustee at 100% of the principal amount thereof against the obligation of the City on such mandatory sinking fund redemption date for such Series 2010 Bonds. Any excess over such obligation shall be credited against future Amortization Amounts in chronological order, and the Amortization Amount of such Series 2010 Bonds to be redeemed by operation of the sinking fund shall be accordingly reduced. Any funds received by the Trustee as set forth above, but not expended as provided therein for the purchase of Series 2010 Bonds on or before said forty-fifth day shall be retained in the Bond Fund and shall thereafter be used only for the purchase of Series 2010 Bonds, for the payment of interest on Series 2010 Bonds and as a credit against future mandatory sinking fund redemption Amortization Amounts in chronological order to the extent otherwise payable out of Amortization Amounts thereafter becoming due unless otherwise directed by the Borrower. Extraordinary Redemption. The Series 2010 Bonds are subject to extraordinary redemption in whole, or in part on any date (if in part, in any order of maturity as directed by the Borrower or, in the absence of such direction, in inverse order of maturity and by lot within maturities), at a redemption price equal to 100% of the principal amount to be redeemed, without premium, together with accrued interest to the date of redemption, from (i) the Net Proceeds of insurance or condemnation or other amount transferred to the Trustee pursuant to the Loan Agreement for deposit to the Redemption Fund; and (ii) the amount in the Project Account or any other account of the Project Fund therein transferred to the Redemption Fund in accordance with the Indenture. The redemption date with respect to any extraordinary redemption pursuant hereto shall be the next succeeding Interest Payment Date following the receipt by the Trustee of the net proceeds to be used for such redemption or the transfer by the Trustee from the Project Account or any account in the Project Fund to the Redemption Fund; provided, however, if such Interest Payment Date occurs within forty (40) days of receipt by the Trustee of the moneys to be used for such redemption, the redemption date shall be the second succeeding Interest Payment Date. Selection of Bonds for Redemption If less than all the Outstanding Series 2010 Bonds are called for redemption (other than sinking fund redemption), the maturities of Series 2010 Bonds to be redeemed shall be selected by the City at the direction of an Authorized Representative of the Borrower. If less than all the Outstanding Series 2010 Bonds of a maturity are to be redeemed (including sinking fund redemption), the Series 2010 Bonds within each maturity of Series 2010 Bonds to be redeemed shall be selected by the Securities Depository. If a portion of a Series 2010 Bond shall be called for redemption, a new Series 2010 Bond in principal amount equal to the unredeemed portion thereof shall be authenticated and delivered to the registered owner upon the surrender thereof. 10

If a Series 2010 Bond is of a denomination larger than the minimum Authorized Denomination, a portion of such Series 2010 Bond may be redeemed, but Series 2010 Bonds shall be redeemed only in the principal amount of an Authorized Denomination and no Series 2010 Bond may be redeemed in part if the principal amount of such Series 2010 Bond to be Outstanding following such partial redemption is not an Authorized Denomination. Notice of Redemption of Bonds Upon receipt of written instructions from the Borrower delivered pursuant to the Loan Agreement to call any of the Series 2010 Bonds or portions thereof for redemption, the Trustee shall send to the registered owner of each Series 2010 Bond to be redeemed notification thereof which notice shall (a) specify the Series 2010 Bonds to be redeemed, the redemption date, the redemption price, CUSIP numbers and the place or places where amounts due upon such redemption will be payable (which shall be the designated corporate trust office of the Trustee) and, if less than all of the Series 2010 Bonds are to be redeemed, the numbers of the Series 2010 Bonds and the portions of Series 2010 Bonds to be redeemed, (b) state any condition precedent to such redemption and (c) state that on the redemption date, and upon the satisfaction of any such condition precedent, the Series 2010 Bonds to be redeemed shall cease to bear interest. The Trustee may deliver a notice of redemption that states that the related redemption of Series 2010 Bonds is conditioned upon the receipt of funds or any other condition, and the Trustee may either rescind or amend any notice delivered pursuant hereto prior to the redemption date. Such notice may set forth any additional information relating to such redemption. Such notice shall be given by mail not less than thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption (1) by registered or certified mail to the owner of each such Series 2010 Bond to be redeemed, at the address appearing on the registration books of the Trustee, (2) to all organizations registered with the Securities and Exchange Commission as a repository for municipal securities information, and (3) to at least one information service of national recognition which disseminates securities redemption information with respect to municipal securities. In preparing such notice, the Trustee shall take into account, to the extent applicable, the prevailing municipal securities industry standards and any regulatory statement of any Federal or state administrative body having jurisdiction over the City, or the municipal securities industry, including, without limitation, Release No. 34 23856 of the Securities and Exchange Commission, or any subsequent amending or superseding release. Failure to give any notice specified in (1) or any defect therein, shall not affect the validity of any proceedings for the redemption of any Series 2010 Bonds with respect to which no such failure has occurred and failure to give any notice specified in (2) or (3), or any defect therein, shall not affect the validity of any proceedings for the redemption of any Series 2010 Bonds with respect to which the notice specified in (1) is correctly given. Any notice mailed or provided herein shall conclusively be presumed to have been given whether or not actually received by any owner. Notwithstanding anything to the contrary contained herein, so long as the Series 2010 Bonds are held under a book-entry system by DTC (or any successor Securities Depository), notices of redemption shall be sent only to DTC (or any successor Securities Depository) or its nominee. Selection of book-entry interest in the Series 2010 Bonds called, and notice of the call to the owners of those interests called, is the responsibility of DTC (or any successor Securities Depository) pursuant to its rules and procedures, and of its participants and indirect participants. Any failure of DTC (or any successor Securities Depository) to advise any participant, or of any 11

participant or any indirect participant to notify the owner of a book-entry interest, of any such notice and its content or effect shall not affect the validity of any proceedings for the redemption of any Series 2010 Bonds. Series 2010 Bonds No Longer Outstanding on Redemption Date Provided funds for their redemption are on deposit at the place of payment on the redemption date, all Series 2010 Bonds or portions thereof called for redemption shall cease to bear interest on such date, shall no longer be secured by the Indenture and shall not be deemed to be outstanding under the provisions of the Indenture. The holders of such Series 2010 Bonds shall look only to such funds for payment and then only to the extent of the amounts so received, without any interest thereon, and the Trustee shall have no responsibility with respect to such money. Any moneys which shall be so set aside or deposited, whether for the payment of Series 2010 Bonds at maturity or upon redemption, and which shall remain unclaimed by the holders of such Series 2010 Bonds for a period of forty-five (45) months after the date on which such Series 2010 Bonds shall have become payable shall, on request of the Borrower, be paid to the Borrower. After such moneys have been paid to the Borrower, the holders of such Series 2010 Bonds shall be entitled to look only to the Borrower, and all liability of the Trustee with respect to such amounts shall cease. BONDHOLDERS' RISKS AN INVESTMENT IN THE SERIES 2010 BONDS INVOLVES CERTAIN RISKS, AS DESCRIBED BELOW. A BONDHOLDER IS ADVISED TO READ THE ENTIRE OFFICIAL STATEMENT, INCLUDING THE APPENDICES HERETO. THE FACTORS LISTED BELOW, AMONG OTHERS, COULD ADVERSELY AFFECT THE BORROWER'S OPERATION AND REVENUES AND EXPENSES OF THE BORROWER TO AN EXTENT WHICH CANNOT BE DETERMINED AT THIS TIME. Project Risks Limited Assets of Borrower; No Operating History. The Borrower was formed for the purpose of acquiring, constructing and owning the Series 2010 Project. The Borrower has and following the issuance of the Series 2010 Bonds will have limited assets which consist of the unspent proceeds of the OTTED Incentive Funds that have been disbursed to the Borrower to date, real estate (or interests therein) upon which the Series 2010 Project will be constructed and the portion of any Project assets to be owned by the Borrower financed with proceeds of the sale of the Series 2010 Bonds and any revenues generated by the Series 2010 Project. Owners of the Series 2010 Bonds will not be able to look to the assets of any other entity, including the City, OSHU, the OTTED Incentive Funds or the EDA Grant, to recoup their investment in the event that the Borrower's operations are unsuccessful. Moreover, the Borrower has no operating history. Prospective purchasers of the Series 2010 Bonds therefore must look to the prior experience or performance of the faculty and management of the Borrower in evaluating whether the Borrower has the necessary attributes to cause successful operation of its business. No Collateralization or Guaranty by Oregon Health Science University or VGTI Oregon. The Borrower's obligations to make payments under the loan Agreement are not 12

secured by any guaranties by the Oregon Health and Science University ("OHSU") or VGTI Oregon (as hereinafter defined) or collateralized with such entities' assets. See "APPENDIX C – CERTAIN INFORMATION REGARDING THE BORROWER – THE BORROWER – Introductory Statement" attached hereto. Construction Risks. Construction of the Building and Infrastructure Improvements (as defined in APPENDIX C hereto) included in the Series 2010 Project is expected to commence in June 2010. The Borrower has made arrangements that it anticipates will be sufficient to assure the timely completion of the construction of the Building and Infrastructure Improvements included in the Series 2010 Project so that the anticipated completion date in January/February 2012 will occur as and when expected. The construction contract provides for a guaranteed maximum price and requires the construction manager to pay damages equal to interest on the Series 2010 Bonds accruing after the scheduled completion date in the event that completion has not occurred in accordance with the required performance bonds. No assurance can be given, however, that such arrangements will prove sufficient. The Series 2010 Project is subject to the usual risks associated with construction, and circumstances or events beyond the control of the Borrower may occur which may result in cost overruns and construction delays some or all of which may not trigger the obligation of the construction manager to pay damages. Such circumstances may include, without limitation, the inability of the Borrower to obtain permits to construct portions of the Series 2010 Project or to obtain any required licenses after completion of the Series 2010 Project, strikes or other labor disputes, shortages in various labor trades, adverse weather conditions, fire or other casualty damage, unanticipated subsoil or environmental conditions, including unforeseen environmental remediation requirements, material shortages or the financial failure of the general contractor or various subcontractors. If the Borrower experiences substantial cost overruns or construction delays, it may lack sufficient funds to complete the Series 2010 Project and, because such overruns or delays may have a material adverse impact on the timing of the Borrower revenues, sufficient funds to cover operating costs during its start-up phase. See "APPENDIX C – CERTAIN INFORMATION REGARDING THE BORROWER – THE SERIES 2010 PROJECT – Construction Contract and Project Management Agreement" attached hereto. Compliance With Laws. Construction of the Building and Infrastructure Improvements relating to the Series 2010 Project is subject to all applicable local, state and federal environmental laws, statutes, ordinances, rules and regulations (collectively, "Environmental Laws"). Under the Mortgage, the Borrower has agreed to observe, conform and comply, and to cause its tenants to observe, conform and comply with all federal, state, county, municipal and other governmental or quasi-governmental laws, rules, regulations, ordinances, codes, requirements, covenants, conditions, orders, licenses, permits, approvals and restrictions, including without limitation, Environmental Laws and the Americans with Disabilities Act of 1990 (collectively, the "Legal Requirements"), now or hereafter affecting all or any part of the Series 2010 Project, its occupancy or the business or operations now or hereafter conducted thereon and the personalty contained therein, within such time as required by such Legal Requirements. While the Borrower is not presently aware of any significant environmental concerns with respect to the Land, the Land may become or be alleged to be subject to Environmental Laws not currently believed to be applicable to the Land or the Building. In such event, there is no guaranty that the costs of compliance or determination of actual liability will

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not exceed the Borrower's ability to pay such costs or otherwise have a materially adverse affect on its ability to operate. The scientific research industry is subject to numerous laws and regulations of federal, state, and local governments. These laws and regulations include, but are not limited to, laws and regulations governing the conduct of federally funded research, including research involving human and animal subjects. The Borrower is and may continue to be periodically the subject of regulatory inquiries in the normal course of its business. While management of the Borrower believes the Borrower is in compliance with applicable government laws and regulations, its compliance with such laws and regulations may be subject to current or future government review and interpretation, as well as regulatory actions unknown or unasserted at this time. No Security Interest on OTTED Incentive Funds. Neither the proceeds of, nor the Equipment, Materials or Supplies (as defined in the OTTED Funding Agreement) purchased with, the OTTED Incentive Funds referenced in APPENDIX C will be subject to a lien of the Trustee for the benefit of the Bondholders. Moreover, a significant portion of the Borrower's other funding may come from both governmental and private grants or loans that are the subject of restrictions that would prohibit the Trustee from acquiring a lien on those funds. The Funding Agreement provides that certain conditions must be met in order for the Borrower to receive disbursements under the Funding Agreement. There can be no guaranty that the Borrower will meet the conditions for future disbursements. See "APPENDIX C – CERTAIN INFORMATION REGARDING THE BORROWER – THE BORROWER – OTTED Funding Agreement" attached hereto. Grants. The Borrower has based its Operating Cash Flows attached hereto as APPENDIX E (including the anticipated receipt of research grants, from the National Institutes of Health ("NIH") and other sources) based upon the experience of Vaccine and Gene Therapy Institute, a division of OHSU ("VGTI Oregon"), which has been the beneficiary of significant federal and non-federal grants in the past. However, there is no guaranty that the Borrower will receive similar grants or any grants at all, other than those that are currently in existence and have been or are being transferred to the Borrower. Furthermore, there is no way to predict the basis on which NIH will determine whether or not to approve a grant request and it is possible that the basis for approval may vary from one application to another and one NIH reviewer to another. See "APPENDIX C – CERTAIN INFORMATION REGARDING THE BORROWER – THE BORROWER – Introductory Statement – Interrelation Between VGTI Florida and VGTI Oregon" and "– Grant Funding" and "APPENDIX E – BORROWER OPERATING CASH FLOWS" attached hereto. The Borrower Operating Cash Flows makes certain assumptions about the timing of faculty recruitment and the amount and timing of grants that recruited faculty will obtain. Any failure or delay in recruiting faculty or any failure to obtain grant funding in the amounts and at the times forecast may reduce the revenues of VGTI Florida and increase the need to draw on its cash reserves or to obtain non-grant sources of funding to meet its expenses. Similarly, the Borrower Operating Cash Flows assumes that certain salaries, supplies and other costs will be eligible for reimbursement from the direct costs of research which grant proceeds fund. The Borrower Operating Cash Flows further assumes that all or a portion of 14

other costs, such as administrative costs and overhead (including debt service on the Series 2010 Bonds), will be reimbursed by NIH and certain other funding sources based on a so-called indirect cost rate negotiated between VGTI Florida and NIH (or other funding source) and based upon expected facilities and administrative costs. There can be no assurance that VGTI Florida will obtain an indirect cost rate equal to that assumed in the Borrower Operating Cash Flows or that actual costs recovered from direct research costs or from the actual indirect cost rate or rates will equal or exceed what the Borrower Operating Cash Flows has assumed. To the extent they do not, the shortfall must be met from other revenue sources or from the available cash balances of VGTI Florida. The availability of research grants is dependent, in part, on the level of appropriations made available by the United States Congress for research, in particular research to be conducted other than by NIH itself or other entities within the federal government and research in areas of interest to VGTI Florida's scientists. Competition is intense for research funding among established and new investigators, among established and new or expanded entities conducting research and for renewals of existing grants and awarding of new grants; and typically only a minor fraction of grant applications are funded. While VGTI Florida's current faculty have been successful previously in obtaining grants and while its strategy is to attract new faculty with a similar record of success or strong prospects for attracting funding, there can be no assurance that future efforts to obtain and retain grants will be comparably successful. See "APPENDIX C – CERTAIN INFORMATION REGARDING THE BORROWER – Grant Funding" attached hereto. Need for Non-Grant Funding Sources. Grant and contract revenues, including indirect cost reimbursement, ordinarily do not cover the full costs of research. The difference must be funded by other revenue sources, such as fund-raising, income from endowment, or research sponsored by corporations (if such research can be conducted at a profit). The Borrower Operating Cash Flows assume that the principal source of meeting this difference will be contributions from fund-raising initiatives. To the extent that these initiatives fail to raise funds in the amounts forecast and alternative revenue sources are not developed, VGTI Florida would be required to draw on its cash reserves and eventually could deplete them. Permits. As referenced in the information under the heading "CERTAIN INFORMATION REGARDING THE BORROWER – THE SERIES 2010 PROJECT – Status of Permits" in APPENDIX C, all of the required building permits are not expected to be received until June 2010. However, there is no guarantee that the Borrower will receive the permits necessary to construct the Building. Borrower Operating Cash Flows. In order to give prospective investors information to evaluate an investment in the Series 2010 Bonds, VGTI Florida compiled the "BORROWER OPERATING CASH FLOWS" which is attached hereto as APPENDIX E. THE BORROWER OPERATING CASH FLOWS IS NOT A FORECAST OR PROJECTION. IT IS BASED ON MANAGEMENT'S JUDGMENT, ASSUMPTIONS AND EXPECTED COURSE OF ACTION STATED THEREIN AND IS BASED, IN PART, UPON ASSUMPTIONS THAT MAY OR MAY NOT OCCUR. NO ASSURANCE CAN BE GIVEN THAT THE BORROWER OPERATING CASH FLOWS IS CORRECT OR PROVIDES FOR ALL THE CONTINGENCIES THAT MAY AFFECT SUCH BORROWER OPERATING CASH 15

FLOWS. NO ASSURANCE CAN BE GIVEN THAT ANY OF THE RESULTS OF OPERATIONS AS SET FORTH IN THE BORROWER OPERATING CASH FLOWS WILL BE ACTUALLY ACHIEVED IN THE FUTURE. Because there is no assurance that actual events will correspond with the assumptions made, there can be no assurance or guaranty that any financial forecast set forth by management of the Borrower will correspond with the results actually achieved in the future. Actual operating results may be affected by many uncontrollable factors, including, but not limited to, increased costs, failure by management of the Borrower to execute its plans, lower than anticipated revenues, failure to recruit the needed scientific faculty, failure of its scientific faculty to attract grants in forecast amounts or at the forecast times, employee regulations, taxes, governmental controls, changes in applicable governmental regulations, and general economic conditions. Investment Risks Limited Obligations of the City. THE SERIES 2010 BONDS ARE LIMITED OBLIGATIONS OF THE CITY, THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON WHICH ARE PAYABLE SOLELY FROM AND SECURED SOLELY BY THE SECURITY DESCRIBED IN THE INDENTURE, INCLUDING PAYMENTS UNDER THE LOAN AGREEMENT, ALL AS DESCRIBED IN AND SUBJECT TO LIMITATIONS SET FORTH IN THE INDENTURE, THE MORTGAGE AND THE LOAN AGREEMENT, FOR THE EQUAL AND RATABLE BENEFIT OF THE REGISTERED OWNERS, FROM TIME TO TIME OF THE SERIES 2010 BONDS. THE SERIES 2010 BONDS AND THE INTEREST THEREON AND PREMIUM, IF ANY, SHALL NOT BE DEEMED TO CONSTITUTE OR CREATE AN INDEBTEDNESS, LIABILITY OR OBLIGATION OF THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION THEREOF, WITHIN THE MEANING OF ANY STATE CONSTITUTIONAL PROVISION OR STATUTORY LIMITATION, OR A PLEDGE OF THE FAITH AND CREDIT OR THE TAXING POWER OF THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE CITY. Special Investment Considerations. As described above, the City's covenant to budget and appropriate Non-Ad Valorem Revenues into the Debt Service Reserve Fund to replenish the amount therein to the amount of the Reserve Requirement does not constitute a lien, either legal or equitable, on any of the City's revenues. The amount of such revenues available to cure any deficiencies in the Debt Service Reserve Fund may be effectively limited by (i) the requirement for a balanced budget, (ii) funding requirements for essential governmental services of the City, (iii) a decrease in one or more of the sources of Non-Ad Valorem Revenues, and (iv) the inability of the City to expend revenues not appropriated or in excess of funds actually available after the use of such funds to satisfy obligations having an express lien or pledge on such funds. Furthermore, the City is not restricted in its ability (i) to pledge such revenues for other purposes or to issue additional debt specifically secured by such revenues or by a covenant similar to that cure any deficiencies in the Debt Service Reserve Fund or (ii) to reduce or discontinue services that generate Non-Ad Valorem Revenues. See "SECURITY AND SOURCES OF PAYMENTS FOR THE SERIES 2010 BONDS – Description of Non-Ad Valorem Revenues."

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All of these factors may limit the availability of Non-Ad Valorem Revenues to cure any deficiencies in the Debt Service Reserve Fund in the event the Loan Payments are insufficient to fund the Debt Service Reserve Fund. In addition, there can be no certainty as to the outcome of any judicial proceedings to enforce the City's obligation to appropriate such funds. Tax-Exempt Status of the Borrower. The tax-exempt status of the Series 2010 Bonds presently depends upon the maintenance by the Borrower of its status as an organization described in Section 50l(c)(3) of the Code. Although the Borrower has covenanted to maintain its status as a tax-exempt organization, loss of tax-exempt status would likely have a significant adverse effect on the organization and its operations. Any suspension, limitation or revocation of the tax-exempt status of the Borrower or assessment of significant tax liability could have a material adverse effect on the Borrower and might lead to loss of tax exemption of interest on the Series 2010 Bonds. See "TAX MATTERS." In addition, if the Borrower were to lose its taxexempt status, its property and its revenues could become subject to federal, state and local income taxation. Loss of the tax-exempt status of the Borrower also could result in loss of the tax-exempt status of other debt issued on behalf of the Borrower, and defaults in covenants regarding the Series 2010 Bonds and any other tax-exempt debt would likely result. The maintenance of the federal tax-exempt status of an organization is contingent on compliance with general rules promulgated in the Code and related regulations regarding the organization and operation of tax-exempt entities, including their operation for charitable and educational purposes and their avoidance of transactions which may cause their earnings or assets to inure to the benefit of private individuals. As these general principles were developed primarily for public charities which do not conduct large-scale technical operations and business activities, they often do not adequately address the myriad of operations and transactions entered into by modern biomedical research organizations. Various state and local governmental bodies in certain parts of the country have also sought to remove the exemption of property from real estate taxes of part or all of the property of various nonprofit institutions on the grounds that a portion of such property was not being used to further the charitable purposes of such organizations so as to warrant exemption from taxation as a charitable institution. Several of these disputes have been determined in favor of the taxing authorities or have resulted in settlements that are not favorable to the organization. It is not possible to predict the scope or effect of future legislative or regulatory actions with respect to taxation of exempt organizations. Since such actions and proposals have been made, they have been vigorously challenged and contested. There can be, however, no assurance that future changes in the laws and regulations of the federal, state or local governments will not materially and adversely affect the operations and revenues of the Borrower by requiring it to pay income or real estate taxes. No Determination of Suitability for Investment. Neither the City nor the Underwriter will make any representation or determination of the suitability of an investment in the Series 2010 Bonds for any prospective investor. Any investor will be required to rely on its professional advisors and its review of documents relating to the Series 2010 Project in order to determine independently whether purchase of the Series 2010 Bonds is an appropriate investment. 17

No Secondary Market. There can be no assurance that there will be a secondary market for the purchase or sale of the Series 2010 Bonds. From time to time there may be no market for them depending upon prevailing market conditions, including the financial condition or market position of firms who may make the secondary market, the evaluation of the Borrower's capabilities and the financial condition and results of operations of the Borrower. Adequacy of Security. If the Borrower does not make its payments under the Loan Agreement (which is the primary source available to pay debt service on the Series 2010 Bonds), the Trustee may exercise its remedies under the Loan Agreement and the Indenture (including foreclosure of the lien of the Mortgage), subject to the limitations referenced in the Mortgage and the Indenture and to the provisions of the Intercreditor Agreement, if any. Legal Matters and Enforceability of Bondowners' Remedies Upon Default. Various Florida laws, constitutional provisions, and federal laws and regulations apply to the Series 2010 Bonds and security for the Series 2010 Bonds. There can be no assurance that there will not be any change in, interpretation of or addition to the applicable laws and provisions that would have a material effect, directly or indirectly, on the affairs of the City or the Borrower. Moreover, it is uncertain that all remedies for default set forth in the Loan Agreement, the Indenture, the Mortgage or other agreements or instruments entered into in connection with the Series 2010 Project and this financing, such as the right of the Trustee to take possession of and operate the Mortgaged Property, collect rents therefrom immediately upon default, without the Borrower's consent and without judicial appointment of a receiver, take possession of the Mortgaged Property and sell the Mortgaged Property on terms that are not commercially reasonable, or obtain the appointment of a receiver on an ex parte basis or despite opposition from the Borrower as a matter or right and without regard to the adequacy of the security or evidence of danger of the Mortgaged Property value being materially reduced, are enforceable under State law or other applicable law under all circumstances. The Trustee may not sell, lease or otherwise dispose of the portion of the Mortgaged Property subject to the Mortgage in the exercise of remedies pursuant thereto in a manner that will adversely impact the exclusion from gross income for federal income tax purposes of the Series 2010 Bonds or materially impair the effective use or character of the Series 2010 Project as a "project" within the meaning of the Act. Notwithstanding anything to the contrary herein or in the Indenture, the application of amounts received by the Trustee as a result of the disposition of the Mortgaged Property pursuant to foreclosure of the Mortgage shall be subject, in all respects, to the provisions of the Intercreditor Agreement. The remedies available to the owners of the Series 2010 Bonds upon an event of default under the Loan Agreement or the Indenture are in many respects dependent upon judicial actions that are often subject to discretion and delay under existing constitutional and statutory law and judicial decisions, including specifically the United States Bankruptcy Code. The remedies specified by the Loan Agreement, the Indenture and the Mortgage may not be readily available or may be limited. The legal opinions being delivered concurrently with delivery of the Series 2010 Bonds will be qualified as to enforceability to the various legal instruments by, among other qualifications, limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally.

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EDA Grant. VGTI Florida has received an Economic Assistance Adjustment grant from the United States Department of Commerce, Economic Development Administration (the "EDA") in the amount of approximately $3,577,500 million (the "EDA Grant"). The EDA Grant requires that VGTI Florida provide matching funds in an amount equal to the EDA Grant. VGTI Florida may not be able to provide matching funds and thus loose the EDA Grant which would have been used for building enhancements to the Series 2010 Project. See "APPENDIX C – CERTAIN INFORMATION REGARDING THE BORROWER – THE SERIES 2010 PROJECT." Bankruptcy. The filing by, or against, the Borrower or the City for relief under the United States Bankruptcy Code (the "Bankruptcy Code") would have an adverse effect on the ability of the Trustee and Bondholders to enforce their claim or claims to the security granted by the Loan Agreement, the Mortgage and the Indenture, and their claim or claims to moneys owed them as unsecured claimants, if any. The filing would operate as an automatic stay of the commencement or continuation of any judicial or other proceeding against the Borrower or the City, as applicable, and their respective property and as an automatic stay of any act or proceeding to enforce a lien against such property. Moreover, following such a filing the revenues and accounts receivable and other property of the Borrower or the City, as applicable, acquired after the filing (and under some conditions prior to the filing) would not be subject to the liens and security interests created under the Loan Agreement, the Mortgage and the Indenture. In addition, the bankruptcy court has the power to issue any order, process or judgment that is necessary or appropriate to carry out the provisions of the Bankruptcy Code; such a court order could require that the property of the Borrower or the City, as applicable, including the revenues of the Borrower and proceeds thereof, could be used for the benefit of the Borrower, despite the lien and security interest of the Trustee therein. The amount of the secured claim which could be filed by the Trustee on behalf of the Bondholders would be limited to the value of the Borrower at the time the bankruptcy proceeding was commenced. This amount would be less than the principal amount of the Series 2010 Bonds, since the failure of the Borrower to produce sufficient revenues to pay operating expenses and debt service requirements prior to the bankruptcy would necessarily reduce the value of the Borrower. To the extent the value of the Borrower exceeds the principal amount of the Series 2010 Bonds, the excess would be an unsecured claim which would rank on a parity with unpaid management, project and construction management fees and the claims of unsecured general creditors of the Borrower. As a result, if the Borrower were sold following commencement of a bankruptcy proceeding, it is unclear how much the Bondholders would receive. In a bankruptcy proceeding, the debtor could file a plan of reorganization which modifies the rights of creditors generally, or any class of creditors, secured or unsecured. The Bondholders may only receive post-petition interest on the Series 2010 Bonds to the extent the value of their security exceeds their claim. The plan, when confirmed by the court, binds all creditors who had notice or knowledge of the plan and discharges all claims against the debtor provided for in the plan. No plan may be confirmed unless, among other conditions, the plan is in the best interests of creditors, is feasible and has been accepted by each class of claims impaired thereunder. Each class of claims has accepted the plan if at least two-thirds in dollar amount and more than one-half in number of the allowed claims of the class that are voted with respect to the plan are cast in its favor. Even if the plan is not so accepted, it may be confirmed if the court finds that the plan is fair and equitable with respect to each class of non-accepting 19

creditors impaired thereunder and does not discriminate unfairly in favor of junior creditors. More particularly, the Bankruptcy Code would permit the liquidation of the Borrower or the adoption of a reorganization plan for the Borrower, even though such plan had not been accepted by (i) the holders of a majority in aggregate principal amount of the Bonds, if the plan is "fair and equitable" and does not discriminate unfairly against the Bondholders as a class and is in the "best interest of the creditors," which may mean that the Bondholders are provided with the benefit of their original lien or the "indubitable equivalent;" or (ii) any holder of the Bonds if the Bondholders, as a class, are deemed unimpaired under the plan. In addition, if the bankruptcy court were to conclude that the Bondholders have "adequate protection," it may (i) substitute other security for the security subject to the lien of the Loan Agreement, the Mortgage or the Indenture or (ii) subordinate the lien of the Bondholders to persons who supply credit to the Borrower, after commencement of the case. In the event of the bankruptcy of the Borrower, any amount realized by the Trustee or Bondholders may depend on the bankruptcy court's interpretation of "indubitable equivalent" and "adequate protection" under then existing circumstances. Any transfers made to the Bondholders or the Trustee at or prior to the commencement of the case may be avoided and recaptured if such transfers are (A) avoidable by a judicial lien creditor who obtained its lien on the date the case commenced (regardless of whether such a creditor actually exists), (B) preferential or fraudulent or (C) voidable under applicable law by any actual unsecured creditor. The Bondholders may also be subject to avoidance and recapture of post-petition transfers, turnover of property of the debtor which they, the Trustee or a custodian hold and assumption, assignment or rejection of executory contracts. Limited Value at Sale or Foreclosure. Upon an Event of Default, even if there is a purchaser for the Mortgaged Property, the Trustee may not realize sufficient funds from such sale of the Mortgaged Property to satisfy the outstanding principal amount of the Series 2010 Bonds. The number of entities that could be expected to purchase or lease the Mortgaged Property are limited, and thus the ability of the Trustee to realize funds from the sale or rental of the Mortgaged Property upon an Event of Default may be limited. Notwithstanding anything to the contrary herein or in the Indenture and subject to the limitations referenced in the Mortgage and the Indenture, the application of amounts received by the Trustee as a result of the disposition of the Mortgaged Property pursuant to foreclosure of the Mortgage shall be subject, in all respects, to the provisions of the Intercreditor Agreement, if any. Other Possible Risk Factors The occurrence of any of the following events (and other unanticipated events) could adversely affect the financial position or results of operations of the Borrower and the Series 2010 Project: (a) controls;

reinstatement or establishment of mandatory governmental wage, rent or price

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(b) inability to control increases in operating costs, including salaries, wages and fringe benefits, supplies and other expenses, without being able to obtain corresponding increases in revenues; (c) unionization, employee strikes and other adverse labor actions which could result in a substantial increase in expenditures without a corresponding increase in revenues; (d) adoption of other federal, state or local legislation or regulations having an adverse effect on the future operating or financial performance of the Borrower; and (e) the occurrence of any natural disasters or other disruptions that have an impact on the operations of the Borrower. SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2010 BONDS Trust Estate Under the Indenture, the Series 2010 Bonds and any Refunding Bonds (collectively, the "Bonds") are secured by: (a) All right, title and interest of the City in and to the Loan Agreement, Loan Payments, other than the Reserved Rights and the Pledged Funds; (b) All amounts held in the funds and accounts under the Indenture, excepting amounts in the Rebate Fund; and (c) All other property of every name and nature from time to time after the date of issuance of the Series 2010 Bonds by delivery or by writing mortgaged, pledged, delivered or hypothecated as and for additional security hereunder by the City or by anyone on its behalf or with its written consent in favor of the Trustee, and the Trustee is hereby authorized to receive all such property at any time and to hold and apply the same subject to the terms hereof. The Loan Agreement, the Mortgage and the Indenture The Series 2010 Bonds are to be issued pursuant to the Indenture and, together with any Refunding Bonds which may be issued from time to time under the Indenture, will be equally and ratably secured thereby. The City will lend the proceeds of the Series 2010 Bonds and any Refunding Bonds to the Borrower pursuant to the Loan Agreement. Pursuant to the Loan Agreement, the Borrower is required to make the Loan Payments in amounts and at times sufficient to pay the principal of, premium, if any, and interest on the Series 2010 Bonds. The Borrower is also obligated to pay any Rebate Amounts together with the fees and expenses of the Rebate Analyst, expenses of the City, and the reasonable fees, charges and expenses of the Trustee. See "APPENDIX G – FORM OF LOAN AGREEMENT" attached hereto. The obligations of the Borrower under the Loan Agreement are general obligations of the Borrower payable from General Revenues which are all revenues, income, receipts and money (other than proceeds of borrowings) received by or on behalf of the Borrower with respect to the Series 2010 Project, as further defined in the Loan Agreement. See "APPENDIX G – FORM OF LOAN AGREEMENT," attached hereto. The Borrower obligations will be further secured by the 21

Mortgage, subject to the Permitted Encumbrances, pursuant to which the Borrower will grant to the Trustee and the City a mortgage lien on the real property and buildings included in the Mortgaged Property (as defined in the Mortgage) and a security interest in the leases, rents, issues, profits, revenues, income, receipts, moneys, royalties, rights and benefits of and from the Mortgaged Property. The Borrower has granted to the Trustee a security interest in the accounts, documents, chattel paper, instruments, and general intangibles arising in any manner from the Borrower's operation of the Mortgaged Property, the inventory located at the Mortgaged Property, and the Equipment, subject to Permitted Encumbrances, as defined in the Loan Agreement. See "APPENDIX G – FORM OF LOAN AGREEMENT." Each item of property that is the subject of that certain Security Agreement (as described and defined in "APPENDIX C – CERTAIN INFORMATION REGARDING THE BORROWER – OTTED Funding Agreement") and pledged to OTTED to secure the Borrower's obligations under the Funding Agreement and all equipment, materials, and supplies (as such terms are defined in the Funding Agreement) during such time as the Borrower has covenanted in the Funding Agreement not to pledge, grant a security interest in, or otherwise encumber such equipment, materials and supplies are not subject to the Mortgage (collectively, the "Separately Secured Property"). The Trustee may also exercise all remedies it or the City may have under law and under the Indenture, the Loan Agreement and the Mortgage, including foreclosure under the Mortgage, subject to the provisions of the Mortgage, which imposes certain limitations on the Trustee's ability to exercise remedies thereunder and the Intercreditor Agreement, if any. The Mortgage provides that, notwithstanding anything to the contrary in the Indenture, unless all of the principal of, premium, if any, and interest on the Bonds is paid in full or provision for such payment has been made in accordance with the Indenture, the Trustee may not sell, lease or otherwise dispose of the portion of the Mortgaged Property subject to the Mortgage in the exercise of remedies pursuant thereto in a manner that will adversely impact the exclusion from gross income for federal income tax purposes of the Series 2010 Bonds or materially impair the effective use or character of the Series 2010 Project as a "project" within the meaning of the Act. The rights of the Trustee under the Intercreditor Agreement are secured on a pari passu basis with the rights of the United States Department of Commerce, Economic Development Administration under the Intercreditor Agreement relating to any mortgage resulting from any EDA Grant made in connection with the Series 2010 Project. The Indenture provides that the Pledged Funds (which excludes the Rebate Fund) until applied in accordance with the provisions of the Indenture, shall be subject to a first lien and charge in favor of the Bondholders of the Bonds for the further security of such Bondholders and Credit Facility Issuers, if any, in accordance with the terms of the Indenture. The Trustee shall keep and hold moneys in the funds and accounts established pursuant to the Indenture separate and apart from all other funds and moneys held by it. The Series 2010 Bonds are not secured by a Credit Facility. THE SERIES 2010 BONDS ARE LIMITED OBLIGATIONS OF THE CITY, THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON WHICH ARE PAYABLE SOLELY FROM AND SECURED SOLELY BY THE SECURITY DESCRIBED IN THE INDENTURE, INCLUDING PAYMENTS UNDER THE LOAN AGREEMENT, ALL AS DESCRIBED IN AND SUBJECT TO LIMITATIONS SET FORTH IN THE INDENTURE, THE MORTGAGE AND THE LOAN AGREEMENT, FOR THE EQUAL AND RATABLE BENEFIT OF THE REGISTERED OWNERS, FROM TIME TO TIME 22

OF THE SERIES 2010 BONDS. THE SERIES 2010 BONDS AND THE INTEREST THEREON AND PREMIUM, IF ANY, SHALL NOT BE DEEMED TO CONSTITUTE OR CREATE AN INDEBTEDNESS, LIABILITY OR OBLIGATION OF THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION THEREOF, WITHIN THE MEANING OF ANY STATE CONSTITUTIONAL PROVISION OR STATUTORY LIMITATION, OR A PLEDGE OF THE FAITH AND CREDIT OR THE TAXING POWER OF THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE CITY. Acceleration Upon the occurrence of an Event of Default, the Trustee may, and at the request of the holders of not less than a majority in aggregate principal amount of Bonds then outstanding, shall, by notice delivered to the City and the Borrower, declare the principal of all Bonds and the interest accrued to the date of such acceleration immediately due and payable. Upon such acceleration, the Trustee shall immediately declare all payments required to be made by the City to be immediately due and payable, shall take control of the Trust Estate, shall also transfer all moneys from all other funds and accounts, except the Rebate Fund, to the Bond Fund and shall exercise its rights under the Loan Agreement and the Mortgage. Refunding Bonds Refunding Bonds may be issued under and secured by the Indenture subject to the conditions provided in the Indenture, at any time or times for the purposes of (i) providing necessary funds to defease or refund all or a portion of the Series 2010 Bonds, (ii) making a deposit, if necessary, to the Debt Service Reserve Fund, and (iii) paying the Costs of Issuance relating to such Refunding Bonds. See "APPENDIX F – FORM OF TRUST INDENTURE" attached hereto. Bond Fund A Bond Fund is established by the Trustee pursuant to the Indenture. The Trustee shall maintain two (2) separate accounts in the Bond Fund which include the Interest Account and the Principal Account. Loan Payments received by the Trustee from the Borrower under the Loan Agreement shall be deposited as received by the Trustee in the Bond Fund in the following manner and in the following order of priority: (1) Subject to the provisions of Section 6.04(c) of the Indenture, there shall be deposited to the Interest Account an amount which shall be sufficient to pay the interest becoming due on the Bonds on the next succeeding Interest Payment Date and any other amounts required to be deposited to the credit of the Bond Fund. Moneys in the Interest Account shall be used to pay the interest on the Bonds as and when the same becomes due whether by redemption or otherwise and for no other purpose. No further deposit need be made to the Interest Account when the moneys therein are equal to the interest coming due on all Outstanding Bonds on the next succeeding Interest Payment Date.

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(2) There shall be deposited to the Principal Account an amount which shall be sufficient to pay the Amortization Amounts and principal becoming due on the Bonds on the next succeeding mandatory redemption date and principal payment date, as applicable, and any other amounts required to be deposited to the credit of the Bond Fund. Moneys in the Principal Account shall be used to pay the principal of and the Amortization Amounts on the Bonds as and when the same shall mature or are redeemed and for no other purpose. No further deposit need be made to the Principal Account when the moneys therein are equal to the principal and the Amortization Amounts coming due on all Outstanding Bonds on the next succeeding date on which the principal or Amortization Amounts become due. In the event that there has been issued a Credit Facility with respect to the Bonds, the Trustee shall draw on the Credit Facility, in accordance with the provisions of such Credit Facility, and within the requisite time period all as set forth in the Credit Facility, if the amounts in the Interest Account or Principal Account are insufficient to pay the principal of, Amortization Amounts due and interest on the Bonds on the applicable Interest Payment Date, maturity date or mandatory redemption date. In the event that a Credit Facility Issuer or an issuer of a letter of credit or surety bond deposited in the Debt Service Reserve Fund has paid the principal of, Amortization Amount and/or interest on the Bonds, then the Trustee shall instead of such deposits described in (1) above, first reimburse the applicable Credit Facility Issuer or issuer of a letter of credit or surety bond deposited in the Debt Service Reserve Fund such amounts, and then make the aforementioned deposits. There is no Credit Facility for the Series 2010 Bonds. In the event that the City has deposited Non-Ad Valorem Revenues to the Debt Service Reserve Fund pursuant to the Indenture (see "City Covenant to Budget and Appropriate" below) and such amounts have not been reimbursed by the Borrower, provided, that sufficient moneys have been deposited to the Interest Account and Principal Account to pay the Bonds on the next payment date, any amount remaining shall first be transferred to the City as reimbursement for such deposits. Such transfers to the City shall continue until the City is reimbursed in full for each deposit made to the Debt Service Reserve Fund. When the balances in the Bond Fund and the Debt Service Reserve Fund are sufficient to redeem or pay all the Bonds then Outstanding and provided no moneys are owed to the City as reimbursement for deposits made to the Debt Service Reserve Fund pursuant to the Indenture, the balances in the Bond Fund and the Debt Service Reserve Fund shall be transferred to the Redemption Fund and shall be held for redemption or payment of the Series 2010 Bonds at the earliest practicable date and for no other purpose. Debt Service Reserve Fund The Debt Service Reserve Fund shall be maintained in an amount equal to the Reserve Requirement. Proceeds from the Series 2010 Bonds in the amount of $4,146,212.50, the Reserve Requirement for such Bonds, will be deposited in the Debt Service Reserve Fund upon the issuance thereof. The Debt Service Reserve Fund shall be used to make transfers to the Bond Fund to the extent necessary to pay the principal of (whether at maturity or earlier redemption or otherwise) and interest on the Bonds as the same become due if the amounts on deposit therein are insufficient therefor. In the event the Value of the obligations credited to the Debt Service Reserve Fund shall exceed the Reserve Requirement, at least semiannually, within five (5) 24

Business Days prior to each Interest Payment Date, or in connection with a valuation requested by an Authorized Representative of the Borrower pursuant to the Indenture, the excess shall be transferred to the Interest Account. In lieu of all or any portion of the required amounts to be on deposit in the Debt Service Reserve Fund, the Borrower may cause to be deposited to the credit of the Debt Service Reserve Fund a surety bond or an insurance policy payable to the Trustee for the benefit of the holders of the Bonds, or a letter of credit, in each case entitling the Trustee to draw, in an aggregate amount equal to all or any portion of the difference between the Reserve Requirement and the amount then to the credit of such Debt Service Reserve Fund, if any. The Borrower, may, from time to time, substitute cash, surety bonds, insurance policies or letters of credit for any of such forms of security so long as such substituted security complies with the requirements of this section. Cash, if any, released from any Debt Service Reserve Fund as a result of a substitution pursuant to this section shall, as directed by an Authorized Representative of the Borrower, be (i) deposited in the Project Fund, (ii) used to purchase Bonds of the series of Bonds from which such cash was originally derived or to defease or redeem such Bonds subject to redemption at the option of the City, or (iii) used as described in an opinion of Bond Counsel to the effect that such described use will not affect adversely the exclusion of interest on any Bonds from gross income for purposes of federal income taxation. Any surety bond, insurance policy or letter of credit shall be payable (upon the giving of notice and the presentation of any certificates as required thereunder) on any date on which money shall be required to be transferred to the Bond Fund and such transfer cannot be met by the amount on deposit in the Bond Fund, any cash in the Debt Service Reserve Fund or provided from any other fund hereunder. In such event, the Trustee shall, not later than three (3) days prior to such amounts being required, take all necessary action to draw money under such surety bond, insurance policy or letter of credit after use of any cash in the Debt Service Reserve Fund. If there are multiple surety bonds, insurance policies or letters of credit in the Debt Service Reserve Fund, draws shall be made ratably on each. The insurer providing such surety bond or insurance policy shall be an insurer whose claims paying ability is rated by Moody's and by Standard & Poor's in the highest rating category without regard to gradation within the category. The issuer of any letter of credit shall be a bank or trust company whose long-term debt obligations are rated by Moody's and by Standard & Poor's within its two (2) highest long-term rating categories and the letter of credit itself shall be rated within the two (2) highest rating categories by Moody's and Standard & Poor's. Any such surety bond, insurance policy or letter of credit shall provide that the Trustee shall have the ability to draw on it immediately prior to its expiration or termination and, if arrangements satisfactory to the Trustee are not made for cash, a surety bond, an insurance policy or another letter of credit to be substituted therefor upon such expiration or termination, the Trustee is instructed to draw upon such surety bond, insurance policy or letter of credit prior to its expiration or termination in an amount equal to the lesser of its stated amount or the difference between the Reserve Requirement and the amount then to the credit of the Debt Service Reserve Fund, if any. Any surety bond, insurance policy or letter of credit shall provide that any fees in connection with such security be paid from available funds of the Borrower. If a disbursement is made pursuant to any such surety bond, insurance policy or letter of credit by direct payments by the provider of such surety bond, insurance policy or letter of credit, 25

deposits pursuant to the Indenture shall be used first to reinstate the maximum limits of such surety bond, insurance policy or letter of credit by making any required repayment thereon, and second, to deposit to the credit of the Debt Service Reserve Fund moneys in the amount needed to remedy any remaining deficiency therein. If the amount in the Debt Service Reserve Fund following a withdrawal of funds or due to a valuation pursuant to the Indenture is less than the Reserve Requirement, the deficiency shall be paid to the Trustee by the Borrower at the times and in the amounts as required in the Loan Agreement, beginning thirty (30) days after the receipt of written notice by the Borrower from the Trustee of such deficiency. In the event the Borrower does not make the payments at the times and in the amounts provided for in the Loan Agreement for deposit into the Debt Service Reserve Fund or if the amount paid by the Borrower is not the full amount required to be deposited pursuant to the Loan Agreement, the Trustee within three (3) days shall provide written notice of such deficiency to the City as required by the Indenture. When the balances in the Bond Fund and the Debt Service Reserve Fund are sufficient to redeem or pay all the Bonds then outstanding and provide no moneys are owed to the City as reimbursement for deposits made to the Debt Service Reserve Fund pursuant to subsection (f) hereof, the balances in the Debt Service Reserve Fund and the Bond Fund shall be transferred to the Redemption Fund to be held for redemption or payment of the Bonds at the earliest practicable date and for no other purpose. See "DESCRIPTION OF THE SERIES 2010 BONDS – Redemption Provisions – Credit Against Mandatory Sinking Fund Redemptions." City Covenant to Budget and Appropriate The City has covenanted to budget, appropriate and deposit into the Debt Service Reserve Fund, at such times as may be required to cure any deficiency therein within (30) days of receipt of written notice from the Trustee, while the Series 2010 Bonds are outstanding, from all legally available Non-Ad Valorem Revenues of the City, sufficient Non-Ad Valorem Revenues to supplement the moneys in the Debt Service Reserve Fund to the extent necessary to replenish the amount therein to the amount of the Reserve Requirement. The Covenant is cumulative to the extent not paid, and shall continue until such Non-Ad Valorem Revenues or other legally available funds in amounts sufficient to replenish the amount in the Debt Service Reserve Fund to the amount of the Reserve Requirement shall have been budgeted, appropriated and actually paid. Except with respect to such Non-Ad Valorem Revenues deposited in the Debt Service Reserve Fund, the Covenant does not create a lien upon or pledge of such Non-Ad Valorem Revenues nor does it preclude the City from pledging in the future all or any specified portion of the Non-Ad Valorem Revenues, nor does it give the Registered Owners a prior claim on all or any specified portion of the Non-Ad Valorem Revenues as opposed to claims of general creditors of the City. The Covenant is subject in all respects to (i) the payment of obligations secured by a lien upon and pledge of Non-Ad Valorem Revenues whether heretofore or hereafter entered into (including the payment of debt service on bonds and other debt instruments) and (ii) any other obligation of the City to budget and appropriate Non-Ad Valorem Revenues whether heretofore or hereafter entered into. The Covenant is intended to have the effect of making available for the 26

deposit into the Debt Service Reserve Fund, at such times as may be required to replenish the amount therein to the amount of the Reserve Requirement within (30) days of receipt of a written notice by the Trustee, the Non-Ad Valorem Revenues and placing on the City a positive duty to appropriate and budget, by amendment if necessary, amounts sufficient to cure such deficiency. The Covenant is subject in all respects to the restrictions of Section 166.241, Florida Statues, which provides that the governing body of each municipality make appropriations for each Fiscal Year which, in any one year, shall not exceed the amount to be received from taxation or other revenue sources, and to payments which are legally mandated by applicable law. The obligations of the City contained herein shall not be construed as a limitation on the ability of the City to pledge or covenant to pledge or use all or any portion of the Non-Ad Valorem Revenues for other legally permissible purposes. The obligation of the City to replenish the amount in the Debt Service Reserve Fund to the amount of the Reserve Requirement therein within (30) days of receipt of a written notice by the Trustee, is subject to the availability of money in the treasury of the City and funding requirements for essential public purposes affecting the health, welfare and safety of the inhabitants of the City or which are legally mandated by law, pledges of any or all of the Non-Ad Valorem Revenues and the budgeting and appropriation for any other obligations of the City to budget and appropriate such Non-Ad Valorem Revenues; however, such obligation is cumulative and shall carry over from Fiscal Year to Fiscal Year. In the event the City replenishes any amount to cure any deficiency in the Debt Service Reserve Fund, the Borrower has agreed pursuant to the Loan Agreement to deposit such amounts (the "Reimbursement Payments") monthly in an amount equal to 1/6th of the amount deposited by the City, if such draw on the Debt Service Reserve Fund was to make an interest payment on the Series 2010 Bonds or 1/12th of the amount deposited by the City, if such draw on the Debt Service Reserve Fund was to make a principal payment or a principal and interest payment on the Series 2010 Bonds. Such Reimbursement Payments will continue monthly until the City is reimbursed in full for all deposits made to the Debt Service Reserve Fund. Description of Non-Ad Valorem Revenues The following describes the sources of the City's Non-Ad Valorem Revenues: Franchise Fees Franchise fees are levied annually on utility companies by the City in return for granting a privilege sanctioning a monopoly or permitting the use of public property. Such fees are currently levied against Florida Power & Light Co., Florida City Gas and Waste Pro (waste collection services). Utility Service Fees – Public Service Tax The Public Service Tax is imposed, levied and collected by the City pursuant to Section 166.231, Florida Statutes, and other applicable provisions of law, on the purchase of electricity, fuel oil, metered or bottled gas (natural liquefied petroleum gas or manufactured), water service, and other services on which a tax may be imposed by law. The City collects a Public Service

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Tax of 5% of the payments received by Florida Power & Light Company from purchasers of electricity. Florida law authorizes any municipality in the State to levy a Public Service Tax on the purchase within such municipality of electricity, metered natural gas, liquefied petroleum gas either metered or bottled, manufactured gas either metered or bottled, water service and fuel oil as well as any services competitive with those specifically enumerated. This tax may not exceed 10% of the payments received by the sellers of such services from purchasers (except in the case of fuel oil, for which the maximum tax is four cents per gallon). The purchase of natural gas or fuel oil by a public or private utility either for resale or for use as fuel in the generation of electricity, or the purchase of fuel oil or kerosene for use as an aircraft engine fuel or propellant or for use in internal combustion engines, is exempt from the levy of such tax. Pursuant to the Constitution of the State, Florida Statutes and a resolution of the City, the City levies a Public Service Tax, within the incorporated area of the City at the rate of 10% on sales of all services for which it is allowed to tax, and with the restriction that the tax on fuel oil cannot exceed 4 cents per gallon. Florida law provides that a municipality may exempt from the Public Service Tax the first 500 kilowatts of electricity per month purchased for residential use. The City has not adopted such an exemption but it does exempt purchases by the United States Government, the State, St. Lucie County, the City and its agencies, boards, commissions and authorities from the levy of such tax. In addition, the City exempts purchases used exclusively for church purposes by any State recognized church. The Public Service Tax must be collected by the seller from purchasers at the time of sale and remitted to the City. Such tax will appear on a periodic bill rendered to consumers for electricity, metered and bottled gas, water service and fuel oil. A failure by a consumer to pay that portion of the bill attributable to the Public Service Tax may result in a suspension of the service involved in the same fashion as the failure to pay that portion of the bill attributable to the particular utility service. Local Communications Services Tax The Communications Services Tax Simplification Act, enacted by Chapter 2000-260, Laws of Florida, as amended by Chapter 2001-140, Laws of Florida, and now codified in part as Chapter 202, Florida Statutes (the "Communications Services Tax Act") established, effective October 1, 2001, a communications services tax on the sale of communications services as defined in Section 202.11, Florida Statutes, and as of the same date repealed Section 166.231(9), Florida Statutes, which previously granted municipalities the authority to levy a utility services tax on the purchase of telecommunication services. Florida Statutes, Section 202.19, as amended, provides that counties and municipalities may levy, by ordinance, a discretionary communications services tax (the "Local Communications Services Tax") on communications services, the revenues from which may be pledged for the repayment of current or future bonded indebtedness. The City increased the rates for its Local Communications Services Tax pursuant to Ordinance No. 09-46 enacted on May 11, 2009 from 1.50 to 5.22.

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Communication services are defined as the transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals, including cable services, to a point, or between or among points, by or through any electronic, radio, satellite, cable, optical, microwave, or other medium or method now in existence or hereafter devised, regardless of the protocol used for such transmission or conveyance. The term does not include: (a)

Information services;

(b)

Installation or maintenance of wiring or equipment on a customer's premises;

(c)

The sale or rental of tangible personal property;

(d)

The sale of advertising, including, but not limited to, directory advertising;

(e)

Bad check charges;

(f)

Late payment charges;

(g)

Billing and collection services; or

(h) Internet access service, electronic mail service, electronic bulletin board service, or similar on-line services. Any sale of communications services charged to a service address in the City is subject to the City's local communications services tax at a rate of 5.22%. The Communications Services Tax Act further provides that, to the extent that a provider of communications services is required to pay to a local taxing jurisdiction a tax, charge, or other fee under any franchise agreement or ordinance with respect to the services or revenues that are also subject to the tax, such provider is entitled to a credit against the amount of such tax payable to the State in the amount of such tax, charge, or fee with respect to such service or revenues. The amount of such credit shall be deducted from the amount that the local taxing jurisdiction is entitled to receive. The Local Communications Services Tax must be collected by the provider from purchasers and remitted to the FDOR. The proceeds of said Local Communications Services Tax less the FDOR's cost of administration is deposited in the Local Communications Services Tax clearing trust fund and distributed monthly to the appropriate jurisdictions. Licenses and Permits These are revenues derived from the issuance of local licenses and permits, including professional and occupational licenses required for the privilege of engaging in certain trades, occupations and other activities. Intergovernmental This category includes federal, state and other local units grants, and revenues shared by the state and other local units.

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Half Cent Sales Tax. The State levies and collects a sales tax on, among other things, the sales price of each item or article of tangible personal property sold at retail in the State, subject to certain exceptions and dealer allowances. In 1982, the Florida legislature created the Local Government Half-Cent Sales Tax Program (the "Local Government Half-Cent Sales Tax Program") which distributes a portion of the sales tax revenue and money from the State's General Revenue Fund to counties and municipalities that meet strict eligibility requirements. In 1982, when the Local Government Half-Cent Sales Tax Program was created, the general rate of sales tax in the State was increased from 4 % to 5%, and one--half of the fifth cent was devoted to the Local Government Half-Cent Sales Tax Program, thus giving rise to the name "Half-Cent Sales Tax." Although the amount of sales tax revenue deposited into the Local Government Half-Cent Sales Tax Program is no longer one--half of the fifth cent of every dollar of the sales price of an item subject to sales tax, the name "Half-Cent Sales Tax" has continued to be utilized. Section 212.20, Florida Statutes, provides for the distribution of sales tax revenues collected by the State and further provides for the distribution of a portion of sales tax revenues to the Local Government Half-Cent Sales Tax Clearing Trust Fund (the "Trust Fund"), after providing for transfers to the General Fund and the Ecosystem Management and Restoration Trust Fund. The entire sales tax remitted to the State by each sales tax dealer located within a particular county (the "Local Government Half-Cent Sales Tax Revenues") is deposited in the Trust Fund and earmarked for distribution to the governing body of such county and each participating municipality within that county pursuant to a distribution formula. The percentage of Local Government Half--Cent Sales Tax Revenues deposited in the Trust Fund is 8.814 %. The general rate of sales tax in the State is currently 6.00%. After taking into account the distributions to the General Fund (historically 5% of taxes collected) and the Ecosystem Management and Restoration Trust Fund (.2% of the taxes collected), for every dollar of taxable sales price of an item, approximately 0.501 cents is deposited into the Trust Fund. As of October 1, 2001, the Trust Fund began receiving a portion of certain taxes imposed by the State on the sales of communication services (the "CST Revenues") pursuant to Chapter 202, Florida Statutes. Monies received by the City pursuant to Chapter 202, Florida Statutes, that are not deposited in the Trust Fund do not constitute Half-Cent Sales Tax revenues. Accordingly, moneys distributed from the Trust Fund now consist of funds derived from both general sales tax proceeds and CST Revenues required to be deposited into the Trust Fund. [Balance of page intentionally left blank.]

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The Half-Cent Sales Tax collected within a county and distributed to local government units is distributed among the county and the municipalities therein in accordance with the following formula: County Share (percentage of total Half-Cent = Sales Tax receipts)

Municipality Share (percentage of total Half-Cent = Sales Tax receipts)

unincorporated area population

+ 2/3 incorporated area population

total county population

+ 2/3 incorporated area population

municipality population total county population

+ 2/3 incorporated area population

For purposes of the foregoing formula, "population" is based upon the latest official State estimate of population certified prior to the beginning of the local government Fiscal Year. Should any unincorporated area of St. Lucie County become incorporated as a municipality, the share of the Half-Cent Sales Tax received by St. Lucie County and the City would be reduced. The Half-Cent Sales Tax is distributed from the Trust Fund on a monthly basis to participating units of local government in accordance with Part VI, Chapter 218, Florida Statutes (the "Sales Tax Act"). The Sales Tax Act permits the City to pledge its share of the Half-Cent Sales Tax for the payment of principal of and interest on any capital project. To be eligible to participate in the Half-Cent Sales Tax, the counties and municipalities must comply with certain requirements set forth in the Sales Tax Act. These requirements include those concerning the reporting and auditing of its finances, the levying of ad valorem taxes or receipt of other revenue sources, and certifying certain requirements pertaining to the employment and compensation of law enforcement officers, the employment of fire fighters, the auditing of certain dependent special districts, and the method of fixing millage rates for the levying of ad valorem taxes. Although the Sales Tax Act does not impose any limitation upon the number of years during which the City can receive distribution of the Half-Cent Sales Tax from the Trust Fund, there may be future amendments to the Sales Tax Act. To be eligible to participate in the Trust Fund in future years, the City must comply with certain eligibility and reporting requirements of Chapter 218, Part VI, Florida Statutes, otherwise, the City will not be entitled to any Trust Fund distributions for twelve (12) months following a "determination of noncompliance" by the FDOR. State Revenue Sharing. A portion of the taxes levied and collected by the State is shared with local governments under the provisions of Chapter 218, Part II, Florida Statutes. The amount deposited by FDOR into the State Revenue Sharing Trust Fund for Municipalities is 1.3409% of available sales and use tax collections after certain required distributions, 12.5% of the Florida alternative fuel user decal fee collections, and the net collections from the one-cent municipal fuel tax. 31

To be eligible for State Revenue Sharing funds, a local government must be audited, with certain exceptions; must have filed its annual financial report with the Florida Department of Financial Services; must certify certain requirements pertaining to the employment and compensation of law enforcement officers and the employment of firefighters; must levy an ad valorem tax of at least 3 mills or collected equivalent alternative revenues from a combination of the following sources available to municipalities: a remittance from the county pursuant to Section 125.01(6)(a), Florida Statutes, occupational license taxes, utility taxes, and ad valorem taxes. Eligibility is retained if the local government has met eligibility requirements for the previous three years, even if the local government reduces its millage or utility taxes because of the receipt of the Half-Cent Sales Tax. The amount of the State Revenue Sharing Trust Fund for Municipalities distributed to anyone municipality is the average of three factors: an adjusted population factor; a sales tax collection factor, which is the proportion of the local municipality's ordinary sales tax collected within the municipality to the total sales tax collected within all eligible municipalities in the State; and a relative revenue-raising ability factor, which measures the municipality's ability to raise revenue relative to other qualifying municipalities in the State. Each municipality is entitled to receive a minimum amount of State Revenue Sharing funds known as the "guaranteed entitlement" as defined in Section 218.21(6), Florida Statutes. To be eligible to participate in State Revenue Sharing in future years, the City must comply with certain eligibility and reporting requirements, otherwise, the City will not be entitled to distributions for a period of time. Charges for Services Charges for various services provided by the City to residents, property owners, and grants received from other governments, including the following: (a) General Government: all money resulting from charges for current services; i.e., photographs, zoning review fees, certification fees for reports and ordinances; (b) Public Safety: fees for police services, extra-duty administration fees, towing and storage fees; (c) Building and Zoning Inspections: fees for right-of-way permits, Alcoholic license review fees, burglar alarm permits; (d) events; and

Recreational and Special Events: fees for parks and recreation activities and

(e) Other: fees for services not specifically mentioned above, i.e., engineering services, public hearing fees.

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Fines and Forfeitures Fines and forfeitures reflect those penalties and fines imposed for the commission of statutory offenses, violation of lawful administrative rules and regulations, and for neglect of official duty. Forfeitures include revenues resulting from parking and court fines as well as proceeds from the sale of contraband property seized by law enforcement agencies. Interest This category includes interest earned on County investments. As the economy slows, the amount of interest received by the County is negatively impacted. Miscellaneous Revenues This category includes a variety of revenues and transfers from other funds, including: (i) (ii) (iii) (iv) (v)

Gains (or losses) on sale of investments Rents and royalties Disposition of fixed assets Contributions and donations Other miscellaneous revenue

Non-Ad Valorem Revenues of the City The following table represents the City's determination of Non-Ad Valorem Revenues for the City's fiscal years ending September 30, 2004 through September 30, 2009 (excludes NonAd Valorem Revenues of the City which are not legally available to cure any deficiencies in the Debt Service Reserve Fund for the Series 2010 Bonds). Certain of such Revenues may hereinafter be specifically pledged to secure other indebtedness by the City. Any such debt would be payable from such specific revenue sources prior to curing any deficiencies in the Debt Service Reserve Fund for the Series 2010 Bonds. Such table is not intended to represent revenues of the City which would necessarily be available for curing any deficiencies in the Debt Service Reserve Fund for the Series 2010 Bonds; however, they are an indication of the relative amounts of Non-Ad Valorem Revenues of the City which may be available for curing any deficiencies in the Debt Service Reserve Fund for the Series 2010 Bonds taking into account general government expenditures. Certain categories may cease to exist altogether and new sources may come about from time to time. [Balance of page intentionally left blank.]

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Non-Ad Valorem Revenues of the City

Non Ad Valorem Taxes(1) Licenses & Permits Intergovernmental Charges for Service Human Services Fines and forfeitures Miscellaneous(2) Total

2004 $9,718,051 9,933,478 12,152,982 5,879,471 80,770 1,062,819 4,785,212 $43,612,783

For the Fiscal Years ended September 30 2005 2006 2007 2008 $10,674,465 $13,211,505 $14,619,494 $15,083,571 13,058,345 8,525,628 5,747,294 13,177,960 17,642,674 20,176,790 19,449,970 19,918,170 2,798,987 3,147,612 5,614,527 2,939,946 97,193 109,338 116,300 108,017 849,059 889,044 1,150,631 970,097 2,171,262 2,538,115 3,468,900 3,137,429 $47,291,985 $48,598,032 $50,167,116 $55,335,190

2009 $16,661,359 12,427,201 18,773,901 2,256,770 104,965 1,009,035 2,354,435 $53,587,666

________________ (1) (2)

Includes Franchise and Utility Tax and Communications Tax revenues. One-time revenues.

Source: City Finance Department

In addition to the Series 2010 Bonds, the City has also covenanted to budget and appropriate Non-Ad Valorem Revenue for the following outstanding securities: Certificates of Participation, Series 2004 Tesoro Special Assessment District, Series 2004(1) CRA Tax Increment Bonds, Series 2004(1) CRA Tax Increment Bonds, Series 2006(1) Special Assessment District Bonds, Series 2005A(1) Special Assessment Refunding Bonds, Series 2008A(1) Master Lease Project Refunding Certificates of Participation, Series 2008 Lease Revenue Bonds, Series 2010A and 2010B(1)

Current Principal Amount Outstanding $ 3,465,000 20,545,000 9,395,000 45,750,000 16,825,000 31,360,000 44,575,000 39,900,000

___________ (1) Similar to the Series 2010 Bonds, the City covenant to budget and appropriate Non-Ad Valorem Revenue for such securities is a back-up covenant.

The maximum annual debt service on the above, including estimated maximum annual debt service on the Series 2010 Bonds, is $20,291,807. [Balance of page intentionally left blank.]

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ESTIMATED DEBT SERVICE SCHEDULE The following table sets forth the estimated debt service payments on the Series 2010 Bonds: Bond Year Ending May 1 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 Total

Principal

Interest(1)

$1,015,000.00 1,045,000.00 1,090,000.00 1,130,000.00 1,190,000.00 1,245,000.00 1,310,000.00 1,375,000.00 1,445,000.00 1,505,000.00 1,580,000.00 1,655,000.00 1,730,000.00 1,810,000.00 1,900,000.00 1,995,000.00 2,095,000.00 2,200,000.00 2,305,000.00 2,420,000.00 2,545,000.00 2,670,000.00 2,805,000.00 2,945,000.00 3,090,000.00 3,245,000.00 3,410,000.00 3,580,000.00 3,760,000.00 3,945,000.00 $64,035,000.00

$2,850,376.94 3,128,462.50 3,128,462.50 3,098,012.50 3,056,212.50 3,012,612.50 2,956,112.50 2,896,612.50 2,834,362.50 2,768,862.50 2,700,112.50 2,640,506.26 2,565,256.26 2,486,256.26 2,413,850.00 2,336,000.00 2,245,500.00 2,150,500.00 2,050,750.00 1,946,000.00 1,836,000.00 1,720,750.00 1,599,750.00 1,472,500.00 1,339,000.00 1,198,750.00 1,051,500.00 897,000.00 734,750.00 564,250.00 385,250.00 197,250.00 $66,261,570.72

Debt Service $2,850,376.94 3,128,462.50 4,143,462.50 4,143,012.50 4,146,212.50 4,142,612.50 4,146,112.50 4,141,612.50 4,144,362.50 4,143,862.50 4,145,112.50 4,145,506.26 4,145,256.26 4,141,256.26 4,143,850.00 4,146,000.00 4,145,500.00 4,145,500.00 4,145,750.00 4,146,000.00 4,141,000.00 4,140,750.00 4,144,750.00 4,142,500.00 4,144,000.00 4,143,750.00 4,141,500.00 4,142,000.00 4,144,750.00 4,144,250.00 4,145,250.00 4,142,250.00 $130,296,570.72

____________ (1) Interest on the Series 2010 Bonds has been capitalized until November 1, 2012. See "ESTIMATED SOURCES AND USES OF FUNDS."

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FINANCIAL STATEMENTS The Financial Statements of the City for the fiscal year ended September 30, 2009 are included as APPENDIX B and is included herein as a publicly available document for informational purposes only, and consent from the auditors has not been requested. The Financial Statements of the Borrower for the fiscal year ended June 30, 2009 are included as APPENDIX D and is included herein for informational purposes only. The Borrower has not requested consent from its auditors for inclusion herein. TAX MATTERS In the opinion of Squire, Sanders & Dempsey L.L.P., Bond Counsel, under existing law: (i) interest on the Series 2010 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; and (ii) the Bonds and the income thereon are exempt from taxation under the laws of the State of Florida, except estate taxes imposed by Chapter 198, Florida Statutes, as amended, and net income and franchise taxes imposed by Chapter 220, Florida Statutes, as amended. Bond Counsel expresses no opinion as to any other tax consequences regarding the Series 2010 Bonds. The opinion on tax matters will be based on and will assume the accuracy of certain representations and certifications, and continuing compliance with certain covenants, of the City and the Borrower contained in the transcript of proceedings and that are intended to evidence and assure the foregoing, including that the Series 2010 Bonds are and will remain obligations the interest on which is excluded from gross income for federal income tax purposes. In addition, Bond Counsel has relied on, among other things, the opinion of McDermott Will & Emery LLP, as counsel to the Borrower, regarding the current status of the Borrower as an organization described in Section 501(c)(3) of the Code, which opinion is subject to a number of qualifications and limitations. Bond Counsel has not given any opinion or assurance concerning Section 513(a) of the Code or the effect of any future activities of the City or the Borrower. Failure of the Borrower to maintain its status as an organization described in Section 501(c)(3) of the Code, or to operate the facilities financed by the Series 2010 Bonds in a manner that is substantially related to the Borrower's charitable purpose under Section 513(a) of the Code, may cause interest on the Series 2010 Bonds to be included in gross income retroactively to the date of the issuance of the Series 2010 Bonds. Bond Counsel will not independently verify the accuracy of the City's or the Borrower's certifications and representations or the continuing compliance with the City's or the Borrower's covenants and will not independently verify the accuracy of the opinion of Borrower's counsel. The opinion of Bond Counsel is based on current legal authority and covers certain matters not directly addressed by such authority. It represents Bond Counsel's legal judgment as to exclusion of interest on the Series 2010 Bonds from gross income for federal income tax purposes but is not a guaranty of that conclusion. The opinion is not binding on the Internal Revenue Service ("IRS") or any court. Bond Counsel expresses no opinion about (i) the effect of

36

future changes in the Code and the applicable regulations under the Code or (ii) the interpretation and the enforcement of the Code or those regulations by the IRS. The Code prescribes a number of qualifications and conditions for the interest on state and local government obligations to be and to remain excluded from gross income for federal income tax purposes, some of which require future or continued compliance after issuance of the obligations. Noncompliance with these requirements by the City or the Borrower may cause loss of such status and result in the interest on the Series 2010 Bonds being included in gross income for federal income tax purposes retroactively to the date of issuance of the Series 2010 Bonds. The Borrower and, subject to certain limitations, the City have each covenanted to take the actions required of it for the interest on the Series 2010 Bonds to be and to remain excluded from gross income for federal income tax purposes, and not to take any actions that would adversely affect that exclusion. After the date of issuance of the Series 2010 Bonds, Bond Counsel will not undertake to determine (or to so inform any person) whether any actions taken or not taken, or any events occurring or not occurring, or any other matters coming to Bond Counsel's attention, may adversely affect the exclusion from gross income for federal income tax purposes of interest on the Series 2010 Bonds or the market value of the Series 2010 Bonds. Under the Code, interest on the Series 2010 Bonds is excluded from the calculation of a corporation's adjusted current earnings for purposes of the corporate alternative minimum tax, but interest on the Series 2010 Bonds may be subject to a branch profits tax imposed on certain foreign corporations doing business in the United States and to a tax imposed on excess net passive income of certain S corporations. Under the Code, the exclusion of interest from gross income for federal income tax purposes may have certain adverse federal income tax consequences on items of income, deduction or credit for certain taxpayers, including financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, those that are deemed to incur or continue indebtedness to acquire or carry tax-exempt obligations, and individuals otherwise eligible for the earned income tax credit. The applicability and extent of these and other tax consequences will depend upon the particular tax status or other tax items of the owner of the Series 2010 Bonds. Bond Counsel will express no opinion regarding those consequences. Payments of interest on tax-exempt obligations, including the Series 2010 Bonds, are generally subject to IRS Form 1099-INT information reporting requirements. If a Series 2010 Bond owner is subject to backup withholding under those requirements, then payments of interest will also be subject to backup withholding. Those requirements do not affect the exclusion of such interest from gross income for federal income tax purposes. Legislation affecting tax-exempt obligations is regularly considered by the United States Congress and may also be considered by the State legislature. Court proceedings may also be filed the outcome of which could modify the tax treatment of obligations such as the Series 2010 Bonds. There can be no assurance that legislation enacted or proposed, or actions by a court, after the date of issuance of the Series 2010 Bonds will not have an adverse effect on the tax status of interest on the Series 2010 Bonds or the market value of the Series 2010 Bonds. Prospective purchasers of the Series 2010 Bonds should consult their own tax advisers regarding pending or proposed federal and state tax legislation and court proceedings, and 37

prospective purchasers of the Series 2010 Bonds at other than their original issuance at the respective prices indicated on the cover of this Official Statement should also consult their own tax advisers regarding other tax considerations such as the consequences of market discount, as to all of which Bond Counsel expresses no opinion. Bond Counsel's engagement with respect to the Series 2010 Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the City, the Borrower or the owners of the Series 2010 Bonds regarding the tax status of interest thereon in the event of an audit examination by the IRS. The IRS has a program to audit tax-exempt obligations to determine whether the interest thereon is includible in gross income for federal income tax purposes. If the IRS does audit the Series 2010 Bonds, under current IRS procedures, the IRS will treat the City as the taxpayer and the beneficial owners of the Series 2010 Bonds will have only limited rights, if any, to obtain and participate in judicial review of such audit. Any action of the IRS, including but not limited to selection of the Series 2010 Bonds for audit, or the course or result of such audit, or an audit of other obligations presenting similar tax issues, may affect the market value of the Series 2010 Bonds. Original Issue Discount and Original Issue Premium Certain of the Series 2010 Bonds ("Discount Bonds") as indicated on the cover of this Official Statement were offered and sold to the public at an original issue discount ("OID"). OID is the excess of the stated redemption price at maturity (the principal amount) over the "issue price" of a Discount Bond. The issue price of a Discount Bond is the initial offering price to the public (other than to bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) at which a substantial amount of the Discount Bonds of the same maturity is sold pursuant to that offering. For federal income tax purposes, OID accrues to the owner of a Discount Bond over the period to maturity based on the constant yield method, compounded semiannually (or over a shorter permitted compounding interval selected by the owner). The portion of OID that accrues during the period of ownership of a Discount Bond (i) is interest excluded from the owner's gross income for federal income tax purposes to the same extent, and subject to the same considerations discussed above, as other interest on the Bonds, and (ii) is added to the owner's tax basis for purposes of determining gain or loss on the maturity, redemption, prior sale or other disposition of that Discount Bond. A purchaser of a Discount Bond in the initial public offering at the price for that Discount Bond stated on the cover of this Official Statement who holds that Discount Bond to maturity will realize no gain or loss upon the retirement of that Discount Bond. Certain of the Series 2010 Bonds ("Premium Bonds") as indicated on the inside cover of this Official Statement were offered and sold to the public at a price in excess of their stated redemption price (the principal amount) at maturity. That excess constitutes bond premium. For federal income tax purposes, bond premium is amortized over the period to maturity of a Premium Bond, based on the yield to maturity of that Premium Bond (or, in the case of a Premium Bond callable prior to its stated maturity, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on that Premium Bond), compounded semiannually. No portion of that bond premium is deductible by the owner of a Premium Bond. For purposes of determining the owner's gain or loss on the sale, redemption (including redemption at maturity) or other disposition of a Premium Bond, the 38

owner's tax basis in the Premium Bond is reduced by the amount of bond premium that is amortized during the period of ownership. As a result, an owner may realize taxable gain for federal income tax purposes from the sale or other disposition of a Premium Bond for an amount equal to or less than the amount paid by the owner for that Premium Bond. A purchaser of a Premium Bond in the initial public offering at the price for that Premium Bond stated on the inside cover of this Official Statement who holds that Premium Bond to maturity (or, in the case of a callable Premium Bond, to its earlier call date that results in the lowest yield on that Premium Bond) will realize no gain or loss upon the retirement of that Premium Bond. Owners of Discount and Premium Bonds should consult their own tax advisers as to the determination for federal income tax purposes of the amount of OID or bond premium properly accruable or amortizable in any period with respect to the Discount or Premium Bonds and as to other federal tax consequences and the treatment of OID or bond premium for purposes of state and local taxes on, or based on, income. The form of Bond Counsel's Opinion is attached as APPENDIX H hereto. LITIGATION The City is a defendant from time to time in various lawsuits, including, in particular, litigation related to zoning and other land use regulation matters. It is the opinion of the City Attorney that none of any such actions presently pending will have a material effect upon the finances of the City. There was a prior attempt during 2009 to sell bonds for VGTI Florida's project through a community development district. The underwriter for such bonds was unable to sell the bonds on terms and conditions acceptable to VGTI Florida. The City was subsequently approached by VGTI Florida to consider financing the project. VGTI Florida has agreed to indemnify the City in an agreed upon aggregate sum if there is any litigation arising from the prior attempt to sell the bonds and involving the City. VGTI Florida has advised the City that its contract with that underwriter expired by its own terms on December 31, 2009, and that it otherwise terminated the contract for cause. Furthermore, when the underwriter was unable to sell the bonds on terms and conditions acceptable to VGTI Florida, VGTI Florida had the right to terminate the contract for cause The City experiences routine litigation and claims incident to the conduct of its affairs. In the opinion of the City Attorney, there are no lawsuits presently pending or threatened, the adverse outcome of which could potentially impair the City's ability to perform its obligations to the Registered Owners of the Series 2010 Bonds. LEGAL MATTERS Legal matters incident to the authorization, issuance and sale of the Series 2010 Bonds and with regard to the tax-exempt status of the interest on the Series 2010 Bonds (see "TAX MATTERS") are subject to the legal opinion of Squire, Sanders & Dempsey L.L.P., Miami, Florida, whose fees and expenses for legal services as Bond Counsel will be paid from a portion of the proceeds of the Series 2010 Bonds. The signed legal opinion, dated and premised on law in effect as of the date of original delivery of the Series 2010 Bonds, will be delivered to the 39

Underwriter at the time of original delivery, and the text of the opinion will be printed on the Series 2010 Bonds. The proposed text of the legal opinion is set forth as APPENDIX H hereto. The actual legal opinion to be delivered may vary from that text if necessary to reflect facts and law on the date of delivery. The opinion will speak only as of its date, and subsequent distribution of the opinion by recirculation of the Official Statement or otherwise shall create no implication that Bond Counsel has reviewed or expressed any opinion concerning any of the matters referenced in the opinion subsequent to its date. Certain legal matters incident to the issuance of the Series 2010 Bonds will be passed upon for the City by Roger G. Orr, City Attorney; and GrayRobinson, P.A., Tampa, Florida, Disclosure Counsel. The Underwriter is being represented by Kutak Rock, Denver, Colorado and Dean, Mead, Minton & Zwemer, Fort Pierce, Florida, Underwriter's Counsel. The Borrower is being represented by its counsel, McDermott Will & Emery LLP, Miami, Florida. ENFORCEABILITY OF REMEDIES The remedies available to the Registered Owners of the Series 2010 Bonds upon a default under the Bond Ordinance are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically Title 11 of the United States Code, the remedies specified by the Bond Ordinance may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2010 Bonds (including Bond Counsel's opinion) will be qualified as to the enforceability of the remedies provided in the various legal instruments by limitations imposed by the exercise of judicial discretion in accordance with principles of equity, and by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors enacted before or after such delivery. RATINGS Moody's Investors Service, Inc. ("Moody's") has assigned an underlying rating of "Aa3" to the Series 2010 Bonds. There is no assurance that any rating will continue for any given period of time or that it will not be lowered or withdrawn entirely by such rating agency, if in its judgment, circumstances so warrant. A downward change in or withdrawal of such rating may have an adverse effect on the market price of the Series 2010 Bonds. An explanation of the significance of the rating can be received from the applicable rating agency. UNDERWRITING The Underwriter shown on the cover page hereof has agreed, subject to certain conditions precedent set forth in a Bond Purchase Agreement with the City, to purchase the Series 2010 Bonds from the City, at a price of $62,165,832.30 ($64,035,000.00 par amount less an Underwriter's discount of $1,085,393.25 less net original issue discount of $783,774.45), for the purpose of resale. The Underwriter has furnished the information on the inside cover page of this Official Statement pertaining to the public offering prices of the Series 2010 Bonds. The public offering prices of the Series 2010 Bonds may be changed from time to time by the Underwriter, and the Underwriter may allow a concession from the public offering prices to 40

certain dealers. None of the Series 2010 Bonds will be delivered by the City to the Underwriter unless all of the Series 2010 Bonds are so delivered. DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATION Florida law requires the City to make a full and fair disclosure of any bonds or other debt obligations which it has issued or guaranteed and which are or have been in default as to principal or interest at any time after December 31, 1975 (including bonds or other debt obligations for which it has served as a conduit issuer). The applicable rule provides, however, that if the City in good faith believes that such disclosure would not be considered material by reasonable investors, such disclosure may be omitted. The City is not and has not been in default as to principal of and interest on bonds or other debt obligations to which revenues of the City are pledged. Although the City is not aware of any other payment default, it has not undertaken an independent review of bonds or other debt obligations for which it served only as a conduit issuer. To the extent any of such bonds or other debt obligations are in default as to the payment of principal and interest, the obligation of the City thereunder is limited solely to funds received from the party borrowing the proceeds of such bonds or other debt obligations, and the City is not obligated to pay principal of and interest on such bonds or debt obligations from any other funds of the City. Accordingly, any prior default with respect to such obligations issued by the City would not in the City's judgment be considered material by reasonable investors in the Bonds. CONTINUING DISCLOSURE The Borrower, as an "obligated party" under Rule 15c2-12(b)(5) promulgated under the Securities Exchange Act of 1934, as amended, has covenanted for the benefit of the Series 2010 Bondholders to provide certain financial information and operating data relating to the Borrower as well as the Florida Single Audit required by the OTTED Agreement (the "Borrower") and to provide notices of the occurrence of certain enumerated material events (collectively, "Borrower Information"). Such Borrower Information does not include updating the information included in "APPENDIX E – BORROWER OPERATING CASH FLOWS" beyond that to be included in the required annual audited financial statements of the Borrower. The Borrower has hired TD Bank, National Association, as its initial dissemination agent. The City has covenanted for the benefit of the Series 2010 Bondholders to also provide certain financial information and annually update the information included on the table entitled "Non-Ad Valorem Revenues of the City" included herein and to provide notices of the occurrence of certain enumerated material events (collectively, "City Information"). Borrower and City Information will be separately filed by the Borrower's dissemination agent and the City with the Municipal Securities Rulemaking Board's Electronic Municipal Market Access System ("EMMA"). The notices of material events, when and if they occur, shall also be timely filed by the City and the Borrower with EMMA. The specific nature of the financial information, operating data, and of the type of events with trigger a disclosure obligation, and other details of the undertaking are described in "APPENDIX I-1 – FORM OF CONTINUING DISCLOSURE CERTIFICATE – BORROWER" and "APPENDIX I-2 – FORM 41

OF CONTINUING DISCLOSURE CERTIFICATE – CITY" attached hereto. The Continuing Disclosure Certificates shall be separately executed by the City and the Borrower prior to the issuance of the Series 2010 Bonds. These covenants have been made in order to assist the Underwriter in complying with the continuing disclosure requirements of Rule 15c2-12 promulgated by the Securities and Exchange Commission. The City has filed all annual reports required under continuing disclosure undertakings entered into pursuant to SEC Rule 15c2-12 and has complied in all materials respects with such Rule. The Borrower has not been subject to continuing disclosure undertakings prior to the issuance of the Series 2010 Bonds. ADVISORS AND CONSULTANTS The City has retained certain advisors and consultants in connection with the issuance of the Series 2010 Bonds. These advisors and consultants are compensated from a portion of the proceeds of the Series 2010 Bonds, identified as "Costs of Issuance" under the heading "ESTIMATED SOURCES AND USES OF FUNDS" herein; their compensation is, in some instances, contingent upon the issuance of the Series 2010 Bonds and the receipt of the proceeds thereof. Bond Counsel and Disclosure Counsel. Squire, Sanders & Dempsey L.L.P., Miami, Florida and GrayRobinson, P.A., Tampa, Florida, represent the City as Bond Counsel and Disclosure Counsel, respectively, with respect to the issuance of the Series 2010 Bonds. Squire, Sanders & Dempsey L.L.P., as Bond Counsel, is not obligated to undertake and have not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained in the Official Statement. MISCELLANEOUS The references, excerpts and summaries of all documents, resolutions and ordinances referenced herein do not purport to be complete statements of the provisions of such documents, resolutions and ordinances, and reference is directed to all such documents, resolutions and ordinances for full and complete statements of all matters of fact relating to the Series 2010 Bonds, the security for and the repayment of the Series 2010 Bonds and the rights and obligations of the holders thereof. [Balance of page intentionally left blank.]

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The execution and delivery of this Official Statement has been duly authorized by the City and the Borrower. CITY OF PORT ST. LUCIE, FLORIDA

/s/ Patricia Christensen Mayor

/s/ Karen A. Phillips City Clerk

OREGON HEALTH AND SCIENCE UNIVERSITY VACCINE AND GENE THERAPY INSTITUTE FLORIDA CORP.

By: /s/ Mark Williams Name: Mark Williams Title: Chief Operating Officer

43

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APPENDIX A

GENERAL INFORMATION PERTAINING TO THE CITY OF PORT ST. LUCIE AND ST. LUCIE COUNTY, FLORIDA

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APPENDIX A GENERAL INFORMATION PERTAINING TO THE CITY OF PORT ST. LUCIE AND ST. LUCIE COUNTY, FLORIDA THE FOLLOWING INFORMATION CONCERNING THE CITY OF PORT ST. LUCIE, FLORIDA AND ST. LUCIE COUNTY, FLORIDA, IS INCLUDED ONLY FOR THE PURPOSE OF PROVIDING GENERAL BACKGROUND INFORMATION. THE SERIES 2010 BONDS ARE PAYABLE SOLELY FORM THE SOURCES DESCRIBED IN THE OFFERING STATEMENT TO WHICH THIS INFORMATION IS APPENDED, AND ARE NOT GENERAL OBLIGATIONS OF THE CITY, THE COUNTY, THE STATE OF FLORIDA, OR ANY POLITICAL SUBDIVISION THEREOF, AND NEITHER THE CITY, THE STATE, NOR ANY POLITICAL SUBDIVISION THEREOF IS REQUIRED TO LEVY ANY TAX FOR PAYMENT OF THE SERIES 2010 BONDS. LOCATION The City of Port St. Lucie (the "City") is a residential community in the southern part of St. Lucie County, Florida (the "County"), and was incorporated in 1961. The City encompasses approximately 114 square miles of the 588 square miles of the County and is located in southeastern Florida. The City is located one hundred miles north of the City of Miami, 50 miles north of the City of West Palm Beach and about 65 miles south of the City of Melbourne. The City is served by three major north-south Florida highways: Interstate 95, the Florida Turnpike, and U.S. Highway 1. Below is a table which shows the relative number of square miles of each incorporated municipality within the County and of the unincorporated area of the County: Land Area

Square Miles

City of Port St. Lucie City of Ft. Pierce St. Lucie Village Unincorporated Area

116 19 1 452

St. Lucie County total

588

Source: Planning and Zoning Department, City of Port St. Lucie. GOVERNMENT The City operates under a Mayor/Council/Manager form of government. The City Council, comprised of the Mayor and four Council members, is the primary governing body of the City. Pursuant to an amendment to the City's Charter, in November 2002, the Mayor and two City Council Members were elected to a four year term and the remaining City Council Members were elected for a two year term. Thereafter, all City's Council Members and the Mayor will be elected to a four year term. The City Manager is the chief administrative officer responsible to the City Council.

A-1

POPULATION Currently more than 56% of the County's population resides within the City, less than onefifth resides within the City of Ft. Pierce and the balance of the County's population resides in the unincorporated area of the County. The City's population increased from 50 in 1960, the year before the City's incorporation, to 88,769 in 2000. The City is part of the Fort Pierce/Port St. Lucie/Stuart Standard Metropolitan Statistical Area (SMSA), which has a population of 416,720. The following table sets forth the population trends in the City, the County and the State from the years 1960 through 2000 and the City's, the County's and the State's population for the years 2002 through 2009. The City's estimated population as of September 30, 2009 was 155,251. City of Port St. Lucie and St. Lucie County, Florida Population Trends 1960-2009 Average Annual Percentage Increase

St. Lucie County

Average Annual Percentage Increase

State of Florida

Average Annual Percentage Increase

Year

City of Port St. Lucie

1960 1970 1980 1990 2000

50 330 14,690 55,761 88,769

-56.00 435.15 27.96 5.92

39,294 50,837 87,182 150,171 192,695

-2.94 7.15 7.23 2.83

4,951,560 6,789,437 9,746,959 12,937,926 15,982,378

-3.72 4.35 3.27 1.25

2002 2003 2004 2005 2006 2007 2008 2009

96,430 103,072 115,155 129,135 144,159 155,315 157,896 155,251

4.26 6.88 11.72 12.14 11.63 7.73 1.66 (1.67)

203,360 211,898 226,216 240,039 259,315 271,961 276,428 272,864

2.57 4.19 6.75 6.11 8.03 4.87 1.61 (1.28)

14,411,563 14,712,922 14,982,333 15,322,040 18,089,888 18,680,367 18,807,219 18,748,925

1.85 2.09 1.83 2.27 18.06 3.26 0.67 0.31

__________________ Sources: University of Florida, Bureau of Economic and Business. Governor's Office of Economic Analysis. Population data is as of April 1st for each year.

BUDGET PROCESS The City follows the procedures set forth in Chapters 166 and 200 of the Florida Statutes in establishing its budgetary data. The City Manager submits to the City Council a proposed operating budget for the fiscal year commencing on October 1. The operating budget includes proposed expenditures and means of financing them. Public hearings are then conducted to obtain taxpayer comments on the operating budget. The budget is legally enacted through the passage of an ordinance by City Council on or before the fifteenth day of September of the year currently ending.

A-2

The level of budgetary control is the department. The City Manager is authorized to transfer budgeted amounts within departments of any fund. Revisions that alter the budget totals of any department require approval of the City Council. Unencumbered appropriations lapse at year end. The reported budgetary data represent the final approved budget after amendments adopted by the City Council. Budgets for general and special revenue funds are adopted on a basis consistent with generally accepted accounting principles, except that encumbrances are presented as expenditures. Formal budget integration is not employed for proprietary, capital project or trust funds because effective budgetary control is achieved by alternate measures. Budgeted amounts are as originally adopted, or as amended by the City Council.

