Fort Walton Beach Resolution — 2026-02 Authorizing Issuance of Revenue Note-Preston Hood Expansion Loan $7,500,000 — reading text

such variations, omissions and insertions as may be necessary, desirable and authorized or permitted by this Agreement. SECTION 9. SECURITY FOR NOTE; NOTE NOT DEBT OF THE CITY. The payment of the principal of and interest on the Note shall be secured forthwith, by a lien upon and a pledge of the Pledged Funds. Until the Note is paid or deemed paid pursuant to the provisions of this Agreement, the City hereby covenants and agrees to appropriate in its annual budget, by amendment, if necessary, from Non-Ad Valorem Revenues lawfully available in each Fiscal Year, amounts sufficient to pay the principal of and interest on the Note until the maturity thereof. Such covenant and agreement on the part of the City to budget and appropriate such amounts of Non-Ad Valorem Revenues shall be cumulative to the extent not paid, and shall continue until such Non-Ad Valorem Revenues or other legally available funds in amounts sufficient to make all such required payments shall have been budgeted, appropriated and actually paid. Notwithstanding the foregoing covenant of the City, the City does not covenant to maintain any services or programs, now provided or maintained by the City, which generate Non-Ad Valorem Revenues. Such covenant to budget and appropriate does not create any lien upon or pledge of such Non-Ad Valorem Revenues, except for the Pledged Funds, nor does it preclude the City from pledging in the future its Non-Ad Valorem Revenues, except to the extent that the City must meet the anti- dilution test set forth in Section 10.F. herein prior to creating any lien or pledge on such Non-Ad Valorem Revenues, nor does it require the City to levy and collect any particular Non-Ad Valorem Revenues, nor does it give the registered owner of the Note a prior claim on the Non-Ad Valorem Revenues as opposed to claims of general creditors of the City. Such covenant to budget and appropriate Non-Ad Valorem Revenues is subject in all respects to the payment of obligations secured by a pledge of such Non-Ad Valorem Revenues heretofore or hereinafter entered into ( including the payment of debt service on notes and other debt instruments). However, the covenant to budget and appropriate in its general annual budget for the purposes and in the manner stated herein shall have the effect of making available for the payment of principal and interest on the Note, in the manner described herein, Non-Ad Valorem Revenues and placing on the City a positive duty to appropriate and budget, by amendment, if necessary, amounts sufficient to meet its obligations hereunder; subject, however, to the payment of services and programs which are for essential public purposes affecting the health, welfare and safety of the inhabitants of the City or which are legally mandated by applicable law and further subject to the restrictions of Section 166. 241, Florida Statutes, insofar as there are not sufficient Non-Ad Valorem Revenues to comply with such covenant after the satisfaction of the funding requirements for obligations having an express lien on or pledge of such revenues and the funding requirements for essential governmental services of the City. The City agrees that its covenant and agreement to budget and appropriate Non-Ad Valorem Revenues shall be deemed entered into for the benefit of the registered owner of the Note, and this obligation may be enforced by a court of competent jurisdiction. 7  The Note shall not constitute a general obligation or indebtedness of the City and the Lender shall never have the right to require or compel the levy of taxes upon any property of or in the City for the payment of the principal of and interest on the Note. The City does hereby irrevocably pledge the Pledged Funds to the payment of the principal of and interest on the Note. SECTION 10. COVENANTS OF THE CITY. So long as any of the principal of or interest on the Note shall be outstanding and unpaid or until provision for payment of the Note shall have been made pursuant to Section 21 hereof, the City covenants with the Lender as follows: A. Tax Compliance. The City will take all actions within its powers necessary to maintain the exclusion from gross income of interest on the Note to the same extent as such existed on the date of issuance of the Note, and all other actions within its powers necessary to maintain the status of the Note as a " qualified tax-exempt obligation" for purposes of Section 265( b)( 3)( B) of the Code. B. Financial Statements. Not later than 270 days following the end of each Fiscal Year, the City shall provide the Lender( in electronic format, if available) the annual audited financial statements of the City audited by the City's certified public accountants together with the report of such accountants containing only such qualifications as are reasonably acceptable to the Lender; provided that if such audited financial statements are not available by such date, the City shall provide the Lender unaudited financial statements by such date, and audited financial statements as soon as available thereafter. If the audit is publicly available on the City's website or on the " EMMA" website maintained by the Municipal Securities Rulemaking Board, the requirement to provide the audit to the Lender will be satisfied if the City emails a link to the posted item to the Lender within such 270- day period. The City shall also provide the Lender with a certificate that no Event of Default has occurred and is continuing hereunder, and that the City is in compliance with all covenants on its part set forth herein. The electronic financial statements may be sent to the following email address ( or such other address as the Lender supplies to the City in writing): PublicFinance@WebsterBank.com. C. Annual Budget and Other Information. The City shall prepare its annual budget in accordance with Florida law, and shall provide the Lender a copy of its final annual budget for each Fiscal Year within 30 days of adoption thereof by the Council and such other information as the Lender may reasonably request, in form satisfactory to the Lender. The annual budget and other information may be sent to the following email address ( or such other address as the Lender supplies to the City in writing): PublicFinance@WebsterB ank. com. D. Sinking Fund. The City hereby creates and establishes a special, separate fund to be called the " City of Fort Walton Beach, Florida Capital Improvement Revenue Note, Series 2026 Sinking Fund" ( hereinafter called the " Sinking Fund"). 