Okaloosa County BOCC — August 6, 2013 — Resolution for Airport Revenue Refunding Bonds, Series 2013 — reading text

(1) the anticipated total principal amount of Bonds and Subordinated Indebtedness required to finance the project as set forth in the Supplemental Indenture and the principal amount of Completion Bonds to be issued, and (ii) that the proceeds of the Completion Bonds are projected to be sufficient to complete the project. Subordinated Indebtedness. Under the Indenture, the County may incur Subordinated Indebtedness secured by a lien on Net Revenues and the Trust Estate which is junior and subordinate to the lien securing the Bonds. Any such Subordinate Indebtedness is required to have the same payment dates as the Outstanding Bonds and may not be accelerated without the consent of the Insurer for the Series 2007 Bonds. See "APPENDIX C — FORMS OF THE MASTER INDENTURE OF TRUST, THE FIRST SUPPLEMENTAL INDENTURE, THE SECOND SUPPLEMENTAL INDENTURE AND THE THIRD SUPPLEMENTAL INDENTURE" for a discussion of further restrictions regarding the issuance of Subordinated Indebtedness. Special Facility Bonds. The Indenture permits the County to issue Special Facility Bonds to finance any facility, improvement, structure, equipment or assets acquired or constructed on any land or in or on any structure or building at the Airports, the cost which are paid for by the primary user under an agreement between the County and such user, or from the proceeds of Special Facility Bonds, or both. Such payments are excluded from Revenues. Special Facility Bonds will not be secured by a lien on the Net Revenues and the Trust Estate. The County has no present plan to issue any Special Facility Bonds. 15 Other Indebtedness In addition to the Series 2007 Bonds and the Refunded Indebtedness, the County has entered into a State Infrastructure Bank loan with the State of Florida Department of Transportation in the amount of $819,000, payable over a 7-year period ending in 2018, to finance a commercial access road at Bob Sikes Airport, which is secured by a pledge of the Net Revenues on a junior basis to the pledge thereof securing the Series 2013 Bonds and Series 2007 Bonds. The County has a separate State Infrastructure Bank Loan in the amount of $3,000,000, payable over a 10-year period ending in 2021, to finance the rehabilitation of the taxiway and stormwater improvements at Bob Sikes Airport, which is also secured by a pledge of the Net Revenues on a junior basis to the Series 2013 Bonds and Series 2007 Bonds. Application of Revenues Upon Default Upon the occurrence of a default in the payment of principal or interest under the Master Indenture, the Revenue Fund and all Revenues therein shall be immediately transferred and held by the Trustee, and applied as provided in the Indenture. See "APPENDIX C — FORM OF THE MASTER INDENTURE OF TRUST, THE FIRST SUPPLEMENTAL INDENTURE, THE SECOND SUPPLEMENTAL INDENTURE AND THE THIRD SUPPLEMENTAL INDENTURE," herein. FINANCIAL GUARANTY INSURANCE [to come] BOND INSURANCE RISK FACTORS The County has applied for a bond insurance policy to guarantee the scheduled payment of principal and interest on the Series 2013 Bonds. The County has yet to determine whether an insurance policy will be purchased with the Series 2013 Bonds. If an insurance policy is purchased, the following are risk factors relating to bond insurance. In the event of default of the payment of principal or interest with respect to the Series 2013 Bonds when all or some becomes due, any owner of the Series 2013 Bonds shall have a claim under the applicable Bond Insurance Policy (the "Policy") for such payments. However, in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments are to be made in such amounts and at such times as such payments would have been due had there not been any such acceleration. The Policy does not insure against redemption premium, if any. The payment of principal and interest in connection with mandatory or optional prepayment of the Series 2013 Bonds by the County which is recovered by the County from the bond owner as a voidable preference under applicable bankruptcy law is covered by the insurance policy, however, such payments will be made by the Bond Insurer at such time and in such amounts as would have 16 been due absent such prepayment by the County unless the Bond Insurer chooses to pay such amounts at an earlier date. Under most circumstances, default of payment of principal and interest does not obligate acceleration of the obligations of the Bond Insurer without appropriate consent. The Bond Insurer may direct and must consent to any remedies and the Bond Insurer's consent may be required in connection with amendments to any applicable bond documents. In the event the Bond Insurer is unable to make payment of principal and interest as such payments become due under the Policy, the Series 2013 Bonds are payable solely from the moneys received pursuant to the applicable bond documents. In the event the Bond Insurer becomes obligated to make payments with respect to the Series 2013 Bonds, no assurance is given that such event will not adversely affect the market price of the Series 2013 Bonds or the marketability (liquidity) for the Series 2013 Bonds. The long-term ratings on the Series 2013 Bonds are dependent in part on the financial strength of the Bond Insurer and its claims paying ability. The Bond Insurer's financial strength and claims paying ability are predicated upon a number of factors which could change over time. No assurance is given that the long-term ratings of the Bond Insurer and of the ratings on the Series 2013 Bonds insured by the Bond Insurer will not be subject to downgrade and such event could adversely affect the market price of the Series 2013 Bonds or the marketability (liquidity) for the Series 2013 Bonds. See description of "RATINGS" herein. The obligations of the Bond Insurer