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A-3

SOURCES OF REVENUES OF THE CITY Revenue Set forth below are the sources of revenue for the last ten fiscal years: GENERAL REVENUES BY SOURCE LAST TEN FISCAL YEARS CITY OF PORT ST. LUCIE, FLORIDA Fiscal Year

Taxes

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

$13,694,748 15,747,220 17,887,582 20,373,898 23,840,428 29,690,938 37,844,417 51,761,788 67,267,830 61,086,578(1) 52,136,148

Licenses & Permits $2,215,564 2,523,091 2,795,329 4,130,984 7,248,541 9,933,478 13,058,345 8,525,628 5,747,294 13,177,960 12,427,201

Fines & Forfeitures

InterGovernMental

Charges for Services

Interest on Special Assessments

Impact Fees

Interest on Investments

$471,199 590,064 675,800 713,347 1,002,952 1,062,819 849,059 889,044 1,150,631 970,097 1,009,035

$10,781,975 12,471,257 12,759,935 12,701,199 16,921,573 23,084,389 29,525,221 28,498,714 28,569,107 34,464,721 28,899,528

$9,681,110 3,572,976 4,545,334 7,811,083 6,740,681 16,432,840 19,413,929 12,530,657 13,409,488 12,501,201 11,985,186

$5,006,411 5,109,234 4,725,767 7,182,436 7,217,605 10,476,511 9,704,565 9,459,364 8,886,909 10,988,686 9,137,147

$676,545 871,543 1,761,648 3,795,561 7,204,654 11,923,402 14,942,169 20,894,212 10,720,007 5,316,188 3,051,214

$4,860,842 4,499,178 4,092,086 3,929,887 2,388,292 2,758,107 3,816,186 8,861,164 17,208,824 7,693,158(2) 1,937,732

Miscellaneous

Human Services

$1,432,240 1,221,827 2,692,239 6,415,495 13,979,614 15,510,690 8,795,086 58,210,956 15,722,143 4,998,787 5,171,514

$36,192 58,175 65,975 68,779 85,342 80,770 97,193 109,338 116,300 108,017 104,965

Total $48,856,825 46,664,565 52,001,695 67,122,669 86,629,682 120,953,944 138,046,170 199,740,865 168,798,533 151,305,393 125,859,670

_____________________ Source: City of Port St. Lucie Finance Department (1) Reflective of the doubling of the homestead exemption from $25,000 to $50,000 and the decrease in assessed values. See "PROPERTY TAXES – Property Taxes and Collections." (2) Reflective of the reduced rates of return on investments.

Expenditures Set forth below are the City's expenditures by function for the last ten fiscal years: GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION LAST TEN FISCAL YEARS CITY OF PORT ST. LUCIE, FLORIDA Fiscal Year

General Government

Public Safety

Physical Environment

Transportation

Economic Environment

Human Services

Culture & Recreation

Capital Outlay

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

$2,969,224 2,924,072 3,615,785 4,949,609 8,051,082 10,080,721 11,534,911 13,376,409 12,862,379 12,072,175 10,859,846

$12,846,955 15,411,667 16,377,470 17,369,860 15,790,890 27,117,155 33,890,702 34,610,167 34,160,143 37,171,553 39,746,373

$761,328 1,276,678 604,083 1,077,086 760,183 767,560 988,870 913,514 1,277,461 1,195,176 3,529,369

$4,402,980 6,182,839 11,523,669 14,661,241 7,823,240 6,190,778 8,078,585 11,706,250 13,979,979 21,165,446 15,103,623

$994,667 1,473,545 1,692,129 1,974,032 1,505,479 1,657,098 981,864 3,234,282 6,472,106 8,034,727 3,598,068

$718,393 809,966 907,873 1,081,353 637,269 820,008 1,060,103 1,309,706 1,546,693 1,585,256 1,529,441

$3,236,954 3,566,294 3,782,968 4,343,560 4,480,759 4,959,781 5,343,601 6,861,866 7,384,388 7,570,299 10,591,211

$24,668,210 27,139,521 18,967,271 19,710,981 61,992,894 73,213,797 66,986,769 86,801,669 104,864,122 201,807,935 106,373,286

Total(1)

Debt Service $9,801,736 15,761,759 15,339,556 40,443,187 35,212,022 33,363,547 42,161,440 34,033,258 47,950,702 59,340,257(2) 46,594,033

$60,400,447 74,546,341 72,810,804 105,610,909 136,253,818 158,170,445 171,026,845 192,847,121 230,497,973 349,942,824 237,925,250

____________________ Source: City of Port St. Lucie Finance Department (1) General governmental expenditures may be paid from sources other than General Fund revenues. Accordingly, the total amount of general governmental expenditures in a given fiscal year may exceed the total General Fund revenues for that fiscal year. (2) Increase in long-term debt of the City. See Note G to the Notes to the Combined Financial Statements in the City's Financial Statements which are included in Appendix B hereto.

A-4

DEBT The following tables show the details of the City's direct and overlapping bonded debt for general obligation bonds as of September 30, 2009. COMPUTATION OF DIRECT AND OVERLAPPING BONDED DEBT GENERAL AND LIMITED OBLIGATION BONDS City of Port St. Lucie, Florida

Jurisdiction St. Lucie County St. Lucie County District School Board

Bonded Debt Outstanding

Percent Applicable to Port St. Lucie

$ 4,745,000(1)

--

Dollar Amount Per Capita Applicable to Applicable to Port St. Lucie Port St. Lucie

46.00%

$ 2,182,700

$ 14

42.02(2)

--

--

City of Port St. Lucie 88,725,000 100.00 88,725,000 571 TOTAL $93,470,000 $90,907,700 $585 ____________________ (1) Includes Limited Ad Valorem Tax Bonds in the amount of $2,855,000. (2) Exemptions for Economic Development and Additional Homestead are not included. Note: The above information on Bonded Debt does not include Self-Supporting and Non-Self Supporting Revenue Bonds, Certificates and Notes. Source: St. Lucie County Clerk of Circuit Court, St. Lucie County School Board, St. Lucie County Property Appraiser, City of Port St. Lucie Finance Department, University of Florida Bureau of Economic and Business Research.

COMMERCE AND INDUSTRY The City has a stable, diversified service sector base, and is a center for tourism, recreation and residences. The City also has an evolving bio-medical industry. Major economic activities of the City and surrounding areas include construction, transportation, tourism, wholesale and retail trade, truck farming, citrus, cattle and major league sports. The New York Mets baseball team operates a team spring training complex within the City limits. The City was planned for singlefamily residences, schools, churches, community centers, recreational parks, and shopping centers, but until recently did not provide for multi-family housing. The Ballantrae Golf and Yacht Club project, which is between 80-90% completely constructed, is a 402-acre planned unit development which includes the completed Jack Nicklaus Signature Golf Course and plans for single family and multi-family homes, a church, day care center and marina. There are two Professional Golfers' Association of America (PGA) courses, one is PGA Village, a 54-hole public golf course adjacent to the City with a state-of-the-art golf school, the PGA Learning Center and the other is in an 18-hole private golf course, the PGA St. Lucie West Country Club located in the Village of St. Lucie West. In addition, there is the City-owed Saints Golf Course, Club Med Resorts' golf course, St. James Golf Course and Tesoro's Club and Golf Course. St. Lucie West is a master planned community of approximately 4,600 acres consisting of single and multi-family housing in addition to commercial and industrial development.

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Approximately 90% of the project has been developed with the balance under construction or in various stages of planning. There are several other planned communities within the City including Tradition, Tesoro, Veranda, Copper Creek and Verano. East Lake Village is located within the boundaries of the City's CRA. Land adjacent to the North Fork of the St. Lucie River is utilized by Club Med Resorts. The City has the following facilities available: a large motel, vacation villas, a marina, a golf course and restaurants. Principal Employers St. Lucie County, Florida 3rd Quarter 2009 Employer St. Lucie School Board Wal-Mart Retail and Distribution Lawnwood / HCA Medical Liberty Healthcare Group, Inc. Indian River State College Publix City of Port St. Lucie QVC St. Lucie County Commissioners Riverside Bank _____________

Number of Employees 4,500 3,134 2,710 2,000 1,800 1,405 1,206 1,038 1,000 870

Source: InfoGroup, Inc. – InfoUSA (Florida Agency for Workforce Development); Economic Development Council of St. Lucie County; City of Port St. Lucie Payroll Department

Personal Income St. Lucie County, Florida (2000 – 2009) Fiscal Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 ___________________

Total Personal Income $4,302,495,000 4,537,494,000 4,712,133,000 4,943,139,000 5,372,556,000 6,205,838,000 6,834,485,000 7,297,176,000 N/A N/A

% Increase 8.0% 5.5 3.8 4.9 8.7 15.5 10.1 6.8 N/A N/A

N/A – Information not available. Source: U.S. Commerce Department, Bureau of Economic Analysis.

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Per Capita $21,993 22,892 22,904 23,051 23,656 25,861 27,380 28,056 N/A N/A

The unemployment rate for the County is generally higher than the unemployment rate for the State due, in part, to the greater dependence on agricultural and construction employment within the County and seasonal variations related to such employment. The City's unemployment rate is generally lower than the unemployment rate for the County due, in part, to the fact that the City does not heavily rely on the agricultural sector for employment. Labor Force St. Lucie County, Florida Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 ___________

Labor Force 87,455 90,694 94,718 98,347 103,498 112,008 118,279 122,976 123,438 124,107

Employment 82,438 85,031 87,904 91,876 97,071 106,714 113,393 116,021 112,615 107,321

Unemployment Number 5,017 5,663 6,814 6,471 6,427 5,294 4,886 6,955 10,823 16,786

Unemployment Rate 7.7% 8.2 8.1 7.5 8.2 4.6 4.9 6.9 10.4 15.3

Source: Labor Market Statistics, Local Area Unemployment Statistics Program.

Labor Force State of Florida Year Labor Force 1999 7,711,000 2000 7,870,000 2001 7,998,000 2002 8,125,000 2003 8,219,000 2004 8,389,000 2005 8,635,000 2006 8,886,000 2007 9,079,000 2008 9,206,000 2009 9,197,000 ____________________

Employment 7,402,000 7,569,000 7,625,000 7,663,000 7,786,000 7,998,000 8,305,000 8,588,000 8,709,000 8,628,000 8,232,000

Unemployment Number 309,000 300,000 373,000 462,000 433,000 391,000 330,000 299,000 369,000 578,000 966,000

Source: Labor Market Statistics, Local Area Unemployment Statistics Program.

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Unemployment Rate 4.0% 3.8 4.7 5.7 5.3 4.7 3.8 3.4 4.1 6.3 10.5

Construction and Property Value Last Ten Years City of Port St. Lucie, Florida Construction Residential Year Number of Units Value 1999 1,121 $122,892,878 2000 1,236 122,557,255 2001 1,856 173,377,856 2002 3,384 333,622,385 2003 6,363 635,875,121 2004 7,026 789,390,815 2005 7,341 1,001,637,632 2006 4,183 512,461,746 2007 1,289 185,825,190 2008 609 74,176,293 2009 197 14,978,683 ____________________

Commercial Number of Units Value 214 $29,981,626 264 34,177,654 286 35,294,415 296 36,436,896 269 63,110,832 168 37,595,308 348 89,036,036 381 144,886,669 449 148,693,443 407 95,398,929 290 61,687,034

Source: City of Port St. Lucie Building Department. Figures are for calendar year January 1 - December 31

Bank Deposits Last Ten Fiscal Years City of Port Lucie, Florida (in thousands) Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 ____________________

Banks $455,040 497,768 550,854 617,338 693,347 880,865 957,130 1,032,620 1,243,209 2,012,794

Savings & Loans $232,181 295,262 359,706 433,458 544,859 681,588 682,729 693,129 143,100 269,192

Source: www.FDIC.gov Summary of Deposits (SOD) data Year 2000 – 2008 data are as of the end of the third quarter – September 30. Year 2009 data is as of the end of the second quarter – June 30.

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Total $687,221 793,030 910,560 1,050,796 1,238,206 1,562,453 1,639,859 1,725,749 1,386,309 2,281,986

PROPERTY TAXES Property values in the City are determined by the County Property Appraiser. Millage on property located in the City is set by the City Council, and the first $50,000 of appraised value on homestead property is deducted prior to tax computation. The tax collections since 2000 are summarized below. Property Taxes and Collections Total Assessed Tax Roll Value for Tax Year Purposes (000's) 2000 $2,826,176 2001 3,044,946 2002 3,391,006 2003 4,197,584 2004 5,902,190 2005 8,400,235 2006 12,140,246 2007 13,091,352 2008 10,546,602 2009 7,834,651 _____________________

Property Taxes Levied $11,166,932 13,026,119 15,620,304 20,679,133 27,481,070 39,291,125 53,751,893 55,001,379 44,658,353 36,750,714

Current Tax Collection(1) $10,669,966 12,483,847 15,002,628 19,926,317 26,498,822 37,845,564 51,863,132 53,076,166 42,433,724 30,127,751*

% of Levy Collected 95.5% 95.6 96.0 96.4 96.4 96.3 96.5 96.5 95.0 82.0

(1) Current Tax Collections presented herein are through the County Tax Collector's Recapitulation date of June 30. Includes Operating and Debt Service starting with the 2005 Tax Roll Year. * Collections thru March 31, 2010. The 2009 tax roll year is collected in Fiscal Year 2010.  Tax roll year is January 1 to December 31.  Municipality's Fiscal Year is October 1 to September 30. Source: St. Lucie County Tax Collector Records

In 2008, Florida voters and the legislature approved various changes in the manner in which property taxes are assessed. Such changes include (1) an exemption of an additional $25,000 of the assessed value of homestead property (to be applied on the assessed value between $50,000 and $75,000); provided however, this reform does not apply to tax levies by school boards; (2) a cap of 10 percent on yearly assessment increases on certain non-homestead residential and commercial property; provided however, this reform does not apply to tax levies by school boards; (3) portability of the three percent cap on homestead residential property, up to $500,000, when relocating to a new home within Florida; and (4) a $25,000 exemption from the tangible personal property tax. The 10 percent cap will affect assessments beginning on January 1, 2009. All other reforms took effect retroactive to January 1, 2008.

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ASSESSED VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS CITY OF PORT ST. LUCIE, FLORIDA Tax Roll Real Year Property 2000 $3,482,522,669 2001 3,729,867,762 2002 4,128,072,137 2003 4,977,036,929 2004 6,791,568,073 2005 9,416,966,696 2006 13,355,784,368 2007 14,357,933,121 2008 12,779,489,552 2009 9,945,285,528 ____________________

Personal Property $260,134,621 284,329,369 297,754,233 316,487,655 344,247,634 437,940,172 483,044,056 592,885,837 647,192,155 658,937,776

Centrally Assessed $243,949 257,063 272,017 299,944 324,003 326,912 369,665 451,868 610,423 406,311

Combined(1) Exemptions $916,723,693 969,507,718 1,035,091,781 1,096,240,271 1,233,949,272 1,454,998,314 1,698,952,045 1,859,917,943 2,880,690,124 2,769,978,059

Assessed Value for Operations Property $2,826,177,546 3,044,946,476 3,391,006,606 4,197,584,257 5,902,190,438 8,400,235,466 12,140,246,044 13,091,352,883 10,546,602,006 7,834,651,556

(1) The Combined Exemptions consists of: a) Renewable Energy Sources, b) Governmental, c) Widows & Widowers, d) Disability, e) Institutional, f) Homestead – regular and additional, g) LOLA, h) Economic Development and i) Tangible Property Exentions. Source: St. Lucie County Property Appraiser Note: Tax Roll Year is January 1 to December 31. City's Fiscal Year is October 1 to September 30.

The ten largest taxpayers and the type of business each such entity is engaged in is summarized below. SCHEDULE OF TEN LARGEST TAXPAYERS 2009 TAX ROLL CITY OF PORT ST. LUCIE, FLORIDA Valuation(1)

Taxpayer 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Florida Power and Light Co. Wal-Mart Stores Inc. St Lucie Land LTD HCA Health Services of FL., Inc. BellSouth Telecommunications Sandpiper Resort Property Inc. Liberty Medical Supply Inc. West Coast Investors LLC Stuart Property Holdings LTD Landing At Tradition Dev. Co.

$ 80,990,133 77,321,834 41,542,900 40,411,866 38,145,300 34,529,393 31,802,336 31,228,359 25,975,600 24,982,700

Percentage 1.03% 0.99 0.53 0.52 0.49 0.44 0.41 0.40 0.33 0.32

Total Taxable Assessed Value of 10 Largest Taxpayers $ 426,930,421 5.45 Total Taxable Assessed Value of Other Taxpayers 7,407,721,135 94.55 Total Taxable Assessed Value of All Taxpayers $7,834,651,556 100.00% ____________________ (1) Includes both Real and Personal Property Tax roll year is January 1 to December 31 Source: St. Lucie County Property Appraiser; St. Lucie County Tax Collector and City of Port St. Lucie GIS Department

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EDUCATIONAL FACILITIES The County has 21 public elementary schools, 8 middle schools, 6 public high schools, including one magnet school, which combines a middle school and a high school. In addition, the County has three special need schools: Woodlands Academy which services the needs of high school and middle school students with disciplinary problems, Anglewood Center which assists high school and middle school students with small children complete their education and Dale Cassens School for the physically and emotionally handicapped students at all grade levels. There are also ten private schools supplementing the public system. Higher education in the area is offered by Barry University located in Port St. Lucie with its emphasis on upper class coursework for the working adult who is obtaining their Bachelors and Masters degrees. The state university system is represented by Florida Atlantic University ("FAU"), and offers selected post-graduate courses and degrees in elementary and early childhood education. FAU has acquired a 50-acre campus in St. Lucie West. Indian River State College ("IRSC") is a four-year state college located in Ft. Pierce with locations in surrounding counties. Its broad selection of programs leads to both bachelors and associate degrees. IRSC operates a 40-acre campus in St. Lucie West. In August 2000, FAU opened a joint-use 1000 square foot facility with IRSC allowing them to increase course offerings at both the state college and university levels. AGRICULTURE The County is the largest citrus producing county in the State. The County's 588 square miles occupy 1% of the land area in Florida. Eighty-two percent (82%) of the County's land is used in farm-related activities. In 1998, an estimated .88% of wage and salary employees were agricultural workers as compared to .70% statewide. The most recent information provided by the U.S. Department of Commerce, 1997 Census of Agriculture, states that as of 1997 there were 500 counted farms in the County, encompassing approximately 227,414 acres with an average land and building value of $1.2 million. The market value of all agricultural products (i.e., crops and livestock) produced in the County amounted to $260.5 million in cash receipts, representing 4% of the State's total farm cash receipts. TOURISM AND RECREATION A combination of favorable climate and available recreational activities including public beaches, tennis courts, golf courses and theaters has made tourism an important industry in St. Lucie County. Within the County, there are 9 licensed hotels and 30 licensed motels with approximately 2,530 total units. The County also has over 363 licensed dining establishments with an estimated seating capacity in excess of 27,000. The County has one inlet, located at its northeast corner and is connected to the federally-maintained Intracoastal Waterway. City residents have easy access to the ocean by way of the North Fork of the St. Lucie River through its protected, tree-lined waterway meandering through the City. Besides boating and fishing, the City maintains 210 acres of developed parks and has over 680 acres in undeveloped or passive status. Developed parks have facilities for organized athletic programs.

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TRANSPORTATION FACILITIES Highways: Within its 116 square miles of area, the City provides approximately 863 miles of paved roads. The transportation network makes up approximately 6,000 acres which is 12% of the City's land area. The City has excellent access to three major north-south Florida highways. Both Interstate I-95 and the Florida Turnpike have interchanges in the City. U.S. Route 1 is the primary local highway with most of the area's commercial development along this corridor. The City has easy access to two principle east-west highways. State Road 76 connects Stuart to southwest Florida and State Road 70 provides connections to other Florida West Coast areas. Bus and Taxi Service: Greyhound Bus Lines has a terminal located in Fort Pierce near the I95 and the Florida Turnpike interchanges, offering daily scheduled service for nationwide thru-line and charter service. The City has three taxi services and seven motor services to Palm Beach International Airport. Rail Transportation: Freight service to the Port St. Lucie region is provided by the Florida East Coast Railroad which operates from Jacksonville to Miami. Passenger railway service is located in nearby West Palm Beach. Water Port: The Port of Fort Pierce, ten miles north of the City, is a deep water port accommodating ships of up to six hundred feet. Cargo traffic consists primarily of citrus, vegetables and fertilizer. There is 64,000 square feet of refrigerated storage and an additional 8,000 square feet of dry storage in dock warehouses which are owned and operated by Indian River Terminal Company, a subsidiary of Bernard Egan & Company. Airports: The St. Lucie County International Airport is located in nearby Fort Pierce and presently has two runways. In addition, the facility provides fuel, repair, hanger and U.S. customs and immigration services. Palm Beach International Airport (less than 50 miles away from the City) is the closest major commercial traffic port, servicing most U.S. airlines. POLICE AND FIRE PROTECTION The City's Police Department consists of approximately 238 authorized full-time sworn officers and 67 full-time civilian personnel, for a total of 305 employees. The Department's budget for fiscal 2009-2010 is $36.2 million, as compared to $38.0 million for 2008-2009. It is estimated that the Department handled 139,508 calls for service in 2009 and of those calls 3,588 involved "serious" crimes (i.e. homicide, rape, robbery, aggravated assault, burglary, theft, auto theft). In 2008, the Department handled 151,376 total calls for service. Of these calls, 3,970 involved serious crimes. There was 1 reported homicide in 2009, 3 reported homicides in 2008 and 2 in 2007. There are a number of programs offered to residents: a close patrol plan of homes belonging to seasonal residents, an infant car seat loan program, an active neighborhood crime watch program, Police Athletic League, Domestic Violence Security Program, Reverse 911 System and Operation Identification Lending Engravers. As part of the local justice system, there are programs (such as teen court) available for youth offenders, D.A.R.E. (Drug Abuse Resistance Education), School Resource Officers and a Juvenile Counselor.

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EMPLOYEE RELATIONS The City currently employs 1,123 individuals on a full time basis, as authorized by the City Council. Under the Constitution of the State, employees have the right to join together for the purposes of collective bargaining. The City has four active unions, Coastal Florida Police Benevolent Association (PBA-Lts), Coastal Florida Police Benevolent Association (PBA-Sgts), Coastal Florida Public Employee Association (PEA) and International Union Police Association AFL CIO (IUPA). Strikes by municipal employees, under any conditions, are prohibited by the Florida Constitution. The City maintains a Civil Service Appeals Board. Employees may be removed for cause.

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APPENDIX B

CITY AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009

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To the City Council Port St. Lucie, Florida

March 16, 2010

The management’s discussion and analysis and the schedule of funding progress as listed in the table of contents are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards and state financial assistance is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and Chapter 10.550, Rules of the Auditor General, and is also not a required part of the basic financial statements of the City. The combining and individual nonmajor fund financial statements and schedules as listed in the table of contents and the schedule of expenditures of federal awards and state financial assistance have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.

Certified Public Accountants

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Management's Discussion & Analysis

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MANAGEMENT’S DISCUSSION AND ANALYSIS Management’s discussion and analysis is a narrative overview and analysis of the financial activities of the City of Port St. Lucie for the fiscal year ended September 30, 2009. Readers are encouraged to consider the information presented here in conjunction with additional information furnished in the letter of transmittal. Financial Highlights • At the end of fiscal year 2009, the City’s assets exceeded its liabilities by $759,523,061 (net assets). Of this amount, $40,342,695 (unrestricted net assets) may be used to meet the City’s ongoing obligation to citizens and creditors. • The City’s total net assets decreased by $14,032,004 primarily from the decline in property taxes, interest and capital grants and contribution revenues. • At September 30, 2009, the City’s governmental funds reported combined ending fund balances of $155,634,999 a decrease of $107,840,371 compared to the prior year. Of this total amount $130,512,639 (unreserved fund balance) is available for spending of which $117,169,320 is designated for future use. • At September 30, 2009, the unreserved fund balance of the General Fund was $15,534,051 or 26.9 percent of the total General Fund revenues and 25.7 percent of General Fund expenditures. • During the year, the City issued bonds in the amount of $187,160,000 and retired bonds, notes and certificates of participation in the amount of $184,120,883 a net increase of $3,039,117 compared with a net increase the prior year of $102,235,490. The debt issued included the Utility System Refunding Revenue Bonds, Series 2009 in the amount of $110,200,000, the Refunding Certificates of Participation Master Lease Project, Series 2008 in the amount of $45,600,000 and the City Center Special Assessment Refunding Bonds, Series 2008A in the amount of $31,360,000. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The Statement of Net Assets presents information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. MDA-1

The Statement of Activities presents information showing how the City’s net assets changed during the most recent fiscal year. All Changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused sick leave). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, physical environment, transportation, economic environment, human services and culture and recreation. The business-type activities include water and sewer, stormwater management and a golf course. The government-wide financial statements include not only the City itself which is the primary government, but also a legally separate Port St. Lucie Governmental Finance Corporation and a legally separate Community Redevelopment Agency (CRA) for which the City is financially accountable. They are both governed by the same board members; the City Council. Accordingly, the financial information for these component units has been blended with and included as an integral part of the primary government. The government-wide financial statements can be found on pages 1-2 of this report. Fund financial statements. A Fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the City’s funds can be divided into three categories: governmental, proprietary and fiduciary. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate the comparison between governmental funds and governmental activities.

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The City maintains 46 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General Fund, Debt Service Fund, Community Redevelopment Agency Fund, Community Redevelopment Agency Tax Increment Revenue Fund, Capital Improvement Project (CIP) Funds, City Center Capital Improvement Fund, Crosstown Parkway Capital Improvement Fund and Southwest Annexation District I CIP Fund, all of which are considered to be major funds. Data from the other 39 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The basic governmental fund financial statements can be found on pages 3-8 of this report. Proprietary funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the governmentwide financial statements. The City uses enterprise funds to account for the Water and Sewer Utility Operating Fund, the Stormwater Utility Fund and for the Golf Course Fund. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses an internal service fund to account for the Medical Trust Fund. Because this service predominantly benefits governmental rather than business-type functions, it has been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Water and Sewer Utility Fund, the Stormwater Utility Fund and the Golf Course Fund as the City has elected to report all the enterprise funds as major funds in the proprietary fund financial statements. The basic proprietary fund financial statements can be found on pages 9-14 of this report. Fiduciary funds. Fiduciary funds and Agency funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds and Agency funds are not reported in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on pages 15-17 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 18-64 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s compliance with its General Fund, major funds budget and the City’s progress in funding its obligation to provide pension benefits to its employees. Required supplementary information can be found on pages 65-70 of this report. MDA-3

The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the required supplementary information on pensions. Combining and individual fund statements and schedules can be found on pages 71-84 of this report. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a governments financial position. In the case of the City of Port St. Lucie, assets exceeded liabilities by $759,523,061 at the close of the most recent fiscal year. The City’s decrease in net assets for this fiscal year is $14,032,004. City of Port St Lucie Net Assets on September 30, 2009 (In Thousands) Governmental Activities 2009 2008 Assets: Current and other assets Capital assets Total assets Liabilities: Long-term liabilities outstanding Other Liabilities Total Liabilities Net Assets: Investment in capital assets, net of related debt Restricted Unrestricted Total net assets

Business-type Activities 2009 2008

Totals 2009

2008

$ 338,960 743,397

$ 499,893 657,483

$ 178,649 692,905

$ 186,660 681,537

$ 517,609 1,436,302

$ 686,553 1,339,020

1,082,357

1,157,376

871,554

868,197

1,953,911

2,025,573

534,454 176,098

546,456 229,382

466,346 17,490

452,207 23,973

1,000,800 193,588

998,663 253,355

710,552

775,838

483,836

476,180

1,194,388

1,252,018

274,327 116,014 (18,536)

182,324 219,503 (20,289)

242,949 85,890 58,879

253,467 83,291 55,259

517,276 201,904 40,343

435,791 302,794 34,970

$ 371,805

$ 381,538

$ 387,718

$ 392,017

$ 759,523

$ 773,555

A large portion of the City’s total net assets are restricted approximately 26.6 percent, consisting of $138,737,164 in restricted capital project cash and investments, $63,070,596 in restricted debt service funds and $97,094 restricted for stormwater claims. The City has unspent bond proceeds for capital projects and debt service reserve requirements in cash and investments that must be restricted. The City’s total net assets also include $517,275,512 (68.1 percent) invested in capital assets (e.g. land, utility plant and equipment, buildings, improvements, machinery and equipment, and infrastructure), less any related debt used to acquire those assets still outstanding. The City uses these capital assets to provide services to citizens. Consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related MDA-4

debt, it should be noted the resources needed to repay this debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities. The remaining balance of $40,342,695 (5.3 percent) in unrestricted net assets may be used to meet the City’s ongoing obligations to citizens and creditors. The City’s net assets decreased by $14,032,004 from $773,555,065 to $759,523,061 during the current fiscal year. The decline in the City’s revenue from property taxes is (19.5 percent), interest (40.1 percent) and capital grants and contributions (39.0 percent) account for this decrease. The City’s combined total revenues dropped $29,608,439 (11.2 percent).

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City of Port St Lucie Changes in Net Assets on September 30, 2009 (In Thousands) Governmental Activities 2009 2008 Program revenues: Charges for services $ 21,602 Operating grants and contributions 10,881 Capital grants and contributions 11,823

Business-type Activities 2009 2008

Totals 2009

2008

$ 28,375 12,327 1,519

$ 70,738 409 18,236

$ 67,737 1,709 29,911

$ 92,340 11,290 30,059

$ 96,112 14,036 31,430

44,889 31,449 2,274 11,380 1,463

55,771 30,313 2,640 18,983 1,988

8,863 1,686

7,804 6,225

44,889 31,449 2,274 20,243 3,149

55,771 30,313 2,640 26,787 8,213

135,761

151,916

99,932

113,386

235,693

265,302

11,993 43,401 5,177 38,904 5,454 1,651 11,985 25,862 -

10,854 40,580 3,226 33,233 9,031 1,678 8,949 24,786 -

85,476 17,807 2,016

77,017 19,641 2,003

11,993 43,401 5,177 38,904 5,454 1,651 11,985 25,862 85,476 17,807 2,016

10,854 40,580 3,226 33,233 9,031 1,678 8,949 24,786 77,017 19,641 2,003

144,427

132,337

105,299

98,661

249,726

230,998

(8,665) (1,068)

19,579 1,191

(5,367) 1,068

14,725 (1,191)

(14,033) -

34,304 -

Changes in net assets Net assets - 10/01/2008

(9,733) 381,538

20,770 360,768

(4,299) 392,017

13,534 378,483

(14,032) 773,555

34,304 739,251

Net assets - 09/30/2009

$ 371,805

$ 381,538

$ 387,718

$ 392,017

$ 759,523

$ 773,555

General revenues: Property taxes Other taxes State revenue sharing Interest income Other revenues Total revenue Expenses: General government Public safety Physical environment Transportation Economic environment Human Services Culture and recreation Interest on long-term debt water and wastewater Stormwater Golf course Total expenses Increase in net assets before transfers Transfers

Governmental activities. Governmental activities decreased the City’s net assets by $9,732,904. Representing 69.4 percent of the loss. Key elements of this decrease are as follows: •

Property taxes decreased by $10,881,741 (19.5 percent) from the previous year

MDA-6



Interest income decreased by $7,602,251 (40.1 percent) from the previous year because of the collapse in the financial market and interest rates going to an unprecedented low.



Utility taxes, franchise fees, and state revenue sharing was very flat with a decrease of $25,308 (0.2 percent) from the prior year. The Communication Service Tax did have a significant increase of $1,236,695 (67.1 percent) because the rate was increased to the state average rate of 5.22 percent. This increased revenue was collected for three months of the current year.



Charges for service decreased by $6,773,543 (23.9 percent) from the prior year. The decline in new construction in both residential and commercial construction industry impacted revenues for building permits, zoning fees and impact fees.



Operating grants and contributions decreased by $1,445,632 (11.7 percent) and capital grants and contributions increased by $10,303,906 (678.2 percent). The operating grants decreased because of payments received from the Federal Emergency Management Agency (FEMA) in the prior year were greater than the current year. The capital grants and contributions increased because developers contributions increased. The City also received a grant for the Boardwalk at Veterans Park and a grant for a reuse main at the City Center project. These one time revenues fluctuate each fiscal year.

Revenues by Source - Governmental Activities

Other Interest 1% 8%

Property Taxes 33%

Charges for Services 16% Other Taxes 25%

Operating Grants & Contributions Capital Grants & 8% Contributions 9%

For the most part, increases in expenditures closely paralleled inflation and growth in the demand for service, but were under budgeted levels. Operating expenditures of governmental activities increased by $12,089,707 (9.1 percent) over the prior year. Government Accounting Standards Board (GASB) statement 45 on Other Post Employment Benefits (OPEB) was implemented in this current fiscal year. The Annual Required Contribution (ARC) in the governmental activity was $1,854,341. Highlights of other increases were: MDA-7



Operating expenditures for Transportation increased $5,671,198 (17.1 percent) over the prior year due to an increase in personnel cost, non-capital road maintenance projects, depreciation expense on infrastructure.



Operating expenditures for Culture and Recreation increased $3,036,152 (33.9 percent) primarily driven by the expansion of the City’s park facilities by opening the new Civic Center. Increase staffing for the Civic Center from 23 full time equivalents (FTE) to 40.5 FTE’s was the major cause for the increase.



Operating expenditures in Public Safety increased $2,821,243 (6.9 percent) over the prior year due to increase in personnel cost. The Union contract negotiated a 5 to 7 percent increase for the prior year 2007/2008 and the current year 2008/2009. Higher health care cost and depreciation expense also contributed to the increase.



Operating expenditures for General Government increased $1,138,216 (10.5 percent) from the prior year primarily due to salary, health insurance and depreciation expense increases.



Debt Service increased by $1,076,145 (4.3 percent) from the prior year. The governmental funds increased their debt in fiscal 2007 and 2008 and; therefore, interest expense also increased.



Operating expenditures for Economic Environment decreased $3,576,480 (39.6 percent) due to a decrease in funding for the City’s grant programs. The Neighborhood Stabilization program a HUD Grant for the purchase of foreclosed homes requires these homes be set-up as inventory for resale; therefore, these expenditures are on the Statement of Net Assets and do not appear on the Statement of Activities. Ex pen ses & P ro gr am Revenu es - Governmental Activities 45 Ex pens es

40

Pr ogram R ev enue s

35

$ Millions

30 25 20 15 10 5 0 G eneral Governm ent

Public S afety

Phys ic al E nv ir onm ent

T ranspor tation

E conom ic Env ir onm ent

Hum an S er vices

Culture & Recr eation

Interest on Long Ter m Debt

Business-type activities. Business-type activities decreased the City’s net assets by $4,299,100 accounting for 30.6 percent of the total decline in the City’s net assets. MDA-8

Revenues by Source - Business-type Activities

System Development 1% Connection Fees 1% Interest 4%

Other 5%

Capital Grants & Contributions 18% Charges for Services 71%

Key elements of the business-type activity net assets increases and decreases are as follows: •

The City’s water and waste water utility operations net assets decreased by $6,063,386. Depreciation expense had the largest increase of $5,279,641 (22.2 percent) over the prior year. Personal Services increased by $1,658,862 (10.9 percent) as the result of including OPEB contributions to the Annual Required Contributions (ARC) plus the 5 percent salary increase received by all employees. The operating expenses were relatively flat. Revenues from operations increased $1,697,155 (3.4 percent) due to a 3 percent rate increase and the addition of new customers. Interest income and new customer fees decreased and revenue from the swap agreement increased for a net decrease of $5,055,404 (49.5 percent). The number of customer connections increased 511 to a total of 69,417 for water and by 339 to a total of 49,675 for waste water during the fiscal year.



The City’s stormwater management operating revenues were up by $1,347,481 (8.9 percent) and operating expenses were down by $770,982 (4.9 percent) contributing to the positive results for operations and increased net assets.



The City’s golf course had an increase of $37,156 (.5 percent) in net assets. Revenues were down $43,813 (2.7 percent) and expenses were up $30,299 (1.5 percent) over the prior year. The current transfer in from the general fund was $356,220. The golf course is at the break point on the cash basis but did not generate enough revenue to fund depreciation.

MDA-9

Expenses & Program Revenues - Business Type Activities

90

Expenses Program Revenues

80 70

$ M illions

60 50 40 30 20 10 0 Water and Sewer

Stormwater Utility

Golf Course

Financial Analysis of the City’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. This information is useful in assessing the City’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of the City’s net resources available for spending at the end of a fiscal year. As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $155,634,999, a decrease of $107,840,371 in comparison with the prior year. The decrease is from spending capitalized interest for debt service and spending and encumbering funds in large capital projects. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unreserved fund balance of the General Fund was $15,534,051 while total fund balance reached $15,667,999. As a measure of the General Fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balances to total fund revenues and expenditures. Unreserved fund balance represents 26.9 percent of total General Fund revenues and 25.7 percent of total General Fund expenditures, while total fund balance represents 27.2 percent of revenues and 25.9 percent of expenditures in the General Fund. The fund balance of the City’s General Fund decreased by $5,605,107 during the current fiscal year. The City had increased fund balance in the prior year by $5,479,023 in anticipation of decreased property values to avoid a millage rate increase. Fund balance was also affected by MDA-10

transfers out in excess of $3 million primarily to purchase land from the Building Fund, the (CRA) for the City’s annual tax increment, debt service on the City Complex Certificate of Participation, Series 2004 and to the Stormwater Fund Howard Creek Drainage Project for emergency debris removal. • Revenues from property taxes as well as other taxes were down 4.7 million (11.8 percent). Licenses and permits were up 2.6 percent and intergovernmental was down $2.4 million or 21.9 percent. This decrease was because the City had received a one time revenue from F.E.M.A. in the prior year. Interest was down 75.6 percent and impact fees declined by 76.6 percent. Both of these decreases were because of the economy and the low interest rates and slow housing starts. • The City’s General Fund total expenditures decreased by $389,248 (.6 percent) from the prior year. Public safety increased by $2,861,170 (7.8 percent) from the prior year. The International Union Police Association (IUPA) collective bargaining agreement for fiscal year (FY) 2008 was not ratified until FY 2009. This collective bargaining agreement allowed retro salary increases for FY 2008 that required a budget amendment and increased expenditures in FY 2009. Culture and Recreation had an increase in expenditures of $2,778,332 (37.0 percent) due to the opening of the new Civic Center in December, 2008. This increased the operating cost as well as added personnel. The City refunded the 1998 Sales Tax Bonds in FY 2008 which reduced the City’s debt service by $4,851,320 (97.9 percent). The remaining divisions all decreased their expenditures. The Crosstown Parkway project consists of 8 miles, 6 lane divided highway, including 3 bridges and an interchange at Interstate I-95. Segment 3, a bridge over the turnpike, was completed in September, 2007, segment 2 was completed in August, 2008 and segments 4 and 5 were completed in March, 2009. The remaining Segment 1, which is the bridge over the North Fork of the St. Lucie River, is still in the permitting process and may be several years before construction will begin. In June of 2005, a bond referendum vote was overwhelmingly approved by 89 percent of voters authorizing $165 million in general obligation debt to construct this parkway. In 2005 and 2006, the City issued two phases of the general obligation bonds totaling $93.830 million with a principal balance of $88.725 million at September 30, 2009. It is anticipated that phase three bonds will be issued in 2012. Two new funds were established in FY 2009. The first is a special revenue fund to account for the Neighborhood Stabilization program. This $13.5 million grant for the purchase of foreclosed homes was received from Housing Urban Development (HUD). The second new fund is a capital improvement fund for the Eastern Waterway Improvement Project (EWIP). This fund was established to account for the construction cost associated with the improved drainage in the eastern section of the City to prevent flooding. The Southwest Annexation Special Assessment District, Phase I (SAD) is a bonded project in the process of constructing roads, water, waste water and drainage infrastructure on 3,606 acres being developed for residential and commercial use. The Torrey Pines Institute for Molecular Studies and the Oregon Health and Science University’s Vaccine and Gene Therapy Institute (VGTI) have already located within the district. The City has commitments from Wyndcrest Digital Domain, an electronic movie production process, Martin Memorial Hospital and the Mann Research Center to locate within this district. MDA-11

The governmental fund balances decreased by $107.8 million or 160.9 percent. Major factors are as follows: • Southwest Annexation capital improvement fund decreased by $31.4 million as bond funds are spent on the infrastructure on this major project. • Crosstown Parkway capital improvement fund decreased by $28.0 million as bond funds are spent on this transportation project. • Road and Bridge capital improvement fund decreased its fund balance by $13.2 million as impact fees are spent on the infrastructure improvements throughout the City. • Becker Road capital improvement fund decreased by $10.7 million as designated funds for this project are spent on infrastructure improvements. • Southwest Annexation collection fund decreased the fund balance by $7.4 million by using capitalized interest to make debt payments. • Community Redevelopment (CRA) capital improvement fund decreased by $7.0 million with the completion of the Civic Center project. • General Fund decreased its fund balance by $5.6 million as revenues from taxes and user fees declined and expenditures remained constant. The City has three proprietary funds: the Water & Sewer Utility System Fund, the Stormwater Utility Fund and the Golf Course Fund. Unrestricted net assets of the Water and Sewer Utility System Fund at the end of the year amounted to $68,760,023. Unrestricted net assets for the Stormwater Utility Fund amounted to $(9,016,395), (see Note II B. Compliance and Accountability; page 27), and unrestricted net assets for the Golf Course Fund amounted to $285,091. The total increase and decrease in net assets for the three funds was $(6,063,386), $1,855,574 and $37,156 respectively. Other factors concerning the finances of these funds have been addressed in the discussion of the City’s business-type activities. General Fund Budgetary Highlights The increase in the final revenue budget over the original budget was modest, with a total increase of 2.0 percent or $1,165,765. Major increases in the revenue budget were as follows: • $741,666 in F.E.M.A. reimbursement for the 2004 Hurricanes Frances and Jeanne. • $230,000 interfund transfer from the Torrey Pines CIP Fund in reimbursement for staff time and in-house professional services associated with construction of the Torrey Pines Institute. The increase in the final expenditure budget over the original budget was also modest, with a 6.3 percent or $4,050,261 increase. Appropriation via budget amendment for retroactive increases in salaries and benefits under collective bargaining agreements for the Police Department, the reimbursement of the Building Fund for the purchases of land and the interfund transfer to the Stormwater Fund of F.E.M.A. revenues received for upgrades and improvements of Howard Creek. The cost associated with the aforementioned items are: MDA-12

• $1,353,009 in retroactive pay plan adjustments of salaries and benefits for police officers in accordance with the (IUPA) collective bargaining agreement. • $816,583 in reimbursement of the Building Department Fund for the purchase of land adjacent to the City Hall Complex. • $716,936 interfund transfer to the Stormwater Fund for construction upgrades and improvements to Howard Creek. The revenue variance from the final budget to the actual revenues for the General Fund was $2,418,426 under budget (4.2 percent). Major variances of the final budget to actual were as follows: • Charges for Services ($1,587,921) under budget, a (44.8) percent variance. • Licenses and Permits ($945,901) under budget, a (8.9) percent variance. • Intergovernmental Revenue ($633,858) under budget, a (7.0) percent variance. • Taxes $763,049 over budget, a (2.3) percent variance. • Miscellaneous Revenues $494,856 over budget, a (47.4) percent increase. • Fines & Forfeitures $135,226 over budget, an (18.1) percent variance. The variance from the final budget to actual expenditures for the General Fund was $5,149,413 under budget (7.50 percent). All divisions within the General Fund were under the final revised budget with the exception of the following: • School Crossing Guards ($26,053) over budget, a 5.1 percent variance. • Drug Abuse Resistance and Education (DARE) ($8,402) over budget, a 48.7 percent variance. • Human Resources ($4,033) over budget, a 0.9 percent variance. Capital Asset and Debt Administration Capital assets. The City’s investment in capital assets for its governmental and business-type activities as of September 30, 2009 amounted to $1,436,302,037 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements, infrastructure, machinery and equipment, plant, water and sewer system and construction in progress. Projects for major governmental capital assets during the current year that increased the city’s investment in capital assets includes the following: • Becker Road Widening, Turnpike to I-95 $16,140,406 • CRA Civic Center Facility $54,351,661 • Crosstown Parkway Infrastructure Improvements. Segments 4&5. $54,891,142 • City Center Infrastructure Improvements $16,847,161 • Southwest Annexation Infrastructure Improvements $85,120,872 MDA-13

Construction work in progress for major governmental capital assets during the current year includes the following: • Crosstown Parkway Infrastructure (Segment 1) $2,671,004 • Botanical Gardens $1,741,384 Southwest Annexation Special Assessment Districts • Village Parkway Phase II $25,471,748 • Gatlin/I-95 Phase II Construction $7,677,419 The City transferred major capital assets from the governmental activities to the business-type activities. These transfers were from Southwest Annexation Infrastructure Improvements, City Center Infrastructure Improvements & Crosstown Parkway Segments 4&5 in the amount of $8,651,787. Developers contributed infrastructure to the utility system totaling $2,503,433. Other major projects in the business-type activities include the following: • James E. Anderson water treatment plant expansion $30,772,294 • Southport wastewater treatment plant expansion $19,272,025 • Glades wastewater treatment plant expansion $25,542,410 • Glades wastewater repump station $7,288,971 • Midport repump station & storage $2,415,233 Construction work in progress for major business-type capital assets during the current year includes the following: • Rangeline water treatment plant, Phase I water storage repump $16,556,173 • Prineville expansion Phase I Admin. II $2,001,844 • Westport wastewater treatment expansion from 6.0 to 10.0 million gallons daily $6,774,688 • Water and wastewater main extension on Federal Highway 1 North $2,136,288 • Glades wastewater treatment plant deep injection well $5,594,416 • Westport wastewater treatment plant - expansion 2.0 million gallons daily $1,432,287 • Glades water main extension $2,096,652 • River Park water mains $1,182,724

MDA-14

City of Port St Lucie Capital Assets (net of depreciation) (In Thousands) Governmental Activities 2009 2008 Land Buildings Improvements other than buildings Machinery and equipment Infrastructure Plant Water and sewer system Construction in progress Total capital assets

Business-type Activities 2009 2008

Totals 2009

2008

$ 111,737 103,918

$ 96,798 59,349

$ 20,717 3,524

$ 18,804 3,634

$ 132,454 107,442

$ 115,602 62,983

17,670 11,079 457,447 41,546

11,881 10,772 311,091 167,592

1,475 6,506 1,488 223,778 397,572 37,845

1,603 8,373 153,894 390,559 104,671

19,145 17,585 458,935 223,778 397,572 79,391

13,484 19,145 311,091 153,894 390,559 272,263

$ 743,397

$ 657,483

$ 692,905

$ 681,538

$ 1,436,302

$ 1,339,021

Additional information on the City’s capital assets can be found in note III-D on pages 34-35 of this report. Bonded debt. At the end of the current fiscal year, the City had total bonds, notes and certificates outstanding of $993,326,950. Of this amount, $296,640,000 is special assessment debt for which the City is liable in the event of default by the property owners subject to the assessment. The remainder of the City debt represents bonds and notes secured solely by specified revenue sources. City of Port St Lucie Outstanding Debt - General Obligation, Special Assessment and Revenue Bonds (In Thousands) Governmental Activities 2009 2008 General Obligation Bonds $ 88,725 Special Assessment Bonds 296,640 Revenue Bonds 147,893 Total

$ 533,258

Business-type Activities 2009 2008

$ 88,925 301,880 155,036

$

460,069

$ 545,841

$ 460,069

$

444,368

$ 444,368

Totals 2009 $

2008

88,725 296,640 607,962

$ 88,925 301,880 599,404

$ 993,327

$ 990,209

During the current fiscal year, the City’s bonds, certificates of participation and notes outstanding increased by $3,117,867. The key factors in this increase was the issuance of the Refunding Certificates of Participation, Series 2008 to go from a variable rate debt to a fixed rate issue, refunding the City Center Special Assessment, Series 2008A and restructuring the debt repayment to fit the projects completion and issuing the Utility System Refunding Revenue Bonds, Series 2009 to restructure the variable rate debt to a fixed rate structure. MDA-15

The City partially redeemed the following special assessment bonds: Special Assessment District I Phase II for $1,400,000, USA 3 & 4 for $3,800,000, USA 5, 6 & 7A for $2,300,000, USA 9 for $270,000, South Lennard Road for $220,000, River Point for $845,000, Tesoro for $1,900,000, Glassman for $470,000, East Lake Village for $225,000, St. Lucie Land Holdings for $600,000 and the combined Peacock and Lowry for $80,000. The total partial calls for the special assessment districts for the current fiscal year were $12,110,000. Additional information on the City’s long-term debt can be found in Note III-G on pages 38-54 of this report. Economic Factors and Next Year’s Budgets and Rates Taxable Value - The taxable value of property in Port St. Lucie fell by 26 percent ($3 billion) for the fiscal year 2009-10 to $7.9 billion. The weak real estate market is the driving force behind the decreasing value. In addition to the declining value of existing properties, the taxable value of new construction was only $132 million compared to over $500 million in the 2008 tax roll and the two years prior to that added over $1.1 billion to the tax roll each year. This recent drop in taxable value, when combined with the 19 percent drop in the prior year, sets the total taxable value less than the 2005 tax roll (FY 2005-06). Millage Tax Rate - The City Council voted to increase the City’s Millage Rate by 11 percent to a total rate of 4.6866. Of this rate, 1.0000 mill is voted for debt service on the Crosstown Parkway road project. This rate increase helped soften the financial impact of the 26 percent drop in taxable value. The combined effect of this higher tax rate and the lower value created a drop in Ad-Valorem Tax Revenue of $7.5 million. Financial Contingencies - In order to assist in balancing the FY 2009-10 budget, the City Council directed staff to reduce the budgeted contingencies to 4 percent in the various operating funds. The previous policy called for an 8 percent contingency. This action allowed the General Fund budget to designate $3.1 million as available funding for the future year (FY 2010-11) and release it from the Contingency Account. Staffing Changes - With the difficulty of balancing the FY 2009-10 budget, 114 Full Time Equivalent (FTE’s) were cut from the staffing level. Of that City wide total, 53 FTE’s were from the General Fund which is impacted the greatest by the drop in Property Tax Revenue. The staffing reductions were felt in many areas of the organization including the ranks of sworn police officers as the Budgetary Policy of 1.6 officers per thousand of population was not met with the FY 2009-10 budget. The officer total was reduced by 16 FTE’s for an actual staffing ratio of 1.54 officers per thousand. Rates and Fees - The annual Stormwater Fee was increased by $20 to $153 to cover inflation plus funding the debt service on a large drainage project in the eastern portion of the City. It was also necessary to increase the annual Street Lighting Fee charged to the properties in the various special areas that elected to have residential street lighting. The rate increased by $4 to $23. All other rates and fees were held equal to the prior year including the Water and Sewer rates which were originally projected to be increased by 3 percent.

MDA-16

Request for Information This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, 121 S.W. Port St. Lucie Boulevard, Port St. Lucie, Florida, 34984-5099.

MDA-17

(THIS PAGE INTENTIONALLY LEFT BLANK)

Basic Financial Statements ■ Notes to the Financial Statements ■ Required Supplementary Information

CITY OF PORT ST. LUCIE, FLORIDA Statement of Net Assets September 30, 2009

Business Type Activities

Governmental Activities Assets Equity in Pooled Cash and Investments Investments Receivables Internal Balances Prepaids and Other Assets Deferred Charges Restricted Assets: Equity in Pooled Cash and Investments Investments Receivables Deposits Capital Assets, Net of Depreciation Capital Assets, Not Depreciated Total assets

$

Liabilities Accounts Payable Unearned Revenue Payables from Restricted Assets Long-Term Debt Due within one year Long-Term Debt Due in more than one year Other Post Employment Benefits Total liabilities Net assets Invested in Capital Assets, net of related debt Restricted for: Debt Service Capital Projects Claims Net assets - Unrestricted Total net assets

$

36,560,018 9,818,889 154,499,813 1,283,337 1,850,612 18,763,255

27,198,648 31,043,737 19,862,527 (1,283,337) 1,891,677 13,403,190

$

63,758,666 40,862,626 174,362,340 3,742,289 32,166,445

53,021,244 62,993,237 169,655 590,113,634 153,283,253 1,082,356,947

21,784,521 64,013,350 734,279 634,342,757 58,562,393 871,553,742

74,805,765 127,006,587 169,655 734,279 1,224,456,391 211,845,646 1,953,910,689

4,265,206 148,827,837 12,987,338 10,017,745 532,599,386 1,854,340 710,551,852

6,203,738 2,243,999 5,446,716 3,595,391 465,458,034 887,898 483,835,776

10,468,944 151,071,836 18,434,054 13,613,136 998,057,420 2,742,238 1,194,387,628

274,326,677

242,948,835

517,275,512

33,701,454 82,313,027 (18,536,063) 371,805,095

29,369,142 56,424,137 97,094 58,878,758 387,717,966

63,070,596 138,737,164 97,094 40,342,695 759,523,061

1 The notes to the financial statements are an integral part of this statement.

$

Total Primary Government

$

$

CITY OF PORT ST. LUCIE, FLORIDA Statement of Activities Year Ended September 30, 2009

Expenses

2

Functions/Programs Primary government: Governmental activities: General Government Public Safety Physical Environment Transportation Economic Environment Human Services Culture and Recreation Debt service - Interest Total governmental activities

$ 11,992,504 43,401,330 5,176,460 38,904,334 5,454,266 1,650,621 11,985,206 25,861,845 144,426,566

Business-type activities: Utility System Stormwater Utility Golf Course Total business-type activities

85,475,608 17,807,203 2,016,046 105,298,857

Total primary government

$ 249,725,423

Charges for Services

$

3,899,070 1,897,530 12,313,424 1,844,263 19,069 104,965 1,523,523 21,601,844

Program Revenues Operating Capital Grants and Grants and Contributions Contributions

$

52,688,326 16,480,343 1,569,018 70,737,687 $

92,339,531

738,096 1,109,223 1,861,911 6,773,318 398,744 10,881,292

$

409,157 409,157 $

11,290,449

$

9,260 126,530 18,520 10,137,641 1,531,330 11,823,281

Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Business-type Activities Activities Total

$

-

$

(7,346,078) (40,268,047) 7,155,484 (25,060,519) 1,338,121 (1,545,656) (8,531,609) (25,861,845) (100,120,149)

-

(16,078,884) 609,786 (447,028) (15,916,126)

(16,078,884) 609,786 (447,028) (15,916,126)

30,059,168

(100,120,149)

(15,916,126)

(116,036,275)

44,888,912 13,582,701 3,078,658 1,570,426 4,908,774 2,273,713 7,456,766 851,595 11,380,172 218,532 1,244,683 (1,067,687) 90,387,245

3,739,124 5,124,500 35,621 1,650,094 1,067,687 11,617,026

44,888,912 13,582,701 3,078,658 1,570,426 4,908,774 2,273,713 7,456,766 851,595 15,119,296 5,124,500 254,153 2,894,777 102,004,271

(9,732,904)

(4,299,100)

(14,032,004)

Change in net assets

The notes to the financial statements are an integral part of this statement.

$

16,299,241 1,936,646 18,235,887

General revenues: Property Taxes Franchise & Utility Taxes Communications Service Tax Local Business Tax Half Cent Sales Tax State Revenue Sharing-Unrestricted Local Option Gas Tax Insurance Premium Tax Interest Swap Gain on Sale of Capital Assets Miscellaneous Transfers Total general revenues and transfers

Net assets - beginning Net assets - ending

(7,346,078) (40,268,047) 7,155,484 (25,060,519) 1,338,121 (1,545,656) (8,531,609) (25,861,845) (100,120,149)

$

381,537,999 371,805,095

392,017,066 $ 387,717,966

773,555,065 $ 759,523,061

CITY OF PORT ST. LUCIE, FLORIDA Balance Sheet Governmental Funds September 30, 2009

General Assets Cash and Cash Equivalents Equity in Pooled Cash Investments Receivables Assessments Receivable Due From Other Funds Due From Other Governmental Units Prepaid Items Deposits Inventories Restricted Assets: Equity in Pooled Cash Investments Receivables Total assets Liabilities and fund balances Liabilities: Accounts Payable and Accrued Liabilities Accrued Salaries and Wages Due To Other Funds Deposits Deferred Revenue Payables from Restricted Assets Retainage Payable from Restricted Assets Total liabilities

$

$

$

Fund balances: Reserved for: Encumbrances Inventories Prepaids Unreserved, designated for, reported in: Special Revenue Funds Capital Project Funds Debt Service Fund Unreserved, undesignated, reported in: General Fund Special Revenue Funds Capital Project Funds Total fund balances Total liabilities and fund balances

The notes to the financial statements are an integral part of this statement.

$

24,030 11,736,328 2,486,051 1,336,704 928,610 1,255,273 27,348 67,243 39,357 18,157 17,919,101

643,308 498,519 2,231 55,537 1,051,507 2,251,102

Debt Service Fund

Community Redevelopment Fund

Community Redevelopment Capital Fund

$

$

$

$

$

395 10,469 64,713 15,648 38,843 130,068

-

$

$

94,654 26,693 671 122,018

7,508 1,301 60 8,869

$

$

6,100 5,773 500,000 22,683 50,000 6,028,034 894,149 7,506,739

500,000 121,812 6,362 628,174

39,357 94,591

-

-

-

-

130,068

113,149 -

6,878,565 -

15,534,051 15,667,999

130,068

113,149

6,878,565

17,919,101

3

$

130,068

$

122,018

$

7,506,739

Crosstown Parkway Capital Fund

City Center Capital Fund $

$

$

$

7,136 1,016,974 282,901 1,307,011

582,478 582,478

$

$

$

49,321 19,283 658,910 5,566,126 4,569,270 10,862,910

651,981 651,981

SW Annexation District 1 Capital Fund

Other Governmental Funds

$

$

$

$

104,822 84,219 2,176,283 22,573,445 24,938,769

5,883,307 5,883,307

$

$

925 22,565,430 7,274,407 265,703 147,967,456 46,045 2,262,665 12,700 14,368 1,689,267 38,150,957 34,657,824 130,812 255,038,559

1,316,725 70,375 974,091 54,287 148,193,948 1,574,839 152,184,265

Total Governmental Funds $

$

$

24,955 34,402,512 9,792,924 2,256,550 147,967,456 1,109,042 4,237,317 40,048 81,611 1,728,624 53,021,244 62,993,237 169,655 317,825,175

1,967,541 570,195 976,322 109,824 149,745,515 8,814,417 6,362 162,190,176

66,312 -

1,976,060 -

18,223,857 -

3,005,818 1,689,297 27,068

23,272,047 1,728,654 121,659

658,221 -

8,234,869 -

-

43,819,718 57,334,730 -

43,932,867 73,106,385 130,068

724,533

10,210,929

831,605 19,055,462

(70,887) (2,951,450) 102,854,294

15,534,051 (70,887) (2,119,845) 155,634,999

1,307,011

$

The notes to the financial statements are an integral part of this statement.

10,862,910

$

24,938,769

4

$

255,038,559

$

317,825,175

(THIS PAGE INTENTIONALLY LEFT BLANK)

CITY OF PORT ST. LUCIE, FLORIDA Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets September 30, 2009

Amounts reported for governmental activities in the statement of net assets are different because: Total fund balances: governmental funds balance sheet Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. The cost of the assets is $942,888,457 and the accumulated depreciation is $199,491,574 Long-term liabilities, including bonds payable, compensated absences, other post employment benefits are not due and payable and are not reported in the funds. Long-term liabilities at year end consist of: Bonds Payable Compensated Absences Notes Payable Other Post Employment Benefits

$ 155,634,999

743,396,883

(543,672,226)

530,857,911 8,483,672 2,476,303 1,854,340

Governmental funds record debt issuance costs as expenditures when these costs are first incurred. Unamortized debt issuance costs must be included as a deferred charge in the government-wide financial statements.

18,763,255

Governmental funds do not report a liability for accrued interest until it is due and payable. Accrued interest must be reported as a liability in the government-wide financial statements.

(4,166,559)

In fund financial statements, governmental fund types recognize discounts and premiums during the current period as other financing uses. In the government-wide statements, discounts and premiums are applied against bonds payable. Liabilities for earned but unavailable revenues are reported in the funds, but not in the statement of net assets. The internal service fund is used by management to charge the cost of employee health insurance. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net assets.

Net assets of governmental activities

5 The notes to the financial statements are an integral part of this statement.

(799,248)

935,661

1,712,330

$ 371,805,095

CITY OF PORT ST. LUCIE, FLORIDA Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Year Ended September 30, 2009

Debt Service Fund

General Revenues Taxes Licenses and Permits Intergovernmental Charges for Services Human Services Fines and Forfeitures Interest on Investments Interest on Special Assessments Impact Fees Developers Contributions Other Total revenues

$

Expenditures Current: General Government Public Safety Physical Environment Transportation Economic Environment Human Services Culture and Recreation Capital Outlay Debt Service: Principal Interest Total expenditures Excess (deficiency) of revenues over (under) expenditures

34,732,241 9,638,544 8,449,334 1,957,757 104,965 881,936 169,368 72,770 80,945 1,538,227 57,626,087

$

10,122,284 48,972 10,171,256

Community Redevelopment Fund

Community Redevelopment Capital Fund

$

$

1,725,321 19,069 3,892 129 1,748,411

50,000 95,772 145,772

6,505,973 39,530,957 859,594 64,847 99,663 1,529,441 10,281,505 1,259,708

4,651 -

596,591 -

341,640 6,853,886

103,752 192,578 60,428,018

200,000 4,206,833 4,411,484

540,000 2,577,876 3,714,467

7,195,526

(2,801,931)

5,759,772

(1,966,056)

(7,049,754)

Other financing sources (uses) Transfers In Transfers Out Issuance of Debt Premium on Issuance of Debt Discount on Issuance of Debt Advance Bond Refunding Total other financing sources (uses)

255,000 (3,058,176) (2,803,176)

(6,123,232) (6,123,232)

1,521,561 1,521,561

Net change in fund balances

(5,605,107)

(363,460)

(444,495)

(7,041,328)

Fund balance - beginning

21,273,106

493,528

557,644

13,919,893

Fund balance - ending

The notes to the financial statements are an integral part of this statement.

$

15,667,999

$

130,068

6

$

113,149

600,000 (591,574) 8,426

$

6,878,565

City Center Capital Fund $

$

350,000 15,128 2,998 368,126

Crosstown Parkway Fund $

1,486,911 166,819 1,332,000 87,118 3,072,848

SW Annexation District 1 Capital Fund

Other Governmental Funds

Total Governmental Funds

$

$

$

272,925 53,681 11,263 337,869

7,281,623 2,788,657 16,837,962 10,008,360 127,099 1,164,856 9,137,147 2,978,444 1,350,453 714,700 52,389,301

52,136,148 12,427,201 28,899,528 11,985,186 104,965 1,009,035 1,937,732 9,137,147 3,051,214 2,817,079 2,354,435 125,859,670

946,970 2,392,798

290,208 31,930,763

1,267,445 41,771,151

4,353,873 215,416 1,722,805 13,476,472 2,560,174 309,706 22,164,980

10,859,846 39,746,373 3,529,369 15,103,623 3,598,068 1,529,441 10,591,211 106,373,286

3,339,768

32,220,971

43,038,596

19,888,436 18,884,558 83,576,420

20,732,188 25,861,845 237,925,250

(2,971,642)

(29,148,123)

(42,700,727)

(31,187,119)

(112,065,580)

(2,779,477) 31,360,000 (859,195) (26,780,606) 940,722

6,123,232 (4,973,213) 1,150,019

11,271,449 11,271,449

17,352,008 (20,665,265) 45,600,000 532,697 (44,560,000) (1,740,560)

37,123,250 (38,190,937) 76,960,000 532,697 (859,195) (71,340,606) 4,225,209

(2,030,920)

(27,998,104)

(31,429,278)

(32,927,679)

(107,840,371)

2,755,453

38,209,033

50,484,740

135,781,973

263,475,370

19,055,462

$ 102,854,294

$ 155,634,999

724,533

$

10,210,929

$

The notes to the financial statements are an integral part of this statement.

7

CITY OF PORT ST. LUCIE, FLORIDA Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended September 30, 2009

Amounts reported for governmental activities in the statement of activities are different because: Net changes in fund balances - total governmental funds

$

(107,840,371)

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount of capital outlay recorded as expenditures in the current period.

105,327,797

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount of depreciation expense associated with capital outlays recorded as expenditures in the current period.

(19,413,880)

In the governmental funds, revenues cannot be recognized until they are available to liquidate liabilities of the current period. In the statement of activities, revenue is recognized as soon as it is earned regardless of its availability.

(360,877)

The issuance of long-term debt provides current financial resources to governmental funds. These transactions, however have no effect on net assets. This is the amount of long-term debt issued in the current period.

(76,633,502)

The repayment of the principal of long-term debt consumes the current financial resources of governmental funds. These transactions, however, have no effect on net assets. This is the amount of repayment of principal of long-term debt recorded in the current period

89,948,686

Governmental funds report the effect of issuance of premiums and discounts when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This is the amount of the difference in treatment of unamortized bond premiums and discounts.

259,499

Governmental funds report the effect of issuance costs when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This is the amount of the effect of the difference in treatment of unamortized debt issuance costs.

610,925

Governmental funds do not recognize expenditures for the long-term accrued liability associated with compensated absences and post-employment benefits. This is the amount of compensated absences and OPEB recorded in the current period.

(2,032,957)

Governmental funds do not recognize expenditures for the liability associated with accrued interest payable on long-term debt. This is the amount of accrued interest payable recorded in the current period.

(121,821)

The internal service fund is used by management to charge the costs of health insurance. The net revenue of certain activities of the internal service fund is reported with governmental activities. Change in net assets of governmental activities

The notes to the financial statements are an integral part of this statement.

523,597 $

8

(9,732,904)

CITY OF PORT ST. LUCIE, FLORIDA Statement of Net Assets Proprietary Funds September 30, 2009

Enterprise Funds UTILITY SYSTEM FUND Assets Current assets Cash and Cash Equivalents Equity in Pooled Cash and Investments Investments Receivables Due From Other Funds Due From Other Governmental Units Prepaid Items Deposits Inventories Restricted Assets: Equity in Pooled Cash and Investments Investments Deposits Total current assets

$

Noncurrent assets Receivables Unamortized Bond Expense Capital Assets (net of depreciation) Capital Assets (not depreciated) Total noncurrent assets Total assets Liabilities Current liabilities Accounts Payable and Accrued Liabilities Accrued Salaries and Wages Due To Other Funds Deposits Deferred Revenue Accrued Vacation and Medical Leave Benefits Current Portion Long-Term Obligations Restricted Liabilities: Payables from Restricted Assets Total current liabilities Noncurrent liabilities Payables from Restricted Assets Long-Term Obligations Other Post Employment Benefits Total noncurrent liabilities Total liabilities Net assets Investment in Capital Assets, Net of Related Debt Restricted for Debt Service Restricted for Capital Projects Restricted for Claims Unrestricted Total net assets

$

5,550 22,912,120 30,971,294 10,037,145 31,484 889,674 30,055 31,573 1,510,956

STORMWATER UTILITY FUND

$

1,200 3,792,304 72,222 186,619 30,018 544,536 9,419 30,302 254,251

$

500 486,974 221 7 2,747 1,375 106 23,640

Total

$

7,250 27,191,398 31,043,737 10,223,764 61,509 1,436,957 40,849 61,981 1,788,847

$

2,132,551 25,965 38,490 656 329 -

21,331,589 64,013,350 734,279 152,499,069

452,932 5,373,803

515,570

21,784,521 64,013,350 734,279 158,388,442

2,197,991

8,201,806 13,154,633 625,791,964 54,184,024 701,332,427 853,831,496

248,557 4,025,674 1,591,427 5,865,658 11,239,461

4,525,119 2,786,942 7,312,061 7,827,631

8,201,806 13,403,190 634,342,757 58,562,393 714,510,146 872,898,588

2,197,991

1,656,222 166,367 103,381 3,822,493 2,206,731 186,266 3,067,845

417,489 47,157 91,504 42,988 76,255 255,000

42,448 8,574 37,268 10,025 -

2,116,159 222,098 194,885 3,865,481 2,243,999 272,546 3,322,845

1,617,646 17,983 -

5,194,846 16,404,151

930,393

98,315

5,194,846 17,432,859

1,635,629

452,648,774 561,434 453,210,208 469,614,359

251,870 12,707,892 295,668 13,255,430 14,185,823

101,368 30,796 132,164 230,479

251,870 465,458,034 887,898 466,597,802 484,030,661

1,635,629

230,019,673 29,013,304 56,424,137 68,760,023 384,217,137

5,617,101 355,838 97,094 (9,016,395) (2,946,362) $

7,312,061 285,091 7,597,152

242,948,835 29,369,142 56,424,137 97,094 60,028,719 $ 388,867,927

562,362 562,362

$

The notes to the financial statements are

an integral part of this statement.

GOLF COURSE FUND

Governmental Activities Internal Service Fund

9

$

CITY OF PORT ST. LUCIE, FLORIDA Reconciliation of the Statement of Net Assets of Proprietary Funds To the Statement of Net Assets September 30, 2009

Total net assets of Enterprise Funds on the statement of net assets of proprietary funds

$

The internal service fund is used by management to charge the costs of employee health insurance. The net revenue of certain activities of the internal service fund is reported with governmental activities. Net Assets in business-type activities

(1,149,961) $

10

388,867,927

387,717,966

CITY OF PORT ST. LUCIE, FLORIDA Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds Year Ended September 30, 2009

Enterprise Funds UTILITY SYSTEM FUND Operating revenues Charges for Services Employer Contributions to Health Insurance Employee Contributions to Health Insurance Total operating revenues

$

52,688,326 52,688,326

STORMWATER UTILITY FUND $

16,480,343 16,480,343

GOLF COURSE FUND $

1,569,018 1,569,018

Total $

70,737,687 70,737,687

Governmental Activities Internal Service Fund $

13,018,613 610,478 13,629,091

Operating expenses Personal Services Contractual Services Depreciation Expense Operating Supplies and Expense Administrative Expenses Insurance Premiums Benefits Paid Total operating expenses

16,753,994 1,383,852 29,034,914 13,315,981 60,488,741

5,603,160 5,745,242 573,044 3,141,198 15,062,644

Operating income (loss)

(7,800,415)

1,417,699

(444,892)

(6,827,608)

(367,438)

Nonoperating revenue (expense) Interest Income Swap Agreement Grants Interest Expense Gain (Loss) on Disposition of Equipment Amortization Miscellaneous Guaranteed Revenue Hurricane Expense NRCS Grant Expense Other Grant Expense Total nonoperating revenue (expense)

3,670,395 5,124,500 409,157 (23,077,174) (614,635) (569,210) 508,160 645,888 (13,902,919)

67,971 1,936,646 (595,151) (28,935) (28,139) 409,649 (101,182) (1,801,759) (163,220) (304,120)

758 26,205 98,865 125,828

3,739,124 5,124,500 2,345,803 (23,672,325) (617,365) (597,349) 1,016,674 645,888 (101,182) (1,801,759) (163,220) (14,081,211)

10,104 10,104

Income (loss) before transfers, contributions special items, and extraordinary items

(21,703,334)

1,113,579

(319,064)

(20,908,819)

(357,334)

13,376,100 1,066,353 1,228,023 19,875 (50,403) (6,063,386)

741,995 1,855,574

356,220 37,156

13,376,100 1,066,353 1,228,023 1,118,090 (50,403) (4,170,656)

(357,334)

Capital Contributions System Development Fees Connection Fees Transfers in Transfers out Change in net assets Total net assets - beginning Total net assets - ending

The notes to the financial statements are

an integral part of this statement.

390,280,523 $

384,217,137

1,074,166 78,542 250,580 610,622 2,013,910

(4,801,936) $

(2,946,362)

11

23,431,320 7,207,636 29,858,538 17,067,801 77,565,295

7,559,996 $

7,597,152

851,101 219,773 911,843 1,065,094 10,948,718 13,996,529

393,038,583 $

388,867,927

919,696 $

562,362

CITY OF PORT ST. LUCIE, FLORIDA Reconciliation of the Statement of Revenues, Expenses, and Changes in Fund Net Assets of Proprietary Funds To the Statement of Activities Year Ended September 30, 2009

Changes in net Assets - Enterprise Funds

$

The internal service fund is used by management to charge the costs of employee health insurance. The net revenue of certain activities of the internal service fund is reported with governmental activities. Change in net assets of business-type activities

The notes to the financial statements are an integral part of this statement.

(128,444) $

12

(4,170,656)

(4,299,100)

CITY OF PORT ST. LUCIE, FLORIDA Statement of Cash Flows Proprietary Funds Year Ended September 30, 2009

Enterprise Funds UTILITY SYSTEM FUND

STORMWATER UTILITY FUND

GOLF COURSE FUND

Internal Service Funds

Total

Cash Flows from Operating Activities Cash Received from Customers Cash Paid to Suppliers Cash Paid to Employees Other Operating Receipts

$

Net Cash Provided by (used in) Operating Activities

52,210,503 (17,089,607) (16,712,115) -

$

18,408,781

17,271,056 (10,285,649) (5,460,500) -

$

1,524,907

1,562,439 (655,395) (1,075,839) -

$

(168,795)

71,043,998 (28,030,651) (23,248,454) -

$

19,764,893

13,832,599 (14,053,983) 89 (221,295)

Cash Flows from Noncapital Financing Activities Transfers Repayment of Interfund Borrowing Proceeds from Interfund Borrowings

Net Cash Provided (used) by Noncapital Financing Activities

(30,528) 31,484 (103,381)

741,995 -

356,220 -

1,067,687 31,484 (103,381)

-

(102,425)

741,995

356,220

995,790

-

Cash Flows From Capital and Related Financing Activities System Development Fees Connection Fees Proceeds (payment) Hurricane/Grant Related Guaranteed/Other Revenue Acquisition and Construction of Capital Assets Principal paid on Capital Debt Interest Paid on Capital Debt Proceeds from Sale of Assets Proceeds from Borrowings

1,066,353 1,041,543 409,157 1,154,048 (27,843,851) (101,590,448) (23,077,174) 100,891 110,200,000

(2,150,454) 2,346,295 (714,232) (250,000) (595,151) 42,085 -

98,863 (80,366) (10,057) 27,635 -

1,066,353 1,041,543 (1,741,297) 3,599,206 (28,638,449) (101,850,505) (23,672,325) 170,611 110,200,000

-

(38,539,481)

(1,321,457)

36,075

(39,824,863)

-

(101,867) 95,371 (6,496)

151,788 758 152,546

28,640,030 (34,927,227) 4,258,614 5,124,500 3,095,917

-

Net Cash Provided (used) in Investing Activities

28,488,242 (34,825,360) 4,162,485 5,124,500 2,949,867

Net Increase (Decrease) in Cash and Cash Equivalents/Investments

(17,283,258)

938,949

376,046

(15,968,263)

3,307,487

111,428

64,951,432

Net Cash Provided (used) by Capital and Related Financing Activities Cash Flows From Investing Activities Proceeds from Sales and Maturities of Investments Purchase of Investment Securities Interest and Dividends on Investments Proceeds from Swap Agreement

Cash and Cash Equivalents/Investments Beginning of Year End of Year

The notes to the financial statements are an integral part of this statement.

61,532,517 $

44,249,259

13

$

4,246,436

$

487,474

$

48,983,169

9,446 9,446

(211,849)

2,370,365 $

2,158,516

CITY OF PORT ST. LUCIE, FLORIDA Statement of Cash Flows Proprietary Funds Year Ended September 30, 2009

Enterprise Funds UTILITY SYSTEM FUND

STORMWATER UTILITY FUND

GOLF COURSE FUND

Internal Service Funds

Total

Reconciliation of Operating Income (Loss) to net Cash Provided by (used in) Operating Activities Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation /Amortization Bad Debt Expense Change in assets and liabilities (Increase) decrease in Accounts Receivable (Increase) decrease in Other Assets (Increase) decrease in Deferred Revenue (Increase) decrease in Prepaid Expense Increase (decrease) in Accounts Payable Increase (decrease) in Other Liabilities Increase (decrease) in Other Accrued liability Total adjustments

Net Cash Provided by (used in) Operating Activities

$

(7,800,415)

$

29,034,914 -

1,417,699

$

601,183 180,150

(1,013,985) 381,758 (2,874,913) 639,543 41,879 26,209,196

572,575 (12,041) (1,506,811) 129,492 142,660 107,208

(444,892)

$

(6,827,608)

250,580 -

29,886,677 180,150

15,283 (125) 99 10,260 276,097

(441,410) 385,000 (4,381,849) 769,134 194,799 26,592,501

$

(367,438)

201,627 5,793 (3,165) 648 85,364 (144,124) 146,143

$

18,408,781

$

1,524,907

$

(168,795)

$

19,764,893

$

(221,295)

$

$

$

7,250 27,191,398 21,784,521 48,983,169

$

$

500 486,974 487,474

$

$

1,200 3,792,304 452,932 4,246,436

$

$

5,550 22,912,120 21,331,589 44,249,259

$

2,132,551 25,965 2,158,516

$ $

13,376,100 13,376,100

$ $

-

$ $

-

$ $

13,376,100 13,376,100

$ $

-

Reconciliation of Cash to Statement of Net Assets Cash and Cash Equivalents Equity in Pooled Cash and Investments Restricted Equity in Pooled Cash and Investments

Noncash investing, capital, and financing activities: Contributions of Capital Assets TOTAL

The notes to the financial statements are an integral part of this statement.

14

CITY OF PORT ST. LUCIE, FLORIDA Statement of Fiduciary Net Assets Fiduciary Funds September 30, 2009

Pension Trust Fund Assets Investments: Corporate Stocks Corporate Bonds US Government Obligations Federal Agencies Mutual Funds Money Market Funds Cash Surrender Value of Life Insurance Accrued Interest Receivable Accounts Receivable Prepaid Expenses Equipment (net of accumulated depreciation) Total Assets

$

18,902,791 5,707,755 933,577 3,094,029 38,646,514 1,995,623 279,451 258,368 42,617 3,076 14 69,863,815

Liabilities and Net Assets Liabilities Accounts Payable Deposits Due to Broker Total Liabilities

56,868 42,936 121,001 220,805

Net Assets Held in Trust for: Reserved for Employees' Retirement

69,643,010

Total Net Assets

69,643,010

Total Liabilities and Net Assets

The notes to the financial statements are an integral part of this statement.

$

15

69,863,815

CITY OF PORT ST. LUCIE, FLORIDA Statement of Changes in Fiduciary Net Assets Fiduciary Funds Year Ended September 30, 2009

Pension Trust Fund Additions City State (via General Fund) Employee Net Appreciation in Fair Value of Investments Interest and Dividends Miscellaneous Income Investment Expense Total Additions (reductions)

$

5,478,720 851,595 1,795,292 186,384 892,559 358,815 (123,792) 9,439,573

Deductions Benefit Payments Administrative Costs and Charges Refunds Total Deductions

2,055,287 102,722 398,990 2,556,999

Change in Net Assets

6,882,574

Total Net Assets - beginning

62,760,436

Total Net Assets - ending

The notes to the financial statements are an integral part of this statement.

$

16

69,643,010

CITY OF PORT ST. LUCIE, FLORIDA Statement of Fiduciary Net Assets Agency Fund September 30, 2009

Agency Trust Fund Assets Cash and Equivalents Accounts Receivable Total Assets

$

Liabilities Accounts Payable Due to Contractor Total Liabilities

The notes to the financial statements are an integral part of this statement.

17

$

405,770 164,666 570,436

$

1,651 568,785 570,436

(THIS PAGE INTENTIONALLY LEFT BLANK)

Notes to the Financial Statements

CITY OF PORT ST. LUCIE, FLORIDA Index to Notes to Financial Statements September 30, 2009

Page

Note I

Summary of Significant Accounting Policies A. B. C. D.

Note II

Scope of Reporting Entity................................................................................................. 18 Government-Wide and Fund Financial Statements .......................................................... 19 Basis of Presentation......................................................................................................... 21 Assets, Liabilities and Net Assets or Equity, Revenues, and Expenditures/Expenses ............................................................................................ 23

Stewardship, Compliance, and Accountability A. Budget and Budgetary Accounting................................................................................... 26 B. Compliance and Accountability........................................................................................ 27

Note III

Detailed Notes On All Funds A. B. C. D. E. F. G. H.

Note IV

Cash and Investments ....................................................................................................... 28 Receivables ....................................................................................................................... 32 Assessments Receivable ................................................................................................... 33 Capital Assets ................................................................................................................... 34 Construction Commitments .............................................................................................. 36 Interfund Receivables, Payables, and Transfers ............................................................... 36 Long-Term Debt ............................................................................................................... 38 Fund Balances – Reserved ................................................................................................ 53

Other Information A. B. C. D. E.

Risk Management ............................................................................................................. 54 Employee Retirement Systems ......................................................................................... 55 Post-Employment Health Care Benefits ........................................................................... 61 Contingencies.................................................................................................................... 64 Subsequent Events ............................................................................................................ 64

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Port St. Lucie, Florida (the City) was incorporated in 1961 and covers an area of approximately 114 square miles. The City derives authority from Article VIII, Section 2 of the Constitution of the State of Florida, under Chapter 166, Florida Statutes; the Municipal Home Rule Powers Act. The specific organizational governing authority of the City of Port St. Lucie is the City of Port St. Lucie City Charter as adopted in 1976 and as from time to time subsequently amended. The City operates under an elected City Council (5 members) and provides services to its more than 155,251 residents in many areas in the form of law enforcement, community enrichment and development, street maintenance, culture and recreation, planning and zoning, human services and general administrative services. The accounting policies of the City conform to generally accepted accounting principles as applicable to governmental units. The following is summary of the more significant policies: A. SCOPE OF REPORTING ENTITY The accompanying financial statements present the City's primary government and component units over which the City exercises significant influence. Significant influence or accountability is based primarily on operational or financial relationships with the City (as distinct from legal relationships). The following component units are included in the City's financial statements: Blended Component Units: Port St. Lucie Governmental Finance Corporation - The corporation is a not-for-profit corporation incorporated in 1990 for the sole purpose of assisting the City in acquiring and constructing various governmental projects consisting of real and/or personal property. The directors of the corporation are the Mayor and members of the City Council of the City. The Community Redevelopment Agency was organized to develop an area within the City for commercial purposes. Property taxes collected within this area are remitted by the various taxing entities back to the Community Redevelopment Agency for enhancement within those boundaries. The directors of the Community Redevelopment Agency are the Mayor and members of the City Council. The component units are blended because they provide services entirely to the City. The activities of the units are included in the combined financial statements within Special Revenue Funds as being an integral part of the City. Separate financial statements of these component units are not prepared. The Port St. Lucie Municipal Police Officers’ Retirement Trust Fund is included in these financial statements as a pension trust fund. The plan issues a stand-alone financial statement.

18

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Government-wide Financial Statements The government-wide financial statements include the statement of net assets and the statement of activities. These statements report financial information for the City as a whole excluding fiduciary activities such as employee pension plans. The primary government and component units are presented separately within the financial statements with the focus on the primary government. Individual funds are not displayed but the statements distinguish governmental activities, generally supported by taxes and City general revenues, from business-type activities, generally financed in whole or in part with fees charged to external customers. The statement of activities reports the expenses of a given function offset by program revenues directly connected with the functional program. A function is an assembly of similar activities and may include portions of a fund or summarize more than one fund to capture the expenses and program revenues associated with a distinct functional activity. Program revenues include: (1) charges for services which report fees, fines and forfeitures, and other charges to users of the City's services; (2) operating grants and contributions which finance annual operating activities including restricted investment income; and (3) capital grants and contributions which fund the acquisition, construction, or rehabilitation of capital assets and include fees to developers. These revenues are subject to externally imposed restrictions to their program uses. Taxes and other revenue sources not properly included with program revenues are reported as general revenues. The Government-wide Financial Statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the Proprietary Fund and Fiduciary Fund financial statements. For the most part, the effect of interfund activity has been removed from these statements. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred. The City's fiduciary funds are presented in the fund financial statements by type (pension). Since by definition these assets are being held for the benefit of a third party (pension participants) and cannot be used to address activities or obligations of the government, these funds are not incorporated into the governmentwide statements. Fund Financial Statements Fund financial statements are provided for governmental, proprietary, and fiduciary funds. Major individual governmental and enterprise funds are reported in separate columns with composite columns for non-major funds.

19

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED) Fund Financial Statements (continued) The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Since the governmental fund statements are presented on a different measurement focus and basis of accounting than the government-wide statements' governmental column, a reconciliation is presented on the page following each statement, which briefly explains the adjustment necessary to transform the fund based financial statements into the governmental column of the government-wide presentation. Totals on the business-type activity fund statements should directly reconcile to the businesstype activity column presented in the government-wide statements. The focus of the government-wide financial statements is on the City as a whole. The focus of the Fund Financial Statements is on the major funds of the governmental and business-type activities. Each presentation provides valuable information that can be analyzed to enhance the usefulness of the information. Proprietary funds record both operating and non-operating revenues and expenses. Operating revenues are those that are obtained from the operations of the proprietary fund that include charges for services and user fees. Non-operating revenues are not related to the operations of the proprietary fund and include interest earnings and intergovernmental revenue. Operating expenses represent the cost of operations, which includes depreciation. Non-operating expenses are not related to operations such as interest expense. The enterprise funds follow private-sector standards issued prior to December 1, 1989, to the extent those standards do not conflict with Governmental Accounting Standards Board statements. However, pursuant to Governmental Accounting Standards Board Statement No.20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Funds Accounting, the City has elected not to apply Financial Accounting Standards Board Statements and interpretations issued after November 30, 1989 by the Financial Accounting Standards Board. Modified Accrual: Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual (i.e., both measurable and available). "Available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers all revenues available if they are collected within 60 days after year-end. Primary revenue sources that have been treated as susceptible to accrual include, where material, intergovernmental revenue, franchise taxes, communication taxes and charges for services. Grant revenue is considered earned and is accrued when all eligibility requirements are met.

20

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED) Fund Financial Statements (continued) Modified Accrual (continued): Property taxes are accounted for when measurable and available. No accruals for the property tax levy becoming due in November 2007 are included in the accompanying financial statements since such taxes are levied for the subsequent fiscal year and are not considered available at September 30, 2009. In applying the "susceptible to accrual" concept to intergovernmental revenues (the City may act as either provider or recipient), the provider should recognize liabilities and expenses and the recipient should recognize receivables and revenue when the applicable eligibility requirements including time requirements, are met. Resources transmitted before the eligibility requirements are met; should, under most circumstances, be reported as advances by the provider and deferred revenue by recipient. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred, as under accrual accounting. Exceptions to this general rule include principal and interest on general obligation long-term debt, as well as expenditures related to compensated absences and claims and judgments which are recognized when due. C. BASIS OF PRESENTATION The financial transactions of the City are recorded in individual funds. The operations for each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures/expenses. Resources are allocated to and accounted for in individual funds, based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Governmental Funds The focus of Governmental Fund measurement (in the Fund Financial Statements) is upon determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than upon net income. The following is a description of the major Governmental Funds of the City: General Fund - The General Fund is the general operating fund of the City. All general tax revenue and other receipts that are not allocated by law or contractual agreement to another fund are accounted for in this fund. The general operating expenditures, fixed charges and capital improvement costs that are not paid through other funds are paid from the general fund. 21

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

C. BASIS OF PRESENTATION (CONTINUED) Governmental Funds (continued) General Obligation Debt Service Fund - to account for the revenues derived from the voterapproved 1 mill debt service levy for the acquisition, improvement and expansion of the third east-west transportation corridor through the City. Port St. Lucie Community Redevelopment Agency Fund - to account for revenues and expenditures of the Community Redevelopment Agency established for the purpose of improving the economic and social conditions within a specific boundary. Community Redevelopment Agency Capital Improvement Fund - to account for the financial resources and expenditures for the construction of infrastructure, water, sewer and recreational improvements within the community redevelopment area. City Center Capital Improvement Fund - to account for the financial resources and expenditures for the design, acquisition and construction of various capital improvements in the City Center SAD development area. Crosstown Parkway Capital Improvement Fund - to account for the financial resources and expenditures for design, acquisition and construction of the third major east-west transportation corridor across the City. The funding resources include interest income, advalorem tax revenues, and bond proceeds. Capital SW Annexation District 1 Fund - to account for the financial resources and expenditures for design and construction of the recently annexed area in the southwest section of the City. The funding resources include proceeds of the current year bond issue. Proprietary Funds The focus of Proprietary Fund measurement is upon determination of operating income, changes in net assets, financial position, and cash flows, which is similar to businesses. The City electively chose to record all enterprise funds as major. The following is a description of the major Proprietary Funds of the City: Utility System Fund - to account for the operations of a water and wastewater system. Stormwater Utility Fund - to account for the operations of a program designed to maintain, replace and improve the City's stormwater-related infrastructure. Golf Course Fund - to account for the operation of the Saints at Port St. Lucie Golf Course.

22

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

C. BASIS OF PRESENTATION (CONTINUED) Other Fund Types Additionally, the City reports the following Fund types: Internal Service Fund – to account for the medical insurance provided to City employees and administered by the City. Pension Trust Funds - to account for one defined benefit plan and three defined contribution plans, which accumulate resources for pension benefit payments to its employees/retirees. D. ASSETS, LIABILITIES AND NET ASSETS OR EQUITY, REVENUES, AND EXPENDITURES/ EXPENSES 1. Pooled Cash and Investments - The City's cash and cash equivalents are considered to be cash on hand and demand deposits. The City has established an investment policy in accordance with Section 218.415, State Statutes, that allows the City to invest in relatively low risk securities, such as the Florida Local Government Surplus Fund and U. S. Government Securities and Agencies. Investments are stated at fair value. Resources of all funds, with the exception of the pension funds, have been combined into investment pools for the purpose of maximizing investment yields. Investment revenue is comprised of interest and dividends and realized and unrealized gains and losses on investments. Investment revenue on pooled investments is allocated monthly based upon equity balances of the respective funds. Accrued interest on pooled investments is grouped with investments on the balance sheet at year-end. 2. Accounts Receivable - All accounts receivable is shown net of an allowance for uncollectibles. Unbilled service revenues of the utility system are accrued at the end of the year by prorating actual subsequent billings. 3. Due To/Due From - Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds". Any residual balance outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances". 4. Inventories - Inventories are composed of expendable supplies held for consumption, and are stated at cost using the first-in, first-out method. The governmental fund type inventories are recorded using the consumption method.