8  On or before the Business Day prior to each date fixed for the payment of principal or interest on the Note, the City shall deposit from Non-Ad Valorem Revenues budgeted and appropriated pursuant to the covenant contained herein to the Sinking Fund the amounts sufficient to pay the interest and principal becoming due on the Note on the next payment date therefor. The amounts remaining on deposit in the Sinking Fund on the day following the respective interest or principal payment may be withdrawn by the City and applied for other City purposes. In no event shall any moneys remain on deposit in the Sinking Fund for a period greater than 13 months. Amounts on deposit in the Sinking Fund may be invested and reinvested by the City in Authorized Investments maturing or redeemable at the option of the City not later than the date such amounts are needed for the payments required hereunder. Except to the extent otherwise required by any provision hereof or of any tax compliance certificate delivered in connection with the delivery of the Note, all income from the investment of moneys in the fund and accounts established by this Agreement shall, upon receipt thereof, be deposited to the credit of the Sinking Fund and used for the purposes thereof. The designation of a special fund by this Agreement shall not be construed to require the establishment of any completely independent, self-balancing funds, as such term is commonly used and defined in governmental accounting, but is intended solely to constitute an earmarking of certain moneys and investments for certain purposes and to establish certain priorities for application of such moneys and investments as herein provided. The moneys and investments required to be accounted for in the foregoing fund established herein may be deposited in a single fund or account, provided that adequate accounting records are maintained to reflect the allocation of the moneys and investments on deposit therein into the fund established hereunder and to control the restricted uses of such moneys and investments for the various purposes as herein provided. The City shall not be required to make any further payments into the Sinking Fund when the aggregate amount of money and Authorized Investments in said funds and accounts is at least equal to the total principal of and interest on the Note then outstanding. E. Project Fund. The City covenants and agrees to establish a separate fund, to be known as the " City of Fort Walton Beach, Florida Capital Improvement Revenue Note, Series 2026 Project Fund," which shall be used only for payment of the costs ofthe Project. Moneys in the Project Fund, until applied in payment of any item of the cost of the Project in the manner hereinafter provided, shall be held in trust by the City and shall be subject to a lien and charge in favor of the Lender and for the further security of the Lender. 9  The City covenants that the completion of the Project will be completed without delay and in accordance with sound engineering practices. The City shall make disbursements or payments from the Project Fund to pay the costs of the Project upon the filing with the Clerk and the Lender of documents and/ or certificates signed by the City Manager or his or her designee, stating with respect to each disbursement or payment to be made: ( 1) the item number of the payment, ( 2) the name and address of the Person to whom payment is due, ( 3) the amount to be paid, (4) the purpose, by general classification, for which payment is to be made, and ( 5) that( A) each obligation, item of cost or expense mentioned therein has been properly incurred, is in payment of a part of the costs of the Project and is a proper charge against the Project Fund and has not been the basis of any previous disbursement or payment, or ( B) each obligation, item of cost or expense mentioned therein has been paid by the City, has not been theretofore reimbursed to the City or otherwise been the basis of any previous disbursement or payment and the City is entitled to reimbursement thereof. The Clerk shall retain all such documents and/ or certificates submitted pursuant hereto for seven( 7) years from the dates of such documents and/ or certificates. The Clerk shall make available the documents and/ or certificates at all reasonable times for inspection by the Lender or the agent or representative of the Lender. Notwithstanding any of the other provisions of this Section 10( E), to the extent that other moneys are not available therefor, amounts in the Project Fund shall be applied to the payment of principal and interest on the Note when due. The date of completion ofthe Project shall be determined by the City Manager, who shall certify such fact in writing to the Council. Promptly after the date of the completion of the Project, and after paying or making provisions for the payment of all unpaid items of the cost of such Project, the City shall deposit any balance of moneys remaining in the Project Fund in such other fund or account as shall be determined by the