REQUEST FOR PROPOSAL. Okaloosa County, Florida Beach Restoration Revenue Note, Series 2012 Non Bank-Qualified Loan

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1 REQUEST FOR PROPOSAL Okaloosa County, Florida Beach Restoration Revenue Note, Series 2012 Non Bank-Qualified Loan RFP: #BCC RFP DUE: October 5, 4:00 P.M. (CST) THE INTENT OF THIS SPECIFICATION IS TO IDENTIFY THE INSTITUTION THAT CAN PROVIDE OKALOOSA COUNTY, FLORIDA WITH A NON BANK QUALIFIED LOAN IN THE PRINCIPAL AMOUNT NOT TO EXCEED $5,000,000 AT THE LOWEST OVERALL BORROWING COST

2 NOTICE TO PROPOSERS Notice is hereby given that the Board of County Commissioners of Okaloosa County, FL, will accept sealed proposals until 4:00 p.m. (local time) October 5, 2012, for a Non Bank Qualified Loan. Pursuant to copies of proposal provisions, proposal forms, and specifications may be obtained from the Okaloosa County Purchasing Department, 602-C North Pearl Street, Crestview, FL 32536; or they may be downloaded from our website at (Departments, Purchasing, Vendor Registration & Opportunities). At 4:00 p.m. (local time), October 5, 2012, the time to receive proposals will be closed. All proposals must be in sealed envelopes reflecting on the outside thereof the proposer s name and "Proposal for RFP #56-12, Okaloosa County, Beach Restoration Revenue Note, Series 2012, Non Bank Qualified Loan be opened at 4:00 p.m., October 5, 2012". The Board of County Commissioners will consider all proposals properly submitted to Okaloosa County Purchasing Department, 602-C N. Pearl St., Crestview FL Note: An electronic copy must be submitted to FirstSouthwest, Mark P. Galvin at mark.galvin@firstsw.com. There is no obligation on the part of the County to award the proposal to the lowest proposer, and the County reserves the right to award the proposal to the proposer submitting a responsive proposal with a resulting negotiated agreement which is most advantageous and in the best interest of Okaloosa County, and to waive any irregularity or technicality in proposals received. Okaloosa County shall be the sole judge of the proposal and the resulting negotiating agreement that is in its best interest and its decision shall be final. Any proposer failing to mark outside of envelope as set forth herein may not be entitled to have their proposal considered. All proposals should be addressed as follows: Okaloosa County Purchasing Dept. Attn: Richard Brannon 602-C North Pearl St. Crestview FL //Signed// - J Jack Allen for 09/24/2012 Richard L Brannon Date Purchasing Director BOARD OF COUNTY COMMISSIONERS OKALOOSA COUNTY Don Amunds Chairman

3 Okaloosa County, Florida REQUEST FOR NON BANK-QUALIFIED LOAN PROPOSALS BEACH RESTORATION REVENUE NOTES, SERIES 2012, IN AN AMOUNT NOT TO EXCEED $5,000,000 RFP Issue Date: September 19, 2012 Proposal Due Date: October 5, 4:00 pm Central

4 TABLE OF CONTENTS A. PURPOSE... 4 B. OKALOOSA COUNTY... 4 C. THE PROJECT... 4 D. STRUCTURE OF FINANCING... 5 E. SECURITY FOR THE LOAN... 5 F. ADDITIONAL BONDS TEST... 6 G. TAX-EXEMPT OBLIGATION... 6 H. PROPOSAL FORMAT... 7 I. MISCELLANEOUS... 7 J. TENTATIVE SCHEDULE... 8 K. RFP INSTRUCTIONS... 9 APPENDIX A Preliminary Amortization Schedule B Estimated Debt Service Coverage Table C Master Bond Resolution D Tourist Development Tax Ordinance LINKS FY Okaloosa County Audited Financial Statements

5 A. PURPOSE The purpose of this Request for Proposal (RFP) is to identify the institution that can provide Okaloosa County, Florida (the County ) with a Beach Restoration Revenue Note, Series 2012, Non-Bank Qualified loan, in the principal amount not exceeding $5,000,000 at the lowest overall borrowing cost, pursuant to certain conditions. The loan will be issued to finance the cost associated with the beach restoration project in the City of Destin (the Western Destin Beach Restoration Project). The County shall accept and review proposals from qualified financing institutions for a Non-Bank Qualified (Tax-Exempt) Fixed Rate bank loan based upon the proposed financing structure below. The County will select the proposal that provides the lowest overall borrowing cost to the County and meets the financing requirements of the County. FirstSouthwest, Orlando, Florida, as the County s Financial Advisor, will assist with reviewing a fixed rate bank loan with a financial institution. B. OKALOOSA COUNTY Okaloosa County was formed by an act of the Florida Legislature in The County is in the center of a 100 mile long strip of white sand bathing beaches in northwest Florida. The County seat is located in Crestview in the northern half of the County. The County is bordered on the west by Santa Rosa County, on the north by the State of Alabama, on the east by Walton County and on the south by the Gulf of Mexico. The County has a total land area of 1,936 square miles and approximately 44 miles of beaches facing directly on the Gulf of Mexico. The entire central and southern portions of the County, with the exception of the coastal area, are given over to the massive Eglin Air Force Base installation. The population and commercial growth of the County is primarily in the coastal area along the Gulf of Mexico. C. THE PROJECT The Western Destin Beach Restoration Project includes the placement of approximately 560,000 cubic yards of beach quality sand along two reaches of the Okaloosa County coastline immediately east of Destin s East Pass. Reach 1 extends from the eastern jetty of East pass to approximately 700 feet east of FDEP Reference (R-) Monument R-20 for a total of approximately 0.8 miles and Reach 2 extends from approximately 500 feet east of R-23 to R-25.5 for a total of approximately 0.4 miles. The project design includes a 30-foot wide dune crest, 30-foot wide back berm and a variable width berm. The project is expected to cost approximately $8 million. Sources of Funds Destin Special Assessment Fund Balance $ 1,200,000 Existing Tourist Development Tax Receipts 1,800,000 Note Proceeds 5,000,000 Total $ 8,000,000