23

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

D. ASSETS, LIABILITIES AND NET ASSETS OR EQUITY, REVENUES, AND EXPENDITURES/ EXPENSES (CONTINUED) 5. Restricted Assets - Certain revenue bond proceeds of the various funds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because they are maintained in separate bank accounts and their use is limited by applicable bond covenants. 6. Capital Assets and Depreciation - The City's property, plant, equipment, and infrastructure with useful lives of more than one year are stated at historical cost and comprehensively reported in the government-wide financial statements. The City maintains infrastructure asset records consistent with all other capital assets. Proprietary and component unit capital assets are also reported in their respective fund financial statements. Donated assets are stated at fair value on the date donated. The City generally capitalizes assets with cost of $750 or more as purchase and construction outlays occur. The costs of normal maintenance and repairs that do not add to the asset value or materially extend useful lives are not capitalized. Capital assets are depreciated using the straight-line method. When capital assets are disposed, the cost and applicable accumulated depreciation are removed from the respective accounts, and the resulting gain or loss is recorded in operations. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of assets constructed net of any interest income earned. Due to favorable interest rates, no interest was capitalized in the current year. Estimated useful lives, in years, for depreciable assets are as follows: Assets

Years

Buildings Improvements, other than buildings Infrastructure Mobile equipment Furniture, machinery, and equipment

5 - 50 2 - 50 20 - 50 3 - 30 3 - 30

7. Compensated Absences - It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits, which will be paid to employees upon separation from City service if they meet certain criteria. These benefits plus their related taxes are classified as compensated absences. The accumulated compensated absences are accrued when incurred in the government-wide financial statements and proprietary funds for both the current and long-term portions. The General Fund, Road and Bridge Fund, and Building Department Fund, typically are the governmental-type funds that liquidate the compensated absences liability. Compensated absences are reported in the governmental funds only if they have matured and are due and payable as of September 30, 2009.

24

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

D. ASSETS, LIABILITIES AND NET ASSETS OR EQUITY, REVENUES, AND EXPENDITURES/ EXPENSES (CONTINUED) 8. Long-Term Debt, Deferred Debt Expense, and Bond Discounts/Premiums - In the government-wide financial statements and the proprietary fund types in the fund financial statements, outstanding debt is reported as liabilities. Bond issuance costs, bond discounts or premiums, and the difference between the reacquisition price and the net carrying value of refunded debt are capitalized and amortized over the terms of the respective bonds using the effective interest method. The governmental fund financial statements recognize the proceeds of debt and premiums as other financing sources and discounts as other financing uses of the current period. Issuance costs are reported as expenditures. 9. Fund Equity - In the financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. 10. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from management's estimates. 11. Property Taxes - The City's property tax is levied annually on October 1 on the real and personal property located in the City on January 1 (the lien date) of the fiscal year. The assessed value on which the 2007-2008 levy was based was approximately $10.54 billion. The assessed values are established by the St. Lucie County Property Appraiser. Tax collections by the St. Lucie County Tax Collector begin normally in November of each year with a due date of March 31 of the following year. Discounts are allowed for early payment of 4% in November, 3% in December, 2% in January, and 1% in February. Unpaid property taxes become delinquent as of April 1. Current tax collections for the year ended September 30, 2009 were approximately 95.48% of the total tax levied. The City is permitted by state law to levy taxes up to 10 mills of assessed valuation. The tax rate for the year ended September 30, 2009 was 3.2172 mills for general operating purposes plus a 1.0 mill levy in a voter-approved referendum to apply for debt service on general-obligation bonds to finance transportation roadway expansion and improvements. 12. Subsequent Events - Management has performed an analysis of the activities and transactions subsequent to September 30, 2009, to determine the need for any adjustments to and/or disclosures within the audited financial statements for the year ended September 30, 2009. Management has performed their analysis through March 16, 2010.

25

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

E.

IMPLEMENTATION OF GOVERNMENTAL ACCOUNTING BOARD STATEMENTS The City is a phase 2 government for the purpose of implementation of Governmental Accounting Standards Board (GASB) statements, based on its annual revenue. In 2009, the City implemented Statement No. 45, “Accounting and Financial Reporting by Employers for Post-employment Benefits Other Than Pensions.” The new standard is required for all governmental employers who provide other post employment benefits for which the employer pays all or a part of the cost.

NOTE II – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. BUDGET AND BUDGETARY ACCOUNTING The City’s Office of Management and Budget prepare an annual operating budget for the General, Special Revenue, and Enterprise Funds. Major capital facilities and improvements, which are accounted for within the Capital Projects Funds are subject to budgetary control on a project basis whereas other capital outlay accounted for within these funds are subjected to the standard budgetary control. The City includes anticipated cash carryforwards from the prior year as budgeted revenues in the formal budget. These amounts, however, are excluded from budgeted revenues in the accompanying financial statements in accordance with generally accepted accounting principles. The City follows these procedures in establishing the budgetary data reflected in the financial statements: a. The City Manager submits to the City Council a proposed operating budget for the fiscal year commencing on October 1. The operating budget includes proposed expenditures and means of financing them. b. Public hearings are conducted to obtain taxpayer comments. c. The budget is legally enacted through the passage of an ordinance by City Council on or before the fifteenth day of September of the fiscal year currently ending. d. The level of budgetary control is the department. The City Manager is authorized to transfer budgeted amounts within departments of any fund. Revisions that alter the budgeted totals of any department require approval of the City Council. Unencumbered appropriations lapse at year-end. e. Budgets for general and special revenue funds are adopted on a basis consistent with generally accepted accounting principles, except encumbrances are presented as expenditures.

26

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

A. BUDGET AND BUDGETARY ACCOUNTING (CONTINUED) f. Formal budget integration is not employed for proprietary, capital project or trust funds because effective budgetary control is achieved by alternate measures. g. Encumbrances - Under encumbrance accounting, purchase orders, contracts and other commitments for the expenditure of funds are recorded in order to reserve that portion of the applicable appropriation in the governmental funds. Encumbrances outstanding at year-end are reported as a reserve of fund balance and do not constitute expenditures or liabilities because the commitments will be honored during the subsequent year. B. COMPLIANCE AND ACCOUNTABILITY The following funds had deficit fund balances/net assets at September 30, 2009:

Business-Type Activities/Proprietary Funds: Stormwater Utility

$

(2,946,362)

The Stormwater Utility deficit was created in a previous fiscal year by a significant monetary judgment against the City. In prior years, three hurricanes have damaged the City’s stormwater infrastructure. One of the City’s major stormwater drainage canals was extensively damaged by the most recent storm. These storms have necessitated higher rework and maintenance expenses to the system, thus slowing the recovery of profitability to the fund. Increased user fees have generated a profit in the current year and continue toward reducing the accumulated deficit with another increase approved for the coming fiscal year also. In the current year, as part of this system rework and rehabilitation grants were received to assist in this endeavor which also required City funding of the project in order to obtain the grant resources. The following funds had expenditures in excess of appropriations at September 30, 2009: Fund Name

Budget

Debt Service Fund $ Non-major Funds: Law Enforcement Impact Fee Fund Government Finance Fund Water and Sewer Collection - South Leonard Road Water and Sewer Collection - Combined Water and Sewer Collection - South West Annexation Water and Sewer Collection - Riverpoint Water and Sewer Collection - Glassman

4,312,833 3,000 5,860,833 386,538 323,775 7,581,325 1,140,000 976,136

Actual $

4,411,484 3,817 5,935,527 392,604 335,000 7,581,423 1,140,899 979,073

Variance $

98,651 817 74,694 6,066 11,225 98 899 2,937

The cause for the Non-major Fund variances was due to more expenses incurred than budgeted. Advance payments on various debt issues were disbursed during the course of the year. 27

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

NOTE III – DETAILED NOTES ON ALL FUNDS A. CASH AND INVESTMENTS Cash balances from all funds are combined and invested to the extent available. Earnings are allocated monthly to each fund based on average daily balances of cash and investments. At fiscal year end, the carrying amount of the City's cash was $38,327,812 including petty cash of $32,205 (the bank balance was $39,467,631). Of the bank balance, $250,000 was insured by federal depository insurance and $39,367,631 was collateralized by the Florida Public Deposit Security Trust Fund. Florida Statutes require state and local governmental units to deposit monies with a financial institution classified as a "Qualified Public Depository," which is a state insurance pool for banks and other financial institutions. The pool requires each bank to render as collateral a percentage of all state and local monies on deposit. Upon default of a particular financial institution within the pool, the pooled collateral is used to reinstate the state and local government deposits. This pool is additional insurance above the federal depository insurance. The City has cash deposits only with qualifying institutions as of September 30, 2009. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed. Investment Risks Interest rate risk is the risk that changes in interest rates will adversely affect the fair market value of fixed income securities. Effective duration, a commonly used measure of interest rate risk, incorporates a security’s yield, coupon, final maturity, call features and other imbedded options into one number expressed in years that indicates how price-sensitive a security or portfolio of securities is to changes in interest rates. The effective duration of a security or portfolio indicates the approximate percentage change in fair value expected for a one percent change in interest rates. The longer the duration, the more sensitive the security or portfolio is to changes in interest rates. The city’s investment policies do not provide specific restrictions as to the maturity period of various investments. The maturity periods are usually spread based on anticipated need for financial resources while balancing the rate of return with those needs. Fixed income securities have inherent financial risks, including credit risk and interest rate risk. Credit risk for fixed income securities is the risk that the issuer will not fulfill its obligations. Nationally recognized statistical rating organizations (“NSROs”), such as Moody’s and Standard and Poor’s, assign credit ratings to security issuers and issues that indicate a measure of potential credit risk to investors. Fixed income securities considered investment grade are those rated at least Baa by Moody’s and BBB by Standard and Poor’s. The credit risk of the City is governed by the investment policies described above. The City guidelines also reference diversification within those investments that limit the maximum percentages that particular types of investments cannot exceed ranging from 35% (Certificates of Deposit and Money Market accounts) to 75% (Local Government surplus funds trust fund).

28

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

A. CASH AND INVESTMENTS (CONTINUED) Investments are stated at fair value. Short-term investments are stated at cost, which approximates fair value. Investments with the Local Government Surplus Funds Trust Fund investment pool, sponsored by Florida’s State Board of Administration, a 2a-7 like pool, as defined by GASB Statement 31, are valued at amortized cost which approximates market. The fair value of the position in the investment pool A is the same value of the pool shares. On November 29, 2007, the State Board of Administration implemented a temporary freeze on the assets held in the Pool due to an unprecedented amount of withdrawals from the Fund coupled with the absence of market liquidity for certain securities within the Pool. The significant amount of withdrawals followed reports that the Pool held asset-backed commercial paper that was subject to sub prime mortgage risk. On December 4, 2007, based on recommendations from an outside financial advisor, the State Board of Administration restructured the Pool into two separate pools. Pool A consisted of all money market appropriate assets, which was approximately $12 billion or 86% of Pool assets. Pool B consisted of assets that either defaulted on a payment, paid more slowly than expected, and/or had any significant credit and liquidity risk, which was approximately $2 billion or 14% of Pool assets. At the time of the restructuring, all current pool participants had their existing balances proportionately allocated into Pool A and Pool B. The fair value for securities traded on a national exchange are valued at the last reported sales price. Gains and losses on investments are calculated under the specific identification method. The City is authorized to invest in the local government surplus funds trust fund, obligations of the U.S. government or agencies thereof, banking institutions within the state and other such institutions within the guidelines of the state statutes. Allowed investments also include interest-bearing savings accounts, money market accounts, certificates of deposit, or time deposits constituting direct obligations of any bank certified as a Qualified Pubic Depository. These limitations do not apply to funds related to the issuance of debt where there are other existing policies or indentures in effect. Repurchase agreements collateralized by the above noted securities constitute an allowed investment. Pool A has been re-designed with the descriptive title of LGIP (Local Government Investment Pool) and is considered a SEC 2a7-like fund. Currently, the LGIP is 100% liquid and available for withdrawals without restrictions or redemptive fees. Standard and Poor’s Rating Services has assigned its “AAAm” principal stability fund rating to the LGIP. Currently, Fund B participants are prohibited from withdrawing any amount from Fund B. As amounts become available in Fund B through maturities and settlements, they are transferred to the LGIP and become available to participants in the same manner as the other LGIP balances. Fund B is accounted for as a fluctuating NAV Pool. The Fair Value factor for September 30, 2009 as .54915 and has been applied to the account balance to arrive at an amount for financial statement reporting purposes. As of March 16, 2010, the City has $-0- and $13,687,696 invested in LGIP and Fund B, respectively. Additional information regarding the Local Government Surplus Funds Trust Fund may be obtained from the State Board of Administration.

29

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

A. CASH AND INVESTMENTS (CONTINUED) The City has entered into guaranteed investment contracts for the investment of certain construction funds. At year-end, there was a balance of $45,860,093 in the contracts. Government Securities are maintained in a custody account in the name of the City and the investment banker with an independent third-party custodian equal to or greater than the construction fund account balances. The defined contribution pension trust funds’ investments are maintained by an independent third party investment management firm that is permitted by the City to invest those monies in their managed mutual funds. The Municipal Police Officers’ Retirement Trust Fund is authorized to invest in: • U.S. Government obligations and U.S. agencies • High quality bonds on notes and fixed income securities • General market common stocks and equity securities (maximum investment of 70% of total assets and no one stock or equity-related security would exceed 5% of the total portfolio on the cost basis) Except for the investments held in mutual funds, the City’s investments are uninsured and unregistered and are held in the custodian’s or the Bank’s accounts in the City’s name as described above. The City carried no investments that individually represented 5% or more of the City’s net assets available for benefits as of September 30, 2009. The composition of fixed income securities at September 30, 2009, along with credit quality and effective duration measures, is summarized as follows: Pension Funds (Municipal Police Officers' Retirement Trust)

Fair Value U.S. Government Obligations U.S. Government Agencies Corporate Obligations Temporary Investment Funds

$

933,577 3,094,029 5,707,755 1,995,623

Rating S&P

Duration (in years)

AAA AAA A-AA AAA

5.7 7.7 6.3 Daily

$ 11,730,984 * Investment grade is a S & P rating of AAA and/or a Moody's rating of Aaa.

30

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

A. CASH AND INVESTMENTS (CONTINUED) The following schedule reconciles the deposit and investment information above to the City's financial statements:

FUND TYPE

Cash and Cash Equivalents

Governmental Activities $ General GO Bond Debt Service Community Redevelopment Community Redevelopment TIF CIP City Center CIP Crosstown Parkway Capital SW Annexation District 1 Nonmajor Govermental Funds Total Governmental

24,030 -

$ 11,736,328 94,654

Investments

Restricted Investments

Restricted Equity in Pooled Cash and Investments

$

$

$

2,486,051 26,693

15,648 -

18,157 64,713 -

Total Cash and Investments

$

14,264,566 80,361 121,347

6,100 -

5,773 -

894,149 282,901 4,569,270

6,028,034 1,016,974 5,566,126

6,934,056 1,299,875 10,135,396

925

22,565,430

7,274,407

22,573,445 34,657,824

2,176,283 38,150,956

24,749,728 102,649,542

24,955

34,402,512

9,792,924

62,993,237

53,021,243

160,234,871

Business Type Activities Utility System Fund Stormwater Utility Fund Golf Course Fund Total Business-Type

5,550 1,200 500 7,250

22,912,120 3,792,304 486,974 27,191,398

30,971,294 72,222 221 31,043,737

64,013,350 64,013,350

21,331,589 452,932 21,784,521

139,233,903 4,318,658 487,695 144,040,256

Internal Service Fund Medical Trust Fund Total Fiduciary Fund

-

2,132,551 2,132,551

25,965 25,965

$ 63,726,461

$ 40,862,626

TOTAL

$

-

Equity in Pooled Cash and Investments

32,205

31

$127,006,587

$ 74,805,764

2,158,516 2,158,516 $ 306,433,643

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

B. RECEIVABLES At September 30, 2009, receivables for the City’s individual major funds and nonmajor and fiduciary funds in the aggregate, including the applicable allowances for collectible accounts are as follows:

Debt Service Fund

General

Community Redevelopment Crosstown TIF CIP Parkway Fund Fund

Capital SW Annexation Total District 1 Other Governmental Fund Governmental Activities

Governmental Activities:

Accounts Receivable Other Receivable Accrued Interest

$ 1,321,027 15,677

$

38,843

$

500,000 -

$

49,321

$

104,822

$

67,698 328,817

Total Governmental Funds $ 1,336,704

$

38,843

$

500,000

$

49,321

$ 104,822

$

396,515

Due From Other Governments Assessments Receivable Total Governmental Activities

$

1,888,725 537,480 2,426,205

4,237,317 147,967,456 $ 154,630,978

Accounts receivable for enterprise funds are net of allowance for uncollectible accounts of $872,846 of which $662,569 relates to the Utility System and $210,277 relates to the Stormwater Utility System. In addition, the enterprise funds have long term accounts receivable for 10 year, non-interest bearing water and sewer connection fees loans. The following schedule summarizes the receivable balances in the following fund types at September 30, 2009:

Utility System Business-Type Activities: Accounts Receivable Unbilled Revenues Accrued Interest

$

Accounts Receivable (Long Term)

5,905,216 3,674,675 457,254 10,037,145

$

8,201,806 $

18,238,951

32

Total Business-Type Activities

Stormwater Utility 186,619 186,619

$

$

186,619

6,091,835 3,674,675 457,254 10,223,764 8,201,806

$

18,425,570

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

C. ASSESSMENTS RECEIVABLE The City is currently expanding the Utility System (Water and Sewer). This expansion is to occur in multiple phases and projects at various times in the City. The levy’s have occurred in prior years and the current year and are reflected as special revenue funds. The City is assessing property owners for the expansion of the water and sewer system. Property owners were given the option of prepaying the full assessment amount or financing the amount over 20 years. The City issued special assessment debt to fund the construction for property owners who elected not to prepay. When financed, the payment is included in with the property-owners annual real property tax bill and includes interest and an amount to cover the additional costs of financing. Property owners may payoff their assessment at any time plus accrued interest. The City has also issued special assessment debt for funding infrastructure improvements of roads, drainage, and water and sewer within particular benefited areas. These have been implemented at the request of those property-owners. The benefited properties are assessed annually for the necessary amounts to fund the current debt service requirements on the applicable debts. The following schedule summarizes the current year transactions and balances at September 30, 2009: Total Governmental Activities Assessments Receivable Balance, October 1, 2008 Reduction to Rent Roll Collections and Credits During the Year Ended September 30, 2009 Interest on Delinquent Assessments

$ 184,263,338 (67,483)

Assessments Receivable Balance, September 30, 2009

$ 147,967,456

33

(36,435,043) 206,644

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

D. CAPITAL ASSETS Capital asset activity for the year ended September 30, 2009 was as follows: Beginning Balance

Transfers

Ending Balance

(264,892) -

$ (159,538,357)

$ 111,737,585 41,545,668

48,696,766

(264,892)

(159,538,357)

153,283,253

72,933,347

5,338,037

(8,959)

41,606,547

119,868,972

20,811,703 25,856,279 453,569,597

3,899,939 3,512,557 54,303,052

(2,600) (1,112,133) -

2,819,676 178,473 105,899,693

27,528,718 28,435,176 613,772,342

573,170,926

67,053,585

(1,123,692)

150,504,389

789,605,208

Governmental Activities: Capital Assets, Not Being Depreciated: Land $ 96,797,717 Construction in Progress 167,592,019 Total Capital Assets, Not Being Depreciated 264,389,736 Capital Assets, Being Depreciated Buildings Improvements Other Than Buildings Machinery and Equipment Infrastructure Total Capital Assets, Being Depreciated

Decrease

$ 15,204,760 33,492,006

$

Less Accumulated Depreciation For: Buildings Improvements Other Than Buildings Machinery and Equipment Infrastructure

13,584,686

2,374,778

(8,959)

8,930,757 15,992,960 141,569,291

929,404 4,063,780 12,959,555

(1,161) (1,056,928) -

153,411 -

9,859,000 19,153,223 154,528,846

Total Accumulated Depreciation

180,077,694

20,327,517

(1,067,048)

153,411

199,491,574

Total Capital Assets, Being Depreciated - Net

393,093,232

46,726,068

(56,644)

150,350,978

590,113,634

$ 657,482,968

$ 95,422,834

(321,536)

$ (9,187,379)

Governmental Activities Capital Assets - Net *

Increase

*

$

-

15,950,505

$ 743,396,887

Depreciation expense was charged to functions as follows: Governmental Activities: General Government Public Safety Physical Environment Transportation Economic Environment Human Services Culture & Recreation Total Governmental Activities Depreciation Expense

$

$

34

781,691 2,413,027 88,480 14,212,023 1,616,605 66,008 1,149,683 20,327,517

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

D. CAPITAL ASSETS (CONTINUED) Capital asset activity for the year ended September 30, 2009 was as follows: Beginning Balance Business-Type Activities: Capital Assets, Not Being Depreciated: Land $ 18,804,196 Construction in Progress 104,670,771 Total Capital Assets, Not Being Depreciated 123,474,967 Capital Assets, Being Depreciated Plant Water and Sewer System Machinery and Equipment Buildings Improvements Other Than Buildings Infrastructure Traffic Total Capital Assets, Being Depreciated

$

Decreases

1,913,207 16,247,064

$

18,160,271

-

184,558,610 488,528,840 22,020,979 4,152,138

2,924,952 19,958,780 608,293 -

2,404,232 -

1,482,508 15,510

701,664,799

24,990,043

(1,821,688)

30,664,385 97,969,871 13,647,686 518,585

6,411,459 20,859,951 2,339,182 109,989

(198,932) (3,334) (857,712) -

801,539 -

128,250 9,707

Total Accumulated Depreciation

143,602,066

29,858,538

Total Capital Assets, Being Depreciated - Net

558,062,733

(4,868,495)

Less Accumulated Depreciation For: Plant Water and Sewer System Machinery and Equipment Buildings Improvements Other Than Buildings Infrastructure

Business-Type Activities Capital Assets - Net *

Increase

$ 681,537,700

$

13,291,776

(840,763) (3,333) (977,592) -

*

(1,059,978)

(761,710)

$

(761,710)

$

Transfers

Ending Balance

(83,072,845)

$

20,717,403 37,844,990

(83,072,845)

58,562,393

74,012,520 7,914,595 (170,297) -

260,655,319 516,398,882 21,481,383 4,152,138

-

2,404,232 1,482,508 15,510

81,756,818

806,589,972

(153,411) -

36,876,912 118,826,488 14,975,745 628,574

-

929,789 9,707

(153,411)

172,247,215

81,910,229

$ (1,162,616)

634,342,757

$ 692,905,150

Depreciation expense was charged to functions as follows: Business-Type Activities: Water and Sewer Stormwater Utility Golf Course Total Business-Type Activities Depreciation Expense

$

$

35

29,034,914 573,044 250,580 29,858,538

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

E.

CONSTRUCTION COMMITMENTS The City has outstanding commitments for engineering and construction projects in process. Those commitments are approximated for the respective funds at September 30, 2009: Nonmajor Governmental Funds Crosstown Parkway Fund Capital SW Annexation District 1 Fund City Center CIP Fund Stormwater Utility Utility System

$

$

F.

3,126,143 1,976,060 18,223,857 66,312 278,045 19,258,031 42,928,448

INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS The following is a summary of amounts due from and due to other funds:

Receivable Fund

Payable Fund

General Fund General Fund General Fund Nonmajor Governmental Funds Nonmajor Governmental Funds Community Redevelopment Fund Debt Service Fund Crosstown Parkway Fund Capital SW Annexation District 1 Fund City Center CIP Fund Community Redevelopment TIF CIP Fund Stormwater Utility Fund Stormwater Utility Fund Utility System Fund Internal Service Fund Golf Course Fund

Nonmajor Governmental Funds Stormwater Utility Fund Utility System Fund General Fund Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds Stormwater Utility Fund Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds

Amount $

761,922 63,307 103,381 2,231 43,814 671 395 19,283 84,219 7,136 22,683 1,821 28,197 31,484 656 7

$ 1,171,207 All remaining balances resulted from the time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur, transactions are recorded in the accounting system, and payments between funds are made and adjustments recorded subsequent to year end.

36

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

F. INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS (CONTINUED) The following is a summary of interfund transfers:

Transfers In Fund

Transfers Out Fund

General Fund Nonmajor Governmental Funds Stormwater Utility Fund Golf Course Fund Nonmajor Governmental Funds Community Redevelopment Fund Community Redevelopment Fund Community Redevelopment Fund Crosstown Parkway Fund Capital SW Annexation District 1 Fund Capital SW Annexation District 1 Fund Community Redevelopment TIF CIP Fund Utility System Fund Stormwater Utility Fund Nonmajor Governmental Funds Nonmajor Governmental Funds

Nonmajor Governmental Funds $ 255,000 General Fund 1,239,617 General Fund 741,666 General Fund 356,220 City Center CIP Fund 2,779,477 General Fund 720,673 Nonmajor Governmental Funds 209,314 Community Redevelopment TIF CIP Fund 591,574 Debt Service Fund 6,123,232 Nonmajor Governmental Funds 11,221,046 Utility System Fund 50,403 Crosstown Parkway Fund 600,000 Nonmajor Governmental Funds 19,875 Nonmajor Governmental Funds 329 Crosstown Parkway Fund 4,373,213 Nonmajor Governmental Funds 8,959,701

Amount

$ 38,241,340 The City’s routine transfers include transfers made to move unrestricted revenues or balances that have been collected or accumulated in the General Fund to other funds based on budgetary authorization, and the transfer of revenues from a fund that by statute or budgetary authority must collect them to a fund that by statute or budgetary authority to expend them. Additional transfers were made related to bond proceeds which were used to advance refund an outstanding bond obligation in another fund. Additionally, several funds transferred to the Road & Bridge Fund their allocable share of construction project expenditures.

37

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT Governmental Activities Debt: The following is a summary of transactions of notes payable, bonds payable, and certificates of participation for the year ended September 30, 2009: Beginning Balance Local Option Gas Tax Bonds, Series 2000 $ 4,355,000 Series 2004 16,030,000 Sales Tax Improvement Revenue Bonds, Series 2003 16,890,000 Loan Payable 155,055 Revenue Anticipation Note 2003 3,286,347 Certificates of Participation, Series 2004 4,610,000 Certificates of Participation, Series 2007 44,560,000 Certificates of Participation, Series 2008 CRA Tax Increment Bonds, Series 2004 10,490,000 CRA Tax Increment Bonds, Series 2006 46,450,000 General Obligation Bonds, Series 2005 44,580,000 General Obligation Bonds, Series 2006 44,345,000 3,400,000 Improvement Revenue Note, Series 2006A Sales Tax Refunding Bonds, Series 2008 4,965,000 Special Assessment District Bonds: Series 1997A 2,505,000 Series 1998A 21,945,000 Series 2001A, South Lennard Road 2,300,000 Series 2001D 26,460,000 Series 2002 A & B, River Point 5,675,000 Series 2003 A & B, Tesoro 22,445,000 Series 2003 C, Glassman 6,990,000 Series 2003 D, East Lake Village 8,195,000 Series 2005 A 17,585,000 Series 2005 B 3,160,000 Series 2006A 24,330,000 Series 2007A 4,450,000 Series 2007B 155,840,000 Series 2008A Compensated Absences Unamortized Bond (Premium)/Discount & Loss on Defeasance Due Within One Year

Other Post Employment Benefits

Additions $

-

Ending Balance

Reductions $

1,385,000 805,000

$

2,970,000 15,225,000

Current Portion $

1,450,000 1,375,000

45,600,000 -

630,000 78,752 1,628,436 1,145,000 44,560,000 1,025,000 540,000 100,000 100,000 1,000,000 25,000

16,260,000 76,303 1,657,911 3,465,000 44,575,000 9,950,000 46,450,000 44,480,000 44,245,000 2,400,000 4,940,000

625,000 76,303 1,657,911 860,000 555,000 700,000 355,000 345,000 1,000,000 25,000

31,360,000

1,400,000 3,800,000 220,000 2,300,000 845,000 1,900,000 470,000 225,000 760,000 270,000 24,330,000 80,000 -

1,105,000 18,145,000 2,080,000 24,160,000 4,830,000 20,545,000 6,520,000 7,970,000 16,825,000 2,890,000 4,370,000 155,840,000 31,360,000

150,000 80,000 -

545,996,402

76,960,000

89,622,188

533,334,214

9,254,214

8,662,290

5,034,783

5,213,400

8,483,673

763,531

(149,663) 81,845,120

436,337 95,271,925

1,385,244 (17,639,159) 538,404,777 $ 538,404,777

1,854,340 $

38

83,699,460

$ 95,271,925

799,244 (10,017,745) 532,599,386 1,854,340 $ 534,453,726

10,017,745 $ 10,017,745

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT (CONTINUED) Governmental Activities Debt (continued): Compensated Absences:

10/1/2008

Increase

Decrease

9/30/2009

Current Portion

General Road & Bridge Building Department HH Recovery HH Recovery CDBG Housing CRA

$7,164,999 656,256 816,498 16,125 4,206 4,206 -

$4,288,595 409,321 244,899 28,071 44,650 9,774 9,473

$4,324,691 435,177 398,103 9,479 16,125 17,335 7,074 5,416

$ 7,128,903 630,400 663,294 18,592 31,521 6,906 4,057

$ 641,601 56,736 59,696 1,673 2,837 622 365

$8,662,290

$5,034,783

$5,213,400

$ 8,483,673

$ 763,531

$24,020,000 Local Option Gas Tax Improvement Revenue Bonds, Series 2000 – payable from and collateralized by a lien upon and pledge of the Local Option Gas Tax Revenues, due in annual principal installments ranging from $1,450,000 to $1,520,000 plus interest semiannually ranging from 4.85% to 4.90% through September 2011. Proceeds used for roadway widening, drainage improvements and street signals for various City streets. $19,100,000 Local Option Gas Tax Refunding and Improvement Revenue Bonds, Series 2004 – payable from and collateralized by a lien upon and pledge of the Local Option Gas Tax Revenues, on a parity with the Series 1996 bonds and the Series 2000 bonds, due in annual principal installments ranging from $1,375,000 to $3,430,000 plus interest semiannually at a rate of 5.0% through March 2015. Proceeds for the construction of a sixlane highway and bridge overpass plus refund outstanding bonds. $20,000,000 Sales Tax Improvement Revenue Bonds, Series 2003 – payable from and collateralized by a lien upon and pledge of the state shared Sales Tax Revenues, due in annual principal installments ranging from $625,000 to 2,115,000 plus interest ranging from 3.5% to 5.0% through September 2023. Proceeds used for roadway improvements. Loan Payable - collateralized by radio equipment, payable in a principal installment of $76,303 plus interest paid at a rate of 5.5% through 2010. $8,000,000 Improvement Revenue Notes, Series 2003 – payable from and secured by a lien upon and pledge of the City’s covenant to budget and appropriate non-ad valorem revenues sufficient to meet current debt service, due in one principal installment of $1,687,919 plus interest semiannually at a rate of 3.62% through November 2009. Proceeds used to finance the construction of roadway widening and drainage improvements. 39

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT (CONTINUED) Governmental Activities Debt (continued): $5,860,000 Certificate of Participation, Florida Master Lease Project, Series 2004 (Public Buildings Project) – payable from the limited and special obligation of the City to make rent payments on the multiple public buildings subject to annual appropriation, due in annual principal installments ranging from $135,000 to $395,000 plus interest semiannually at a rate ranging from 3.375% to 4.25% through September 2023. Due to the early call of certain bonds, no principal payment is due until September 2013. Proceeds used to finance the construction of a police building, animal shelter, and administration complex. $45,600,000 Refunding Certificates of Participation, Series 2008 – payable from the limited and special obligation of the City to make rent payments on the multiple public buildings subject to annual appropriation, due in annual principal installments ranging from $860,000 to $3,865,000 plus interest semiannually at a rate ranging from 4.0% to 6.25% through September 2027. Proceeds were used to refund the $44,560,000 Certificates of Participation, Series 2007, which had be issued for construction and improvements related to the medical research facility area of the City. $11,870,000 Redevelopment Trust Fund Revenue Bonds, Series 2004 – payable from and collateralized by a lien upon and pledge of the net tax increment revenues generated in the Community Redevelopment Area, due in annual principal installments ranging from $550,000 to $915,000 plus interest semiannually at a rate ranging from 2.75% to 5.0% through January 2023. Proceeds used to finance infrastructure improvements in the CRA. $46,450,000 Redevelopment Trust Fund Revenue Bonds, Series 2006 – payable from and collateralized by a lien upon and pledge of the net tax increment revenues generated in the Community Redevelopment Area, due in annual principal installments ranging from $700,000 to $6,285,000 plus interest semiannually at a rate ranging from 3.625% to 5.0% through January 2026. To finance property acquisition and construction related to the planned Civic Center to be located within the Community Redevelopment Area. $49,285,000 General Obligation Bonds, Series 2005 – due in annual principal installments ranging from $355,000 to $3,140,000 plus interest ranging from 3.25% to 5.0% through July 2035. To finance a portion of the construction of the Cross Town Parkway. $44,545,000 General Obligation Bonds, Series 2006 – due in annual principal installments ranging from $345,000 to $3,155,000 plus interest semiannually at a rate ranging from 4.0% to 5.0% through July 2035. To finance additional phase of Cross Town Parkway.

40

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT (CONTINUED) Governmental Activities Debt (continued): $5,015,000 Sales Tax Refunding Bonds, Series 2008 – payable from and collateralized by a lien upon and a pledge of the state shared sales tax revenues, due in annual principal installments ranging form $25,000 to $955,000 plus interest ranging from 3.25% to 4.0% through September, 2017. Proceeds were used to refund the balance of the outstanding 1998 Sales Tax Refunding and Improvement Revenue Bonds. Special Assessment Debt with Government Commitment: $17,955,000 Special Assessment Bonds, Series 1997A (Water and Sewer Assessment District #1, Phase II) - payable from assessments levied on subject properties within the service area, due in principal installment of $1,105,000 plus interest ranging from 2.6% to 2.7% through October, 2014. Due to the early call of certain bonds, no principal payment is due until October, 2014. The City has a secondary obligation to budget sufficient revenues to cover the annual debt service requirements if the amounts within the fund are not available to meet the coming payment. $65,455,000 Special Assessment Bonds, Series 1998A (Utilities Service Area 3 & 4) payable from assessments levied on subject properties within the service area, due in annual principal installments ranging from $4,090,000 to $4,915,000 plus at a rate of 5.0% through October, 2018. Due to the early call of certain bonds, no principal payments are due until October 2015. The City has a secondary obligation to budget sufficient revenues to cover the annual debt service requirements if the amounts within the fund are not available to meet the coming payment. $3,545,000 Special Assessment Bonds, Series 2001A (South Lennard Road Special Assessment District) - payable from assessments levied on subject properties within the service area, due in annual principal installments ranging from $100,000 to $310,000 plus interest at a rate of 7.125% through September 2021. Due to the early call of certain bonds, no principal payments are due until September, 2013. The City has a secondary obligation to budget sufficient revenues to cover the annual debt service requirements if the amounts within the fund are not available to meet the coming payment. $54,390,000 Special Assessment Bonds, Series 2001D (Utilities Service Area 5, 6 & 7A) – payable from assessments levied on subject properties within the service area, due in annual principal installments ranging from $140,000 to $3,945,000 plus interest ranging from 4.25% to 5.0% through September 2021. Due to the early call of certain bonds, no principal payments are due until September, 2014. The City has a secondary obligation to budget sufficient revenues to cover the annual debt service requirements if the amounts within the fund are not available to meet the coming payment.

41

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT (CONTINUED) Special Assessment Debt with Government Commitment (continued): $15,600,000 Special Assessment District Bonds, Series 2002A – Tax Exempt; Series 2002B – Tax Exempt; Series 2002A – Taxable; Series 2002B – Taxable (River Point Special Assessment District) – payable from assessments levied on subject properties within the assessment area, due in annual principal installments ranging from $310,000 to $595,000 plus interest ranging from 3.90% to 4.75% through January 2023. Due to the early call of certain bonds, no principal payments are due until January, 2014. The Series A – Tax Exempt and Taxable bonds carry a “due-on-sale” clause requiring the applicable amount of principal outstanding be paid when various encumbered properties are sold by the developer. The City has a secondary obligation to budget sufficient revenues to cover the annual debt service requirements if the amounts within the fund are not available to meet the coming debt service payment. Proceeds are for infrastructure improvements. $49,355,000 Special Assessment Bonds, Series 2003A – Tax Exempt; Series 2003A – Taxable Series; Series 2003B – Tax Exempt (Tesoro Special Assessment District) – payable from assessments levied on subject properties within the assessment area, due in annual principal installments ranging from $1,040,000 to $2,380,000 plus interest ranging from 4.50% to 4.75% through January 2023. Due to the early call of certain bonds, no principal payments are due until January, 2013. The Series A – Tax Exempt and Taxable bonds carry a “due-on-sale” clause requiring the applicable amount of principal outstanding be paid when various encumbered properties are sold by the developer. The City has a secondary obligation to budget sufficient revenues to cover the annual debt service requirements if the amounts within the fund are not available to meet the coming debt service payment. Proceeds are for infrastructure improvements in the SAD. $9,500,000 Special Assessment Bonds, Series 2003C (Glassman Special Assessment District) – payable from assessments levied on subject properties within the assessment area, due in annual principal installments ranging from $225,000 to $835,000 plus interest at a rate of 6.75% through July 2023. Due to the early call of certain bonds, no principal payments are due until July, 2013. The bonds carry a “due-on-sale” clause requiring the applicable amount of principal outstanding be paid when various encumbered properties are sold by the developer. The City has a secondary obligation to budget sufficient revenues to cover the annual debt service requirements if the amounts within the fund are not available to meet the coming debt service payment. $10,350,000 Special Assessment Bonds, Series 2003D (East Lake Village Special Assessment District) – payable from assessments levied on subject properties within the assessment area, due in annual principal installments ranging from $150,000 to $775,000 plus interest ranging from 3.1% to 4.625% through July 2023. The bonds carry a “due-onsale” clause requiring the applicable amount of principal outstanding be paid when various encumbered properties are sold by the developer. The City has a secondary obligation to budget sufficient revenues to cover the annual debt service requirements if the amounts within the fund are not available to meet the coming debt service payment. 42

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT (CONTINUED) Special Assessment Debt with Government Commitment (continued): $18,725,000 Special Assessment District Bonds, Series 2005A – (St. Lucie Land Holdings Special Assessment District) – payable from assessments levied on subject properties within the assessment area, due in annual principal installments ranging from $80,000 to $1,365,000 plus interest ranging from 3.25% to 4.625% through July 2027. Proceeds used to finance a portion of the cost of acquisition and improvements of roadway and drainage system additions, improvements and extensions and the potable water distribution and wastewater collection system within the SAD. $4,765,000 Special Assessment District Bonds, Series 2005B – (Utility Service Area 9 – Water and Wastewater Expansion Project) – payable from assessments levied on subject properties within the service area, due in annual principal installments beginning in 2014, ranging from $45,000 to $345,000 plus interest ranging from 3.9% to 4.5% through July 2025. Due to the early call of certain bonds, no principal payments are due until July, 2015. Proceeds used for water and wastewater system expansion within the SAD. $6,635,000 Combined Special Assessment District Bonds, Series 2007A – (Peacock and Lowry Special Assessment District) – payable from and secured by a lien upon and pledge of the City’s covenant to budget and appropriate non-ad valorem revenues sufficient to meet current debt service, due in annual principal installments ranging from $145,000 to $525,000 plus interest semiannually at a rate of 5.35% through July 2027. Due to the early call of certain bonds, no principal payments are due until July, 2013. Proceeds used for the construction of roadway and drainage system additions, improvements and extensions and the potable water distribution and wastewater collection system within the SAD. $155,840,000 Combined Special Assessment District Bonds, Series 2007B – (Southwest Annexation Special Assessment District) – payable from and secured by a lien upon Southwest pledged revenues, due in annual principal installments beginning in 2011, ranging from $2,450,000 to $9,735,000 plus interest semiannually ranging from 4.0% to 5.0% through July 2040. Proceeds used for the construction of roadway and drainage system additions, improvements and extensions and the potable water distribution and wastewater collection system within the SAD. $31,360,000 Special Assessment Refunding Bonds, Series 2008A – (City Center Special Assessment District) – payable from and secured by a lien upon and pledge of the City’s covenant to budget and appropriate non-ad valorem revenues sufficient to meet current debt service, due in annual principal installments beginning in 2011, ranging from $6,100,000 to $2,400,000 plus interest semiannually ranging from 3.5% to 6.5% through July 2035. Proceeds used to refund the $25,185,000 Special Assessment District Bonds, Series 2006A, which had been issued for the construction of roadway and drainage system additions, improvements and extensions and the potable water distribution and wastewater collection system within the City Center SAD. 43

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT (CONTINUED) Minimum payments of long-term debt service requirements for each of the years subsequent to September 30, 2009 are: Total Principal

September 30, 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

$

Total Interest

Total

9,254,214 12,610,000 13,480,000 16,040,000 18,290,000 26,385,000 24,410,000 25,630,000 27,225,000 23,495,000 24,920,000 27,115,000 24,120,000 25,375,000 20,180,000 21,205,000 21,920,000 16,465,000 11,280,000 11,865,000 12,485,000 13,150,000 13,840,000 14,575,000 15,335,000 16,130,000 10,370,000 8,380,000 8,810,000 9,260,000 9,735,000

$ 21,657,064 21,385,787 20,985,198 20,494,628 19,884,603 19,047,476 18,061,882 17,052,264 15,971,527 14,804,823 13,818,450 12,759,031 11,606,504 10,616,130 9,630,768 8,875,581 8,094,391 7,429,840 6,870,376 6,378,124 5,861,126 5,318,124 4,747,376 4,147,874 3,532,276 2,886,050 2,207,750 1,809,250 1,390,250 949,750 486,750

$

$ 533,334,214

$ 318,761,020

$ 852,095,234

44

30,911,278 33,995,787 34,465,198 36,534,628 38,174,603 45,432,476 42,471,882 42,682,264 43,196,527 38,299,823 38,738,450 39,874,031 35,726,504 35,991,130 29,810,768 30,080,581 30,014,391 23,894,840 18,150,376 18,243,124 18,346,126 18,468,124 18,587,376 18,722,874 18,867,276 19,016,050 12,577,750 10,189,250 10,200,250 10,209,750 10,221,750

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT (CONTINUED) Business-Type Activity Debt: The following summary reflects the transactions of long-term obligations in the enterprise funds for the year ended September 30, 2009: Beginning Balance Stormwater Utility System Fund Revenue Bonds, Series 2002 Utility System Fund Revenue Bonds, Series 1997A Revenue Bonds, Series 2001 Revenue Bonds, Series 2003 Revenue Bonds, Series 2004 Revenue Bonds, Series 2004A Revenue Bonds, Series 2005 Revenue Bonds, Series 2006 Revenue Bonds, Series 2006A Revenue Bonds, Series 2007 Revenue Bonds, Series 2009 Compensated Absences Add Accreted Interest on Utility System Fund Revenue Bonds Less Unamortized Bond(Discount)/Premium & Loss on Defeaseance Current Portion Payable Total Proprietary Fund Long-Term Obligations Other Post Employment Benefits

Additions

$ 12,380,000

-

Reductions

$

Ending Balance

250,000

$ 12,130,000

Current Portion

$

255,000

4,407,140 9,743,365 20,365,000 28,750,000 51,645,000 85,895,000 78,435,000 34,967,230 117,780,000 444,367,735 3,001,212

110,200,000 110,200,000 2,115,984

4,407,140 1,486,555 485,000 485,000 85,895,000 1,490,000 94,498,695 2,088,919

8,256,810 19,880,000 28,265,000 51,645,000 78,435,000 34,967,230 116,290,000 110,200,000 460,069,040 3,028,277

8,406,044

1,478,699

4,288,664

5,596,079

-

1,554,883 (6,001,751)

1,018,972 -

360,029 (3,595,391)

-

(175,882) -

1,407,845 720,000 650,000 290,000 3,322,845 272,546

451,328,123

114,813,655

100,700,396

465,458,034

3,595,391

$ 451,328,123

887,898 $115,701,553

$ 100,700,396

887,898 $466,345,932

$ 3,595,391

The Stormwater Utility Revenue Bonds are collateralized by a lien upon and a pledge of the stormwater revenues derived from the operation of the stormwater utility system, the franchise revenues derived from the electric franchise fees collected from Florida Power & Light Company, and income earned on bond related investment accounts. $14,000,000 Stormwater Utility Revenue Bonds, Series 2002 - due in annual principal and sinking fund installments of $255,000 to $1,365,000, plus interest ranging from 3.75% 5.25% through May 1, 2023.

45

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT (CONTINUED) Business-Type Activity Debt (continued): The Utility System Revenue Bonds are payable solely from and secured by a lien upon and pledge of the net revenues derived from the operation of the water and sewer system and the Capital Facilities Charges (limited to the debt service component) of the Utility System. $52,654,418 Utility System Revenue Bonds, Series 2001 - due in annual principal installments of $970,704 to $1,407,845 plus interest semiannually ranging from 4.59% to 5.32% through September 2016; all remaining bonds are of the capital appreciation series. $61,431,495 Utility System Revenue Bonds, Series 2003 - due in annual principal installments of $720,000 to $3,675,000 plus interest semiannually ranging from 3.25% to 5.0% through September 2031. $29,165,000 Utility System Revenue Bonds, Series 2004 - due in annual principal installments of $650,000 to $1,890,000 plus interest semiannually ranging from 3.237% to 5.00% through September 2034. $51,645,000 Utility System Refunding Revenue Bonds, Series 2004A - due in annual principal installments of $495,000 to $12,155,000 plus interest semiannually ranging from 4.375% to 5.00% through September 2031. Principal payments begin September, 2017. $78,435,000 Utility System Revenue Bonds, Series 2006 – due in annual principal installments of $1,685,000 to $27,385,000 plus interest semiannually of ranging from 4.5% to 5.063% through September 2036. $35,197,230 Utility System Refunding Revenue Bonds, Series 2006A – due in annual principal installments of $715,000 to $5,186,344 plus interest semiannually of ranging from 4.0% to 5.0% through September 2033. $119,445,000 Utility System Refunding Revenue Bonds, Series 2007 – due in annual principal installments of $290,000 to $10,675,000 plus interest semiannually of ranging from 4.0% to 5.25% through September 2027. $110,200,000 Utility System Refunding Revenue Bonds, Series 2009 – due in annual principal installments beginning in 2013, ranging from $1,645,000 to $16,570,000 plus interest semiannually of ranging from 4.125% to 5.25% through September 2035.

46

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT(CONTINUED) The annual requirements to amortize bonded debt and note payable as of September 30, 2009 follows: Total Principal

September 30, 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

$

3,322,845 3,490,690 5,338,458 11,687,102 12,515,671 12,991,340 13,430,703 14,695,000 15,415,000 16,160,000 16,905,000 17,720,000 18,580,000 19,450,000 19,015,000 19,935,000 20,905,000 23,555,000 23,105,000 24,105,000 25,120,000 26,350,000 16,481,344 11,680,887 20,760,000 19,970,000 27,385,000

$ 460,069,040

47

Total Interest $

22,670,716 22,681,546 22,691,447 22,585,266 22,204,034 21,714,414 21,189,268 19,374,632 18,648,727 17,878,740 17,075,514 16,217,489 15,348,161 14,446,540 13,481,666 12,517,132 11,512,961 10,449,455 9,261,993 8,369,590 7,198,083 5,971,148 16,362,423 15,726,676 3,456,370 2,396,857 1,386,354

$ 392,817,202

Total $

25,993,561 26,172,236 28,029,905 34,272,368 34,719,705 34,705,754 34,619,971 34,069,632 34,063,727 34,038,740 33,980,514 33,937,489 33,928,161 33,896,540 32,496,666 32,452,132 32,417,961 34,004,455 32,366,993 32,474,590 32,318,083 32,321,148 32,843,767 27,407,563 24,216,370 22,366,857 28,771,354

$ 852,886,242

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT (CONTINUED) Refunded Debt Refunding provides for an irrevocable deposit with an escrow agent of sufficient funds to pay principal, interest, and, if applicable, call premiums, when due, on the refunded bonds to the earliest call date. Accordingly, these obligations are no longer considered a liability of the City. The City has the following debt issues which have been refunded. Date Outstanding as of Issue Series Refunded Refund Date 9/30/2009 Stormwater Utility Bonds

1988

10/9/1990

$ 13,770,000

$ 3,625,000

Utility System Revenue Bonds

2001

9/29/2004

37,480,891

35,870,741

Utility System Revenue Bonds

2003

9/29/2004

7,355,000

5,900,000

Utility System Revenue Bonds

2003

12/14/2006

33,191,495

33,191,495

City Center Special Assessment District Bonds 2006A

12/3/2008

24,330,000

23,445,000

Utility System Revenue Bonds

5/22/2009

4,407,140

4,407,140

1997A

Derivative Disclosure – Interest Rate Swap Concurrently with the issuance of the 2006 remarketing of the Utility System Revenue Bonds Series 2004A, the City entered into a Swap Agreement with Royal Bank of Canada (“Counterparty”). The purpose of the Swap Agreement is to provide a cash flow opportunity to the City. The notional amount of the swap was $51,645,000. The termination date of the Swap Agreement is September 1, 2031, unless terminated earlier as provided in the agreement. Upon earlier termination, a payment may be owed by the City to the Counterparty or may be owed by the Counterparty to the City depending on the economic circumstances at the time of termination. The Counterparty and the City are both variable rate payors under the terms of the Swap Agreement. The Counterparty pays 68.25% of the ISDA Swap Rate and the City pays the SIFMA Municipal Swap Index Rate. In September 2009, the Counterparty requested a two-year suspension of the swap agreement. In consideration thereof, a payment of $1,616,000 was provided to the City. At September 30, 2009, the fair value was $1,625,524 in favor of the Counterparty. Concurrently with the March 2007 issuance of Certificates of Participation (“COP”), the City entered into a Swap Agreement with Royal Bank of Canada (“Counterparty”). The notional amount of the 2007 COP Swap Agreement with the Counterparty originally was $44,560,000. Commencing on May 2, 2007, and monthly thereafter, the City pays a fixed rate of 3.678% and the Counterparty pays the USD-SIFMA Municipal Swap Index (formerly the USD-BMA Municipal Swap Index). The termination date is September 1, 2017, unless terminated earlier as provided in the Swap Agreement. Upon earlier termination, a payment may be owed by the City to the Counterparty, or the Counterparty may owe a payment to the City, depending upon the economic circumstances prevailing at the time of termination. As of September 30, 2009, the fair value of the 2007 Swap was $3,366,037 in favor of 48

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT (CONTINUED) Derivative Disclosure – Interest Rate Swap (continued) the Counterparty. In fiscal year 2009, the City entered into another Swap Agreement with Royal Bank of Canada concurrently with the 2008 Refunding issue of the 2007 COP with a notional amount of $45,600,000. The 2007 Swap remained in effect, but its notional amount was changed to match the 2008 Refunding Swap. As of September 30, 2009, the notional amount for both the 2007 and 2008 Refunding Swaps was $44,575,000. For the 2008 Refunding Swap, the City pays the USD-SIFMA Municipal Swap Index and the Counterparty pays a fixed rate of 3.527%. The termination date is September 1, 2027, unless terminated earlier as provided in the Swap Agreement. Upon earlier termination, a payment may be owed by the City to the Counterparty, or the Counterparty to the City, depending on the economic circumstances prevailing at the time of the termination. As of September 30, 2009, the fair value of the 2008 Refunding Swap Agreement was $2,589,887 in favor of the City. The fair value was estimated using a valuation model developed by an independent investment firm and maintained by the City for tracking the Swaps. On June 2, 2008, concurrent with the remarketing of the Utility System Revenue Bonds, Series 2005, the City entered into a Swap Agreement with Royal Bank of Canada (“Counterparty”), relating to that issue. The notional amount of the Swap Agreement with the Counterparty is $85,895,000. Beginning on July 1, 2008, and on a monthly basis thereafter, the City pays the fixed rate of 2.45% and the Counterparty pays the floating rate of the SIFMA Municipal Swap Index. The termination date is June 1, 2010 unless terminated earlier as provided in the Swap Agreement. The Swap Agreement was terminated in June, 2009, and payment rendered to the Counterparty of $1,690,000. Swap payments and associated debt – assuming interest rates remain the same at September 30, 2009 debt service requirements on the 2008 COP and interest rate swaps would be as follows:

September 30, 2010 2011 2012 2013 2014 2015-2109 2020-2024 2025-2029

Fixed Rate Principal Interest $ 860,000 1,705,000 1,770,000 1,845,000 1,935,000 11,055,000 14,475,000 10,930,000

$ 2,438,200 2,403,800 2,335,600 2,264,800 2,172,550 9,478,738 6,067,013 1,393,750

49

Interest Rate Swaps, Net

Total Debt Service

$

$ 3,364,327 4,173,994 4,168,944 4,171,224 4,166,472 18,514,676 16,698,649 11,440,830

66,127 65,194 63,344 61,424 58,922 (2,019,062) (3,843,364) (882,920)

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT (CONTINUED) Risks of Interest Rate Swap The specific risks in a particular swap depend upon the terms of the transaction and the circumstances of each of the parties. The following risks commonly associated with interest rate swaps are: 1.

Interest Rate Risk: Periodic Payments & Market Value - Fluctuations in interest rates will significantly affect the payments a party is obligated to make or are entitled to receive under an interest rate swap. Fluctuations in interest rates will also affect the market value of the swap, causing an unrealized market gain or loss. The amount of such gain or loss could be significant. Unrealized market losses may have financial statement impact, and may require the posting of collateral.

2.

Basis Risk - If variable rate bonds are outstanding and the swap is used to offset the interest expense on them with variable rate payments from the swap counterparty, there will be some degree of “basis risk.” This is the risk that the payment to be made will exceed the payment received. This risk is greatest when the variable rate receipt from the swap counterparty is based on an index with no specific correlation to the underlying variable rate bonds. The same risk may exist if, under the swap, a variable payment is made in exchange for receipt of another variable payment, each linked to a different interest rate index (commonly referred to as a “basis swap”).

3.

Tax Event Risk - This is the primary component of basis risk. If there are tax-exempt variable rate bonds outstanding or making variable payments under the swap that are linked to a tax-exempt index, and receive variable payments lined to a taxable index, then the swap’s cash flow will be sensitive to potential and actual changes in federal income tax policy. This could cause a basis risk resulting in ongoing net payment obligations under the swap and potentially adversely affect the value of the swap each to a significant degree depending on the nature of the tax event and the overall level of interest rates.

4.

Liquidity Risk - There is no public market for interest rate swaps and there is no exchange-type market tat can be used to sell, cancel, or reverse an outstanding swap. It may be difficult or impossible to liquidate an existing position if rates or market prices have moved or to assess the value of a position or exposure to risk after entering into the transaction.

50

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT (CONTINUED) Utility System Fund A summary of significant bond ordinance terms and covenants for the Utility System Revenue Bonds are as follows: 1.

Principal and interest are payable from and secured by a pledge of the net revenues from the operation of the system. Pledged revenues may include ad valorem taxes, special assessments, capital facilities charges, and certain investment earnings thereon, or any combination thereof. Currently, ad valorem taxes and special assessments are not pledged as a Pledged Revenue for the bonds. The bonds do not constitute a lien on the system.

2.

Depository funds will be established for the deposit of various revenues. These funds will include: • Revenue Fund - For deposit of the gross revenue derived from the operation of the Utility System. Monies in the trust fund are used to make deposits to the sinking fund and to pay the current operating expenses. • Sinking Fund - For deposit of amounts sufficient to pay the debt service requirement during the current bond year. • Reserve Account - For deposit of amounts equal to the reserve account requirement, which is an amount equal to the maximum annual debt service requirement. The City may substitute a reserve account credit facility for the requirements of the reserve account or a portion thereof. • Capital Facilities Charges Fund - for deposit of amounts collected for connection • Fees for new connections to the System which may be used only to pay the cost of Expansion Facilities or debt service on Bonds for which Capital Facilities Charges have been pledged. • Renewal and Replacement Fund - For deposit of an amount equal to 5% of the gross revenues collected during the preceding fiscal year, with a maximum of $1,000,000 on deposit in this fund. Monies in the renewal and replacement fund may be used only for the purpose of paying the cost of emergency repairs, extensions, enlargements or additions to, or the replacement of capital assets of the Utility System.

51

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT (CONTINUED) Utility System Fund (continued) 3.

The City has covenanted to establish and maintain rates at a level sufficient to provide net revenues equal to 100% of the current debt service requirement plus the required deposits into the Reserve account and the Renewal and Replacement Fund, and equal to 110% of the current debt service requirement and the required deposits, when including the investment income from the Project Fund, a calculated percentage of the capital facilities charges, and any transfers from the Rate Stabilization fund.

4.

The City will not issue additional debt on the system without meeting certain parity requirements for debt coverage.

5.

The 2007 bonds are not subject to redemption prior to maturity. Redemption provisions allow for the Series 2009 bonds maturing in 2019 to be redeemed after September 1, 2018 as a whole or in part at any time thereafter without premium. The bonds maturing in 2025 and 2029 are subject to mandatory redemption prior to maturity at a redemption price equal to the unpaid principal portion outstanding plus accrued interest through amortization installments.

6.

In September 2000, the City entered into a Debt Service Forward Delivery Agreement with Chase Manhattan Bank regarding the debt service payments on the Series 1997A Bonds. Under that agreement the City will transfer the required monthly debt service accruals to the custodian bank rather than semi-annual payments. In consideration thereof, the City received $2.4 million, which is being amortized over the remaining amortization period of the issue. Subsequent to that agreement, and at various times, the City defeased and/or early-called various portions of the 1997A issue on which the payments were based. By mutual agreement, the underlying debt service obligations were replaced even though the monthly payments to the debt service account maintenance by the custodian, Chase Manhattan Bank, remained the same.

Stormwater Utility Fund A summary of significant bond ordinance terms and covenants for the Stormwater Utility Revenue Bonds, Series 2002 is as follows: 1.

Depository Funds - The bond ordinance establishes certain funds and determines the order in which revenues are to be deposited into these funds. A description of these funds, including their purpose, in order of priority of revenue transfers, are as follows: • Stormwater Utility Revenue Bonds Sinking Fund - For deposit of amounts sufficient to pay the debt service requirement during the current bond year.

52

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT (CONTINUED) Stormwater Utility Fund (continued) • Stormwater Utility Trust Fund - For deposit of the gross revenue derived from the operation of the Stormwater Utility. Monies in the trust fund are used to make deposits to the sinking fund and to pay the current operating expenses. • Reserve Account - For deposit of amounts equal to the reserve account requirement which is an amount equal to the lesser of a) the maximum debt service requirement, or b) the maximum amount which is permitted as a reasonably required reserve under the provisions of the Internal Revenue Code. The City may substitute a reserve account credit facility for the requirements of the reserve account. • Stormwater Utility Revenue Bonds Renewal and Replacement Fund - For deposit of an amount equal to 10% of the stormwater revenues collected during the preceding fiscal year, with a maximum of $500,000 on deposit in this fund. Monies in the renewal and replacement fund may be used only for the purpose of paying the cost of emergency repairs, extensions, enlargements or additions to, or the replacement of capital assets of the stormwater utility system. • Electric Franchise Fee Fund - For deposit of the franchise revenues. Monies in the franchise fee fund are first used for deposit into the sinking fund of amounts necessary to ensure that there will be on deposit sufficient amounts to pay the debt service requirement or to make payments to the provider of the reserve account credit facility. • Project Fund - For deposit of all remaining bond proceeds after payment of all costs and expenses in connection with the preparation, issuance and sale of the bonds for payment of expenses in connection with the utility projects. 2.

Stormwater Utility Rates - The City must enact utility rates adequate to provide total pledged revenues net of operating expenses, to meet the bond reserve requirements, plus 120% of debt service requirements in each bond year.

3.

Sale or Disposal - Provisions are made for the sale, mortgage, lease or disposal of the system only as a whole or substantially as a whole and only if net proceeds realized from such disposal are sufficient to retire all bond obligations in accordance with provisions of the ordinance.

4.

Optional Redemption - The Series 2002 bonds maturing on or prior to May 1, 2012 are not subject to optional redemption. The bonds maturing on May 1, 2013 and thereafter may be redeemed prior to their stated dates of maturing on May 1, 2012 or any date thereafter. 53

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

G. LONG-TERM DEBT (CONTINUED) Stormwater Utility Fund (continued) 5.

Mandatory Redemption - The 2002 bonds maturing on May 1, 2015 are subject to mandatory redemption prior to maturity beginning on May 1, 2014 through May 1, 2017.

H. FUND BALANCES - RESERVED The following is a summary of reserved fund balances at September 30, 2009:

General Fund Reserved For: Encumbrances $ Prepaid Items Inventories Total

City Center CIP Fund

Crosstown Parkway Fund

Capital SW Annexation District 1 Fund

Other Governmental Funds

TOTAL

94,591 39,357

$

66,312 -

$ 1,976,060 -

$ 18,223,857 -

$ 3,005,818 27,068 1,689,297

$ 23,272,047 121,659 1,728,654

$ 133,948

$

66,312

$ 1,976,060

$ 18,223,857

$ 4,722,183

$ 25,122,360

The designation of fund balance within the capital project funds is for future capital improvements to be incurred within that particular fund. The designation of fund balances within the special revenue accounts is for future expenditures related to the particular fund. The designation of fund balance within the debt service fund is for debt payments that are normally expended from the debt service fund. NOTE IV – OTHER INFORMATION A. RISK MANAGEMENT The City is exposed to various risks of loss related to theft of, damage to, and destruction of assets, errors and omissions, injuries to employees, and natural disasters. The City is a member of the Treasure Coast Risk Management Program (a cooperative of local governments created under Florida Statute 163). As a participant in the risk pool, the City may be assessed for any deficits of the pool, which would be required to be funded. Presently, an actuarially projected amount is being assessed to the members of the pool on an annual basis.

54

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

A. RISK MANAGEMENT (CONTINUED) The City has commercial property, automobile physical damage liability, and flood coverage through the Risk Management Program which also carries various reinsurance policies through different carriers. There is a $100,000 deductible per occurrence except wind, flood and earthquake. The general and automobile liability coverage is limited to $100,000 per claim and $200,000 per occurrence with no reinsurance. This limit of liability tracks Florida Statute 768.28, "Statute of Sovereign Immunity." The Workers Compensation liability policy is statutory per Florida State Statute 440, with employer’s liability of $2,000,000 each accident, and $2,000,000 per incident, each employee. The limits for Public Officials and Employment Practices Liability are $1,000,000 per claim, subject to a $225,000 self-insured retention. The City is self-insured for health benefits provided to employees. The various departments fund the Medical Insurance Fund (Internal Service Fund) based on the experience rate of the prior year on a per employee basis for total claims and expenses paid. The City has contracted with Blue Cross/Blue Shield Health Systems of Florida to provide administration services for the plan. Administrative fees are based upon the volume of claims processed and are paid out of this fund. The City purchased stoploss insurance from Symetra Life Insurance Company. The individual stop-loss limit is $180,000 with an additional aggregate deductible of $153,000 and a maximum stop loss limit of $13,191,678 in paid claims. Stop-loss payments for the past year were $0. Changes in claims liability for the past two years are as follows: Balance at September 30, 2007 Current Year Claims Current Year Payments

$

Balance at September 30, 2008 Current Year Claims Current Year Payments

1,076,876 10,957,468 (11,481,698) 552,646 11,082,399 (11,226,523)

Balance at September 30, 2009 (Due within the coming year)

$

408,522

B. EMPLOYEE RETIREMENT SYSTEMS The City has three defined contribution pension plans and one defined-benefit pension plan: • • • •

General Employees Retirement Plan Police Officers Retirement 401A Plan Employees Retirement 401A Plan Municipal Police Officers’ Retirement Trust Fund

55

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

B. EMPLOYEE RETIREMENT SYSTEMS (CONTINUED) The City accounts for all four plans as pension trust funds; therefore, they are accounted for in substantially the same manner as proprietary funds with economic resources measurement focus and the accrual basis of accounting. Plan member contributions, employer contributions, and contributions from other entities, including rollover by participants from other plans, are recognized in the period in which the contributions are due. Benefits and refunds are recognized when due in accordance with terms of the plans. Plan assets are valued at fair value for financial statement purposes, as reported by the custodial agents. The defined contribution plans do not issue stand-alone financial reports and are not included in any other retirement system’s financial report. Financial statements for the individual pension plans are presented below since separate financial reports have not been issued for the separate defined contribution plans. Combining Statement of Fiduciary Net Assets Pension Trust Funds September 30, 2009 General Police Officers' Employees' Employees' Retirement 401 A Retirement 401 Assets Investments: Corporate Stocks $ Mutual Funds Cash Surrender Value of Life Insurance Accounts Receivable Total assets

172,938 2,349,628 279,451 1,337 2,803,354

$

5,413,332 3,601 5,416,933

$

29,187,624 37,679 29,225,303

Total

$

172,938 36,950,584 279,451 42,617 37,445,590

Liabilities and Fund Balances Liabilities Deposits Total liabilities Net Assets Held in Trust for: Pension Benefits Total Net Assets Total Liabilities and Net Assets

-

$

2,803,354 2,803,354 2,803,354

56

-

$

5,416,933 5,416,933 5,416,933

$

42,936 42,936

42,936 42,936

29,182,367 29,182,367 29,225,303

37,402,654 37,402,654 37,445,590

$

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

B. EMPLOYEE RETIREMENT SYSTEMS (CONTINUED) Combining Statement of Changes in Fiduciary Net Assets Pension Trust Funds Year Ended September 30, 2009 General Police Officers' Employees' Employees' Retirement 401 A Retirement 401 A Additions Contributions: City Employee Total Contributions

$

122,059 122,059

Investment Income: Net Appreciation in Fair Value of Investments

$

302,166 37,515 339,681

$

3,358,697 280,540 3,639,237

Total

$

3,782,922 318,055 4,100,977

Total Additions

(30,837) (30,837) 91,222

(127,990) (127,990) 211,691

345,211 345,211 3,984,448

186,384 186,384 4,287,361

Deductions Benefit Payments Refunds Total Deductions

199,490 199,490

26,370 49 26,419

1,263,877 188,351 1,452,228

1,489,737 188,400 1,678,137

(108,268)

Change in Net Assets Total Net Assets - beginning Total Net Assets - ending

$

2,911,622 2,803,354

$

185,272

2,532,220

2,609,224

5,231,661 5,416,933

26,650,147 29,182,367

34,793,430 37,402,654

$

$

General Employees’ Retirement System A defined contribution pension plan provides pension benefits in return for services rendered, provides an individual account for each participant, and specifies how contributions to the individual's account are to be determined instead of specifying the amounts of benefits the individual is to receive. Under a defined contribution pension plan, the benefits a participant will receive depend solely on the amount contributed to the participant's account and the returns earned on investments of those contributions. The General Employees' Retirement System, sponsored and administered by the City, is a defined contribution plan available to all employees of the City prior to October 1, 1991. Presently, there are 16 active participants in the plan. The City is the sole contributor to the General Employees' Retirement System. The plan requires City contributions of 10.5% of employee compensation. The funds are invested in life insurance, annuity contracts and a variable rate investment plan. The City pays the plan administrative fee; however, the contract maintenance fee is deducted from the individual contracts where applicable. Total pension contributions for the year ended September 30, 2009 were approximately $126,517 on covered payroll of $1,275,737. The City's total payroll was $62,975,216. 57

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

B. EMPLOYEE RETIREMENT SYSTEMS (CONTINUED) General Employees’ Retirement System (continued) No pension provision changes occurred during the year that affected the City's required contribution. The vesting schedule allows 100% vesting after five years within the plan. At September 30, 2009 there were 24 employees vested in the plan with vested benefits of approximately $2,802,017. The plan held no securities of the City or other related parties as of and for the year ended September 30, 2009. Police Officers’ Retirement Plan 401A The plan is sponsored and administered by the City as a defined contribution plan available to the eligible employees after three months of service. Presently, there are 151 active participants in the plan. At September 30, 2009 there were 142 employees vested in the plan with vested benefits of approximately $5,369,518. Contributions to the plan are at the rate of 10.5% for those members who are not directing the City contribution to the Municipal Police Officers' Retirement Trust Fund (MPORT). Pension contributions for the year were $307,979 on a covered payroll of $2,932,904. The plan held no securities of the City or other related parties as of and for the year ended September 30, 2009. Employees’ Retirement Plan 401A The Employees' Retirement Plan 401A is sponsored and administered by the City as a defined contribution plan available to all employees after three months of service. Presently, there are 850 active participants in the plan. The plan allows City contributions of 10.5% of employee compensation. The participant has a choice of multiple investment options within the fund with each account bearing the cost of the annual maintenance charge, if applicable. Pension contributions for the year ended September 30, 2009 were approximately $3,473,150 on covered payroll of $30,055,097 for those employees directing their pension contribution to the fund. At September 30, 2009 there were 555 employees vested in the plan with vested benefits of approximately $25,975,259. There were no pension provision changes to this plan during the year that affected the required contribution. The vesting schedule on this plan allows 100% vesting after five years service with the City. The plan held no securities of the City or other related parties as of and for the year ended September 30, 2009. The three defined contribution pension plans do not issue a stand-alone financial statement. 58

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

B. EMPLOYEE RETIREMENT SYSTEMS (CONTINUED) Municipal Police Officers’ Retirement Trust Fund Plan Description and Contributions The Municipal Police Officers' Retirement Trust Fund (plan), which is a single-employer defined benefit public employees retirement system (PERS), was established under the provisions of Chapter 185 of the Statutes of the State of Florida, and is accounted for in the Municipal Police Officers' Retirement Trust Fund. The plan is managed and administered by the five-member Retirement Board, which includes two Council appointees, two members of the department elected by the membership, and a fifth member elected by the other four and appointed by the Council. There are presently 211 active participants in the plan of which 93 are vested for normal retirement. The total payroll of the police department is $23,848,771 with a covered payroll of $16,671,493. Covered payroll refers to all compensation paid by the City to active employees covered by the plan on which contributions are based. Total contributions to the plan for the year amounted to $4,024,630, of which $1,453,713 were employee contributions, $23,524 were employee buy-back contributions, $1,695,798 were City contributions, and $851,595 were state contributions. The state contributions are recorded as revenue and personnel expenditures in the City’s general fund before being recorded as a contribution in this plan. Employee contributions averaged 9% of covered payroll. The City contributes at the rate of 10.5% of compensation to the plan. The funding policy for the plan is actuarially determined in that an annual actuarial valuation is performed each year to determine the required contribution to the Plan. The contribution requirements to cover normal cost as of September 30, 2007 for the Plan's year ending September 30, 2009 were total contributions of $3,493,926 (24.1% of anticipated covered payroll) of which $1,305,214 estimated member contributions, $708,340 were the State contributions, and the balance of $1,480,372 in employer contributions. The plan provides for normal retirement at age 55 with 10 years of service or age 52 with 25 years of service. Normal retirement benefits are calculated at 3.09% per service year based on the participant's compensation of the highest 5 years during the past 10 years of employment. The entry age actuarial cost method is used to determine all benefits under the 1983 Group Annuity Mortality Table with the level percentage of payroll method (closed) used for amortizing unfunded actuarial liability. Under the provisions of the plan, pension benefits vest fully after 5 years of full-time employment as a sworn police officer; however, if an employee terminates with the City, funds must remain in the plan until normal retirement age to realize that vesting. The actuarial assumptions include an inflation rate of 3.5%, an investment rate of return of 8.5%, and projected salary increases of 6.5% with no postretirement benefit increases. The plan liabilities are systematically funded as a level percentage of anticipated payroll over the average future working lifetime of the plan participants and a remaining amortization period of 30 years. The plan is funded by employee contributions of 9% of salary, employer contributions of 10.5% of salary, and the proceeds of the .85% tax on casualty insurance premiums on property within the municipal limits of the City. Currently, all new sworn officers are required to participate in the plan upon gaining employment by the City. The plan has no allowances for postemployment benefit increases subsequent to retirement date calculations. The plan issues a stand-alone financial report. 59

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

B. EMPLOYEE RETIREMENT SYSTEMS (CONTINUED) Municipal Police Officers’ Retirement Trust Fund (continued) Plan Description and Contributions (continued) That report may be obtained by contacting the Plan Administrator, Ms. Sandra Steele at the Port St. Lucie Police Department, 121 S.W. Port St. Lucie Blvd, Port St. Lucie, Florida. Plan Membership At September 30, 2009, membership of the plan consisted of the following: Number of Participants Retirees and Beneficiaries Currently Receiving Benefits DROP Retirees Terminated Employees not yet Receiving Benefits Total Current Employees: Employer-Financed Vested Employer-Financed Nonvested

22 10 15 47 118 93

Total

211

Funding Status and Progress The development of the Net Pension Obligation to date is as follows:

Actuarially Determined Contribution (A) Interest on NPO Adjustment to (A) Annual Pension Costs Contributions Made Increase in NPO NPO Beginning of Year NPO End of Year % of APC Contributed

2007

2008

2009

$ 1,145,043 (46,108) 45,040 1,143,975 1,472,281 (328,306) (542,444) $ (870,750) 128.7%

$ 1,321,212 (74,014) 72,300 1,319,498 1,522,446 (202,948) (870,750) $ (1,073,698) 115.4%

$ 1,471,612 (91,264) 104,238 1,484,586 1,752,362 (267,776) (1,073,698) $ (1,341,474) 119.0%

60

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

B. EMPLOYEE RETIREMENT SYSTEMS (CONTINUED) Funding Status and Progress (continued) The total contributions for the plan for the past three years was in excess of the annual pension cost. The current years actuarial analysis reflected actual contributions exceeding the required contributions for the year ended September 30, 2009. Detailed information regarding the funding of the plan is contained in the Supplementary Information accompanying the financial statements. Currently an annual actuarial evaluation is performed for and funded by the Plan. The most recent actuarial valuation was performed for the year ended September 30, 2009. Other information regarding contributions and funding progress is included as supplementary information to this report. The method used in determining valuation of assets is based on a four year moving weighted average of the ratio of market value to cost value. This technique has the effect of smoothing short-term market fluctuations. Deferred Compensation Plan

The City offers employees a deferred compensation Plan created in accordance with Internal Revenue Code Section 457. The Plan, available to all employees, permits them to defer a portion of their salary until future years. The deferred compensation assets are not available to employees until termination, retirement, death, or unforeseeable emergency. The assets in the plan are maintained by an independent trustee. The assets are protected by the trust agreement from any claims on the employer and from any use by the employer other than paying benefits to employees and their beneficiaries in accordance with the plan. In accordance with GASB Statement No. 32, the plan's assets and related liability were removed from the City balance sheets as of September 30, 1997. C. POST-EMPLOYMENT HEALTH CARE BENEFITS In addition to providing pension benefits, the City provides certain health care and life insurance benefits for retired employees. Substantially all of the City’s employees may become eligible for those benefits if they reach normal retirement age while working for the City. The primary government recognizes the costs associated with providing these benefits as claims are paid. The actuarial valuation performed as of October 1, 2008 for the year ended September 30, 2009, the date of the most recent actuarial valuation available, those costs totaled approximately $4,076,621. Premiums paid by retirees for the year total approximately $345,748. Section 112.0801, Florida Statutes, as amended by Sections 1 and 2 of Chapter 87-373, Laws of Florida, requires all public employers to allow their retirees to participate in the same health group plan or self-insurance plan offered to their active employees. There are currently 90 City retirees, spouses and other dependents participating in the health insurance plan plus 5 receiving only life insurance coverage benefits. There are a total of 1,045 active participants in the plan of which 836 are not yet eligible to receive benefits. 61

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

C. POST-EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED) The Other Post Employment Benefit plan is a single-employer benefit plan administered by the City. Retiree’s are charged the same rate by the insurance company as active employees. Premiums charged by the insurance company are a blended rate based on the experience of younger active employees and older retired employees. Since retirees actually have higher costs yet pay the same rate as younger active employees, the city actually subsidizes the cost of the retirees’ health insurance coverage. 2009 Normal Cost(service cost for one year) Amortization of Unfunded Actuarial Interest to the end of the year Annual Required Contribution Contributions and accrued contributions Increase in Net OPEB Obligation Net OPEB Obligation-beginning of year

$

2,163,522 1,804,923 108,176 4,076,621 (1,334,382) 2,742,239 -

Net OPEB Obligation-end of year

$

2,742,239

The City’s annual OPEB cost, employer contributions toward that cost, percentage of OPEB cost contributed, and the net OPEB obligation for 2009 were as follows:

Fiscal Year Ended

Annual OPEB Cost

9/30/2009

4,076,621

Employer % of Contributions Annual OPEB Net Toward Cost OPEB OPEB Cost Contributed Obligation 1,334,382

32.73%

2,742,239

Other information regarding funding progress is included as supplementary information to this report.

62

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

C. POST-EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED) Funding Policy The City instituted a cost sharing agreement with retired employees for individual coverage only. The contribution requirements of plan members and the City are established and may be amended by the City Council. These contributions are neither mandated nor guaranteed. The City has retained the right to unilaterally modify its payment for retiree health care benefits. Administrative costs are financed through investment earnings. As of September 30, 2009, the most recent actuarial valuation date, the plan was unfunded other than the implicit contribution subsidy and the initial funding contribution subsequent to year end. Retiree members contribute $549 per month for individual coverage. Spousal, family and additional rates are also part of the plan which are also based on rated charged of employees. The plan pays up to 80% of the individual premium for each insured according to the age/service formula factor of the retiree. Spouses and other dependents are eligible for coverage, but the retiree is responsible for the entire cost, there is no direct plan subsidy. The unfunded actuarial accrued liability was $27,746,091. The covered payroll for active employees covered by the plan was $17,923,099. Actuarial Methods and Assumption In any long-term actuarial valuation, certain demographics, economic and behavioral assumptions must be made concerning the population, investment discount rates, and the benefits provided. These actuarial assumptions form the basis for the actuarial model which is used to project the future population, benefits to be provided, and contributions to be collected. The investment return rate assumption is used to discount the future benefits to a present value on the valuation date. While assumptions such as future rates of retirement and mortality are similar for both OPEB and pension plans, there are some additional assumptions. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the October 1, 2008 actuarial valuation, the Unit Credit Actuarial Cost Method was used. Using the plan benefits, the present health premiums and a set of actuarial assumptions, the anticipated future payments are projected. The unit credit method then provides a systematic funding for the anticipated payments. The yearly Annual Required Contribution (ARC) is computed to cover the cost of benefits being earned by covered members as well as to amortize a portion of the unfunded accrued liability. The initial unfunded actuarial accrued liability is being amortized as a level dollar amount over an open period of 30 years and changes in the UAAL are amortized over the remaining portion of the 30 year period.

63

CITY OF PORT ST. LUCIE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS September 30, 2009

C. POST-EMPLOYMENT HEALTH CARE BENEFITS (CONTINUED) Actuarial Methods and Assumption (continued) The demographic assumptions are based on assumptions used in the Florida Retirement System and adopted by the Florida Retirement System Board except for Police Officers which are consistent with those used by the City of Port St. Lucie Municipal Police Officers’ Retirement Trust Fund. The actuarial assumptions include a 5% discount rate, compounded annually, net of investment expenses. The annual healthcare cost trend rate initially is set at 7.4%, reduced annually to an ultimate rate of 4%. D. CONTINGENCIES The City is a defendant in various lawsuits arising in the normal course of business, including claims for property damages, personal injuries, and personnel practices. In the opinion of management, the ultimate outcome of these lawsuits, some of which are covered by insurance, will not have a material adverse effect on the City's financial position. E.

SUBSEQUENT EVENTS Subsequent to year end, the City issued $36,000,000 Stormwater Utility Revenue Bonds, 2010 A and B. The bonds were issued to provide funds for the expansion and improvements to the stormwater drainage system including property acquisition in the Eastern Watershed Improvement Project.

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APPENDIX C

CERTAIN INFORMATION REGARDING THE BORROWER

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APPENDIX C CERTAIN INFORMATION REGARDING THE BORROWER The Information contained in this APPENDIX C contains certain forward-looking statements that are subject to a number of risks and uncertainties, including those described in "BONDHOLDERS' RISKS" in the forepart of the Official Statement which are beyond the control of VGTI Florida (as hereinafter defined). The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. THE BORROWER Introductory Statement General. Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. ("VGTI Florida" or the "Borrower") is a start-up research institute with a focus on immunology and treatment of human disease, including the development of vaccines and therapeutics for infectious disease and identification of defects in the immune system of the elderly. VGTI Florida is sponsored by the Oregon Health and Science University ("OHSU") and is located in Port St. Lucie, Florida (the "City"), approximately 35 miles north of Jupiter, approximately 53 miles north of West Palm Beach, approximately 121 miles north of Miami and approximately 126 miles southeast of Orlando. VGTI Florida is a not-forprofit corporation and is exempt from federal income taxation under Section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"), as an organization described in Section 501(c)(3) of the Code. Working in conjunction with the Economic Development Council of St. Lucie County, VGTI Florida secured a $60 million Innovation Incentive Program Grant from the State of Florida (the "State") in 2008 and formally commenced operations in July 2008. See "THE BORROWER – OTTED Funding Agreement" in this APPENDIX C. VGTI Florida currently occupies space, rent free, on the third floor of a building owned by the Torrey Pines Institute for Molecular Studies ("TPIMS") and located in the Research Park (as hereinafter defined) within the City where VGTI Florida's facility will be constructed. As of April 1, 2010, VGTI Florida employed 26 research scientists and support staff and 10 administrative managers and staff. Research Strategy. VGTI Florida's research will use a systems biology approach (i.e., the investigation of a group of objects that work together to produce a result) to gain a comprehensive understanding of the function of the human immune system. By studying the response of the immune system during an infection, following the administration of vaccinations, in response to tumors and during the aging process, VGTI Florida scientists hope to understand what constitutes an effective immune system which can be used to develop interventional treatments to enhance immune responses and thereby provide better protection from infectious diseases and cancer and diminish the immune response in autoimmune disorders. Such research approach will be used by VGTI Florida to, among other things, (i) investigate issues and problems of infection, immunity and inflammation in the elderly, including H1N1 and seasonal flu, (ii) investigate immune system defects in the elderly and the impact of immune system aging and its consequences on diseases common in the elderly, and (iii) develop vaccines and therapeutics for existing and emerging infectious diseases such as West Nile Virus, flu, herpes viruses, malaria and tuberculosis, targeting the general population, as well as vulnerable subgroups (e.g., the elderly and HIV infected individuals).

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The research to be conducted at VGTI Florida will be distinguishable from other research due to its focus on the integration of emerging technologies (e.g., genomics, proteomics, and metabolomics) to define the function of the human immune response in a comprehensive manner. In furtherance of the foregoing research objectives, VGTI Florida plans to target its recruitment efforts on attracting research groups that are singly focused on utilizing this integrative approach to advance the knowledge base with regards to human immunity. VGTI Florida employs an integrated and interdisciplinary model for its research endeavors by providing a close-knit collaborative environment for a group of independent scientists specializing in virology, immunology, animal models, pathology and clinical infectious disease. VGTI Florida research spans the continuum between basic and clinical science, in which discoveries are rapidly advanced from the level of molecular and cellular biology through animal models and ultimately into clinical testing -- from the laboratory bench to the bedside. Management of VGTI Florida plans to cooperate with the existing research institutes in the City, Jupiter (Palm Beach County), Orlando and Miami areas to promote synergies and thus fill in the gaps that exist in the disciplines currently represented. For example, while TPIMS and a facility of The Scripps Research Institute located in Jupiter, Florida ("Scripps Florida") primarily focus on chemical and systems biological approaches to the development of therapeutics for human disease, neither TPIMS nor Scripps Florida emphasizes the development of vaccines and animal model systems needed for translation of basic research findings into novel cures as does VGTI Florida. In addition, VGTI Florida expects to partner with regional, national and international clinical institutes and biotechnology enterprises to facilitate the access to patient samples and involvement in clinical trials. Such partnerships will enable VGTI Florida to obtain information related to clinical samples, to develop new concepts and ideas in the research laboratory and direct that information back to the clinics to facilitate the development of new therapies and treatments. Furthermore, VGTI Florida currently works with and expects to continue to work with existing institutes and universities in the City and the greater Southern and Central Florida region to ultimately develop the region as a center of biotechnology. As of April 1, 2010, VGTI Florida had (i) commenced a clinical trial on the efficacy of the H1N1 and seasonal flu vaccines in the elderly as compared to young individuals in conjunction with Martin Memorial Health System ("Martin Memorial") and (ii) partnered with the University of Miami Center for AIDS Research ("CFAR") to develop influenza vaccines for HIV infected infants and pregnant women. Interrelationship Between VGTI Florida and VGTI Oregon. VGTI Florida has been closely modeled after the Vaccine and Gene Therapy Institute ("VGTI Oregon") at OHSU with the distinction that the VGTI Florida program will include significant emphasis on the issues and problems of infection immunity and inflammation in the elderly, which carries particular relevance to communities in the State. VGTI Florida and VGTI Oregon complement each other in the use of resources that are uniquely established at each individual institute. VGTI Florida's access to a state of the art non-human primate facility located at VGTI Oregon is expected to enable experimental studies that could not be conducted using human subjects. The non-human primate model serves as the most suitable for experimental modeling of the human immune response, will serve as a proving ground for various therapies and vaccine design trials and is more suited to perform invasive interventions that are difficult to conduct in human subjects. The research conducted at VGTI Florida primarily will focus on human subjects, thereby complementing and advancing the animal research conducted at VGTI Oregon in non-human primates. Information obtained regarding the immune response using resources at both VGTI Florida and VGTI Oregon and the collaborative environment between the two institutions will foster crossfertilization of scientific ideas. Management of VGTI Florida hopes that the establishment of VGTI Florida will accelerate the knowledge and discoveries already being developed by VGTI Oregon. For

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additional information regarding VGTI Oregon, see the information under the heading "THE BORROWER – OHSU and VGTI Oregon; VGTI Florida's Relationship with VGTI Oregon and OHSU – VGTI Oregon" in this APPENDIX C.