are contractual obligations and in an event of default by the Bond Insurer, the remedies available may be limited by applicable bankruptcy law or state law related to insolvency of insurance companies. Neither the County nor the Underwriter have made independent investigation into the claims paying ability of the Bond Insurer and no assurance or representation regarding the financial strength or projected financial strength of the Bond Insurer is given. Thus, when making an investment decision, potential investors should carefully consider the ability of the Issuer to pay principal and interest on the Series 2013 Bonds and the claims paying ability of the Bond Insurer, particularly over the life of the investment. See "FINANCIAL GUARANTY INSURANCE" herein for further information provided by the Bond Insurer and the Policy, which includes further instructions for obtaining current financial information concerning the Bond Insurer. FLOW OF FUNDS Revenues The County's Revenues are deposited upon receipt in the Revenue Fund held by the County. On or before the 25" day of each month, the County is required to withdraw money from the Revenue Fund for application as follows: 17 (1) to the Operation and Maintenance Fund, held by the County, for monthly Operation and Maintenance Expenses; (2) to the applicable Interest Account in the Bond Fund, an amount, which together with amounts transferred from any Pledged PFC Account relating thereto and amounts transferred from the Pledged CFC Account relating thereto, is equal to one-sixth (1/6") of the next interest payment due after such date with respect to each Series of Bonds provided, however, that the County shall be credited with any amount which is on deposit in a Capitalized Interest Account relating to the next interest payment on such Series in the Construction Fund. (3) to the applicable Principal Account or Redemption Account as the case may be in the Bond Fund, an amount which together with amounts transferred from any Pledged PFC Account relating thereto and amounts transferred from the Pledged CFC Account relating thereto, is equal to one-twelfth (1/12") of the next principal payment or mandatory sinking fund payment due after such date with respect to each Series of Bonds. (4) except as described above or in the applicable Supplemental Indenture, to the Debt Service Reserve Fund held by the Trustee, 1/12" of the amount required to restore any deficiency in the Debt Service Reserve Requirement, after taking into account any monthly transfers from a Pledged PFC Account or other similar account established under a Supplemental Indenture (including the Pledged CFC Account established with respect to the Series 2007 Bonds and the Second Supplemental Indenture); (5) to the Operation and Maintenance Reserve Account held by the County, 1/ 12" of the amount necessary to restore any deficiency in the Operation and Maintenance Reserve Account Requirement (which is established under the Indenture as 1/6 of the amount budgeted in the County's then current Fiscal Year for Operation and Maintenance Expenses); (6) to the Revenue Fund Coverage Account held by the County, the amount (in 12 equal monthly installments) needed to restore to such account the Revenue Fund Coverage Amount (25% of Annual Debt Service in any Fiscal Year, less the amount on deposit in the PFC Coverage Subaccounts or similar accounts established under a Supplemental Indenture, including the Pledged CFC Coverage Subaccount established with respect to the Series 2007 Bonds under the Second Supplemental Indenture, if any. The County expects to be able to deposit into a Series 2013 PFC Coverage Subaccount the full coverage amount from PFC Revenues simultaneously with issuance of the Series 2013 Bonds. (7) to the Repair and Rehabilitation Fund held by the County, the amount (in 12 equal monthly installments) necessary to restore any deficiency in the Repair and Rehabilitation Fund Requirement (initially $500,000, adjusted as provided in the Indenture); (8) to the Subordinated Indebtedness Fund held by the County, the amount required for debt service on Subordinated Indebtedness; (9) to the Rebate Fund, amounts required to provide for rebate on tax-exempt Bonds; and 18 (10) unless otherwise provided by Supplemental Indenture, to the Airports General Purpose Fund, all money remaining in the Revenue Fund. The First Supplemental Indenture, Second Supplemental Indenture and Third Supplemental Indenture require Revenues to be used to fully fund the Debt Service Reserve Fund prior to any deposit to the Airports General Purpose Fund. In calculating the amount of any required deposit to a Fund or Account under the Indenture, credit may be taken for all interest earnings and other amounts lawfully held in such Fund or Account. Whenever the amount in a Fund or Account exceeds the amount then required to be on deposit therein, (i) as to Funds and Accounts held by the County, the County may, or (ii) as to Funds and Accounts held by the Trustee the Trustee shall, at the written direction of the County (but only from money held by the Trustee under the Indenture), transfer the excess to the Revenue Fund or the Airports General Purpose Fund. Notwithstanding any other provision of the Indenture, money may be deposited into any Fund or Account from any legally available source, including but not limited to the Airports General Purpose Fund established under the Indenture. Passenger Facility Charge Revenues All receipts from the Passenger Facility Charge ("PFC Revenue") are deposited into the Passenger Facility Charge Fund as soon as possible upon receipt. Pledged PFC Revenues are deposited into 2013 Pledged PFC Account therein until, in each month, the amount on deposit in the 2013 Pledged PFC Account equals (i) the PFC Debt Service on the Series 2013 Bonds for such month and (ii) the product of (I) any required deposit to the 2013 Debt