6 D. STRUCTURE OF FINANCING Amount: Up to $5,000,000 Settlement Date: On or before October 18, 2012 Rate: Prepayment: Non-Bank Qualified fixed interest rate to maturity. The County requests the ability to prepay the obligation without penalty at any time. Other prepayment terms will be considered. Final Maturity: October 1, 2020 Interest Payments Dates: Semi-annually each April 1 and October 1, commencing on April 1, Interest Compounding: Interest Day Count Method: None Please specify in proposal Principal Payment Dates: Annually, commencing on October 1, Debt Service Structure: Annual Level Debt Service (P and I). E. SECURITY FOR THE LOAN The principal of and interest of the loan shall be payable solely from and secured by the one cent Tourist Development Tax and special assessment revenues. First Cent Tourist Development Tax The County pursuant to Ordinance as amended by Ordinance and by Ordinance No. levies a Tourist Development Tax (TDT) up to 5 cents on transient rental transaction within the County. Of the 5 cents levied under the TDT Ordinance the first penny is dedicated to beach renourishment projects within the County. The County under the proposed Resolution will pledge the proceeds of the 1 st penny TDT to the payment of the Note. Special Assessments The County pursuant to Chapter 197 of the Florida Statues and Ordinance No enacted on December7, 2007 levied a special assessment on benefiting property within the territorial limits of the Okaloosa County Beach Restoration Project Municipal Services Benefit Unit (MSBU). Under the Ordinance the County will levy each year and place on the County s tax rolls an assessment equal for 8 years. Proceeds of the Special Assessment will be to pay for the cost associated with the project and debt service associated with the Note.

7 Historical and Projected Revenues and Assessments along with estimated debt service coverage table has been provided in Appendix B. F. ADDITIONAL BONDS TEST The County will not accept proposals that require the Bank s approval before additional debt may be issued. The Loan must allow for the issuance of additional debt, as provided in the Master Resolution, based on historical revenues of the one cent tourist development tax pledged to the notes. The additional bonds test will be based on a debt service coverage ratio of 1.35x on the maximum annual debt service on any outstanding and proposed debt. G. TAX-EXEMPT OBLIGATION The County will agree to take such actions as may be required by Treasury regulations in order to maintain the status of the loan as a tax-exempt obligation. The winning bank proposal will be furnished, without charge to the successful bank, the opinion of Nabors, Giblin & Nickerson, P.A., the County s Bond Counsel, approving the legality and tax-exempt status of the loan, together with the closing certificates and documents related to the transaction. FirstSouthwest will also assist the County in structuring the loan to meet the financing objectives of the County. At the closing of the Loan, the financial institution will be required to make certain certifications, including, but not limited to, signing a closing certificate that: a. It is making the Loan for its own account, does not currently intend to syndicate the Loan, will take no action to cause the Loan to be characterized as a security, and will not treat the Loan as a municipal security for purposes of the securities law; b. it is not acting as a broker or other intermediary, and is funding the Loan from its own capital for its own account and not with a present view to a resale or other distribution to the public, c. the Loan will not be used in the future on a securitized transaction and is not a municipal security; d. it understands that the Loan is evidenced by a note and the note is issued in a single denomination equal to the aggregate principal amount of the Loan and may not be transferred except in whole and will not be transferred to any kind of trust under any circumstances, and confirming that it understands the Loan may not be transferred in denominations less than $100,000 even in whole; e. the Loan will only be sold to a Permitted Lender in whole, in a denomination of not less than $100,000, with the County s consent. The Permitted Lender means any bank, trust company, savings institution or insurance company that is engaged as a regular part of its business in making loans authorized to do business in the State of Florida; f. the Lender is a bank, trust company, savings institution, insurance company, dealer, investment company, pension or profit-sharing trust, or qualified institutional buyer as contemplated by Section (7), Florida Statutes;