Faculty Recruitment. VGTI Florida has a faculty recruitment strategy that will identify individuals conducting research in the areas of human immunology using a systems biology approach that complements the existing faculty and the mission of the institute. VGTI Florida intends to recruit senior faculty to head each of the thematic and technological research areas in infectious disease, cancer and aging and mentor two or three associates and/or junior faculty. The major recruitment criteria for candidates will be excellence, complementarity and adherence to the overall scientific strategy of VGTI Florida. For example, VGTI Florida's Co-Director and Chief Scientific Officer, Rafick-Pierre Sékaly, Ph.D., led a team of researchers involved in the development of a radical new therapy to combat AIDS that is expected to enable the destruction of both the HIV viruses circulating in the body, as well as those hidden in immune system cells. Faculty will be recruited through the use of a recruitment committee consisting of existing faculty at VGTI Florida and key faculty at VGTI Oregon. Faculty recruitment efforts will target those individuals with either already funded research programs in the case of senior investigators or those that have a high chance of obtaining funding quickly in the case of associate and junior faculty. VGTI Florida expects that faculty will be attracted to its state of the art facilities, focus on immunology and flexible operating model. Furthermore, management of VGTI Florida believes that the ability of faculty to fully direct their efforts to research, an attractive recruitment/relocation package, access to various core facilities, the prospect of participating in large institutional sponsored program projects, the ability to collaborate with hospitals and other health care facilities to quickly move immunology and vaccine developments from the laboratory to patients, and access to an integrated database of patient samples and clinical trials data will enable VGTI Florida to attract qualified researchers. For additional information on faculty recruitment, see the information under the heading "Job Creation Plan" in this APPENDIX C. VGTI Florida's initial recruitment plan projected that by the end of 2011, it would successfully recruit and engage a Co-Director and five (5) other faculty and that in each year from 2012 through 2017 it would recruit between one (1) and three (3) principal investigators (senior faculty) per year for a total of twenty (20) research groups by the beginning of 2018. As of April 1, 2010, VGTI Florida had engaged six (6) faculty members (including the Co-Director and Executive Director). Research Grants. Principal investigators at VGTI Florida will target their funding efforts towards the National Institutes of Health ("NIH") and the Bill and Melinda Gates Foundation (the "Gates Foundation") as is the case with most research institutes similar to VGTI Florida. As described above, senior faculty will be recruited who have existing grants, and future funding will be sought through responses by faculty to requests for applications announcements ("RFAs") and faculty initiated applications. By pursuing funding for defined research areas through responses to RFAs, VGTI Florida believes it will ensure that applications are directed to areas that have been identified by NIH as funding priorities. Attempts to obtain funding from various NIH institutes that support the type of research conducted at VGTI Florida (e.g., National Institute of Allergy and Infectious Diseases, National Cancer Institute, National Heart, Lung, and Blood Institute, National Institute on Aging and National Institute of Neurological Disorders and Stroke) will be a priority, in an effort to diversify the application pool and ensure that not all grant applications are relying on a limited number of NIH institutes for funding. Management believes that VGTI Florida's immunology expertise provides the necessary flexibility to compete for funding through new initiatives that are regularly issued by NIH. VGTI Florida expects to use its relationship with OHSU, as well as those federal and private foundation grants already received by or transferred to VGTI Florida, as the basis for future federal and private grant applications. VGTI Florida has recruited several faculty members with existing grants that have been transferred to VGTI Florida and hopes to recruit additional faculty with existing grants in the future. As of April 1, 2010, $3,636,445 in grants have been transferred to VGTI Florida and $3,800,000 in grants and subgrants have

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been received directly by VGTI Florida or OHSU on behalf of VGTI Florida. For additional information regarding research grants see the information under the heading "Grant Funding" in this APPENDIX C. Collaboration With Other Institutions in the State. VGTI Florida is committed to maintaining existing partnerships and developing new partnerships with academic, clinical and biotechnology partners. In addition to its previously described collaborations with TPIMS, Martin Memorial, and CFAR, VGTI Florida is currently collaborating with the University of Florida for new projects. The establishment of scientific collaborations with the scientific community in the State is required under the terms of the Funding Agreement (as hereinafter defined) and will be directed through the joint interests of VGTI Florida faculty and the institutions with which VGTI Florida is currently collaborating and other strategically aligned institutions in the State. VGTI Florida also intends to build upon VGTI Oregon's ongoing national and international collaborations. Furthermore, in addition to interactions with virologists, immunologists, chemists and systems biologists at Florida institutions, VGTI Florida plans to interact with various computational science and nano-engineering programs with the goal of engaging in such research studies. Finally, in order to fully develop its translational and clinical research, VGTI Florida strives to expand its existing relationships with academic medical centers, community hospitals and other health care entities in the State. Other Revenue Sources. VGTI Florida plans to hire a development officer to facilitate and orchestrate fundraising efforts both locally and nationally. The research being conducted at VGTI Florida represents areas that are easily recognized by lay persons as important. The study of the human immune response to infectious diseases, cancer and the impact of aging on the immune system are of interest to all individuals. Moreover, the research being conducted at VGTI Florida has the potential to impact the lives of millions of people globally. Finally, the demographics of the State and interest within the State in cancer, aging and HIV/AIDS is expected to enable the identification of a local donor base. Because grant revenues will not be sufficient to fund all of the operating costs of VGTI Florida, additional funds from annual gifts or other sources or the creation of an endowment to cover any shortfall will be required once funds granted by the State pursuant to the OTTED Funding Agreement (as hereinafter defined) are no longer available for this purpose. (See "THE BORROWER – OTTED Funding Agreement" in this APPENDIX C.) Current Faculty VGTI Florida currently has six (6) faculty members. Certain biographical information regarding the current VGTI Florida faculty is as follows: Jay A. Nelson, Ph.D., age 61, is the Executive Director and Vice President of VGTI Florida and a senior Faculty Member at VGTI Florida. Dr. Nelson is also a Professor in the Department of Molecular Microbiology and Immunology, OHSU, (since 1992) and the Director of VGTI Oregon (since 1998). Dr. Nelson divides his time equally between VGTI Florida and VGTI Oregon. The primary focus of Dr. Nelson's research over the years has been on the pathogenesis for cytomegalovirus. Dr. Nelson received a Bachelor of Science degree in Biological Sciences from California State University, Hayward, California and a Ph.D. degree in Microbiology from Oregon State University, Corvallis, Oregon. In addition, Dr. Nelson completed a Post Doctoral Fellowship at Fred Hutchinson Cancer Research Center, Seattle, Washington. Dr. Nelson is a member of the American Association for the Advancement of Science. Rafick-Pierre Sékaly, Ph.D., age 59, is the Co-Director and Chief Scientific Officer of VGTI Florida and a Senior Faculty Member at VGTI Florida. Dr. Sékaly also is currently serving as a Professor in the Department of Molecular Microbiology and Immunology, OHSU (since 2008) Director, Institut National de la Santé et de la Recherche Médicale, Unité 743-Immunologie humaine ("INSERM") France (since 2005); Scientific Director, National Laboratory of Immune Monitoring, Université de Montréal/MDS Pharma, Montréal, Québec (since 2004); Director, Laboratory of Microbiology and

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Immunology, CHUM Research Center, Montréal, Québec (since 2003); Professor, Department of Microbiology and Immunology, Université de Montréal, Montréal, Québec (since 1998); and Adjunct Professor, Department of Microbiology and Immunology, McGill University, Montréal, Québec (since 1990). Dr. Sekaly is now full time at VGTI Florida. Dr. Sékaly primarily conducts research relating to HIV/AIDS. He and his laboratories published an article in the June 2009 edition of the journal "Nature Medicine" identifying where HIV hides in the body when it can no longer be detected by testing. Dr. Sékaly received a Bachelor of Science degree in Biological Sciences from Université de Montréal, Montréal, Québec, a Master of Science degree in Immunology from Université de Montréal, Department of Hematology-Oncology, Hôtel-Dieu Hospital and a Ph.D. degree in Biochemistry from University of Lausanne, where he worked at its Ludwig Institute for Cancer Research, Lausanne, Switzerland. In addition, Dr. Sékaly completed a Post Doctoral Fellowship at Laboratory of Immunogenetics, National Institute of Allergy and Infectious Disease, NIH, Bethesda, Maryland. Dr. Sékaly is a member of the American Association for the Advancement of Science. John Hiscott, Ph.D., age 59, is a Senior Faculty member at VGTI Florida. From 1996 until joining VGTI Florida, Dr. Hiscott has been a Professor in the Departments of Microbiology & Immunology and Medicine & Oncology at McGill University, Montréal, Québec. He also serves as Director of Terry Fox Molecular Oncology Group and Staff Investigator, Lady David Institute for Medical Research, both at Jewish General Hospital, Montréal, Québec. His research focuses on the body's immune system response to viral infections and the regulation of gene expression in cells infected with human retroviruses. Dr. Hiscott is currently equally dividing his time between VGTI Florida and McGill University. As of July 1, 2010, it is expected that Dr. Hiscott will be at VGTI Florida on a fulltime basis; he is in the process of transitioning his laboratory from Montréal, Québec to Florida. He is currently a recipient of a Senior Investigator Award from the Canadian Institute of Health Research. In 2003, the International Society for Interferon and Cytokine Research presented him the Milstein award, which he shared with another scientist. In addition, Dr. Hiscott is the Editor of Cyokine and Growth Factor Reviews. Dr. Hiscott received a Bachelor of Science degree (with honors) in Bacteriology and Immunology from University of Western Ontario, London, Ontario, a Master of Science degree in Cancer Research Laboratory from the University of Western Ontario, London, Ontario, and a Ph.D. degree in Basic Medical Sciences from New York University, New York, New York. In addition, Dr. Hiscott completed Post Doctoral Fellowships at the Institut für Molekularbiologie, Universitat Zurich, Zurich, Switzerland and Roche Institute of Molecular Biology, Nutley, New Jersey. Elias Haddad Ph.D., age 44, is an Associate Faculty member at VGTI Florida. Prior to joining VGTI Florida, Dr. Haddad served as an Associate Professor at the University of Montréal, Québec (20062010). He is currently a full time Associate Member at VGTI Florida. Dr. Haddad's research focuses on applying systems biology approaches to better identify protective immune responses and correlate of immune protection. Dr. Haddad received a Bachelor of Science degree in Biology from the American University of Beirut, Beirut, Lebanon, a Master of Science degree in Microbiology and Immunology from the American University of Beirut, Beirut, Lebanon, and a Ph.D. degree in Microbiology and Immunology from McGill University, Montréal, Québec. In addition, Dr. Haddad completed a Post Doctoral Fellowship at the National Cancer Institute at Bethesda, Maryland. Lydie Trautmann, Ph.D., age 34, is a Junior Faculty member at VGTI Florida. Dr Trautmann is pursuing various research projects on HIV acute infection and other infections to better understand the first events of the immune response using a systems biology approach. Dr. Trautmann received an Engineer degree in Biotechnology from École Supérieure de Biotechnologie de Strasbourg, Université Louis Pasteur, Strasbourg, France and a Ph.D. degree in Immunology from Université René Descartes, Paris, France. Dr. Trautmann was a Post Doctoral Fellow at the laboratoire de microbiologie et d'immunologie, University of Montreal, Montréal, Québec. Nicolas Chomont, Ph. D., age 33, is a Junior Faculty member at VGTI Florida. Dr. Chomont is engaged in various research projects involving HIV/AIDs. Dr. Chomont received a Bachelor of Science

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degree in the Biological Sciences from Université Paris VI, Paris, France, a Master of Science degree in Biochemistry from Université Paris VI, Paris, France and a Ph.D. degree in Virology from Pierre et Marie Curie Université Paris VI, Paris, France. In addition, Dr. Chomont completed a Post Doctoral Fellowship in Immunology at Université de Montréal, Montréal, Québec. Board of Directors VGTI Florida is presently governed by a Board of Directors (the "Board of Directors") consisting of five (5) members. Forty percent (40%) of the members of the Board of Directors are designated by OHSU (the "OHSU Directors") and sixty percent (60%) are elected by the Board of Directors from those individuals nominated by the Board of Directors, acting as a nominating committee (the "Elected Directors"). The Elected Directors are elected at each annual meeting of the Board of Directors and serve until (i) the next annual meeting of the Board of Directors or (ii) their earlier resignation or removal. The Bylaws of VGTI Florida provide that regular meetings of the Board of Directors may be held at such times and places, within or without of the State, as determined by the Board of Directors. Historically, the Board of Directors of VGTI Florida has met quarterly by phone and annually in person in the State. The following matters require the vote of the OHSU Directors and a majority of the Elected Directors: (a) approval of the annual budget, (b) amendment, restatement or repeal of the Bylaws or the Articles of Incorporation, (c) an increase in the number of Elected Directors, (d) any merger or consolidation of VGTI Florida, and (e) dissolution or liquidation of VGTI Florida. The current members of the Board of Directors and their principal affiliations are set forth below: Members of Board of Directors as of April 1, 2010 Name

Designation

Affiliation

Richard Cantlin, Esquire

Elected Director

Partner, Perkins Coie, LLP

Daniel M. Dorsa, Ph.D.

OHSU Director

Vice President for Research, OHSU

Mark Edlen

Elected Director

Managing Principal, Gerding Edlen Development

Jay A. Levy, M.D.

Elected Director

Professor of Medicine, University of California, San Francisco School of Medicine

Jay A. Nelson, Ph.D.

OHSU Director

Director, VGTI Oregon

In addition, Rafick-Pierre Sékaly, Ph.D., the Co-Director and Chief Scientific Officer of VGTI Florida, serves as an ex offico, non-voting member of the Board of Directors. Management The Board of Directors has delegated responsibility for the day to day operations of VGTI Florida to the Interim Chief Operating Officer and senior management staff. The names and certain biographical information of VGTI Florida's senior management are listed below or, in the case of the Executive Director and Vice President and the Co-Director and Chief Scientific Officer of VGTI Florida, under the heading "Current Faculty" in this APPENDIX C: Mark B. Williams, age 54, is the Interim Chief Operating Officer of VGTI Florida which position he has held since 2009 and also serves as the Associate Vice President for Campus Development

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at OHSU. Mr. Williams spends approximately twenty-five percent (25%) of his time on matters relating to VGTI Florida. From 2007 to 2009, Mr. Williams was the Associate Vice President for Campus Planning, Development & Real Estate at OHSU and from 2004 to 2007, the South Waterfront Project Director at OHSU. Mr. Williams received a Bachelor of Arts degree in Political Science from Rutgers College, New Brunswick, New Jersey and a Juris Doctor degree from University of Oregon, Eugene, Oregon. Christopher Pearce, age 44, is the Finance Director of VGTI Florida, which position he has held since 2009. Prior to joining VGTI Florida, from 2008 to 2009, Mr. Pearce was Manager Cost and Performance, Florida Power & Light Inc. In addition from 2005-2008, he was with CHF International, Silver Spring, Maryland as the Director of Finance & Administration (Kigali, Rwanda) (2006-2008) and Director of Finance & Administration (Timisoara, Romania) (2005-2006). Mr. Pearce received a Bachelor of Science degree in Finance from the University of Virginia, Charlottesville, Virginia and a Master of Arts degree in Law and Diplomacy from Tufts University, Medford, Massachusetts. Anthony D. Maynard, age 35, is the Grants Manager of VGTI Florida, which position he has held since 2009. From 2007-2009, Mr. Maynard was Assistant Financial Manager, Office of Sponsored Research, Florida International University where he managed a grant portfolio in excess of $35 million including multiple federal grants. From 2002 to 2006, Mr. Maynard was the Fiscal Manager, Andrew Rankin Memorial Chapel, Howard University, Washington, D.C. Mr. Maynard received a Bachelor of Science degree in Business Management from Howard University, Washington, D.C. John Schatzle, Ph. D., age 46, is the Manager Scientific Affairs at VGTI Florida. From 2004 to 2009, Dr. Schatzle was the Chairman of the Immunology Graduate Program (2008-2009) and Associate Professor, Department of Pathology (2004-2009), at the University of Texas Southwestern Medical Center, Dallas, Texas. Dr. Schatzle received a Bachelor of Science degree in Microbiology from the University of Southwestern Louisiana, Lafayette, Louisiana, and a Ph.D. degree in Microbiology and Immunology from Louisiana State University, Shreveport, Louisiana. In addition, Dr. Schatzle completed a Post Doctoral Fellowship sponsored by the National Cancer Institute of NIH in the Department of Microbiology at the University of Texas, Austin, Texas. OHSU and VGTI Oregon; VGTI Florida's Relationship with VGTI Oregon and OHSU Oregon Health and Science University OHSU, a public corporation of the State of Oregon, is a leading health and research university located in Portland, Oregon. OHSU, through its five (5) schools, is the only institution in the State of Oregon that grants doctoral degrees in the health professions (i.e., medicine, dentistry and nursing). OHSU also operates a 560 bed tertiary care hospital and academic medical center that serves as the primary clinical site for OHSU students. OHSU received approximately $268.9 million in research funding during the fiscal year ended June 30, 2008 and approximately $281.5 million during the fiscal year ended June 30, 2009. During the fiscal year ended June 30, 2008, OHSU had approximately 108 inventions and during the fiscal year ended June 30, 2009, approximately 130 inventions, some of which resulted in new markets, "spin-off" businesses and new opportunities (including four (4) new start-up companies during the fiscal year ended June 30, 2008 and three (3) during the fiscal year ended June 30, 2009). OHSU is an important economic and social force in the Pacific Northwest with an annual budget of approximately $1.8 billion and more than 12,400 employees. OHSU is not liable for the payment of the principal, premium of, if any, or interest on the Series 2010 Bonds and none of OHSU's assets (tangible or intangible) will be pledged as security for the Series 2010 Bonds.

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VGTI Oregon VGTI Oregon was established in 2001 as a division of OHSU with the opening of the approximately 60,000 square foot OHSU West Campus Research Building. VGTI Oregon was founded by Jay A. Nelson, Ph.D., a senior OHSU virologist who currently serves as VGTI Oregon's Director and VGTI Florida's Executive Director and Vice President. VGTI Oregon is an established research institute composed of a multidisciplinary team of scientists with expertise in immunology, cell biology, virology and animal model systems that was assembled to provide a mechanism for rapidly moving discoveries from the laboratory into the clinic. While the major focus of VGTI Oregon has been on developing vaccines and therapeutics for infectious disease, another focus has been identifying defects in the immune system in the elderly who are the most susceptible to infections, the most difficult to immunize, and thus the most difficult group for whom to develop therapeutic intervention. This has been done through vertical integration of animal and human models aimed at rapidly translating basic scientific findings into practical use. Among the resources utilized at OHSU is the nonhuman primate model ("NHP") that is an essential element of any clinically relevant investigation in the area of human disease. One of VGTI Oregon's highest priorities is to establish and maintain expertise in and scientifically exploit NHP models of immunity and infection. The Oregon National Primate Research Center ("ONPRC"), a division of OHSU, is one of eight (8) National Primate Research Centers established by an Act of Congress in 1960 and funded through the NIH National Center for Research Resources to expand the nonhuman primate resources for use in medical research, as well as to stimulate research in the NHP area. VGTI Oregon, an independent institute and a division of OHSU, was formed in close association with ONPRC to facilitate the scientific and fiscal marriage between ONPRC and the OHSU School of Medicine ("SOM"). Specifically, VGTI Oregon faculty provides the scientific leadership and staff for ONPRC's Division of Pathobiology and Immunology. This association is mutually beneficial, providing new scientific programs for ONPRC and strengthening ties between ONPRC and basic science and clinical programs at the OHSU Portland campus. All current VGTI Oregon faculty participate in NHP research and are ONPRC scientists. However, with the growth of VGTI Oregon some of the research programs have become more clinically based and have diverged into research areas that do not involve NHP. This has resulted in some faculty becoming more intellectually and financially tied to other departments at OHSU, rather than ONPRC. Grant funding for VGTI Oregon over the last five (5) fiscal years is highlighted below: OHSU/VGTI (Oregon)** Grant Funding by Fiscal Years Ended June 30,

Direct Costs Indirect Costs Total

2005 $8,682,624.00 3,940,646.00

2006 $12,705,387.50 5,739,248.50

2007 $11,747,369.22 4,579,132.78

2008 $11,308,865.00 5,016,594.00

2009 $18,303,743.40 5,483,137.39

$12,623,270.00

$18,444,636.00

$16,326,502.00

$16,325,459.00

$23,786,880.79

________________ ** Funding amounts are for VGTI Oregon and are not necessarily representative of what VGTI Florida will experience. VGTI Oregon estimates that its total funding for the fiscal year ending June 30, 2010 will be approximately $25 million.

VGTI Oregon, as a division of OHSU will not be liable for the payment of the principal of, premium, if any, or interest on the Series 2010 Bonds and none of OHSU's assets (tangible or intangible) dedicated to or derived from VGTI Oregon will be pledged as security for the Series 2010 Bonds.

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VGTI Florida's Relationship to OHSU and VGTI Oregon VGTI Oregon has played a major role in establishing VGTI Florida as an independent entity, and VGTI Florida has been closely modeled after VGTI Oregon. VGTI Oregon's operations are being used as the basis for determining the economic and operational model for VGTI Florida, with the distinction that the VGTI Florida program will focus, among other things, on the issues and problems of infection, immunity and inflammation in the elderly. Furthermore, VGTI Florida expects to maintain a strong relationship with VGTI Oregon, but while some animal research will be conducted by VGTI Florida, protocols utilizing human subjects will be the primary focus of the research conducted by VGTI Florida. Memorandum of Understanding with OHSU VGTI Florida and OHSU are parties to a Memorandum of Understanding effective March 11, 2008, as subsequently amended (the "Memorandum"), to memorialize their mutual understanding of the relationship to exist between OHSU and VGTI Florida. In the Memorandum, VGTI Florida and OHSU acknowledge (i) a commitment to promote the mission of VGTI Florida as stated in its Bylaws, (ii) that OHSU has the necessary infrastructure and expertise to provide the core administrative support to VGTI Florida as it develops its programs, and (iii) that OHSU will provide ongoing support and advice to VGTI Florida in order to ensure the success of VGTI Florida. Pursuant to the Memorandum, VGTI Florida may request that OHSU provide services to VGTI Florida including the provision of administrative services by OHSU administrators; provided, however, that the scope of any such service must be approved by OHSU. The salaries and other payroll expenses of the OHSU employees providing services, based on their time expended in providing these services, will be reimbursed by VGTI Florida effective as of the execution date of the Funding Agreement (as hereinafter defined). The Memorandum requires that OHSU and VGTI Florida must coordinate policies, practices and services of joint concern and interest including but not limited to internal governance, human resources, research policies, technology and research collaborations, research administration, and finance and accounting policies. OHSU and VGTI Florida have agreed in the Memorandum that in consideration of such administrative support and expertise, all right, title and interest to any ideas, improvements, designs, authored works, discoveries, inventions, software, technologies, techniques, processes, products, material, concepts, or work product, whether or not patentable, that VGTI Florida, through its employees or agents may conceive, develop, create or reduce to practice which: (a) relates to or arises out of the responsibilities or work by those employees or agents for VGTI Florida, (b) arises through the use of VGTI Florida time, materials, equipment, facilities or confidential information, (c) results from any research, development, or other activities of VGTI Florida, or (d) relates to VGTI Florida's actual or anticipated business (the "Intellectual Property") will belong exclusively to OHSU. OHSU will manage and must approve actions and development activities relating to the exploitation of the Intellectual Property such as patent filings, licensing, litigation and other legal fees. OHSU will advance all costs relating to or arising from the protection and commercialization of the Intellectual Property and VGTI Florida will reimburse OHSU for such services. OHSU has acknowledged and agreed that, notwithstanding any other provision in the Memorandum, all Intellectual Property transferred by VGTI Florida to OHSU pursuant to the Memorandum will be held and used in accordance with certain limitations on its use and transfer, including rules in the Code that proscribe private business use of its facility and possibly certain "march in rights" or other special rights by the federal government under the Bayh-Dole Act to the same extent that VGTI Florida is or was subject to such limitations. Net royalty income, which is defined in the Memorandum as cash revenue or other compensation generated from the licensing or transfer of Intellectual Property and which is net of all costs related to the

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exploitation of such Intellectual Property ("Net Royalty Income") will be divided as follows: (a) the creator(s) will receive forty percent (40%) of the first $50,000, thirty-five percent (35%) of the next $50,000 and thirty percent (30%) of anything above $100,000, and (b) all remaining Net Royalty Income will be divided equally between VGTI Florida and OHSU. VGTI Florida's Relationship with Florida Universities and Health Care Centers Management of VGTI Florida believes that in order for VGTI Florida to be successful, it will need to develop arrangements with a medical school and/or hospital that can offer both research capabilities and access to patients, similar to VGTI Oregon's relationship with clinical researchers and clinicians at the OHSU School of Medicine. Accordingly, within two (2) years of occupying its permanent facilities, VGTI Florida hopes to provide graduate training to students enrolled in the graduate programs at OHSU. Furthermore, in exchange for receiving support of VGTI Florida graduate programs from universities in the State, such as the University of Florida, University of Miami or Florida Atlantic University ("FAU"). VGTI Florida anticipates offering to participate in joint scientific projects and in teaching immunology, virology, cell biology, and systems biology at such universities. VGTI Florida and the University of Miami are currently discussing the possibility of VGTI Florida faculty's also holding faculty appointments at the University of Miami. As agreed in the Funding Agreement (as hereinafter defined), VGTI Florida intends to develop outreach programs directed at local schools and community colleges, including summer internships for high school students and undergraduate students. In addition, VGTI Florida expects to create opportunities for the continuing education of local teachers, including internships, presentations by VGTI Florida faculty, and opportunities to tour and learn about VGTI Florida's research facility. Job Creation Plan Pursuant to the Funding Agreement, VGTI Florida is required to employ at least 200 individuals by June 30, 2018. However, VGTI Florida expects to attain such number of employees by June 30, 2016 based on the Borrower Operating Cash Flows. As of April 1, 2010, VGTI Florida employed six (6) scientific faculty members, twenty (20) scientific staff and ten (10) administrative and support staff. Management of VGTI Florida has estimated that twenty (20) principal investigators at VGTI Florida would require that an additional 180 personnel be hired by VGTI Florida (including research, administrative, building maintenance, janitorial and security personnel. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

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_________________

12

42

30

4 20 6

2011

89

47

4 35 8

2012

127

38

4 30 4

2013

165

38

4 30 4

2014

183

18

1 16 1

2015

190

7

1 5 1

2016

195

5

0 5 0

2017

200

5

0 5 0

2018

200

200

20 150 30

Total as of June 30, 2018

* As defined in the OTTED Funding Agreement. See "OTTED Funding Agreement." ** For more information regarding Principal Investors/Faculty, Scientific Staff and Administrative and Support Staff, please see "APPENDIX E – BORROWER OPERATING CASH FLOWS" attached to the Official Statement.

(1) Salary Range for Principal Investigators is $80,000 to $200,000. (2) Salary Range for Scientific Staff is $40,000 to $80,000. (3) Salary Range for Administrative and Support Staff is $30,000 - $100,000.

6

6

6

Total New Jobs

Cumulative Number of New Jobs

1 2 3

1 2 3

Principal Investigator(1) Scientific Staff(2) Administrative and Support Staff(3)

2010

2009

Job Category

Job Creation - Funding Agreement (Fiscal Years Ending June 30,)

The tables below set forth the number of jobs* by job category and the total jobs created annually and cumulatively (a) as of June 30, 2009, (b) anticipated to be created to meet the requirements of the Funding Agreement for each fiscal year ending June 30, 2010 through June 30, 2018 and the total number of jobs as of June 30, 2018 and (c) anticipated to be created pursuant to the Borrower Operating Cash Flows attached to the Official Statement as APPENDIX E for each fiscal year ending June 30, 2010 through June 30, 2019 and the total number of jobs as of June 30, 2019**:

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6

Cumulative Number of New Jobs

82

29

3 3 23

2011

106

24

3 0 21

2012

115

9

4 0 5

2013

153

38

0 0 38

2014

171

18

1 0 17

2015

200

29

3 0 26

2016

* Includes two (2) jobs created in Fiscal Year 2008.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

(1) Salary Range for Faculty is $100,000 to $250,000 (excluding the Executive Director and Chief Scientific Officer). (2) Salary Range for Scientific Staff is $40,000 to $80,000. (3) Salary Range for Administrative and Support Staff is $25,000 - $150,000.

_________________

47

6

Total New Jobs 53

5 5 37

1 1 4

2010

Faculty(1) Scientific Staff(2) Administrative and Support Staff(3)

2009*

Job Creation – Borrower Operating Cash Flows (Fiscal Years Ending June 30,)

226

26

0 0 26

2017

244

18

0 0 18

2018

247

3

0 0 3

2019

247

20 9 218

Total as of June 30, 2018

Grant Funding The receipt of both federal and private foundation support particularly from NIH, as well as VGTI Florida's relationship with OHSU, is expected to serve as the foundation for the research grants for which VGTI Florida expects to apply in the future. NIH invests over $30.5 billion annually in medical research. More than 80% of NIH's funding is awarded through almost 50,000 competitive grants to more than 325,000 researchers at over 3,000 universities, medical schools, and other research institutions in every state and around the world. About 10% of NIH's budget supports projects conducted by nearly 6,000 scientists in its own laboratories, most of which are on the NIH campus in Bethesda, Maryland. As of April 1, 2010, VGTI Florida's grant portfolio consists of four existing NIH grants aggregating $2,446,089 for the period 2010 to 2014 and two existing Gates Foundation grants aggregating $1,190,356 for the period 2010 to 2012 transferred to it by Dr. Sékaly. In September 2009, VGTI Florida was awarded through OHSU a $3.8 million grant from NIH through National Institute of Drug Abuse ("NIDA") Avant-Garde Award Program for HIV/AIDS Research. Scheduled to commence in early 2010 this grant program (the "Avant-Garde Award") is intended to complement NIDA's traditional investigator-initiated grant programs and is designed to support individual scientists who (i) propose innovative solutions to challenges in HIV/AIDS biomedical and behavioral research relevant to drug abuse, and (ii) pursue research directions that are not typically supported by other NIH grant programs. Furthermore VGTI Florida expects to receive a subgrant from Fred Hutchinson Cancer Research Center in the amount of $506,336 (representing only direct costs) relating to a NIH grant. Like all research organizations, projects will be led by principal investigators. These scientists develop the basic ideas for the research and then propose such ideas to potential funding sources. It takes several years for a principal investigator to become fully funded, and even then not all of a principal investigator's costs are covered by grants. Additional funding is required to support a principal investigator's initial start-up costs and ongoing costs not covered by grants. In the case of VGTI Florida, its initial start-up costs are being funded by an Innovation Incentive Program Grant (see "OTTED Funding Agreement" in this APPENDIX C). Grants from non-federal sources follow a similar methodology except that many of these sources will not reimburse indirect costs or will reimburse them at a lower rate, requiring the organization to obtain other funding for the difference. VGTI Florida's principal investigators/faculty have experience in obtaining grants from NIH and other sources. Over the last five (5) years these principal investigators have obtained 37 new grants from NIH and other sources aggregating approximately $101,537,293. VGTI Florida intends to focus its recruitment efforts on recruiting additional principal investigators/faculty with similar track records. Grants and contracts from the federal government are normally awarded on a competitive and a cost-reimbursement basis and for multi-year projects with funding renewable on an annual basis. The grants pay a portion of the salary of a principal investigator's supporting researchers and staff and the cost of some of the equipment and supplies used for the research. Many research projects involve the subcontracting of a portion of research to other research organizations that may have specific skills or other resources needed for the project. The costs of the facilities, utilities, maintenance and administrative support for funded research are reimbursed through a negotiated overhead or indirect cost rate. In practice, not all costs are covered, and other sources of revenue are necessary to support the organization. VGTI Florida expects to obtain funds to cover start-up costs incurred prior to the receipt of grants and direct and indirect costs not covered by grants through the initiation of annual, capital and/or other fundraising activities and eventually from patents and other royalties. There can be no assurance as to whether these fundraising activities will succeed or as to whether patent and other royalties will

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materialize or whether they will be sufficient to cover any shortfall between grants obtained and costs incurred. A summary of the grants awarded or having been transferred to VGTI Florida as of April 1, 2010 is set forth below: Grants Office of Tourism, Trade and Economic Development EDA Grant* NIH Avant Garde Award NIH — Subcontracts Bill and Melinda Gates Foundation

$60,000,000 3,577,500 3,800,000 2,446,089 1,190,356

Total Grants Awarded

$71,013,945

*As hereinafter defined. See "THE BORROWER – EDA Grant" in this APPENDIX C. OTTED Funding Agreement The Florida Legislature established the Innovation Incentive Program pursuant to Section 288.1089, Florida Statutes (the "Innovation Incentive Program"), to ensure that sufficient resources are available to allow the State to respond expeditiously to extraordinary economic opportunities and to compete effectively for high-value research and development and incentive business projects. Pursuant to a written agreement (the "Funding Agreement") between VGTI Florida and the State of Florida, Executive Office of the Governor's Office of Tourism, Trade, and Economic Development ("OTTED") dated April 17, 2008 (the "Effective Date"), OTTED has found and determined that the establishment of VGTI Florida in the State will promote and support cutting edge vaccine and gene therapy research and development independently, as well as in cooperation with State and United States based universities and research institutes. The Funding Agreement entitles VGTI Florida to receive $60 million plus the investment income thereon (the "Incentive Funds") for purposes of establishing and operating a nonprofit research institute in the State pursuant to the Innovation Incentive Program, subject to the terms and conditions of the Funding Agreement. The Incentive Funds can be used in a manner that is consistent with the business plan, budget and Funding Agreement, as may be amended from time to time. The current business plan includes debt service on the Series 2010 Bonds. The Incentive Funds are disbursed in five (5) installments, provided that VGTI Florida has met the conditions for each disbursement and is otherwise not in default of the Funding Agreement. To date VGTI Florida has received $35 million of the $60 million in Incentive Funds from OTTED. The term of the Funding Agreement is twenty (20) years. The Funding Agreement requires several deliverables and imposes numerous covenants on VGTI Florida. By accepting the funds, VGTI Florida commits that by no later than the tenth (10th) anniversary of the Effective Date, it will have established at least 200 full time equivalent jobs and acquired at least $10 million in scientific equipment. VGTI Florida also must pay an agreed average wage that is not less than 130% of the average private sector wage in St. Lucie County, Florida, as reported annually by the Florida Agency for Workforce Innovation. As of the Effective Date, the agreed average wage was set at $42,278.60. The interim disbursement conditions and other covenants are intended to ensure that VGTI Florida meets these goals and that the Incentive Funds are used exclusively for the purpose of the establishment and development of a nonprofit research institute in accordance with the business plan submitted to OTTED. Failure to meet the disbursement conditions or a material breach of the covenants

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may result in denial or reduction of a disbursement request, termination of the Funding Agreement and, in the event of "Ceased Operations" as defined in the Funding Agreement, repayment of all disbursed but unspent funds remaining in VGTI Florida's accounts and enforcement of a security interest in such funds and in equipment purchased with Innovation Incentive Funds. In addition to the Funding Agreement, VGTI Florida entered into a Trust Agreement with OTTED and the State Board of Administration ("SBA"), as trustee for the benefit of VGTI Florida (the "Trust Agreement") and a Security Agreement (the "Security Agreement") and delivered a fully executed Account Control Agreement to perfect OTTED's security interest in the funds VGTI receives from OTTED. Account Control Agreements naming OTTED as the secured party also are in place with respect to financial institution accounts in which VGTI Florida deposits grant funds under the Funding Agreement. The Security Agreement also establishes a security interest in all equipment having a purchase price of more than $5,000 and purchased with Innovation Incentive Funds. The Security Agreement and the Funding Agreement carry a negative pledge clause, which prohibits VGTI Florida from granting any other person a security interest in the equipment subject to the security interest. The security interests expire on the tenth (10th) anniversary of the Funding Agreement or sooner if VGTI Florida achieves 200 new jobs. The Funding Agreement provides that $45 million of the total $60 million grant be placed in trust with the SBA, as trustee for the benefit of VGTI Florida. The remaining $15 million was disbursed in 2008 directly to VGTI Florida upon its execution and delivery of the above-described agreements. The second disbursement in the amount of $20 million was made by OTTED to VGTI Florida on August 27, 2009. The disbursement of $20 million was requested on May 7, 2010 and is expected to be received within thirty (30) days after the receipt of such request, leaving $5 million plus investment interest remaining. The third disbursement in the amount of $20 million is expected to be requested in June 2010, or earlier if the disbursement conditions are met sooner. The fourth disbursement in the amount of $5 million is expected to be requested in June 2011, or earlier if the disbursement conditions are met sooner. The final disbursement consists of all funds in trust that were not previously disbursed to VGTI Florida, which is anticipated to consist exclusively of the investment income on the undisbursed funds. It is expected to be disbursed in June 2018. The disbursements are not subject to legislative appropriation. As structured, the equitable title to the funds is in VGTI Florida as beneficiary of the trust. The funds held in trust are invested in accordance with an investment profile provided by VGTI Florida to the SBA. All interest or investment income resulting from such investment is the property of VGTI Florida and is to be distributed to it in accordance with the terms of the Funding Agreement. However, in the event of material default, VGTI Florida can lose the right to have the undisbursed funds, including investment income, disbursed to it. In addition to the specific conditions for the respective disbursement requests described above, VGTI Florida also must comply with reporting and audit requirements imposed by the Funding Agreement. These include annual operational reports, an annual science report, audited and unaudited financial statements, any changes proposed to the business plan, and a legal opinion supporting each disbursement request. The obligation to provide audited financials, an annual science report and an annual operations report continues through the end of the twenty-year term of the Funding Agreement.

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OTTED must approve the disbursement requests, unless a "Material Default" occurs. The following defaults under the Funding Agreement are Material Defaults: an uncured default under the Security Agreement; VGTI Florida's loss or suspension for a period exceeding 120 days of federal funding that would be reasonably expected to have a material adverse effect (as defined in the Funding Agreement) on VGTI Florida's operations; loss or suspension for a period exceeding 120 days of a license that VGTI Florida requires for operations; the filing of a voluntary petition in bankruptcy or of an involuntary petition in bankruptcy that is not dismissed within 60 days; court-determined insolvency; a material failure to provide required information in the annual audited financial statements, operations report or scientific report (that is not cured within 30 days of notice) required under the Funding Agreement; a material misrepresentation in any disbursement request; failure to commit in writing each year to remain in Florida for the next succeeding year; loss of VGTI Florida's tax exempt status; or "Ceased Operations," which the Funding Agreement defined as the failure of VGTI Florida to create at least 50% of the total jobs it was projected to have created following the third disbursement. In the event of Ceased Operations, OTTED may direct the SBA not to disburse funds, may terminate the Funding Agreement, may dissolve the Trust Agreement and may require VGTI Florida to repay any Incentive Funds remaining in the pledge account (i.e., the account that holds amounts disbursed, which account is subject to a pledge/security agreement) that have not been spent, less the costs of winding down its operations. The wind-down plan must be approved by OTTED. Ceased Operations is the only instance under the Funding Agreement in which VGTI Florida may be required to repay disbursed funds back to OTTED. As long as there are no Ceased Operations, if VGTI Florida falls short of its job creation goals, agreed average wage or expenditure goals, OTTED may still approve a disbursement request, but the Funding Agreement provides a formula for reducing the amount of the disbursement until the goals are brought current. EDA Grant VGTI Florida has been granted an Economic Assistance Adjustment grant from the United States Department of Commerce, Economic Development Administration (the "EDA") in the amount of approximately $3,577,500 million (the "EDA Grant"). The EDA Grant requires that VGTI Florida provide matching funds in an amount equal to the EDA Grant. Any funds received from the EDA Grant will be applied toward Building (as hereinafter defined) enhancements. See "THE SERIES 2010 PROJECT" in this APPENDIX C. Upon disbursement of funds to VGTI Florida under the EDA Grant, VGTI Florida will grant a mortgage on the Land (as hereinafter defined) and Building to the EDA which mortgage will be pari pasu with the mortgage securing the Series 2010 Bonds. To establish the relative priorities between the EDA, the City and the Trustee under the Mortgage, the EDA, the City and the Trustee will enter into an Intercreditor Agreement (the "Intercreditor Agreement"). The Intercreditor Agreement will provide that upon any enforcement of the security interest under the Mortgage and any sale of the Mortgaged Property, as such terms are defined in the forepart of this Official Statement, the proceeds will be distributed between the EDA and the Trustee on a pro rata basis in accordance with their respective interests.

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In-Kind Contributions In addition to the grants described above, as of April 1, 2010 VGTI Florida has received in-kind contributions from the City and County with an estimated value of $57,558,400 as summarized below:

Contributor City of Port St. Lucie City of Port St. Lucie City of Port St. Lucie City of Port St. Lucie St. Lucie County

In-Kind Contributions From City and County Contribution Infrastructure Impact Fee Abatement EDA Grant Guarantee Rent Concessions (3 years) Impact Fee Abatement

Total

Value $50,000,000 300,000 3,577,500 3,432,000 248,900 $57,558,400

Borrower Operating Cash Flows The Borrower Operating Cash Flows, dated May 12, 2010 in APPENDIX E to this Official Statement, has been prepared by VGTI Florida and sets forth financial results of VGTI Florida for its fiscal years ended June 30, 2008 and June 30, 2009 and financial forecasts for its fiscal years ending June 30, 2010 to June 30, 2019, inclusive. The Borrower Operating Cash Flows includes for each year principal elements of receipts and disbursements, changes in VGTI's Florida's cash balances, certain financial ratios and a series of supporting schedules and the assumptions upon which these schedules are based. The Borrower Operating Cash Flows has been prepared on a cash basis and is not intended to be consistent with the presentation format used in VGTI-Florida's audited financial statements. It projects that VGTI Florida will be required to fund the excess of total disbursements (which include debt service on the Series 2010 Bonds) over operating and non-operating receipts from its balance of cash and investments, which has been or will be provided principally from the OTTED grant, through the fiscal year ending June 30, 2016. The Borrower Operating Cash Flows further projects that, as of June 30, 2016, VGTI Florida's cash balance will be approximately $4,720,927 and thereafter that operating and non-operating receipts will exceed disbursements (including Series 2010 Bond debt service) and VGTI Florida's cash balances will increase. While VGTI Florida's management believes that the assumptions upon which the Borrower Operating Cash Flows' projected financial results are based were reasonable as of the date of the Borrower Operating Cash Flows, there can be no assurance that the assumptions or resulting projections will correspond to what actually may occur. Future operating and non-operating receipts and disbursements may be materially greater or less than what has been projected. Accordingly, there can be no assurance that operating and non-operating receipts will be sufficient to pay total disbursements, including debt service on the Series 2010 Bonds, or that such sufficiency, if and when achieved, will occur before exhaustion of cash and investment balances available to fund any shortfall. See "APPENDIX E – BORROWER OPERATING CASH FLOWS" and "BONDHOLDERS' RISKS" in the forepart of this Official Statement.

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THE SERIES 2010 PROJECT The Series 2010 Project Proceeds of the Series 2010 Bonds will be applied to finance a portion of the Series 2010 Project, consisting of that certain land located at 9801 Discovery Way, Port St. Lucie, Florida 34987 in Port St. Lucie, St. Lucie County, Florida (the "Land") and an approximately 99,000 gross square foot building to be constructed on such Land (the "Building") to be used for biomedical and other scientific research, development, training and educational facilities, including, without limitation, related office, administrative and ancillary space, laboratory suites, research laboratory offices, conference rooms, lecture halls, and associated support systems, parking facilities and infrastructures improvements relating thereto, together, without limitation, furniture, fixtures and equipment related thereto The Series 2010 Project will be part of an approximately 150-acre biomedical research park in the City known as Florida Center for Innovation at Tradition (the "Research Park"), as more fully described below. The Building will be comprised of three (3) occupied levels and mechanical penthouses on the fourth level as follows: (a) nine (9) biochemistry laboratory suites (each with an associated tissue culture suite), (b) vivarium with two (2) associated laboratory spaces; (c) one (1) laboratory suite with three (3) individual laboratory spaces, (d) laboratory support spaces for equipment, glass wash area and gas cylinder storage, (e) core laboratory suites for genomics, flow cytometry, bioinformatics and mass spectrometry proteomics/metabolomics, and imaging, (f) break room, main lecture hall, conference room and administrative offices, (g) research laboratory offices, (h) core spaces, including loading dock, receiving areas, restrooms, electric rooms, stairs, intermediate distribution frame and main distribution frame rooms, and janitor's closet, (i) mechanical penthouse build out, and (j) 249 parking spaces. The Building is expected to be completed by January/February 2012 provided construction is commenced in June 2010. Status of Permits The Army Corps of Engineers has given permit approval to commence wetland mitigation on the Land and the South Florida Water Management District has approved commencement of mass grading activities on the Land. The Series 2010 Project team submitted an application to the City for site plan approval on June 3, 2009, and site related permits are expected to be ready by late June 2010. Building permits are expected to be applied for in mid May 2010, and are expected to be received by late June 2010. Construction Contract and Project Management Agreement Construction Contract. A design/build agreement (the "Design/Build Agreement") was executed with Whiting-Turner Contracting Company ("Whiting-Turner") as of May 29, 2009 for construction of the Building. The Building included in the Series 2010 Project is currently at the conclusion of schematic design stage and a guaranteed maximum price equal to $36,000,000 ("GMP") was agreed to on October 15, 2009. VGTI Florida has required a Performance Bond under the Design/Build Agreement equal to 100% of the GMP. Whiting-Turner is an employee-owned firm providing construction management, general contracting, and design/build services, primarily for large commercial, institutional, and infrastructure projects in the United States. Whiting-Turner undertakes such projects as retail construction,

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biotechnology clean rooms, theme parks, educational facilities, stadiums, and corporate headquarters for such clients as AT&T and General Motors. Whiting-Turner has approximately thirty (30) locations throughout the United States. More information on Whiting-Turner can be found at its website, http://www.whiting-turner.com. Project Management Agreement. Project management for the Series 2010 Project will be provided under a Project Management Agreement (the "Project Management Agreement") was entered into on December 15, 2009 with the Mann Research Center LLC ("MRC"). MRC was formed by Alfred E. Mann, a biotechnology entrepreneur and philanthropist. In addition to serving as VGTI Florida's project manager, MRC intends to develop its own approximately 22 acre complex at the Research Park, with approximately 290,000 gross square feet of research and development space that is expected to complement programs at VGTI Florida and other present and future Research Park tenants. MRC has engaged individuals previously employed by the developers of Tradition (as hereinafter defined) to oversee the project management services to be provided by MRC in connection with the Series 2010 Project. Infrastructure Improvements VGTI Florida will cause certain infrastructure improvements to be completed with proceeds of the Series 2010 Bonds and amounts provided by VGTI Florida including a gravity sewer main, sewer manholes, storm water lake excavation and related earthwork, and storm water lake control structure (the "Infrastructure Improvements"). Biomedical Research Park VGTI Florida has obtained the following information regarding the other anchor institutions described below and other biomedical research centers described below from various sources which may or may not have obtained such information directly from the institutions or entities named. Accordingly, VGTI Florida is not responsible for the accuracy or completeness of such information set forth below. The Research Park, currently under development, will be comprised of approximately 150 acres and will be part of the 8,300-acre master-planned community of Tradition in the City ("Tradition"). The Research Park is located in the City between Orlando and West Palm Beach, both of which are the home to scientific research facilities. It is hoped that the Research Park will facilitate the growth of the region and will ultimately attract the attention of the international biotechnology community. The Research Park is expected to be comprised of the following four (4) anchor institutions, which are all property owners: (i) VGTI Florida; (ii) TPIMS; (iii) MRC; and (iv) Martin Memorial. A Hilton Hotel Homewood Suites by Hilton Hotels opened November 2009, and additional hotel, restaurants and retail facilities are planned. TPIMS. TPIMS, with facilities in San Diego, California and the City, engages in research concentrating on Multiple Sclerosis, aging and Alzheimer's Disease, infectious diseases, pain, inflammation, diabetes, rheumatoid arthritis, transplant rejection, heart disease, women's health issues and many types of cancer. In January 2009, TPIMS occupied a second facility of approximately 107,000 gross square feet on an approximately 20 acre site in the Research Park, which now serves as its headquarters. As of April 1, 2010, TPIMS employed approximately 140 staff with almost half in the new Florida corporate headquarters. During its fiscal year ended June 30, 2009 and for the nine months ended March 31, 2010, TPIMS and its Florida facility had grant and contract revenue of $14,262,264 and $9,672,770, respectively. Of these amounts, $8,098,249 and $5,279,537, respectively, including certain grants for major equipment purchases associated with occupation of the new facility relate to the Florida

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facility. TPIMS is currently collaborating with VGTI Oregon on several projects and expects to expand such collaboration to VGTI Florida. It has developed a series of compound libraries that VGTI Florida expects will be of use in connection with their scientific assays. MRC. MRC is a single-purpose limited liability company which was established by Alfred E. Mann, for the purpose of becoming a development partner in the Research Park. MRC will be comprised of an approximately 22-acre multiple-tenant complex with approximately 290,000 gross square feet of research and development space in a variety of configurations. The research space is expected to consist of both wet and dry laboratory facilities and thus is expected to be able to host organizations ranging from start-ups to mid-size research entities. In addition, approximately 100,000 gross square feet for medical offices and approximately 10,000 gross square feet for supporting retail entities is expected to be located on the six (6)-building campus. MRC is currently in lease negotiations with a research and development institute, expects to initiate a new marketing plan during the second calendar quarter of 2010 and is assisting Martin Memorial on its master plan for the hospital and medical office building. Martin Memorial. Martin Memorial is a not-for-profit, community-based health care system based in Stuart, Florida located approximately 11 miles from the City. Martin Memorial operates two acute care community hospitals in Stuart, Florida (one with 344 licensed beds and one with 100 licensed beds), three (3) Medicenters, and various other centers and clinics. Martin Memorial received certificate of need approval in June 2007 for the construction of an 80-licensed bed hospital in Tradition, to serve the residents of the western part of the City which hospital is currently expected to open in 2013. Although Martin Memorial won its first level certificate of need appeal, the Martin Memorial project is still under appeal and is expected to be reviewed in September 2010. There is no guarantee when or if certificate of need approval will be obtained. Martin Memorial desires to assist in bringing medical discoveries from laboratory to the bedside (especially in the case of cancer research) by participating in clinical trials. Martin Memorial is affiliated with the H. Lee Moffitt Cancer Center, Tampa, Florida ("Moffitt"), a National Cancer Institute Comprehensive Cancer Center consisting of 206 licensed beds. Such affiliation enables Martin Memorial to collaborate with the cancer specialists at Moffitt and provide its doctors and patients greater access to the latest research, drug protocols and treatments. The Martin Memorial hospital to be developed at the Research Park is expected to include a unit for conducting Phase 1 (i.e., safety) clinical trails. Sales and Marketing Approximately 34 acres of undeveloped land remain in the Research Park that are expected to be used for bio-science research development. The owner of this land has entered into an agreement with Florida Innovation Partners, LLC, a wholly-owned subsidiary of VGTI Florida ("FIP"), for the marketing of this land. The subsidiary has an advisory board comprised of one representative each from VGTI Florida, TPIMS, MRC and Martin Memorial. Upon closing on the Series 2010 Bonds, FIP will have approximately $542,000 on deposit earmarked for the conduct of such marketing efforts. Regional Research Centers In addition to the anchor institutions within the Research Park described above, there are other biotechnology research centers operating within the South and Central geographic region of the State, including Scripps Florida, Max Planck Florida Institute and Sanford Burnham Medical Research Institute. Scripps Florida. Scripps Florida is the permanent east coast facility for The Scripps Research Institute ("TSRI"), La Jolla, California. It is located in Jupiter, Florida approximately 35 miles from the Research Park. Scripps Florida commenced operations in 2006 and moved into its current facilities in

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February 2009. As of September 30, 2009, approximately 334 full-time equivalent ("FTE") scientists, technicians and other employees currently are located at this facility. (Source: OTTED (April 2010)). During the year ended September 30, 2009, TSRI and Scripps Florida had grant and contract revenue of $266.8 million and $66.3 million, respectively, including grants to Scripps Florida from OTTED (Source: TSRI Audited Financial Statements for the Year Ended September 30, 2009). Max Planck Florida Institute. The Max Planck Society (the "Society") is a non-profit German research organization under private law. Within the German research system, its mandate is to carry out basic research at the highest international level in selected areas of the natural sciences and humanities in its own research institutes, most of which are located in Germany. The Society's 78 institutes and research facilities currently employ more than 12,600 people, including 4,400 scientific staff. In addition, there are more than 11,300 students, Ph.D. students, post doctoral fellows and guest scientists studying and researching at Society institutes. In 2007, the Society approved the establishment of an institute in Florida through the non-profit Max Planck Florida Corporation, which would be the Society's fourth facility outside of Germany and its first center in the United States. In 2009, Max Planck Florida Institute began operating in temporary space on the campus of FAU in Jupiter, Florida, where it plans to build a 100,000 square foot research facility that will employ 135 scientists and staff. Max Planck Florida Institutes has indicated that it intends to focus its Florida-based scientific activities on bio-imaging, using the most advanced techniques for visualizing microscopic molecular processes. It is linked to scientific research worldwide and has indicated it intends to make its network available to its partners in Florida. Sanford Burnham Medical Research Institute. Sanford-Burnham Medical Research Institute ("Sanford-Burnham"), with facilities in Santa Barbara, California and in the "Medical City" located in Lake Nona, Orlando, Florida, has established major research programs in cancer, neurodegeneration, diabetes and infection, inflammatory and childhood diseases (including, stem cell research). The Lake Nona facility, occupied in March 2009, comprises approximately 175,000 gross square feet and houses the "Sanford-Burnham Diabetes and Obesity Research Center" and the "Conrad Prebys Center for Chemical Genomics" ultra-high throughput chemical screening center. As of December 31, 2009, Sanford-Burnham employed approximately 123 scientists, technicians and other employees at the Lake Nona facility (Source: OTTED (April 2010)). During the fiscal year ended June 30, 2009, SanfordBurnham had federal, private and other governmental grants and contracts revenues of $96.8 million, of which the Lake Nona facility represented $3.5 million, exclusive of a $20.7 million OTTED grant (Source: Sandford-Burnham Audited Financial Statements for the Year Ended June 30, 2009). Purchase of the Land and Infrastructure Improvements VGTI Florida purchased the Land from Horizons St. Lucie Development, LLC (the "Seller"), agreed to reimburse the Seller for certain infrastructure improvements allocable to the Land and agreed to pay for the Infrastructure Improvements pursuant to an Agreement for Purchase and Sale Agreement having an effective date of May 11, 2009, as amended (the "Purchase and Sale Agreement"). At the closing for the purchase of the Land, the purchase price for the Land paid by VGTI Florida to the Seller was the nominal amount of $10.00. However, in addition to the nominal purchase price, VGTI Florida became obligated under the Purchase and Sale Agreement, at the closing of the issuance of the Series 2010 Bonds, to (i) pay to the Seller, the amount of $3,173,890.50, representing the reimbursement of the Seller for the costs of certain public infrastructure improvements which are allocable to the Land and have been or will be constructed by Seller or its affiliates, and (ii) cause $432,468 of the proceeds of the Series 2010 Bonds to be used by VGTI Florida to construct certain of the Infrastructure Improvements to be funded by the Series 2010 Bonds, consisting of sewer and stormwater improvements and related earthwork. Other Infrastructure Improvements needed to serve the Land at an approximate cost of $298,983 will be paid for by VGTI Florida. VGTI Florida has secured its unpaid obligation to the Seller by a mortgage on the Land.

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Certain of the Infrastructure Improvements and other infrastructure improvements relating to the Land will be owned by the City or other governmental entities and, with respect to components not financed by the Series 2010 Bonds, private entities other than VGTI Florida. Title to the Land is subject to various easements, covenants, conditions and restrictions of record, including, without limitation, the commercial covenants and conditions applicable to Tradition, which provide for the owners of parcels to pay certain community fees and assessments. As the owner of the Land, VGTI Florida is required to pay applicable real estate taxes and taxes and assessments imposed or to be imposed by any applicable community development districts and/or special assessment districts. The Land is restricted for a period of thirty (30) years to the development of not more than approximately 130,000 square feet of net floor area, with a building height not to exceed seventy-five (75) feet, for the development, operation and maintenance of a biomedical research institute and campus for biomedical and other scientific research, training and education primarily involved with vaccine and gene therapy research and development and related biomedical research, and medical related uses, together with related office uses with ancillary uses VGTI Florida's employees and guests consistent with VGTI Florida's obligations under the Series 2010 Bonds along with other related uses necessary for the accomplishment of this purpose, and for other lawful uses as the Seller may approve in writing. The Purchase and Sale Agreement provides that the Land must be developed by VGTI Florida within three (3) years after the issuance of the Series 2010 Bonds in accordance with the design guidelines for Tradition, and the plans for the development of the Land are subject to the Seller's prior written approval which approval has been received in connection with the preliminary plans. The Purchase and Sale Agreement and a related agreement obligate VGTI Florida to purchase water required for irrigation of the Land from an affiliate of the developer of the Research Park.

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APPENDIX D

BORROWER AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009

(THIS PAGE INTENTIONALLY LEFT BLANK)

OREGON HEALTH AND SCIENCE UNIVERSITY VACCINE AND GENE THERAPY INSTITUTE FLORIDA CORP. Financial Statements June 30, 2009 (With Independent Auditors’ Report Thereon)

(THIS PAGE INTENTIONALLY LEFT BLANK)

Independent Auditors’ Report

The board of directors Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp.: We have audited the accompanying statement of financial position of Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. (VGTI) as of June 30, 2009, and the related statements of activities and cash flows for the year then ended. These financial statements are the responsibility of VGTI’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of VGTI’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. as of June 30, 2009, and the changes in its net assets and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

September 29, 2009, except for footnote 7, which is as of April 26, 2010

KPMG LLP is a Delaware limited liability partnership, the U.S. member firm of KPMG International Cooperative (“KPMG International”), a Swiss entity

OREGON HEALTH AND SCIENCE UNIVERSITY VACCINE AND GENE THERAPY INSTITUTE FLORIDA CORP. Statement of Financial Position June 30, 2009 Assets Assets: Cash and cash equivalents Prepaids and other

$

Total current assets

10,447,329 281,959 10,729,288

Long-term deposit Property, plant and equipment, net

300,000 8,693,166

Total assets

$

19,722,454

$

1,238,450 142,146 3,905,342 24,958

Liabilities and Net Assets Liabilities: Accounts payable Accrued liabilities Short-term promissory note Current portion of long-term debt Total current liabilities

5,310,896

Deferred revenue Long-term debt, net of current portion

3,728,004 1,990,388

Total liabilities

11,029,288

Net assets: Unrestricted

8,693,166

Total liabilities and net assets

$

See accompanying notes to financial statements.

2

19,722,454

OREGON HEALTH AND SCIENCE UNIVERSITY VACCINE AND GENE THERAPY INSTITUTE FLORIDA CORP. Statement of Activities Year ended June 30, 2009 Revenues, gains, and other support: Grant revenue

$

Total revenues, gains, and other support

11,270,179 11,270,179

Operating expenses: Salaries and wages Supplies Purchased services Maintenance and repairs Utilities and related expenses Rentals and leases Other expenses Depreciation

595,680 121,669 1,224,731 28,162 18,639 351,149 302,580 75,068

Total operating expenses

2,717,678

Increase in net assets from operations

8,552,501

Nonoperating income: Investment income

140,665

Total nonoperating income

140,665

Total increase in net assets

8,693,166 —

Net assets at beginning of year Net assets at end of year

$

See accompanying notes to financial statements.

3

8,693,166

OREGON HEALTH AND SCIENCE UNIVERSITY VACCINE AND GENE THERAPY INSTITUTE FLORIDA CORP. Statement of Cash Flows Year ended June 30, 2009 Cash flows from operating activities: Total increase in net assets Adjustments to reconcile total increase in net assets to net cash used in operating activities: Depreciation Changes in: Prepaids and other assets Long-term deposit Accounts payable Accrued liabilities Deferred revenue

$

8,693,166 75,068 (281,959) (300,000) 445,771 142,146 (11,271,996)

Net cash used in operating activities

(2,497,804)

Cash flows from investing activity: Capital expenditures

(2,054,867)

Net cash used in investing activity

(2,054,867)

Cash flows from financing activity: Proceeds from Florida State grant

15,000,000

Net cash provided by financing activity

15,000,000

Net increase in cash and cash equivalents

10,447,329 —

Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental disclosures of noncash financing activity: Land purchased through issuance of promissory note Special assessment district note to fund land improvements Property additions included in accounts payable See accompanying notes to financial statements.

4

$

10,447,329

$

3,905,342 2,015,346 792,679

OREGON HEALTH AND SCIENCE UNIVERSITY VACCINE AND GENE THERAPY INSTITUTE FLORIDA CORP. Notes to Financial Statements June 30, 2009

(1)

Organization and Summary of Significant Accounting Policies (a)

Organization Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. (VGTI) is a not-for-profit corporation, formed March 11, 2008, which received its initial funding on July 1, 2008. VGTI is a research institute that synergizes existing and future research and medical institutes, companies and universities in the Treasure Coast region of Florida to produce next generation research through a nucleus of world-class scientific researchers to form the foundation for the development of a biotech center that endeavors to rival other biotech clusters around the country.

(b)

Cash Equivalents For purposes of the financial statements, VGTI considers all liquid investments having maturities of three months or less at the time of purchase to be cash equivalents.

(c)

Property, Plant, and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided using the straight-line method over the shorter of the lease term or the useful lives as follows: Leasehold improvements Equipment and furniture Land improvements

3 years 3 - 15 years 20 years

VGTI periodically reviews the carrying amount of their long-lived assets whenever events or circumstances provide evidence that suggests that the carrying amount of long-lived assets may not be recoverable. If this review indicates that long-lived assets may not be recoverable, VGTI reviews the expected undiscounted future net operating cash flows from the use of these assets. If such assets are considered to be impaired, the impairment in value is recognized as a charge in the statements of activities. The impairment charge is the difference between the carrying amount of the long-lived asset and its fair value. As of June 30, 2009, VGTI does not believe that there is any indication that the carrying value of its long-lived assets has been impaired. (d)

Deferred Revenue and Revenue Recognition Deferred revenue represents amounts provided by the State of Florida for research efforts for which the related qualified research expenditures have not yet been incurred. Grant revenue is recognized as related qualified research expenditures are incurred. The collectibility of the accounts receivable is assessed periodically and a provision for doubtful accounts is recorded as considered necessary.

(e)

Concentration of Revenue All revenue in the current year is the result of a grant agreement with the State of Florida. The State of Florida has agreed to provide VGTI a total of $60 million in funding for operations and acquisition of capital equipment, of which $15 million has been received. Distribution of the

5

(Continued)

OREGON HEALTH AND SCIENCE UNIVERSITY VACCINE AND GENE THERAPY INSTITUTE FLORIDA CORP. Notes to Financial Statements June 30, 2009

remaining undistributed grant funds is contingent on VGTI meeting certain performance requirements, including creation of stated numbers of jobs. (f)

Income Taxes The Internal Revenue Service has recognized VGTI as tax exempt under Internal Revenue Code Section 501(c)(3) except to the extent of unrelated business income tax under the Internal Revenue Code. There is no unrelated business income, and therefore, no provision for income tax is reflected in the accompanying financial statements.

(g)

Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(h)

Recently Adopted Accounting Standards In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a threshold of more-likely than-not for reorganization of tax benefits of uncertain tax positions taken or expected to be taken in a tax return. FIN 48 also provides related guidance on measurement, derecognition, classification, interest and penalties, and disclosure. The provisions of FIN 48 were effective for VGTI on July 1, 2008. As VGTI is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code as a public charity and is generally not subject to federal or state income taxes, the adoption of FIN 48 did not have a material impact on VGTI’s financial statements.

(2)

Property, Plant, and Equipment Property, plant, and equipment, net, consist of the following as of June 30, 2009: Land Land improvements Leasehold improvements Equipment and furniture Construction in process

$

10 5,987,590 420,575 1,935,642 424,417 8,768,234

Less accumulated depreciation

(75,068) $

6

8,693,166

(Continued)

OREGON HEALTH AND SCIENCE UNIVERSITY VACCINE AND GENE THERAPY INSTITUTE FLORIDA CORP. Notes to Financial Statements June 30, 2009

(3)

Debt Debt payable consists of the following as of June 30, 2009: Short-term promissory note due December 21, 2009, interest payable at 0% per annum until due date, 12% per annum thereafter Special assessment district note, interest payable at 6.12%, due in annual payments of $148,298 in 30 annual installments

$

3,905,342 2,015,346

$

5,920,688

The short-term promissory note’s proceeds are being used to prepare VGTI’s land for construction of their new facility. Management intends to refinance the short-term promissory note with the proceeds of a tax-exempt bond offering, final size to be determined, which will also include new money to fund construction of VGTI’s primary facility. The issuance of this debt is planned to occur in late October or November of 2009 with construction commencing in December of 2009. The facility is currently expected to be operational in the July 2011. The special assessment district note is for local land improvements that will be maintained by the local government, such as streets, pavement, streetlights, sewers, and drainage systems. Scheduled principal repayments on long-term debt are as follows: Fiscal year: 2010 2011 2012 2013 2014 Thereafter

(4)

$

24,958 26,485 28,106 29,826 31,652 1,874,319

$

2,015,346

Commitments and Contingencies (a)

Management Agreement VGTI has a memorandum of understanding with Oregon Health & Science University (OHSU) (a related party). The agreement, which includes services such as accounting, payroll, information technology and management services, is in effect for an indefinite term, until terminated by either party. Fees for these services amounted to $222,277 in 2009 and are included in purchased services in the accompanying statement of activities.

7

(Continued)

OREGON HEALTH AND SCIENCE UNIVERSITY VACCINE AND GENE THERAPY INSTITUTE FLORIDA CORP. Notes to Financial Statements June 30, 2009

(b)

Building Lease VGTI leases their primary research facility from the Torrey Pines Institute for Molecular Studies, Inc. for a term of three years under an operating lease agreement. VGTI has the right to extend the term for an indeterminate period, based on specific criteria. VGTI’s rental agreement is to pay 1/3 of operating costs based on an annual budget which is then reconciled to actual cost at year-end. These actual costs are then used to determine a new monthly rental amount for the next year. Total rent expense under this building lease was approximately $342,000 in 2009 and is included in rentals and leases in the accompanying statement of activities.

(c)

Legal Proceedings From time to time, VGTI may be involved in various claims and legal actions arising in the ordinary course of business. Liabilities are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. VGTI’s management is not aware of any current legal proceedings or claims.

(5)

Related-Party Transactions VGTI was created by the founders of The Vaccine and Gene Therapy Institute at Oregon Health and Science University, a component unit of OHSU. VGTI is a related party to OHSU, but does not consolidate into OHSU’s financial statements as OHSU does not control VGTI. VGTI has entered into a management agreement with OHSU (see note 4). Per the terms of VGTI’s by-laws, OHSU must occupy two of the five board of directors’ positions, and OHSU will receive the rights to any and all intellectual property developed by OHSU. Related-party accounts payable balances, relating to its management agreement with OHSU, totaled $227,277 as of June 30, 2009, respectively. This amount is included in accounts payable in the accompanying statement of financial position. Other related-party transactions include professional service contracts between employees of OHSU and VGTI, including management services of $250,000 and VGTI advisory board fees of $125,400.

(6)

Subsequent Events The Company has evaluated the impact of subsequent events through September 29, 2009, the date on which the financial statements were issued, and has determined that all subsequent events have been appropriately reflected in the accompanying financial statements.

(7)

Correction Subsequent to issuance of the VGTI financial statements on September 29, 2009, it was determined that a mathematical error was made in the presentation of the cash flows from investing activities whereby the cash flows from investing activities, specifically capital expenditures, were presented as a total cash outflow of $2,497,804, rather than the appropriate total cash outflow of $2,054,867. The financial statements have been revised to reflect these appropriate amounts.

8

APPENDIX E

BORROWER OPERATING CASH FLOWS

(THIS PAGE INTENTIONALLY LEFT BLANK)

VGTI Florida Operating Cash Flows May 12, 2010

bJN

Table of Contents Introduction .................................................................................................................................................................. 3  Overview of VGTI Florida ............................................................................................................................................ 3  Overview of VGTI Florida Operating Cash Flows ...................................................................................................... 4  Schedule 1: Debt Service Coverage Ratios and Ending Cash Balances ................................................................ 4  Schedule 2 and Schedule 3: Net Receipts Projections ............................................................................................. 5  VGTI Florida Projected Receipts ................................................................................................................................ 5  Operating Receipts ................................................................................................................................................. 5  Direct Awards ...................................................................................................................................................... 5  Indirect Awards ................................................................................................................................................... 5  Fundraising ......................................................................................................................................................... 6  Royalties ............................................................................................................................................................. 6  Non-Operating Receipts ......................................................................................................................................... 6  State of Florida Funds ......................................................................................................................................... 6  Income on Innovation Incentive Funds ................................................................................................................ 6  Investment Income on VGTI Florida Funds ......................................................................................................... 6  TPIMS Security Deposit and Interest .................................................................................................................. 6  Transfer from Cash Balance....................................................................................................................................... 6  VGTI Florida Projected Disbursements ...................................................................................................................... 6  Salary and OPE Disbursements ............................................................................................................................. 7  Grant ................................................................................................................................................................... 7  Faculty................................................................................................................................................................. 7  Scientific Support ................................................................................................................................................ 7  Administration ..................................................................................................................................................... 7  Facilities .............................................................................................................................................................. 7  Non-Salary Disbursements ..................................................................................................................................... 7  Grant ................................................................................................................................................................... 7  Start-Up Research Funds.................................................................................................................................... 7  Capital Equipment ............................................................................................................................................... 8  Administration ..................................................................................................................................................... 8  Facilities .............................................................................................................................................................. 8  Net Receipts ............................................................................................................................................................... 8  Attachment A: VGTI Florida Cash Flows ................................................................................................................... 9 

The data and assumptions included in this document were provided by VGTI Florida. bJO

THE VGTI FLORIDA OPERATING CASH FLOWS IS NOT A FORECAST OR PROJECTION. IT IS BASED ON MANAGEMENT’S JUDGEMENT, ASSUMPTIONS AND EXPECTED COURSE OF ACTION STATED THEREIN AND IS BASED, IN PART, UPON THE ASSUMPTIONS THAT MAY OR MAY NOT OCCUR. NO ASSURANCE CAN BE GIVEN THAT THE VGTI FLORIDA OPERATING CASH FLOWS IS CORRECT OR PROVIDES FOR ALL THE CONTINGENCIES THAT MAY AFFECT SUCH VGTI FLORIDA OPERATING CASH FLOWS. NO ASSURANCE CAN BE GIVEN THAT ANY OF THE RESULTS OF OPERATIONS AS SET FORTH IN THE VGTI OPERATING CASH FLOWS WILL ACTUALLY BE ACHIEVED IN THE FUTURE.

Introduction Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. (“VGTI Florida”) was created with the oversight of the Oregon Health and Science University Vaccine and Gene Therapy Institute (“VGTI Oregon”), a division of Oregon Health and Science University (“OHSU”). VGTI Florida secured a major grant from the State of Florida in 2008 (the “Innovation Incentive Funds”) and formally commenced operations in 2009. VGTI Florida is currently operating in space rented from Torrey Pines Institute for Molecular Studies (“TPIMS”) and now seeks financing for a new research building (“the Building”) through the issuance of tax-exempt bonds. VGTI Florida recently applied for and was awarded an Economic Development Administration (“EDA”) grant in the amount of approximately $3.5 million. The funds will be used to enhance the Building. VGTI Florida developed the VGTI Florida Operating Cash Flows (“Model”), which is included as Attachment A. This memorandum contains a brief overview of the Model’s major assumptions. Personnel from VGTI Florida, VGTI Oregon, and OHSU administration developed the Model, and those parties provided the data and assumptions on which it is based. The Model describes what is currently expected to occur based on the assumptions specifically set forth herein. However, because there is no assurance that actual events will correspond with the assumptions made, there is no guaranty that the Model will correspond with the results actually achieved in the future.

Overview of VGTI Florida VGTI Florida is a not-for-profit Florida corporation and is exempt from federal income taxation under Section 501(a) of the Internal Revenue Code of 1986 (the “Code”) as an organization described in Section 501(c)(3) of the Code. VGTI Florida expects to generate future revenue through grants from and contracts with the Federal Government, primarily from the National Institutes of Health (“NIH”). In addition, VGTI Florida will pursue contributions to support its research from corporations, charitable foundations, and individuals. VGTI Florida also expects to receive royalties from any patents issued from the research it will conduct. Grants and contracts from the Federal Government are awarded on a competitive basis. Each project is led by a principal investigator (“PI”). These scientists develop the basic ideas for the research and then propose these ideas to the funding organizations. It typically takes several years for a PI to become fully funded, and even at that point, not all of the PI’s costs will be covered by grants. Additional funding is required to support a PI’s initial startup costs. In the case of VGTI Florida, the startup costs are expected to be covered by the Innovation Incentive Funds and funds raised from private donors. Grants from the Federal Government are normally awarded on a cost-reimbursement basis for multi-year projects with funding renewable on an annual basis. The grants pay a portion of the salaries of the PIs, supporting researchers and staff. In addition, the grants pay for some equipment and the supplies used for research. Many research projects involve the sub-contracting of a portion of research to other research organizations that may have specific skills or other resources needed for the project. The costs of the facilities, utilities, maintenance and administrative support are usually reimbursed through an overhead or indirect cost rate, which is typically negotiated with the organization’s cognizant agency every one to three years. In practice, not all costs are covered, and other

The data and assumptions included in this document were provided by VGTI Florida. bJP

sources of revenue are necessary to support the organization. To that end, VGTI Florida has included plans for a fund-raising program to supplement revenue it expects to generate from patents and royalties on their discoveries.

Overview of VGTI Florida Operating Cash Flows The Model contains a cash-basis projection of the receipts and disbursements associated with the first ten fiscal years (July 1, 2009 through June 30, 2019) of operation of VGTI Florida. These projections ultimately arrive at the expected debt service coverage ratios and ending cash balances for each fiscal year. Schedule 1 though Schedule 3 (“Summary Schedules”), which are described in further detail below, contain the summary calculations for debt service coverage, ending cash balances, and net receipts for each fiscal year. Schedule 4 through Schedule 20 (“Supporting Schedules”) contain supporting calculations for the Summary Schedules.

Schedule 1: Debt Service Coverage Ratios and Ending Cash Balances Projected debt service coverage ratios and cash balances are shown in the table below. These metrics speak to VGTI Florida’s ability to remain viable and repay the debt required to build its new research facility.

Fiscal  Year FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

Projection   Debt Service  Year Coverage Ratio  Actual N/A Actual N/A Year 1 N/A Year 2 N/A Year 3 N/A Year 4                          1.05 Year 5                          1.05 Year 6                          1.05 Year 7                          1.05 Year 8                          1.26 Year 9                          1.52 Year 10                          1.54

Beginning Cash Ending Cash (In Thousands) (In Thousands) $0 $15,000 $15,000 $10,400 $10,400 $35,100 $35,100 $35,700 $35,700 $24,700 $24,700 $12,500 $12,500 $7,000 $7,000 $7,200 $7,200 $4,700 $4,700 $5,900 $5,900 $8,300 $8,300 $10,800

The debt service coverage ratio is calculated by dividing the net cash flow from all sources plus planned transfers from the balance of the Innovation Incentive Funds by the amount of debt service. It is VGTI Florida’s policy to keep its debt service coverage ratio equal to or greater 1.05 each year. Thus, if net cash receipts (“Net Receipts” as discussed further below) are not equal to 1.05 times the annual debt service, an amount is

The data and assumptions included in this document were provided by VGTI Florida. 4

bJQ

made available from the cash reserve to fund debt service (“Transfer from Cash Balance” as discussed further below). As the table shows, ending cash balances generally trend downward until Fiscal Year 2017, when VGTI Florida’s research award portfolio is better able to support its operational expenses.

Schedule 2 and Schedule 3: Net Receipts Projections Schedule 2 is the summary of the net receipts projection. Schedule 3 contains a detailed projection of all receipts and disbursements, and the narrative hereafter follows the line-by-line flow of Schedule 3, referring specifically to any additional schedules containing calculations that support the figures in the Summary Schedules.

VGTI Florida Projected Receipts Projected receipts for VGTI Florida are broken down into two categories: operating and non-operating. Operating receipts reflect income VGTI Florida expects to earn through the normal course of its business, such as grants, the indirect costs reimbursed for those grants, philanthropy, and royalties. Non-operating receipts reflect income VGTI Florida expects to earn outside of its research-related activities, such as funding from the Innovation Incentive Funds and investment income.

Operating Receipts Direct Awards Direct awards from grants and contracts reimburse organizations for the direct costs of the research they conduct on behalf of the grantor. These direct costs include the salaries of the researchers and their assistants, as well as the cost of reagents and other supplies. Receipts from direct awards were forecasted based upon an analysis of the historical awards received by VGTI Oregon from organizations such as the NIH and the Bill and Melinda Gates Foundation. The Model assumes that senior faculty recruited from other institutions will transfer their existing grants to VGTI Florida. Projected annual transfer awards were based on each PI’s current research portfolio. The Model also assumes that faculty members will win new awards each year. The assumptions for new awards were based on the experience of VGTI Oregon. However, the amount of new awards per faculty member is projected to be approximately half of the amount at VGTI Oregon. This reduction reflects the conservative nature of the projections. Details of the forecast are shown in Schedule 5. Indirect Awards In addition to the direct awards, indirect awards compensate organizations for overhead costs incurred to conduct extramural research projects. These awards are determined by the organization’s indirect cost rate, which is periodically calculated and negotiated with the organization’s cognizant agency. The indirect cost rate is applied to modified total direct costs (“MTDC”), which is equal to direct awards less subcontracts and capital equipment. Based on VGTI Oregon’s historical experience, the Model assumes that VGTI Florida spends 10% of its direct awards on subcontracts and capital equipment. The details of this calculation are shown in Schedule 6. VGTI Florida’s projected indirect cost rate for new awards ranges from 65% to 90% of MTDC, depending on the year, which is based on the expected costs for VGTI Florida’s facilities and administration. The Model assumes an 8% indirect cost rate for existing awards since they are transferring to VGTI Florida from Canadian institutions; however, at least one transferring grant may be renegotiated to a higher rate in the future. Not all grantors reimburse for the full amount of the direct award. Therefore, the model assumes that VGTI Florida will only receive 90% of the indirect award amount each year. The details of this calculation are shown in Schedule 7.

The data and assumptions included in this document were provided by VGTI Florida. 5

bJR

Fundraising The Model assumes that VGTI Florida will raise over $20 million through fundraising for equipment, endowed chairs, and general support for the organization in the first 10 years of operation. In fiscal years 2012 through 2019, fundraising is projected to be 17.5% of indirect awards, which is consistent with the historical experience of VGTI Oregon. The details of this calculation are shown in Schedule 5. Royalties The research conducted by VGTI Florida is expected to produce patentable discoveries, which VGTI Florida anticipates will generate related royalty income. Royalty receipts are assumed to begin in fiscal year 2016 and total $350,000 in the first 10 fiscal years of operation; this assumption is based on VGTI Florida’s knowledge of similar organizations. The amount was forecast at a minimal level, since the specific amount and timing depends upon the creation of intellectual property.

Non-Operating Receipts State of Florida Funds The State of Florida’s Office of Tourism, Trade, and Economic Development (“OTTED”) awarded $60.0 million in Innovation Incentive Funds to VGTI Florida in four principal installments, each contingent upon VGTI Florida’s fulfilling certain milestones. VGTI Florida received the first installment of $15.0 million in fiscal year 2008 and the second installment of $20.0 million in the beginning of fiscal year 2010. The Model assumes that the third installment of $20.0 million and the fourth and final installment of $5.0 million will be received in fiscal years 2010 and 2011, respectively. In addition, VGTI Florida will receive investment income on undisbursed Innovation Incentive Funds as described below under the caption “Income on Innovation Incentive Funds”. Income on Innovation Incentive Funds According to the OTTED Agreement, Innovation Incentive Funds not yet disbursed to VGTI Florida are held in a trust for the benefit of VGTI Florida. VGTI Florida will receive investment income earned on the funds in that trust after the fulfillment of a final set of milestones by the 10th anniversary of the OTTED Funding Agreement. The Model assumes that investment income will accrue at an annual rate of .25% in fiscal year 2010 and .5% each fiscal year thereafter through fiscal year 2018 based on estimates of current interest rates. VGTI Florida expects to meet the specified milestones and receive the balance of the accrued investment income in fiscal year 2018. The details of this calculation are shown in Schedule 6. Investment Income on VGTI Florida Funds The Model assumes that VGTI Florida will earn investment income on any unused funds at a rate of 1.5% in fiscal year 2010 and 3% thereafter; this rate is based on estimates of current market performance made by VGTI Florida’s financial advisors. The details of this calculation are shown in Schedule 9. TPIMS Security Deposit and Interest The Model also assumes that VGTI Florida will earn interest on the security deposit VGTI Florida paid to TPIMS for the use of TPIMS’ space in fiscal years 2009 and 2010. The security deposit of $300,000 is returned to VGTI Florida, along with accrued interest, in fiscal year 2012.

Transfer from Cash Balance As previously mentioned, the Transfer from Cash Balance represents the amount VGTI Florida must draw from its cash reserve to break even (on the basis of net receipts) or meet a debt service coverage ratio of 1.05.

VGTI Florida Projected Disbursements Projected disbursements are broken down according to whether or not they relate to salary and other payroll expenses (“OPE”). Salary expense assumptions are used to corroborate the expected headcount and average salary expectations set forth in the OTTED agreement, as shown in Schedules 19 and 20.

The data and assumptions included in this document were provided by VGTI Florida. 6

bJS

Salary and OPE Disbursements Grant In grant-funded programs, grant disbursements equal MTDC and are split between salary disbursements (for positions such as staff scientists and research associates) and other, non-salary disbursements directly related to research activities, such as supplies and travel. The Model assumes that approximately 67% of the MTDC amount is allocated to support salaries and OPE, which is based on VGTI Oregon’s experience with grants. The details of this calculation are shown in Schedule 6. Faculty The Model includes staggered start dates for faculty personnel through fiscal year 2015, which is consistent with VGTI Florida’s plan for faculty hires, and assumes salaries will grow by 3% annually after the year of hire. Estimates for starting salaries were based on VGTI Florida’s knowledge of the market. VGTI Florida expects faculty members to cover 50% of their own salaries, as well as all of the other costs of their research, with extramural funding. As such, the Model assumes that 50% of the salaries and OPE for most senior and associate faculty personnel are transferred to direct costs starting in the second year after hire. In addition, 25% of salaries and OPE for junior faculty are transferred to direct costs in years three and four after hire, with 50% charged to direct costs thereafter. For certain senior faculty, the transfer of salaries to direct costs is accelerated due to the recent award of an Avant Garde grant. The details of this calculation are shown in Schedule 11. Scientific Support In accordance with VGTI Florida’s plans for scientific support hires, the Model includes staggered start dates for scientific support personnel through fiscal year 2011 and assumes that salaries grow 3% annually after the year of hire. 80% of scientific support salaries are charged to direct costs starting in the fourth year after hire. The details of this calculation are shown in Schedule 12. Administration Administration personnel start dates are staggered through fiscal year 2014. Estimated starting salary assumptions are based on VGTI Florida’s experience in the market. After the year of hire, the Model assumes salaries will grow by 3% annually. The details of this calculation are shown in Schedule 13. Facilities All current VGTI Florida research is being conducted in space owned by TPIMS. Once the new VGTI Florida facilities become available in fiscal year 2012, the Model assumes that the salaries of facilities support positions will begin to be incurred. Assumptions for estimated starting salaries are based on VGTI Florida’s market experience. After the year of hire, the Model assumes salaries will grow by 3% annually. The details of this calculation are shown in Schedule 14.

Non-Salary Disbursements Grant There are two components of non-salary grant disbursements in the Model: (1) non-salary MTDC and (2) subcontracts and capital equipment charged to direct costs. The Model assumes that 33% of MTDC is allocated to non-salary disbursements. The Model also assumes that VGTI Florida will utilize 10% of its direct awards for subcontracts and capital equipment based on VGTI Oregon’s experience with grant funding. The details of these calculations are shown in Schedule 6. Start-Up Research Funds The Model assumes that certain faculty members will receive start-up funds per VGTI Florida’s plan for faculty hires. Half of the designated start-up funds for each person are disbursed in the year of hire, and 10% of start-up funds are disbursed in each of the subsequent four years. This pattern of consumption is based upon experience at VGTI Oregon and the scientific leadership’s experience at other institutions. The details of this calculation are shown in Schedule 15.

The data and assumptions included in this document were provided by VGTI Florida. bJT

Capital Equipment The Model includes disbursements for capital equipment purchases not charged to direct awards, which are based on an equipment list created by VGTI Oregon. Administration Non-salary administration disbursements include an amount to be paid to OHSU for administrative services provided each year, as well as additional disbursements for items such as an annual audit, consultants, insurance and legal services. Estimates for these disbursements were based on VGTI Florida’s experience and knowledge of other organizations. The details for the calculation of several line items in this category are shown in Schedule 16. Facilities Non-salary facilities disbursements include items such as debt service for the new facility, utilities and building maintenance assessments. Estimates for utilities and maintenance costs were based on VGTI Oregon’s experience and knowledge of other organizations. This category also includes an assessment levied by a governmentallycreated special assessment district (“SAD”) that covers certain costs of the wastewater, storm water, and roadway improvements serving the new facility. The details for debt service are shown in Schedule 18 and the details for several other line items in this category are shown in Schedule 17.

Net Receipts Projected net operating receipts and net receipts are shown in the table below. Net receipts include receipts from all of the activities of the organization. Operating receipts include all of the receipts of the organization with the exception of the Innovation Incentive Funds and the interest on the fund balances.

Fiscal Year FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

Projection  Year Actual Actual Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Net Operating  Receipts Net Receipts (In Thousands) (In Thousands) $0 $15,000 ($4,700) $0 ($15,500) $24,700 ($5,500) $500 ($12,400) $0 ($12,900) $200 ($5,900) $200 $0 $200 ($2,700) $200 $1,100 $1,200 $2,100 $2,400 $2,200 $2,500

As the table shows, both measures of net receipts generally trend downward until Fiscal Year 2017, when VGTI Florida’s research award portfolio is better able to support its operational expenses.

The data and assumptions included in this document were provided by VGTI Florida. bJU

Attachment A: VGTI Florida Cash Flows

The data and assumptions included in this document were provided by VGTI Florida. bJV

bJNM

Schedule 4 Schedule 5 Schedule 6 Schedule 7 Schedule 8 Schedule 9 Schedule 10 Schedule 11 Schedule 12 Schedule 13 Schedule 14 Schedule 15 Schedule 16 Schedule 17 Schedule 18 Schedule 19 Schedule 20

Schedule 1 Schedule 2 Schedule 3

Summary Schedules

Transfer Grant Receipts Projection Detail New Grant Receipts Projection Detail Operating Receipts Projection Detail Indirect Awards Projection Calculation Detail Fundraising Projection Detail Non-Operating Receipts Projection Detail Grant Disbursements Detail Faculty Salary and OPE Projection Detail Scientific Support Salary and OPE Projection Detail Administration Salary and OPE Calculation Detail Facilities Salary and OPE Calculation Detail Start-Up Funds Calculation Detail Administration Non-Salary Calculation Detail Facilities Non-Salary Calculation Detail Debt Service Schedule OTTED Job Creation Reconciliation OTTED Average Salary Reconciliation by Category (For Salaries with Headcount)

Support Schedules

Debt Service Coverage and Cash Balance Summary Ten-Year Projection Summary Ten-Year Projection Detail

VGTI - Florida Operating Cash Flows 10 Year Projection Summary Schedule References

bJNN

Summary Schedules (1 through 3)

11

Note: See Schedule 3 for details.

Beginning Cash Balance Ending Cash Balance

Debt Service Coverage Ratio

Net Receipts Before Debt Service

Add Back: Debt Service

Net Receipts

$0 $15,000,000

N/A

$15,000,000

$0

$15,000,000

Actual

FY2008

VGTI - Florida Operating Cash Flows Debt Service Coverage and Cash Balance Summary Schedule 1

bJNO

$15,000,000 $10,447,329

N/A

$0

$0

$0

$10,447,329 $35,117,300

N/A

$24,669,971

$0

$24,669,971

Torrey Pines Institute FY2009 FY2010 Year 1 Actual

$35,117,300 $35,663,534

N/A

$546,233

$0

$546,233

FY2011 Year 2

$0

$0

$0

$35,663,534 $24,650,037

N/A

FY2012 Year 3

$24,650,037 $12,512,259

1.05

$4,856,775

$4,625,500

$231,275

FY2013 Year 4

$12,512,259 $6,968,615

1.05

$4,858,560

$4,627,200

$231,360

FY2014 Year 5

$6,968,615 $7,211,975

1.05

$4,869,260

$4,625,900

$243,360

FY2015 Year 6

$7,211,975 $4,720,927

1.05

$4,857,930

$4,626,600

$231,330

FY2016 Year 7

$4,720,927 $5,936,657

1.26

$5,839,730

$4,624,000

$1,215,730

FY2017 Year 8

$5,936,657 $8,325,685

1.52

$7,017,128

$4,628,100

$2,389,028

FY2018 Year 9

$8,325,685 $10,808,513

1.54

$7,111,128

$4,628,300

$2,482,828

FY2019 Year 10

12

N/A $10,808,513

$79,626,716

$32,385,600

$47,241,116

10-Year Total/ Balance

Note: See Schedule 3 for details.

$0 $15,000,000

$0

Total Disbursements

Beginning Cash Balance Ending Cash Balance

$0

Total Non-Salary and OPE Disbursements

$0 $15,000,000

$0 0 0 0 0

Non-Salary Disbursements: Grant Start-Up Research Funds Capital Equipment Administration Facilities

Net Operating Receipts Net Receipts

$0

$15,000,000 $10,447,329

($4,693,336) $0

$4,693,336

$4,110,588

$0 35,391 1,095,824 1,648,723 1,330,650

$582,748

$0 349,136 121,988 111,624 0

$4,693,336

$15,000,000

$0 0 0 0 0

$0 140,665 4,552,671

$10,447,329 $35,117,300

($15,486,739) $24,669,971

$20,224,551

$15,593,631

$1,433,333 475,000 9,000,000 3,865,000 820,298

$4,630,920

$2,066,667 880,875 729,962 953,417 0

$44,894,522

$4,737,812 40,156,710 0

Torrey Pines Institute FY2009 FY2010 Year 1 Actual

$0 15,000,000 0

Actual

FY2008

Total Salary Disbursements

Disbursements Salary and OPE Disbursements: Grant General Faculty Scientific Support Administration Facilities

Total Receipts

Receipts Operating Receipts Non-Operating Receipts Transfers from Cash Balance

VGTI - Florida Operating Cash Flows Ten-Year Projection Summary Schedule 2

bJNP

$35,117,300 $35,663,534

($5,507,286) $546,233

$11,990,448

$5,494,614

$1,666,667 1,225,000 0 1,215,450 1,387,498

$6,495,834

$2,583,333 1,662,926 950,638 1,075,769 223,167

$12,536,681

$6,483,162 6,053,519 0

FY2011 Year 2

$35,663,534 $24,650,037

($12,387,903) $0

$23,982,521

$15,025,678

$2,566,667 2,125,000 7,000,000 2,564,914 769,098

$8,956,843

$3,933,333 2,513,002 712,880 1,108,042 689,585

$23,982,521

$11,594,618 1,374,406 11,013,497

FY2012 Year 3

$24,650,037 $12,512,259

($12,877,279) $231,275

$28,433,632

$18,131,549

$3,366,667 3,675,000 4,000,000 1,676,661 5,413,222

$10,302,083

$5,133,333 2,850,820 466,373 1,141,284 710,273

$28,664,907

$15,556,352 739,501 12,369,053

FY2013 Year 4

$12,512,259 $6,968,615

($5,919,011) $231,360

$29,364,221

$16,817,472

$4,966,667 1,975,000 3,000,000 1,441,701 5,434,104

$12,546,749

$7,533,333 2,664,583 324,585 1,292,666 731,581

$29,595,581

$23,445,209 375,368 5,775,004

FY2014 Year 5

$6,968,615 $7,211,975

$34,301 $243,360

$27,573,699

$13,689,604

$5,800,000 1,600,000 0 837,042 5,452,563

$13,884,094

$8,700,000 2,764,797 334,323 1,331,446 753,528

$27,817,058

$27,608,000 209,058 0

FY2015 Year 6

$7,211,975 $4,720,927

($2,707,407) $231,330

$34,659,907

$18,771,307

$7,000,000 2,450,000 2,500,000 1,347,693 5,473,614

$15,888,601

$10,500,000 2,896,724 344,353 1,371,390 776,134

$34,891,237

$31,952,500 216,359 2,722,378

FY2016 Year 7

$4,720,927 $5,936,657

$1,074,102 $1,215,730

$35,485,898

$17,935,639

$8,000,000 2,050,000 1,200,000 1,193,664 5,491,975

$17,550,259

$12,000,000 2,983,626 354,683 1,412,531 799,418

$36,701,628

$36,560,000 141,628 0

FY2017 Year 8

$5,936,657 $8,325,685

$2,069,396 $2,389,028

$36,354,604

$17,622,629

$8,800,000 1,150,000 1,100,000 1,054,964 5,517,665

$18,731,975

$13,200,000 2,888,343 365,324 1,454,907 823,401

$38,743,632

$38,424,000 319,632 0

FY2018 Year 9

$8,325,685 $10,808,513

$2,233,058 $2,482,828

$36,422,932

$17,239,637

$9,064,000 600,000 1,000,000 1,035,534 5,540,103

$19,183,295

$13,596,000 2,864,355 376,283 1,498,554 848,103

$38,905,761

$38,655,990 249,771 0

FY2019 Year 10

13

N/A $10,808,513

($54,168,104) $47,241,116

$289,185,748

$160,432,348

$52,664,000 17,360,391 29,895,824 17,881,344 42,630,788

$128,753,400

$79,246,000 25,319,188 5,081,393 12,751,631 6,355,188

$336,426,863

$235,017,644 64,976,617 36,432,603

10-Year Total/ Balance

(2)

0 0 0 0

0 0 0 0 0 0 0

Subtotal Faculty Salaries

Scientific Support: (7) Bioinformaticist Flow Cytometry Core Mass Spectrometry Core Sequencing Core Imaging Core Animal Resources

Subtotal Scientific Support Salaries

0

Institutional Faculty Base: Senior Faculty Associate Faculty Junior Faculty

(6)

Salary and OPE Disbursements Grant: (5) MTDC

Disbursements

15,000,000

0

Total Receipts

0

Subtotal Transfer from Cash Balance

15,000,000

Subtotal Receipts before Transfer from Cash

Transfer from Cash Balance Deficit Reduction

15,000,000

0

0 0 0

0

0 0 0

Subtotal Non-Operating Receipts

0

15,000,000 0 0 0

(1)

Actual

FY2008

Non Operating Receipts (4) State of Florida Interest on State of Florida Funds Interest on VGTI Funds TPIS Security Deposit and Interest

Subtotal Operating Receipts

Indirect Awards Fund Raising (3) Royalties

Subtotal Direct Awards

Operating Receipts Direct Awards: MTDC (1) Subcontracts and Capital Equipment

Receipts

VGTI - Florida Operating Cash Flows Ten-Year Projection Detail Schedule 3

bJNQ

121,988

41,199 0 0 80,789 0 0

349,136

349,136 0 0

0

4,693,336

4,552,671

4,552,671

140,665

140,665

0 0 140,665 0

0

0 0 0

0

0 0 0

729,962

111,240 186,909 0 194,063 108,000 129,750

880,875

578,375 32,500 270,000

2,066,667

44,894,522

0

0

44,894,522

40,156,710

40,000,000 0 156,710 0

4,737,812

1,137,812 100,000 0

3,500,000

3,100,000 400,000 0

Torrey Pines Institute FY2009 FY2010 Year 1 Actual

950,638

184,777 204,404 108,000 208,575 111,240 133,643

1,662,926

853,976 395,850 413,100

2,583,333

12,536,681

0

0

12,536,681

6,053,519

5,000,000 0 1,053,519 0

6,483,162

1,733,162 500,000 0

4,250,000

3,875,000 375,000 0

FY2011 Year 2

712,880

95,909 210,536 111,240 42,966 114,577 137,652

2,513,002

1,484,784 602,726 425,493

3,933,333

23,982,521

11,013,497

11,013,497

12,969,024

1,374,406

0 0 1,069,906 304,500

11,594,618

3,957,118 1,137,500 0

6,500,000

5,900,000 600,000 0

FY2012 Year 3

466,373

98,786 43,370 114,577 44,255 23,603 141,781

2,850,820

1,507,055 709,266 634,499

5,133,333

28,664,907

12,369,053

12,369,053

16,295,853

739,501

0 0 739,501 0

15,556,352

5,568,852 1,487,500 0

8,500,000

7,700,000 800,000 0

FY2013 Year 4

324,585

40,382 44,671 23,603 45,583 24,311 146,035

2,664,583

1,423,925 624,003 616,654

7,533,333

29,595,581

5,775,004

5,775,004

23,820,577

375,368

0 0 375,368 0

23,445,209

8,757,709 2,187,500 0

12,500,000

11,300,000 1,200,000 0

FY2014 Year 5

334,323

41,594 46,012 24,311 46,951 25,040 150,416

2,764,797

1,476,711 731,183 556,903

8,700,000

27,817,058

0

0

27,817,058

209,058

0 0 209,058 0

27,608,000

10,570,500 2,537,500 0

14,500,000

13,050,000 1,450,000 0

FY2015 Year 6

344,353

42,841 47,392 25,040 48,359 25,792 154,928

2,896,724

1,384,422 646,577 865,725

10,500,000

34,891,237

2,722,378

2,722,378

32,168,859

216,359

0 0 216,359 0

31,952,500

11,340,000 3,062,500 50,000

17,500,000

15,750,000 1,750,000 0

FY2016 Year 7

354,683

44,127 48,814 25,792 49,810 26,565 159,576

2,983,626

1,425,955 665,975 891,697

12,000,000

36,701,628

0

0

36,701,628

141,628

0 0 141,628 0

36,560,000

12,960,000 3,500,000 100,000

20,000,000

18,000,000 2,000,000 0

FY2017 Year 8

365,324

45,451 50,278 26,565 51,304 27,362 164,363

2,888,343

1,468,733 579,413 840,197

13,200,000

38,743,632

0

0

38,743,632

319,632

0 141,532 178,100 0

38,424,000

12,474,000 3,850,000 100,000

22,000,000

19,800,000 2,200,000

FY2018 Year 9

376,283

46,814 51,786 27,362 52,843 28,183 169,294

2,864,355

1,512,795 596,795 754,764

13,596,000

38,905,761

0

0

38,905,761

249,771

0 0 249,771 0

38,655,990

11,930,490 3,965,500 100,000

22,660,000

20,394,000 2,266,000

FY2019 Year 10

5,081,393

793,120 934,172 486,490 865,499 514,674 1,487,438

25,319,188

13,465,867 5,584,288 6,269,032

79,246,000

336,426,863

36,432,603

36,432,603

299,994,261

64,976,617

60,000,000 141,532 4,530,585 304,500

235,017,644

80,429,644 22,328,000 350,000

131,910,000

118,869,000 13,041,000

10-Year Total/ Balance

0

Subtotal Administration Salaries

0 0 0 0

0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Start-Up Research Funds: Senior Faculty Associate Faculty Junior Faculty

Subtotal Start-Up Funds Disbursements

Capital Equipment: (14) Scientific/General

Administration: Office Supply Equipment-Minor Equipment Maint Contract (11) Software Insurance Speaker Fees Travel Hosting Advertising Legal Services Relocation Pkgs Audit and Financial Consultants Executive Committee Consultants Organizational Consultants Board of Directors (11) OHSU Administration

Subtotal Administration Disbursements

(10)

0

0 0

Subtotal Grant Disbursements

0

Non-Salary Disbursements Grant: (5) MTDC Subcontracts and Capital Equipment

0

Subtotal Facilities Salaries

Subtotal Salary and OPE Disbursements

0 0 0 0 0

Facilities: Facilities Manager Security Maintenance Custodial Logistics

(9)

0 0 0 0 0 0 0 0 0 0 0

Actual

FY2008

Administration: (8) Chief Operating Officer Office Manager Finance Director Account Technicians Grants Managers Grants Writer IT Programmer IT Support Fundraiser Admin Ast Advisory Board

VGTI - Florida Operating Cash Flows Ten-Year Projection Detail Schedule 3

bJNR

1,648,723

106,982 4,225 5,593 395,123 13,932 237,923 0 363,400 0 222,277

21,193 81,725 22,118 7,570 166,662

1,095,824

35,391

35,391 0 0

0

0 0

582,748

0

0 0 0 0 0

111,624

77,277 12,444 11,473 0 10,430 0 0 0 0 0 0

3,865,000

20,000 350,000 1,800,000 150,000 170,000 0 120,000 20,000 0 200,000 375,000 170,000 25,000 150,000 15,000 300,000

9,000,000

475,000

150,000 100,000 225,000

1,433,333

1,033,333 400,000

4,630,920

0

0 0 0 0 0

953,417

193,125 62,573 128,750 61,144 158,875 93,750 93,750 68,750 0 0 92,700

Torrey Pines Institute FY2009 FY2010 Year 1 Actual

1,215,450

100,000 80,000 0 0 300,000 5,000 90,000 30,000 0 150,000 300,000 70,000 25,000 0 15,450 50,000

0

1,225,000

900,000 100,000 225,000

1,666,667

1,291,667 375,000

6,495,834

223,167

32,500 52,000 58,500 45,500 34,667

1,075,769

198,919 64,450 132,613 62,979 163,641 96,563 96,563 70,813 93,750 0 95,481

FY2011 Year 2

2,564,914

70,000 50,000 1,400,000 0 309,000 5,000 90,000 30,000 0 150,000 300,000 70,000 25,000 0 15,914 50,000

7,000,000

2,125,000

1,800,000 100,000 225,000

2,566,667

1,966,667 600,000

8,956,843

689,585

100,425 160,680 180,765 140,595 107,120

1,108,042

204,886 66,383 136,591 64,868 168,550 99,459 99,459 72,937 96,563 0 98,345

FY2012 Year 3

1,676,661

25,000 20,000 800,000 0 318,270 7,000 90,000 30,000 0 100,000 75,000 70,000 25,000 50,000 16,391 50,000

4,000,000

3,675,000

2,100,000 600,000 975,000

3,366,667

2,566,667 800,000

10,302,083

710,273

103,438 165,500 186,188 144,813 110,334

1,141,284

211,033 68,375 140,689 66,814 173,607 102,443 102,443 75,125 99,459 0 101,296

FY2013 Year 4

1,441,701

40,000 10,000 600,000 0 327,818 7,000 90,000 30,000 0 100,000 75,000 70,000 25,000 0 16,883 50,000

3,000,000

1,975,000

900,000 700,000 375,000

4,966,667

3,766,667 1,200,000

12,546,749

731,581

106,541 170,465 191,774 149,157 113,644

1,292,666

217,364 70,426 144,909 129,963 178,815 105,516 105,516 77,379 102,443 56,000 104,335

FY2014 Year 5

837,042

25,000 10,000 0 0 337,653 7,000 90,000 30,000 0 100,000 75,000 70,000 25,000 0 17,389 50,000

0

1,600,000

750,000 700,000 150,000

5,800,000

4,350,000 1,450,000

13,884,094

753,528

109,737 175,579 197,527 153,632 117,053

1,331,446

223,885 72,539 149,257 133,861 184,180 108,682 108,682 79,700 105,516 57,680 107,465

FY2015 Year 6

1,347,693

25,000 10,000 500,000 0 347,782 7,000 90,000 30,000 0 100,000 75,000 70,000 25,000 0 17,911 50,000

2,500,000

2,450,000

750,000 800,000 900,000

7,000,000

5,250,000 1,750,000

15,888,601

776,134

113,029 180,847 203,453 158,241 120,565

1,371,390

230,601 74,715 153,734 137,877 189,705 111,942 111,942 82,091 108,682 59,410 110,689

FY2016 Year 7

1,193,664

25,000 30,000 240,000 0 358,216 7,000 90,000 30,000 0 100,000 150,000 70,000 25,000 0 18,448 50,000

1,200,000

2,050,000

600,000 400,000 1,050,000

8,000,000

6,000,000 2,000,000

17,550,259

799,418

116,420 186,272 209,556 162,988 124,181

1,412,531

237,519 76,956 158,346 142,014 195,396 115,301 115,301 84,554 111,942 61,193 114,009

FY2017 Year 8

1,054,964

25,000 50,000 220,000 0 368,962 7,000 90,000 30,000 0 100,000 0 70,000 25,000 0 19,002 50,000

1,100,000

1,150,000

300,000 400,000 450,000

8,800,000

6,600,000 2,200,000

18,731,975

823,401

119,913 191,860 215,843 167,878 127,907

1,454,907

244,645 79,265 163,097 146,274 201,258 118,760 118,760 87,090 115,301 63,028 117,430

FY2018 Year 9

1,035,534

25,000 50,000 200,000 0 368,962 7,000 90,000 30,000 0 100,000 0 70,000 25,000 0 19,572 50,000

1,000,000

600,000

0 300,000 300,000

9,064,000

6,798,000 2,266,000

19,183,295

848,103

123,510 197,616 222,318 172,914 131,744

1,498,554

251,984 81,643 167,990 150,662 207,296 122,322 122,322 89,703 118,760 64,919 120,952

FY2019 Year 10

17,881,344

401,193 741,725 5,782,118 157,570 3,373,325 59,000 1,036,982 294,225 5,593 1,595,123 1,438,932 1,037,923 250,000 563,400 171,958 972,277

29,895,824

17,360,391

8,285,391 4,200,000 4,875,000

52,664,000

39,623,000 13,041,000

128,753,400

6,355,188

925,513 1,480,821 1,665,923 1,295,718 987,214

12,751,631

2,291,239 729,768 1,487,448 1,096,455 1,831,753 1,074,739 1,074,739 788,142 952,416 362,231 1,062,702

10-Year Total/ Balance

5

Notes: (1) See Schedule 6. (2) See Schedule 7. (3) See Schedule 8. (4) See Schedule 9. (5) See Schedule 10. (6) See Schedule 11. (7) See Schedule 12.

0.00

15,000,000 10,447,329

(4,693,336) 0

4,693,336

4,110,588

1,330,650

0 0 588,000 66,902 369,703 6,044 300,000

0.23

10,447,329 35,117,300

(15,486,739) 24,669,971

20,224,551

15,593,631

820,298

0 148,298 0 0 672,000 0 0

Torrey Pines Institute FY2009 FY2010 Year 1 Actual

(8) See Schedule 13. (9) See Schedule 14. (10) See Schedule 15. (11) See Schedule 16. (12) See Schedule 17. (13) See Schedule 18. (14) Estimated actuals.

0 15,000,000

Beginning Cash Balance Ending Cash Balance

Operating Ratio

0 15,000,000

Net Operating Receipts Net Receipts

0

0 0

Subtotal Facilities Disbursements

Subtotal Non-Salary Disbursements

Total Disbursements

0 0 0 0 0 0 0

Actual

FY2008

Facilities: Debt Service (13) SAD (12) Torrey Pines Outfit Land Acquisition Utilities (12) Building Maintenance (12) TPIS Security Deposit

VGTI - Florida Operating Cash Flows Ten-Year Projection Detail Schedule 3

bJNS

0.54

35,117,300 35,663,534

(5,507,286) 546,233

11,990,448

5,494,614

1,387,498

0 148,298 0 0 739,200 500,000 0

FY2011 Year 2

0.48

35,663,534 24,650,037

(12,387,903) 0

23,982,521

15,025,678

769,098

0 148,298 0 0 370,800 250,000 0

FY2012 Year 3

0.55

24,650,037 12,512,259

(12,877,279) 231,275

28,433,632

18,131,549

5,413,222

4,625,500 148,298 0 0 381,924 257,500 0

FY2013 Year 4

0.80

12,512,259 6,968,615

(5,919,011) 231,360

29,364,221

16,817,472

5,434,104

4,627,200 148,298 0 0 393,382 265,225 0

FY2014 Year 5

1.00

6,968,615 7,211,975

34,301 243,360

27,573,699

13,689,604

5,452,563

4,625,900 148,298 0 0 405,183 273,182 0

FY2015 Year 6

0.92

7,211,975 4,720,927

(2,707,407) 231,330

34,659,907

18,771,307

5,473,614

4,626,600 148,298 0 0 417,339 281,377 0

FY2016 Year 7

1.03

4,720,927 5,936,657

1,074,102 1,215,730

35,485,898

17,935,639

5,491,975

4,624,000 148,298 0 0 429,859 289,819 0

FY2017 Year 8

1.06

5,936,657 8,325,685

2,069,396 2,389,028

36,354,604

17,622,629

5,517,665

4,628,100 148,298 0 0 442,755 298,513 0

FY2018 Year 9

1.06

8,325,685 10,808,513

2,233,058 2,482,828

36,422,932

17,239,637

5,540,103

4,628,300 148,298 0 0 456,037 307,468 0

FY2019 Year 10

0.81

N/A 10,808,513

(54,168,104) 47,241,116

289,185,748

160,432,348

42,630,788

32,385,600 1,482,977 588,000 66,902 5,078,182 2,729,128 300,000

10-Year Total/ Balance

bJNT

Support Schedules (4 through 20)

Total

NIH - Banchereau NIH - Ahmed NIH - Lederman Gates Foundation - Pantaleo NIH/Argos - Sekalyu Gates Foundation - Koup

Total

NIH - Banchereau NIH - Ahmed NIH - Lederman Gates Foundation - Pantaleo NIH/Argos - Sekalyu Gates Foundation - Koup

$0 0 0 0 0 0 $0

$0

Actual

Actual

$0 0 0 0 0 0

FY2009

4 4 4 2 2 2

Full Years Left

FY2008

$5,851,394

$939,816 1,035,284 1,424,300 220,278 1,761,256 470,460

Total DC

VGTI - Florida Operating Cash Flows Transfer Grant Receipts Projection Detail Schedule 4

bJNU

$1,872,309

$194,445 238,912 328,685 101,667 782,780 225,821

FY2010 Year 1

10 4 4 2 3 1

End Yr Months

$1,872,309

$194,445 238,912 328,685 101,667 782,780 225,821

FY2011 Year 2

58 52 52 26 27 25

Months Left

$993,499

$194,445 238,912 328,685 16,944 195,695 18,818

FY2012 Year 3

$16,204 19,909 27,390 8,472 65,232 18,818

Monthly DC

$762,041

$194,445 238,912 328,685

FY2013 Year 4

$351,236

$162,037 79,637 109,562

FY2014 Year 5

$0

FY2015 Year 6

$0

FY2016 Year 7

$0

FY2017 Year 8

$0

FY2018 Year 9

$0

FY2019 Year 10

$5,851,394

$939,816 1,035,284 1,424,300 220,278 1,761,256 470,460

Total

$0

$0

Avant Garde Grant Receipts

Revised Total Grant Receipts

Note: (1) See Schedule 4.

$0

Original New Grant Receipts Estimate

Actual

Actual

$0 0

FY2009

FY2008

Original Total Grant Receipts Estimate Transfer Grant Receipts (1)

VGTI - Florida Operating Cash Flows New Grant Receipts Projection Detail Schedule 5

bJNV

$0

$0

$0

$0 0

$3,500,000

$500,000

$1,127,691

$3,000,000 1,872,309

FY2010 Year 1

$4,250,000

$500,000

$1,877,691

$3,750,000 1,872,309

FY2011 Year 2

$6,500,000

$500,000

$5,006,501

$6,000,000 993,499

FY2012 Year 3

$8,500,000

$500,000

$7,237,959

$8,000,000 762,041

FY2013 Year 4

$12,500,000

$500,000

$11,648,764

$12,000,000 351,236

FY2014 Year 5

$14,500,000

$0

$14,500,000

$14,500,000 0

FY2015 Year 6

$17,500,000

$0

$17,500,000

$17,500,000 0

FY2016 Year 7

$20,000,000

$0

$20,000,000

$20,000,000 0

FY2017 Year 8

$22,000,000

$0

$22,000,000

$22,000,000 0

FY2018 Year 9

$22,660,000

$0

$22,660,000

$22,660,000 0

FY2019 Year 10

$131,910,000

$2,500,000

$123,558,606

$129,410,000 5,851,394

Total

$0

New Award MTDC

$0

$0 0% $0 $0

$0 0

Avant Garde Award Avant Garde Award (2) Subcontracts and Capital Equipment

Subcontracts and Capital Equipment

Avant Garde Award MTDC

All Awards Direct Awards Subcontracts and Capital Equipment

Notes: (1) See Schedule 5. (2) See Schedule 4.

10% 67%

$0

Non-Salary MTDC

Assumptions [A] Subcontracts and Capital Equipment % [B] Salary and OPE % of MTDC

$0

Salary MTDC

$0 67%

$0 0%

$0

Transfer Award MTDC

MTDC Salary and OPE % of MTDC

$0

$0

Subcontracts and Capital Equipment

$0

$0

$0 67%

$0 0

$0

$0

$0 10%

$0 10%

Transfer Awards Transfer Direct Awards (2) Subcontracts and Capital Equipment

$0

$0

$0

Subcontracts and Capital Equipment

Actual

Actual

$0 10%

FY2009

FY2008

$0 10%

New Awards New Direct Awards (1) Subcontracts and Capital Equipment %

VGTI - Florida Operating Cash Flows Operating Receipts Projection Detail Schedule 6

bJOM

$1,033,333

$2,066,667

$3,100,000 67%

$3,500,000 400,000

$400,000

$100,000

$500,000 20%

$1,685,078

$187,231

$1,872,309 10%

$1,014,922

$112,769

$1,127,691 10%

FY2010 Year 1

$1,291,667

$2,583,333

$3,875,000 67%

$4,250,000 375,000

$500,000

$0

$500,000 0%

$1,685,078

$187,231

$1,872,309 10%

$1,689,922

$187,769

$1,877,691 10%

FY2011 Year 2

$1,966,667

$3,933,333

$5,900,000 67%

$6,500,000 600,000

$500,000

$0

$500,000 0%

$894,149

$99,350

$993,499 10%

$4,505,851

$500,650

$5,006,501 10%

FY2012 Year 3

$2,566,667

$5,133,333

$7,700,000 67%

$8,500,000 800,000

$500,000

$0

$500,000 0%

$685,837

$76,204

$762,041 10%

$6,514,163

$723,796

$7,237,959 10%

FY2013 Year 4

$3,766,667

$7,533,333

$11,300,000 67%

$12,500,000 1,200,000

$500,000

$0

$500,000 0%

$316,112

$35,124

$351,236 10%

$10,483,888

$1,164,876

$11,648,764 10%

FY2014 Year 5

$4,350,000

$8,700,000

$13,050,000 67%

$14,500,000 1,450,000

$0

$0

$0 0%

$0

$0

$0 10%

$13,050,000

$1,450,000

$14,500,000 10%

FY2015 Year 6

$5,250,000

$10,500,000

$15,750,000 67%

$17,500,000 1,750,000

$0

$0

$0 0%

$0

$0

$0 10%

$15,750,000

$1,750,000

$17,500,000 10%

FY2016 Year 7

$6,000,000

$12,000,000

$18,000,000 67%

$20,000,000 2,000,000

$0

$0

$0 0%

$0

$0

$0 10%

$18,000,000

$2,000,000

$20,000,000 10%

FY2017 Year 8

$6,600,000

$13,200,000

$19,800,000 67%

$22,000,000 2,200,000

$0

$0

$0 0%

$0

$0

$0 10%

$19,800,000

$6,798,000

$13,596,000

$20,394,000 67%

$22,660,000 2,266,000

$0

$0

$0 0%

$0

$0

$0 10%

$20,394,000

$2,266,000

10%

$2,200,000

$22,660,000

10%

FY2019 Year 10

$22,000,000

FY2018 Year 9

$39,623,000

$79,246,000

$118,869,000

$131,910,000 12,941,000

$2,400,000

$100,000

$2,500,000

$5,266,255

$585,139

$5,851,394

$111,202,745

$12,355,861

$123,558,606

Total

Note: (1) See Schedule 6.

90% 8% 54%

Indirect Awards Realized

Assumptions [A] Indirect Award Realized % [B] Indirect Cost Rate on Transfer Awards [C] Indirect Cost Rate on Avant Garde Award

$0

$0

All Awards MTDC

$0

$0 90%

Indirect Awards Indirect Awards % Realized

Indirect Awards Realized on Avant Garde Award

$0 N/A

Avant Garde Award Avant Garde Award MTDC (1) Indirect Cost Rate

$0

$0 90%

Indirect Awards Indirect Awards % Realized

Indirect Awards Realized on Transfer Awards

$0 N/A

$0

Transer Awards Transfer Award MTDC (1) Indirect Cost Rate

Indirect Awards Realized on New Awards

$0 90%

Indirect Awards Indirect Awards % Realized

$0

$0

$0

$0 90%

$0 N/A

$0

$0 90%

$0 N/A

$0

$0 90%

$0 N/A

Actual

Actual

$0 N/A

FY2009

FY2008

New Awards New Award MTDC (1) Indirect Cost Rate

VGTI - Florida Operating Cash Flows Indirect Awards Projection Calculation Detail Schedule 7

bJON

$1,137,812

$3,100,000

$194,400

$216,000 90%

$400,000 54%

$121,326

$134,806 90%

$1,685,078 8%

$822,087

$913,430 90%

$1,014,922 90%

FY2010 Year 1

$1,733,162

$3,875,000

$243,000

$270,000 90%

$500,000 54%

$121,326

$134,806 90%

$1,685,078 8%

$1,368,837

$1,520,930 90%

$1,689,922 90%

FY2011 Year 2

$3,957,118

$5,900,000

$243,000

$270,000 90%

$500,000 54%

$64,379

$71,532 90%

$894,149 8%

$3,649,739

$4,055,266 90%

$4,505,851 90%

FY2012 Year 3

$5,568,852

$7,700,000

$243,000

$270,000 90%

$500,000 54%

$49,380

$54,867 90%

$685,837 8%

$5,276,472

$5,862,747 90%

$6,514,163 90%

FY2013 Year 4

$8,757,709

$11,300,000

$243,000

$270,000 90%

$500,000 54%

$22,760

$25,289 90%

$316,112 8%

$8,491,949

$9,435,499 90%

$10,483,888 90%

FY2014 Year 5

$10,570,500

$13,050,000

$0

$0 90%

$0 54%

$0

$0 90%

$0 8%

$10,570,500

$11,745,000 90%

$13,050,000 90%

FY2015 Year 6

$11,340,000

$15,750,000

$0

$0 90%

$0 54%

$0

$0 90%

$0 8%

$11,340,000

$12,600,000 90%

$15,750,000 80%

FY2016 Year 7

$12,960,000

$18,000,000

$0

$0 90%

$0 54%

$0

$0 90%

$0 8%

$12,960,000

$14,400,000 90%

$18,000,000 80%

FY2017 Year 8

$12,474,000

$19,800,000

$0

$0 90%

$0 54%

$0

$0 90%

$0 8%

$12,474,000

$13,860,000 90%

$19,800,000 70%

FY2018 Year 9

$11,930,490

$20,394,000

$0

$0 90%

$0 54%

$0

$0 90%

$0 8%

$11,930,490

$13,256,100 90%

$20,394,000 65%

FY2019 Year 10

$80,429,644

$118,869,000

$1,166,400

$1,296,000

$2,400,000

$379,170

$421,300

$5,266,255

$78,884,074

$87,648,971

$111,202,745

Total

17.5%

$0

Notes: (1) See Schedule 3. (2) Fundraising is projected as 17.5% of direct awards starting in FY 2012.

Assumption [A] Fundraising % of Direct Awards

$0

Fundraising

$0 N/A

Actual

Actual

$0 N/A

FY2009

FY2008

Direct Awards Fundraising % of Direct Awards (2)

(1)

VGTI - Florida Operating Cash Flows Fundraising Projection Detail Schedule 8

bJOO

$100,000

$3,500,000 N/A

FY2010 Year 1

$6,500,000 17.5% $1,137,500

$500,000

FY2012 Year 3

$4,250,000 N/A

FY2011 Year 2

$1,487,500

$8,500,000 17.5%

FY2013 Year 4

$2,187,500

$12,500,000 17.5%

FY2014 Year 5

$2,537,500

$14,500,000 17.5% #

FY2015 Year 6

$3,062,500

$17,500,000 17.5%

FY2016 Year 7

$3,500,000

$20,000,000 17.5%

FY2017 Year 8

$3,850,000

$22,000,000 17.5%

FY2018 Year 9

$3,965,500

$22,660,000 17.5%

FY2019 Year 10

22

$22,328,000

$131,910,000

Total

$15,000,000

(3)

(3)

(3)

$40,156,710

$0

$4,500

$300,000 1.50%

$156,710

$35,117,300 1.50%

$0

$112,500

$5,000,000 0.25%

$40,000,000

FY2010 Year 1

$6,053,519

$0

N/A

$0 3.00%

$1,053,519

$35,663,534 3.00%

$0

$25,000

$112,500 0.50%

$5,000,000

FY2011 Year 2

$0

$563

$137,500 0.50%

$0

FY2012 Year 3

$1,374,406

$304,500

$0

$0 3.00%

$1,069,906

$24,650,037 3.00%

Notes: (1) Per OTTED Agreement, interest accrued on Florida funds will be held in a trust and disbursed to VGTI Florida in June 2018 if certain conditions are met. (2) See Schedule 3. (3) Reflects actual FY 2009 amount.

Assumption [A] Return on Investment % 2010-Florida Funds [B] Return on Investment % 2011 and beyond-Florida Funds [C] Return on Investment % 2010-VGTI Funds [D] Return on Investment % 2011 and beyond-VGTI Funds

$140,665

$0

Total Non-Operating Revenue

N/A

Interest Earned on Previous Year Security Deposit Outstanding

TPIS Security Deposit and Interest Received

$300,000 N/A

$10,447,329 N/A

Torrey Pines Security Deposit Torrey Pines (TPIS) Security Deposit Outstanding Interest Earned on Funds

$15,000,000

$0

$0

$140,665

0.25% 0.50% 1.50% 3.00%

(1)

$0 $45,000,000 N/A

Actual

FY2009

Investment Income Earned on Previous Year Balance of VGTI Funds

Ending Balance of VGTI Funds (2) Investment Income on Funds

Interest on VGTI Funds

Investment Income Received on Previous Year Balance of Flordia Funds

Investment Income Earned on Previous Year Balance of Florida Funds

$15,000,000 $45,000,000

Actual

FY2008

State of Florida Funds

$60,000,000

Beg. Balance

Ending Balance of Florida Funds and Investment Income Investment Income on Funds

Interest on Innovation Incentive

VGTI - Florida Operating Cash Flows Non-Operating Receipts Projection Detail Schedule 9

bJOP

$739,501

$0

$0

$0 3.00%

$739,501

$12,512,259 3.00%

$0

$688

$138,063 0.50%

$0

FY2013 Year 4

$375,368

$0

$0

$0 3.00%

$375,368

$6,968,615 3.00%

$0

$690

$138,750 0.50%

$0

FY2014 Year 5

$209,058

$0

$0

$0 3.00%

$209,058

$7,211,975 3.00%

$0

$694

$139,440 0.50%

$0

FY2015 Year 6

$216,359

$0

$0

$0 3.00%

$216,359

$4,720,927 3.00%

$0

$697

$140,134 0.50%

$0

FY2016 Year 7

$141,628

$0

$0

$0 3.00%

$141,628

$5,936,657 3.00%

$0

$701

0.50%

$0

FY2017 Year 8

$319,632

$0

$0

$0 3.00%

$178,100

$8,325,685 3.00%

$141,532

$0

FY2018 Year 9

$249,771

$0

$0

$0 3.00%

$249,771

$10,808,513 3.00%

$0

$0

FY2019 Year 10

23

$64,976,617

$304,500

$600,000

$4,530,585

$141,532

$141,532

$60,000,000

Total

(1)

(1)

Notes: (1) See Schedule 6. (2) See Schedule 11. (3) See Schedule 12.

Assumptions [A] Estimated Grant-Funded Average OPE % [B] Estimated Grant-Funded Average Salary

Implied Grant-Funded Headcount

Implied Grant-Funded Salary Estimated Grant-Funded Average Salary

Salary MTDC Less Transfers Estimated Grant-Funded Average OPE Percentage

Salary Direct Cost Less: Faculty Transfers to Direct Cost (2) Less: Support Transfers to Direct Cost (3)

Grant-Funded Headcount

Total Grant Expense

Subcontracts and Capital Equipment

Non-Salary MTDC

Salary MTDC (1)

Grant Expense (Salary and OPE)

VGTI - Florida Operating Cash Flows Grant Disbursements Detail Schedule 10

bJOQ

0

0

35% $40,000

$0 $40,000

$0 35%

$0 $0

$0 35%

$0 0 0

$0

$0

$0 0 0

$0

$0

$0

$0

$0

Actual

Actual $0

FY2009

FY2008

33

$1,327,160 $40,000

$1,791,667 35%

$2,066,667 275,000 0

$3,500,000

$400,000

$1,033,333

$2,066,667

FY2010 Year 1

43

$1,709,877 $40,000

$2,308,333 35%

$2,583,333 275,000 0

$4,250,000

$375,000

$1,291,667

$2,583,333

FY2011 Year 2

61

$2,426,632 $40,000

$3,275,954 35%

$3,933,333 391,102 266,277

$6,500,000

$600,000

$1,966,667

$3,933,333

FY2012 Year 3

69

$2,767,234 $40,000

$3,735,767 35%

$5,133,333 855,408 542,159

$8,500,000

$800,000

$2,566,667

$5,133,333

FY2013 Year 4

105

$4,197,259 $40,000

$5,666,299 35%

$7,533,333 1,152,832 714,203

$12,500,000

$1,200,000

$3,766,667

$7,533,333

FY2014 Year 5

122

$4,890,542 $40,000

$6,602,231 35%

$8,700,000 1,362,140 735,629

$14,500,000

$1,450,000

$4,350,000

$8,700,000

FY2015 Year 6

148

$5,913,542 $40,000

$7,983,282 35%

$10,500,000 1,759,021 757,698

$17,500,000

$1,750,000

$5,250,000

$10,500,000

FY2016 Year 7

174

$6,968,726 $40,000

$9,407,780 35%

$12,000,000 1,811,791 780,428

$20,000,000

$2,000,000

$6,000,000

$12,000,000

FY2017 Year 8

192

$7,663,127 $40,000

$10,345,222 35%

$13,200,000 2,050,937 803,841

$22,000,000

$2,200,000

$6,600,000

$13,200,000

FY2018 Year 9

195

$7,811,066 $40,000

$10,544,940 35%

$13,596,000 2,223,104 827,957

$22,660,000

$2,266,000

$6,798,000

$13,596,000

FY2019 Year 10

4

$45,675,166

$61,661,474

$79,246,000 12,156,335 5,428,191

$131,910,000

$13,041,000

$39,623,000

$79,246,000

Total

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Subtotal Senior Faculty

Associate Faculty (Elias El Haddad) Associate Faculty Associate Faculty Associate Faculty Associate Faculty

Subtotal Associate Faculty

Junior Faculty Junior Faculty Junior Faculty Junior Faculty Junior Faculty Junior Faculty Junior Faculty Junior Faculty

Subtotal Junior Faculty

Total Faculty Annual Salaries 590,000

0

0 0 0 0 0 0 0 0

0

0 0 0 0 0

590,000

250,000 340,000 0 0 0 0 0

Est. Actual

Actual

0 0 0 0 0 0 0

FY2009

FY2008

Faculty Annual Salaries Director (Jay Nelson) Co-Director (Rafick Sekaly) Senior Faculty (John Hiscott) (1) Senior Faculty Senior Faculty Senior Faculty Senior Faculty

VGTI - Florida Operating Cash Flows Faculty Salary and OPE Projection Detail Schedule 11

bJOR

1,032,700

200,000

100,000 100,000 0 0 0 0 0 0

150,000

150,000 0 0 0 0

682,700

257,500 350,200 75,000 0 0 0 0

FY2010 Year 1

1,513,681

306,000

103,000 103,000 100,000 0 0 0 0 0

304,500

154,500 150,000 0 0 0

903,181

265,225 360,706 77,250 200,000 0 0 0

FY2011 Year 2

2,279,524

315,180

106,090 106,090 103,000 0 0 0 0 0

463,635

159,135 154,500 150,000 0 0

1,500,709

273,182 371,527 250,000 206,000 200,000 200,000 0

FY2012 Year 3

2,897,910

524,635

109,273 109,273 106,090 100,000 100,000 0 0 0

627,544

163,909 159,135 154,500 150,000 0

1,745,730

281,377 382,673 257,500 212,180 206,000 206,000 200,000

FY2013 Year 4

2,984,847

540,374

112,551 112,551 109,273 103,000 103,000 0 0 0

646,370

168,826 163,909 159,135 154,500 0

1,798,102

289,819 394,153 265,225 218,545 212,180 212,180 206,000

FY2014 Year 5

3,224,392

556,586

115,927 115,927 112,551 106,090 106,090 0 0 0

815,761

173,891 168,826 163,909 159,135 150,000

1,852,045

298,513 405,978 273,182 225,102 218,545 218,545 212,180

FY2015 Year 6

3,621,124

873,283

119,405 119,405 115,927 109,273 109,273 100,000 100,000 100,000

840,234

179,108 173,891 168,826 163,909 154,500

1,907,607

307,468 418,157 281,377 231,855 225,102 225,102 218,545

FY2016 Year 7

3,729,758

899,482

122,987 122,987 119,405 112,551 112,551 103,000 103,000 103,000

865,441

184,481 179,108 173,891 168,826 159,135

1,964,835

316,693 430,702 289,819 238,810 231,855 231,855 225,102

FY2017 Year 8

3,841,651

926,466

126,677 126,677 122,987 115,927 115,927 106,090 106,090 106,090

891,405

190,016 184,481 179,108 173,891 163,909

2,023,780

326,193 443,623 298,513 245,975 238,810 238,810 231,855

FY2018 Year 9

3,956,900

954,260

130,477 130,477 126,677 119,405 119,405 109,273 109,273 109,273

918,147

195,716 190,016 184,481 179,108 168,826

2,084,493

335,979 456,932 307,468 253,354 245,975 245,975 238,810

FY2019 Year 10

29,672,486

6,096,267

1,146,388 1,146,388 1,015,911 766,246 766,246 418,363 418,363 418,363

6,523,038

1,719,582 1,523,866 1,333,850 1,149,369 796,370

17,053,182

3,201,949 4,354,651 2,375,334 2,031,821 1,778,467 1,778,467 1,532,492

Total

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Subtotal Senior Faculty

Associate Faculty (Elias El Haddad) Associate Faculty Associate Faculty Associate Faculty Associate Faculty

Subtotal Associate Faculty

Junior Faculty Junior Faculty Junior Faculty Junior Faculty Junior Faculty Junior Faculty Junior Faculty Junior Faculty

Subtotal Junior Faculty

Total Faculty Salaries and OPE 349,136

0

0 0 0 0 0 0 0 0

0

0 0 0 0 0

349,136

0 349,136 0 0 0 0 0

Est. Actual

Actual

0 0 0 0 0 0 0

FY2009

FY2008

Faculty Salaries and OPE Director (Jay Nelson) Co-Director (Rafick Sekaly) Senior Faculty (John Hiscott) (1) Senior Faculty Senior Faculty Senior Faculty Senior Faculty

VGTI - Florida Operating Cash Flows Faculty Salary and OPE Projection Detail Schedule 11

bJOS

(2)

1,155,875

270,000

135,000 135,000 0 0 0 0 0 0

32,500

32,500 0 0 0 0

853,375

321,875 437,750 93,750 0 0 0 0

FY2010 Year 1

(3)

1,937,926

413,100

139,050 139,050 135,000 0 0 0 0 0

395,850

200,850 195,000 0 0 0

1,128,976

331,531 450,883 96,563 250,000 0 0 0

FY2011 Year 2

2,904,105

425,493

143,222 143,222 139,050 0 0 0 0 0

602,726

206,876 200,850 195,000 0 0

1,875,886

341,477 464,409 312,500 257,500 250,000 250,000 0

FY2012 Year 3

3,706,228

708,258

147,518 147,518 143,222 135,000 135,000 0 0 0

815,807

213,082 206,876 200,850 195,000 0

2,182,163

351,722 478,341 321,875 265,225 257,500 257,500 250,000

FY2013 Year 4

3,817,415

729,506

151,944 151,944 147,518 139,050 139,050 0 0 0

840,281

219,474 213,082 206,876 200,850 0

2,247,628

362,273 492,691 331,531 273,182 265,225 265,225 257,500

FY2014 Year 5

4,126,937

751,391

156,502 156,502 151,944 143,222 143,222 0 0 0

1,060,490

226,058 219,474 213,082 206,876 195,000

2,315,056

373,141 507,472 341,477 281,377 273,182 273,182 265,225

FY2015 Year 6

4,655,745

1,178,932

161,197 161,197 156,502 147,518 147,518 135,000 135,000 135,000

1,092,305

232,840 226,058 219,474 213,082 200,850

2,384,508

384,336 522,696 351,722 289,819 281,377 281,377 273,182

FY2016 Year 7

4,795,418

1,214,300

166,033 166,033 161,197 151,944 151,944 139,050 139,050 139,050

1,125,074

239,825 232,840 226,058 219,474 206,876

2,456,043

395,866 538,377 362,273 298,513 289,819 289,819 281,377

FY2017 Year 8

4,939,280

1,250,729

171,014 171,014 166,033 156,502 156,502 143,222 143,222 143,222

1,158,826

247,020 239,825 232,840 226,058 213,082

2,529,725

407,742 554,529 373,141 307,468 298,513 298,513 289,819

FY2018 Year 9

5,087,458

1,288,251

176,144 176,144 171,014 161,197 161,197 147,518 147,518 147,518

1,193,591

254,431 247,020 239,825 232,840 219,474

2,605,616

419,974 571,164 384,336 316,693 307,468 307,468 298,513

FY2019 Year 10

6

37,475,523

8,229,960

1,547,624 1,547,624 1,371,479 1,034,432 1,034,432 564,790 564,790 564,790

8,317,449

2,072,956 1,981,026 1,734,006 1,494,180 1,035,281

20,928,113

3,689,936 5,367,449 2,969,168 2,539,777 2,223,084 2,223,084 1,915,616

Total

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Subtotal Senior Faculty, Before Avant Garde Transfers

Subtotal Senior Faculty, With Avant Garde Transfers

Associate Faculty (Elias El Haddad) Associate Faculty Associate Faculty Associate Faculty Associate Faculty

Subtotal Associate Faculty

Junior Faculty Junior Faculty Junior Faculty Junior Faculty Junior Faculty Junior Faculty Junior Faculty Junior Faculty

Subtotal Junior Faculty

Total Faculty Salary and OPE Transfers to Direct Cost

0

0

0 0 0 0 0 0 0 0

0

0 0 0 0 0

0

0

0 0 0 0 0 0 0

Est. Actual

Actual

0 0 0 0 0 0 0

FY2009

FY2008

Faculty Salaries and OPE Transfer to Direct Cost Director (Jay Nelson) Co-Director (Rafick Sekaly) Senior Faculty (John Hiscott) (1) Senior Faculty Senior Faculty Senior Faculty Senior Faculty

VGTI - Florida Operating Cash Flows Faculty Salary and OPE Projection Detail Schedule 11

bJOT

0

0 0 0 0 0 0 0

275,000

0

0 0 0 0 0 0 0 0

0

0 0 0 0 0

275,000

FY2010 Year 1

0

0 0 0 0 0 0 0

275,000

0

0 0 0 0 0 0 0 0

0

0 0 0 0 0

275,000

FY2011 Year 2

391,102

0

0 0 0 0 0 0 0 0

0

0 0 0 0 0

391,102

116,102

0 116,102 0 0 0 0 0

FY2012 Year 3

855,408

73,759

36,880 36,880 0 0 0 0 0 0

106,541

106,541 0 0 0 0

675,108

400,108

0 239,171 160,938 0 0 0 0

FY2013 Year 4

1,152,832

112,851

37,986 37,986 36,880 0 0 0 0 0

216,278

109,737 106,541 0 0 0

823,702

548,702

0 246,346 165,766 136,591 0 0 0

FY2014 Year 5

1,362,140

194,488

78,251 78,251 37,986 0 0 0 0 0

329,307

113,029 109,737 106,541 0 0

838,345

838,345

0 253,736 170,739 140,689 136,591 136,591 0

FY2015 Year 6

1,759,021

313,207

80,599 80,599 78,251 36,880 36,880 0 0 0

445,727

116,420 113,029 109,737 106,541 0

1,000,086

1,000,086

0 261,348 175,861 144,909 140,689 140,689 136,591

FY2016 Year 7

1,811,791

322,603

83,016 83,016 80,599 37,986 37,986 0 0 0

459,099

119,913 116,420 113,029 109,737 0

1,030,089

1,030,089

0 269,189 181,137 149,257 144,909 144,909 140,689

FY2017 Year 8

2,050,937

410,532

85,507 85,507 83,016 78,251 78,251 0 0 0

579,413

123,510 119,913 116,420 113,029 106,541

1,060,992

1,060,992

0 277,264 186,571 153,734 149,257 149,257 144,909

FY2018 Year 9

2,223,104

533,487

88,072 88,072 85,507 80,599 80,599 36,880 36,880 36,880

596,795

127,215 123,510 119,913 116,420 109,737

1,092,821

1,092,821

0 285,582 192,168 158,346 153,734 153,734 149,257

FY2019 Year 10

12,156,335

1,960,928

490,311 490,311 402,238 233,715 233,715 36,880 36,880 36,880

2,733,161

816,365 689,150 565,640 445,727 216,278

7,462,246

6,087,246

0 1,948,738 1,233,178 883,526 725,180 725,180 571,445

Total

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Subtotal Senior Faculty, Before Avant Garde Transfers

Subtotal Senior Faculty, With Avant Garde Transfers

Associate Faculty Associate Faculty Associate Faculty Associate Faculty Associate Faculty

Subtotal Associate Faculty

Junior Faculty Junior Faculty Junior Faculty Junior Faculty Junior Faculty Junior Faculty Junior Faculty Junior Faculty

Subtotal Junior Faculty

Total Faculty Salaries and OPE After Transfers

349,136

0

0 0 0 0 0 0 0 0

0

0 0 0 0 0

349,136

349,136

0 349,136 0 0 0 0 0

Est. Actual

Actual

0 0 0 0 0 0 0

FY2009

FY2008

Faculty Salaries and OPE After Transfers Director (Jay Nelson) Co-Director (Rafick Sekaly) Senior Faculty (John Hiscott) (1) Senior Faculty Senior Faculty Senior Faculty Senior Faculty

VGTI - Florida Operating Cash Flows Faculty Salary and OPE Projection Detail Schedule 11

bJOU

880,875

270,000

135,000 135,000 0 0 0 0 0 0

32,500

32,500 0 0 0 0

578,375

853,375

321,875 437,750 93,750 0 0 0 0

FY2010 Year 1

1,662,926

413,100

139,050 139,050 135,000 0 0 0 0 0

395,850

200,850 195,000 0 0 0

853,976

1,128,976

331,531 450,883 96,563 250,000 0 0 0

FY2011 Year 2

2,513,002

425,493

143,222 143,222 139,050 0 0 0 0 0

602,726

206,876 200,850 195,000 0 0

1,484,784

1,759,784

341,477 348,307 312,500 257,500 250,000 250,000 0

FY2012 Year 3

2,850,820

634,499

110,639 110,639 143,222 135,000 135,000 0 0 0

709,266

106,541 206,876 200,850 195,000 0

1,507,055

1,782,055

351,722 239,171 160,938 265,225 257,500 257,500 250,000

FY2013 Year 4

2,664,583

616,654

113,958 113,958 110,639 139,050 139,050 0 0 0

624,003

109,737 106,541 206,876 200,850 0

1,423,925

1,698,925

362,273 246,346 165,766 136,591 265,225 265,225 257,500

FY2014 Year 5

2,764,797

556,903

78,251 78,251 113,958 143,222 143,222 0 0 0

731,183

113,029 109,737 106,541 206,876 195,000

1,476,711

1,476,711

373,141 253,736 170,739 140,689 136,591 136,591 265,225

FY2015 Year 6

2,896,724

865,725

80,599 80,599 78,251 110,639 110,639 135,000 135,000 135,000

646,577

116,420 113,029 109,737 106,541 200,850

1,384,422

1,384,422

384,336 261,348 175,861 144,909 140,689 140,689 136,591

FY2016 Year 7

2,983,626

891,697

83,016 83,016 80,599 113,958 113,958 139,050 139,050 139,050

665,975

119,913 116,420 113,029 109,737 206,876

1,425,955

1,425,955

395,866 269,189 181,137 149,257 144,909 144,909 140,689

FY2017 Year 8

2,888,343

840,197

85,507 85,507 83,016 78,251 78,251 143,222 143,222 143,222

579,413

123,510 119,913 116,420 113,029 106,541

1,468,733

1,468,733

407,742 277,264 186,571 153,734 149,257 149,257 144,909

FY2018 Year 9

2,864,355

754,764

88,072 88,072 85,507 80,599 80,599 110,639 110,639 110,639

596,795

127,215 123,510 119,913 116,420 109,737

1,512,795

1,512,795

419,974 285,582 192,168 158,346 153,734 153,734 149,257

FY2019 Year 10

25,319,188

6,269,032

1,057,313 1,057,313 969,241 800,717 800,717 527,910 527,910 527,910

5,584,288

1,256,591 1,291,876 1,168,366 1,048,453 819,003

13,465,867

14,840,867

3,689,936 3,418,711 1,735,990 1,656,251 1,497,905 1,497,905 1,344,170

Total

3% 25% 30% 35% 25% 50% 25% 50%

6

3 1 2

FY2011 Year 2

[I] Director Base Salary [J] Co-Director Base Salary [K] John Hiscott FY09-FY10 Base Salary [L] John Hiscott FY11 Base Salary [L] Senior Faculty Base Salary [L] Associate Faculty Base Salary [M] Junior Faculty Base Salary

1

FY2010 Year 1

9

4 2 3

Notes: (1) Reflects "Phase 1" and "Phase 2" salaries. (2) Jay Nelson's salary is included as part of "Advisory Board" disbursements for FY 2009; therefore, it is excluded here. (3) Reflects 4/1/2010 start date.

[A] Annual Salary Increase [B] Senior Faculty OPE [C] Associate Faculty OPE [D] Junior Faculty OPE [E] Sekaly Year 4 Transfer to DC [F] Senior/Associate Transfers to DC in Years 4+ [G] Junior Transfer to DC in Years 3 and 4 [H] Junior Transfer to DC in Years 5+

Assumptions

0

Total Headcount

1 0 0

Est. Actual

Actual

0 0 0

FY2009

FY2008

Faculty Headcount Senior Faculty Associate Faculty Junior Faculty

VGTI - Florida Operating Cash Flows Faculty Salary and OPE Projection Detail Schedule 11

bJOV

6 3 3

$250,000 $340,000 $75,000 $250,000 $200,000 $150,000 $100,000

12

FY2012 Year 3

7 4 5 16

FY2013 Year 4

7 4 5 16

FY2014 Year 5

7 5 5 17

FY2015 Year 6

7 5 8 20

FY2016 Year 7

7 5 8 20

FY2017 Year 8

7 5 8 20

FY2018 Year 9

7 5 8 20

FY2019 Year 10

Total

0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0

Total Scientific Support Salaries

Scientific Support Salaries and OPE Sr Bioinformaticist (Peter Wilkinson) Bioinformaticist Flow Cytometry Core (Rebeka Bordi) Flow Cytometry Core (Tomas Baumgartner) Mass Spectometry Core Sequencing Core (Dabnath Mukhopadhyay) Sequencing Core Imaging Core Animal Resources (Salary 1) (50% w/ TPIMS) Animal Resources (Salary 1) (50% w/ TPIMS) Animal Resources (Salary 1) (50% w/ TPIMS) Animal Resources (Salary 2) (50% w/ TPIMS)

Total Scientific Support Salaries and OPE

121,988

41,199 0 0 0 0 47,930 32,859 0 0 0 0 0

80,000

80,000 0 0 0 0 0 0 0 0 0 0 0

Est. Actual

Actual

Scientific Support Annual Salaries Sr Bioinformaticist (Peter Wilkinson) Bioinformaticist Flow Cytometry Core (Rebeka Bordi) Flow Cytometry Core (Tomas Baumgartner) Mass Spectometry Core Sequencing Core (Dabnath Mukhopadhyay) Sequencing Core Imaging Core Animal Resources (Salary 1) (50% w/ TPIMS) Animal Resources (Salary 1) (50% w/ TPIMS) Animal Resources (Salary 1) (50% w/ TPIMS) Animal Resources (Salary 2) (50% w/ TPIMS)

FY2009

FY2008

VGTI - Florida Operating Cash Flows Scientific Support Salary and OPE Projection Detail Schedule 12

bJPM

(1)

729,962

111,240 0 99,000 87,909 0 92,813 101,250 108,000 27,000 27,000 27,000 48,750

556,900

82,400 0 80,000 67,000 0 75,000 75,000 80,000 20,000 20,000 20,000 37,500

FY2010 Year 1

(2)

(3)

(2)

950,638

114,577 70,200 111,240 93,164 108,000 104,288 104,288 111,240 27,810 27,810 27,810 50,213

705,607

84,872 52,000 82,400 69,010 80,000 77,250 77,250 82,400 20,600 20,600 20,600 38,625

FY2011 Year 2

979,157

118,015 72,306 114,577 95,958 111,240 107,416 107,416 114,577 28,644 28,644 28,644 51,719

726,775

87,418 53,560 84,872 71,080 82,400 79,568 79,568 84,872 21,218 21,218 21,218 39,784

FY2012 Year 3

1,008,532

121,555 74,475 118,015 98,837 114,577 110,639 110,639 118,015 29,504 29,504 29,504 53,270

748,578

90,041 55,167 87,418 73,213 84,872 81,955 81,955 87,418 21,855 21,855 21,855 40,977

FY2013 Year 4

1,038,788

125,202 76,709 121,555 101,802 118,015 113,958 113,958 121,555 30,389 30,389 30,389 54,869

771,036

92,742 56,822 90,041 75,409 87,418 84,413 84,413 90,041 22,510 22,510 22,510 42,207

FY2014 Year 5

1,069,952

128,958 79,011 125,202 104,856 121,555 117,377 117,377 125,202 31,300 31,300 31,300 56,515

794,167

95,524 58,526 92,742 77,671 90,041 86,946 86,946 92,742 23,185 23,185 23,185 43,473

FY2015 Year 6

1,102,050

132,826 81,381 128,958 108,002 125,202 120,898 120,898 128,958 32,239 32,239 32,239 58,210

817,992

98,390 60,282 95,524 80,002 92,742 89,554 89,554 95,524 23,881 23,881 23,881 44,777

FY2016 Year 7

1,135,112

136,811 83,822 132,826 111,242 128,958 124,525 124,525 132,826 33,207 33,207 33,207 59,956

842,532

101,342 62,091 98,390 82,402 95,524 92,241 92,241 98,390 24,597 24,597 24,597 46,120

FY2017 Year 8

1,169,165

140,916 86,337 136,811 114,579 132,826 128,260 128,260 136,811 34,203 34,203 34,203 61,755

867,808

104,382 63,953 101,342 84,874 98,390 95,008 95,008 101,342 25,335 25,335 25,335 47,504

FY2018 Year 9

1,204,240

145,143 88,927 140,916 118,017 136,811 132,108 132,108 140,916 35,229 35,229 35,229 63,608

893,842

107,513 65,872 104,382 87,420 101,342 97,858 97,858 104,382 26,095 26,095 26,095 48,929

FY2019 Year 10

10,476,726

1,316,441 713,169 1,229,099 1,034,367 1,097,183 1,200,211 1,160,718 1,238,099 309,525 309,525 309,525 558,864

7,805,236

1,024,624 528,274 917,110 768,080 812,728 859,791 859,791 917,110 229,278 229,278 229,278 429,895

Total

0 0 0 0 0 0 0 0 0 0 0 0

0

0 0 0 0 0 0 0 0 0 0 0 0

0

Total Scientific Support Transfers to Direct Cost

Scientific Support Salaries and OPE after Transfers - Detail Sr Bioinformaticist (Peter Wilkinson) Bioinformaticist Flow Cytometry Core (Rebeka Bordi) Flow Cytometry Core (Tomas Baumgartner) Mass Spectometry Core Sequencing Core (Dabnath Mukhopadhyay) Sequencing Core Imaging Core Animal Resources (Salary 1) (50% w/ TPIMS) Animal Resources (Salary 1) (50% w/ TPIMS) Animal Resources (Salary 1) (50% w/ TPIMS) Animal Resources (Salary 2) (50% w/ TPIMS)

Total Scientific Support Salaries and OPE after Transfers 121,988

41,199 0 0 0 0 47,930 32,859 0 0 0 0 0

0

0 0 0 0 0 0 0 0 0 0 0 0

Est. Actual

Actual

Scientific Support Transfers to Direct Cost Sr Bioinformaticist (Peter Wilkinson) Bioinformaticist Flow Cytometry Core (Rebeka Bordi) Flow Cytometry Core (Tomas Baumgartner) Mass Spectometry Core Sequencing Core (Dabnath Mukhopadhyay) Sequencing Core Imaging Core Animal Resources (Salary 1) (50% w/ TPIMS) Animal Resources (Salary 1) (50% w/ TPIMS) Animal Resources (Salary 1) (50% w/ TPIMS) Animal Resources (Salary 2) (50% w/ TPIMS)

FY2009

FY2008

VGTI - Florida Operating Cash Flows Scientific Support Salary and OPE Projection Detail Schedule 12

bJPN

0

0 0 0 0 0 0 0 0 0 0 0 0

729,962

111,240 0 99,000 87,909 0 92,813 101,250 108,000 27,000 27,000 27,000 48,750

FY2010 Year 1

0

0 0 0 0 0 0 0 0 0 0 0 0

950,638

114,577 70,200 111,240 93,164 108,000 104,288 104,288 111,240 27,810 27,810 27,810 50,213

FY2011 Year 2

712,880

23,603 72,306 114,577 95,958 111,240 21,483 21,483 114,577 28,644 28,644 28,644 51,719

266,277

94,412 0 0 0 0 85,933 85,933 0 0 0 0 0

FY2012 Year 3

466,373

24,311 74,475 23,603 19,767 114,577 22,128 22,128 23,603 29,504 29,504 29,504 53,270

542,159

97,244 0 94,412 79,070 0 88,511 88,511 94,412 0 0 0 0

FY2013 Year 4

324,585

25,040 15,342 24,311 20,360 23,603 22,792 22,792 24,311 30,389 30,389 30,389 54,869

714,203

100,161 61,368 97,244 81,442 94,412 91,166 91,166 97,244 0 0 0 0

FY2014 Year 5

334,323

25,792 15,802 25,040 20,971 24,311 23,475 23,475 25,040 31,300 31,300 31,300 56,515

735,629

103,166 63,209 100,161 83,885 97,244 93,901 93,901 100,161 0 0 0 0

FY2015 Year 6

344,353

26,565 16,276 25,792 21,600 25,040 24,180 24,180 25,792 32,239 32,239 32,239 58,210

757,698

106,261 65,105 103,166 86,402 100,161 96,718 96,718 103,166 0 0 0 0

FY2016 Year 7

354,683

27,362 16,764 26,565 22,248 25,792 24,905 24,905 26,565 33,207 33,207 33,207 59,956

780,428

109,449 67,058 106,261 88,994 103,166 99,620 99,620 106,261 0 0 0 0

FY2017 Year 8

365,324

28,183 17,267 27,362 22,916 26,565 25,652 25,652 27,362 34,203 34,203 34,203 61,755

803,841

112,732 69,070 109,449 91,663 106,261 102,608 102,608 109,449 0 0 0 0

FY2018 Year 9

376,283

29,029 17,785 28,183 23,603 27,362 26,422 26,422 28,183 35,229 35,229 35,229 63,608

827,957

116,114 71,142 112,732 94,413 109,449 105,687 105,687 112,732 0 0 0 0

FY2019 Year 10

31

5,081,393

476,901 316,219 505,674 428,498 486,490 436,066 429,432 514,674 309,525 309,525 309,525 558,864

5,428,191

839,540 396,950 723,425 605,869 610,693 764,144 764,144 723,425 0 0 0 0

Total

0

Total Scientific Support Headcount

Notes: (1) Reflects actual amount for FY 2009. (2) Reflects start date of 8/1/2009. (3) Reflects start date of 7/20/2009.

[B] Sr Bioinfomaticist Salary [C] Bioinformatics Salary [D] Flow Cytometry Core Salary [E] Mass Spectometry Core Salary [F] Sequencing Core Salary [G] Imaging Core Salary [H] Animal Resources Salary 1 [I] Animal Resources Salary 2

$80,000 $52,000 $80,000 $80,000 $75,000 $80,000 $40,000 $75,000

3%

2

1 0 0 1 0 0

121,988

6

1 1 0 1 1 2

729,962

111,240 186,909 0 194,063 108,000 129,750

FY2010 Year 1

9

2 1 2 1 1 2

950,638

184,777 204,404 108,000 208,575 111,240 133,643

FY2011 Year 2

[J] Bioinfomaticist OPE [K] Flow Cytometry Core OPE [L] Mass Spectometry Core OPE [M] Sequencing Core OPE [N] Imaging Core OPE [O] Animal Resources OPE 1 [P] Animal Resources OPE 2 [Q] Support Adjustment Factor [R] Transfer to Direct Cost in Years 4+

Assumptions

0 0 0 0 0 0

Scientific Support Headcount Bioinformaticist Flow Cytometry Core (Rebeka Bordi) Mass Spectometry Core Sequencing Core Imaging Core Animal Resources

[A] Annual Salary Increase

0

Total Scientific Support Salaries and OPE after Transfers

41,199 0 0 80,789 0 0

Est. Actual

Actual

Scientific Support Salaries and OPE after Transfers - Summary Bioinformaticist 0 Flow Cytometry Core 0 Mass Spectometry Core 0 Sequencing Core 0 Imaging Core 0 Animal Resources 0

FY2009

FY2008

VGTI - Florida Operating Cash Flows Scientific Support Salary and OPE Projection Detail Schedule 12

bJPO

35% 35% 35% 35% 35% 35% 30% 50% 80%

9

2 1 2 1 1 2

712,880

95,909 210,536 111,240 42,966 114,577 137,652

FY2012 Year 3

9

2 1 2 1 1 2

466,373

98,786 43,370 114,577 44,255 23,603 141,781

FY2013 Year 4

9

2 1 2 1 1 2

324,585

40,382 44,671 23,603 45,583 24,311 146,035

FY2014 Year 5

9

2 1 2 1 1 2

334,323

41,594 46,012 24,311 46,951 25,040 150,416

FY2015 Year 6

9

2 1 2 1 1 2

344,353

42,841 47,392 25,040 48,359 25,792 154,928

FY2016 Year 7

9

2 1 2 1 1 2

354,683

44,127 48,814 25,792 49,810 26,565 159,576

FY2017 Year 8

9

2 1 2 1 1 2

365,324

45,451 50,278 26,565 51,304 27,362 164,363

FY2018 Year 9

9

2 1 2 1 1 2

376,283

46,814 51,786 27,362 52,843 28,183 169,294

FY2019 Year 10

5,081,393

793,120 934,172 486,490 865,499 514,674 1,487,438

Total

0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total Administration Salaries

Total Administration Salaries with Headcount

Administration Salaries and OPE - Detail Chief Operating Officer Office Manager Finance Director Account Technician (1) Account Technician (2) Grants Manager (1) Grants Manager (2) Grants Writer IT Programmer IT Support Fundraiser Admin Ast Advisory Board (1)

Total Administration Salaries and OPE

0 0 0 0 0 0 0 0 0 0 0 0 0

111,624

77,277 12,444 11,473 0 0 10,430 0 0 0 0 0 0 0

365,000

455,000

150,000 45,000 100,000 0 0 70,000 0 0 0 0 0 0 90,000

Est. Actual

Actual

Administration Annual Salaries Chief Operating Officer Office Manager Finance Director Account Technician (1) Account Technician (2) Grants Manager (1) Grants Manager (2) Grants Writer IT Programmer IT Support Fundraiser Admin Ast Advisory Board (1)

FY2009

FY2008

VGTI - Florida Operating Cash Flows Administration Salary and OPE Calculation Detail Schedule 13

bJPP

(2)

(2)

(2)

(2)

953,417

193,125 62,573 128,750 61,144 0 90,125 68,750 93,750 93,750 68,750 0 0 92,700

681,242

773,942

154,500 46,350 103,000 45,292 0 72,100 55,000 75,000 75,000 55,000 0 0 92,700

FY2010 Year 1

1,075,769

198,919 64,450 132,613 62,979 0 92,829 70,813 96,563 96,563 70,813 93,750 0 95,481

776,679

872,160

159,135 47,741 106,090 46,651 0 74,263 56,650 77,250 77,250 56,650 75,000 0 95,481

FY2011 Year 2

1,108,042

204,886 66,383 136,591 64,868 0 95,614 72,937 99,459 99,459 72,937 96,563 0 98,345

799,980

898,325

163,909 49,173 109,273 48,050 0 76,491 58,350 79,568 79,568 58,350 77,250 0 98,345

FY2012 Year 3

1,141,284

211,033 68,375 140,689 66,814 0 98,482 75,125 102,443 102,443 75,125 99,459 0 101,296

823,979

925,275

168,826 50,648 112,551 49,492 0 78,786 60,100 81,955 81,955 60,100 79,568 0 101,296

FY2013 Year 4

1,292,666

217,364 70,426 144,909 68,818 61,144 101,436 77,379 105,516 105,516 77,379 102,443 56,000 104,335

933,990

1,038,325

173,891 52,167 115,927 50,977 45,292 81,149 61,903 84,413 84,413 61,903 81,955 40,000 104,335

FY2014 Year 5

1,331,446

223,885 72,539 149,257 70,883 62,979 104,480 79,700 108,682 108,682 79,700 105,516 57,680 107,465

962,010

1,069,475

179,108 53,732 119,405 52,506 46,651 83,584 63,760 86,946 86,946 63,760 84,413 41,200 107,465

FY2015 Year 6

1,371,390

230,601 74,715 153,734 73,009 64,868 107,614 82,091 111,942 111,942 82,091 108,682 59,410 110,689

990,870

1,101,559

184,481 55,344 122,987 54,081 48,050 86,091 65,673 89,554 89,554 65,673 86,946 42,436 110,689

FY2016 Year 7

1,412,531

237,519 76,956 158,346 75,200 66,814 110,842 84,554 115,301 115,301 84,554 111,942 61,193 114,009

1,020,597

1,134,606

190,016 57,005 126,677 55,703 49,492 88,674 67,643 92,241 92,241 67,643 89,554 43,709 114,009

FY2017 Year 8

1,454,907

244,645 79,265 163,097 77,456 68,818 114,168 87,090 118,760 118,760 87,090 115,301 63,028 117,430

1,051,214

1,168,644

195,716 58,715 130,477 57,375 50,977 91,334 69,672 95,008 95,008 69,672 92,241 45,020 117,430

FY2018 Year 9

1,498,554

251,984 81,643 167,990 79,779 70,883 117,593 89,703 122,322 122,322 89,703 118,760 64,919 120,952

1,082,751

1,203,703

201,587 60,476 134,392 59,096 52,506 94,074 71,763 97,858 97,858 71,763 95,008 46,371 120,952

FY2019 Year 10

3

12,751,631

2,291,239 729,768 1,487,448 700,950 395,506 1,043,612 788,142 1,074,739 1,074,739 788,142 952,416 362,231 1,062,702

9,488,313

10,641,014

1,921,169 576,351 1,280,780 519,222 292,967 896,546 630,513 859,791 859,791 630,513 761,933 258,736 1,152,702

Total

0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 1 0 0 0 0 1 0 0 2

Total Administration Salaries and OPE

Administration Headcount Chief Operating Officer Office Manager Finance Director Account Technician (1) Account Technician (2) Grants Manager (1) Grants Manager (2) IT Programmer IT Support Fundraiser Office Manager Advisory Board (1)

Total Administration Headcount

4

1 1 1 0 0 1 0 0 0 0 0 0

111,624

77,277 12,444 11,473 0 10,430 0 0 0 0 0 0

Est. Actual

Actual

Administration Salaries and OPE - Summary Chief Operating Officer Office Manager Finance Director Account Technicians Grants Managers Grants Writer IT Programmer IT Support Fundraiser Admin Ast Advisory Board (1)

FY2009

FY2008

VGTI - Florida Operating Cash Flows Administration Salary and OPE Calculation Detail Schedule 13

bJPQ

8

1 1 1 1 0 1 1 1 1 0 0 0

953,417

193,125 62,573 128,750 61,144 158,875 93,750 93,750 68,750 0 0 92,700

FY2010 Year 1

9

1 1 1 1 0 1 1 1 1 1 0 0

1,075,769

198,919 64,450 132,613 62,979 163,641 96,563 96,563 70,813 93,750 0 95,481

FY2011 Year 2

9

1 1 1 1 0 1 1 1 1 1 0 0

1,108,042

204,886 66,383 136,591 64,868 168,550 99,459 99,459 72,937 96,563 0 98,345

FY2012 Year 3

9

1 1 1 1 0 1 1 1 1 1 0 0

1,141,284

211,033 68,375 140,689 66,814 173,607 102,443 102,443 75,125 99,459 0 101,296

FY2013 Year 4

11

1 1 1 1 1 1 1 1 1 1 1 0

1,292,666

217,364 70,426 144,909 129,963 178,815 105,516 105,516 77,379 102,443 56,000 104,335

FY2014 Year 5

11

1 1 1 1 1 1 1 1 1 1 1 0

1,331,446

223,885 72,539 149,257 133,861 184,180 108,682 108,682 79,700 105,516 57,680 107,465

FY2015 Year 6

11

1 1 1 1 1 1 1 1 1 1 1 0

1,371,390

230,601 74,715 153,734 137,877 189,705 111,942 111,942 82,091 108,682 59,410 110,689

FY2016 Year 7

11

1 1 1 1 1 1 1 1 1 1 1 0

1,412,531

237,519 76,956 158,346 142,014 195,396 115,301 115,301 84,554 111,942 61,193 114,009

FY2017 Year 8

11

1 1 1 1 1 1 1 1 1 1 1 0

1,454,907

244,645 79,265 163,097 146,274 201,258 118,760 118,760 87,090 115,301 63,028 117,430

FY2018 Year 9

11

1 1 1 1 1 1 1 1 1 1 1 0

1,498,554

251,984 81,643 167,990 150,662 207,296 122,322 122,322 89,703 118,760 64,919 120,952

FY2019 Year 10

34

12,751,631

2,291,239 729,768 1,487,448 1,096,455 1,831,753 1,074,739 1,074,739 788,142 952,416 362,231 1,062,702

Total

$150,000 $90,000 $45,000 $100,000 $45,292 $80,000 $55,000 $75,000 $75,000 $55,000 $40,000 $25,000 $150,000 $90,000

3%

FY2010 Year 1

FY2011 Year 2

[P] COO OPE [Q] Administrative Director OPE [R] Executive Assistant OPE [S] Finance Director OPE [T] Account Technicians OPE [U] Grants Director OPE [V] Grants Manager OPE [W] Grants Writer OPE [X] IT Programmer OPE [Y] IT Support OPE [Z] Office Manager OPE [AA] Fundraiser Salary [BB] Fundraiser OPE

Assumptions

Est. Actual

Actual

Notes: (1) Not included in headcount and does not incur OPE costs. (2) Reflects actual amount for FY 2009.

[B] COO Salary [C] Administrative Director Salary [D] Executive Assistant Salary [E] Finance Director Salary [F] Account Technicians Salaries [G] Grants Director Salary [H] Grants Manager Salary [I] Grants Writer Salary [J] IT Programmer Salary [K] IT Support Salary [L] Admin Ast Salary [M] Executive Committee Consultants Salary [N] Consultants Salary [O] Advisory Board Salary

[A] Annual Salary Increase

FY2009

FY2008

VGTI - Florida Operating Cash Flows Administration Salary and OPE Calculation Detail Schedule 13

bJPR

25% 25% 35% 25% 35% 25% 25% 25% 25% 25% 40% $75,000 25%

FY2012 Year 3

FY2013 Year 4

FY2014 Year 5

FY2015 Year 6

FY2016 Year 7

FY2017 Year 8

FY2018 Year 9

FY2019 Year 10

Total

0 0 0 0 0

[B] Security Salary [C] Maintenance Salary [D] Custodial Salary [E] Logistics Salary [F] Facilities Manager Salary

$40,000 $45,000 $35,000 $40,000 $75,000

0

0 0 0 0 0

0

0 0 0 0 0

FY2010 Year 1

[G] Security OPE [H] Maintenance OPE [I] Custodial OPE [J] Logistics OPE [K] Facilities Manager OPE [L] 2011 Partial-Year Adjustment

0

Total Facilities Headcount

3%

0 0 0 0 0

Facilities Headcount Facilities Manager Security Maintenance Custodial Logistics

[A] Annual Salary Increase

0

Total Facilities Salaries and OPE

Assumptions

0 0 0 0 0

Facilities Salaries and OPE Facilities Manager Security Maintenance Custodial Logistics

0

0 0 0 0 0

Est. Actual

Actual

0

1 3 3 3 2

FY2009

FY2008

Total Facilities Salaries

Facilities Salaries Facilities Manager Security Maintenance Custodial Logistics

Headcount

VGTI - Florida Operating Cash Flows Facilities Salary and OPE Calculation Detail Schedule 14

bJPS

0

0 0 0 0 0

0

0 0 0 0 0

0

0 0 0 0 0

30% 30% 30% 30% 30% 33%

12

1 3 3 3 2

223,167

32,500 52,000 58,500 45,500 34,667

515,000

75,000 120,000 135,000 105,000 80,000

FY2011 Year 2

12

1 3 3 3 2

689,585

100,425 160,680 180,765 140,595 107,120

530,450

77,250 123,600 139,050 108,150 82,400

FY2012 Year 3

12

1 3 3 3 2

710,273

103,438 165,500 186,188 144,813 110,334

546,364

79,568 127,308 143,222 111,395 84,872

FY2013 Year 4

12

1 3 3 3 2

731,581

106,541 170,465 191,774 149,157 113,644

562,754

81,955 131,127 147,518 114,736 87,418

FY2014 Year 5

12

1 3 3 3 2

753,528

109,737 175,579 197,527 153,632 117,053

579,637

84,413 135,061 151,944 118,178 90,041

FY2015 Year 6

12

1 3 3 3 2

776,134

113,029 180,847 203,453 158,241 120,565

597,026

86,946 139,113 156,502 121,724 92,742

FY2016 Year 7

12

1 3 3 3 2

799,418

116,420 186,272 209,556 162,988 124,181

614,937

89,554 143,286 161,197 125,375 95,524

FY2017 Year 8

12

1 3 3 3 2

823,401

119,913 191,860 215,843 167,878 127,907

633,385

92,241 147,585 166,033 129,137 98,390

FY2018 Year 9

12

1 3 3 3 2

848,103

123,510 197,616 222,318 172,914 131,744

652,387

95,008 152,012 171,014 133,011 101,342

FY2019 Year 10

6

6,355,188

925,513 1,480,821 1,665,923 1,295,718 987,214

5,231,940

761,933 1,219,093 1,371,479 1,066,706 812,728

Total

$4,750,000

$0

2011

2012

2013

2014

2015

2016

2017

2018

Senior Faculty Associate Faculty Junior Faculty

Senior Faculty Associate Faculty Junior Faculty

Senior Faculty Associate Faculty Junior Faculty

Senior Faculty Associate Faculty Junior Faculty

Senior Faculty Associate Faculty Junior Faculty

Senior Faculty Associate Faculty Junior Faculty

Senior Faculty Associate Faculty Junior Faculty

Senior Faculty Associate Faculty Junior Faculty

Note: (1) Reflects actual amount for FY 2009.

Total

Senior Faculty Total (1) Associate Faculty Total (1) Junior Faculty Total (1)

2010

Senior Faculty Associate Faculty Junior Faculty

$35,391 0 0

$35,391

$0 0 0

$0

750,000 500,000 1,125,000

$1,500,000 1,000,000 2,250,000

Actual

Actual

$0 0 0

FY2009

FY2008

Start-Up Funds Disbursed (50/10/10/10/10 Schedule) Senior Faculty 2009 0 Associate Faculty 0 Junior Faculty 0

Start-Up Funds Designated Senior Faculty 100% Associate Faculty 100% Junior Faculty 100%

VGTI - Florida Operating Cash Flows Start-Up Funds Calculation Detail Schedule 15

bJPT

$475,000

$150,000 100,000 225,000

0 0 0

150,000 100,000 225,000

$0

$0 0 0

FY2010 Year 1

$1,225,000

$900,000 100,000 225,000

750,000 0 0

0 0 0

150,000 100,000 225,000

$1,500,000

$1,500,000 0 0

FY2011 Year 2

$2,125,000

$1,800,000 100,000 225,000

1,500,000 0 0

150,000 0 0

0 0 0

150,000 100,000 225,000

$3,000,000

$3,000,000 0 0

FY2012 Year 3

$3,675,000

$2,100,000 600,000 975,000

1,500,000 500,000 750,000

300,000 0 0

150,000 0 0

0 0 0

150,000 100,000 225,000

$5,500,000

$3,000,000 1,000,000 1,500,000

FY2013 Year 4

$1,975,000

$900,000 700,000 375,000

0 500,000 0

300,000 100,000 150,000

300,000 0 0

150,000 0 0

0 0 0

150,000 100,000 225,000

$1,000,000

$0 1,000,000 0

FY2014 Year 5

$1,600,000

$750,000 700,000 150,000

0 500,000 0

0 100,000 0

300,000 100,000 150,000

300,000 0 0

150,000 0 0

0 0 0

$1,000,000

$0 1,000,000 0

FY2015 Year 6

$2,450,000

$750,000 800,000 900,000

0 500,000 750,000

0 100,000 0

0 100,000 0

300,000 100,000 150,000

300,000 0 0

150,000 0 0

$2,500,000

$0 1,000,000 1,500,000

FY2016 Year 7

$2,050,000

$600,000 400,000 1,050,000

0 0 750,000

0 100,000 150,000

0 100,000 0

0 100,000 0

300,000 100,000 150,000

300,000 0 0

$1,500,000

$0 0 1,500,000

FY2017 Year 8

$1,150,000

$300,000 400,000 450,000

0 0 0

0 0 150,000

0 100,000 150,000

0 100,000 0

0 100,000 0

300,000 100,000 150,000

$0

$0 0 0

FY2018 Year 9

$600,000

$0 300,000 300,000

0 0 0

0 0 150,000

0 100,000 150,000

0 100,000 0

0 100,000 0

$0

$0 0 0

FY2019 Year 10

$17,360,391

$8,285,391 $4,200,000 4,875,000

0 0 0

0 0 1,050,000

0 800,000 1,200,000

0 900,000 0

0 1,000,000 0

3,000,000 1,000,000 1,500,000

3,000,000 0 0

1,500,000 0 0

0 0 0

1,500,000 1,000,000 2,250,000

$20,750,000

$9,000,000 5,000,000 6,750,000

Total

Note: (1) See Schedule 3.

[A] Equipment Maint Contract % of Purchase [B] Board of Directors Base Year [C] Board of Directors Annual Increase

20% $15,000 3%

$0

Board of Directors

Assumptions

$0

Equip Maint Contract

$0

$22,118

$1,095,824 N/A

Actual

Actual $0 N/A

FY2009

FY2008

Capital Equipment (1) Equipment Maint Contract % of Purchase

VGTI - Florida Operating Cash Flows Administration Non-Salary Calculation Detail Schedule 16

bJPU

$15,000

$1,800,000

$9,000,000 20%

FY2010 Year 1

$15,450

$0

$0 20%

FY2011 Year 2

$15,914

$1,400,000

$7,000,000 20%

FY2012 Year 3

$16,391

$800,000

$4,000,000 20%

FY2013 Year 4

$16,883

$600,000

$3,000,000 20%

FY2014 Year 5

$17,389

$0

$0 20%

FY2015 Year 6

$17,911

$500,000

$2,500,000 20%

FY2016 Year 7

$18,448

$240,000

$1,200,000 20%

FY2017 Year 8

$19,002

$220,000

$1,100,000 20%

FY2018 Year 9

$19,572

$200,000

$1,000,000 20%

FY2019 Year 10

$171,958

$5,782,118

$29,895,824

Total

$0

Building Maintenance

$6,044

$369,703

$0

$0

$672,000

$2,015,347 6.12% 30 $148,298

Torrey Pines Institute FY2009 FY2010 Year 1 Actual

(1)

$500,000

$739,200

$148,298

FY2011 Year 2

(1)

$250,000

$370,800

$148,298

FY2012 Year 3

$257,500

$381,924

$148,298

FY2013 Year 4

$265,225

$393,382

$148,298

FY2014 Year 5

Note: (1) Calculated based on TPIS May 2009 actual of $54,000 plus additional $2,000, then annualized ($56,000*12) for FY2010. Increased by 10% in FY2011.

[A] Total Square Feet [B] Years Payment for SAD [C] Interest Rate for SAD [C] New Facility Utilities Base Year [D] New Facility Building Maint Base Year [E] New Facility Utilities/Maint Annual Growth

101,000 30 6.12% $370,800 $250,000 3.00%

$0

Utilities

Assumptions

$0

Actual

FY2008

Assessment ("SAD") Assessment Amount Interest Rate Number of Payback Periods (Annual) Annual Payment

VGTI - Florida Operating Cash Flows Facilities Non-Salary Calculation Detail Schedule 17

bJPV

$273,182

$405,183

$148,298

FY2015 Year 6

$281,377

$417,339

$148,298

FY2016 Year 7

$289,819

$429,859

$148,298

FY2017 Year 8

$298,513

$442,755

$148,298

FY2018 Year 9

$307,468

$456,037

$148,298

FY2019 Year 10

39

$2,729,128

$5,078,182

$1,482,977

Total

2031

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

Fiscal Year

11/1/2010 5/1/2011 11/1/2011 5/1/2012 11/1/2012 5/1/2013 11/1/2013 5/1/2014 11/1/2014 5/1/2015 11/1/2015 5/1/2016 11/1/2016 5/1/2017 11/1/2017 5/1/2018 11/1/2018 5/1/2019 11/1/2019 5/1/2020 11/1/2020 5/1/2021 11/1/2021 5/1/2022 11/1/2022 5/1/2023 11/1/2023 5/1/2024 11/1/2024 5/1/2025 11/1/2025 5/1/2026 11/1/2026 5/1/2027 11/1/2027 5/1/2028 11/1/2028 5/1/2029 11/1/2029 5/1/2030 11/1/2030

Payment Date

63,675,000.00 62,870,000.00 62,870,000.00 62,015,000.00 62,015,000.00 61,110,000.00 61,110,000.00 60,150,000.00 60,150,000.00 59,135,000.00 59,135,000.00 58,055,000.00 58,055,000.00 56,910,000.00 56,910,000.00 55,700,000.00 55,700,000.00 54,415,000.00 54,415,000.00 53,055,000.00 53,055,000.00 51,615,000.00 51,615,000.00 50,085,000.00 50,085,000.00 48,465,000.00 48,465,000.00 46,745,000.00 46,745,000.00 44,925,000.00 44,925,000.00 42,995,000.00 42,995,000.00 40,950,000.00 40,950,000.00 38,780,000.00

Beginning Principal Balance

Par Value Interest Rate Number of Payback Periods (Semi-Annual)

VGTI - Florida Operating Cash Flows Debt Service Schedule Schedule 18

bJQM

2,170,000.00

2,045,000.00

1,930,000.00

1,820,000.00

1,720,000.00

1,620,000.00

1,530,000.00

1,440,000.00

1,360,000.00

1,285,000.00

1,210,000.00

1,145,000.00

1,080,000.00

1,015,000.00

960,000.00

905,000.00

855,000.00

805,000.00

Principal Payment

63,675,000.00 6.00% 60.00

1,740,450.00 1,910,250.00 1,910,250.00 1,910,250.00 1,910,250.00 1,910,250.00 1,886,100.00 1,886,100.00 1,860,450.00 1,860,450.00 1,833,300.00 1,833,300.00 1,804,500.00 1,804,500.00 1,774,050.00 1,774,050.00 1,741,650.00 1,741,650.00 1,707,300.00 1,707,300.00 1,671,000.00 1,671,000.00 1,632,450.00 1,632,450.00 1,591,650.00 1,591,650.00 1,548,450.00 1,548,450.00 1,502,550.00 1,502,550.00 1,453,950.00 1,453,950.00 1,402,350.00 1,402,350.00 1,347,750.00 1,347,750.00 1,289,850.00 1,289,850.00 1,228,500.00 1,228,500.00 1,163,400.00

Interest 1,740,450.00 1,910,250.00 1,910,250.00 1,910,250.00 1,910,250.00 2,715,250.00 1,886,100.00 2,741,100.00 1,860,450.00 2,765,450.00 1,833,300.00 2,793,300.00 1,804,500.00 2,819,500.00 1,774,050.00 2,854,050.00 1,741,650.00 2,886,650.00 1,707,300.00 2,917,300.00 1,671,000.00 2,956,000.00 1,632,450.00 2,992,450.00 1,591,650.00 3,031,650.00 1,548,450.00 3,078,450.00 1,502,550.00 3,122,550.00 1,453,950.00 3,173,950.00 1,402,350.00 3,222,350.00 1,347,750.00 3,277,750.00 1,289,850.00 3,334,850.00 1,228,500.00 3,398,500.00 1,163,400.00

Total Debt Service

2,457,000.00

2,579,700.00

2,695,500.00

2,804,700.00

2,907,900.00

3,005,100.00

3,096,900.00

3,183,300.00

3,264,900.00

3,342,000.00

3,414,600.00

3,483,300.00

3,548,100.00

3,609,000.00

3,666,600.00

3,720,900.00

3,772,200.00

4,625,500.00

Net Annual Interest Expense

4,627,000.00

4,624,700.00

4,625,500.00

4,624,700.00

4,627,900.00

4,625,100.00

4,626,900.00

4,623,300.00

4,624,900.00

4,627,000.00

4,624,600.00

4,628,300.00

4,628,100.00

4,624,000.00

4,626,600.00

4,625,900.00

4,627,200.00

4,625,500.00

Net Annual Debt Service

Total

2042

2041

2040

2039

2038

2037

2036

2035

2034

2033

2032

Fiscal Year

5/1/2031 11/1/2031 5/1/2032 11/1/2032 5/1/2033 11/1/2033 5/1/2034 11/1/2034 5/1/2035 11/1/2035 5/1/2036 11/1/2036 5/1/2037 11/1/2037 5/1/2038 11/1/2038 5/1/2039 11/1/2039 5/1/2040 11/1/2040 5/1/2041 11/1/2041 5/1/2042

Payment Date

38,780,000.00 36,480,000.00 36,480,000.00 34,045,000.00 34,045,000.00 31,460,000.00 31,460,000.00 28,720,000.00 28,720,000.00 25,820,000.00 25,820,000.00 22,745,000.00 22,745,000.00 19,485,000.00 19,485,000.00 16,030,000.00 16,030,000.00 12,365,000.00 12,365,000.00 8,480,000.00 8,480,000.00 4,365,000.00 4,365,000.00

Beginning Principal Balance

Par Value Interest Rate Number of Payback Periods (Semi-Annual)

VGTI - Florida Operating Cash Flows Debt Service Schedule Schedule 18

bJQN

63,675,000.00

4,365,000.00

4,115,000.00

3,885,000.00

3,665,000.00

3,455,000.00

3,260,000.00

3,075,000.00

2,900,000.00

2,740,000.00

2,585,000.00

2,435,000.00

2,300,000.00

Principal Payment

63,675,000.00 6.00% 60.00

3,463,400.00 1,094,400.00 3,529,400.00 1,021,350.00 3,606,350.00 943,800.00 3,683,800.00 861,600.00 3,761,600.00 774,600.00 3,849,600.00 682,350.00 3,942,350.00 584,550.00 4,039,550.00 480,900.00 4,145,900.00 370,950.00 4,255,950.00 254,400.00 4,369,400.00 130,950.00 4,495,950.00 146,244,900.00

82,569,900.00

Total Debt Service

1,163,400.00 1,094,400.00 1,094,400.00 1,021,350.00 1,021,350.00 943,800.00 943,800.00 861,600.00 861,600.00 774,600.00 774,600.00 682,350.00 682,350.00 584,550.00 584,550.00 480,900.00 480,900.00 370,950.00 370,950.00 254,400.00 254,400.00 130,950.00 130,950.00

Interest

75,903,700.00

261,900.00

508,800.00

741,900.00

961,800.00

1,169,100.00

1,364,700.00

1,549,200.00

1,723,200.00

1,887,600.00

2,042,700.00

2,188,800.00

2,326,800.00

Net Annual Interest Expense

138,773,700.00

4,626,900.00

4,623,800.00

4,626,900.00

4,626,800.00

4,624,100.00

4,624,700.00

4,624,200.00

4,623,200.00

4,627,600.00

4,627,700.00

4,623,800.00

4,626,800.00

Net Annual Debt Service

5

2

2

Total New Jobs

Cumulative Number of New Jobs

6

Total Proposed Job Creation by Category

Notes: (1) See Schedule 11. (2) See Schedule 12. (3) See Schedule 13. (4) See Schedule 14. (5) See Schedule 10.

1 2 3

Projected Job Creation Plan per OTTED Agreement Principal Investigator Scientific Staff Administrative & Support Staff

7

1 2 2 0 0

FY2009

10-Year Plan Implied Job Creation by Expense Category Faculty (1) 0 Scientific Support (2) 0 Administration (3) 2 (4) Facilities 0 Grant (5) 0

FY2008

VGTI - Florida Operating Cash Flows OTTED Job Creation Reconciliation Schedule 19

bJQO

6

1 2 3

53

46

5 4 4 0 33

FY2010 Year 1

30

4 20 6

82

29

3 3 1 12 10

FY2011 Year 2

47

4 35 8

103

21

3 0 0 0 18

FY2012 Year 3

4 0 0 0 8

38

4 30 4

115

12

FY2013 Year 4

38

4 30 4

153

38

0 0 2 0 36

FY2014 Year 5

18

1 16 1

171

18

1 0 0 0 17

FY2015 Year 6

29

3 0 0 0 26

7

1 5 1

200

FY2016 Year 7

26

0 0 0 0 26

5

0 5 0

226

FY2017 Year 8

18

0 0 0 0 18

5

0 5 0

244

FY2018 Year 9

3

0 0 0 0 3

0

0 0 0

247

FY2019 Year 10

2

Total

200

20 150 30

247

20 9 11 12 195

Notes: (1) See Schedule 11. (2) See Schedule 12. (3) See Schedule 13. (4) See Schedule 14. (5) See Schedule 10. (6) Per OTTED Agreement

Projected Salary Range per OTTED Agreement (6) Principal Investigator $80K - $200K Scientific Staff $40K - $80K Administrative & Support Staff $30K - $100K

Overall Average

Implied Average Salary: Faculty Scientific Support Administration with Headcount Facilities Grant

2

Total Headcount

$0

0 0 2 0 0

(3)

$0 $0 $0 $0 $0

Total Headcount: Faculty Scientific Support Administration with Headcount Facilities Grant

Total Salary

Total Salary: Faculty (1) Scientific Support (2) Administration with Headcount Facilities (4) Grant (5)

FY2008

$52,143

$590,000 $40,000 $91,250 N/A N/A

7

1 2 4 0 0

$365,000

$590,000 $80,000 $365,000 $0 $0

FY2009

$37,894

$172,117 $92,817 $85,155 N/A $40,217

53

6 6 8 0 33

$2,008,402

$1,032,700 $556,900 $681,242 $0 $1,327,160

FY2010 Year 1

VGTI - Florida Operating Cash Flows OTTED Average Salary Reconciliation by Category (For Salaries with Headcount) Schedule 20

bJQP

$36,604

$168,187 $78,401 $86,298 $42,917 $39,765

82

9 9 9 12 43

$3,001,556

$1,513,681 $705,607 $776,679 $515,000 $1,709,877

FY2011 Year 2

$36,476

$189,960 $80,753 $88,887 $44,204 $39,781

103

12 9 9 12 61

$3,757,062

$2,279,524 $726,775 $799,980 $530,450 $2,426,632

FY2012 Year 3

$35,979

$181,119 $83,175 $91,553 $45,530 $40,105

115

16 9 9 12 69

$4,137,577

$2,897,910 $748,578 $823,979 $546,364 $2,767,234

FY2013 Year 4

$37,216

$186,553 $85,671 $84,908 $46,896 $39,974

153

16 9 11 12 105

$5,694,003

$2,984,847 $771,036 $933,990 $562,754 $4,197,259

FY2014 Year 5

$37,615

$189,670 $88,241 $87,455 $48,303 $40,086

171

17 9 11 12 122

$6,432,189

$3,224,392 $794,167 $962,010 $579,637 $4,890,542

FY2015 Year 6

$37,507

$181,056 $90,888 $90,079 $49,752 $39,956

200

20 9 11 12 148

$7,501,439

$3,621,124 $817,992 $990,870 $597,026 $5,913,542

FY2016 Year 7

$38,072

$186,488 $93,615 $92,782 $51,245 $40,050

226

20 9 11 12 174

$8,604,260

$3,729,758 $842,532 $1,020,597 $614,937 $6,968,726

FY2017 Year 8

$38,310

$192,083 $96,423 $95,565 $52,782 $39,912

244

20 9 11 12 192

$9,347,727

$3,841,651 $867,808 $1,051,214 $633,385 $7,663,127

FY2018 Year 9

$38,649

$197,845 $99,316 $98,432 $54,366 $40,057

247

20 9 11 12 195

$9,546,204

$3,956,900 $893,842 $1,082,751 $652,387 $7,811,066

FY2019 Year 10

43

$61,056

$188,997 $87,699 $88,676 $48,444 $39,996

$97,873,141

$29,672,486 $7,805,236 $9,488,313 $5,231,940 $45,675,166

Total

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APPENDIX F

FORM OF TRUST INDENTURE

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TRUST INDENTURE by and between TD BANK, NATIONAL ASSOCIATION as Trustee and CITY OF PORT ST. LUCIE, FLORIDA Dated as of June 1, 2010 relating to $64,035,000 City of Port St. Lucie, Florida Research Facilities Revenue Bonds, Series 2010 (Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project)

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TABLE OF CONTENTS

TABLE OF CONTENTS (continued) Page

ARTICLE I

DEFINITIONS AND RULES OF CONSTRUCTION ................................... 4

Page Section 4.08.

Definitions............................................................................................ 4

Section 1.02.

Rules of Construction ........................................................................ 14

Section 5.01.

AUTHORIZATION, EXECUTION, AUTHENTICATION, REGISTRATION AND DELIVERY OF BONDS ....................................... 15

Section 5.02.

Payments ............................................................................................ 29

Section 5.03.

Bond Fund.......................................................................................... 29

Section 5.04.

Debt Service Reserve Fund................................................................ 30

ARTICLE II

ARTICLE V

Inspection of Project Books ............................................................... 28

Section 1.01.

REVENUES AND FUNDS........................................................................... 29 Establishment of Funds...................................................................... 29

Section 2.01.

Authorization of Series 2010 Bonds .................................................. 15

Section 2.02.