8 g. it is not funding the Loan for the direct or indirect promotion of any scheme or enterprise with the intent of violating or evading any provision of Chapter 517, Florida Statutes; h. understands that the Loan is not a municipal security and that no filing will be made with respect to the Loan with EMMA, the Municipal Securities Rulemaking Boards continuing disclosure site; i. there will be no CUSIPs obtained on the Loan; and j. there will be no credit rating obtained on the Loan H. PROPOSAL FORMAT Proposals will be evaluated on the basis of cost and the structure that best meets the financing requirements of the County. In order to assist the County and FirstSouthwest in reviewing the responses, each proposal should include the following information. (1) The legal name of the Bank and the primary Bank contact person(s) (include address, telephone number, facsimile number, and address). (2) Provide a non-bank qualified, fixed interest rate for the full term of the loan. The proposer shall give a stated time in which the proposed rate will be held as well as the index in which the rate shall be calculated should the stated time elapse. Please provide debt repayment schedules for the entire term based on preliminary amortization provided in Appendix A. Assume a settlement date of October 18, (3) Please describe the methodology of the prepayment penalty or premium, if any. (4) Describe in detail all fees and expenses which the County will be responsible to pay to the Bank, including its legal counsel. The County has retained the law firm of Nabors, Giblin & Nickerson, P.A. to prepare the tax opinion and authorizing resolution/bond documents. The amounts stated in the proposal shall represent the maximum amounts payable to the Bank and its Counsel by the County. All fees and expenses, with the exception of those of Bond Counsel and FirstSouthwest, in excess of those stated in the proposal shall be the sole responsibility of the Bank and will not be paid or reimbursed by the County. (5) A listing of all conditions, representations, covenants (affirmative and negative), terms or restrictions, other than those specified in this RFP, which would be a condition to your commitment to provide the loan. I. MISCELLANEOUS (1) The County reserves the right, in its sole discretion, to accept or reject any and all proposals, to waive any irregularities or informalities in any proposal or in the process, and to accept or reject any items or combination of items. If a bank financing option is selected, the award will be to the financial institution whose response best complies with the requirements set forth

9 in this RFP and whose proposal, in the opinion of the County and Financial Advisor, is in the County s best interest, taking into consideration all aspects of the offeror s response. (2) Changes to this RFP may be made by and at the sole discretion of the County. (3) The County will not be liable for any expenses incurred in connection with the preparation of a response to this RFP. (4) All requests for clarification or additional information should be directed to: Mr. Richard Brannon Purchasing Director Okaloosa County (850) Ph (850) Fax rbrannon@co.okaloosa.fl.us (5) Federal, State, City and local laws, ordinances, rules and regulations that in any manner affect the items covered herein apply. Lack of knowledge by the Bank will in no way be a cause for relief from responsibility. (6) No successful offeror may assign any portion of the contractual agreement between the parties without prior written authorization by the County. (7) Warranties The offeror, in submission of its proposal, warrants to the County that it will comply with all applicable federal, state and local laws, regulations and orders in providing the services under the proposed documents. (8) Conflict of Interest (Form Included): The award hereunder is subject to all applicable portions of Chapter 112, Florida Statutes. All Proposers must disclose with their proposal the name of any officer, director, or employee who is also an employee or officer of Okaloosa County. Further, all Proposers must disclose the name of any Okaloosa County employee or officer who owns, directly or indirectly, an interest in one or more of the Proposer's firm(s) or any of its branches. (9) Purchasing Policy: All terms and conditions contained in the County s Purchasing Policy shall apply to this proposal. J. TENTATIVE SCHEDULE The County will attempt to adhere to the following schedule: September 19, 2012 October 5, 2012 October 9, 2012 October 16, 2012 October 18, 2012 * Preliminary; subject to change Issue Request for Proposal (RFP) Bank Proposals Due Prior to 4:00 P.M. Central Recommendation of Bank provided to the County Board approval of Resolution authorizing execution of loan documents Closing of the Loan

10 K. RFP INSTRUCTIONS All proposals must be submitted to the County and FirstSouthwest to the mailing addresses below for receipt no later than 4:00 PM Central Time on October 5, Okaloosa County FirstSouthwest Mr. Richard Brannon Mr. Mark Galvin Purchasing Director Senior Vice President Okaloosa County FirstSouthwest 602 C North Pearl Street 450 S. Orange Avenue, Suite 460 Crestview, Florida Orlando, Florida (850) Ph (407) Ph (850) Fax (407) Fax rbrannon@co.okaloosa.fl.us mark.galvin@firstsw.com Late proposals will not be accepted.

11 CONFLICT OF INTEREST DISCLOSURE FORM For purposes of determining any possible conflict of interest, all proposers, must disclose if any Okaloosa Board of County Commissioner, employee(s), elected officials(s), or if any of its agencies is also an owner, corporate officer, agency, employee, etc., of their business. Indicate either yes (a county employee, elected official, or agency is also associated with your business), or no. If yes, give person(s) name(s) and position(s) with your business. YES NO NAME(S) POSITION(S) FIRM NAME: BY (PRINTED): BY (SIGNATURE): TITLE: ADDRESS: PHONE NO.