Details of the Series 2010 Bonds ....................................................... 15

Section 2.03.

Provisions on Interest and Payment................................................... 16

Section 2.04.

Execution of Bonds............................................................................ 17

Section 2.05.

Authentication of Bonds .................................................................... 17

Section 2.06.

Form of Bonds ................................................................................... 17

Section 2.07.

Delivery of the Series 2010 Bonds; Initial Deposits.......................... 17

Section 2.08.

Registration of Bonds; Persons Treated as Owners; Exchange; Charges .............................................................................................. 19

Section 6.01. Section 6.02.

Payments into Project Fund ............................................................... 35

Temporary Bonds............................................................................... 20

Section 6.03.

Cost of Project.................................................................................... 35

Section 2.09. Section 2.10.

Mutilated, Lost or Destroyed Bonds.................................................. 20

Section 2.11.

Cancellation and Disposition of Bonds.............................................. 20

Section 2.12.

Refunding Bonds ............................................................................... 20

ARTICLE III

REDEMPTION OF BONDS ......................................................................... 23

Section 3.01.

Redemption Dates and Prices for Bonds ........................................... 23

Section 3.02.

Selection of Bonds for Redemption................................................... 25

Section 3.03.

Notice of Redemption of Bonds ........................................................ 25

Section 3.04.

Not Outstanding on Redemption Date............................................... 26

ARTICLE IV

GENERAL COVENANTS AND PROVISIONS ......................................... 27

Section 4.01.

Payment of Bonds; Security............................................................... 27

Section 5.05.

Redemption Fund............................................................................... 33

Section 5.06.

Rebate Fund ....................................................................................... 33

Section 5.07.

Moneys to Be Held in Trust............................................................... 34

Section 5.08.

Repayment to the Borrower; Assignment Upon Early Mandatory Redemption ..................................................................... 34

ARTICLE VI

CUSTODY AND APPLICATION OF BOND PROCEEDS........................ 35 Creation of Project Fund.................................................................... 35

Section 6.04.

Payments from Project Fund.............................................................. 36

Section 6.05.

Disposition of Balance in Project Fund ............................................. 36

Section 6.06.

Limit on Investments ......................................................................... 37

ARTICLE VII

INVESTMENTS............................................................................................ 38

Section 7.01.

Investment of Funds........................................................................... 38

Section 7.02.

Valuation............................................................................................ 38

Section 7.03.

Investments through Trustee’s Bond Department ............................. 39

ARTICLE VIII

DISCHARGE OF INDENTURE................................................................... 40

Section 8.01. ARTICLE IX

Discharge of Indenture....................................................................... 40

DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS.......................................................................................... 42

Section 4.02.

Performance of City’s Covenants ...................................................... 27

Section 4.03.

Instruments of Further Assurance...................................................... 27

Section 9.01.

Events of Default ............................................................................... 42

Section 4.04.

Loan To Finance the Project .............................................................. 27

Section 9.02.

Acceleration ....................................................................................... 42

Section 4.05.

Rights Under Loan Agreement .......................................................... 28

Section 9.03.

Other Remedies; Rights of Bondholders ........................................... 42

Section 4.06.

Covenant Not to Impair Tax Status of Bonds.................................... 28

Section 9.04.

Right of Bondholders to Direct Proceedings ..................................... 43

Section 4.07.

Reports of Trustee.............................................................................. 28

Section 9.05.

Application of Moneys ...................................................................... 43

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ii MIAMI/4253270.6

TABLE OF CONTENTS (continued)

TABLE OF CONTENTS (continued) Page

Page

Section 9.06.

Remedies Vested in Trustee............................................................... 44

Section 9.07.

Limitations on Suits ........................................................................... 44

Section 13.01.

Consents, etc., of Bondholders .......................................................... 56

Section 9.08.

Waivers of Events of Default............................................................. 45

Section 13.02.

Limitation of Rights........................................................................... 56

Section 9.09.

Unconditional Right to Receive Principal, Premium and Interest................................................................................................ 45

Section 13.03.

Limitation of Liability of Officers, Members, etc., of City ............... 56

Section 13.04.

Notices, etc......................................................................................... 56

Section 13.05.

Successors and Assigns...................................................................... 57

Section 9.10. ARTICLE X

Notice of Defaults; Opportunity to Cure Defaults............................. 45

THE TRUSTEE ............................................................................................. 47

Section 10.01.

Acceptance of Trusts.......................................................................... 47

Section 10.02.

Fees, Charges, Expenses and Indemnification of Trustee ................. 49

Section 10.03.

Intervention by Trustee ...................................................................... 49

Section 10.04.

Merger or Consolidation of Trustee................................................... 50

Section 10.05.

Resignation by Trustee ...................................................................... 50

Section 10.06.

Removal of Trustee............................................................................ 50

Section 10.07.

Appointment of Successor Trustee by Bondholders; Temporary Trustee................................................................................................ 50

Section 10.08.

Concerning any Successor Trustee .................................................... 50

Section 10.09.

Trustee Protected in Relying Upon Resolutions, etc ......................... 51

Section 10.10.

Successor Trustee as Bond Registrar, Custodian of Bond Fund and Paying Agent............................................................................... 51

Section 10.11.

Appointment of Co-Trustee ............................................................... 51

ARTICLE XI

Section 13.06.

Severability ........................................................................................ 57

Section 13.07.

Applicable Law.................................................................................. 57

Section 13.08.

Counterparts....................................................................................... 58

Section 13.09.

Payments Due on Non-Business Days............................................... 58

Section 13.10.

City, Members, Attorneys, Officers, Employees and Agents of City Not Liable .................................................................................. 58

Exhibit A – Form of Bonds Exhibit B – Form of Requisition for Project Costs Exhibit C – Form of Requisition for Costs of Issuance

Supplemental Indentures Not Requiring Consent of Bondholders ....................................................................................... 53

Section 11.02.

Supplemental Indentures Requiring Consent of Bondholders........... 53

Section 11.03.

Opinion of Counsel Required ............................................................ 54

Section 11.04.

Trustee’s Obligation Regarding Supplemental Indentures ................ 54

AMENDMENT OF LOAN AGREEMENT AND MORTGAGE ................ 55

Section 12.01.

Amendments Not Requiring Consent of Bondholders ...................... 55

Section 12.02.

Amendments Requiring Consent of Bondholders ............................. 55

Section 12.03.

Limitation on Amendments ............................................................... 55

Section 12.04.

Opinion of Counsel Required ............................................................ 55 iii

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MISCELLANEOUS ...................................................................................... 56

SUPPLEMENTAL INDENTURES; AMENDMENTS TO OTHER DOCUMENTS............................................................................................... 53

Section 11.01.

ARTICLE XII

ARTICLE XIII

iv MIAMI/4253270.6

THIS TRUST INDENTURE (the “Indenture”), dated as of June 1, 2010, by and between TD Bank, National Association, a national bank, duly organized and existing under the laws of the United States of America, qualified to exercise trust powers in the State of Florida and having its designated corporate trust office in Jacksonville, Florida, as trustee, and its successors in trust and assignees (the “Trustee”), and the City of Port St. Lucie, Florida (the “City”) a municipal corporation of the State of Florida.

by the Borrower, to pay or reimburse the payment of, the Costs of the Project, fund certain reserves established for the Series 2010 Bonds, capitalize interest on the Series 2010 Bonds, and pay costs of issuance of the Series 2010 Bonds, (ii) pay the principal of, premium, if any, and interest on the Series 2010 Bonds when due (whether at maturity, by redemption, acceleration or otherwise), and (iii) observe the other covenants and agreements and make the other payments set forth therein, and

WITNESSETH:

WHEREAS, the obligations of the Borrower under the Loan Agreement are secured by a Mortgage and Security Agreement dated as of June 1, 2010 (as the same may be modified, amended and supplemented from time to time, (the “Mortgage”) from the Borrower to the Trustee, on a pari passu basis with the rights of the United States Department of Commerce, Economic Development Administration under a mortgage resulting from any EDA Grant made in connection with the Project (the “EDA Mortgage”);

WHEREAS, the City is authorized and empowered by the provisions of the Constitution and the laws of the State of Florida to issue industrial development revenue bonds for the purposes of providing funds to pay all or any part of the cost of any “project” as defined in the Florida Industrial Development Financing Act, as amended, consisting of Part II of Chapter 159 of the Florida Statutes (the “Industrial Development Act”); and to lease or sell such projects to others, or loan the proceeds from the sale of such bonds to others to finance the acquisition, construction and equipping of such projects; and WHEREAS, Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp., a Florida not-for-profit corporation (the “Borrower”), desires (i) to finance the cost of the acquisition, construction and equipping of a research and development facility, as more particularly described in Exhibit “A” to the Loan Agreement (hereinafter defined) to be located in the City (the “Project”), including capitalized interest, (ii) to fund a reserve account, and (iii) to pay a portion of the costs associated with the issuance of the Series 2010 Bonds (hereinafter defined); and WHEREAS, the City has determined that it will be acting in furtherance of the public purposes intended to be served by the Industrial Development Act by assisting the Borrower in financing all or a portion of the costs of the Project; and WHEREAS, the City has determined that the Project will serve a paramount public purpose, pursuant to its home rule power, has covenanted to budget and appropriate Non-Ad Valorem Revenues (as defined herein) to fund any deficiency in the Debt Service Reserve Fund (as described herein), provided that the Borrower agrees to reimburse the City for any Non-Ad Valorem Revenues deposited in the Debt Service Reserve Fund, as provided herein and in the hereinafter defined Loan Agreement; and WHEREAS, the City has determined to issue its Research Facilities Revenue Bonds, Series 2010 (Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project) (the “Series 2010 Bonds”); and WHEREAS, upon the issuance of the Series 2010 Bonds, the City will loan (the “Loan”) the proceeds of the Series 2010 Bonds to the Borrower pursuant to a Loan Agreement, dated as of June 1, 2010 (the “Loan Agreement”), between the City and the Borrower and will cause such proceeds to be deposited in the funds and accounts established under this Indenture in the manner and to be applied as provided herein; and WHEREAS, pursuant to the Loan Agreement, the Borrower has agreed to (i) apply the proceeds of the Loan made pursuant to the Loan Agreement, together with other funds provided MIAMI/4253270.6

WHEREAS, as security for the payment of the Series 2010 Bonds, the City has agreed to assign and pledge to the Trustee all right, title, and interest of the City in and to the hereinafter described property including the City’s rights under the Loan Agreement (exclusive of its Reserved Rights as defined herein); and WHEREAS, the execution and delivery of this Indenture and the sale, issuance and delivery of the Series 2010 Bonds have been in all respects duly and validly authorized by the Authorizing Ordinance and by a Supplemental Bond Resolution duly adopted by the City; and WHEREAS, the Series 2010 Bonds, the Trustee’s certificate of authentication to be endorsed thereon, and the form of assignment to be printed thereon are to be in substantially the form attached to this Indenture as Exhibit A, with appropriate variations, omissions and insertions as are permitted or required by this Indenture. WHEREAS, all things necessary to make the Series 2010 Bonds, when authenticated by the Trustee and issued, as provided in this Indenture, valid, binding and legal limited obligations of the City and to constitute this Indenture a valid and binding agreement securing the payment of the principal of, premium, if any, and interest on the Series 2010 Bonds issued and to be issued hereunder, have been done and performed and the execution and delivery of this Indenture and the execution and issuance of the Series 2010 Bonds, subject to the terms hereof, have in all respects been duly authorized; NOW, THEREFORE, THIS INDENTURE FURTHER WITNESSETH: That the City, as security for payment of the principal of, premium, if any, and interest on the Series 2010 Bonds and for the funds which may be advanced by the Trustee pursuant hereto, does hereby pledge and assign without recourse to the Trustee, and grant a lien on and security interest to the Trustee in the following described property: A. All right, title and interest of the City in and to the Loan Agreement and Loan Payments, other than the Reserved Rights; B. All amounts held in the funds and accounts hereunder, excepting amounts in the Rebate Fund (as hereinafter defined) (the “Pledged Funds”);

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C. All other property of every name and nature from time to time hereafter by delivery or by writing mortgaged, pledged, delivered or hypothecated as and for additional security hereunder by the City or by anyone on its behalf or with its written consent in favor of the Trustee, and the Trustee is hereby authorized to receive all such property at any time and to hold and apply the same subject to the terms hereof; TO HAVE AND TO HOLD all the same with all privileges and appurtenances hereby conveyed and assigned, or agreed or intended to be, to the Trustee and its successors in such trust and their assigns forever; IN TRUST, however, for the equal and proportionate benefit and security of the owners from time to time of the Bonds issued under and secured by this Indenture without privilege, priority or distinction as to the lien or otherwise of any of the Bonds over any of the others, upon the terms and conditions hereinafter stated; PROVIDED, HOWEVER, that if the City shall well and truly pay, or cause to be paid, the principal of, premium, if any, and the interest on the Bonds due or to become due thereon, at the times and in the manner set forth in the Bonds according to the true intent and meaning thereof, or shall provide, as permitted hereby, for the payment thereof by depositing with the Trustee the entire amount due or to become due thereon, and shall well and truly cause to be kept, performed and observed all of its covenants and conditions pursuant to the terms of this Indenture, and shall pay, or cause to be paid to the Trustee all sums of money due or to become due to it in accordance with the terms and provisions hereof, then upon the final payment thereof this Indenture and the rights hereby granted shall cease, determine and be void, except to the extent specifically provided herein; otherwise this Indenture shall remain in full force and effect; and THEREFORE, the City hereby covenants and agrees with the Trustee and with the respective owners, from time to time, of the Bonds as follows:

ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION Section 1.01. Definitions. Terms defined in the Loan Agreement and not defined herein shall, as used herein, have the meanings ascribed to them therein, and the following words and terms, as used in this Indenture, shall have the following meanings, in each case unless a different meaning for a word or term clearly appears from the context in which the word or term is used: “Act” means Chapter 166, Part II, Florida Statutes, Chapter 159, Parts II and VII, Florida Statutes, as amended, Sections 1.01 and 9.09(b) of the Charter, the Authorizing Ordinance and other applicable provisions of law. “Agreement of Purchase and Sale” means that certain Agreement of Purchase and Sale dated as of May 11, 2009 between the Borrower and Horizons St. Lucie Development, LLC, as the same has been and may be amended for supplemented from time to time. “Amortization Amount” means an annual amount designated as such by the Indenture, such amount to be included in the Loan Payments and to be deposited by the Trustee to the credit of the Principal Account for the purpose of paying Term Bonds. “Authorized Denominations” means $5,000 or any integral multiple of $5,000 in excess thereof. “Authorized Representative” means, when used with respect to the Borrower, means the President, Vice President, or Secretary/Treasurer of the Borrower or any other office or employee of the Borrower who is designated in writing to the Trustee by the President of the Borrower as an Authorized Representative of the Borrower for purposes of the Loan Agreement and the Trust Indenture and, when used with respect to the City, means the Mayor, the City Manager or the Finance Director of the City or any other officer or employee of the City designated in writing to the Trustee by the City Manager as an Authorized Representative of the City for purposes of the Loan Agreement and the Trust Indenture. “Authorizing Ordinance” means Ordinance 10-18 enacted by the City on April 26, 2010, pursuant to which it has authorized the financing and reimbursement of the Costs of certain research facilities in conjunction with the financing and reimbursement of the Costs of the Project that may not constitute a “project” under the Act, but which the City has authorized pursuant to the home rule provisions of Florida Statutes Chapter 166, the City Charter and other applicable provisions of law, and authorized the provision of its covenant to budget and appropriate Non-Ad Valorem Revenues to be deposited in the Debt Service Reserve Fund as provided in this Indenture. “Bond Counsel” means Squire, Sanders, & Dempsey L.L.P. or another attorney or firm of attorneys nationally recognized on the subject of municipal bonds acceptable to the City.

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4

“Bond Documents” means this Indenture, the Loan Agreement, the Mortgage, the Intercreditor Agreement and any other document authorized to be entered into by the City pursuant to the Bond Ordinance in connection with the issuance of the Series 2010 Bonds. “Bond Fund” means the “City of Port St. Lucie, Florida VGTI Florida Project Bond Fund” created by Section 5.01, in which there shall be established an Interest Account and a Principal Account. “Bond Ordinance” means collectively, the Authorizing Ordinance and Resolution 10-R29 adopted by the City Council on May 10, 2010, as may be supplemented or amended. “Bond Year” means, with respect to the first Bond Year for the Series 2010 Bonds, the period beginning on the Closing Date for the Series 2010 Bonds and ending one (1) year later. Each subsequent Bond Year begins on the day after the expiration of the previous Bond Year and ends one (1) year later, and for any subsequent series of Refunding Bonds shall be as determined in the Supplemental Indenture authorizing such series of Refunding Bonds.

“Code” means the Internal Revenue Code of 1986, as amended. References to the Code and Sections thereof include relevant applicable regulations, temporary regulations and proposed regulations thereunder and any successor provisions to those Sections, regulations, temporary regulations or proposed regulations and any applicable regulations, temporary regulations or proposed regulations issued pursuant to the Internal Revenue Code of 1954. “Cost” when used with respect to the Project and “Cost of the Project” each means the “Cost of the Project” as set forth in Section 6.03. “Covenant” means the covenant of the City to budget and appropriate Non-Ad Valorem Revenues for deposit into the Debt Service Reserve Fund, as set forth in Section 5.04(g) of this Indenture. “Credit Facility” means, with respect to any series of Refunding Bonds, a policy of insurance, a letter of credit, or other insurance or financial product which guarantees prompt payment of all or any portion of the principal of, premium, if any, and interest on any such series of Bonds.

“Bondholder,” “bondholder,” “holder” or “owner” means the registered owner of any Bond.

“Credit Facility Issuer” means an insurance company, bank, or other organization which has provided a Credit Facility in connection with the issuance of any series of Refunding Bonds.

“Bonds” means collectively, the Series 2010 Bonds and any Refunding Bonds authorized to be issued hereunder. “Borrower” means Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp., a Florida not-for-profit corporation, its successors and assigns under the Loan Agreement. “Building” means the structure to be partially financed from disbursements made from the Project Account and included as part of the Project. “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks located in Jacksonville, Florida or in New York, New York are authorized to close. “Capitalized Interest Account” means the Capitalized Interest Account in the Project Fund created by Section 6.01. “City” means the City of Port St. Lucie, Florida, a municipal corporation of the State of Florida. “City Clerk” means the Clerk of the City or any Deputy City Clerk. “City Council” means the City Council of the City of Port St. Lucie, Florida as the governing board of the City. “City Manager” means the City Manager of the City, as the chief administrative officer thereof or his designee or the officer or officers succeeding to his principal function.

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“Debt Service Requirement” means the amounts required in each Bond Year to pay the principal of and interest on the Bonds as the same become due and payable; provided however, with respect to any Term Bond which is required to be paid prior to its stated maturity through the operation of a mandatory sinking fund, the Amortization Amounts coming due in any Bond Year with respect to such obligation shall be the amount required to be deposited into the Principal Account of the Bond Fund for the retirement of the Amortization Amounts, rather than the entire principal amount of such debt coming due at the stated maturity. “Debt Service Reserve Fund” means the “City of Port St. Lucie, Florida VGTI Florida Project Debt Service Reserve Fund” created by Section 5.01. “Default” means an event or condition the occurrence of which would, with the lapse of time or the giving of notice or both, become an Event of Default. “EDA Grant” means any grant received by the Borrower from the United States Department of Commerce, Economic Development Administration in connection with the Project. “EDA Mortgage” means a mortgage resulting from an EDA Grant made in connection with the Project. “Event of Default” means any of the events enumerated in Section 9.01. “Finance Director” means the Finance Director/Treasurer of the City or her designee or officer or officers succeeding to her principal function.

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“Fitch” means Fitch Ratings, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer issue ratings on obligations of a type similar to the Bonds, “Fitch” shall be deemed to refer to any other nationally recognized securities rating agency designated by the City by written notice to the Trustee “Funding Agreement” means that certain Innovation Incentive Funding Agreement between the State of Florida, Executive Office of the Governor’s Office of Tourism, Trade and Economic Development and the Borrower dated April 17, 2008, as amended or supplemented from time to time. “Government Obligations” means (a) direct obligations of the United States of America for the full and timely payment of which the full faith and credit of the United States of America is pledged, or (b) obligations, the full and timely payment of the principal of, premium, if any, and the interest on which is fully guaranteed as a full faith and credit obligation of the United States of America (including any securities described in (a) or (b) issued or held in book-entry form on the books of the Department of the Treasury of the United States of America), which obligations, in either case, are not subject to redemption prior to maturity at less than par by anyone other than the holder. “Indenture” means this Indenture of Trust, as supplemented from time to time. “Intercreditor Agreement” means the intercreditor agreement entered into among the Borrower, the City, the Trustee and the United States Department of Commerce, Economic Development Administration, relating to the Mortgage as a result of any EDA Grant and the Bonds. “Interest Account” means the Interest Account in the Bond Fund created by Section 5.01. “Interest Payment Date” means each May 1 and November 1, commencing November 1, 2010, with respect to the Series 2010 Bonds, and with respect to any Refunding Bonds issued hereunder, such dates as specified in the Supplemental Indenture authorizing such Refunding Bonds. “Land” means the real property on which the Building will be located, which is more particularly described in the Mortgage, and which is to be financed or refinanced from a disbursement from the Project Account and included as part of the Project pursuant to the terms of the Loan Agreement and the Indenture. “Letter of Representations” means the Letter of Representations, from the City to the Securities Depository and any amendments thereto or any successor agreements between the City and any successor Securities Depository, relating to a book-entry system to be maintained by the Securities Depository with respect to the Bonds. Notwithstanding any provision hereof, including Article XI regarding supplemental indentures and amendments, the City may enter into any amendment or successor agreement to the Letter of Representations without the consent of Bondholders.

“Mayor” means the Mayor or Vice Mayor of the City. “Moody’s” means Moody’s Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer issue ratings on obligations of a type similar to the Bonds, “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency designated by the City by written notice to the Trustee. “Mortgage” means the Mortgage, and Security Agreement, dated as of June 1, 2010, from the Borrower to the City and the Trustee, as Mortgagee, granting a mortgage lien on and security interest in the Mortgaged Property, as security for the Borrower’s obligations under the Loan Agreement, as amended from time to time. “Mortgaged Property” shall have the meaning ascribed to that term in the Mortgage. “Non-Ad Valorem Revenues” means all revenues of the City that are not derived from ad valorem taxation and that are legally available to fund any deficiencies in the Debt Service Reserve Fund for the Bonds pursuant to this Indenture and that are not required to pay essential services. “Opinion of Counsel” means a written opinion of an attorney or firm of attorneys, who may be counsel for the City or the Borrower, but shall not be a full time employee of either the City or the Borrower. “Outstanding” or “outstanding,” when used with reference to the Bonds at any date as of which the amount of Outstanding Bonds is to be a determined, means all Bonds which have been authenticated and delivered by the Trustee hereunder except: (a)

Bonds paid, redeemed or otherwise cancelled at or prior to such date;

(b) any Bond (or portion of a Bond) (1) for the payment or redemption of which there has been separately set aside with the Trustee and held in trust, exclusively for the benefit of the owners thereof, cash or Government Obligations as described in Section 8.01(a)(2) and (2) if the Bonds are to be redeemed prior to their maturity, with respect to which the provisions of Section 8.01(a) have been met; (c)

Bonds deemed paid pursuant to the provisions of Section 8.01;

(d) Bonds in lieu of which others have been authenticated under Sections 2.08, 2.09 or 2.10; and (e) for purposes of any consent or other action to be taken by the holders of a specified percentage of Outstanding Bonds, all Bonds held by or for the City or the Borrower, except that for purposes of any such consent or action the Trustee shall be obligated to consider as not being Outstanding only Bonds known by the Trustee to be so held.

“Loan Agreement” means the Loan Agreement, dated as of June 1, 2010, between the City and the Borrower, as amended from time to time.

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“Payment of the Bonds” means payment in full of the principal of, premium, if any, and interest on the Bonds or provision for such payment sufficient to discharge this Indenture as provided herein, including payment of or provision for all fees and expenses of the City and the Trustee. “Permitted Investments” means, except as otherwise provided in a Supplemental Indenture relating to a Series of Refunding Bonds, and includes any of the following securities, if and to the extent that such securities are a legal investment for the City: (1)

rated investment from S&P and an “Aa” rated investment from Moody’s, or (2) repurchase all Collateral and terminate the repurchase agreement without penalty. In the event the repurchase agreement provider has not satisfied the above conditions within ten (10) days of the date such conditions apply, then the repurchase agreement shall provide that the Trustee shall be entitled to, and in such event, the Trustee shall withdraw the entire amount invested plus accrued interest within two (2) Business Days, Any repurchase agreement entered into pursuant to this Indenture shall contain the following additional provisions: (a) Failure to maintain the requisite collateral percentage will require the Borrower or the Trustee to liquidate the collateral as provided above;

Government Obligations;

(2) obligations of any of the following agencies: Governmental National Mortgage Association (including participation certificates issued by such association); Fannie Mae (including participation certificates issued by such entity); Federal Home Loan Banks; Federal Farm Credit Banks; Tennessee Valley Authority; Farmers Home Administration; Student Loan Marketing Association; Federal Home Loan Mortgage Corporation;

(b) The Holder of the collateral, as hereinafter defined, shall have possession of the collateral or the collateral shall have been transferred to the Holder of the collateral, in accordance with applicable state and federal laws (other than by means of entries on the transferor’s books);

(3) deposits, Federal funds or bankers’ acceptances (with term to maturity of 270 days or less) of any bank which has an unsecured, uninsured and unguaranteed obligation rated in one of the top two rating categories by both Moody’s and S&P;

(c) The repurchase agreement shall state and an opinion of counsel shall be rendered that the Holder of the collateral has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this means the holder of the collateral is in possession);

(4)

commercial paper rated in the top two rating category by both Moody’s and S&P;

(5) obligations of any state of the United States or political subdivision thereof or constituted authority thereof the interest on which is exempt from federal income taxation under Section 103 of the Code and rated in one of the top two rating categories by both Moody’s and S&P; (6) both (A) shares of a diversified open-end management investment company (as defined in the Investment Company Act of 1940) or a regulated investment company (as defined in Section 851(a) of the Code) that is a money market fund that is rated in the highest rating category by both Moody’s and S&P, and (B) shares of money market mutual funds that invest only in Government Obligations and repurchase agreements secured by such obligations, which funds are rated in the highest categories for such funds by both Moody’s and S&P; (7) repurchase agreements, which will be collateralized at the onset of the repurchase agreement of at least 103% marked to market weekly with collateral with a domestic or foreign bank or corporation (other than life or property casualty insurance company) the long-term debt of which, or, in the case of a financial guaranty insurance company, claims paying ability, of the guarantor is rated at least “AA” by S&P and “Aa” by Moody’s provided that the repurchase agreement shall provide that if during its term the provider’s rating by either S&P or Moody’s falls below “AA-” or “Aa3,” respectively, the provider shall immediately notify the Trustee and the provider shall at its option, within ten days of receipt of publication of such downgrade, either (A) maintain collateral at levels, sufficient to maintain an “AA” rated investment from S&P and an “Aa” rated investment from Moody’s, or (B) repurchase all collateral and terminate the repurchase agreement Further, if the provider’s rating by either S&P or Moody’s falls below “A-” or “A3,” respectively, the provider most at the direction of the Issuer to the Trustee, within ten (10) calendar days, either (1) maintain collateral at levels sufficient to maintain an “AA” MIAMI/4253270.6

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(d) The repurchase agreement shall be a “repurchase agreement” as defined in the United States Bankruptcy Code and, if the provider is a domestic bank, a “qualified financial contract” as defined in the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) and such bank is subject to FIRREA; (e) The repurchase transaction shall be in the form of a written agreement, and such agreement shall require the provider to give written notice to the Trustee of any change in its long-term debt rating; (f) The Borrower or its designee shall represent that it has no knowledge of any fraud involved in the repurchase transaction; (g) The City and the Trustee shall receive an opinion of Bond Counsel (which opinion shall be addressed to the City and the Trustee) that such repurchase agreement complies with the terms of this section and is legal, valid, binding and enforceable upon the provider in accordance with its terms; (h)

The term of the repurchase agreement shall be no longer than ten years;

(i) The interest with respect to the repurchase transaction shall be payable at the times and in the amounts necessary in order to make funds available when required; (j) The repurchase agreement shall provide that the Trustee may withdraw funds without penalty at any time, or from time to time, for any purpose permitted or required under this Indenture;

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(k) Any repurchase agreement shall provide that a perfected security interest in such investments is created for the benefit of the Beneficial Owners under the Uniform Commercial Code of Florida, or book-entry procedures prescribed at 31 C.P.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq. are created for the benefit of the Beneficial Owners; and

(d) the Trustee receives an opinion of counsel that such agreement is an enforceable obligation of such insurance company, bank, financial institution or parent; (e) in the event of a suspension, withdrawal, or downgrade below an, AA- or AA- by Moody’s, S&P or Fitch, respectively, the provider shall notify the Trustee within five (5) days of such downgrade event and the provider shall at its option, within ten (10) business days after notice is given to the Trustee take any one of the following actions;

(l) The collateral delivered or transferred to the City, the Trustee, or a thirdparty acceptable to, and acting solely as agent for, the Trustee (the “Holder of the Collateral”) shall be delivered and transferred in compliance with applicable slate and federal laws (other than by means of entries on provider’s books) free and clear of any third-party liens or claims pursuant to a custodial agreement subject to the prior written approval of the majority of the Holders and the Trustee. The custodial agreement shall provide that the Trustee must have disposition or control over the collateral of the repurchase agreement, irrespective of an event, of default by the provider of such repurchase agreement.

(i) collateralize the agreement at levels, sufficient to maintain an “AA” rated investment from S&P or Fitch and an “Aa2” from Moody’s with a marked to market approach, or (ii) assign the agreement to another provider, as long as the minimum rating criteria of “AA” rated investment from S&P or Fitch and an “Aa2” from Moody’s with a marked to market approach; or

If such investments are held by a third-party, they shall be held as agent for the benefit of the Trustee as fiduciary for the Beneficial Owners and not as agent for the bank serving as Trustee in its commercial capacity or any other party and shall be segregated from securities owned generally by such third party or bank;

(iii) have the agreement guaranteed by a provider which results in a minimum rating criteria of an “AA” rated investment from S&P or Fitch and an “Aa2” from Moody’s with a marked to market approach; or (iv)

(8) any other investment approved in writing by the Owners of a majority in aggregate principal amount of the Bonds secured thereby; (9) bonds, notes and other debt obligations of any corporation organized under the laws of the United States, any state or organized territory of the United States or the District of Columbia, if such obligations are rated in one of the three highest ratings by both Moody’s and S&P or in one of the two highest categories by either S&P or Moody’s; and (10) investment agreements with a bank, insurance company or other financial institution, or the subsidiary of a bank, insurance company or other financial institution if the parent guarantees the investment agreement, which bank, insurance company, financial institution or parent has an unsecured, uninsured and unguaranteed obligation (or claims-paying ability) rated in the highest short-term rating category by Moody’s or S&P (if the term of such agreement does not exceed 365 days), or has an unsecured, uninsured and unguaranteed obligation (or claims paying ability) rated “Aa2” or better by Moody’s and “AA” or better by S&P, respectively (if the term of such agreement is more than 365 days) or is the lead bank of a parent bank holding company with an uninsured, unsecured and unguaranteed obligation of the aforesaid ratings, provided: (a) interest is paid on any date interest is due on the Bonds (not more frequently than quarterly) at a fixed rate (subject to adjustments for yield restrictions required by the Code) during the entire term of the agreement; (b) moneys invested thereunder may be withdrawn without penalty, premium, or charge upon not more than two days’ notice;

repay all amounts due and owing under the agreement.

(f) In the event the provider has not satisfied any one of the above condition within three (3) days of the date such conditions apply, than the agreement shall provide that the Trustee shall be entitled to withdraw the entire amount invested plus accrued interest without penalty or premium. (11) bonds, notes and other debt obligations of any corporation organized under the laws of the United States, any state or organized territory of the United States or the District of Columbia, if such obligations are rated in one of the three highest ratings by both Moody’s and S&P or in one of the two highest categories by either S&P or Moody’s; (12) the Local Government Surplus Funds Trust Fund as described in Florida Statutes, Section 218.405 or the corresponding provisions of subsequent laws provided that such fund is rated at least “AA” by S&P (without regard to gradation) or at least “Aa” by Moody’s (without regard to gradation); and (13)

other investments permitted by Florida law.

“Principal Account” means the Principal Account in the Bond Fund created by Section 5.01. “Project” means the Project, as described in the Loan Agreement. “Project Account” means the Project Account in the Project Fund created by Section 6.01 of the Indenture.

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“Project Fund” means the “City of Port St. Lucie, Florida VGTI Florida Project Fund” created by Section 6.01 of the Indenture.

“Taxable Bonds” means those Bonds for which interest allocable to such Bonds is not intended to be excluded from gross income for purposes of the Code.

“Rebate Fund” means the “City of Port St. Lucie, Florida VGTI Florida Project Rebate Fund” created by Section 5.01.

“Term Bonds” means, with respect to the Series 2010 Bonds, those Bonds designated as such pursuant to Section 2.02 hereof which are subject to mandatory sinking fund redemption by payment of Amortization Amounts pursuant to Section 3.01(b) hereof, and with respect to Refunding Bonds, as determined by Supplemental Indenture authorizing such Bonds.

“Record Date” means the fifteenth day of the calendar month preceding each Interest Payment Date. “Redemption Fund” means the “City of Port St. Lucie, Florida VGTI Florida Project Redemption Fund” created by Section 5.01.

“Trust Estate” means the right, title, interest, in the Loan Agreement, the Loan Payments, other than Reserved Rights, the Pledged Funds, and other property pledged as security for the Bonds under the granting clauses hereof.

“Refunding Bonds” means Bonds issued for the purpose of refunding the Series 2010 Bonds pursuant to Section 2.12 of this Indenture.

“Trustee” shall mean TD Bank, National Association, Jacksonville, Florida, or its successors serving as such hereunder.

“Reserve Requirement” means $4,146,212.50, which is an amount equal to the least of: (i) maximum annual Debt Service Requirement payable in any Bond Year prior to Payment of the Bonds on all outstanding Bonds; (ii) one hundred twenty-five percent (125%) of average annual Debt Service Requirement with respect to the outstanding Bonds; and (iii) ten percent (10%) of the initial offering price of the Bonds to public, as such initial offering price is determined under the Code.

Section 1.02. Rules of Construction. Unless the context clearly indicates to the contrary, the following rules shall apply to the construction of this Indenture:

“Reserved Rights” means the rights of the City under the Loan Agreement to payment of fees, costs and expenses, indemnification and receipt of notices and other reports contemplated by the Loan Agreement, and the right to receive Reimbursement Payments with respect to NonAd Valorem Revenues deposited by the City in the Debt Service Reserve Fund pursuant to the Covenant. “Securities Depository” means initially The Depository Trust Company and any successor for the Bonds as provided in Section 2.02 of the Indenture.

(a)

Words importing the singular number shall include the plural number and vice

versa. (b) Words importing the redemption or calling for redemption of Bonds shall not be deemed to refer to or connote the payment of Bonds at their stated maturity. (c) All references herein to particular articles or sections are references to articles or sections of this Indenture unless otherwise indicated. (d) The headings herein are solely for convenience of reference and shall not constitute a part of this Indenture nor shall they affect its meaning, construction or effect. [END OF ARTICLE I]

“Series 2010 Bonds” means the City of Port St. Lucie, Florida Research Facilities Revenue Bonds, Series 2010 (Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project), issued hereunder. “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies and a corporation organized and existing under the laws of the State of New York, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer issue ratings on obligations of a type similar to the Bonds, “S&P” shall be deemed to refer to any other nationally recognized securities rating agency designated by the City by written notice to the Trustee. “State” means the State of Florida. “Supplemental Indenture” means any supplement or amendment to this Indenture authorized pursuant to Article XI hereof.

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ARTICLE II AUTHORIZATION, EXECUTION, AUTHENTICATION, REGISTRATION AND DELIVERY OF BONDS Section 2.01. Authorization of Series 2010 Bonds. There are hereby authorized to be issued Research Facilities Revenue Bonds, Series 2010 (Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project), of the City in the aggregate principal amount of Sixty Four Million Thirty Five Thousand Dollars ($64,035,000). The Series 2010 Bonds are being issued by the City to provide funds, together with other available money, to (i) finance a loan to the Borrower for the purpose of paying or reimbursing the costs of acquisition, construction and equipping of the Project, (ii) fund capitalized interest on the Series 2010 Bonds through November 1, 2012, (iii) fund a deposit to the Debt Service Reserve Fund for the Series 2010 Bonds in the amount of the Reserve Requirement, and (iv) pay certain costs of issuance of the Series 2010 Bonds. No Bonds may be issued under the provisions of this Indenture except in accordance with this Article II. Section 2.02. Details of the Series 2010 Bonds. The Series 2010 Bonds authorized hereby shall be designated “City of Port St. Lucie, Florida Research Facilities Revenue Bonds (Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project), with the further designation of “Series 2010,” shall be dated as of their date of issuance, shall be issued as fully registered Bonds without coupons in Authorized Denominations, numbered R-1 upward, shall bear interest payable each May 1 and November 1, commencing November 1, 2010, at rates, and shall mature on May 1 in years and amounts as follows: Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2033* 2035* 2042* __________________________ *Term Bond.

Amount $ 1,015,000 1,045,000 1,090,000 1,130,000 1,190,000 1,245,000 1,310,000 1,375,000 1,445,000 1,505,000 1,580,000 1,655,000 1,730,000 17,270,000 5,475,000 23,975,000

Rate 3.000% 4.000 4.000 5.000 5.000 5.000 5.000 5.000 4.125 5.000 5.000 4.375 4.500 5.000 5.000 5.000

Interest on the Series 2010 Bonds shall be calculated on a 360-day year of twelve 30-day months.

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Section 2.03. Provisions on Interest and Payment. Each Bond shall bear interest from the Interest Payment Date next preceding the date on which it is authenticated, unless such Bond is (a) authenticated before the first Interest Payment Date following the initial delivery of Bonds, in which case it shall bear interest from its date, or (b) authenticated upon an Interest Payment Date, in which case it shall bear interest from such Interest Payment Date; provided, however, that if at the time of authentication of any Bond interest is in default, such Bond shall bear interest from the date to which interest has been paid. Principal of and premium, if any, on the Bonds shall be payable at the designated office of the Trustee. Principal shall be payable upon presentation and surrender of the Bonds as the same become due. Interest on the Bonds shall be paid to the persons in whose name the Bonds are registered at the close of business of the 15th calendar day (whether or not a Business Day) of the calendar month next preceding an Interest Payment Date by check or draft mailed to such persons at their addresses as they appear on the registration books; provided at the written request of an owner of at least $1,000,000 in aggregate principal amount of Bonds, timely submitted to the Trustee, principal and interest shall be payable by wire transfer at an address specified by such owner. If any Bond is not paid upon presentment when due (whether at maturity, by acceleration or call for redemption or otherwise), such Bond shall continue to bear interest until paid at the rate specified thereon. Principal, premium, if any, and interest shall be payable in lawful money of the United States of America. The Depository Trust Company (“DTC”), New York, New York, will act as Securities Depository for the Bonds. The City has entered into a Letter of Representations with DTC. Upon the issuance of the Bonds, one fully-registered Bond will be registered in the name of Cede & Co., as nominee for DTC, for each maturity. So long as Cede & Co. is the registered owner of the Bonds, as nominee of DTC, references herein to the owners of the Bonds or registered owners of the Bonds shall mean Cede & Co. and shall not mean the beneficial owners of the Bonds. Notwithstanding the prior paragraph, if there is a Securities Depository for the Bonds, payments thereon shall be made directly to and at such Securities Depository. The interest of each of the beneficial owners of the Bonds will be recorded through the records of a DTC participant. Transfers of beneficial ownership interests in the Bonds which are registered in the name of Cede & Co. will be accomplished by book entries made by DTC and, in turn, by the DTC participants and indirect participants who act on behalf of the beneficial owners of Bonds. DTC may determine to discontinue providing its service with respect to the Bonds at any time by giving notice to the City and the Trustee and discharging its responsibilities with respect thereto under applicable law. If there is no successor Securities Depository appointed by the City, the City shall deliver Bonds to the beneficial owners thereof. The City, in its sole discretion, may determine not to continue participation in the system of book-entry transfers through DTC (or a successor Securities Depository) at any time by giving reasonable notice to DTC (or a successor Securities Depository) and the Trustee. In such event, the City will deliver Bonds to the beneficial owners thereof pursuant to Section 2.07. The City and the Trustee shall recognize DTC or its nominee, Cede & Co., while the registered owner, as the owner of the Bonds for all purposes, including notices and voting.

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Conveyance of notices and other communications by DTC to DTC participants and by DTC participants and indirect participants to beneficial owners of the Bonds will be governed by arrangements among DTC, DTC participants and indirect participants, subject to any statutory and regulatory requirements as may be in effect from time to time. Section 2.04. Execution of Bonds. The Bonds shall be signed by the manual or facsimile signature of the Mayor of the City, and its seal shall be affixed thereto or a facsimile thereof printed thereon and attested by the manual or facsimile signature of the City Clerk or any authorized deputy clerk. In case any officer whose signature or a facsimile of whose signature shall appear on any Bond shall cease to be such officer before the delivery of the Bonds, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes the same as if he had remained in office until such delivery. Any Bond may bear the facsimile signature of or may be signed by such persons as at the actual time of the execution thereof shall be the proper officers to sign such Bond although at the date of such Bond such persons may not have been such officers. Section 2.05. Authentication of Bonds. The Bonds shall bear a certificate of authentication, substantially in the form hereinabove set forth, duly executed by the Trustee. The Trustee shall authenticate each Bond with the signature of an authorized agent of the Trustee but it shall not be necessary for the same agent to authenticate all of the Bonds of any series. Only such authenticated Bonds shall be entitled to any right or benefit under this Indenture and such certificate on any Bond issued hereunder shall be conclusive evidence that the Bond has been duly issued and is secured by the provisions hereof. Section 2.06. Form of Bonds. The Bonds shall be in substantially the form attached to this Indenture as Exhibit A, with such appropriate designations, variations, omissions and insertions as are permitted or required by this Indenture. Section 2.07. Delivery of the Series 2010 Bonds; Initial Deposits. (a) The Trustee shall authenticate and deliver the Bonds when there have been filed with or received by it the following: (1) A certified copy of the Bond Ordinance and all resolutions of the City mentioned in the opinion of Bond Counsel referred to in clause (5) below and in the opinion of counsel to the City mentioned in clause (6) below authorizing (i) the execution and delivery of this Indenture and the Loan Agreement, and (ii) the issuance, sale, execution and delivery of the Series 2010 Bonds; (2) Evidence that the City has held a public hearing, after published notice, to consider the issuance of the Series 2010 Bonds for the purposes of Section 147(f) of the Code (“TEFRA Hearing”), together with a certified copy of the resolution authorizing the issuance of the Series 2010 Bonds for purposes of Section 147(f) of the Code, and authorizing the execution and delivery of the Indenture, the Loan Agreement, the Intercreditor Agreement and the other related documents and instruments delivered in connection with the sale and issuance of the Series 2010 Bonds to which the City is a party;

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(3) Original executed counterparts of this Indenture, the Loan Agreement, the Mortgage, and the Intercreditor Agreement; (4) A binding commitment to issue a mortgagee title insurance policy in the amount of at least the aggregate principal amount of the Series 2010 Bonds, designating the Trustee as insured; (5) Copies of any financing statements filed to perfect the security interests created by this Indenture or the Mortgage; (6) Opinion of Bond Counsel to the effect that the Bonds have been duly authorized, executed and delivered by the City entitled to the benefits of and secured by this Indenture; (7) Opinion of the City Attorney, to the effect that the Indenture, the Intercreditor Agreement, the Loan Agreement and the assignment of the Loan Agreement have been duly authorized, executed and delivered by the City and constitute legal, valid, binding and enforceable limited obligations of the City; (8) A copy, certified by an Authorized Representative of the Borrower, of the resolution or resolutions of the board of directors of the Borrower approving the form of and authorizing the execution and delivery of the Loan Agreement and the Mortgage and the other related documents and instruments to be delivered in connection with the issuance of the Series 2010 Bonds to which the Borrower is a party; (9) An Opinion of Counsel to the Borrower acceptable to the City and Bond Counsel to the effect that (A) the Borrower has been duly organized and is validly existing as a not-for-profit corporation in good standing under the laws of the State of Florida and the Borrower has the power and authority to execute and deliver the Loan Agreement, the Mortgage and the other related documents and instruments to be delivered in connection with the issuance of the Series 2010 Bonds to which the Borrower is a party; (B) the Loan Agreement, the Mortgage and the other related documents and instruments to be delivered in connection with the issuance of the Series 2010 Bonds to which the Borrower is a party have each been duly authorized, executed and delivered by the Borrower and assuming due authorization, execution and delivery of the same by the other parties thereto, constitute valid legal and binding obligations of the Borrower enforceable in accordance with their terms, except to the extent that the enforceability of the same may be limited by, among other things, bankruptcy, insolvency or other laws affecting creditors’ rights generally and by principles of equity, and (C) the Borrower is an organization described in Section 501(c)(3) of the Code and, to the knowledge of counsel to the Borrower, has done nothing to impair its status as such; (ii) the Borrower is exempt from federal income taxation under Section 501(a) of the Code, except taxation of unrelated business income under Section 511 of the Code; (iii) the application of the proceeds of the Series 2010 Bonds in the manner described in the Loan Agreement does not constitute a use by the Borrower with respect to a trade or business that is an unrelated trade or business as defined in Section 513(a) of the Code; and (iv) the use of the Project in accordance with the terms of the Loan Agreement and the representations made by the Borrower therein will cause the Project to be

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used in furtherance of the Borrower’s “exempt purpose” as defined in Section 501(c)(3) of the Code; (10) A request and authorization of the City, signed by the Mayor, to the Trustee to authenticate and deliver the Series 2010 Bonds to such person or persons named therein upon payment to the Trustee for the account of the City of $62,165,832.30. (b) The City’s receipts derived from the sale of the Series 2010 Bonds of $62,165,832.30, together with $208,000.00 to be paid by the Borrower, shall be deposited as follows: Project Fund: Capitalized Interest Account Project Account Cost of Issuance Account - Bonds Subaccount Cost of Issuance Account - Borrowers Subaccount Debt Service Reserve Fund: Credit Enhancement Fee:

$ 7,543,070.69 45,300,000.00 176,549.11 208,000.00 4,146,212.50 5,000,000.00

Section 2.08. Registration of Bonds; Persons Treated as Owners; Exchange; Charges. The Trustee shall act as bond registrar and shall maintain registration books for the registration and the registration of transfer of the Bonds. The transfer of any Bond shall be in Authorized Denominations and may be registered only upon the books kept for the registration and registration of transfer of the Bonds upon surrender thereof to the bond registrar together with an assignment duly executed by the registered owner in person or by his duly authorized attorney or legal representative. Upon any such transfer the City shall execute and the Trustee shall authenticate and deliver in exchange for such Bond a new registered bond or bonds, registered in the name of the transferee, of an Authorized Denomination.

Section 2.09. Temporary Bonds. Prior to the preparation of Bonds in definitive form, the City may issue temporary bonds in registered form and in Authorized Denominations, but otherwise in substantially the form hereinabove set forth, with appropriate variations, omissions and insertions. The City shall promptly prepare, execute and deliver to the Trustee before the first Interest Payment Date, Bonds in definitive form, and upon presentation and surrender of Bonds in temporary form, the Trustee shall authenticate and deliver in exchange therefor Bonds in definitive form of the same aggregate principal amount. Until exchanged for Bonds in definitive form, Bonds in temporary form shall be entitled to the lien and benefit of this Indenture. Section 2.10. Mutilated, Lost or Destroyed Bonds. Should any Bond become mutilated or be lost or destroyed, the City shall cause to be executed, and the Trustee shall authenticate and deliver, a new Bond of like Series, date and tenor in exchange and substitution for, and upon cancellation of, such mutilated Bond or in lieu of and in substitution for such lost or destroyed Bond; provided, however, that the City and the Trustee shall so execute, authenticate and deliver only if the holder has paid the reasonable expenses and charges of the City and the Trustee in connection therewith and, in the case of a lost or destroyed Bond, has furnished to the City and the Trustee indemnity satisfactory to each. If any such Bond shall have matured, the Trustee may pay the same without surrender thereof and without authenticating and delivering a new Bond. Section 2.11. Cancellation and Disposition of Bonds. All Bonds which have been paid (whether at maturity, by acceleration or call for redemption or otherwise) or delivered to the Trustee by the City for cancellation shall not be reissued, and the Trustee shall, unless otherwise directed by the City, cremate, shred or otherwise dispose of such Bonds. The Trustee shall deliver to the City, upon request, a certificate of any such cremation, shredding or other disposition of any Bond. Section 2.12. Refunding Bonds.

Prior to due presentment for registration of transfer, the bond registrar shall treat the registered owner as the person exclusively entitled to payment of principal and the exercise of all other rights and powers of the owner, except that all interest payments shall be made to the registered owner as of the Record Date. Upon surrender thereof at the designated corporate trust office of the Trustee, together with an assignment duly executed by the registered owner or his duly authorized attorney or legal representative, Bonds may, at the option of the owner, be exchanged for an equal aggregate principal amount of Bonds of the same maturity of Authorized Denominations as requested by the owner thereof or his duly authorized attorney or legal representative. The City shall execute and the Trustee shall authenticate any Bonds whose execution and authentication is necessary to provide for exchange of Bonds pursuant to this section. Any exchange or registration of transfer of any Bond by any owner thereof shall be at the expense of the City, except that the Trustee as bond registrar shall make a charge to any bondholder requesting such exchange, registration or discharge in the amount of any tax or other governmental charge required to be paid with respect thereto.

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(a) Refunding Bonds may be issued under and secured by this Indenture subject to the conditions hereinafter provided in this Section and the provisions of Article II of this Indenture at any time or times for the purposes of (i) providing necessary funds to defease or refund all or a portion of the Series 2010 Bonds or any prior Refunding Bonds, (ii) making a deposit, if necessary, to the Debt Service Reserve Fund, and (iii) paying the Costs of Issuance relating to such Refunding Bonds. Such Refunding Bonds shall be executed substantially in the form and manner set forth herein, but before such Refunding Bonds shall be delivered by the Trustee, there shall be filed or deposited with the Trustee the following: (1) A certificate of the Borrower specifying the amount of Refunding Bonds to be issued and the Bonds to be refunded or defeased by such Refunding Bonds, together with any other documents or materials requested by the City; (2) A copy, certified by the Secretary of the Borrower, of the resolution or resolutions of the Board of Directors of the Borrower approving the form of and authorizing the execution and delivery of the amendments to the Loan Agreement, and the amendments to the Mortgage, if any, to take into account the change in the Loan Payments arising from the issuance

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of the Refunding Bonds and to reflect the execution and delivery of a Supplemental Indenture relating to such Refunding Bonds (collectively, the “Amendments”) and the execution and delivery of any other documents and instruments relating to the issuance of the Refunding Bonds to which the Borrower is a party; (3) If required in connection with the issuance of the Refunding Bonds, evidence that the City has held a TEFRA Hearing and a certified copy of the resolution of the City authorized the issuance of such Refunding Bonds in accordance with Section 147(f) of the Code and such other documents as may be required in connection therewith; (4) A certified copy of the ordinance and/or resolutions authorizing the issuance by the City of the Refunding Bonds and authorizing the execution and delivery of the Amendments to which the City is a party and the Supplemental Indenture relating to such Refunding Bonds; (5) the Amendments;

delivered by the City and, assuming the authorization, execution and delivery by the other parties thereto and subject to the terms and conditions thereof, constitute the valid legal and binding agreements of the City enforceable in accordance with their terms, except to the extent that the enforceability of the same may be limited by bankruptcy, insolvency or other laws affecting creditor’s rights generally and by principles of equity; (9) An opinion of Bond Counsel to the effect that (A) except for Refunding Bonds issued as Taxable Bonds and subject to the customary qualifications, the interest on such series of Refunding Bonds is excluded from the gross income of the owners thereof for purposes of federal income taxation and (B) the issuance of such Refunding Bonds will not, in and of itself, adversely affect the exclusion from gross income of the interest of all other Outstanding Bonds to the extent not issued as Taxable Bonds; (10) An opinion of Bond Counsel that the Bonds to be defeased, if any, are no longer considered outstanding under this Indenture;

Original executed counterparts of the Supplemental Indenture and each of (11) Evidence that the Reserve Requirement, as it will exist upon issuance of the Refunding Bonds, has been fully funded;

(6) a binding commitment to issue a revision to the mortgagee title insurance policy in an amount of at least the aggregate principal amount of the Refunding Bonds for the Land; (7) an Opinion of Counsel to the Borrower acceptable to the City and Bond Counsel to the effect that the Borrower is validly existing as a not-for-profit corporation in good standing under the laws of the State, and the Borrower has the power and authority to execute and deliver the Amendments and such other documents and instruments relating to the issuance of the Refunding Bonds to which the Borrower is a party; that the Amendments and the other documents and instruments relating to the issuance of the Refunding Bonds to which the Borrower is a party have each been duly authorized, executed and delivered by the Borrower and, assuming due authorization, execution and delivery thereof by the other parties thereto, constitute valid and binding agreements of the Borrower enforceable in accordance with their terms, except to the extent that the enforceability of the same may be limited by, among other things, bankruptcy, insolvency or other laws affecting creditor’s rights generally and by principles of equity; and (i) the Borrower is an organization described in Section 501(c)(3) of the Code and, to the knowledge of counsel to the Borrower, has done nothing to impair its status as such; (ii) the Borrower is exempt from federal income taxation under Section 501(a) of the Code, except taxation of unrelated business income under Section 511 of the Code; and (iii) the use of the Project in accordance with the terms of the Loan Agreement and the representations made by the Borrower therein will cause the Project to be used in furtherance of the Borrower’s “exempt purpose” as defined in Section 501(c)(3) of the Code;

(12) The Credit Facility and any agreement in connection with the issuance of the Credit Facility, if any, relating to such Refunding Bonds. (b) When the documents described in paragraphs (1) thru (12), inclusive, of this Section 2.12 have been filed with the Trustee and when the Refunding Bonds shall have been executed and authenticated as required by this Indenture, the Trustee shall deliver the Refunding Bonds at one time to, or upon the order of, the purchasers of such Refunding Bonds, but only upon payment to the Trustee of the purchase price of the Refunding Bonds and the accrued interest thereon, if any. The Trustee shall be entitled to rely upon the resolution described in the paragraphs (2), (3) and (4) of this Section 2.12(a) hereof as to all matters stated therein. The Trustee shall be entitled to rely upon the legal opinions described herein as to all matters stated therein. (c) The proceeds of the Refunding Bonds may also be used to pay costs of issuance, and shall be deposited in the funds and accounts in such manner and in such amounts as determined by the Supplemental Indenture relating to such Refunding Bonds. The Refunding Bonds shall be secured on a parity with all Outstanding Bonds issued hereunder, that will remain Outstanding after the issuance of the Refunding Bonds, if any. [END OF ARTICLE II]

(8) An opinion of the City Attorney to the effect that (A) the City is a duly organized and validly existing municipal corporation of the State of Florida, and has all the necessary power and authority to execute and deliver the Amendments and other documents and instruments relating to the issuance of the Refunding Bonds to which the City is a party; and (B) the Amendments and the other documents and instruments relating to the issuance of the Refunding Bonds to which the City is a party have each been duly authorized, executed and

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ARTICLE III REDEMPTION OF BONDS Section 3.01. Redemption Dates and Prices for Bonds. The terms of this Article III shall apply to the redemption of the Series 2010 Bonds. Additional redemption provisions in connection with the issuance of the Refunding Bonds shall be set forth in the Supplemental Indenture relating to such Refunding Bonds, if any. The Series 2010 Bonds may not be called for redemption by the City, except as provided herein: (a) Optional Redemption. The Series 2010 Bonds maturing on or prior to May 1, 2020 are not subject to optional redemption prior to maturity. The Series 2010 Bonds maturing on May 1, 2021 and thereafter are subject to redemption upon the option and direction of the Borrower in whole or in part on any date on or after May 1, 2020, at redemption prices of 100% of the principal amount to be redeemed, plus accrued interest thereon to the redemption date. (b) Mandatory Sinking Fund Redemption. (1) The Series 2010 Bonds maturing on May 1, 2033 are subject to mandatory sinking fund redemption in part at a redemption price equal to 100% of the Amortization Amount on the Series 2010 Bonds to be redeemed plus accrued interest thereon to the redemption date, on May 1 of the years set forth below and in the following principal amounts of Series 2010 Bonds after credit as described below: Year

Amortization Amount

2026 2027 2028 2029 2030 2031 2032 2033* __________________________ *Maturity.

$1,810,000 1,900,000 1,995,000 2,095,000 2,200,000 2,305,000 2,420,000 2,545,000

(2) The Series 2010 Bonds maturing on May 1, 2035 are subject to mandatory sinking fund redemption in part at a redemption price equal to 100% of the Amortization Amount on the Series 2010 Bonds to be redeemed plus accrued interest thereon to the redemption date, on May 1 of the years set forth below and in the following principal amounts of Series 2010 Bonds after credit as described below: Year

Amortization Amount

2034 2035* __________________________ *Maturity.

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(3) The Series 2010 Bonds maturing on May 1, 2042 are subject to mandatory sinking fund redemption in part at a redemption price equal to 100% of the Amortization Amount on the Series 2010 Bonds to be redeemed plus accrued interest thereon to the redemption date, on May 1 of the years set forth below and in the following principal amounts of Series 2010 Bonds after credit as described below: Amortization Amount

Year 2036 2037 2038 2039 2040 2041 2042* __________________________ *Maturity.

$2,945,000 3,090,000 3,245,000 3,410,000 3,580,000 3,760,000 3,945,000

(4) At its option, to be exercised on or before the forty-fifth day next preceding any mandatory sinking fund redemption date, the City, at the direction of the Borrower, may: (i) cause to be paid to the Trustee for deposit in the Bond Fund such amount as the City may determine, accompanied by a certificate directing the Trustee to apply such amount on or before such forty-fifth day to the purchase of Series 2010 Bonds subject to mandatory sinking fund redemption on such date, and the Trustee shall thereupon use all reasonable efforts to expend such funds as nearly as may be practicable in the purchase of such Series 2010 Bonds as directed by the Borrower at a price not exceeding the principal amount thereof plus accrued interest to such mandatory sinking fund redemption date, without premium; or (ii) deliver to the Trustee for cancellation Series 2010 Bonds subject to mandatory sinking fund redemption on such date, in any aggregate principal amount desired; and (iii) receive a credit against its mandatory sinking fund redemption obligation for such Series 2010 Bonds, which prior to such date have been redeemed (otherwise than through the operation of the sinking fund) and canceled by the Trustee and not theretofore applied as a credit against any sinking fund redemption obligation. Each Series 2010 Bond so purchased, delivered or previously redeemed shall be credited by the Trustee at 100% of the principal amount thereof against the obligation of the City on such mandatory sinking fund redemption date for such Series 2010 Bonds. Any excess over such obligation shall be credited against future Amortization Amounts in chronological order, and the Amortization Amount of such Series 2010 Bonds to be redeemed by operation of the sinking fund shall be accordingly reduced. Any funds received by the Trustee pursuant to (i), but not expended as provided therein for the purchase of Series 2010 Bonds on or before said forty-fifth day shall be retained in the Bond Fund and shall thereafter be used only for the purchase of Series 2010 Bonds, for the payment of interest on Series 2010 Bonds and as a credit against

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future mandatory sinking fund redemption Amortization Amounts in chronological order to the extent otherwise payable out of Amortization Amounts thereafter becoming due unless otherwise directed by the Borrower. (c) Extraordinary Redemption. The Series 2010 Bonds are subject to extraordinary redemption in whole, or in part on any date (if in part, in any order of maturity as directed by the Borrower or, in the absence of such direction, in inverse order of maturity and by lot within maturities), at a redemption price equal to 100% of the principal amount to be redeemed, without premium, together with accrued interest to the date of redemption, from (i) the Net Proceeds of insurance or condemnation or other amount transferred to the Trustee pursuant to Section 6.2(c) and Section 9.1 of the Loan Agreement for deposit to the Redemption Fund; and (ii) the amount in the Project Account or any other account of the Project Fund therein transferred to the Redemption Fund in accordance with Section 6.04(d) of this Indenture. The redemption date with respect to any extraordinary redemption pursuant to this Section 3.01(c) hereof shall be the next succeeding Interest Payment Date following the receipt by the Trustee of the net proceeds to be used for such redemption or the transfer by the Trustee from the Project Account or any account in the Project Fund to the Redemption Fund; provided, however, if such Interest Payment Date occurs within forty (40) days of receipt by the Trustee of the moneys to be used for such redemption, the redemption date shall be the second succeeding Interest Payment Date. Section 3.02. Selection of Bonds for Redemption. (a) If less than all the Outstanding Series 2010 Bonds are called for redemption (other than sinking fund redemption), the maturities of Series 2010 Bonds to be redeemed shall be selected by the Borrower. If less than all the Outstanding Series 2010 Bonds of a maturity are to be redeemed (including sinking fund redemption), the Series 2010 Bonds within each maturity of Series 2010 Bonds to be redeemed shall be selected by the Securities Depository. If a portion of a Series 2010 Bond shall be called for redemption, a new Series 2010 Bond in principal amount equal to the unredeemed portion thereof shall be authenticated and delivered to the registered owner upon the surrender thereof, except when such Bond is held in a Book-Entry System. (b) If a Series 2010 Bond is of a denomination larger than the minimum Authorized Denomination, a portion of such Series 2010 Bond may be redeemed, but Series 2010 Bonds shall be redeemed only in the principal amount of an Authorized Denomination and no Series 2010 Bond may be redeemed in part if the principal amount of such Series 2010 Bond to be Outstanding following such partial redemption is not an Authorized Denomination. Section 3.03. Notice of Redemption of Bonds. (a) Upon receipt of written instructions from the Borrower delivered pursuant to Section 9.4 of the Loan Agreement to call any of the Series 2010 Bonds or portions thereof for redemption, the Trustee shall send to the registered owner of each Series 2010 Bond to be redeemed notification thereof which notice shall (a) specify the Series 2010 Bonds to be redeemed, the redemption date, the redemption price, CUSIP numbers and the place or places where amounts due upon such redemption will be payable (which shall be the designated corporate trust office of the Trustee) and, if less than all of the Series 2010 Bonds are to be redeemed, the numbers of the Series 2010 Bonds and the portions of Series 2010 Bonds to be redeemed, (b) state any condition precedent to such redemption and (c) state that on the redemption date, and upon the satisfaction of any such condition precedent, the Series 2010 Bonds to be redeemed shall cease to bear interest. The

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Trustee may deliver a notice of redemption that states that the related redemption of Series 2010 Bonds is conditioned upon the receipt of funds or any other condition, and the Trustee may either rescind or amend any notice delivered pursuant to this Section 3.03 prior to the redemption date. Such notice may set forth any additional information relating to such redemption. Such notice shall be given by mail not less than thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption (1) by first class mail to the owner of each such Series 2010 Bond to be redeemed, at the address appearing on the registration books of the Trustee, (2) to all organizations registered with the Securities and Exchange Commission as a repository for municipal securities information, and (3) to at least one information service of national recognition which disseminates securities redemption information with respect to municipal securities. Such notice shall take into account, to the extent applicable, the prevailing municipal securities industry standards. Failure to give any notice specified in (1) or any defect therein, shall not affect the validity of any proceedings for the redemption of any Series 2010 Bonds with respect to which no such failure has occurred and failure to give any notice specified in (2) or (3), or any defect therein, shall not affect the validity of any proceedings for the redemption of any Series 2010 Bonds with respect to which the notice specified in (1) is correctly given. Any notice mailed or provided herein shall conclusively be presumed to have been given whether or not actually received by any owner. (b) Notwithstanding anything to the contrary contained herein, so long as the Bonds are held under a book-entry system by The Depository Trust Company (“DTC”) (or any successor Securities Depository), notices of redemption shall be sent only to DTC (or any successor Securities Depository) or its nominee. Selection of book-entry interest in the Bonds called, and notice of the call to the owners of those interests called, is the responsibility of DTC (or any successor Securities Depository) pursuant to its rules and procedures, and of its participants and indirect participants. Any failure of DTC (or any successor Securities Depository) to advise any participant, or of any participant or any indirect participant to notify the owner of a book-entry interest, of any such notice and its content or effect shall not affect the validity of any proceedings for the redemption of any Bonds. Provided funds for their Section 3.04. Not Outstanding on Redemption Date. redemption are on deposit at the place of payment on the redemption date, all Series 2010 Bonds or portions thereof called for redemption shall cease to bear interest on such date, shall no longer be secured by this Indenture and shall not be deemed to be outstanding under the provisions of this Indenture. The holders of such Series 2010 Bonds shall look only to such funds for payment and then only to the extent of the amounts so received, without any interest thereon, and the Trustee shall have no responsibility with respect to such money. Any moneys which shall be so set aside or deposited, whether for the payment of Series 2010 Bonds at maturity or upon redemption, and which shall remain unclaimed by the holders of such Series 2010 Bonds for a period of forty-five (45) months after the date on which such Series 2010 Bonds shall have become payable shall, on request of the Borrower, be paid to the Borrower. After such moneys have been paid to the Borrower, the holders of such Series 2010 Bonds shall be entitled to look only to the Borrower, and all liability of the Trustee with respect to such amounts shall cease. [END OF ARTICLE III]

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ARTICLE IV GENERAL COVENANTS AND PROVISIONS Section 4.01. Payment of Bonds; Security. (a) The City shall promptly pay when due the principal of (whether at maturity, by acceleration or call for redemption or otherwise), premium, if any, and interest on the Bonds at the places, on the dates, from the accounts and in the manner provided herein and in the Bonds according to the true intent and meaning thereof; provided, however, that such obligations are not general obligations of the City but are limited obligations of the City secured solely by and payable solely from the Trust Estate. Neither the faith and credit nor the taxing power of the State of Florida or any political subdivision thereof is pledged as security for the payment of the principal of, premium, if any, or interest on the Bonds. (b) Pursuant to the granting clauses of this Indenture, the City assigns its rights under the Loan Agreement (other than Reserved Rights) and the Mortgage to the Trustee and pledges the revenues therefrom for payment for the Bonds under the Act, in each case, subject to its Reserved Rights, and Loan Payments, as and when received, shall immediately be subject to the lien and security interest of this Indenture without any requirement of delivery thereof to the Trustee or any other act. Such lien and security interest shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the City without regard to whether such parties have notice thereof. The Loan Payments pledged hereunder shall not be pledged, in whole or in part, as security for any obligations of the City other than the Bonds. Section 4.02. Performance of City’s Covenants. The City shall faithfully observe and perform all covenants, conditions and agreements on its part contained in this Indenture, in the Loan Agreement, the Intercreditor Agreement and in every Bond executed, authenticated and delivered hereunder and in all proceedings of its City Council pertaining thereto; provided, however, that the liability of the City under any such covenant, condition or agreement for any breach or default by the City thereof or thereunder shall be limited solely to the funds held by the Trustee pursuant to this Indenture and the revenues pledged hereunder. The City represents that it is duly authorized under the Constitution and laws of the State of Florida, including particularly and without limitation the Act, to issue the Bonds authorized hereby and to execute this Indenture and to pledge the Loan Payments pledged hereunder in the manner and to the extent herein set forth; and that all action on its part for the issuance of the Bonds, the execution and delivery of this Indenture and the pledge of the Loan Payments pledged hereunder has been duly and effectively taken.

equipping of the Project. The City shall not create or knowingly suffer to be created any lien or security interest in the Project or any lien on the revenues with respect to the loan under the Loan Agreement, except the pledge made pursuant to this Indenture. Section 4.05. Rights Under Loan Agreement. Subject to the terms of Article IX hereof, the Trustee in its own name or, to the extent procedurally required, in the name of the City may enforce all rights of the City and all obligations of the Borrower under and pursuant to the Loan Agreement and the Mortgage for and on behalf of the Bondholders, whether or not the City is in default hereunder. Section 4.06. Covenant Not to Impair Tax Status of Bonds. The City shall not take nor permit nor suffer to be taken nor fail to take any action within its control, or direct the Trustee to take or fail to take any action, which action or failure to act would impair the exclusion, if applicable, from gross income for federal income tax purposes of the interest on the Bonds (other than Taxable Bonds), including the calculation and payment of any rebate necessary to preserve the exclusion. The City, to the extent within its power or direction, shall not knowingly and intentionally permit or direct the investment of any proceeds of the Bonds by the Trustee in such a manner that would result in the Bonds (other than Taxable Bonds) being characterized as ‘arbitrage bonds” under Section 148 of the Code. The City will comply with the provision of the tax certificate and the exhibits thereto applicable to the City. Section 4.07. Reports of Trustee. The Trustee shall make reports to the Borrower of all moneys received and expended by it. Such reports shall be made monthly, with a copy to the City if the City so requests. The Trustee shall furnish to the City and the Borrower, upon request, (a) a statement of the aggregate principal amount of the Bonds outstanding as of the date of such request, and (b) such information in the possession of the Trustee as may be necessary to make any reports as may be required by the Act or any State or Federal law, now or hereafter in effect. Section 4.08. Inspection of Project Books. All books and documents relating to the Project in the possession of the City shall at all reasonable times be open to inspection by such agents as the Trustee or the owners of not less than 50% in aggregate principal amount of the Bonds then outstanding may from time to time designate. [END OF ARTICLE IV]

Section 4.03. Instruments of Further Assurance. Upon receipt of indemnification satisfactory to it, the City shall do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, such indentures supplemental hereto and such further acts, instruments and transfers as may be reasonably required for the better assuring, transferring, conveying, pledging and assigning to the Trustee of all the rights assigned hereby, including the Trust Estate, the Loan Payments and other revenues pledged hereunder, for the payment of the principal of, premium, if any, and interest on the Bonds. Section 4.04. Loan To Finance the Project. The City shall make the Loan to the Borrower so that it can acquire, construct and equip or cause the acquisition, construction and

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ARTICLE V

equal to the principal and the Amortization Amounts coming due on all Outstanding Bonds on the next succeeding date on which the principal or Amortization Amounts become due.

REVENUES AND FUNDS Section 5.01. Establishment of Funds. In addition to the Project Fund created by Section 6.01, there are hereby established with the Trustee the following trust funds: (a) The City of Port St. Lucie, Florida VGTI Florida Project Bond Fund, with an Interest Account and a Principal Account therein; (b)

The City of Port St. Lucie, Florida VGTI Florida Project Debt Service Reserve

(c)

The City of Port St. Lucie, Florida VGTI Florida Project Redemption Fund; and

Fund;

(d) The City of Port St. Lucie, Florida VGTI Florida Project Rebate Fund, provided such fund is not pledged as security for the Bonds and is not a part of the Trust Estate. The Trustee is hereby authorized to establish and maintain for so long as necessary other funds and accounts under this Indenture. Amounts shall be initially deposited in funds under this Indenture as provided in Section 2.07 hereof. Section 5.02. Payments. Loan Payments received by the Trustee from the Borrower under the Loan Agreement shall be deposited into the Bond Fund in accordance with Section 5.03 hereof and any other payments received from the Borrower under the Loan Agreement shall be applied in accordance with the Loan Agreement and this Indenture. Section 5.03. Bond Fund. (a) Loan Payments made by the Borrower in accordance with Section 4.1 of the Loan Agreement shall be deposited as received by the Trustee in the Bond Fund in the following manner and the following order of priority: (1) Subject to the provisions of Section 6.04(c) hereof, there shall be deposited to the Interest Account an amount which shall be sufficient to pay the interest becoming due on the Bonds on the next succeeding Interest Payment Date and any other amounts required to be deposited to the credit of the Interest Account of the Bond Fund. Moneys in the Interest Account shall be used to pay the interest on the Bonds as and when the same becomes due whether by redemption or otherwise and for no other purpose. No further deposit need be made to the Interest Account when the moneys therein are equal to the interest coming due on all Outstanding Bonds on the next succeeding Interest Payment Date. (2) There shall be deposited to the Principal Account an amount which shall be sufficient to pay the Amortization Amounts and principal becoming due on such Bonds on the next succeeding mandatory redemption date and principal payment date, as applicable, and any other amounts required to be deposited to the credit of the Principal Account of the Bond Fund. Moneys in the Principal Account shall be used to pay the principal of and the Amortization Amounts on the Bonds as and when the same shall mature or are redeemed and for no other purpose. No further deposit need be made to the Principal Account when the moneys therein are

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(b) In the event that there has been issued a Credit Facility with respect to the Bonds, the Trustee shall draw on the Credit Facility, in accordance with the provisions of such Credit Facility, and within the requisite time period all as set forth in the Credit Facility, if the amounts in the Interest Account or Principal Account are insufficient to pay the principal of, Amortization Amounts due and interest on the Bonds on the applicable Interest Payment Date, maturity date or mandatory redemption date. In the event that a Credit Facility Issuer or an issuer of a letter of credit or surety bond deposited in the Debt Service Reserve Fund has paid the principal of, Amortization Amount and/or interest on the Bonds, then the Trustee shall instead of such deposits described in (a) above, first reimburse the applicable Credit Facility Issuer or issuer of a letter of credit or surety bond deposited in the Debt Service Reserve Fund such amounts, and then make the aforementioned deposits. (c) In the event that the City has deposited Non-Ad Valorem Revenues to the Debt Service Reserve Fund pursuant to Section 5.04(f) hereof and such amounts have not been reimbursed by the Borrower, provided, that sufficient moneys have been deposited to the Interest Account and Principal Account to pay the Bonds on the next payment date, any amount remaining shall first be transferred to the City as reimbursement for such deposits. Such transfers to the City shall continue until the City is reimbursed in full for each deposit made to the Debt Service Reserve Fund. (d) When the balances in the Bond Fund and the Debt Service Reserve Fund are sufficient to redeem or pay all the Bonds then Outstanding and provided no moneys are owed to the City or the Trustee under the Bond Documents or to the City as reimbursement for deposits made to the Debt Service Reserve Fund pursuant to Section 5.04(g) hereof, the balances in the Bond Fund and the Debt Service Reserve Fund shall be transferred to the Redemption Fund and shall be held for redemption or payment of the Bonds at the earliest practicable date and for no other purpose. Section 5.04. Debt Service Reserve Fund. (a) The Debt Service Reserve Fund shall be maintained in an amount equal to the Reserve Requirement. The Debt Service Reserve Fund shall be used to make transfers to the Bond Fund to the extent necessary to pay the principal of (whether at maturity or earlier redemption or otherwise) and interest on the Bonds as the same become due if the amounts on deposit therein are insufficient therefor. In the event the value of the obligations credited to the Debt Service Reserve Fund shall exceed the Reserve Requirement, at least semiannually, within ten (10) Business Days prior to each Interest Payment Date, or in connection with a valuation requested by an Authorized Representative of the Borrower pursuant to Section 7.02 hereof, the excess shall be transferred to the Interest Account. (b) In lieu of all or any portion of the required amounts to be on deposit in the Debt Service Reserve Fund, the Borrower may cause to be deposited to the credit of the Debt Service Reserve Fund a surety bond or an insurance policy payable to the Trustee for the benefit of the holders of the Bonds, or a letter of credit, in each case entitling the Trustee to draw, in an aggregate amount equal to all or any portion of the difference between the Reserve Requirement and the amount then to the credit of such Debt Service Reserve Fund, if any. The Borrower,

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may, from time to time, substitute cash, surety bonds, insurance policies or letters of credit for any of such forms of security so long as such substituted security complies with the requirements of this section. Cash, if any, released from any Debt Service Reserve Fund as a result of a substitution pursuant to this section shall, as directed by an Authorized Representative of the Borrower, be (i) deposited in the Project Fund, (ii) used to purchase Bonds of the series of Bonds from which such cash was originally derived or to defease or redeem such Bonds subject to redemption at the option of the City, or (iii) used as described in an opinion of Bond Counsel to the effect that such described use will not affect adversely the exclusion of interest on any Bonds from gross income for purposes of federal income taxation. (c) Any surety bond, insurance policy or letter of credit shall be payable (upon the giving of notice and the presentation of any certificates as required thereunder) on any date on which money shall be required to be transferred to the Bond Fund and such transfer cannot be met by the amount on deposit in the Bond Fund, any cash in the Debt Service Reserve Fund or provided from any other fund hereunder. In such event, the Trustee shall, not later than three (3) days prior to such amounts being required, take all necessary action to draw money under such surety bond, insurance policy or letter of credit after use of any cash in the Debt Service Reserve Fund. If there are multiple surety bonds, insurance policies or letters of credit in the Debt Service Reserve Fund, draws shall be made ratably on each. The insurer providing such surety bond or insurance policy shall be an insurer whose claims paying ability is rated by Moody’s and by Standard & Poor’s in the highest rating category without regard to gradation within the category. The issuer of any letter of credit shall be a bank or trust company whose long-term debt obligations are rated by Moody’s and by Standard & Poor’s within its two (2) highest longterm rating categories and the letter of credit itself shall be rated within the two (2) highest rating categories by Moody’s and S&P. Any such surety bond, insurance policy or letter of credit shall provide that the Trustee shall have the ability to draw on it immediately prior to its expiration or termination and, if arrangements are not made for cash, a surety bond, an insurance policy or another letter of credit to be substituted therefor upon such expiration or termination, the Trustee is instructed to draw upon such surety bond, insurance policy or letter of credit prior to its expiration or termination in an amount equal to the lesser of its stated amount or the difference between the Reserve Requirement and the amount then to the credit of the Debt Service Reserve Fund, if any. Any surety bond, insurance policy or letter of credit shall provide that any fees in connection with such security be paid from available funds of the Borrower. (d) If a disbursement is made pursuant to any such surety bond, insurance policy or letter of credit by direct payments by the provider of such surety bond, insurance policy or letter of credit, deposits pursuant to Section 5.03(a) shall be used first to reinstate the maximum limits of such surety bond, insurance policy or letter of credit by making any required repayment thereon, and second, to deposit to the credit of the Debt Service Reserve Fund moneys in the amount needed to remedy any remaining deficiency therein. (e) If the amount in the Debt Service Reserve Fund following a withdrawal of funds or due to a valuation pursuant to Section 7.02 hereof is less than the Reserve Requirement, the deficiency shall be paid to the Trustee by the Borrower at the times and in the amounts as required in the Loan Agreement, beginning thirty (30) days after the receipt of written notice by the Borrower from the Trustee of such deficiency. In the event the Borrower does not make the payments at the times and in the amounts provided for in the Loan Agreement for deposit into

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the Debt Service Reserve Fund or if the amount paid by the Borrower is not the full amount required to be deposited pursuant to the Loan Agreement, the Trustee within three (3) days shall provide written notice of such deficiency to the City as required by subsection (g) of this Section 5.04. (f) When the balances in the Bond Fund and the Debt Service Reserve Fund are sufficient to redeem or pay all the Bonds then outstanding and provided no moneys are owed to the City or the Trustee under the Bond Documents or to the City as reimbursement for deposits made to the Debt Service Reserve Fund pursuant to subsection (g) hereof, the balances in the Debt Service Reserve Fund may be transferred to either the Bond Fund to pay the Bonds at maturity or, together with any money in the Bond Fund, to the Redemption Fund to be held for redemption or payment of the Bonds at the earliest practicable date and for no other purpose. (g) Covenant to Budget and Appropriate. The City hereby covenants to budget, appropriate and deposit into the Debt Service Reserve Fund, at such times as may be required to cure any deficiency therein within (30) days of receipt of written notice from the Trustee, while the Series 2010 Bonds are outstanding, from all legally available Non-Ad Valorem Revenues of the City, sufficient Non-Ad Valorem Revenues to supplement the moneys in the Debt Service Reserve Fund to the extent necessary to replenish the amount therein to the amount of the Reserve Requirement. The Covenant is cumulative to the extent not paid, and shall continue until such Non-Ad Valorem Revenues or other legally available funds in amounts sufficient to replenish the amount in the Debt Service Reserve Fund to the amount of the Reserve Requirement shall have been budgeted, appropriated and actually paid. Except with respect to such Non-Ad Valorem Revenues deposited in the Debt Service Reserve Fund, the Covenant does not create a lien upon or pledge of such Non-Ad Valorem Revenues nor does it preclude the City from pledging in the future all or any specified portion of the Non-Ad Valorem Revenues, nor does it give the Registered Owners a prior claim on all or any specified portion of the Non-Ad Valorem Revenues as opposed to claims of general creditors of the City. The Covenant is subject in all respects to (i) the payment of obligations secured by a lien upon and pledge of Non-Ad Valorem Revenues whether heretofore or hereafter entered into (including the payment of debt service on bonds and other debt instruments) and (ii) any other obligation of the City to budget and appropriate Non-Ad Valorem Revenues whether heretofore or hereafter entered into. The Covenant is intended to have the effect of making available for the deposit into the Debt Service Reserve Fund, at such times as may be required to replenish the amount therein to the amount of the Reserve Requirement within (30) days of receipt of a written notice by the Trustee, the Non-Ad Valorem Revenues and placing on the City a positive duty to appropriate and budget, by amendment if necessary, amounts sufficient to cure such deficiency. The Covenant is subject in all respects to the restrictions of Section 166.241, Florida Statues, which provides that the governing body of each municipality make appropriations for each Fiscal Year which, in any one year, shall not exceed the amount to be received from taxation or other revenue sources, and to payments which are legally mandated by applicable law. The obligations of the City contained herein shall not be construed as a limitation on the ability of the City to pledge or covenant to pledge or use all or any portion of the Non-Ad

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Valorem Revenues for other legally permissible purposes. The obligation of the City to replenish the amount therein to the amount of the Reserve Requirement in the Debt Service Reserve Fund within (30) days of receipt of a written notice by the Trustee, is subject to the availability of money in the treasury of the City and funding requirements for essential public purposes affecting the health, welfare and safety of the inhabitants of the City or which are legally mandated by law, pledges of any or all of the Non-Ad Valorem Revenues and the budgeting and appropriation for any other obligations of the City to budget and appropriate such Non-Ad Valorem Revenues; however, such obligation is cumulative and shall carry over from Fiscal Year to Fiscal Year. Section 5.05. Redemption Fund. The Trustee shall deposit to the Redemption Fund for redemption of Bonds in accordance with Article III hereof (a) any amounts deposited by the Borrower with the Trustee for the purpose of paying the redemption price of all or a portion of such Bonds, (b) any amounts required to be transferred from the Project Fund and the accounts therein pursuant to Section 6.05 hereof, and (c) any proceeds required to be transferred to the Redemption Fund pursuant to Sections 6.2 of the Loan Agreement. Such money shall be held in the Redemption Fund solely for the purpose of redeeming Bonds in advance of their maturity and shall be applied to the redemption of the Bonds called for redemption pursuant to Article III at the applicable redemption price on such redemption date. Interest on such redeemed Bonds shall be paid from the Interest Account, except to the extent moneys for payment of the interest were deposited to the Redemption Fund for such purpose.

Section 5.07. Moneys to Be Held in Trust. All moneys required to be deposited with or paid to the Trustee for the account of any fund or account under any provision of this Indenture (including any temporary trust fund or account established pursuant to Section 5.01) received by the Trustee shall be held by the Trustee in trust, and, except for moneys in the Rebate Fund or deposited with or paid to the Trustee for deposit in the Redemption Fund for the redemption of Bonds, notice of the redemption of which has been duly given shall, while held by the Trustee, constitute part of the Trust Estate and be subject to the lien hereof. Section 5.08. Repayment to the Borrower; Assignment Upon Early Mandatory Redemption. Subject to Section 5.07, following payment of the Bonds and after payment of the fees and expenses of the Trustee and any other paying agent, including but not limited to the reimbursement of the City for any Non-Ad Valorem Funds deposited to the Debt Service Reserve Fund pursuant to the Covenant, and other amounts required to be paid hereunder and under the Loan Agreement, including Section 4.6 thereof, all amounts remaining in any fund or account under this Indenture shall be paid to the Borrower. [END OF ARTICLE V]

Section 5.06. Rebate Fund. (a) The Trustee shall make information regarding the Bonds and the investments hereunder available to the Borrower upon request, shall make deposits to and disbursements from the Rebate Fund in accordance with the directions received from an Authorized Representative of the Borrower, shall invest moneys in the Rebate Fund pursuant to said directions and shall deposit income from such investments pursuant to said directions, and shall make payments to the United States of America in accordance with directions received from an Authorized Representative of the Borrower. (b) Notwithstanding any provision of this Indenture to the contrary, the Trustee shall not be liable or responsible for any calculation or determination which may be required in connection with or for the purpose of complying with Section 148 of the Code or any applicable Treasury regulation (the “Arbitrage Rules”), including, without limitation, the calculation of amounts required to be paid to the United States under the provisions of the Arbitrage Rules, the maximum amount which may be invested in “nonpurpose obligations” as defined in the Code and the fair market value of any investment made hereunder, it being understood and agreed that the sole obligation of the Trustee with respect to investments of funds hereunder shall be to invest the moneys received by the Trustee pursuant to the instructions of the Borrower’s Authorized Representative given in accordance with Article VII hereof. The Trustee shall have no responsibility for determining whether or not the investments made pursuant to the direction of the Borrower’s Authorized Representative or any of the instructions received by the Trustee under this Section 5.06 comply with the requirements of the Arbitrage Rules and shall have no responsibility for monitoring the obligations of the Borrower or the City for compliance with the provisions of the Indenture with respect to the Arbitrage Rules.

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ARTICLE VI

section, incident to the acquisition, construction, equipping and financing of the Project and placing the Project in operation;

CUSTODY AND APPLICATION OF BOND PROCEEDS Section 6.01. Creation of Project Fund. There is hereby created and ordered established with the Trustee a trust fund to be designated the “City of Port St. Lucie, Florida, VGTI Florida Project Fund” with a Capitalized Interest Account, a Cost of Issuance Account and Project Account therein. Within the Cost of Issuance Account there is hereby created two (2) Subaccounts designated as the “Bonds Subaccount” and the “Borrowers Subaccount.” Section 6.02. Payments into Project Fund. Amounts shall be deposited in the Project Fund pursuant to Section 2.07(b) and as otherwise provided in this Indenture or in the Loan Agreement. The Trustee shall deposit to the Borrower Subaccount of the Cost of Issuance Account, that amount received by the Trustee from the Borrower as provided in Section 3.9 of the Loan Agreement. In addition, if the Project is totally or in part destroyed or damaged, any net insurance proceeds or other amounts received by the Trustee or the Borrower to be used for the purpose of repair or reconstruction shall be deposited in the Project Account. Section 6.03. Cost of Project. The Cost of the Project shall include the following: (a) The actual cost of labor, materials, machinery and equipment as payable to contractors, builders and materialmen in connection with the acquisition, construction and equipping of the Project, including, but not limited to, the furniture, fixtures and equipment associated therewith, or as payable to the sellers thereof; (b) Governmental charges, including ad valorem property and other taxes, levied or assessed during construction upon the Project, or on any property acquired therefor, and premiums on insurance in connection with the Project during construction; (c)

A portion of the interest on the Series 2010 Bonds through November 1, 2012;

(d) Cost of all land and properties, rights, easements and franchises acquired, including without limitation any and all costs associated with acquiring the Land; (e) Fees and expenses of architects and engineers for estimates, surveys and other preliminary investigations, preparation of plans, drawings and specifications and supervision of rehabilitation and modification, as well as for the performance of all other duties of architects and engineers in relation to the acquisition, construction, reconstruction, renovation and equipping of the Project or the issuance of the Series 2010 Bonds; (f) Expenses of administration, supervision and inspection properly chargeable to the Project, legal expenses and fees, fees and expenses of the Trustee and the City, fees and expenses of any paying agent, fees and expenses of financial advisors, brokers or underwriters in arranging for the issuance, sale or placement of the Series 2010 Bonds, financing charges, cost of audits, cost, fees and expenses of preparing, issuing and selling the Series 2010 Bonds, abstracts and reports on titles to real estate, title insurance premiums and all other items or expense, including those of the City and the fees and expenses of the Borrower, not elsewhere specified in this

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(g) Project; (h)

Premiums or other costs for payment or performance bonds in connection with the Any other cost relating to the Project which is permitted by the Act; and

(i) Reimbursement to the Borrower for any of such costs paid by it, together with interest on amounts borrowed to pay such costs (including amounts borrowed from persons related to the Borrower), whether before or after the execution of this Indenture. If the Project is to be repaired or reconstructed after damage or destruction, “Cost of the Project” shall include the corresponding costs of such repair or reconstruction. Section 6.04. Payments from Project Fund. (a) The Trustee shall use all moneys in the Project Account solely to pay the Cost of the Project, as evidenced by requisitions and certificates as hereinafter provided. (b) The Trustee shall disburse the proceeds of the Project Account, solely for Costs of the Project in accordance with a filed requisition, upon which the Trustee may conclusively rely, in the form attached as Exhibit B hereto and signed by an Authorized Representative of the Borrower. Upon receipt of such requisition, the Trustee shall disburse the proceeds from the Project Account in accordance with this Section 6.04. (c) Amounts for interest on the Series 2010 Bonds shall be disbursed from the Capitalized Interest Account to the Interest Account on or prior to each Interest Payment Date in an amount equal to the lesser of (1) the interest due on the Series 2010 Bonds on such Interest Payment Date and (2) the amount remaining in the Capitalized Interest Account. (d) Amounts in the Bonds Subaccount of the Cost of Issuance Account may be disbursed by the Trustee no more than twelve (12) months from the date of issuance of the Series 2010 Bonds. Disbursements for Cost of Issuance from the Cost of Issuance Account and Subaccounts therein shall be paid by the Trustee upon requisition, upon which the Trustee may conclusively rely, in the form attached as Exhibit C, executed by an Authorized Representative of the Borrower. Upon receipt by the City and the Trustee of a certificate executed by an Authorized Representative of the Borrower stating that all Costs of Issuance relating to the Series 2010 Bonds have been paid or provision for payment thereof has been made, the Trustee shall transfer any amounts remaining in the Bonds Subaccount of the Cost of Issuance Account to the Project Account and shall transfer any amounts remaining in the Borrower Subaccount of the Cost of Issuance Account to the Borrower and the Cost of Issuance Account shall be closed. Provided, however, if the Trustee does not receive such certificate within 12 twelve months from the date of the issuance of the Series 2010 Bonds, the Trustee shall upon 15 fifteen days notice to the City and the Borrower transfer any remaining amounts in the Bonds Subaccount of the Cost of Issuance Account to the Project Account. Section 6.05. Disposition of Balance in Project Fund. Upon any redemption in whole of the Series 2010 Bonds or when the Project shall have been completed and the Trustee shall have

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received a certificate of the Borrower stating the date of completion and what items of the Cost of the Project, if any, have not been paid and for the payment of which moneys should be reserved in the Project Fund, the balance of any moneys remaining in the Project Fund in excess of the amount to be reserved for payment of unpaid items of the Cost of the Project, other than funds in the Capitalized Interest Account, shall be deposited in the Redemption Fund. Any such amounts shall be invested at a yield not in excess of the yield on the Series 2010 Bonds as directed by the Borrower and either (a) used to redeem the Series 2010 Bonds at the earliest practicable date or (b) at the request of the Borrower, used as described in an opinion of Bond Counsel delivered and addressed to the Trustee to the effect that no adverse impact on the tax status of interest on the Series 2010 Bonds will result from such described use. Section 6.06. Limit on Investments. Beginning on the date of the third anniversary of the issuance of the Series 2010 Bonds, the Trustee shall invest moneys in the Project Fund or transferred therefrom to the Bond Fund only in accordance with instructions that have been prepared or reviewed (with a signed acknowledgement of such review) by Bond Counsel. [END OF ARTICLE VI]

ARTICLE VII INVESTMENTS Section 7.01. Investment of Funds. The Trustee shall separately invest and reinvest the moneys held in the funds and amounts under this Indenture at the request of and as directed in writing by the Borrower in Permitted Investments. Any such investments shall be held by or under the control of the Trustee and while so held shall be deemed a part of the fund or account in which such moneys were originally held, and, except as otherwise set forth herein, the interest accruing thereon and any profit realized from such investments shall be credited to such fund or account and any loss resulting from such investments shall be charged to such fund or account. The Trustee shall sell and reduce to cash a sufficient amount of such investments whenever the cash balance in any fund is insufficient for the purposes thereof. Investment of moneys held in the funds created by this Indenture shall be subject to the following limitations which shall be observed by the Borrower in directing such investments (and such direction may be conclusively relied on by the Trustee for such purposes): (a) for the Project Fund, investment in Permitted Investments maturing not later than the date that such funds are expected to be expended; (b) for the Bond Fund (including any temporary trust funds and accounts established pursuant to Section 5.01), investment in Permitted Investments maturing not later than the dates on which such moneys will be needed to pay principal of and interest on the Bonds; (c) for the Debt Service Reserve Fund, investment in Permitted Investments maturing not later than the earlier of five years from the date of acquisition of the investment and the final maturity of Outstanding Bonds; and (d) for the Rebate Fund, investment in Permitted Investments maturing not later than the dates on which such moneys will be needed for the purposes thereof. For the purpose of determining compliance with the previous paragraph, investments shall be deemed to have a maturity equal to, as applicable, the next permitted draw date thereon or the next date on which they are subject to redemption at the option of the holder. For the purpose of determining the amount on deposit to the credit of any such fund or account, obligations purchased as an investment of moneys therein shall be valued semiannually pursuant to Section 7.02, inclusive of accrued interest. The Trustee shall be under no obligation to invest moneys pursuant to this Section, except upon written direction from the Borrower Section 7.02. Valuation. For the purpose of determining the amount on deposit in any fund or account, Permitted Investments shall be valued (a) at face value if such Permitted Investments mature within six months from the date of valuation thereof, and (b) if such Permitted Investments mature more than six months after the date of valuation thereof, at the market value of such obligations.