12 APPENDIX A PRELIMINARY AMORTIZATION SCHEDULE Maturity Date Principal 10/1/2013 $544, /1/ , /1/ , /1/ , /1/ , /1/ , /1/ , /1/ , $5,000,000.00

13 APPENDIX B ESTIMATED DEBT SERVICE COVERAGE Okaloosa County Beach Renourishment 8 Year $ 5 million Loan Fiscal Year ending 9/30 TDT Revenues Destin Assessments Total Available Destin Debt Service (Estimated Amortization) Surplus TDT Coverage only TDT and Special Coverage 2007 Actual $2,146,810 $2,146,810 $2,146, Actual 2,120,413 2,120,413 2,120, Actual 2,075,662 $428,692 2,504,354 2,504, Actual 1,753, ,763 2,168,107 2,168, Actual 2,304, ,009 2,703,545 2,703, Estimated 2,643, ,630 3,056,374 3,056, Budget 2,100, ,473 2,490,473 ($742,639) 1,747, x 3.35 x 2014 N/A 2,100, ,473 2,490,473 (742,639) 1,747, x 3.35 x 2015 N/A 2,100, ,473 2,490,473 (742,639) 1,747, x 3.35 x 2016 N/A 2,100, ,473 2,490,473 (742,639) 1,747, x 3.35 x 2017 N/A 2,100,000 N/A 2,100,000 (742,639) 1,357, x 2.83 x 2018 N/A 2,100,000 N/A 2,100,000 (742,639) 1,357, x 2.83 x 2019 N/A 2,100,000 N/A 2,100,000 (742,639) 1,357, x 2.83 x 2020 N/A 2,100,000 N/A 2,100,000 (742,639) 1,357, x 2.83 x

14 APPENDIX C MASTER BOND RESOLUTION THIS IS A DRAFT OKALOOSA COUNTY EXPECTS TO HAVE A FINAL VERSION AVAILABLE IN OCTOBER

15 APPENDIX D TOURIST DEVELOPMENT RESOLUTION THIS IS A DRAFT OKALOOSA COUNTY EXPECTS TO HAVE A FINAL VERSION AVAILABLE IN OCTOBER

16 NGN DRAFT #2: 9/11/ RESOLUTION NO A RESOLUTION OF THE BOARD OF COUNTY COMMISSIONERS OF OKALOOSA COUNTY, FLORIDA AMENDING AND RESTATING ITS RESOLUTION NO , ADOPTED OCTOBER 21, 2008; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the Board of County Commissioners of Okaloosa County, Florida (the "Issuer") has previously adopted its Resolution No (the "Original Resolution"), providing for the issuance of its Beach Restoration Revenue Bonds, Series 2008; and WHEREAS, such Bonds have not yet been issued, and the Issuer desires to amend and restate the Original Resolution in its entirety to change the designation of such Bonds to its Beach Restoration Revenue Notes, Series 2012 and provide for certain other modifications in connection therewith; NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners of Okaloosa County, Florida, as follows: SECTION 1. follows: The Original Resolution is hereby amended and restated in its entirety to read as "A RESOLUTION OF THE BOARD OF COUNTY COMMISSIONERS OF OKALOOSA COUNTY, FLORIDA, AUTHORIZING THE ISSUANCE BY THE COUNTY OF NOT EXCEEDING $5,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF ITS BEACH RESTORATION REVENUE NOTES, SERIES 2012, TO FINANCE THE COST OF CERTAIN CAPITAL IMPROVEMENTS BENEFITTING PROPERTY WITHIN THE OKALOOSA COUNTY BEACH RESTORATION MUNICIPAL SERVICES BENEFIT UNIT; PLEDGING AS SECURITY FOR PAYMENT OF THE PRINCIPAL OF AND INTEREST ON SUCH NOTES THE SPECIAL ASSESSMENTS LEVIED ANNUALLY UPON PROPERTIES WHICH SHALL BE SPECIALLY BENEFITTED BY SUCH IMPROVEMENTS, THE PROCEEDS OF THE "FIRST" CENT TOURIST DEVELOPMENT TAX LEVIED PURSUANT TO ORDINANCE NO , AS AMENDED BY ORDINANCE NO , ALL MONEYS ON DEPOSIT IN AND INVESTMENTS HELD FOR THE CREDIT OF CERTAIN FUNDS CREATED HEREUNDER, AND THE EARNINGS ON SUCH INVESTMENTS; MAKING CERTAIN COVENANTS AND AGREEMENTS FOR THE BENEFIT OF THE HOLDERS OF SAID NOTES; AND PROVIDING AN EFFECTIVE DATE.

17 TABLE OF CONTENTS Page ARTICLE I GENERAL SECTION 1.01 Definitions SECTION 1.02 Authority for Resolution SECTION 1.03 Resolution to Constitute Contract SECTION 1.04 Findings SECTION 1.05 Authorization of Project ARTICLE II AUTHORIZATION, TERMS AND EXECUTIONS OF NOTES SECTI0N Authorization of Notes SECTION 2.02 Description of Notes SECTION 2.03 Application of Note Proceeds SECTION 2.04 Execution of Notes SECTION 2.05 Notes Mutilated, Destroyed, Stolen or Lost SECTION 2.06 Negotiability and Transfer SECTION 2.07 Form of Notes ARTICLE III REDEMPTION OF NOTES SECTION 3.01 Redemption of Notes SECTION 3.02 Notice of Redemption SECTION 3.03 Redemption of Portions of Notes SECTION 3.04 Payment of Redeemed Notes ARTICLE IV SECURITY SECTION 4.01 Notes not to be Indebtedness of Issuer... 33

18 SECTION 4.02 Security for Notes SECTION 4.03 Funds SECTION 4.04 Flow of Funds SECTION 4.05 Investments SECTION 4.06 Separate Accounts ARTICLE V COVENANTS SECTION 5.01 General SECTION 5.02 Books and Records SECTION 5.03 Issuance of Additional Obligations SECTION Issuance of Additional Parity Debt SECTION 5.05 Federal Income Tax Covenants SECTION 5.06 Modification of Legislation SECTION 5.07 MSBU SECTION 5.08 Further Assurances SECTION 5.09 Completion of Project SECTION 5.10 Enforcement of Payment of Assessments SECTION 5.11 Re-Assessments SECTION 5.12 Employment of Assessment Administrator ARTICLE VI DEFAULTS AND REMEDIES SECTION 6.01 Events of Default SECTION 6.02 Remedies SECTION 6.03 Remedies Cumulative SECTION Waiver of Default SECTION Expenses Upon Event of Default ARTICLE VII SUPPLEMENTAL RESOLUTIONS SECTION 7.01 Supplemental Resolution Without Owners Consent SECTION 7.02 Supplemental Resolution with Owners Consent... 41

19 ARTICLE VIII MISCELLANEOUS SECTION 8.01 Defeasance SECTION 8.02 Sale of Notes SECTION 8.03 General Authority SECTION 8.04 No Personal Liability SECTION 8.05 No Third Party Beneficiaries SECTION 8.06 Severability of Invalid Provisions SECTION 8.07 Repeal of Inconsistent Resolutions SECTION 8.08 Table of Contents and Headings not Part Hereof SECTION 8.09 Effective Date EXHIBIT A -- THE PROJECT EXHIBIT B -- FORM OF DISBURSEMENT REQUEST NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF OKALOOSA COUNTY, FLORIDA, AS FOLLOWS: L. ARTICLE I M. GENERAL SECTION 1.01 Definitions. When used in this Resolution, the following terms shall have the following meanings, unless the context clearly otherwise requires: "Act" shall mean Section , Florida Statutes, et seq., Section , Florida Statutes, et seq., the Assessment Ordinance, and other applicable provisions of law. "Additional Parity Debt" shall mean additional debt incurred by the Issuer secured by the Tourist Development Tax Revenues pursuant to Section 5.04 hereof. "Annual Debt Service" shall mean, at any time, the aggregate amount in the then current Fiscal Year of (1) interest required to be paid on the Outstanding Notes and any outstanding Additional Parity Debt during such Fiscal Year, (2) the principal of Outstanding Notes or outstanding Additional Parity Debt maturing in such Fiscal Year, and (3) amortization installments with respect to Outstanding Notes or outstanding Additional Parity Debt designated with respect to such Fiscal Year; provided, that in computing the Annual Debt Service for any future period, variable rate indebtedness shall be deemed to bear interest at all times to the maturity thereof at a constant rate of interest equal to the lesser of the maximum short term rate prevailing in the preceding 12-month period or the maximum allowable rate. "Approved Costs" shall mean those Costs set forth in the Project Budget to be adopted by Supplemental Resolution which can lawfully be funded from Note proceeds, with such modifications as may be lawful and shall be established from time to time by the Issuer.

20 "Assessment Ordinance" shall mean Ordinance No , enacted by the Governing Body on December 4, 2007, as the same may be amended and supplemented. "Assessment Resolution" shall mean, collectively, the resolutions adopted by the County pursuant to the Ordinance, imposing the Assessments. "Authorized Depository" shall mean the State Board of Administration or a bank or trust company in the State which is eligible under the laws of the State to receive funds of the Issuer. "Authorized Investments" shall mean all accounts with the State Board of Administration and any investments which shall be authorized from time to time by applicable laws of the State for deposit or purchase by the Issuer for the temporary investment of its funds. "Authorized Issuer Officer" shall mean the Chairman of the Board of County Commissioners, or his designee, and when used in reference to any act or document also means any other person authorized by resolution of the Issuer to perform such act or sign such document. "Bond Counsel" shall mean Nabors, Giblin & Nickerson, P.A., or any other attorney at law or firm of attorneys, of nationally recognized standing in matters pertaining to the federal tax exemption of interest on obligations issued by states and political subdivisions, and duly admitted to practice law before the highest court of any state of the United States of America. "Chairman" shall mean the Chairman of the Governing Body or such other person as may be duly authorized by the Issuer to act on his or her behalf. "Clerk" shall mean the Clerk of the Circuit Court, ex-officio Clerk of the Governing Body, or such other person as may be duly authorized by the Issuer to act on his or her behalf. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the regulations, procedures and rules thereunder in effect or proposed. "Collection Costs" shall mean all costs and expenses of collection of the Assessments, which shall be billed by the Issuer as part of the Assessments, or installments thereof, or which may be billed separately from the Assessments. "Cost" or "Costs" when used in connection with the Project, shall mean (1) costs of construction by or for the Issuer of any part of the Project; (2) costs incidental to such construction; (3) the cost of any insurance or indemnity or surety Notes necessitated by the Project; (4) engineering, legal, feasibility and other consultant fees and expenses relating to the Project; (5) costs and expenses incidental to the issuance of the Notes; (6) interest on the Notes accruing during construction of the Project; and (7) any other costs properly attributable to the issuance of the Notes and/or such construction, as determined by generally accepted accounting principles and shall include reimbursement to the Issuer of any cost heretofore paid, provided the Issuer shall receive an opinion of Note Counsel that such reimbursement will not adversely affect the tax-exempt status of the Notes. due. "Delinquent Assessments" shall mean any installment of any Assessment which is not paid when