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The Trustee shall value the Permitted Investments in the funds and accounts established under this Indenture ten Business Days prior to each May 1 and November 1 and shall provide a report of such valuation to the Borrower. In addition, the Permitted Investments shall be valued by the Trustee at any time requested by an Authorized Representative of the Borrower on reasonable notice to the Trustee (which period of notice may be waived or reduced by the Trustee); provided, however, that the Trustee shall not be required to value the Permitted Investments more than once in any calendar quarter. Section 7.03. Investments through Trustee’s Bond Department. The Trustee may make investments permitted by Section 7.01 through its own bond department or trust investments department. [END OF ARTICLE VII]

ARTICLE VIII DISCHARGE OF INDENTURE Section 8.01. Discharge of Indenture. If: (a) (1)(i) the Bonds secured hereby have become due and payable in accordance with their terms or otherwise as provided in this Indenture or have been duly called for redemption or (ii) irrevocable instructions to call the Bonds for redemption have been given by the City to the Trustee, and (2) the Trustee holds for such purpose cash or noncallable Government Obligations the principal of and the interest on which at maturity (which shall be prior to or on the date of redemption or payment of the Bonds) will be sufficient (i) to redeem in accordance with the relevant section hereof or pay at maturity all Bonds then outstanding and to pay any premium applicable to such redemption, (ii) to pay interest on all Bonds outstanding prior to their redemption or payment at maturity, and (iii) to pay to the City any unreimbursed deposited pursuant to the Covenant to the Debt Service Reserve Fund, and the City and the Trustee its reasonable fees and expenses and all other amounts due it; or (b) all Bonds theretofore issued under this Indenture (other than Bonds which have been destroyed or lost and replaced or paid and Bonds for whose payment cash or Government Obligations have theretofore been deposited in trust) have been delivered to the Trustee for cancellation; and in either case (c) the City has observed and performed all its covenants, conditions and agreements in this Indenture and the Bonds, then the Trustee shall at the expense of the Borrower cancel and discharge this Indenture (provided the provisions hereof relating to payment of the Bonds from such cash or noncallable Government Obligations, the holders’ rights of registration of transfer, and the related rights and duties of the Trustee shall continue until all the Bonds have been paid or the provisions of Section 3.04 apply to all the Bonds not paid) and execute and deliver to the City such instruments in writing as shall be requisite to cancel the lien hereof, and assign and deliver to the Borrower any property at the time subject to this Indenture which may then be in its possession, except funds or securities held by the Trustee for the payment of the principal of, premium, if any, and interest on the Bonds; provided there shall be no discharge under subsection (a) unless the Trustee has received: (1) an opinion of an independent certified public accountant or other individual or entity nationally recognized for verification of municipal calculations addressed to the Trustee and the City that the interest on and maturing principal of the Government Obligations and any other funds then held pursuant to this Indenture will provide moneys in amounts and at times as necessary to pay all principal of and redemption premium and interest on the Bonds as the same are due or are called for redemption; and (2) an opinion of Bond Counsel addressed to the Trustee and the City that (i) the defeasance complies with the requirements of this section, and (ii) the Bonds are no longer outstanding under this Indenture.

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If cash or noncallable Government Obligations, the principal of and interest on which will be sufficient therefor (as determined in accordance with (1) and (2)), shall have been deposited with the Trustee (whether upon or prior to the maturity or the redemption date) for the payment or redemption of Bonds, such Bonds shall be deemed to be paid and no longer outstanding; provided, however, that if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been duly given or arrangements shall have been made for the giving thereof. [END OF ARTICLE VIII]

ARTICLE IX DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS Section 9.01. Events of Default. Each of the following events shall be an Event of Default: (a)

Default in the due and punctual payment of any interest on any Bond;

(b) Default in the due and punctual payment of the principal of or premium, if any, on any Bond (whether at maturity, by acceleration or call for redemption or otherwise); (c) Failure of the Debt Service Reserve Fund to be maintained at the Reserve Requirement for a period of 12 consecutive months; (d) Subject to Section 9.10, default in the observance or performance of any of the other covenants, conditions or agreements of the City under this Indenture; and (e)

An Event of Default under the Loan Agreement.

Section 9.02. Acceleration. Upon the occurrence of an Event of Default, the Trustee may, and at the request of the holders of not less than a majority in aggregate principal amount of Bonds then outstanding, shall, by notice delivered to the City and the Borrower, declare the principal of all Bonds and the interest accrued to the date of such acceleration immediately due and payable. Upon such acceleration, the Trustee shall immediately declare all payments required to be made by the City to be immediately due and payable, shall take control of the Trust Estate, shall also transfer all moneys from all other funds and accounts, except the Rebate Fund, hereunder to the Bond Fund and shall exercise its rights under the Loan Agreement and the Mortgage. Section 9.03. Other Remedies; Rights of Bondholders. Upon the occurrence of an Event of Default, the Trustee may proceed to protect and enforce its rights and the rights of the Bondholders by mandamus or other suit, action or proceeding at law or in equity, including an action for specific performance of any agreement herein contained. No remedy conferred by this Indenture upon or reserved to the Trustee or to the Bondholders is intended to be exclusive of any other remedy, but each such remedy shall be cumulative and shall be in addition to any other remedy given to the Trustee or to the Bondholders hereunder or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or acquiescence therein, and every such right and power may be exercised from time to time and as often as may be deemed expedient. No waiver of any default or Event of Default, whether by the Trustee pursuant to Section 9.08 or by the Bondholders, shall extend to or shall affect any subsequent default or Event of Default hereunder or shall impair any rights or remedies consequent thereon.

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Section 9.04. Right of Bondholders to Direct Proceedings. Except as provided in Section 9.10, anything in this Indenture to the contrary notwithstanding, the owners of a majority in aggregate principal amount of Bonds then outstanding shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Trustee, with indemnity as may be required by it pursuant to Section 10.01(k), to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Indenture or for the appointment of a receiver or any other proceedings hereunder; provided, however, that such direction shall not be otherwise than in accordance with the provisions of law and of this Indenture. Unless directed by the owners of a majority in aggregate principal amount of Bonds then outstanding pursuant to this section, the Trustee shall have full power in the exercise of its discretion for the best interests of the owners, to conduct, continue, discontinue, withdraw, compromise, settle or otherwise dispose of any legal or equitable action or proceeding. Section 9.05. Application of Moneys. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article shall, after payment of the unpaid fees and expenses of the Trustee and the cost and expenses of the proceedings resulting in the collection of such moneys and the creation of a reserve for anticipated fees, costs and expenses, be deposited in the Bond Fund. All moneys in the Bond Fund shall be applied as follows: (a) Unless the principal of all the Bonds shall have become or shall have been declared due and payable; First — To the payment to the persons entitled thereto of all installments of interest then due on the Bonds (other than Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of this Indenture), in the order of the maturity of the installments of such interest and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the persons entitled thereto; Second — To the payment to the persons entitled thereto of the unpaid principal of and premium, if any, on any of the Bonds which shall have become due (other than Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of this Indenture) in the order of their due dates, with interest on such Bonds at the respective rates specified therein from the respective dates upon which they become due and, if the amount available shall not be sufficient to pay in full Bonds due on any particular date, together with such interest, then first to the payment of such interest ratably, according to the amount of such interest due on such date, and then to the amount of such principal and premium, ratably, according to the amount of such principal due on such date, to the persons entitled thereto;

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Third — To the extent permitted by law, to the payment to the persons entitled thereto of the unpaid interest on overdue installments of interest ratably, according to the amounts of such interest due on such date; and Fourth — To the City for any previously unreimbursed deposits to the Debt Service Reserve Fund pursuant to the Covenant. (b) If the principal of all the Bonds shall have become due or shall have been declared due and payable, all such moneys shall be applied to the payment of the principal and interest then due and unpaid upon the Bonds without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the persons entitled thereto. (c) If the principal of all the Bonds shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of this article, then (subject to the provisions of subsection (b) of this section in the event that the principal of all the Bonds shall later become due or be declared due and payable) the moneys shall be applied in accordance with the provisions of subsection (a) of this section. Whenever moneys are to be applied pursuant to the provisions of this section, such moneys shall be applied at such times and from time to time as the Trustee shall determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Trustee shall apply such moneys, it shall fix the date (which may be an Interest Payment Date) upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such dates shall cease to accrue. The Trustee shall give such other notice as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date, and shall not be required to make payment to the owner of any Bond until such Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid. Section 9.06. Remedies Vested in Trustee. All rights of action (including the right to file proof of claims) under this Indenture or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceeding relating thereto and any such suit or proceeding instituted by the Trustee may be brought in its name as Trustee without the necessity of joining as plaintiffs or defendants any owners of the Bonds, and any recovery of judgment shall be for the equal benefit of the owners of the outstanding Bonds. Section 9.07. Limitations on Suits. Except to enforce the rights given under Section 9.02, no owner of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of this Indenture or for the execution of any trust thereof or any other remedy thereunder, unless (a) a default has occurred of which the Trustee has been notified as provided in Section 10.01(h), or of which by such section it is deemed to have notice, (b) such default shall have become an Event of Default and the owners of at least a majority in aggregate principal amount of Bonds then outstanding shall have made written request to the

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Trustee and shall have offered it reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, (c) they have offered to the Trustee indemnity as provided in Section 10.01(k), (d) the Trustee for sixty (60) days after such notice shall fail or refuse to exercise the powers hereinbefore granted, or to institute such action, suit or proceeding in its own name or in the name of such owners, (e) no direction inconsistent with such request has been given to the Trustee during such sixty (60) day period by the owners of a majority in aggregate principal amount of Bonds then outstanding, and (f) notice of such action, suit or proceeding is given to the Trustee; it being understood and intended that no one or more owners of the Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice this Indenture by its, his or their action or to enforce any right hereunder except in the manner herein provided, and that all proceedings at law or in equity shall be instituted and maintained in the manner herein provided and for the equal benefit of the owners of all Bonds then outstanding.

the Borrower shall have had thirty (30) days after such notice to correct such default or cause such default to be corrected, and shall not have corrected such default or caused such default to be corrected within such period; provided, however, if any default described in Section 9.01(d) shall be such that it cannot be corrected within such period, it shall not constitute an Event of Default if corrective action is instituted by the City or the Borrower, on behalf of the City, within such period and diligently pursued until such default is corrected; provided, however, no such curative action shall exceed ninety (90) days. [END OF ARTICLE IX]

The notification, request and offer of indemnity set forth in the preceding paragraph, at the option of the Trustee, shall be conditions precedent to the execution of the powers and trusts in this Indenture and to any action or cause of action for the enforcement of this Indenture or for any other remedy hereunder, except to enforce the obligations arising under Section 9.02. Section 9.08. Waivers of Events of Default. The Trustee may in its discretion waive any Event of Default hereunder and its consequences and rescind any declaration of acceleration of maturity of the principal of and interest on the Bonds under Section 9.02, and shall do so upon the request of the holders of at least a majority in aggregate principal amount of Bonds then outstanding; provided, however, that no Event of Default shall be waived unless prior to such waiver all arrears of principal and interest (other than principal or interest on the Bonds which became due and payable by declaration of acceleration) and all fees and expenses of the Trustee in connection with such Event of Default shall have been paid or provided for. In case of any waiver or rescission described above, or in case any proceedings taken by the Trustee on account of any such Event of Default shall have been discontinued or concluded or determined adversely, then and in every such case the City, the Trustee and the Bondholders shall be restored to their former positions and rights hereunder, respectively, but no such waiver or rescission shall extend to any subsequent or other Event of Default, or impair any right consequent thereon. Section 9.09. Unconditional Right to Receive Principal, Premium and Interest. Nothing in this Indenture shall, however, affect or impair the right of any Bondholder to enforce, by action at law, payment of the principal of, premium, if any, or interest on any Bond at and after the maturity thereof, or on the date fixed for redemption or upon the same being declared due prior to maturity as herein provided, or to enforce, by action at law, the obligation of the City to pay the principal of, premium, if any, and interest on each of the Bonds issued hereunder to the respective owners thereof at the time, place, from the source and in the manner herein and in the Bonds expressed. Section 9.10. Notice of Defaults; Opportunity to Cure Defaults. Anything contained in this Indenture to the contrary notwithstanding, no default described in Section 9.01(d) on the part of the City shall constitute an Event of Default until (a) notice of such default shall be given (1) by the Trustee to the City and the Borrower or (2) by the holders of 25% in aggregate principal amount of Bonds then outstanding to the Trustee, the City and the Borrower, and (b) the City and

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ARTICLE X THE TRUSTEE Section 10.01. Acceptance of Trusts. By executing this Indenture, the Trustee hereby accepts the trusts and obligations imposed upon it by this Indenture and agrees to perform such trusts and obligations, but only upon and subject to the following express terms and conditions: (a) The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default has occurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use in the circumstances in the conduct of his own affairs. (b) The Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, receivers or employees, but shall be answerable for the conduct of the same in accordance with the same standard of care specified above, and shall be entitled to act upon the reasonable opinion or advice of its counsel concerning all matters of trust hereof and the duties hereunder, and may in all cases be reimbursed hereunder for reasonable compensation paid to all such attorneys, agents and receivers, as may reasonably be employed in connection with the trust hereof. Except for negligence and willful misconduct, the Trustee shall not be responsible for any loss or damage resulting from any action or non-action by it taken or omitted to be taken in good faith in reliance upon an Opinion of Counsel. (c) The Trustee shall not be responsible for any recital herein or in the Bonds (except in respect to the certificate of the Trustee endorsed on the Bonds), or for the recording of this Indenture or for insuring the Project or other facilities or collecting any insurance moneys, or for the validity of the execution by the City of this Indenture or of any supplements thereto or instruments of further assurance, or for the sufficiency of, or filing of documents related to, the security for the Bonds issued hereunder or intended to be secured hereby, or for the value of or title to the Project or other facilities or otherwise as to the maintenance of the security hereof; and the Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part of the City except as otherwise provided herein. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with Section 7.01, except for the Trustee’s negligence and willful misconduct. (d) The Trustee shall not be accountable for the use of any Bonds authenticated or delivered hereunder or for the use of the Borrower of the proceeds of the Bonds advanced to the Borrower. The bank or trust company acting as Trustee and its directors, officers, employees or agents may in good faith buy, sell, own, hold and deal in the Bonds and may join in any action which any Bondholder may be entitled to take with like effect as if such bank or trust company were not the Trustee. To the extent permitted by law, such bank or trust company may also receive tenders and purchase in good faith Bonds from itself, including any department, affiliate or subsidiary, with like effect as if it were not the Trustee.

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(e) The Trustee shall be protected in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram or other paper or document reasonably believed by it to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken by the Trustee pursuant to this Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the owner of any Bond shall be conclusive and binding upon all future owners of the same Bond and upon Bonds issued in exchange therefor or in place thereof. (f) As to the existence or non-existence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a certificate signed on behalf of the City by its Mayor and attested by its City Clerk under its seal, or such other person or persons as may be designated for such purposes by resolution of the City, as sufficient evidence of the facts therein contained and prior to the occurrence of a default of which the Trustee has been notified as provided in subsection (h) of this section, or of which by said subsection it is deemed to have notice, may also accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may at its discretion secure such further evidence deemed necessary or advisable, but shall in no case be bound to secure the same. The Trustee may accept a certificate of the City Clerk of the City under its seal to the effect that a resolution in the form therein set forth has been adopted by the City as conclusive evidence that such resolution has been duly adopted and is in full force and effect. (g) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty, and the Trustee shall not be answerable for other than its negligence or willful misconduct. The immunities and exceptions from liability of the Trustee shall extend to its officers, directors, employees and agents. (h) The Trustee shall not be required to take notice or be deemed to have notice of any default hereunder except for defaults specified in subsections (a) or (b) of Section 9.01 hereof, unless the Trustee shall be specifically notified in writing of such default by the City or by the holders of at least 25% in aggregate principal amount of Bonds. (i) The Trustee shall not be required to give any bond or surety in respect to the execution of its rights and obligations hereunder. (j) Anything contained in this Indenture to the contrary notwithstanding, the Trustee shall have the right, but shall not be required, to demand, as a condition of any action by the Trustee in respect of the authentication of any Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Indenture, any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, in addition to that required by the terms hereof. (k) No provision of this Indenture shall require the Trustee to risk or expend its own funds or otherwise incur any financial liability in the performance of its duties under this Indenture if repayment of such funds or full indemnity against such risk or liability is not assured to it. Before taking any action under this Indenture, the Trustee may require that satisfactory indemnity be furnished to it for the reimbursement of all expenses to which it may be put and to

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protect it against all liability by reason of any action so taken, except liability which is adjudicated to have resulted from its negligence or willful misconduct. (l) All moneys received by the Trustee shall, until used or applied or invested as herein provided, be held in trust in the manner and for the purposes for which they were received but need not be segregated for investment purposes from other funds except to the extent required by this Indenture or law. The Trustee shall not be under any liability for interest on any moneys received hereunder except such as may be separately agreed upon in writing. (m) The Trustee shall not be responsible for any recital herein or in the Bonds, or for the recording, re-recording, filing or re-filing of this Indenture, the Mortgage or any financing statements or continuation statements, or for insuring the Project, or for the validity of this Indenture or of any supplements hereto or instruments of further assurance, or for the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby, or for the value of or title to the Project. The Trustee shall have no obligation to perform any of the duties of the City under the Loan Agreement. The Trustee shall have no duty or responsibility to examine or review and shall have no liability for the contents of any documents submitted to or delivered to any Bondholder in the nature of a preliminary or final placement memorandum, official statement, offering circular or similar disclosure document. (n) The Trustee shall not be personally liable for any claims by or on behalf of any person, firm, corporation or other legal entity arising from the conduct or management of, or from any work or thing done on, the Project, and shall have no affirmative duty with respect to compliance of the Project under state or federal laws pertaining to the transport, storage, treatment or disposal of pollutants, contaminants, waste or hazardous materials, or regulations, permits or licenses issued under such laws. The Trustee shall have no duty to inspect or oversee the construction or completion of the Project or to verify the truthfulness or accuracy of the certifications made by the Borrower with respect to the Trustee’s disbursements for Costs of the Project in accordance with the Loan Agreement and this Indenture. Section 10.02. Fees, Charges, Expenses and Indemnification of Trustee. The Trustee shall be entitled to payment of and reimbursement for reasonable fees for its services and all outof-pocket expenses reasonably incurred by the Trustee hereunder and as bond registrar and paying agent for the Bonds, including the reasonable fees and expenses of its counsel. In the event the Trustee ceases to be the paying agent and registrar hereunder, that portion of the Trustee’s fees attributable to such services shall be payable to such other entities performing such services. Notwithstanding any other provision of this Indenture, the provisions of this section shall survive the satisfaction and discharge of this Indenture or the appointment of a successor Trustee. Section 10.03. Intervention by Trustee. In any judicial proceeding to which the City is a party and which has a substantial bearing on the interests of owners of the Bonds, the Trustee may intervene on behalf of bondholders and, subject to Section 10.01(k), shall do so if requested by the owners of at least a majority in aggregate principal amount of Bonds then outstanding. The rights and obligations of the Trustee under this section are subject to the approval of a court of competent jurisdiction.

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Section 10.04. Merger or Consolidation of Trustee. Any corporation or bank into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or bank resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party shall be and become successor Trustee hereunder and vested with all the trusts, powers, discretion, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Section 10.05. Resignation by Trustee. The Trustee and any successor Trustee may at any time resign from the trusts hereby created by giving notice to the City, the Borrower and each owner of Bonds then outstanding. Such resignation shall take effect only upon the appointment of a successor Trustee or temporary Trustee pursuant to Section 10.07. Section 10.06. Removal of Trustee. The Trustee may be removed (a) at any time by an instrument or concurrent instruments in writing delivered to the Trustee, the Borrower, and the City and signed by the owners of a majority in aggregate principal amount of Bonds then outstanding, or (b) prior to any Event of Default and upon 30 days’ prior written notice to the Trustee, by the City or, with the consent of the City, by the Borrower. Section 10.07. Appointment of Successor Trustee by Bondholders; Temporary Trustee. In case the Trustee hereunder shall resign, be removed, be dissolved, be in course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in case it shall be taken under the control of any public officer or officers or of a receiver appointed by a court, a successor may be appointed by the owners of a majority in aggregate principal amount of Bonds then outstanding with the consent of the City, such consent not to be unreasonably withheld, by an instrument or concurrent instruments in writing signed by such owners; provided, however, that in case such vacancy continues for at least 30 days the City, by an instrument signed by the Mayor of the City and attested by its City Clerk under its seal or the Borrower, by certificate signed by an Authorized Representative of the Borrower, may appoint a temporary Trustee to fill such vacancy until a successor Trustee shall be appointed by the Bondholders in the manner provided above; and any such temporary Trustee so appointed shall immediately and without further act be superseded by the Trustee so appointed by such Bondholders. If no successor or temporary Trustee is appointed within 60 days of the resignation of the Trustee, the Trustee may petition a court of suitable jurisdiction at the expense of the Borrower to seek the immediate appointment of a successor Trustee by such court. Every such Trustee appointed pursuant to this section shall be, if there be such an institution willing, qualified and able to accept this trust upon reasonable or customary terms, a trust company or bank having a combined capital, surplus and undivided profits of not less than $100 million or having at least $500 million in trust assets under management. Notice of the removal or appointment of the Trustee shall be provided to the holders of the Bonds. Section 10.08. Concerning any Successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the City an instrument in writing accepting such appointment hereunder, and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the properties,

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rights, powers, trusts, duties and obligations of its predecessor; but such predecessor shall, nevertheless, on the request of the City, or its successor, execute and deliver an instrument transferring to such successor Trustee all the properties, rights, powers and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all securities and moneys held by it as Trustee hereunder to its successor. Should any instrument in writing from the City be required by any successor Trustee for more fully and certainly vesting in such successor the properties, rights, powers and duties hereby vested or intended to be vested in the predecessor, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the City. The resignation of any Trustee and the instrument or instruments removing any Trustee and appointing a successor hereunder, together with all other instruments provided for in this article shall be filed and/or recorded by the successor Trustee in each recording office where the Indenture may have been filed and/or recorded.

In case any separate trustee or co-trustee, or a successor to either, shall become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a successor to such separate trustee or cotrustee. [END OF ARTICLE X]

Section 10.09. Trustee Protected in Relying Upon Resolutions, etc. In the absence of negligence or willful misconduct by the Trustee, the resolutions, requisitions, opinions, certificates and other instruments provided for in this Indenture may be accepted by the Trustee as conclusive evidence of the facts and conclusions stated therein and shall be full warrant, protection and authority to the Trustee for the release of property and the withdrawal of cash hereunder. Section 10.10. Successor Trustee as Bond Registrar, Custodian of Bond Fund and Paying Agent. In the event of a change in the office of Trustee, the predecessor Trustee which has resigned or been removed shall cease to be the bond registrar, custodian of the funds and amounts hereunder and paying agent for principal of, premium, if any, and interest on the Bonds, and the successor Trustee shall become such bond registrar, custodian and paying agent. Section 10.11. Appointment of Co-Trustee. (a) In case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as herein granted, or take any other action which may be desirable or necessary in connection therewith, the Trustee may appoint an additional institution as a separate trustee or co-trustee. (a) In the event that the Trustee appoints an additional institution as a separate trustee or co-trustee, each and every remedy, power, right, claim, demand, cause of action, immunity, estate, interest and lien expressed or intended by this Indenture to be exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate trustee or co-trustee but only to the extent necessary to enable such separate trustee or co-trustee to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate trustee or co-trustee shall run to and be enforceable by either of them. Such co-trustee may be removed by the Trustee at any time, with or without cause. (b) Should any instrument in writing from the City be required by the separate trustee or co-trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the City.

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ARTICLE XI SUPPLEMENTAL INDENTURES; AMENDMENTS TO OTHER DOCUMENTS Section 11.01. Supplemental Indentures Not Requiring Consent of Bondholders. The City and the Trustee may, without the consent of, or notice to, any of the Bondholders, enter into an indenture or indentures supplemental to this Indenture as shall not be inconsistent with the terms and provisions hereof for any one or more of the following purposes: (a)

to cure any ambiguity or formal defect or omission in this Indenture;

(b) to grant to or confer upon the Trustee for the benefit of the Bondholders any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Bondholders or the Trustee or either of them; (c)

to subject to this Indenture additional revenues, properties or collateral;

(d) to modify, amend or supplement this Indenture in such manner as required to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, any similar Federal statute hereafter in effect, or any state securities (“Blue Sky”) law, and, if they so determine, to add to this Indenture such other terms, conditions and provisions as may be required by the Trust Indenture Act of 1939, as amended, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended or any similar Federal statute or state securities law; (e) to make any change herein which, in the opinion of Bond Counsel, is necessary to preserve the exclusion, if applicable, of interest on the Bonds from gross income for Federal income tax purposes; (f) to make any other change herein which shall not prejudice in any material respect the rights of the owners of the Bonds then outstanding; and (g)

to provide for the issuance of Refunding Bonds as provided in Section 2.12

hereof. Section 11.02. Supplemental Indentures Requiring Consent of Bondholders. Exclusive of supplemental indentures covered by Section 11.01 and subject to the terms and provisions contained in this section, and not otherwise, the owners of at least a majority in aggregate principal amount of Bonds then Outstanding have the right from time to time, anything contained in this Indenture to the contrary notwithstanding, to consent to and approve the execution by the City and the Trustee of such other indenture or indentures supplemental hereto as shall be deemed necessary or desirable by the City for the purpose of modifying, altering, amending, adding to or rescinding, in any particular manner, any of the terms or provisions contained in this Indenture or in any supplemental indenture; provided, however, that nothing in this Indenture shall permit, or be construed as permitting, without the consent and approval of the owners of all the Bonds then outstanding, (a) an extension of the maturity of the principal of or the interest on any Bond, or (b) a reduction in the principal amount of, or premium, if any, on any Bond or the rate of interest thereon, or (c) an extension of time or a reduction in amount of any payment

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required by any sinking fund that may be applicable to any Bond, or (d) a privilege or priority of any Bond or Bonds over any other Bond or Bonds, or (e) a reduction in the aggregate principal amount of Bonds required for consent to any supplemental indenture. If at any time the City shall request the Trustee to enter into any such supplemental indenture for any of the purposes of this section, the Trustee shall send to each Bondholder notice of the proposed execution of such supplemental indenture by first class mail to the address of such Bondholder as it appears on the registration books; provided, however, that failure to give such notice to any Bondholder by mailing, or any defect therein, shall not affect the validity of any proceedings pursuant hereto. Such notice shall briefly set forth the nature of the proposed supplemental indenture and shall state that copies thereof are on file at the designated office of the Trustee for inspection by all Bondholders. If, within sixty (60) days or such longer period as shall be prescribed by the City following the giving of such notice, the owners of a majority in aggregate principal amount of Bonds then outstanding shall have consented to the execution thereof as herein provided, no owners of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the City from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any such supplemental indenture as in this section permitted and provided, this Indenture shall be deemed to be modified and amended in accordance therewith. Bonds owned or held by or for the account of the City or the Borrower shall not be deemed outstanding for the purpose of consent or any calculation of outstanding Bonds provided for in this article. At the time of any such calculation, the City and the Borrower shall furnish the Trustee certificates of an Authorized Representative, upon which the Trustee may conclusively rely, describing any Bonds required so to be excluded. No supplemental indenture shall be executed by the City and the Trustee, whether under this section or Section 11.01, that adversely affects the rights, duties or immunities of the Borrower under this Indenture, the Loan Agreement, the Mortgage or any other Bond Document without the prior written consent of the Borrower. Section 11.03. Opinion of Counsel Required. Anything in this Indenture to the contrary notwithstanding, the Trustee shall not execute any indenture supplemental to this Indenture unless there shall have been filed with the Trustee an opinion of Bond Counsel stating that such supplemental indenture is authorized or permitted by this Indenture and complies with its terms, that upon execution it will be valid and binding upon the City in accordance with its terms. Section 11.04. Trustee’s Obligation Regarding Supplemental Indentures. The Trustee may but shall not be obligated to enter into any supplemental indenture which affects the Trustee’s rights, duties or immunities hereunder. [END OF ARTICLE XI]

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ARTICLE XII

ARTICLE XIII

AMENDMENT OF LOAN AGREEMENT AND MORTGAGE

MISCELLANEOUS

Section 12.01. Amendments Not Requiring Consent of Bondholders. The City and the Trustee may, without the consent of or notice to the Bondholders, consent to any amendment, change or modification of the Loan Agreement or the Mortgage: (a) Indenture; (b)

as may be required by the provisions of Loan Agreement, the Mortgage or this for the purpose of curing any ambiguity, formal defect or omission therein;

(c) to make any other change therein that will not prejudice in any material respect the rights of the Bondholders. Section 12.02. Amendments Requiring Consent of Bondholders. Except for amendments, changes or modifications as provided in Section 12.01, and subject to Section 12.03, neither the City nor the Trustee shall consent to any amendment, change or modification of the Loan Agreement or the Mortgage without the written approval or consent of the holders of a majority in aggregate principal amount of Bonds then Outstanding given and procured as provided in Section 11.02. If the City or the Borrower requests the consent of the Trustee to any such proposed amendment, change or modification, the Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of such proposed amendment, change or modification to be given in the same manner as provided by Section 11.02. Such notice shall briefly set forth the nature of such proposed amendment, change or modification and shall state that a copy of the instrument embodying the same is on file at the designated office of the Trustee for inspection by all Bondholders. Section 12.03. Limitation on Amendments. No amendment, change or modification may decrease the obligation of the Borrower under the Loan Agreement or the Mortgage to pay amounts sufficient to pay the Bonds as the same become due; provided that the City and the Trustee may consent to any amendment, change or modification of the Loan Agreement or the Mortgage upon receipt of the consent of all the Bondholders. Section 12.04. Opinion of Counsel Required. The Trustee shall not consent to any amendment, change or modification of the Loan Agreement unless there shall have been filed with the Trustee and the City an opinion of Bond Counsel that such amendment, change or modification is authorized or permitted by this Indenture and complies with its terms and that on execution it will be valid and binding on the party or parties executing it in accordance with its terms, which opinion of Bond Counsel, to the extent appropriate, may rely on an opinion of Bond Counsel stating whether such amendment, change or modification would have an adverse effect on the exemption of interest on the Bonds from gross income for federal income tax purposes. [END OF ARTICLE XII]

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Section 13.01. Consents, etc., of Bondholders. Any consent, request, direction, approval, objection or other instrument required by this Indenture to be signed and executed by the Bondholders may be in any number of concurrent writings of similar tenor and may be signed or executed by such Bondholders in person or by agent appointed in writing. Proof of the execution of any such consent, request, direction, approval, objection or other instrument or of the writing appointing any such agent, if made in the following manner, shall be sufficient for any of the purposes of this Indenture, and shall be conclusive in favor of the Trustee with regard to any action taken under such request or other instrument. The fact and date of the execution by any person of any such writing may be approved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that the person signing such writing acknowledged before him the execution thereof, or by affidavit of any witness to such execution. Section 13.02. Limitation of Rights. With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Indenture or the Bonds is intended or shall be construed to give to any person other than the parties hereto, the Borrower and the owners of the Bonds any legal or equitable right, remedy or claim under or in respect to this Indenture or any covenants, conditions and agreements herein contained; this Indenture and all of the covenants, conditions and agreements hereof being intended to be and being for the sole and exclusive benefit of the parties hereto, the Borrower and the owners of the Bonds as herein provided. Section 13.03. Limitation of Liability of Officers, Members, etc., of City. No covenant, agreement or obligation contained herein shall be deemed to be a covenant, agreement or obligation of any present or future officer, director, employee or agent of the City in his individual capacity, and neither the members of the City Council nor any officer thereof executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof. No officer, director, employee or agent of the City shall incur any personal liability with respect to any other action taken by him pursuant to this Indenture or the Act, provided such officer, commissioner, employee or agent acts in good faith. Section 13.04. Notices, etc. Unless otherwise provided herein, all directions, demands, notices, approvals, consents, requests and other communications hereunder shall be in writing and shall be deemed to have been given at the earliest of (a) personal delivery, (b) transmission by email or facsimile which the sender’s equipment indicates has been sent (in the case of an addressee whose facsimile number or email address, as applicable, is supplied), and only if a copy of the same is also delivered, sent or mailed, as applicable, as described in clause (a), clause (c) or clause (d), within one (1) calendar day of said facsimile or email), (c) the first (1st) business day following deposit with Federal Express or a similar courier, charges prepaid, or (d) the fifth (5th) business day following deposit with the United States Postal Service for first class registered or certified mail, return receipt requested, postage prepaid, addressed to the addressee at the address that shall most recently have been designated, by effective notice hereunder from

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the addressee to the sender, as the addressee’s desired address for notices hereunder (or, prior to any such notice, at the address for the addressee set forth below): To the City:

City of Port St. Lucie, Florida 121 S.W. Port St. Lucie Boulevard Port St. Lucie, Florida 34984 Attention: City Manager with a copy to: City Attorney 121 S.W. Port St. Lucie Boulevard Port St. Lucie, Florida 34984 Attention: Roger Orr Telecopy: 772-344-4298 Email: [email protected]

To the Trustee:

TD Bank, National Association 7545 Centurion Parkway, #402 Jacksonville, Florida 32256 Attention: Jane Pope, Vice President Telecopy: 904-645-8447 Email: [email protected]

To the Borrower:

Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. 11350 S.W. Village Parkway Port St. Lucie, Florida 34987 Attention: President with a copy to: Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. 3181 S.W. Scym Jackson Park Road Portland, Oregon 97239-3098 Attention: Mark Williams Telecopy: Email: [email protected]

Section 13.08. Counterparts. This Indenture may be executed in several counterparts, each of which shall be an original and all of which together shall constitute but one and the same instrument. Section 13.09. Payments Due on Non-Business Days. In any case where the date of maturity of interest on or premium, if any, or principal of the Bonds or the date fixed for redemption of any Bonds shall not be a Business Day, then payment of such interest, premium or principal need not be made on such date but shall be made on the next succeeding Business Day, with the same force and effect as if made on the date of maturity or the date fixed for redemption, and, in the case of such payment, no interest shall accrue for the period from and after such date. Section 13.10. City, Members, Attorneys, Officers, Employees and Agents of City Not Liable. No recourse shall be had for the enforcement of any obligation, promise or agreement of the City contained herein or in the other Bond Documents to which the City is a party or for any claim based hereon or thereon or otherwise in respect hereof or thereof against any director, officer, agent, attorney or employee, as such, in his individual capacity, past, present or future, of the City or of any successor entity, either directly or through the City or any successor entity whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise. No personal liability whatsoever shall attach to, or be incurred by, any City Council member, director, officer, agent, attorney or employee as such, past, present or future, of the City or any successor entity, either directly or through the City or any successor entity, under or by reason of any of the obligations, promises or agreements entered into between the City, Trustee or the Borrower, whether herein contained or to be implied herefrom as being supplemental hereto; and all personal liability of that character against every such director, officer, agent, attorney and employee is, by the execution of this Agreement and as a condition of, and as part of the consideration for, the execution of this Agreement, expressly waived and released. Notwithstanding any other provision of this Indenture, the City shall not be liable to the Borrower or the Trustee or any other person for any failure of the City to take action under this Agreement unless the City (a) is requested in writing by an appropriate person to take such action or is provided with indemnity and assurances satisfactory to it, (b) is assured of payment of, or reimbursement for, any reasonable expenses in such action or is provided with indemnity and assurances satisfactory to it, and (c) is afforded, under the existing circumstances, a reasonable period to take such action. In acting under this Agreement, or in refraining from acting under this Agreement, the City may conclusively rely on the advice of its counsel.

Section 13.05. Successors and Assigns. Without limiting any other provision hereof, this Indenture shall be binding upon and inure to the benefit of and be enforceable by the parties and their respective successors and assigns.

[END OF ARTICLE XIII]

Section 13.06. Severability. If any provision of this Indenture shall be held invalid by any court of competent jurisdiction, such holding shall not invalidate any other provision hereof. Section 13.07. Applicable Law. This Indenture shall be governed by the applicable laws of the State.

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IN WITNESS WHEREOF, the City and the Trustee have caused this Indenture to be executed in their respective corporate names by their duly authorized officers, all as of the date first above written. CITY OF PORT ST. LUCIE, FLORIDA

By: Mayor (SEAL) ATTEST:

Deputy City Clerk TD BANK, NATIONAL ASSOCIATION, as Trustee (THIS PAGE INTENTIONALLY LEFT BLANK) By: Vice President

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Exhibit A to Indenture FORM OF BONDS UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE CITY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE TO BE ISSUED THEREFOR IS TO BE REGISTERED IN THE NAME OF CEDE & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS TO BE MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. No. R-__

$___________ UNITED STATES OF AMERICA STATE OF FLORIDA CITY OF PORT ST. LUCIE RESEARCH FACILITIES REVENUE BOND SERIES 2010 (Oregon health and Science University, Vaccine and Gene Therapy Institute Florida Corp. Project)

INTEREST RATE

DATED DATE

MATURITY DATE

____%

___________ 1, 2010

___________ 1, ____

CUSIP

REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT:

DOLLARS

Port St. Lucie, Florida, a municipal corporation of the State of Florida (the “City”), for value received, hereby promises to pay, upon presentation and surrender hereof at the designated office of TD Bank, National Association, or its successor in trust (the “Trustee”), solely from the sources hereinafter described, to the registered owner hereof, or registered assigns or legal representative, the principal sum set forth above on the maturity date set forth above, subject to prior redemption or purchase as described below, and to pay, solely from such sources, on November 1, 2010, and on each May 1 and November 1 thereafter, interest thereon at the interest rate per year specified above (computed on the basis of a 360-day year of twelve 30-day months); provided payment hereof may be otherwise made as hereinafter described to DTC, as hereinafter defined. Interest shall be payable from the Interest Payment Date next preceding the date on which this Bond is authenticated, unless this Bond is (a) authenticated before the first Interest Payment Date following the initial delivery of the Bonds, in which case it shall bear

interest from its date or (b) authenticated upon an Interest Payment Date, in which case it shall bear interest from such Interest Payment Date (unless interest on this Bond is in default at the time of authentication, in which case this Bond shall bear interest from the date to which interest has been paid). Interest hereon shall be paid to the person in whose name this Bond is registered at the close of business on the fifteenth calendar day (whether or not a business day) of the calendar month next preceding an Interest Payment date by check or draft mailed to such person at his address as it appears on the registration books kept by the Trustee; provided at the written request of an owner of at least $1,000,000 in aggregate principal amount of Bonds, as hereinafter defined, principal and interest shall be payable by wire transfer at an address specified by such owner. Principal, premium, if any, and interest are payable in lawful money of the United States of America. This Bond is one of an issue of $__________ aggregate principal amount of City of Port St. Lucie, Florida Research Facilities Revenue Bonds, Series 2010 (Oregon health and Science University, Vaccine and Gene Therapy Institute Florida Corp. Project) (the “Bonds”), of like date and tenor, except as to number and denomination, authorized and issued pursuant to an Trust Indenture, dated as of June 1, 2010 (the “Indenture”), between the City and the Trustee which provides for the security for the Bonds. Proceeds of the Bonds will be used to finance the undertaking of Oregon Health and Science University, Vaccine and Gene Therapy Institute Florida Corp., a Florida not for profit corporation (the “Borrower”) to acquire, construct and equip certain capital projects located in the City (the “Project”). The Project will be owned by the Borrower. The Borrower has also executed a Mortgage and Security Agreement (the “Mortgage”) granting security title in the Project as security for its obligation to repay the loan made to it pursuant to the Loan Agreement, dated as of June 1, 2010 (the “Loan Agreement”), in payments sufficient for payment of principal of, premium, if any, and interest on the Bonds. Reference is hereby made to the Indenture, the Mortgage and the Loan Agreement and to all amendments and supplements thereto for a description of the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the City, the Borrower and the Trustee and the rights of the owners of the Bonds and the terms upon which the Bonds are issued and secured. The Borrower’s obligations under the Loan Agreement, the Mortgage and otherwise in connection with the Bonds are collectible only out of the Borrower’s interest in the Project and proceeds thereof. THE BONDS SHALL BE A LIMITED OBLIGATION OF THE CITY, THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON WHICH ARE PAYABLE SOLELY FROM AND SECURED SOLELY BY THE SECURITY DESCRIBED IN THE INDENTURE, INCLUDING PAYMENTS UNDER THE LOAN AGREEMENT, ALL AS DESCRIBED IN AND SUBJECT TO LIMITATIONS SET FORTH IN THE INDENTURE, THE MORTGAGE AND THE LOAN AGREEMENT, FOR THE EQUAL AND RATABLE BENEFIT OF THE REGISTERED OWNERS, FROM TIME TO TIME OF THE BONDS. THE BONDS AND THE INTEREST THEREON AND PREMIUM, IF ANY, SHALL NOT BE DEEMED TO CONSTITUTE OR CREATE AN INDEBTEDNESS, LIABILITY OR OBLIGATION OF THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION THEREOF, WITHIN THE MEANING OF ANY STATE CONSTITUTIONAL PROVISION OR STATUTORY LIMITATION, OR A PLEDGE OF THE FAITH AND CREDIT OR THE Ex. A-2

Ex. A-1 MIAMI/4253270.6

MIAMI/4253270.6

TAXING POWER OF THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE CITY. The Bonds may not be called for redemption by the City except as provided in the Indenture and as provided below: Optional Redemption. The Bonds maturing on __________, 2010 are not subject to optional redemption prior to maturity. The Bonds maturing on __________, 2010 and ____ are subject to redemption upon the option and direction of the Borrower in whole or in part on any date on or after __________, 2010, at redemption prices of 100% of the principal amount to be redeemed, plus accrued interest thereon to the redemption date. Mandatory Sinking Fund Redemption. The Bonds maturing on May 1, ____ are subject to mandatory sinking fund redemption in part at a redemption price equal to 100% of the principal amount of the Bonds to be redeemed plus accrued interest thereon to the redemption date, on May 1 of the years set forth below and in the following Amortization Amounts after credit as described below: Year

Amortization Amounts

__________________________ *Maturity. Extraordinary Redemption. The Bonds are subject to redemption in whole or in part, at the option of the City, at the direction of the Borrower, at a redemption price equal to 100% of the principal amount of the Bonds to be redeemed plus accrued interest thereon to the redemption date, on any date for which the requisite notice of redemption can be given, upon repayment of the Borrower’s obligations under the Loan Agreement upon the occurrence of certain events specified in the Loan Agreement relating to damage or destruction of the Project or portions thereof or the taking by eminent domain of the Project. If less than all of the Bonds are called for redemption (including sinking fund redemption), the maturities of Bonds to be redeemed shall be selected by the City at the direction of the Borrower and the Bonds within each maturity of Bonds to be redeemed shall be selected by the securities depository for the Bonds. If a portion of this Bond shall be called for redemption, a new Bond in principal amount equal to the unredeemed portion hereof will be authenticated and delivered to the registered owner upon the surrender hereof.

(postage prepaid) not less than thirty (30) nor more than sixty (60) days prior to the redemption date, at his address as it appears on the registration books; provided, however, that failure to give any such notice, or any defect therein, shall not affect the validity of any proceedings for the redemption of any Bonds with respect to which no such failure or defect has occurred. Provided funds for their redemption are on deposit at the place of payment on the redemption date, all Bonds or portions thereof so called for redemption shall cease to bear interest on such date, shall no longer be secured by the Indenture and shall not be deemed to be outstanding under the provisions of the Indenture. This Bond is issued pursuant to a book-entry system administered by The Depository Trust Company (“DTC”). The book-entry system will evidence beneficial ownership of the Bonds with transfers of ownership effected on the register held by DTC pursuant to rules and procedures established by DTC. So long as the book-entry system is in effect, payment by the City will be made to and at DTC and transfer of principal and interest, and provisions of notices or other communications, to beneficial owners of the Bonds will be the responsibility of DTC as set forth in the Indenture. The owner of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein or to take any action with respect to any Event of Default under the Indenture or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture. In certain events, on conditions, in the manner and with the effect set forth in the Indenture, the principal of all the Bonds issued under the Indenture and then outstanding may become or may be declared due and payable before their stated maturity, together with accrued interest thereon. Modifications or alterations of the Indenture or of any supplements thereto, may be made only to the extent and in the circumstances permitted by the Indenture. The Bonds are issuable only as registered bonds without coupons in the denomination of $5,000 or any integral multiple of $5,000 in excess thereof (“Authorized Denominations”). At the designated corporate trust office of the Trustee, in the manner and subject to the limitations and conditions and upon payment of charges provided in the Indenture, Bonds may be exchanged for an equal aggregate principal amount of Bonds of different Authorized Denominations as requested by the owner hereof or his duly authorized attorney or legal representative. The transfer of this Bond may be registered by the registered owner hereof in person or by his duly authorized attorney or legal representative at the designated corporate trust office of the Trustee, but only in the manner and subject to the limitations and conditions provided in the Indenture and upon surrender and cancellation of this Bond. Upon any such registration of transfer the City shall execute and the Trustee shall authenticate and deliver in exchange for this Bond a new Bond, registered in the name of the transferee, of Authorized Denominations. The Trustee and the City shall, prior to due presentment for registration of transfer, treat the registered owner as the person exclusively entitled to payment of principal, premium, if any, and interest and the exercise of all other rights and powers of the owner, except that all payments of interest shall be made to the registered owner as of the fifteenth day of the month preceding each Interest Payment Date.

If any of the Bonds or portions thereof are called for redemption, the Trustee shall send to the registered owner of each Bond to be redeemed notification thereof by first class mail Ex. A-4

Ex. A-3 MIAMI/4253270.6

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Any exchange or registration of transfer shall be without charge except that the Trustee shall make a charge to any bondholder requesting such exchange or registration in the amount of any tax or other governmental charge required to be paid with respect thereto. It is hereby certified that all acts, conditions and things required to happen, exist and be performed under the Constitution and laws of the State of Florida and under the Indenture precedent to and in the issuance of this Bond have happened, exist and have been performed as so required and that the issuance, authentication and delivery of this Bond have been duly authorized by the City.

(Form of Trustee’s Certificate of Authentication) Date of Authentication: _______________ This Bond is one of the Bonds described in the within-mentioned Indenture. TD BANK NATIONAL ASSOCIATION, as Trustee

Unless the certificate of authentication hereon has been executed by the Trustee by manual signature of one of its authorized signers, this Bond shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose.

By: Vice President

IN WITNESS WHEREOF, the City of Port St. Lucie, Florida has caused this Bond to be signed by the manual or facsimile signature of the Mayor, its seal to be impressed or printed hereon and attested by the manual or facsimile signature of the Deputy City Clerk, and this Bond to be dated ________________________, 2010. CITY OF PORT ST. LUCIE, FLORIDA

By: Mayor (SEAL) ATTEST:

Deputy City Clerk

Ex. A-6

Ex. A-5 MIAMI/4253270.6

MIAMI/4253270.6

(Form of Assignment) FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto _____ ______________________________________________________________________________ (Please print or typewrite Name and Address, including zip code of Transferee)

______________________________________________________________________________ PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF TRANSFEREE _________________________________ _________________________________ the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints _____ ______________________________________________________________________________ Attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: _______________ Signature Guaranteed:

Registered Owner: (THIS PAGE INTENTIONALLY LEFT BLANK)

NOTICE: Signature(s) must be guaranteed by an institution which is a participant in the Securities Transfer Agents Medallion Program (“STAMP”) or similar program.

NOTE: The signature above must correspond with the name of the registered owner as it appears on the front of this bond in every particular, without alteration or enlargement or any change whatsoever.

(End of Form of Assignment)

Ex. A-7 MIAMI/4253270.6

Exhibit B to Indenture

Exhibit C to Indenture

NO. ___________

NO. ___________

Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project

Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project

REQUISITION FOR PROJECT COSTS [AND CAPITAL REPLACEMENTS]

REQUISITION FOR COST OF ISSUANCE _______________, ____ _______________, ____ TD Bank, National Association, as Trustee Jacksonville, Florida Attention: Corporate Trust Services

TD Bank, National Association, as Trustee Jacksonville, Florida Attention: Corporate Trust Services

Sirs: Sirs: We hereby requisition from the Project Fund created by the Indenture of Trust dated as of June 1, 2010 (the “Indenture”), between the City of Port St. Lucie, Florida (the “City”) and you as Trustee, the sum of $__________ to be paid to the persons shown on the attached schedule, in each case in the amount and for the purpose shown in said schedule opposite the name of such person. Each amount (a) has been incurred in or about the acquisition, construction and equipping [for the capital repair and replacement] of the Project, as defined in the Indenture, (b) is a proper charge against the Cost of the Project, as defined in the Indenture, and (c) has not been the basis for a prior requisition that has been paid.

We hereby requisition from the [Bonds][Borrowers] Subaccount of the Cost of Issuance Account in the Project Fund created by the Indenture of Trust dated as of June 1, 2010 (the “Indenture”), between the City of Port St. Lucie, Florida (the “City”) and you as Trustee, the sum of $__________ to be paid to the persons shown on the attached schedule, in each case in the amount and for the purpose shown in said schedule opposite the name of such person. Each amount (a) has been incurred in connection with the issuance of the Series 2010 Bonds, as defined in the Indenture, (b) is a proper charge against the Cost of Issuance Account of the Project Fund, and (c) has not been the basis for a prior requisition that has been paid. City of Port St. Lucie, Florida

Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp., Project By: Finance Director By: Title: Authorized Representative

Ex. C-1

Ex. B-1 MIAMI/4253270.6

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APPENDIX G

FORM OF LOAN AGREEMENT

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LOAN AGREEMENT BETWEEN CITY OF PORT ST. LUCIE, FLORIDA AND OREGON HEALTH AND SCIENCE UNIVERSITY VACCINE AND GENE THERAPY INSTITUTE FLORIDA CORP. Dated as of June 1, 2010 Relating to $64,035,000 City of Port St. Lucie, Florida Research Facilities Revenue Bonds, Series 2010 (Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project)

All of the right, title and interest of the City in and to this Loan Agreement, excluding certain rights retained by the City have been assigned to TD Bank, National Association, as trustee, as security for the above-referenced bonds pursuant to a certain Trust Indenture as of June 1, 2010, between the City and TD Bank, National Association, as trustee.

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TABLE OF CONTENTS

TABLE OF CONTENTS (continued) Page

ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION Section 1.1 Section 1.2

Definitions.............................................................................................................. 1 Rules of Construction ............................................................................................ 6 ARTICLE II REPRESENTATIONS

Section 2.1 Section 2.2

Representations by the City ................................................................................... 7 Representations by Borrower................................................................................. 8 ARTICLE III FINANCING OF PROJECT

Section 3.1 Section 3.2 Section 3.3 Section 3.4 Section 3.5 Section 3.6 Section 3.7 Section 3.8 Section 3.9

Loan by the City................................................................................................... 12 Agreement To Undertake Project; Completion Certificate ................................. 12 Repayment of Loan.............................................................................................. 13 Obligation to Complete Project ........................................................................... 13 Limitation of City’s Liability............................................................................... 13 Security for Payments Under the Loan Agreement; Obligations Unconditional....................................................................................................... 13 Recordation and Filing......................................................................................... 14 No Obligation of City with Respect to the Project .............................................. 14 Additional Costs of Issuance ............................................................................... 15 ARTICLE IV PAYMENTS ON THE LOAN; TAX COVENANTS

Section 4.1 Section 4.2 Section 4.3 Section 4.4 Section 4.5 Section 4.6 Section 4.7 Section 4.8 Section 4.9

Payment Obligations of the Borrower ................................................................. 15 Payments Assigned .............................................................................................. 16 Nature of Borrower’s Obligation ......................................................................... 16 Advances by Trustee............................................................................................ 17 Agreement of City................................................................................................ 17 Rebate Requirement............................................................................................. 17 Maintenance of 501(c)(3) Status.......................................................................... 18 Restricted Pledges................................................................................................ 19 Tax Covenants ..................................................................................................... 19 ARTICLE V MAINTENANCE, TAXES AND INSURANCE

Section 5.1

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Maintenance, Modifications and Use of Project; Only Permitted Encumbrances Allowed ....................................................................................... 26 i

Page Section 5.2 Section 5.3 Section 5.4 Section 5.5 Section 5.6

Taxes, Other Governmental Charges and Utility Charges; Mechanics’ and Other Liens........................................................................................................... 26 Insurance .............................................................................................................. 27 General Requirements Applicable to Insurance .................................................. 28 Advances by the City or the Trustee.................................................................... 29 Borrower to Make Up Deficiency in Insurance Coverage................................... 29

ARTICLE VI DAMAGE, DESTRUCTION, CONDEMNATION AND OTHER LOSS OF TITLE Section 6.1 Section 6.2 Section 6.3 Section 6.4

The Borrower To Give Notice ............................................................................. 30 Damage, Destruction, Condemnation or Loss of Title ........................................ 30 Assignment of Condemnation Award and Net Proceeds..................................... 31 Parties to Give Notice .......................................................................................... 31 ARTICLE VII SPECIAL COVENANTS

Section 7.1 Section 7.2 Section 7.3 Section 7.4 Section 7.5 Section 7.6 Section 7.7 Section 7.8

Inspection of Project and Books .......................................................................... 31 Maintenance of Existence .................................................................................... 31 Financial Statements and Certificate of No Default ............................................ 32 Investment and Use of Trust Funds ..................................................................... 33 Single Purpose ..................................................................................................... 33 Indemnification .................................................................................................... 33 Cooperation upon Event of Default ..................................................................... 35 Limits on Consents to Subleases ......................................................................... 35 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES

Section 8.1 Section 8.2 Section 8.3 Section 8.4 Section 8.5 Section 8.6

Event of Default Defined ..................................................................................... 35 Remedies on Default............................................................................................ 36 Application of Amounts Realized in Enforcement of Remedies......................... 37 No Remedy Exclusive.......................................................................................... 37 Attorneys’ Fees and Other Expenses ................................................................... 37 No Additional Waiver Implied by One Waiver................................................... 37 ARTICLE IX PREPAYMENT OF LOAN

Section 9.1 Section 9.2 Section 9.3 Section 9.4 MIAMI/4253640.7

Option To Prepay Loan and Terminate Loan Agreement in Certain Events....... 38 Option To Prepay Loan in Whole........................................................................ 38 Option To Prepay Loan in Part ............................................................................ 38 Amount Required for Prepayment ....................................................................... 39 ii

TABLE OF CONTENTS (continued) Page ARTICLE X MISCELLANEOUS Section 10.1 Section 10.2 Section 10.3 Section 10.4 Section 10.5 Section 10.6 Section 10.7 Section 10.8 Section 10.9

Term of Loan Agreement..................................................................................... 39 Notices ................................................................................................................. 39 Amendments to Loan Agreement and Loan Agreement ..................................... 41 Successors and Assigns........................................................................................ 41 Severability .......................................................................................................... 41 Applicable Law; Entire Understanding ............................................................... 41 No Personal Liability ........................................................................................... 41 Counterparts......................................................................................................... 41 City, City Council Members, Attorneys, Officers, Employees and Agents of City Not Liable ................................................................................................ 42

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THIS LOAN AGREEMENT, dated as of June 1, 2010, between the CITY OF PORT ST. LUCIE, FLORIDA, (the “City”), a municipal corporation of the State of Florida and a “local agency” under Chapter 159, Part II, Florida Statutes, as amended and OREGON HEALTH AND SCIENCE UNIVERSITY VACCINE AND GENE THERAPY INSTITUTE FLORIDA CORP., a Florida not-for-profit corporation (the “Borrower”), W I T N E S S E T H: WHEREAS, at the request of the Borrower, the City has determined to issue pursuant to a Trust Indenture, dated as of June 1, 2010 (the “Indenture”), between the City and TD Bank, National Association, as trustee (the “Trustee”), its Research Facilities Revenue Bonds Series 2010 (Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project) (the “Series 2010 Bonds”), for the purpose of loaning funds to the Borrower to be used, together with other available moneys, to (1) finance and reimburse the costs of the acquisition, construction, furnishing and equipping of certain capital projects in the City, as more fully described in Exhibit A hereto (the “Project”), (2) fund capitalized interest on a portion of the Series 2010 Bonds from the date of issuance of the Series 2010 Bonds through November 1, 2012, (3) fund a deposit to the Debt Service Reserve Fund (as defined in the Indenture) for the Series 2010 Bonds, and (4) pay the costs of issuance of the Series 2010 Bonds; and WHEREAS, the City proposes to loan the proceeds of the sale of the Bonds to the Borrower, and the Borrower agrees to repay such loan on the terms and conditions hereinafter set forth; NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto covenant and agree as follows: ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION Section 1.1

Definitions.

Except as set forth below or unless the context otherwise requires, all undefined capitalized terms shall have the meanings assigned to them in the Indenture. The following words and terms shall have the following meanings unless the context otherwise requires: “Adverse Tax Action” means any action or omission to take action the result of which is to subject interest on the Bonds to inclusion in gross income for federal income tax purposes. “Bonds” means collectively, the Series 2010 Bonds and any Refunding Bonds issued pursuant to the Indenture.

“Consultant” means professional management, marketing or financial consultants having the skill and experience necessary to render the particular report required and that is not unacceptable to the City or the Trustee. Such firm(s) shall not be, and no member, stockholder, director, officer or employee of which shall be, an officer or employee of the Borrower. The reports of Consultants showing forecast financial performances may be in the form of a forecast of the management of the Borrower that is accompanied by a statement of a Consultant to the effect that the Consultant has reviewed the assumptions and procedures used by management and that the underlying assumptions provide a reasonable basis for the forecast of management. “Credit Enhancement Agreement” means the Credit Enhancement Agreement, dated as of June 1, 2010 between the City and the Borrower providing for certain covenants of the Borrower for the benefit of the City. “Default Rate” means ____% per annum, which is the rate equal to the yield on the Bonds plus ____%. “Equipment” means those items of fixtures, furnishings, machinery and equipment, including those items of fixtures, furnishings, machinery and equipment that are now owned or hereafter acquired by the Borrower from the proceeds of the Bonds, and located on the Mortgaged Premises; provided, however, “Equipment” shall not included those items of fixtures, furnishings, machinery and equipment purchased with proceeds from the Funding Agreement, which shall be identified and accounted for separately, or motor vehicles titled under a certificate of title. “Financial Statements” means the financial statements of the Borrower. “Financing Instruments” means the Mortgage, the Intercreditor Agreement and this Loan Agreement. “Fiscal Year” means with respect to the Borrower, each 12-month period commencing on July 1 of each year and ending on June 30 of the next succeeding year, or such other 12-month period as certified to the Trustee by an Authorized Representative of the Borrower as being the new fiscal year of the Borrower. “General Revenues” means all revenues, income, receipts and money (other than proceeds of borrowings) received by or on behalf of the Borrower with respect to the Project, including but not limited to: (a) moneys, earnings, revenues, rights to the payment of money and receivables arising from the operation of the Project; (b) all fees, rents, issues, profits, income, revenues and receipts derived from the operation of the Project;

“Bond Documents” means, collectively, the Indenture, this Loan Agreement, the Mortgage, the Intercreditor Agreement, the Credit Enhancement Agreement and all other documents (including certificates) executed in connection with the issuance of the Series 2010 Bonds.

(c) all accounts, chattel paper and instruments, received by the Borrower from its operation of the Project and all proceeds from them, whether cash or non-cash, all as provided in Article 9 of the Florida Uniform Commercial Code, as codified at Chapter 679, Florida Statutes;

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(d) all contributions, grants or the like from any source, with respect to the Project that are not restricted in any way that would prevent their application to the payment of debt service on indebtedness; (e) all amounts realized upon recourse to any collateral given (other than by a pledge of General Revenues or as a part of General Revenues) by the Borrower to secure the Borrower’s obligations under this Loan Agreement;

“OTTED” means the State of Florida, Executive Office of the Governor’s Office of Tourism, Trade and Economic Development. “Payment of the Bonds” means payment in full of all Bonds and all fees necessary to provide for the discharge of the Indenture or provision for such payment to discharge the Indenture as provided therein. “Permitted Encumbrances” means with respect to the Project, as of any particular time:

(f)

all proceeds of business interruption and similar insurance; and

(g) the money and securities (including the earnings from the investment of them) held by the Trustee in the Pledged Funds established under the Indenture, except the Rebate Fund. “Indenture” means the Trust Indenture, dated June 1, 2010, between the City and the Trustee, as amended or supplemented from time to time. “Industrial Development Act” means Part II of Chapter 159, Florida Statutes, as amended. “Loan” means the loan to the Borrower under this Loan Agreement. “Loan Payments” means the payments made or to be made by the Borrower pursuant to this Loan Agreement for the payment of the principal of, premium, if any and interest on the Bonds, including without limitation, Amortization Amounts and all other amounts coming due and payable under this Loan Agreement, whether by reason of maturity, redemption, acceleration or otherwise in connection with the Bonds. “Maximum Annual Debt Service” means the greatest amount of principal and interest on the Series 2010 Bonds outstanding in any Fiscal Year. “Mortgaged Premises” means the real estate described in Exhibit A attached to the Mortgage and any real estate (or interest therein) becoming part of the Project subsequent to the date hereof, less any portions thereof released in accordance with this Loan Agreement. “Net Book Value” of any property means the net book value of such property at the end of the most recent Fiscal Year for which Financial Statements are available. “Net Proceeds” means the gross proceeds from any insurance recovery or condemnation award remaining after payment of reasonable attorneys’ fees, reasonable fees and expenses of the Trustee and all other reasonable expenses incurred in the collection of such gross proceeds. “Officer’s Certificate” means a certificate signed by an Authorized Representative of the Borrower. Each Officer’s Certificate presented under this Loan Agreement or the Indenture shall state that it is being delivered pursuant to (and shall identify the section or subsection of) this Loan Agreement or the Indenture, as the case may be, and shall incorporate by reference and use in all appropriate instances all terms defined in the Indenture or this Loan Agreement.

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(1) thereby.

This Loan Agreement and any liens and encumbrances created or permitted

(2)

The Mortgage and any liens and encumbrances created or permitted thereby.

(3)

The Indenture and any liens and encumbrances created or permitted thereby.

(4)

The EDA Mortgage.

(5) Subject to the provisions of the Mortgage, any mechanic’s, laborer’s, materialman’s, supplier’s or vendor’s lien or right in respect thereof if payment is not yet due under the contract in question or if such lien is being contested in good faith in accordance with the provisions of the Mortgage. (6) (a) Rights reserved to or vested in any municipality or public authority by the terms of any right, power, franchise, grant, license, permit or provision of law; (b) any liens for taxes, assessments, levies, fees, water and sewer rents or charges and other government and similar charges, which are not due and payable or which pre not delinquent or the amount or validity of which are being contested in good faith and execution thereon is stayed; (c) easements (including, without limitation, reciprocal easement agreements), rights-of-way, buildings, zoning and similar restrictions, servitudes, restrictions, utility agreements, covenants, reservations, oil, gas or other mineral reservations, encroachments, and charges, other minor defects, encumbrances and irregularities in the title to any property which do not materially and adversely impair the use of such property or materially and adversely affect the value thereof; and (d) rights reserved to or vested in any municipality or public authority in control or regulate any property or to use such property in any manner. (7) Liens arising by reason of good faith deposits with the Borrower in connection with leases of real estate, or bids or contracts (other than contracts for the payment of money), deposits by the Borrower to secure public or statutory obligations, or to secure, or in lieu of, surety, stay or appeal bonds, and deposits as security for the payment of taxes or assessments or other similar charges. (8) Any lien arising by reason of deposits with, or the giving of any form of security to, any governmental agency or any body created or approved by law or governmental regulation for any purpose at any time as required by law or governmental regulation as a condition to the transaction or any business or the exercise of any privilege or license, or to enable the Borrower to maintain self-insurance, or to participate in any funds established to cover any insurance risks or in connection with workers’ compensation, unemployment insurance, pension or profit

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sharing plans or other social security, or to share in the privileges or benefits required for companies participating in such arrangements. (9)

Any judgment lien against the Borrower in an amount less than $1,000,000.

(19) Such other title and survey exceptions (including, without limitation, leases, special taxes and assessments, zoning and development restrictions, and historic or landmark restrictions) as have been approved or may be approved in writing by a majority of the Bondholders.

(10) Any lien, including, but not limited to any lien created in connection with the Funding Agreement, which is existing on the date of authentication and delivery of the Series 2010 Bonds provided that no such lien may be increased, extended, renewed or modified to apply to any personal property of the Borrower not subject to such lien on such date or to secure indebtedness of the Borrower not outstanding as of the date hereof, unless such lien as so extended, renewed or modified otherwise qualifies as a Permitted Encumbrance.

(20) Liens on assets acquired in a transaction financed by, and granted in order to secure, any indebtedness related to any equipment lease.

(11) Subject to, and so long as no Event of Default exists under the Loan Agreement or event of default exists under the Mortgage, any lien on “Property” (hereinafter defined) provided that at the time the lien is created the aggregate book value of all Property subject to a lien (including the Property to be encumbered by the lien proposed to be created) shall not exceed 15% of the “Total Assets” (hereinafter defined) of the Borrower, all as shown on the most recently available audited financial statements of the Borrower. For purposes of the foregoing, the term “Total Assets” shall mean all tangible and intangible assets of the Borrower as shown on the asset side of the Borrower’s balance sheet and “Property” shall mean any and all rights, titles and interest in and to any and all property of the Borrower whether real or personal, tangible or intangible and wherever situated.

(22) Subsequent leases entered into in accordance with the terms of this Loan Agreement and the Mortgage.

(12) Any lien on pledges, gifts or grants to be received in the future including any income derived from the investment thereof. (13) Any lien on inventory which does not exceed (25%) twenty-five percent of the Net Book Value thereof. (14) (A) Any lien in favor of a creditor or a trustee on the proceeds of indebtedness prior to the application of such proceeds so long as such indebtedness is permitted under this Loan Agreement and (B) any lien on bonds or notes in favor of the provider of a Credit Facility, if such Credit Facility secures such bonds or notes. (15)

Any liens subordinate to the lien of the Series 2010 Bonds or the Refunding

Bonds. (16) Liens on property received by Borrower through gifts, grants or bequests, whereas such liens are due to restrictions on such gifts, grants or bequests of property or the income thereon. (17)

Any lien securing non-recourse indebtedness.

(18) With respect to the Mortgaged Property, such exceptions to title as are set forth in the title insurance policy delivered on or about the date of authentication and delivery of the Series 2010 Bonds or thereafter pursuant to the Loan Agreement.

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(21) Liens on assets acquired in a transaction financed by, and granted in order to secure, any indebtedness, including non-recourse purchase money indebtedness permitted pursuant to this Loan Agreement.

“Person” means an individual, association, corporation, limited liability company, firm, partnership, trust or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. “Pledged Assets” means all assets pledged and conveyed pursuant to the Mortgage, other than real property or interests therein. “Project” means the project as more fully described in Exhibit A hereto. “Rebate Analyst” means a firm of experts with experience in federal income tax accounting and arbitrage rebate calculations engaged by the Borrower to perform the duties required by the Indenture. “Reimbursement Payments” means amounts owed by the Borrower to the City as reimbursement to the City for deposits made from Non-Ad Valorem Revenues to the Debt Service Reserve Fund pursuant to the Covenant in Section 5.04(g) of the Indenture “Restricted Pledges” means any pledges or donation to the Borrower restricted by the donor thereof for payment of costs associated with all or a portion of the Project. “Trust Estate” means any and all property subject to the operation of the granting clauses of the Indenture. “Trustee” means TD Bank, National Association, its successors and assigns and any other trustee at the time serving as such under the Indenture, whether the original or a successor trustee. “Underwriter” means RBC Capital Markets Corp. Section 1.2

Rules of Construction.

The following rules shall apply to the construction of this Loan Agreement unless the context otherwise requires:

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(a)

Singular words shall connote the plural number as well as the singular and vice

versa. (b) Words importing the redemption or calling for redemption of Bonds shall not be deemed to refer to or connote the payment of Bonds at their stated maturity. (c) All references herein to particular articles or sections are references to articles or sections of this Loan Agreement unless otherwise indicated. (d) The headings and table of contents herein are solely for convenience of reference and shall not constitute a part of this Loan Agreement nor shall they affect its meaning, construction or effect. ARTICLE II REPRESENTATIONS Section 2.1

Representations by the City.

The City makes the following representations: (a) The City is a municipal corporation of the State and a “local agency” under the Industrial Development Act and pursuant to the Act has the power to (1) enter into this Loan Agreement and the Indenture, (2) assign this Loan Agreement (except the Reserved Rights) to the Trustee, (3) issue the Bonds to finance costs to be incurred in connection with the Project, and (4) carry out its other obligations in connection therewith pursuant to the Indenture and this Loan Agreement. The Project constitutes facilities authorized to be financed under the Industrial Development Act and serves a paramount public purpose. (b) The City has duly authorized the execution and delivery of the Indenture, this Loan Agreement and the tax certificate to be dated the date of issuance of the bonds (the “Tax Agreement”), has duly authorized the assignment of this Loan Agreement to the Trustee, the performance of its obligations hereunder and thereunder and the issuance of the Bonds and, simultaneously with the execution and delivery of this Loan Agreement, has duly executed and delivered the Indenture and issued and sold the Series 2010 Bonds.

(e) To its knowledge, no further approval, consent or withholding of objection on the part of any regulatory body, federal, state or local, is required in connection with (1) the issuance and delivery of the Series 2010 Bonds by the City, (2) the execution or delivery of or compliance by the City with the terms and conditions of this Loan Agreement, the Indenture or the Series 2010 Bonds or (3) the assignment and pledge by the City pursuant to the Indenture of its rights under this Loan Agreement (except the Reserved Rights) and the payments thereon by the Borrower, as security for payment of the principal of, premium, if any, and interest on the Series 2010 Bonds. (f) Notwithstanding anything herein to the contrary, any obligation the City may incur hereunder in connection with the issuance of the Series 2010 Bonds shall not be deemed to constitute a general obligation of the City but shall be payable solely from the payments received hereunder, under the Mortgage and certain Non-Ad Valorem Revenues deposited in the Debt Service Reserve Fund pursuant to the Covenant to the extent set forth in the Indenture. (g) No litigation, and to its knowledge, no inquiry or investigation of any kind in or by any judicial or administrative court or agency is pending or threatened against the City with respect to (1) the organization and existence of the City, (2) its authority to execute or deliver this Loan Agreement, the Indenture, the Series 2010 Bonds, the Intercreditor Agreement, or the assignment of this Loan Agreement (except the Reserved Rights), (3) the validity or enforceability of any of such instruments or the transactions contemplated hereby or thereby, (4) the title of any officer of the City who executed such instruments, or (5) any authority or proceedings related to the execution and delivery of such instruments on behalf of the City. No such authority or proceedings have been repealed, revoked, rescinded or amended and all are in full force and effect. (h) The City has determined that the financing of the Project, is advisable and will serve paramount public purpose of the Act. Section 2.2

Representations by Borrower.

The Borrower makes the following representations:

(c) The City is not in default in the payment of the principal of or interest on any of its indebtedness for borrowed money and to its knowledge (i) the City is not in default under any instrument under or subject to which any indebtedness for borrowed money has been incurred and (ii) no event has occurred and is continuing under the provisions of any such instrument that with the lapse of time or the giving of notice, or both, would constitute an event of default thereunder.

(a) The Borrower is a not-for-profit corporation duly organized, validly existing and in good standing under the laws of the State of Florida and has all requisite power and authority to enter into, execute and deliver this Loan Agreement and the Mortgage, the Credit Enhancement Agreement, and any other instrument to be executed in connection herewith or therewith to which the Borrower is a party, including amendments thereto, to undertake the transactions contemplated hereby and thereby and to carry out its obligations hereunder and thereunder, and has duly authorized the execution and delivery of this Loan Agreement, the Mortgage, the Credit Enhancement Agreement and any other instrument to be executed by Borrower in connection herewith or therewith.

(d) The execution and delivery by the City of the Indenture, this Loan Agreement and the Series 2010 Bonds and the assignment of this Loan Agreement (except the Reserved Rights) and the compliance with the terms and conditions thereof will not conflict with or result in the breach of or constitute a default under any of the above described documents.

(b) The execution, delivery and performance by the Borrower of this Loan Agreement, the Mortgage, the Credit Enhancement Agreement and any other instrument to be executed in connection herewith or therewith to which the Borrower is a party, including any amendments thereto, and the consummation of the transactions contemplated hereby and thereby

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are within the Borrower’s corporate powers, have been or will be duly authorized by all necessary corporate action, do not and will not (i) conflict with, contravene or violate any provision of the articles of incorporation or bylaws of the Borrower, including all amendments thereto, which violation would have a material adverse effect on the Borrower or, to the knowledge of the Borrower, any material law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to the Borrower, (ii) result in a breach of or constitute a material default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Borrower is a party, whether directly or indirectly, or by which it or its properties may be bound or affected, or (iii) except as provided in the Indenture, Loan Agreement and Mortgage, result in or require the creation of any material lien, security interest or other charge or encumbrance upon or with respect to any of the Borrower’s properties. (c) To Borrower’s knowledge, no consent of any Person and no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body, is required for the valid or due execution, delivery and performance by the Borrower of this Loan Agreement, the Mortgage, the Credit Enhancement Agreement, and any other instrument to be executed in connection herewith or therewith to which the Borrower is a party, including any amendments thereto, other than such consents, authorizations, approvals or actions as have already been obtained or which cannot be obtained on the date hereof or thereof and are not required to be obtained on the date hereof or thereof. To Borrower’s knowledge, the Borrower is in compliance in all material respects with all of the terms and conditions of each such consent, authorization, approval or action already obtained, has applied for each such consent, authorization, approval or action that may be applied for at this time and has met or has made provisions adequate for meeting all requirements for each such consent, authorization, approval or action not yet obtained. To Borrower’s knowledge, the Borrower is in compliance in all material respects with all governmental approvals, authorizations, consents, orders and licenses required to maintain all material trademarks, patents and other intellectual property rights necessary to conduct its business. (d) This Loan Agreement, the Mortgage, the Credit Enhancement Agreement, and any other instrument to be executed in connection herewith or therewith to which the Borrower is a party, including any amendments thereto, when executed and delivered, will be legal, valid and binding obligations of the Borrower enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted to the extent constitutionally applicable and subject to the exercise of judicial discretion in appropriate cases. (e) The Borrower is not in violation or default of, and neither the execution or delivery of this Loan Agreement, the Mortgage, the Credit Enhancement Agreement, or any other instrument to be delivered by Borrower in connection herewith or therewith, including any amendments thereto, nor the consummation of the transactions contemplated hereby or thereby nor the fulfillment of the obligations hereunder or thereunder will result in a violation of or default of, any bond, debenture, note or other evidence of indebtedness, contract, agreement or lease to which the Borrower is a party or by which the Borrower is bound or, to the knowledge of the Borrower, any applicable law, regulation or order of any governmental authority having jurisdiction over the Borrower.

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(f) There are no actions, suits or proceedings pending, or to the knowledge of the Borrower threatened, at law or in equity before or by any court or administrative agency, against the Borrower which if determined adversely to the Borrower would materially, either individually or in the aggregate, adversely affect the transactions or obligations, and the consummation and performance thereof, contemplated by the Loan Agreement, the Mortgage, the Credit Enhancement Agreement, and any other instrument to be executed by Borrower in connection herewith or therewith, including any amendments thereto. (g) The representations, statements and warranties of the Borrower set forth in this Loan Agreement or any other document executed by Borrower in connection herewith as of the date made (i) are true, correct and complete, (ii) do not contain any untrue statement of a material fact, and (iii) do not omit to state a material fact necessary to make the statements contained herein or therein not misleading or incomplete. The Borrower understands that all such statements, representations and warranties have been and will be relied upon as an inducement by the City to issue the Series 2010 Bonds. (h) The Borrower has not taken any action which would cause interest on the Series 2010 Bonds to be includable in the gross income of the recipients thereof for Federal income tax purposes. (i)

With respect to Borrower’s status as a tax-exempt organization:

(1) the Borrower is an organization exempt from federal income taxation as provided in Section 501(a) of the Code by virtue of being described in Section 501(c)(3) of the Code; (2) except as otherwise disclosed in writing to the City, the purposes, character, activities and methods of operation of the Borrower (the “Borrower Purposes”) have not changed materially since its organization and are not materially different from the purposes, character, activities and methods of operation at the time of its receipt of a determination by the Internal Revenue Service (“IRS”) that it was an organization described in Section 501(c)(3) of the Code (the “Determination”); (3) except as otherwise disclosed in writing to the City, the Borrower has not applied a substantial part of its assets (be it corpus or income) for any purpose or purposes other than those Borrower Purposes which have been disclosed to the IRS, including, without limitation, the Borrower Purposes disclosed in connection with the Determination; (4) the Borrower has not operated since its incorporation in a manner which would cause the IRS to classify the Borrower as an “action organization” within the meaning of Treasury Regulations Section 1.501(c)(3)-(1)(c)(3) including, without limitation, any actions of which the IRS is not aware and which involve (1) the promotion of or attempts to influence legislation by propaganda or otherwise as a substantial part of its activities or (2) the intervention, directly or indirectly, in any political campaign on behalf of or in opposition to any candidate for public office;

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(5) with the exception of the payment of compensation (and the payment or reimbursement of expenses) which is not excessive and is for personal services which are reasonable and necessary to carrying out the Borrower Purposes, no person controlled by any individual or individuals nor any person having a personal or private interest in the activities of the Borrower has acquired or received, directly or indirectly, any income or assets, regardless of form, of the Borrower since its incorporation, other than any such acquisitions or receipts of which the IRS has been informed;

complied and will continue to comply in all material respects with all lawful requirements of any governmental body regarding the use or condition of the Project. The Borrower may, however, contest any such requirement by an appropriate proceeding diligently prosecuted.

(6) the Borrower is not a “private foundation” within the meaning of Section 509(a) of the Code;

Section 3.1

(7) the Borrower has not been notified, directly or indirectly, by the IRS that its exemption under Section 501(c)(3) of the Code has been revoked or modified, or that the IRS is considering revoking or modifying such exemption, and such exemption is still in full force and effect; (8) except as disclosed to the City in writing, the Borrower has filed with the IRS all returns, reports and other documents as required by law when due (or filed a request for an extension with respect thereto), and such materials have not omitted or misstated any material fact; (9) the Borrower has not devoted more than an insubstantial part of its activities in furtherance of a purpose other than an exempt purpose within the meaning of Section 501(c)(3) of the Code; and

ARTICLE III FINANCING OF PROJECT Loan by the City.

Upon the terms and conditions of this Loan Agreement and the Indenture, the City shall lend to the Borrower the proceeds of the sale of the Series 2010 Bonds and any Refunding Bonds issued under the Indenture. The Loan shall be made by depositing proceeds of such sale in accordance with Section 2.07(b) of the Indenture. The Loan shall be disbursed to the Borrower and invested as provided in Article VI and VII of the Indenture in Permitted Investments. Section 3.2

Agreement To Undertake Project; Completion Certificate.

(a) The Borrower shall use the proceeds of the Loan to finance and reimburse the cost of the acquisition, construction and equipping of the Project. If requested by the Trustee after an Event of Default hereunder, the Borrower shall assign to the City or the Trustee any contract relating to acquisition, construction or equipping of the Project. (b)

The Borrower shall, in carrying out such obligations:

(10) the Borrower has not taken any action, nor does it know of any action taken by others or any condition which has not been disclosed to the IRS which would cause the Borrower to lose its exemption from taxation under Section 501(a) of the Code or cause the interest on the Bonds to be includable in the gross income of the recipients thereof for federal income tax purposes.

(1) obtain all licenses, permits and consents required for the acquisition, construction, equipping and operation of the Project, and

(j) The Borrower knows of no violation and has no notice of a violation of any court order or of any law, regulation, ordinance, rule, order, code or requirement of any governmental authority having jurisdiction over all or any portion of the Project that may materially detrimentally affect the development and operation of the Project as planned.

(c) Upon completion of the Project, the Borrower shall furnish the Trustee a certificate (the “Completion Certificate”), executed by the Borrower’s Authorized Officer, which shall specify the completion date and shall state that: (a) the acquisition, construction, and equipping of the Project have been completed in their entirety, are lien free and are ready to be (or have been) placed in service and operated at substantially the level for which they were designed, (b) the Project Costs have been paid, except for any portion thereof which has been incurred but is not then due and payable, or the liability for the payment of which is being contested or disputed by the Borrower, and for the payment of which the Trustee is directed to retain specified amounts of moneys in the Project Account within the Project Fund (without prejudice to any rights against third parties which exist at the date thereof or which may subsequently come into being), and (c) the Project is a “project” within the meaning of the Act.

(k) To the Borrower’s knowledge, the Land is appropriately zoned for construction, installation and operation of the Project or such zoning can be obtained in the ordinary course. (l) The Funding Agreement is in full force and effect and no event of default or any event which, with the giving of notice or the lapse of time, or both, would constitute a default, thereunder has occurred. (m) The Borrower will operate the Project or cause it to be operated, as part of a “project” within the meaning of the Act until payment of the Loan in full.

(2) bring any action or proceeding against any Person with respect to the Project as the Borrower shall deem proper.

(d) Other than the making of the Loan under this Loan Agreement and providing the Covenant under the Indenture, no contract with respect to the Project shall obligate the City in any way.

(n) The Borrower has obtained or will cause to be obtained all necessary material permits and approvals for the operation and maintenance of the Project and has to its knowledge

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Section 3.3

Repayment of Loan.

Subject to the limitations in Section 10.7 hereof, the Borrower unconditionally agrees that it will pay the Loan Payments pursuant to this Loan Agreement the full amount needed and at the times needed to enable the City to make timely payment of the principal of (whether due upon maturity, redemption, acceleration or otherwise), premium, if any, and interest on the Bonds. The Borrower acknowledges that the City’s right to repayment of the Loan is being assigned to the Trustee. The Borrower shall also pay the City, on demand, its reasonable fees, costs and expenses incurred under the Indenture, this Loan Agreement or any other Bond Document in connection with the issuance of the Bonds or the performance of its obligations hereunder or thereunder, including but not limited to, the Reimbursement Payments. Section 3.4

Obligation to Complete Project.

In the event that prior to the delivery of a Completion Certificate with respect to the Project, moneys in the Project Account, available for the Project are not sufficient to pay the Costs of the Project, the Borrower agrees to provide such funds and to pay the amount in excess of the moneys available therefore in the Project Account. The City does not make any warranty, either express or implied, that the moneys paid into the Project Account, will be sufficient for such purpose. The Borrower agrees that if the Borrower should pay any amount to finance Costs of the Project pursuant to the provisions of this Section, the Borrower shall not be entitled to any reimbursement therefore from the City, the Trustee or the Bondholders, nor shall the Borrower be entitled to any diminution of the amounts payable under Section 4.1 hereof. Section 3.5

Limitation of City’s Liability.

limiting the generality of the foregoing, failure to complete the Project, or any portion thereof, any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws or administrative rulings of or administrative actions by the United States of America or the State of Florida or any political subdivision of either, or any failure of the City or Trustee to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Loan Agreement. (c) Nothing contained in this Section shall be construed to release the City from the performance of any of the agreements on its part contained in this Loan Agreement; and in the event the City shall fail to perform any such agreement on its part, the Borrower may institute such action against the City as the Borrower may deem necessary to compel performance provided that no such action shall (i) violate the agreements on the part of the Borrower contained herein, or (ii) diminish the amounts of the Loan Payments or Reimbursement Payments required to be paid by the Borrower hereunder. (d) The Borrower may, at its own cost and expense and in its own name or in the name of the City, prosecute or defend any action or proceeding or take any other action involving third persons which the Borrower deems reasonably necessary in order to secure or protect its rights hereunder and its rights of possession, occupancy and use of any and all of the Project or portions thereof, and in such event the City hereby agrees to cooperate fully with the Borrower and to take all action necessary to effect the substitution of the Borrower for the City in any such action or proceeding if the Borrower shall so request, at the expense of the Borrower. Section 3.7

Recordation and Filing.

Notwithstanding anything herein to the contrary, any obligation the City may incur hereunder in connection with the financing of the Project for the payment of money shall not be deemed to constitute a general obligation of the City but shall be payable solely from the revenues and receipts derived by it from or in connection with this Loan Agreement and the Mortgage.

The Borrower shall (a) record the Mortgage in the Official Records of St. Lucie County through the Clerk of the Circuit Court in and for St. Lucie County, Florida and (b) execute and file in the Clerk’s office and the Florida Secured Transaction Registry such financing statements and continuation statements evidencing the security interest in the Pledged Assets granted under the Mortgage in such form or forms required by the Florida Uniform Commercial Code.

Section 3.6

In the event the Borrower fails to file such continuation statements the Borrower hereby authorizes the Trustee to prepare and file such continuation statements of existing financing statements in favor of the Trustee with respect to the Pledged Assets as shall be necessary to comply with applicable law. The Borrower shall cooperate with the Trustee in connection with any filing made pursuant to this Section.

Security for Payments Under the Loan Agreement; Obligations Unconditional.

(a) It is understood and agreed that the Loan Payments, and certain other payments required to be made to the City under this Loan Agreement are assigned and pledged to the Trustee under the Indenture. The Borrower hereby assents to such assignment and pledge. (b) The obligations of the Borrower to perform and observe the other agreements on its part contained in this Loan Agreement shall be absolute and unconditional and shall not be subject to diminution by setoff, counterclaim, abatement or otherwise and, until such time as the principal of, Amortization Amounts, interest and premium, if any, on the Bonds and any other amounts due and owing hereunder or under the Indenture shall have been fully paid or provision for the payment thereof shall have been made in accordance with the Indenture, the Borrower (1) will not suspend or discontinue, or permit the suspension or discontinuance of, any Loan Payments, and (2) will perform and observe all of its other agreements contained in this Loan Agreement, and (3) will not terminate this Loan Agreement for any cause including, without MIAMI/4253640.7

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Section 3.8

No Obligation of City with Respect to the Project.

The parties acknowledge that the City will have no control over the application or use of the proceeds from the Loan or the Project. The City does not by this agreement or otherwise assume any obligation or affirmative duty to review, monitor, investigate or inspect the Project or the application of Loan proceeds by the Borrower.

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Section 3.9

Indenture, as and when the same become due, upon submission by the Trustee to the Borrower of a statement therefore,

Additional Costs of Issuance.

The Borrower agrees to deposit with the Trustee to the Borrower Subaccount of the Cost of Issuance Account any amount required to pay costs of issuance in excess of the two percent (2%) limitation on payment of cost of issuance from Proceeds of the Series 2010 Bonds. ARTICLE IV PAYMENTS ON THE LOAN; TAX COVENANTS Section 4.1

Payment Obligations of the Borrower

(a) The Borrower (i) acknowledges and agrees that the obligations of the Borrower hereunder are general obligations of the Borrower payable from all General Revenue and unrestricted revenues of the Borrower, and (ii) pledges its full faith and credit for the payment of all amounts payable by it hereunder, including the Loan Payments and the Reimbursement Payments. (b) In repayment of the Bonds, as the source of the Loan made under this Loan Agreement, the Borrower hereby agrees to timely pay to the Trustee, for the account of the City, and for deposit and application as set forth in the Indenture in each Bond Year, until all Outstanding Bonds are retired, Loan Payments in an amount equal to the aggregate amount necessary to pay the principal of, Amortization Amounts, premium, if any, and interest (including, without limitation, default interest at the Default Rate) on the Outstanding Bonds accruing or becoming due and payable in such Bond Year, whether by reason of maturity, redemption, purchase, acceleration or otherwise. Loan Payments in respect of principal, Amortization Amounts, premium or interest with respect to the Bonds shall be made by the Borrower to the Trustee at least five (5) Business Days prior to each applicable payment date on the Bonds, or on such other due dates therefore as may be set forth in the Indenture. (c)

In addition to the Loan Payments, the Borrower agrees to pay:

(1) in the event any moneys in the Debt Service Reserve Fund are transferred to the Bond Fund pursuant to Section 5.04 of the Indenture, or there is a deficiency in the Debt Service Reserve Fund upon a valuation thereof, the Borrower agrees to deposit additional funds with the Trustee in an amount sufficient to ensure that amounts on deposit in the Debt Service Reserve Fund are equal to the Reserve Requirement, such amount to be deposited in no more than twelve (12) substantially equal consecutive installments, the first installment to be made on the first day of the first month after such transfer and thereafter on the first day of each month; (2) any Rebate Amounts as provided by the Indenture and this Loan Agreement, together with the fees and expenses of the Rebate Analyst, (3) the annual fee and reasonable extraordinary fees of the Trustee and reasonable expenses (including without limitation attorneys’ fees and the expenses of mailing any notices of redemption) incurred by the Trustee, as Trustee under the

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(4) the reasonable administrative expenses of the City in connection with the Bonds, as and when the same become due, upon submission by the City to the Borrower of a statement therefore, (5) each other item of expense required in the Indenture, this Loan Agreement or the Mortgage to be paid by Borrower, and (6) within thirty (30) days after receipt of notice from the Trustee, Reimbursement Payments to the City. The Borrower agrees to pay to the City such Reimbursement Payments monthly in an amount equal to 1/6th of the amount deposited by the City, if such draw on the Debt Service Reserve Fund was to make an interest payment on the Bonds or 1/12th of the amount deposited by the City, if such draw on the Debt Service Reserve Fund was to make a principal payment or a principal and interest payment on the Bonds. Such Reimbursement Payments will continue monthly until the City is reimbursed in full for all deposits made to the Debt Service Reserve Fund. The Borrower shall provide written notice to the Trustee of the Reimbursement Payments made to the City. (d) In the event the Borrower should fail to make any of the Loan Payments, the Reimbursement Payments or other payments required by this Article or the Indenture to be paid by the Borrower when due, the item or installment so in default shall continue as an obligation of the Borrower until the amount in default shall have been fully paid, and the Borrower agrees to pay the same until paid, with interest thereon, to the extent legally enforceable, at the Default Rate. Section 4.2

Payments Assigned.

The Borrower consents to the assignment to the Trustee made by the Indenture of the rights of the City under this Loan Agreement (except for Reserved Rights). The Borrower shall pay to the Trustee all amounts payable by the Borrower pursuant to this Loan Agreement and the Mortgage, except for payments to be made to the City pursuant to Sections 4.1(c)(4), 4.1(c)(6) and 7.6 hereof. Section 4.3

Nature of Borrower’s Obligation.

Subject to Section 10.7 and the last paragraph of Section 8.1, the obligation of the Borrower to make the Loan Payments pursuant to this Loan Agreement and the Mortgage to observe and perform all other covenants, conditions and agreements hereunder shall be absolute and unconditional, irrespective of any rights of setoff, recoupment or counterclaim it might otherwise have against the City or the Trustee, and, subject to the prepayment of the Loan as provided herein, the Borrower shall not suspend or discontinue any payment hereunder or under the Mortgage or fail to observe and perform any of its other covenants, conditions or agreements hereunder for any cause, including without limitation, any acts or circumstances that may constitute an eviction or constructive eviction, failure of consideration, failure of title to any part or all of the Project or commercial frustration of purpose, or any damage to or destruction or MIAMI/4253640.7

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condemnation of all or any part of the Project, or any change in the tax or other laws of the United States of America, State of Florida or any political subdivision of either, or any failure of the City or the Trustee to observe and perform any covenant, condition or agreement, whether express or implied, or any duty, liability or obligation arising out of or in connection with the Indenture or this Loan Agreement. The Borrower may, after giving to the City and the Trustee at least ten (10) days’ notice of its intention to do so, at its own expense and in its own name, or in the name of the City if procedurally required, prosecute or defend any action or proceeding or take any other action involving third persons that the Borrower reasonably deems necessary to secure or protect any of its rights hereunder. In the event the Borrower takes any such action, the City shall, solely at the Borrower’s expense, reasonably cooperate with the Borrower and take necessary action to substitute the Borrower for the City in such action or proceeding if the Borrower shall reasonably request. Section 4.4

Advances by Trustee.

If the Borrower fails to make any payment or perform any act required of it hereunder, the Trustee, without prior notice or demand on the Borrower and without waiving or releasing any obligation or default, may (but shall be under no obligation to) make such payment or perform such act. All amounts so paid by the Trustee and all costs, fees and expenses so incurred shall be payable by the Borrower on demand as an additional obligation hereunder, together with interest thereon at the Default Rate until paid. Section 4.5

Rebate Requirement.

(a) The Borrower shall, at its sole expense, be responsible for computation and timely payment on behalf of the City of the amount, if any, due the United States pursuant to Section 148(f) of the Code (the “Rebate Amount”), and shall retain records of all such computations and payments until six (6) years after payment or deemed payment in full of all principal of and premium and interest on the Bonds (“Payment of the Bonds”). The City, at the request and direction of the Borrower, hereby selects May 1 as the end of the “bond year” with respect to the Series 2010 Bonds. (b) Within thirty (30) days after the last day of the bond year ending May 1, 2011, and the last day of each fifth bond year thereafter (each of which last day is hereinafter referred to as an “Installment Computation Date”), and within thirty (30) days after the date of Payment of the Bonds (the “Final Computation Date”), the Borrower will cause the Rebate Analyst to calculate the Rebate Amount and will deliver a copy of such computation (the “Rebate Amount

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(c) Not later than sixty (60) days after the first Installment Computation Date, the Borrower, on behalf of the City, shall deposit into the Rebate Fund for payment to the United States 90% of the Rebate Amount as set forth in the Rebate Amount Certificate prepared by the Rebate Analyst with respect to such Installment Computation Date. Not later than sixty (60) days after each Installment Computation Date thereafter until Payment of the Bonds, the Borrower, on behalf of the City, shall deposit into the Rebate Fund for payment to the United States the amount, if any, by which 90% of the Rebate Amount set forth in the most recent Rebate Amount Certificate exceeds the aggregate of all such payments theretofore made to the United States pursuant to this Section. Not later than sixty (60) days after Payment of the Bonds, the Borrower, on behalf of the City, shall deposit into the Rebate Fund for payment to the United States the amount, if any, by which 100% of the Rebate Amount set forth in the Rebate Amount Certificate with respect to the Final Computation Date exceeds the aggregate of all payments theretofore made pursuant to this Section. All such payments shall be made by the Borrower, on behalf of the City, from any available source. (d) Notwithstanding anything contained herein to the contrary, no such payment will be made if the Borrower receives and delivers to the City and the Trustee an opinion of Bond Counsel to the effect that such payment is not required under the Code to prevent any Bonds from becoming “arbitrage bonds” within the meaning of Section 148 of the Code.

Agreement of City.

At the request of the Borrower, and at the Borrower’s sole costs and expense, paid in advance, the City shall (a) at any time moneys held pursuant to the Indenture are sufficient to effect redemption of any Bonds and if the same are then redeemable under the Indenture, and upon the payment or provision for payment satisfactory to the City of all other amounts due under the Bond Documents, take all steps that may be necessary to effect redemption thereunder and (b) upon satisfaction of such conditions, take any other action required by the Indenture or this Loan Agreement to be taken by the City to effectuate such redemption. Section 4.6

Certificate”) to the City and the Trustee. The Trustee will be under no obligation to verify the accuracy of any Rebate Amount Certificate.

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(e) Upon receipt from the United States of any refund of a prior payment of the Rebate Amount that was paid from amounts provided by the Borrower, such refund shall be paid to the Borrower. Notwithstanding the foregoing, however, if at the time of receipt of such refund there is a shortfall in the required deposits to the Rebate Fund based on the funding requirements set forth in Section 4.6(c), all or a portion of such refund shall be deposited in the Rebate Fund to eliminate such shortfall. (f) The Borrower shall have no right of recovery against the City or the Trustee by way of contribution, indemnification, counterclaim, set-off or otherwise for any payment made or expense incurred by the Borrower pursuant to this Section. Section 4.7

Maintenance of 501(c)(3) Status.

The Borrower shall maintain its status as a corporation that is described in Section 501(c)(3) of the Code. The Borrower shall file all required reports and documents with the Internal Revenue Service so as to maintain its status as an organization described in Section 501(c)(3) of the Code and shall not operate the Project in any manner or engage in any activities or take any action that might reasonably be expected to result in the Borrower ceasing to be a “501(c)(3) organization” within the meaning of Section 145 of the Code. The Borrower shall promptly notify the Trustee and the City of any loss of its status as a “501(c)(3) organization” or of any investigation, proceeding or ruling that is reasonably likely to result in such loss of status.

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Section 4.8

Borrower from purchasing Bonds as permitted by the Indenture or this Loan Agreement or in the open market for the purpose of tendering them to the Trustee for purchase and retirement.

Restricted Pledges.

The Borrower shall apply all Restricted Pledges promptly as follows: (a) to costs of the Project consistent with the terms of such Restricted Pledges in excess of such costs paid or to be paid from proceeds of the Bonds, or (b) to purchase Bonds in the secondary market, within the 13 months immediately succeeding receipt of such Restricted Pledge, and for no other purpose. Such Restricted Pledges to be applied to payments on the Bonds shall be delivered immediately upon receipt to the Trustee for deposit in the Bond Fund. The Borrower shall direct the Trustee to apply any earnings on such deposits to payment of the next installment of interest on the Bonds or, if a credit facility is in effect, to the reimbursement of the issuer thereof, if applicable. In the event that a Restricted Pledge or any portion thereof exceeds the costs of the Project in excess of such costs paid or to be paid from proceeds of the Bonds, such Restricted Pledge or portion thereof shall either (1) be delivered to the Trustee for deposit in an account of the Bond Fund and invested at a restricted yield in accordance with the provisions of the Indenture or (2) utilized in a manner that, in an Opinion of Bond Counsel, delivered to the Trustee, will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes. Section 4.9

Tax Covenants.

(a) The City covenants that, to the extent within its control, it will not knowingly take any action, or fail to take any action, and the Borrower covenants that it will not take any action, or fail to take any action, if any such action or failure to take such action would adversely affect the exclusion from gross income of the interest on the Bonds under Section 103(a) of the Code or cause the interest on the Bonds, or any portion thereof, to become an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations under the Code. The City, to the extent within its control, will not knowingly directly or indirectly, and the Borrower will not directly or indirectly, use or permit the use of any proceeds of the Bonds or any other funds of the City or the Borrower, or take or omit to take any action, that would cause the Bonds to be or become “arbitrage bonds” within the meaning of Section 148(a) of the Code or to fail to qualify as qualified 501(c)(3) bonds within the meaning of Section 145(a) of the Code to the extent applicable to the Bonds or to fail to meet any other applicable requirement of Sections 141, 142, 145, 147, 148, 149 and 150 of the Code (or their statutory predecessor) or cause the interest on the Bonds, or any portion thereof, to become an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations under the Code. To that end, the City, to the extent within its control, and the Borrower will comply with all requirements of Sections 141, 142, 145, 147, 148, 149 and 150 of the Code (or their statutory predecessor) to the extent applicable to the Bonds. In the event that at any time the Borrower is of the opinion that, for purposes of this Section 4.9, it is necessary to restrict or limit the yield on the investment of any moneys held by the Trustee or otherwise, the Borrower shall so instruct the Trustee in writing. The Borrower hereby covenants and agrees that it shall not enter into any arrangement, formal or informal, pursuant to which the Borrower (or any “related party”, as defined in Treasury Regulations §1.150 1(b)) shall purchase the Bonds. This covenant shall not prevent the

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The parties acknowledge that, from and after the issuance of the Bonds, the City’s rights hereunder, exclusive of Reserved Rights, have been assigned to the Trustee and that the City will have no control over the use and application of the proceeds of the Bonds or the Project. The City does not by this instrument or otherwise assume any affirmative duty to review, monitor, investigate or inspect the Project or the application of the proceeds by the Borrower. (b)

As used in this Section, the following words have the following meanings:

“Bond-Financed Property” means the property financed or refinanced with the Net Proceeds of the Bonds. “501(c)(3) Organization” means a “501(c)(3) organization” as defined in Section 150(a)(4) of the Code. “Net Proceeds” means Proceeds less the portion thereof deposited in a reasonably required reserve or replacement fund. “Private Business Use” means use (directly or indirectly) in a trade or business carried on by any Private Person other than use as a member of, and on the same basis as, the general public. Any activity carried on by a Private Person (other than a natural person) shall be treated as a trade or business. In the case of qualified 501(c)(3) bonds within the meaning of Section 145(a) of the Code, Private Business Use excludes use by a 501(c)(3) Organization that is not an unrelated trade or business activity by such 501(c)(3) Organization within the meaning of Section 513(a). “Private Person” means any person other than a “governmental unit” within the meaning of Section 150(a)(2) of the Code. “Proceeds” means all amounts actually or constructively received from the sale of an issue (including underwriters’ discount or compensation but excluding pre-issuance accrued interest) plus all investment earnings thereon. The Borrower agrees that it will not take any action or omit to take any action, which action or omission will adversely affect the exclusion from gross income of the interest on the Bonds for federal income tax purposes or cause the interest on the Bonds, or any portion thereof, to become an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations under the Code and, in the event of such action or omission, it will, promptly upon having such brought to its attention, take such reasonable actions based upon an Opinion of Bond Counsel, and in all cases at the sole expense of the Borrower, as may rescind or otherwise negate such action or omission. With the intent not to limit the generality of the foregoing, the Borrower covenants and agrees that prior to final payment of the Bonds:

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(i) The Borrower will (A) conduct its operations in a manner that will result in Borrower’s continued qualification as a 501(c)(3) Organization, and (B) timely file or cause to be filed all material, returns, reports and other documents that are required to be filed with the Internal Revenue Service. (ii) All Bond-Financed Property is, or upon completion of acquisition or construction will be, owned by a 501(c)(3) Organization or a governmental unit (within the meaning of Section 150(a)(2) of the Code and Treasury Regulations §1.103 1(a)). (iii) The Borrower has used and will use the Bond-Financed Property in such manner that at least 95% of the Net Proceeds of the Bonds will be treated as used, directly or indirectly, by the Borrower in activities that do not constitute a Private Business Use and not more than 5% of the Net Proceeds of the Bonds will be treated as used, directly or indirectly, in a Private Business Use. For this purpose, proceeds used to pay costs of issuing the Bonds shall be treated as used for a Private Business Use. The Borrower may depart from its covenants in this subparagraph (iii) only if and to the extent that an opinion of Bond Counsel is delivered to the Trustee that (A) is based on Section 145 of the Code, (B) states the extent to which the Borrower may depart from such covenants, and (C) states that such departure from such covenants will not adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Bonds or cause the interest on the Bonds, or any portion thereof, to become an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations under the Code. (iv) The Borrower has not and will not secure directly or indirectly more than 5% of either the principal of or the interest on the Bonds by (A) any interest in property used or to be used for any Private Business Use or (B) payments in respect of property used or to be used for any Private Business Use. It will not cause or permit more than 5% of either the principal of or the interest on the Bonds to be derived directly or indirectly from payments (whether or not to the City or the Borrower) in respect of property, or borrowed money, used or to be used for any Private Business Use. Proceeds used to pay costs of issuing the Bonds shall be treated as a Private Business Use. (v) Except as permitted by Section 149(b)(3) of the Code, the Borrower will not permit the Bonds to be federally guaranteed within the meaning of Section 149(b) of the Code. (vi) The Borrower will not permit costs relating to the issuance of the Bonds, including any underwriters’ discount withheld therefrom, paid from or financed by the Proceeds of the Bonds to exceed 2% of the Proceeds of the Bonds within the meaning of Section 147(g) of the Code. (vii) The weighted average maturity of the Bonds will not exceed 120% of the weighted average reasonably expected remaining economic life of the Bond-Financed Property, determined in accordance with Section 147(b) of the Code. For purposes of the preceding sentence, the reasonably expected remaining economic life of property shall be determined as of the date such property was placed in service or, if later, the date of issuance of the applicable

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issue that financed such property. In addition, the cost of financing and refinancing the acquisition of land shall not be taken into account in determining the reasonably expected remaining economic life of the Bond-Financed Property unless 25% or more of the Net Proceeds of the applicable issue that financed such land, directly or indirectly, will be expended to finance or refinance the cost of acquiring land, in which case such land shall be treated as having an economic life of 30 years and shall be taken into account for purposes of determining the reasonably expected remaining economic life of the Bond-Financed Property. (viii) None of the Proceeds of the Bonds will be used to provide any airplane, skybox or other private luxury box, or health club facility (except any health club facility related to the Section 501(c)(3) purpose of the Borrower under the Code), any facility primarily used for gambling or any store the principal business of which is the sale of alcoholic beverages for consumption off premises. (ix) None of the Proceeds of the Bonds will be used directly or indirectly to provide residential rental property for family units within the meaning of Section 145(d) of the Code. (x) At least 95% of the Net Proceeds of the Bonds are or will be used to finance capital expenditures. (xi) The statements concerning the Bonds and the application of their Proceeds required by Section 149(e) of the Code, and approved by the Borrower on behalf of the City, are true and complete for the purposes for which intended. The Borrower shall prepare and submit, or cause to be submitted, true and complete amendments of, or supplements to, those statements if in an Opinion of Bond Counsel such amendments or supplements are deemed to be necessary or advisable. (xii) No changes will be made in the Bond-Financed Property or in the use of such Property that (A) will adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Bonds or will cause the interest on the Bonds, or any portion thereof, to constitute an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations under the Code or (B) cause such Property not to constitute a “project” within the meaning of the Act as in effect on the date of issuance of the Bonds. The Borrower will use such Property or cause such Property to be used so long as the Bonds remain unpaid so as to constitute a “project” within the meaning of the Act as in effect on the date of issuance of the Bonds. (xiii) No Net Proceeds of the Bonds will be used to reimburse the Borrower for any expenditure made by the Borrower more than sixty (60) days prior to March 11, 2009. (xiv) The Borrower will not make any investment or deposit in a Permitted Investment which involves the payment or agreement to pay to a party other than the United States an amount that is required to be paid to the United States by entering into a transaction that reduces the Rebate Amount payable to the United States or results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm’s length and had the yield on the Bonds not been relevant to either party to the transaction.

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(xv) The Borrower agrees to pay all of the reasonable fees and expenses of a Bond Counsel, a certified public accountant and any other necessary consultant employed by the Borrower, the Trustee or the City in connection with any of the requirements imposed by relevant sections of this Loan Agreement. The Borrower shall provide or cause to be provided all information (including information regarding any Nonpurpose Obligations not held in any Fund under this Loan Agreement) to the Trustee or the appropriate consultant, necessary to enable the Trustee to perform the duties imposed on the Trustee by this Loan Agreement with respect to any amounts payable to the Rebate Fund and investment of amounts held under this Loan Agreement. (c)

Use of Bond-Financed Property.

(i) General. For purposes of this Loan Agreement, the use by a Private Person of the Bond-Financed Property pursuant to a Qualified Service Contract (as hereafter defined) shall not be treated as a Private Business Use by such Private Person of such Property or of funds used to finance or refinance such Property. (ii) Qualified Service Contracts. An arrangement under which services are to be provided by a Private Person (“Service Provider”) involving the use of all or any portion of, or any function of, the Bond-Financed Property (for example, management services for an entire facility or a specific department of a facility, or physician services to patients of a hospital) (“Service Contract”) is a “Qualified Service Contract” if the applicable requirements of Rev. Proc. 97-13, as modified by Rev. Proc. 2001-39, are satisfied, or if all of the following conditions are satisfied: (A) reasonable;

the compensation for services provided pursuant to the Service Contract is

(B) none of the compensation for services provided pursuant to the Service Contract is based on net profits from operation of the Bond-Financed Property or any portion thereof; (C) the compensation provided in the Service Contract satisfies one of the following subparagraphs: (i) At least 95% of the compensation for each annual period during the term of the Service Contract is based on a periodic fixed fee and the term of the Service Contract, including all renewal options, does not exceed the lesser of 80% of the reasonably expected useful life of the Bond-Financed Property and 15 years. For purposes of this subsection (c), a “periodic fixed fee” means a stated dollar amount for services rendered for a specified period of time that does not increase except for automatic increases pursuant to a specified, objective external standard that is not linked to the output or efficiency of the Bond-Financed Property (e.g., the Consumer Price Index) and a “renewal option” means a provision under which either party to the Service Contract has a legally enforceable right to renew the Service Contract but does not include a provision under which a contract is automatically renewed for 1-year periods absent cancellation by either party, even if it is expected to be renewed; or (ii) At least 80% of the compensation for each annual period during the term of the Service Contract is based on a periodic fixed fee and the term of the Service MIAMI/4253640.7

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Contract, including all renewal options, does not exceed the lesser of 80% of the reasonably expected useful life of the Bond-Financed Property and 10 years; or (iii) At least 50% of the compensation for each annual period during the term of the Service Contract is based on a periodic fixed fee, the term of the Service Contract, including all renewal options, does not exceed 5 years, and the Service Contract is terminable by the Borrower on reasonable notice, without penalty or cause, at the end of the third year of the Service Contract term; or (iv) All of the compensation for services is based on a capitation fee or a combination of a capitation fee and a periodic fixed fee, the term of the Service Contract, including all renewal options, does not exceed 5 years, and the Service Contract is terminable by the Borrower on reasonable notice, without penalty or cause, at the end of the third year of the Service Contract term. A “capitation fee” means a fixed periodic amount for each person for whom the Service Provider assumes the responsibility to provide all needed services for a specified period so long as the quantity and type of service actually provided to covered persons varies substantially; or (v) All of the compensation for services is based on a per unit fee or a combination of a per unit fee and a periodic fixed fee, the term of the Service Contract, including all renewal options, does not exceed 3 years and the Service Contract is terminable by the Borrower on reasonable notice, without penalty or cause at the end of the second year of the Service Contract term. A “per unit fee” means a fee based on a unit of service provided (e.g., a stated dollar amount for each specified procedure); or (vi) All of the compensation for services is based on a percentage of fees charged or a combination of a per-unit fee and a percentage of revenue or expense fee, the term of the Service Contract, including all renewal options, does not exceed 2 years and the Service Contract is terminable by the Borrower on reasonable notice, without penalty or cause at the end of the first year of the Service Contract term. This subparagraph (C)(vi) applies only to (I) Service Contracts under which the Service Provider primarily provides services to third parties (e.g., radiology services), or (II) Service Contracts involving the Bond-Financed Property during an initial start up period for which there has been insufficient operations to establish a reasonable estimate of the amount of the annual gross revenues (or gross expenses in the case of a Service Contract based on a percentage of gross expenses) (e.g., a Service Contract for general management services for the first year of operations), in which case, the compensation for services may be based on a percentage of gross revenues, adjusted gross revenues (i.e., gross revenues less allowances for bad debts and contractual and similar allowances) or expenses of the Bond-Financed Property or Bond-Refinanced Property, but not more than one. For purposes of this subparagraph (c)(ii)(C), a Service Contract is considered to contain termination penalties if the termination limits the Borrower’s right to compete with the Service Provider, requires the Borrower to purchase equipment, goods, or services from the Service Provider, or requires the Borrower to pay liquidated damages for cancellation of the Service Contract. Another contract between the Service Provider and the Borrower (for example, a loan or guarantee by the Service Provider) is considered to create a contract termination penalty if that contract contains terms that are not customary or arm’s-length that could operate to prevent the

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Borrower from terminating the Service Contract. A requirement that the Borrower reimburse the Service Provider for ordinary and necessary expenses, or restrictions on the hiring by the Borrower of key personnel of the Service Provider are not treated as contract termination penalties;

be binding upon the City and the Borrower, respectively, until all of the Bonds have been paid and retired, notwithstanding any earlier termination of this Loan Agreement or any provision for payment of principal of and premium, if any, and interest on the outstanding Bonds. ARTICLE V

(D) The Service Provider has no role or relationship with the Borrower, directly or indirectly, that, in effect, substantially limits the Borrower’s ability to exercise its rights under the Service Contract, including cancellation rights;

MAINTENANCE, TAXES AND INSURANCE Section 5.1

(E) The Service Provider and its directors, officers, shareholders and employees possess in the aggregate, directly or indirectly, no more than 20 percent of the voting power of the governing body of the Borrower; (F) No individual who is a member of the governing body of the Service Provider and the Borrower is the chief executive officer of the Borrower or the Service Provider or the chairperson of the governing body of the Borrower or the Service Provider; and (G) The Borrower and the Service Provider are not “related parties” (within the meaning of Treasury Regulations §1.150 1(b). (iii) Exceptions. The Borrower may treat a Service Contract that does not comply with one or more of the criteria of subparagraph (c)(ii) as not resulting in Private Business Use of the Bond-Financed Property if it delivers to the Trustee, at its expense, an Opinion of Bond Counsel to the effect that to do so would not adversely affect the exclusion from gross income of the interest on the Bonds or cause the interest on the Bonds, or any portion thereof, to become an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations under the Code. (d) The Authorized Officer of the City having responsibility for issuing the Bonds is authorized and directed, alone or in conjunction with any other officer, employee, consultant or agent of the City, Borrower or any officer, employee, consultant or agent of the Borrower, to give an appropriate tax compliance certificate of the City, for inclusion in the transcript of proceedings for the Bonds, setting forth the reasonable expectations of the City regarding the amount and use of all the proceeds of the Bonds and the facts, estimates and circumstances on which those expectations are based, such certificate to be premised on the reasonable expectations and the facts, estimates and circumstances on which those expectations are based and other facts and circumstances relevant to the tax treatment of interest on the Bonds, as provided by the Borrower, all as of the date of delivery of and payment for the Bonds. (e) Notwithstanding any provision of this Section 4.9, if the Borrower provides to the City and the Trustee an Opinion of Bond Counsel to the effect that any action required under this Section is no longer required, or to the effect that some further action is required, to maintain the exclusions from gross income of interest on the Bonds pursuant to Section 103(a) of the Code, the Borrower, the City and the Trustee may rely conclusively on such opinion in complying with the provisions hereof, and the covenants hereunder shall be deemed to be modified to that extent.

Maintenance, Modifications and Use of Project; Only Permitted Encumbrances Allowed.

(a) The Borrower agrees that, while the Bonds are Outstanding, it will at its own expense, (i) keep the Project or cause the Project to be kept in as reasonably safe condition as its operations shall permit, (ii) make or cause to be made from time to time all necessary repairs thereto and renewals and replacements thereof and otherwise keep the Project in good repair and in good operating condition, and (iii) not permit or suffer others to commit a nuisance on or about the Project. The Borrower shall pay or cause to be paid all costs and expenses of operation and maintenance of the Project. The Borrower will operate the Project as a “project” within the meaning of the Act as long as the Bonds are Outstanding under the Indenture. (b) Subject to Section 3.2 hereof, the Borrower may, at its own expense, make from time to time any additions, modifications or improvements to the Project that it may deem desirable for its business purposes and that do not materially impair the effective use or decrease the value of the Project. The Borrower shall (a) comply with all laws, rules and regulations of any governmental body applicable to the condition or operation of the Project whether existing or later enacted or foreseen or unforeseen and whether involving any change in governmental policy or requiring structural or other changes to the Project; (b) neither commit nor allow others to commit a nuisance in or about the Project; and (c) provide all equipment, furnishings, supplies and other personal property required for the proper use, maintenance and operation of the Project in an economical and efficient manner, consistent with standards of operation and administration generally acceptable for comparable facilities. Section 5.2

Taxes, Other Governmental Charges and Utility Charges; Mechanics’ and Other Liens.

(a) The Borrower shall pay as the same respectively become due, (i) all taxes, assessments, levies, claims and charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Project (including, without limiting the generality of the foregoing, any tax upon or with respect to the income or profits of the Borrower from the Project and that, if not paid, would become a charge on the payments to be made under this Loan Agreement prior to or on a parity with the charge thereon created by the Indenture and including ad valorem, sales and excise taxes, assessments and charges upon the Borrower’s interest in the Project), (ii) all utility and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Project and (iii) all assessments and charges lawfully made by

(f) Tax Covenants Survive Termination of the Loan Agreement. All covenants and obligations of the City and the Borrower contained in this Section 4.9 shall remain in effect and MIAMI/4253640.7

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any governmental body for public improvements that may be secured by a lien on any portion of the Project. (b) The Borrower may, at its expense, contest in good faith any such levy, tax, assessment, claim or other charge, but the Borrower may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom only if the Borrower shall notify the City and the Trustee that in the opinion of counsel to the Borrower by non-payment of any such items, the rights of the Trustee with respect to this Loan Agreement created by the assignment under the Indenture, as to the rights assigned under this Loan Agreement or any part of the payments to be made under this Loan Agreement will not be materially endangered, nor will the Project or any part thereof be subject to loss or forfeiture. If the Borrower is unable to deliver such an opinion of counsel, the Borrower shall promptly pay or bond and cause to be satisfied or discharged all such unpaid items or furnish, at the expense of the Borrower, indemnity satisfactory to the City and the Trustee; but provided further, that any tax, assessment, charge, levy or claim shall be paid forthwith upon the commencement of proceedings to foreclose any lien securing the same. The City and the Trustee, at the expense of the Borrower, will cooperate fully in any such permitted contest. (c) If the Borrower shall fail to pay any of the items required to be paid by it pursuant to (a) above, the City or the Trustee may (but shall be under no obligation to) pay the same, and any amounts so advanced therefor by the City or the Trustee shall become an additional obligation of the Borrower to the one making the advancement which amounts, together with interest thereon at the Default Rate, from the date of payment, the Borrower agrees to pay on demand therefor. (d) The Borrower shall furnish the City and the Trustee, upon request, with proof of payment of any taxes, governmental charges, utility charges, insurance premiums or other charges required to be paid by the Borrower under this Loan Agreement. Section 5.3

Insurance.

(a) While the Bonds are Outstanding, the Borrower will keep the Project properly and continuously insured against such risks as are customarily insured against by businesses of like size and type engaged in the same or similar operations (other than business interruption insurance) including, without limiting the generality of the foregoing: (1) casualty insurance on the Project in an amount not less than the full insurable value of all property located at, and all improvements to, the Project, against loss or damage by fire and lightning and other hazards ordinarily included under uniform broad form of extended coverage endorsement at the time in use in the State; (2) general comprehensive liability insurance against claims for bodily injury, death or property damage occurring on, in or about the Project (such coverage to include provisions waiving subrogation against the City and the Trustee) in amounts no less than $1,000,000 with respect to bodily injury to anyone person, $1,000,000 with respect to bodily injury to two or more persons in anyone accident and $1,000,000 with respect to property damage resulting from anyone occurrence;

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(3) liability insurance with respect to the Project under the workers’ compensation laws of the State; provided, however, that the insurance so required may be provided by blanket policies or under a self insurance program now or hereafter maintained by the Borrower; and (4) if at any time any portion of the Project is in an area that has been identified by the Secretary of Housing and Urban Development as having special flood and mudslide hazards, a policy of flood insurance covering improvements located on such portion of the Project with customary amounts and coverage. (b) The insurance required under subsection (a) above may be maintained by the maintenance of a self-insurance plan so long as any such plan provides for (i) the establishment by the Borrower of a separate segregated self-insurance fund funded in an amount determined (initially and on at least an annual basis) by an insurance or actuarial consultant employing accepted actuarial techniques and (ii) the establishment and maintenance of a claims processing and risk management program. No later than one hundred fifty (150) days after the end of each Fiscal Year of the Borrower, the Borrower shall cause an insurance or actuarial consultant to submit a report to the Trustee to the effect that such self-insurance plan is maintaining adequate reserves and has been adequately funded. Section 5.4 (a)

General Requirements Applicable to Insurance. Each insurance policy obtained in satisfaction of the requirements of Section 5.3

hereof: (1) shall be by such insurer (or insurers) as shall be financially responsible, qualified to do business in the State and of recognized standing; (2) shall be in such form and have such provisions (including, without limitation, the lenders long-form loss payable clause, the waiver of subrogation clause, the deductible amount, if any, and the standard mortgagee endorsement clause), as are generally considered standard provisions for the type of insurance involved; (3) shall prohibit cancellation or substantial modification, termination or lapse in coverage by the insurer without at least 30 days’ prior written notice by the insurer or the Borrower to the City and the Trustee; (4) shall provide that losses thereunder, prior to the occurrence of an Event of Default (or event which, with notice or lapse of time or both, would constitute an Event of Default) hereunder shall be adjusted with the insurer by the Borrower at its expense on behalf of the insured parties and the decision of the Borrower as to any adjustment shall be final and conclusive; and (5) without limiting the generality of the foregoing, all insurance policies carried on the Project, except with respect to workers’ compensation, shall name the Borrower, the Trustee and the City as parties insured thereunder as the respective interests of each of such parties may appear or an endorsement adding the Trustee and the

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City as insured parties thereunder as their respective interests may appear, and any loss thereunder shall be made payable and shall be applied as provided in Section 6.2 hereof.

ARTICLE VI DAMAGE, DESTRUCTION, CONDEMNATION AND OTHER LOSS OF TITLE

(b) Prior to expiration of any such policy or upon renewal, the Borrower shall furnish the City and the Trustee with evidence that the policy or certificate has been renewed or replaced in compliance with this Loan Agreement or is no longer required by this Loan Agreement. (c) No later than one hundred fifty (150) days after the end of every Fiscal Year of the Borrower, the Borrower shall cause an independent insurance agent, provider or consultant to deliver a report to the Borrower, the City and the Trustee stating whether the Borrower is in compliance of the foregoing requirements as of the last day of such Fiscal Year and to make recommendations concerning insurance coverages maintained by the Borrower, The Borrower will promptly comply with the recommendations made in such report to the extent that the recommended coverage is available to the Borrower on commercially reasonable terms.

Section 6.1

In case of any material damage to or destruction of any part of the Project, the Borrower shall give prompt notice thereof to the City and the Trustee. In case of a taking of all or any part of the Project or any right therein under the exercise of the power of eminent domain or any loss thereof because of failure of title thereto or the commencement of any proceedings or negotiations that might result in such a taking or loss, the Borrower shall give prompt notice to the City and the Trustee. Each such notice shall describe generally the nature and extent of such damage, destruction, taking, loss, proceedings or negotiations. Section 6.2

Section 5.5

Damage, Destruction, Condemnation or Loss of Title.

Advances by the City or the Trustee.

In the event the Borrower shall fail to maintain, or cause to be maintained, the full insurance coverage required by this Loan Agreement, the City or the Trustee may (but shall be under no obligation to), after 30 days written notice to the Borrower, contract for the required policies of insurance and pay the premiums on the same; and the Borrower agrees to reimburse the City and the Trustee to the extent of the amounts so advanced by them or any of them with interest thereon at the Default Rate, from the date of advance to the date of reimbursement. In the event the Borrower shall fail to keep or cause to be kept the Project in good repair and good operating condition, the City or the Trustee may (but shall be under no obligation to), after ten (10) days written notice to the Borrower, make any required repairs, renewals and replacements; and the Borrower agrees to reimburse the City and the Trustee to the extent of the amounts so advanced by them or any of them with interest thereon at the Default Rate, from the date of advance to the date of reimbursement. Any amounts so advanced by the City or the Trustee shall become an additional obligation of the Borrower, shall be payable on demand, and shall be deemed a part of the obligation of the Borrower. Section 5.6

The Borrower To Give Notice.

Borrower to Make Up Deficiency in Insurance Coverage.

The Borrower agrees that to the extent that subsequent to the date hereof, it is unable to carry the insurance required by Sections 5.3 and 5.4 hereof, it shall pay promptly to the Trustee for application in accordance with the provisions of Section 6.3 hereof, such amount as would have been received as Net Proceeds by the Trustee under the provisions of Section 6.3 hereof had such insurance been carried to the extent required, as determined by an independent consultant mutually acceptable to the City and the Borrower, unless such independent consultant certifies to the City, the Trustee and the Borrower that a lesser amount is required to be deposited with the Trustee to accomplish the purposes of Section 6.3.

If all or any part of the Project is destroyed or damaged by fire or other casualty, or if title to or the use of all or any part of the Project is taken under the exercise of the power of eminent domain or lost because of failure of title, the Borrower shall, subject to Section 6.3, deposit with the Trustee the Net Proceeds of insurance and any condemnation award received by it on account of any such damage, destruction or loss for deposit in the Project Account pursuant to Section 6.02 of the Indenture. The Borrower shall apply such amounts deposited in the Project Account or held pursuant to Section 6.3 to one or more of the following: (a) The replacement, repair, rebuilding or restoration of property damaged, destroyed or lost so that the Project shall be substantially the same as before such damage, destruction or loss, with such alterations and additions as the Borrower may determine and as will not impair the capacity or character of the Project for the purpose for which it is then being used or is intended to be used, and so long as the Loan Agreement is in effect, shall comply with such agreement; or (b) The acquisition and/or construction by the Borrower of real and/or personal property, that (1) together with any remaining parts of the Project, in the opinion of a Consultant, will give the Project a revenue producing capability not less than that of the Project prior to such taking or loss, (2) is suitable for the Borrower’s operations, (3) is free and clear of all liens and encumbrances of any kind except Permitted Encumbrances, and (4) is available for use and occupancy by the Borrower without the requirement of any payment other than as provided in this Loan Agreement or the Mortgage; or (c) The Prepayment of the Loan in accordance with Section 9.1, for application to the redemption of Bonds pursuant to Section 3.01(c) of the Indenture; or (d)

Some combination of the uses set forth in the above clauses.

The Borrower shall notify the City and the Trustee in writing within 90 days of the event resulting in such destruction, damage or loss of title or use of the project of its plans pursuant to this Section 6.2. The Borrower shall not by reason of the payment of the cost of replacement, repair, rebuilding or restoration be entitled to any reimbursement from the City or the Trustee or

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to any abatement or diminution of the amount payable under this Loan Agreement. All real and personal property acquired pursuant to this section shall become part of the Project, and the Borrower shall take all steps necessary to subject such property to the lien of the Mortgage and this Loan Agreement. Section 6.3

Assignment of Condemnation Award and Net Proceeds.

As security for the Borrower’s obligations hereunder and under the other Bond Documents and the City’s limited obligations under the Indenture, the City and the Borrower hereby irrevocably assign, transfer and set over to the Trustee all of their rights, if any, to the Net Proceeds from the taking of any part of the Project under the exercise of the power of eminent domain or the loss thereof because of failure of title, including Net Proceeds of any title insurance. Notwithstanding the foregoing, in any case when the Net Proceeds of insurance or the condemnation award are less than or equal to $100,000, the Borrower may itself obtain (from the Trustee, if applicable) or retain such Net Proceeds, and need not deposit them with the Trustee or in the Project Account, but the provisions of Section 6.2 shall nevertheless apply to such Net Proceeds to the extent consistent with their not having been so deposited. Section 6.4

or merge into it, or sell or otherwise transfer to another domestic company or corporation all or substantially all of its assets and thereafter dissolve, or sell or assign all or substantially all of its assets to a governmental unit, if after giving effect to such consolidation, merger, transfer, sale or assignment the surviving, resulting or transferee company or corporation or governmental unit: (a)

will not be in default under any covenant under this Loan Agreement;

(b) is either (i) a not-for-profit company, that is a “501(c)(3) organization” described in Section 145 of the Code or a “governmental unit” within the meaning of Section 141(b)(6) of the Code (together, “Exempt Persons”) or (ii) an Exempt Person; provided, that the surviving, resulting or transferee not-for-profit company, corporation or governmental unit need not be treated as the same entity for Federal income tax purposes or qualify as an Exempt Person (or have as its sole member an Exempt Person) if the Borrower has received an opinion of Bond Counsel, addressed also to the Trustee, that such will not be an Adverse Tax Action; (c) if it is not the Borrower, has the power to assume and assumes in writing all of the obligations of the Borrower herein and in the Mortgage and the other Financing Instruments, which assumption may be subject to Section 10.7 hereof;

Parties to Give Notice.

In case of any material damage to or destruction of all or any part of the Project, the Borrower shall give prompt notice thereof to the City and the Trustee. In case of a taking or proposed taking of all or any part of the Project or any right therein by condemnation or eminent domain, the Borrower shall give prompt notice thereof to the City and the Trustee. Each such notice shall describe generally the nature and extent of such damage, destruction, taking, loss, proceeding or negotiations.

(d) if it is not a Florida not-for-profit company, corporation or a political subdivision of the State of Florida, either becomes authorized to transact business in Florida or files with the Trustee a consent to service of process reasonably acceptable to the Trustee; and (e) will have an unrestricted funds balance not less than the unrestricted funds balance of the Borrower immediately prior to such consolidation, merger, transfer, sale or assignment, both computed in accordance with generally accepted accounting principles consistent with methods used in prior years.

ARTICLE VII SPECIAL COVENANTS Section 7.1

Inspection of Project and Books.

The Trustee and the City and their duly authorized agents shall have the right, during normal business hours, upon reasonable notice and without unreasonable interference with the activities of the Borrower in the Project, to enter any part of the Project and to examine and inspect the same and to examine the books, records and accounts of the Borrower (other than records that are required by law to be kept confidential). Section 7.2

Maintenance of Existence

The Borrower shall maintain its existence as a Florida not-for-profit corporation and shall not dissolve or otherwise dispose of all or substantially all of its assets, or consolidate with or merge into another company or corporation or permit one or more other companies or corporations to consolidate with or merge into it; provided, however that the Borrower may consolidate with or merge into another domestic company or corporation (i.e., a company or corporation organized or incorporated under the laws of the United States of America or one of the states thereof), or permit one or more domestic companies or corporations to consolidate with

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In addition, if the Borrower is not the surviving, resulting or transferee not-for-profit company or corporation, the Borrower shall not effect such consolidation, merger, transfer, sale or assignment unless the Borrower delivers to the Trustee an opinion of Bond Counsel that such consolidation, merger, transfer, sale or assignment will not be an Adverse Tax Action. Section 7.3

Financial Statements and Certificate of No Default.

(a) The Borrower shall provide the City, the Trustee and any Bondholder so requesting with copies of the following items: (1) Within sixty (60) days after the end of each Fiscal Year quarter, unaudited quarterly statements of the Borrower’s operations; and (2) Within 150 days after the end of each Fiscal Year, the Borrower’s audited financial statements and a certified public accountant’s report thereon. (b) Concurrently with the delivery of such audited financial statements required pursuant to paragraph (a)(2) above, the Borrower shall deliver or caused to be delivered to the City and the Trustee a certification indicating whether or not the Borrower is aware of any condition, event or act which constitutes an Event of Default hereunder or under the Indenture or

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Mortgage, or which would constitute and Event of Default hereunder or under the Indenture or Mortgage, with the giving of notice or passage of time, or both. Section 7.4

acquisition, ownership, operation, occupation or use of the Project, or the issuance, marketing, validity, enforceability or tax-exempt status of the Series 2010 Bonds that are not Taxable Bonds, the Financing Instruments or the Indenture; or

Investment and Use of Trust Funds.

An Authorized Representative of the Borrower shall provide instructions for the investment, in accordance with Article VII of the Indenture, of all funds held by the Trustee under the Indenture.

(E) any other claim, liability, damage or obligation arising out of or related to participation in the transactions contemplated by this Loan Agreement or any other Bond Document; provided that such indemnity shall not inure to any person other than the Indemnitees.

Section 7.5

Single Purpose.

The Borrower shall conduct no activities other than to acquire, develop, construct, own, operate, dispose of and otherwise deal in all respects with the Project, and to engage in such other activities related to the foregoing as may be necessary, advisable, or convenient to the promotion or conduct of the business of the Borrower. Section 7.6

Indemnification.

(a) The Borrower shall at all times protect, indemnify and save harmless the City and the Trustee and their respective officers, members, directors, officials, employees and agents (together, the “Indemnitees”), from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (hereinafter referred to as “Damages”), including without limitation (1) all amounts paid in settlement of any litigation commenced or threatened against the Indemnitees, if such settlement is effected with the written consent of the Borrower, (2) all expenses reasonably incurred in the investigation of, preparation for or defense of any litigation, proceeding or investigation of any nature whatsoever, commenced or threatened against the Borrower, the Project or the Indemnitees, (3) any judgments, penalties, fines, damages, assessments, indemnities or contributions, and (4) the reasonable fees of attorneys, auditors, and consultants, provided that the Damages arise out of or directly or indirectly relate to: (A) failure by the Borrower or its officers, employees or agents, to comply with the terms of the Financing Instruments or the Indenture, and any agreements, covenants, obligations, or prohibitions set forth therein or any act or omission of the Borrower or any of its agents, contractors, servants, employees or licensees, in connection with the Project or financing thereof; (B)

any action, suit, claim or demand contesting or affecting the title of the Project;

(C) any breach of any representation or warranty of the Borrower set forth in the Financing Instruments or any certificate delivered pursuant hereto or the Indenture, and any claim that any representation or warranty of the Borrower or any statement or information contained in the Official Statement relating to the Series 2010 Bonds contains or contained any untrue or misleading statement of fact or omits or omitted to state any material facts necessary to make the statements made therein not misleading in light of the circumstances under which they were made;

(b) In the event that any action or proceeding is brought against an Indemnitee, with respect to which indemnity may be sought hereunder, the Borrower, upon written notice from the Indemnitee, shall assume the investigation and defense thereof, including the employment of counsel (acceptable to such Indemnitee) and the payment of all expenses. In the event the Indemnitee determines that there exists a conflict of interest between counsel’s representation of the Borrower and its own representation in any such action or proceedings, the Indemnitee shall have the right to employ separate counsel in any such action or proceedings and to participate in the investigation and defense thereof, and if the Borrower consents to the employment of such separate counsel, the Borrower shall pay the fees and expenses of such separate counsel, it being understood and agreed that the Borrower shall not withhold such consent if a material conflict exists and shall not otherwise unreasonably withhold such consent. The obligations of the Borrower under this section shall survive any termination of this Loan Agreement, including prepayment of the Loan. (c) Nothing contained herein shall require the Borrower to indemnify (i) the City for any Damages resulting from its willful misconduct or wrongful acts, or gross negligence or (ii) the Trustee for any Damages resulting from its negligence (under the standard of care set forth in Article X of the Indenture) or its willful misconduct. (d) It is the intention of the parties hereto that, except as contemplated by subsection (c), neither the City nor the Trustee shall incur any pecuniary liability by reason of the terms of this Loan Agreement or the undertakings required of the City or the Trustee hereunder, by reason of the issuance of the Bonds, by reason of the execution of the Indenture or by reason of the performance of any act requested of the City or the Trustee by the Borrower, including all claims, liabilities or losses arising in connection with the violation of any statutes or regulation pertaining to the foregoing; thus, notwithstanding any limitations contained in the preceding paragraphs (other than subsection (c)), if the City or the Trustee should incur any such pecuniary liability, then in such event the Borrower shall indemnify and hold the City and the Trustee harmless against all claims, demands or causes of action whatsoever, by or on behalf of any person, firm or corporation or other legal entity arising out of the same or out of any offering statement or lack of offering statement in connection with the sale or resale of the Bonds and all costs and expenses incurred in connection with any such claim or in connection with any action or proceeding brought thereon, and upon notice from the City, the Borrower shall defend the City and the Trustee in any such action or proceeding.

(D) any action, suit, claim, proceeding or investigation of a judicial, legislative, administrative or regulatory nature arising from or in connection with the construction,

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Section 7.7

Cooperation upon Event of Default.

If an Event of Default under Section 8.1(a) hereof occurs and is continuing, the Borrower shall follow any direction of the City or the Trustee to employ a Consultant or other experts and personnel and to take any other action with respect to the Project and its management, including if so directed by the City or the Trustee to discontinue its occupancy, management and operation of all or any part of the Project, so long as such directions are consistent with the Borrower’s status as a tax-exempt organization under the Code and would not produce for the Borrower gross income from an unrelated trade or business, within the meaning of the Code (including gross income so treated by application of Section 514 of the Code. The obligation of the Borrower to continue occupancy, management and operation of each part of the Project shall continue until the City or the Trustee directs the Borrower to discontinue its occupancy, management and operation thereof. The Borrower shall carry out the obligations to operate the Project under Article V hereof. Section 7.8

(e) The (1) entry of any decree or order for relief by a court having jurisdiction over the Borrower or its property in an involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, (2) appointment of a receiver, liquidator, assignee, trustee, custodian, sequestrator or similar official for the Borrower or any substantial part of its property, or (3) order for the termination or liquidation of the Borrower or its affairs. (f) Failure of the Borrower within 90 days after the commencement of any proceedings against it under the federal bankruptcy laws or any other applicable federal or state bankruptcy, insolvency or similar law, to have such proceedings dismissed or stayed.

Limits on Consents to Subleases.

The Borrower shall not consent to any assignment or subleasing of the space in the Project subject to the Loan Agreement except upon assuring that such will not result in a violation of any of clauses 4.9(b)(iii), (iv), (viii), (ix) or (xii) above. ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES Section 8.1

Borrower or any substantial part of its property, or to the taking possession by any such official of any substantial part of the property of the Borrower, (3) making by the Borrower of any assignment for the benefit of creditors, or (4) taking of corporate action by the Borrower in furtherance of any of the foregoing.

Event of Default Defined.

Each of the following events shall be an Event of Default: (a) Failure of the Borrower to make any payment on the Loan when the same becomes due and payable, whether at maturity, redemption, acceleration or otherwise pursuant to the terms thereof or this Loan Agreement. (b) Failure of the Borrower to observe or perform any of its other covenants, conditions or agreements hereunder for a period of 30 days after notice in writing (unless the Borrower and the Trustee shall agree in writing to an extension of such time prior to its expiration), specifying such failure and requesting that it be remedied, given by the City or the Trustee to the Borrower, or in the case of any default which cannot with due diligence be cured within such 30 day period, failure by the Borrower to proceed promptly to prosecute the curing of the same with due diligence and to cure such within 180 days.

The provisions of subsection (b) above are subject to the limitation that if by reason of force majeure the Borrower is unable in whole or in part to observe and perform any of its covenants, conditions or agreements hereunder, other than its obligations contained in Article IV and in Sections 5.2, 5.3, 7.2, 7.5, 7.6 and 7.7, the Borrower shall not be deemed in default during the continuance of such inability. The term “force majeure” as used herein shall include without limitation acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders of any kind of the government of the United States of America or the State of Florida or any political subdivision thereof or any of their departments, agencies or officials, or any civil or military authority; insurrections; riots; epidemics; landslides; lightning; earthquake; fire; hurricanes; tornadoes; storms; floods; washouts; droughts; arrests; restraint of government and people; civil disturbances; explosions; breakage or accident to machinery, transmission pipes or canals; partial or entire failure of utilities; or any other cause or event not reasonably within the control of the Borrower. The Borrower shall, however, remedy with all reasonable dispatch the cause or causes preventing the Borrower from carrying out its covenants, conditions and agreements, provided that the settlement of strikes, lockouts and other industrial disturbances shall be entirely within the discretion of the Borrower, and the Borrower shall not be required to make settlement of strikes, lockouts and other industrial disturbances by acceding to the demands of any opposing party when such course is in the judgment of the Borrower unfavorable to the Borrower. Section 8.2

Remedies on Default.

Whenever an Event of Default shall have happened and be continuing, the Trustee as the assignee of the City may:

(c) An Event of Default under the Indenture, an Event of Default under the Credit Enhancement Agreement and any Event of Default by the Borrower under the Mortgage.

(a) Declare all amounts due under this Loan Agreement to be immediately due and payable, whereupon all such payments shall become and shall be immediately due and payable;

(d) (1) Commencement by the Borrower of a voluntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, (2) consent by the Borrower to the appointment of a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official for the

(b) Pursuant to the Mortgage and subject to the Intercreditor Agreement, to enter, take possession of and sell, lease, rent or otherwise transfer or use all or any part of the Project;

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(c) Subject to the Intercreditor Agreement, exercise its rights under the Mortgage’s assignment of Pledged Assets and collect, use and dispose of the same and instruct the Borrower to carry out its obligations under Section 4.1(b) hereof and under the Mortgage; (d) Direct the Borrower to employ a Consultant and other experts and personnel who shall give to the Borrower any and all directions that the Borrower has covenanted to follow under Section 7.7; (e) Take any action at law or in equity necessary or desirable to collect the amounts then due and thereafter to become due or to enforce observance or performance of any covenant, condition or agreement of the Borrower under the Mortgage, or this Loan Agreement; and (f) Exercise any remedy afforded a secured party under the Uniform Commercial Code of Florida. If the Trustee, as assignee of the City, exercises any of its rights or remedies under this Section, it shall give notice of such exercise to the Borrower and the City (1) in writing in the manner provided in Section 10.2 and (2) by telephone or telegram, provided that failure to give such notice by telephone or telegram shall not affect the validity of the exercise of any right or remedy under this section. Section 8.3

Application of Amounts Realized in Enforcement of Remedies.

Any amounts collected pursuant to action taken under Section 8.2 hereof shall be applied in accordance with the provisions of the Indenture or, if payment of the Series 2010 Bonds shall have been made, shall be applied according to the provisions of Section 5.08 of the Indenture. Section 8.4

No Remedy Exclusive.

Subject to Section 10.7, no remedy herein conferred on or reserved to the City or the Trustee is intended to be exclusive of any other remedy, and every remedy shall be cumulative and in addition to every other remedy herein or now or hereafter existing at law, in equity or by statute. No delay or failure to exercise any right or power accruing upon an Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, and any such right or power may be exercised from time to time and as often as may be deemed expedient. Section 8.5

Attorneys’ Fees and Other Expenses.

Upon an Event of Default the Borrower shall on demand pay to the City and the Trustee the reasonable fees and expenses of attorneys and other reasonable expenses incurred by them in the collection of payments due on the Loan or the enforcement of performance of any other obligations of the Borrower hereunder. Section 8.6

No Additional Waiver Implied by One Waiver.

If either party or its assignee waives a default by the other party under any covenant, condition or agreement herein, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other default hereunder.

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ARTICLE IX PREPAYMENT OF LOAN Section 9.1

Option To Prepay Loan and Terminate Loan Agreement in Certain Events

(a) The Borrower shall have the option to prepay the Loan Payments in full without premium and terminate this Loan Agreement upon loss of title to or use of substantially all of the Project as a result of the exercise of the power of eminent domain or failure of title, or damage to or destruction of the Project by fire or other casualty to such extent that in the opinion of both the Borrower (expressed in a certificate) and an independent architect or engineer not unacceptable to the Trustee or the City, both filed with the Trustee and the City, (1) the Project cannot be reasonably repaired, rebuilt or restored within a period of 12 months to its condition immediately preceding such damage or destruction, or (2) the Borrower is prevented from carrying on its normal operations at the Project for a period of 12 consecutive months. (b) The Borrower shall have the option to prepay the Loan Payments in part without premium following loss of title to or use of a portion of the Project as a result of the exercise of the power of eminent domain or failure of title, or damage to or destruction of the Project by fire or other casualty (1) to the extent of Net Proceeds not applied pursuant to Sections 6.2(a) and 6.2(b) hereof, or (2) to the extent then desired by the Borrower, if the Borrower shall have furnished to the Trustee and the City (A) an opinion of a Consultant stating that the property forming a part of the Project that was damaged, destroyed, taken by condemnation proceeding or lost because of failure of title is not essential to the Borrower’s use or occupancy of the Project or to its operation at substantially the same revenue-producing level as prior to such damage, destruction or loss, or (B) a certificate of an Authorized Representative of the Borrower stating that General Revenues will be equal to 1.05 times the Maximum Annual Debt Service with respect to all Bonds that will remain Outstanding after such partial prepayment. (c) To exercise any of the above options the Borrower shall within 180 days after the event permitting its exercise file the required certificates and opinions with the City and the Trustee and specify a date not more than 60 days thereafter for making such prepayment. In such case the City shall cause the Trustee to redeem the Series 2010 Bonds as provided in Section 3.01(c) of the Indenture. Section 9.2

Option To Prepay Loan in Whole.

The Borrower shall have the option to prepay the Loan Payments in whole, with any applicable premium, and terminate this Loan Agreement at any time. In such case the City, subject to Section 4.5, shall cause the Trustee to redeem the Bonds as provided in Section 3.01(c) of the Indenture. Section 9.3

Option To Prepay Loan in Part.

The Borrower shall have the option to prepay the Loan in part, with any applicable premium, at any time. The amount so prepaid shall, so long as all payments then due under this Loan Agreement have been made (a) if the Series 2010 Bonds are then redeemable as provided in Section 3.01 of the Indenture, be used to redeem Series 2010 Bonds to the extent possible MIAMI/4253640.7

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under such section, and (b) if Bonds are not then redeemable, be transferred to the Redemption Fund. Section 9.4

Amount Required for Prepayment.

To prepay the Loan Payments in whole or in part under Sections 9.1, 9.2 or 9.3, the Borrower shall pay to the Trustee, for deposit in the Redemption Fund of the Indenture, an amount of cash and/or Defeasance Obligations that will be sufficient (1) in the case of prepayment in whole, to discharge the lien of the Indenture pursuant to Section 8.01 thereof, and (2) in the case of prepayment in part, to cause any Bonds that will be paid with the prepayment to be no longer Outstanding under the Indenture. If the Borrower has prepaid the Loan Payments, as provided above, the Borrower shall not direct the expenditure of any funds from such prepayment in the Redemption Fund for any purpose other than the payment of principal of or premium, if any, or interest on the Bonds to be paid. The Borrower shall instruct the Trustee to give the notice of redemption required by Section 3.03 of the Indenture if any of the Bonds are to be paid other than at maturity. If any Bonds to be redeemed will remain unpaid 30 days after the Borrower’s prepayment of the Loan Payments, the Borrower shall provide, as a condition to such prepayment, an opinion of Bond Counsel addressed to the Trustee to the effect that such prepayment and any resulting investment of funds to provide payment of the Bonds will not constitute an Adverse Tax Action.

addressee’s desired address for notices hereunder (or, prior to any such notice, at the address for the addressee set forth below): (a) If to the Borrower:

Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. 11350 S.W. Village Parkway Port St. Lucie, Florida 34987 Attention: President

With a copy to:

Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. 3181 SW Sam Jackson Park Road Portland, Oregon 97239-3098 Attention: Mark Williams Telecopy: Email: [email protected]

If to the Trustee:

TD Bank, National Association 7545 Centurion Parkway, #402 Jacksonville, Florida 32256 Attention: Jane Pope, Vice President Telecopy: 904-645-8447 Email: [email protected]

If to the City:

City of Port St. Lucie, Florida 121 S.W. Port St. Lucie Boulevard Port St. Lucie, Florida 34984 Attention: City Manager

With a copy to:

City Attorney 121 S.W. Port St. Lucie Boulevard Port St. Lucie, Florida 34984 Attention: Roger Orr Telecopy: 772-344-4298 Email: [email protected]

(b)

ARTICLE X MISCELLANEOUS Section 10.1 Term of Loan Agreement. This Loan Agreement shall be effective upon its execution and delivery and, subject to earlier termination upon prepayment in full of the Loan Payments and other amounts described in Articles IV, VIII and IX, shall expire on the first date upon which the Bonds are no longer Outstanding; provided, however, that the covenants in Section 7.8 shall continue until the final maturity date of all Bonds or the earlier redemption date on which provision for payment for all Bonds has been made and the covenant in Section 4.6 shall continue for six years thereafter.

(c)

Section 10.2 Notices. Unless otherwise provided herein, all demands, notices, approvals, consents, requests and other communications hereunder shall be in writing and shall be deemed to have been given at the earliest of (a) personal delivery, (b) transmission by email or facsimile which the sender’s equipment indicates has been sent (in the case of an addressee whose facsimile number or email address, as applicable, is supplied, and only if a copy of the same is also delivered, sent or mailed, as applicable, as described in clause (a), clause (c) or clause (d), within one (1) calendar day of said facsimile or email), (c) the first (1st) business day following deposit with Federal Express or a similar courier, charges prepaid, or (d) the fifth (5th) business day following deposit with the United States Postal Service for first class registered or certified mail, return receipt requested, postage prepaid, addressed to the addressee at the address that shall most recently have been designated, by effective notice hereunder from the addressee to the sender, as the

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(d) A duplicate copy of each demand, notice, approval, consent, request, opinion or other communication given hereunder by either the City or the Borrower to the other shall also be given to the Trustee.

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Section 10.3 Amendments to Loan Agreement and Loan Agreement. This Loan Agreement (a) may be amended only by a writing signed by both parties and (b) shall not be amended or supplemented before Payment of the Bonds without the consent of the Trustee and the City given in accordance with and subject to Article XII of the Indenture. The Borrower acknowledges that, pursuant to the Indenture, the City and the Trustee are restricted in certain circumstances from signing or consenting to a proposed amendment hereto without the consent or approval of Bondholders. Section 10.4 Successors and Assigns. This Loan Agreement shall be binding on, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Section 10.5 Severability. If any provision of this Loan Agreement shall be held invalid by any court of competent jurisdiction, such holding shall not invalidate any other provision hereof. Section 10.6 Applicable Law; Entire Understanding. This Loan Agreement shall be governed by the applicable laws of the State of Florida. The Financing Instruments and the Bond Documents express the entire understanding and all agreements between the parties and may not be modified except in writing signed by the parties. Section 10.7 No Personal Liability. No covenant, agreement or obligation contained herein shall be deemed to be a covenant, agreement or obligation of any present or future director, trustee, officer, employee or agent of the City in his individual capacity so long as he acts in good faith, and no such director, officer, employee or agent shall be subject to any liability under this Loan Agreement with respect to any other action taken by him provided that he acts in good faith.

Commercial Code of Florida, no security interest in this Loan Agreement may be created or perfected through the transfer or possession of any counterpart of this Loan Agreement other than the original counterpart delivered to the Trustee. Section 10.9 City, City Council Members, Attorneys, Officers, Employees and Agents of City Not Liable. No recourse shall be had for the enforcement of any obligation, promise or agreement of the City contained herein or in the other Bond Documents to which the City is a party or for any claim based hereon or thereon or otherwise in respect hereof or thereof against any director, officer, agent, attorney or employee, as such, in his individual capacity, past, present or future, of the City or of any successor entity, either directly or through the City or any successor entity whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise. No personal liability whatsoever shall attach to, or be incurred by, any director, officer, agent, attorney or employee as such, past, present or future, of the City or any successor entity, either directly or through the City or any successor entity, under or by reason of any of the obligations, promises or agreements entered into between the City and the Borrower, whether herein contained or to be implied herefrom as being supplemental hereto; and all personal liability of that character against every such director, officer, agent, attorney and employee is, by the execution of this Loan Agreement and as a condition of, and as part of the consideration for, the execution of this Loan Agreement, expressly waived and released. Notwithstanding any other provision of this Loan Agreement, the City shall not be liable to the Borrower or the Trustee or any other person for any failure of the City to take action under this Loan Agreement unless the City (a) is requested in writing by an appropriate person to take such action or is provided with indemnity and assurances satisfactory to it, (b) is assured of payment of, or reimbursement for, any reasonable expenses in such action or is provided with indemnity and assurances satisfactory to it, and (c) is afforded, under the existing circumstances, a reasonable period to take such action. In acting under this Loan Agreement, or in refraining from acting under this Loan Agreement, the City may conclusively rely on the advice of its counsel.

The obligations of the Borrower hereunder and under any and all other documents executed and delivered in connection herewith shall be collectible out of, and only out of, the assets of the Borrower, including, without limitation, the Pledged Assets, and not in any circumstances out of the assets of the Borrower’s member or any other Person. For purposes of the preceding sentence, all certificates and other instruments delivered in connection herewith or with any such other document and signed by a manager of the Borrower or any person related to or serving as an officer, employee or agent of the Borrower or a manager of the Borrower shall be considered to impose obligations only on the Borrower, and the preceding sentence shall apply to such obligations. Section 10.8 Counterparts. This Loan Agreement may be executed in several counterparts, each of which shall be an original and all of which together shall constitute but one and the same instrument, except that to the extent, if any, that this Loan Agreement shall constitute personal property under the Uniform

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IN WITNESS WHEREOF, the City has caused this Loan Agreement to be executed in its name and on its behalf by the Mayor (or Vice Mayor) of its City Council, its seal affixed and attested by the City Clerk or any Deputy Clerk, and the Borrower has caused this Loan Agreement to be executed in its name by an Authorized Representative or a duly authorized officer, all as of the day and year first above written. CITY OF PORT ST. LUCIE, FLORIDA

By: Mayor (SEAL) ATTEST:

Deputy City Clerk OREGON HEALTH AND SCIENCE UNIVERSITY VACCINE AND GENE THERAPY INSTITUTE FLORIDA CORP.

By: Title:

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EXHIBIT A

EXHIBIT B

THE PROJECT

EXISTING LIENS Mortgages, Deeds of Trust, Security Interests and Other Liens on All or Part of the Project

The Project consists of the Land, the legal description of which is: LEGAL DESCRIPTION A PARCEL OF LAND LYING IN SECTION 15, TOWNSHIP 37 SOUTH, RANGE 39 EAST, ST. LUCIE COUNTY, FLORIDA AND BEING A PORTION OF PARCEL 5, SOUTHERN GROVE PLAT NO. 4, AS RECORDED IN PLAT BOOK 56, PAGES 18 THROUGH 23, OF THE PUBLIC RECORDS, OF ST. LUCIE COUNTY, FLORIDA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCE AT THE SOUTHEASTERLY CORNER OF PARCEL 6, OF SAID PLAT, SOUTHERN GROVE PLAT NO. 4; THENCE NORTH 15 DEG 2O' 39" WEST, ALONG THE EASTERLY LINE OF PARCEL 6, OF SAID PLAT, A DISTANCE OF 155.13 FEET TO THE POINT OF BEGINNING; THENCE CONTINUE NORTH 15 DEG 20' 39" WEST, A DISTANCE OF 499.09 FEET TO THE SOUTHERLY BOUNDARY OF OPEN SPACE TRACT 1, OF SAID PLAT, AND A NON-TANGENT INTERSECTION WITH A CURVE CONCAVE TO THE NORTHWEST, HAVING A RADIUS OF 187.00 FEET, A CHORD BEARING OF NORTH 64 DEG 49' 35" EAST AND A CHORD DISTANCE OF 6.85 FEET; THENCE NORTHEASTERLY THROUGH A CENTRAL ANGLE OF 02 DEG 05' 52", AN ARC DISTANCE OF 6.85 FEET, TO A TANGENT LINE; THENCE NORTH 63 DEG 46' 39" EAST, A DISTANCE OF 583.27 FEET; THENCE SOUTH 26 DEG 13' 21" EAST, A DISTANCE OF 490.00 FEET; THENCE SOUTH 63 DEG 46' 39" WEST, A DISTANCE OF 511.19 FEET; THENCE SOUTH 15 DEG 20' 39" EAST, A DISTANCE OF 612.34 FEET TO THE NORTH LINE OF A PROPOSED RIGHT OF WAY LINE ALSO BEING A TRACT OF LAND DESCRIBED IN OFFICIAL RECORDS BOOK 3071, AT PAGE 2591, OF THE PUBLIC RECORDS, OF ST. LUCIE COUNTY, FLORIDA; THENCE SOUTH 79 DEG 27' 11" WEST, ALONG SAID NORTH LINE, A DISTANCE OF 60.21 FEET; THENCE NORTH 15 DEG 20' 39" WEST, A DISTANCE OF 595.77 FEET; THENCE SOUTH 63 DEG 46' 39" WEST, A DISTANCE OF 112.01 FEET, TO THE POINT OF BEGINNING. a/k/a Parcel 4 of Southern Grove Plat No. 8, recorded in Plat Book 62, Page 29, of the Public Records of St. Lucie County, Florida. Address:

9801 Discovery Way, Port St. Lucie, FL. 34987

and the approximately 99,000 gross square foot building to be constructed on such land to be used for purposes of biomedical and other scientific research, development, training and educational facilities, including related office, administrative and ancillary space, laboratory suites, research laboratory offices, conference rooms, lecture halls, and associated support systems, parking facilities and infrastructure improvements relating thereto, together, without limitation, furniture, fixtures and equipment related thereto.

MIAMI/4253640.7

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APPENDIX H

FORM OF BOND COUNSEL OPINION

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APPENDIX H FORM OF BOND COUNSEL OPINION Upon delivery of the Series 2010 Bonds, Squire, Sanders & Dempsey L.L.P. is prepared to render its final opinion with respect to the Series 2010 Bonds in substantially the following form:

June 3, 2010 Mayor and Members of the City Council of the City of Port St. Lucie, Florida Re: $64,035,000 City of Port St. Lucie, Florida Research Facilities Revenue Bonds, Series 2010 (Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project) Ladies and Gentlemen: We have served as Bond Counsel in connection with the issuance by the City of Port St. Lucie, Florida (the “City”) of its $64,035,000 aggregate principal amount of Research Facilities Revenue Bonds, Series 2010 (Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project) (the “Series 2010 Bonds”). The Series 2010 Bonds are issued pursuant to the Constitution and laws of the State of Florida, particularly Chapter 166, Part II, Florida Statutes, as amended, Chapter 159, Part II, Florida Statutes, as amended, Sections 1.01 and 9.09(b) of the Charter of the City and other applicable provisions of law (the “Act”), Ordinance 10-18 of the City enacted on April 26, 2010, as supplemented by Resolution No. 10R29 of the City adopted on May 10, 2010 (collectively, the “Bond Ordinance”), and a Trust Indenture dated as of June 1, 2010 (the “Indenture”), by and between the City and TD Bank, National Association, as trustee (the “Trustee”). The Indenture provides that the proceeds of the Series 2010 Bonds will be loaned to the Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp., a Florida not-for-profit corporation (the “Borrower”) pursuant to a Loan Agreement dated as of June 1, 2010 (the “Loan Agreement”) between the City and the Borrower. The Series 2010 Bonds are being issued to provide funds, together with other available moneys, to (i) provide a loan to the Borrower for the purpose of paying or reimbursing the cost of acquisition, construction and equipping of the Project, as defined in the Indenture, (ii) fund a deposit to the Debt Service Reserve Fund in the amount of the Reserve Requirement for the Series 2010 Bonds, (iii) pay capitalized interest on the Series 2010 Bonds until November 1, 2012, and (iv) pay certain costs of issuance of the Series 2010 Bonds.

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Mayor and Members of the City Council of the City of Port St. Lucie, Florida June 3, 2010 Page 2

The Series 2010 Bonds are issuable as fully registered bonds in authorized denominations of $5,000 and integral multiples thereof. The Series 2010 Bonds mature at the times, bear interest payable at the times and at the rates and are subject to redemption, all in the manner provided in the Bond Ordinance, the Indenture and as set forth in the Official Statement relating thereto. Capitalized terms used herein without definitions have the meanings ascribed thereto in the Indenture. The Series 2010 Bonds are special obligations of the City payable from and secured by a lien upon and pledge of the Trust Estate under the Indenture, which consists of (i) all right, title and interest of the City in and to the Loan Agreement and the Loan Payments other than the Reserved Rights, and (ii) all right, title and interest of the City in and to the Pledged Funds (except the Rebate Fund) subject to the provisions of the Indenture, and all right, title and interest under the Mortgage and Security Agreement dated as of June 1, 2010 from the Borrower to the City and the Trustee (the “Mortgage”). We have examined the transcript of the proceedings (the “Transcript”) of the City relating to its issuance of the Series 2010 Bonds and such other documents as we have deemed necessary to render this opinion. We have also examined a Series 2010 Bond as executed and authenticated. We assume that all other Series 2010 Bonds have been similarly executed and authenticated. The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or such events do occur or any other matters come to our attention after the date hereof. Our engagement with respect to the Series 2010 Bonds is concluded with their issuance on this date and we disclaim any obligation to update this opinion. We have assumed and relied on, without undertaking to verify, the genuineness of the documents, certificates and opinions presented to us (whether as originals or as copies) and of the signatures thereon, the accuracy of the factual matters represented, warranted or certified in such documents and certificates, the correctness of the legal conclusions contained in such opinions, and the due authorization, execution and delivery of such documents and certificates by, and the validity and enforceability thereof in accordance with their respective terms against, any parties other than the City. Furthermore, we have relied upon the accuracy, which we have not independently verified, of the representations and certifications, and have assumed continuing compliance with the covenants, of the City and the Borrower, as applicable, contained in the Indenture, the Loan Agreement, the Tax Certificate and Agreement dated as of the date hereof between the City and the Borrower (the “Tax Certificate”) and other relevant documents to which any or all are a party. The accuracy of certain of those representations and certifications, and continuing compliance by the City and the Borrower, as applicable, with

H-2 MIAMI/4254815.2

Mayor and Members of the City Council of the City of Port St. Lucie, Florida June 3, 2010 Page 3

certain covenants, may be necessary for the interest on the Series 2010 Bonds to be and to remain excluded from gross income for federal income tax purposes. Failure to comply with certain of such covenants subsequent to delivery of the Series 2010 Bonds may cause interest on the Series 2010 Bonds to be included in gross income for federal income tax purposes retroactively to their date of issuance. We have also relied upon the opinion McDermott Will & Emery LLP, as counsel to the Borrower, contained in the Transcript, as to all matters concerning the Borrower, including: the due authorization, execution and delivery by, and the binding effect upon and enforceability against, the Borrower of the Loan Agreement; the legal status of the Borrower as an organization described in Section 501(c)(3) of the Code and exempt from federal income tax under Section 501(a) of the Code; and the determination that construction and use of the Project financed by the Loan Agreement does not constitute an “unrelated trade or business” of the Borrower, determined by applying Section 513(a) of the Code. We express no opinion as to matters of title or priority of liens relating to the property mortgaged or pledged by the Borrower pursuant to any mortgage or security agreement or assignment of rents. The rights and obligations of the City under the Indenture, the Series 2010 Bonds, the Loan Agreement and the Tax Certificate and their enforceability, may be subject to bankruptcy, insolvency, fraudulent conveyance or transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general principles of equity (whether considered in a proceeding at law or in equity) and to the limitations on legal remedies against public entities in the State of Florida. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum or waiver provisions contained in the documents mentioned in the preceding sentence. We undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or any other public offering materials relating to the Series 2010 Bonds and express no opinion herein relating thereto. Based on the foregoing, we are of the opinion that, under existing law: 1. The City is a municipal corporation organized and existing under the laws of the State of Florida with the power to adopt the Bond Ordinance, enter into the Indenture and the Loan Agreement, to perform its obligations thereunder and to issue the Series 2010 Bonds. 2. The Bond Ordinance has been duly adopted by the City, the City has duly authorized the execution and delivery of the Indenture and the Loan Agreement and assuming due authorization, execution and delivery by the other parties thereto, each such agreement constitutes a legal, valid and binding obligation of the City enforceable in accordance with its respective terms.

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Mayor and Members of the City Council of the City of Port St. Lucie, Florida June 3, 2010 Page 4

3. The issuance and sale of the Series 2010 Bonds have been duly authorized by the City and, based on the assumption as to execution and authentication stated above, the Series 2010 Bonds constitute legal, valid and binding special obligations of the City, payable in accordance with the terms of the Indenture. The Series 2010 Bonds shall not be or constitute a general indebtedness within the meaning of any constitutional or statutory provision or limitation and the City is not obligated to levy any ad valorem taxes for the payment thereof. Neither the full faith and credit nor the ad valorem taxing power of the State of Florida or any political subdivision or agency thereof is pledged to the payment of the Series 2010 Bonds, and registered owners of the Series 2010 Bonds shall never have the right to compel the exercise of the ad valorem taxing power of the City or taxation in any form on any real or personal property for the payment of the principal of, premium, if any, or interest on the Series 2010 Bonds or for the payment of any other amounts provided for in the Bond Ordinance or the Indenture. 4. The interest on the Series 2010 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. The Series 2010 Bonds and the income thereon are exempt from all taxation under the laws of the State of Florida, except estate taxes imposed by Chapter 198, Florida Statutes, as amended, and net income and franchise taxes imposed by Chapter 220, Florida Statutes, as amended. We express no opinion as to any other tax consequences regarding the Series 2010 Bonds. Under the Code, interest on the Series 2010 Bonds is excluded from the calculation of a corporation’s adjusted current earnings for purposes of the corporate alternative minimum tax, but interest on the Series 2010 Bonds may be subject to a branch profits tax imposed on certain foreign corporations doing business in the United States and to a tax imposed on excess net passive income of certain S corporations. Respectfully submitted,

[to be signed “Squire, Sanders & Dempsey L.L.P.”]

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APPENDIX I-1

FORM OF CONTINUING DISCLOSURE CERTIFICATE – BORROWER

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APPENDIX I-1 FORM OF CONTINUING DISCLOSURE CERTIFICATE

This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp., a Florida not-for-profit corporation (the "Borrower") in connection with the issuance by the City of Port St. Lucie, Florida (the "Issuer") of its $64,035,000 Research Facilities Revenue Bonds, Series 2010 (Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project) (the "Series 2010 Bonds"). The Series 2010 Bonds are being issued pursuant to a Trust Indenture, dated as of June 1, 2010 (the "Indenture"), between the City and TD Bank, National Association, as Trustee. The proceeds of the sale of the Series 2010 Bonds will be used to make a loan to the Borrower, pursuant to a Loan Agreement, dated as of June 1, 2010, between the City and the Borrower. Capitalized terms used but not otherwise defined herein shall have the same meaning as when used in the Indenture unless the context would clearly indicate otherwise. The Borrower covenants and agrees as follows: SECTION 1. PURPOSE OF DISCLOSURE CERTIFICATE. This Disclosure Certificate is being executed and delivered by the Borrower for the benefit of the Series 2010 Bondholders and in order to assist the Underwriter of the Series 2010 Bonds in complying with the continuing disclosure requirements of Rule l5c2-l2 promulgated by the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934 (the "Rule"). SECTION 2. NATURE OF UNDERTAKING. The Borrower, in accordance with the Rule, hereby covenants to provide or cause to be provided: (a) to the Electronic Municipal Market Access system ("EMMA") as described in SEC Release No. 34-59062 and maintained by the Municipal Securities Rulemaking Board for purposes of the Rule, (i) annual financial information and operating data as well as the Florida Single Audit required by the funding agreement with the State of Florida, the Executive Office of the Governor's Office of Tourism, Trade and Economic Development and the Borrower dated April 17, 2008 (the "Annual Information") for each Fiscal Year ending on or after June 30, 2010, not later than the following October 30, and (ii) when and if available, audited financial statements of the Borrower for each such Fiscal Year; and (b) to EMMA, in a timely manner, notice of (i) any Specified Event described in Section 3 hereof if that Specified Event is material, (ii) the Borrower's failure to provide the Annual Information on or prior to the date specified above, and (iii) any change in the accounting principles applied in the preparation of its annual financial statements, any change in its Fiscal Year, and the termination of the Borrower's continuing disclosure obligations. The accounting principles to be applied in the preparation of the Annual Information will be generally accepted accounting principles. In the event that the audited annual financial statements are not available by the date on which the Annual Information will be provided, the Borrower will provide unaudited financial statements by the date specified and audited financial statements when available.

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SECTION 3. SPECIFIED EVENTS. Specified Events shall include the occurrence of the following events, within the meaning of the Rule, with respect to the Series 2010 Bonds: (1)

delinquencies in the payment of principal and interest;

(2)

non-payment related defaults;

(3)

unscheduled draws on debt service reserves reflecting financial difficulties;

(4)

unscheduled draws on the credit enhancement reflecting financial difficulties;

(5)

substitution of the credit or liquidity providers, or their failure to perform;

(6)

adverse tax opinions or events affecting the tax-exempt status of the Series 2010 Bonds;

(7)

modifications to rights of the holders of the Series 2010 Bonds;

(8)

any Series 2010 Bond calls (other than scheduled mandatory redemption of any acceleration of the maturity thereof);

(9)

defeasances in whole or in part of the Series 2010 Bonds;

(10)

release, substitution, or sale of property securing repayment of the Series 2010 Bonds; and

(11)

any changes in the ratings assigned to the Series 2010 Bonds.

The Borrower may, from time to time, in its sole discretion, choose to provide notice of the occurrence of certain other events if, in the judgment of the Borrower, such other events are material with respect to the Series 2010 Bonds, but the Borrower does not specifically undertake to commit to provide any such additional notice of the occurrence of any material event except those events listed above. Any voluntary inclusion by the Borrower of supplemental information that is not required hereunder shall not expand the obligations of the Borrower hereunder and the Borrower shall have no obligation to update such supplemental information or include it in any subsequent report. SECTION 4. REMEDIES; NO EVENT OF DEFAULT. The Borrower agrees that its undertaking pursuant to the Rule set forth above is intended to be for the benefit of the holders and beneficial owners of the Series 2010 Bonds and shall be enforceable by any such holder or beneficial owner; provided that the right to enforce the provisions of this undertaking shall be limited to a right to obtain specific performance of the Borrower's obligations hereunder and any

I-1-2

failure by the Borrower to comply with the provisions of this undertaking shall not be an event of default with respect to the Series 2010 Bonds under the Indenture. SECTION 5. DISSEMINATION AGENTS. The Borrower has appointed [TD Bank, National Association], as its initial dissemination agent to assist in carrying out its obligations under this Disclosure Certificate. The Borrower may, from time to time, in its discretion, appoint another dissemination agent to replace [TD Bank, National Association] or discharge [TD Bank, National Association], with or without appointing a successor dissemination agent. SECTION 6. TERMINATION. The Borrower's obligations under this Disclosure Certificate shall cease (a) upon the legal defeasance, prior redemption, payment in full of all of the Series 2010 Bonds, or (b) when the Borrower no longer remains an Obligated Person with respect to the Series 2010 Bonds within the meaning of the Rule, or (c) upon the termination of the continuing disclosure requirements of the Rule by legislative, judicial or administrative action. SECTION 7. AMENDMENTS. The Borrower reserves the right to amend the provisions of this Disclosure Certificate as may be necessary or appropriate to achieve its compliance with any applicable federal securities law or rule, to cure any ambiguity, inconsistency or formal defect or omission, and to address any change in circumstances arising from a change in legal requirements, change in law, or change in the identity, nature, or status of the Borrower, or type of business conducted by the Borrower. Any such amendment shall be made only in a manner consistent with the Rule and any amendments and interpretations thereof by the SEC. Additionally, compliance with any provision of this Disclosure Certificate may be waived. Any such amendment or waiver will not be effective unless this Disclosure Certificate (as amended or taking into account such waiver) would have complied with the requirements of the Rule at the time of the primary offering of the Series 2010 Bonds, after taking into account any applicable amendments to or official interpretations of the Rule, as well as any change in circumstances, and until the Borrower shall have received either (a) a written opinion of bond or other qualified independent special counsel selected by the Borrower that the amendment or waiver would not materially impair the interests of holders or beneficial owners of the Series 2010 Bonds, or (b) the written consent to the amendment or waiver of the holders of at least a majority of the principal amount of the Series 2010 Bonds then outstanding. Annual Information containing any amended operating data or financial information shall explain, in narrative form, the reasons for any such amendment and the impact of the change on the type of operating data or financial information being provided. Additionally, in the year in which any change in accounting principles is made, the Borrower shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. [Balance of page intentionally left blank.]

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SECTION 8. OBLIGATED PERSONS. If any person other than the Borrower becomes an Obligated Person (as defined in the Rule) relating to the Series 2010 Bonds, the Borrower shall use its best efforts to require such Obligated Person to comply with all provisions of the Rule applicable to such Obligated Person. Dated: June 3, 2010 OREGON HEALTH AND SCIENCE UNIVERSITY VACCINE AND GENE THERAPY INSTITUTE FLORIDA CORP.

Name: Mark Williams Title: Chief Operating Officer

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APPENDIX I-2

FORM OF CONTINUING DISCLOSURE CERTIFICATE – CITY

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APPENDIX I-2 FORM OF CONTINUING DISCLOSURE CERTIFICATE

This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the City of Port St. Lucie, Florida (the "Issuer") in connection with the issuance of its $64,035,000 Research Facilities Revenue Bonds, Series 2010 (Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp. Project) (the "Series 2010 Bonds"). The Series 2010 Bonds are being issued pursuant to a Trust Indenture, dated as of June 1, 2010 (the "Indenture"), between the City and TD Bank, National Association, as Trustee. The proceeds of the sale of the Series 2010 Bonds will be used to make a loan to Oregon Health and Science University Vaccine and Gene Therapy Institute Florida Corp., a Florida not-for-profit corporation (the "Borrower"), pursuant to a Loan Agreement, dated as of June 1, 2010, between the City and the Borrower. Capitalized terms used but not otherwise defined herein shall have the same meaning as when used in the Indenture unless the context would clearly indicate otherwise. The Issuer covenants and agrees as follows: SECTION 1. PURPOSE OF DISCLOSURE CERTIFICATE. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Series 2010 Bondholders and in order to assist the Underwriter of the Series 2010 Bonds in complying with the continuing disclosure requirements of Rule l5c2-l2 promulgated by the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934 (the "Rule"). SECTION 2. NATURE OF UNDERTAKING. The Issuer, in accordance with the Rule, hereby covenants to provide or cause to be provided: (a) to the Electronic Municipal Market Access system ("EMMA") as described in SEC Release No. 34-59062 and maintained by the Municipal Securities Rulemaking Board for purposes of the Rule, (i) annual financial information and operating data of the type described as "Annual Information" in Section 3(a) hereof for each Fiscal Year ending on or after September 30, 2009, not later than the following April 30, and (ii) when and if available, audited financial statements of the Issuer for each such Fiscal Year; and (b) to EMMA, in a timely manner, notice of (i) any Specified Event described in Section 3(b) hereof if that Specified Event is material, (ii) the Issuer's failure to provide the Annual Information on or prior to the date specified above, and (iii) any change in the accounting principles applied in the preparation of its annual financial statements, any change in its Fiscal Year, and the termination of the Issuer's continuing disclosure obligations. The Issuer expects that audited annual financial statements will be prepared and will be available together with the Annual Information identified below. The accounting principles to be applied in the preparation of those financial statements will be generally accepted accounting principles, as modified by applicable State of Florida requirements and the governmental accounting standards promulgated by the Governmental Accounting Standards Board. In the event that the audited annual financial statements are not available by the date on which the

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Annual Information will be provided, the Issuer will provide unaudited financial statements by the date specified and audited financial statements when available. SECTION 3. ANNUAL INFORMATION AND SPECIFIED EVENTS. (a) Annual information to be provided by the Issuer for the immediately completed Fiscal Year shall consist of Non-Ad Valorem Revenues of the City as set forth under the table entitled "Non-Ad Valorem Revenues of the City" in the Official Statement which information is in tabular form. Such information shall be presented in a manner consistent with the presentation of such information in the Official Statement prepared for the Series 2010 Bonds. (b) Specified Events shall include the occurrence of the following events, within the meaning of the Rule, with respect to the Series 2010 Bonds: (1)

delinquencies in the payment of principal and interest;

(2)

non-payment related defaults;

(3)

unscheduled draws on debt service reserves reflecting financial difficulties;

(4)

unscheduled draws on the credit enhancement reflecting financial difficulties;

(5)

substitution of the credit or liquidity providers, or their failure to perform;

(6)

adverse tax opinions or events affecting the tax-exempt status of the Series 2010 Bonds;

(7)

modifications to rights of the holders of the Series 2010 Bonds;

(8)

any Series 2010 Bond calls (other than scheduled mandatory redemption of any acceleration of the maturity thereof);

(9)

defeasances in whole or in part of the Series 2010 Bonds;

(10)

release, substitution, or sale of property securing repayment of the Series 2010 Bonds; and

(11)

any changes in the ratings assigned to the Series 2010 Bonds.

The Issuer may, from time to time, in its sole discretion, choose to provide notice of the occurrence of certain other events if, in the judgment of the Issuer, such other events are material with respect to the Series 2010 Bonds, but the Issuer does not specifically undertake to commit to provide any such additional notice of the occurrence of any material event except those events listed above. Any voluntary inclusion by the Issuer of supplemental information that is not I-2-2

required hereunder shall not expand the obligations of the Issuer hereunder and the Issuer shall have no obligation to update such supplemental information or include it in any subsequent report. SECTION 4. REMEDIES; NO EVENT OF DEFAULT. The Issuer agrees that its undertaking pursuant to the Rule set forth above is intended to be for the benefit of the holders and beneficial owners of the Series 2010 Bonds and shall be enforceable by any such holder or beneficial owner; provided that the right to enforce the provisions of this undertaking shall be limited to a right to obtain specific performance of the Issuer's obligations hereunder and any failure by the Issuer to comply with the provisions of this undertaking shall not be an event of default with respect to the Series 2010 Bonds under the Indenture. SECTION 5. SEPARATE BOND REPORT NOT REQUIRED; INCORPORATION BY REFERENCE. The requirements of this Disclosure Certificate do not necessitate the preparation of any separate annual report addressing only the Series 2010 Bonds. These requirements may be met by the filing of a combined bond report or the Issuer's Comprehensive Annual Financial Report; provided, such report includes all of the required information and is available by April 30. Additionally, the Issuer may incorporate any information provided in any prior filing with EMMA or any other Nationally Recognized Municipal Securities Information Repositories recognized by the SEC for purposes of the Rule or other information filed with the SEC or included in any final official statement of the Issuer; provided, such final official statement is filed with the MSRB. SECTION 6. DISSEMINATION AGENTS. The Issuer may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor dissemination agent. SECTION 7. TERMINATION. The Issuer's obligations under this Disclosure Certificate shall cease (a) upon the legal defeasance, prior redemption, payment in full of all of the Series 2010 Bonds, or (b) when the Issuer no longer remains an Obligated Person with respect to the Series 2010 Bonds within the meaning of the Rule, or (c) upon the termination of the continuing disclosure requirements of the Rule by legislative, judicial or administrative action. SECTION 8. AMENDMENTS. The Issuer reserves the right to amend the provisions of this Disclosure Certificate as may be necessary or appropriate to achieve its compliance with any applicable federal securities law or rule, to cure any ambiguity, inconsistency or formal defect or omission, and to address any change in circumstances arising from a change in legal requirements, change in law, or change in the identity, nature, or status of the Issuer, or type of business conducted by the Issuer. Any such amendment shall be made only in a manner consistent with the Rule and any amendments and interpretations thereof by the SEC. Additionally, compliance with any provision of this Disclosure Certificate may be waived. Any such amendment or waiver will not be effective unless this Disclosure Certificate (as amended or taking into account such waiver) would have complied with the requirements of the Rule at the time of the primary offering of the Series 2010 Bonds, after taking into account any applicable amendments to or official interpretations of the Rule, as well as any change in circumstances,

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and until the Issuer shall have received either (a) a written opinion of bond or other qualified independent special counsel selected by the Issuer that the amendment or waiver would not materially impair the interests of holders or beneficial owners of the Series 2010 Bonds, or (b) the written consent to the amendment or waiver of the holders of at least a majority of the principal amount of the Series 2010 Bonds then outstanding. Annual Information containing any amended operating data or financial information shall explain, in narrative form, the reasons for any such amendment and the impact of the change on the type of operating data or financial information being provided. Additionally, in the year in which any change in accounting principles is made, the Issuer shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. SECTION 9. OBLIGATED PERSONS. If any person other than the Issuer becomes an Obligated Person (as defined in the Rule) relating to the Series 2010 Bonds, the Issuer shall use its best efforts to require such Obligated Person to comply with all provisions of the Rule applicable to such Obligated Person. Dated: June 3, 2010 CITY OF PORT ST. LUCIE, FLORIDA

Name: Patricia Christensen Title: Mayor

ATTEST:

_________________________ Karen A. Phillips, City Clerk APPROVED AS TO FORM AND CORRECTNESS

_____________________________________ Roger G. Orr, Esq., City Attorney

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