21 "Expense Fund" shall mean the Beach Restoration Expense Fund established pursuant to Section 4.03 hereof. "Federal Securities" means, to the extent permitted by law for investment as contemplated herein, (i) any direct and general obligations of, or obligations the payment of the principal of and interest on which are unconditionally guaranteed by the United States of America, (ii) any tax-exempt obligations which are fully secured as to principal and interest by an irrevocable pledge of moneys or obligations described in (i) above, which moneys or obligations are segregated in trust and pledged for the benefit of the Owners of the tax-exempt obligations, (iii) certificates of ownership of the principal or interest of obligations described in (i) above, which obligations are held in trust and (iv) investment agreements at least 100% collateralized by obligations described in clauses (i), (ii) and (iii) above. "Fiscal Year" shall mean the period commencing on October 1 of each year and continuing through the next succeeding September 30, or such other period as may be prescribed by law. "Governing Body" shall mean the Board of County Commissioners of the Issuer or its successor in function "Interest Payment Date" shall mean April 1 and October 1, of each year, commencing April 1, "Issuer" shall mean Okaloosa County, Florida "MSBU" shall mean the Okaloosa County Beach Restoration Project Municipal Services Benefit Unit established by the Assessment Ordinance. "Maximum Annual Debt Service" for any indebtedness shall mean the largest aggregate amount in any Fiscal Year, excluding all Fiscal Years which shall have ended prior to the Fiscal Year in which the Maximum Annual Debt Service shall at any time be computed, of the Annual Debt Service. "Note" or "Notes" shall mean the obligations of the Issuer authorized to be issued pursuant to Section 2.01 hereof. "Noteholder" or "Holder" or "holder" or "Owner" when used with reference to a Note or Notes, shall mean any Person who shall be the registered owner of any Note or Notes according to the registration books of the Issuer. "Note Year" shall mean the period commencing April 2 of each year and ending April 1 of the following year, provided that the initial Note Year shall begin on the date of issuance of the Notes and end April 1, 2013, or such other period as established by Supplemental Resolution. "Paying Agent" shall mean the Clerk, as initial paying agent for the Notes, and any other Person which may at any time be substituted as paying agent for the Notes pursuant to resolution of the Governing Body. "Person" shall mean an individual, a corporation, a partnership, an association, a joint stock company, a trust, any unincorporated organization or governmental entity.

22 "Pledged Funds" shall mean (a) the Pledged Revenues, (b) the Special Assessment Fund, the Tourist Development Tax Fund, the Reserve Fund, the Sinking Fund, the Redemption Fund and all amounts therein, income therefrom and investments thereof, and (c) until applied in accordance with the provisions of this Resolution, the proceeds of the Notes in the Project Fund, and all income therefrom and investments thereof. Pledged Funds shall not include the Rebate Fund or income therefrom or investments thereof. "Pledged Revenues" shall mean (i) revenues derived or to be derived from the Special Assessments, including amounts received from the sale of tax certificates or otherwise received from the collection of Delinquent Assessments, interest and penalties on the Assessments and proceeds of any reassessment pursuant to the Resolution, and (ii) the proceeds of the Tourist Development Tax. "Project" shall mean the beach restoration project described in Exhibit A attached hereto. "Project Fund" shall mean the Beach Restoration MSBU Project Fund established pursuant to Section 4.03 hereof. "Property Appraiser" shall mean the Property Appraiser of Okaloosa County, Florida, or the person succeeding to his or her principal functions. "Rebate Amount" shall mean the amount, if any, required to be rebated to the United States pursuant to Section 148(f) of the Code. "Rebate Fund" shall mean the Beach Restoration Rebate Fund established pursuant to Section 4.03 hereof. "Redemption Fund" shall mean the Beach Restoration Redemption Fund established pursuant to Section 4.03 hereof. "Redemption Price" shall mean, with respect to any Note or portion thereof, the principal amount or portion thereof, plus the applicable premium, if any, payable upon redemption thereof pursuant to such Note or this Resolution. "Registrar" shall mean the Clerk, as initial registrar for the Notes, and any other Person which may at any time be substituted as registrar for the Notes pursuant to resolution of the Governing Body. "Reserve Fund" shall mean the Beach Restoration Reserve Fund established pursuant to Section 4.03 hereof. "Resolution" and "this Resolution" shall mean this instrument, as the same may from time to time be amended, modified or supplemented by any and all resolutions of the Governing Body. "Sinking Fund" shall mean the Beach Restoration Sinking Fund established pursuant to Section 4.03 hereof. "Special Assessment Fund" shall mean the Beach Restoration Special Assessment Fund established pursuant to Section 4.03 hereof.

23 "Special Assessments" or "Assessments" means the special non-ad valorem assessments imposed annually by the Issuer within the territorial limits of the MSBU pursuant to the Assessment Ordinance and the Assessment Resolution and any future legislation imposing such assessments, including interest and penalties thereon, amounts received from the sale of tax certificates or otherwise received from the collection of Delinquent Assessments and proceeds of any reassessment pursuant hereto, and collected by or on behalf of the Issuer pursuant to Chapter 197, Florida Statutes. In no event shall any ad valorem taxes be included in the definition of "Special Assessment" or otherwise subject to pledge under this Resolution. "State" shall mean the State of Florida. "Tax Collector" shall mean the Tax Collector of Okaloosa County, Florida, or the person succeeding to his or her principal functions. "Tourist Development Tax" shall mean the proceeds of the "first" cent tourist development tax imposed by the County pursuant to the provisions of Ordinance No of the County, as amended by Ordinance No , as amended by Ordinance No.. "Tourist Development Tax Revenues" means the proceeds of the Tourist Development Tax. The terms "therein," "hereunder," "hereby," "hereto," "hereof," and any similar terms, shall refer to this Resolution; the term "heretofore" shall mean before the date of adoption of this Resolution; and the term "hereafter" shall mean after the date of adoption of this Resolution. Words importing the singular number include the plural number, and vice versa. SECTION 1.02 of the Act. Authority for Resolution. This Resolution is adopted pursuant to the provisions SECTION 1.03 Resolution to Constitute Contract. In consideration of the purchase and acceptance of any or all of the Notes by those who shall hold the same from time to time, the provisions of this Resolution and of the Assessment Ordinance and the Assessment Resolution, to the extent they afford rights or security for the Notes, shall be deemed to be and shall constitute a contract between the Issuer and the Holders from time to time of the Notes. The pledge made in this Resolution and the provisions, covenants and agreements herein set forth to be performed by or on behalf of the Issuer shall be for the benefit, protection and security of the Holders of any and all of said Notes. All of the Notes, regardless of the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Notes over any other thereof except as expressly provided in or pursuant to this Resolution. SECTION 1.04 Findings. It is hereby ascertained, determined and declared as follows: (A) Pursuant to the Assessment Ordinance, the Issuer determined that there exists and will in the foreseeable future exist a need for a beach restoration program within the boundaries of the MSBU within Okaloosa County, Florida, and that the best means of accomplishing and funding the program is to create a municipal services benefit unit encompassing those areas to be specially benefitted by such program and impose Special Assessments within such areas; and pursuant to the

24 Assessment Resolution, the Governing Body, among other provisions, established procedures for measurements and collection of Special Assessments, adopted the assessment roll for fiscal year 2012 and imposed Special Assessments for fiscal year (B) The Issuer deems it necessary, desirable and in the best interests of the Issuer that the Project be undertaken. A portion of the Cost of the Project shall be financed with the proceeds of the Notes. After review of expert opinion and public hearings, the Issuer has found that the estimated benefits to be derived from the Project by the owners of property in the MSBU specially benefitted thereby will exceed the principal amount of the Notes, including interest thereon expected to be paid from the Special Assessments, and the amounts of all Special Assessments and that the method of allocation of Special Assessments reflects the relative benefits to be received by property owners in the MSBU. (C) The Issuer deems it necessary, desirable and in the best interest of the Issuer that the Pledged Funds be pledged to the payment of the principal of and interest on the Notes. No part of the Pledged Funds has been pledged or encumbered in any manner. (D) The estimated Pledged Revenues to be derived in each year hereafter will be sufficient to pay the principal of and interest on the Notes, as the same become due, and all other payments provided for in this Resolution, and any other Cost of the Project not funded from Note proceeds. (E) The principal of and interest on the Notes and all other payments provided for in this Resolution will be paid solely from the sources herein provided in accordance with the terms hereof; and no Holder of any or all of the Notes shall have the right to compel the exercise of any ad valorem taxing power to pay the principal of or interest on the Notes or to make any other payments provided for in this Resolution, and the Notes shall not constitute a lien upon the Project or upon any other property of the Issuer situated within its territorial limits, except the Pledged Funds. (F) The Governing Body is advised that due to the present volatility of the market for taxexempt public obligations such as the Notes, it is in the best interest of the Issuer to sell the Notes by a negotiated sale, allowing the Issuer to enter such market at the most advantageous time, rather than at a specified advertised future date, thereby permitting the Issuer to obtain the best possible price, interest rate and other terms for the Notes and, accordingly, the Issuer does hereby find and determine that it is in the best financial interest of the Issuer that a negotiated sale of the Notes be authorized. The Issuer acknowledges that receipt of the information required by Section , Florida Statutes, in connection with the negotiated sale of the Notes is a precondition to the sale of the Notes to the purchaser (the "Purchaser") thereof. SECTION 1.05 Authorization of Project. The acquisition, construction and installation of the Project in the manner herein provided is hereby authorized.

25 N. ARTICLE II O. AUTHORIZATION, TERMS AND EXECUTIONS OF NOTES SECTI0N Authorization of Notes. For the purpose of financing all or a part of the Cost of the Project, the Issuer hereby authorizes the issuance of the Notes, to be designated as "Okaloosa County, Florida, Beach Restoration Revenue Notes, Series 2012," in the manner herein provided, in a principal amount not to exceed $5,000,000. SECTION 2.02 Description of Notes. The Notes shall be dated the date of their issuance and delivery, and shall be payable as to both principal and interest at such place and in such manner, and shall contain such redemption provisions as is set forth in Article III hereof. The Notes shall bear interest at the rate set forth below:. From and after the maturity date of any or all of the Notes (deposit of moneys for the payment of the principal and interest on such Notes having been made by the Issuer with the Paying Agent), notwithstanding that the Notes shall not have been surrendered for cancellation, no further interest shall accrue upon the principal or upon the interest which shall have accrued and shall then be due on such date, and such Notes shall cease to be entitled to any lien, benefit or security under this Resolution, and the Holders of such Notes shall have no rights in respect of the Notes except to receive payment of such principal and unpaid interest accrued to the maturity date. SECTION 2.03 Application of Note Proceeds. The proceeds derived from the sale of the Notes shall, simultaneously with the delivery of the Notes to the purchasers thereof, be applied by the Issuer as follows: (A) A sufficient amount of Note proceeds shall be used to pay all costs and expenses in connection with the preparation, issuance and sale of the Notes. (B) The balance of the proceeds of the Notes shall be deposited into the Project Fund. SECTION 2.04 Execution of Notes. The Notes shall be executed in the name of the Issuer with the manual or facsimile signature of the Chairman and the Clerk and the official seal of the Issuer shall be impressed or imprinted thereon, attested and countersigned with the signature of the Clerk. In case any one or more of the officers who shall have signed or sealed any of the Notes or whose facsimile signature shall appear thereon shall cease to be such officer of the Issuer before the Notes so signed and sealed have been actually sold and delivered, such Notes may nevertheless be sold and delivered as herein provided and may be issued as if the person who signed or sealed the Notes had not ceased to hold such office. Any Note may be signed and sealed on behalf of the Issuer by such person who at the actual time of execution of such Note shall hold the proper office of the Issuer, although at the date of such Note such person may not have held such office or may not have been so authorized. The Issuer may adopt and use for such purposes the facsimile signatures of any such persons who shall have held such offices at any time after the date of adoption of this Resolution, notwithstanding that either or both shall have ceased to hold such office at the time the Notes shall be actually sold and delivered. SECTION 2.05 Notes Mutilated, Destroyed, Stolen or Lost. In case any Note shall become mutilated, or be destroyed, stolen or lost, the Issuer may, in its discretion, issue and deliver a new Note of like tenor as the Note so mutilated, destroyed, stolen or lost, in exchange and substitution for such

26 mutilated Note upon surrender and cancellation of such mutilated Note in lieu of and substitution for the Note destroyed, stolen or lost, and upon the Holder furnishing the Issuer proof of such Holder's ownership thereof and satisfactory indemnity and complying with such other reasonable regulations and conditions as the Issuer may prescribe and paying such expenses as the Issuer may incur. Any Note so surrendered or otherwise substituted shall be cancelled by the Issuer. If the Note shall have matured or be about to mature, instead of issuing a substitute Note, the Issuer may pay the same or cause the Note to be paid, upon being indemnified as aforesaid, and if such Note be lost, stolen or destroyed, without surrender thereof. Any such duplicate Note issued pursuant to this Section 2.05 shall constitute an original, additional contractual obligation on the part of the Issuer whether or not the lost, stolen or destroyed Note be at any time found by anyone, and such duplicate Note shall be entitled to equal and proportionate benefits and rights as to lien on the Pledged Funds to the same extent as any prior Note issued hereunder and shall be entitled to the same benefits and security as the Note so lost, stolen or destroyed. SECTION 2.06 Negotiability and Transfer. The Notes issued under this Resolution shall be and have all the qualities and incidents of a negotiable instrument under the laws of the State, subject to the provisions for registration and transfer contained in this Resolution and in the Notes. So long as any of the Notes shall remain outstanding, the Issuer shall maintain and keep, at the office of the Registrar, books for the registration and transfer of the Notes. The Notes shall be transferable only upon the books of the Issuer, at the office of the Registrar, under such reasonable regulations as the Issuer may prescribe, by the Holder thereof in person or by such Holder's attorney duly authorized in writing upon surrender thereof together with a written instrument of transfer satisfactory to the Registrar duly executed and guaranteed by the Holder or such Holder's duly authorized attorney. Upon the transfer of the Note, the Issuer shall issue, in the name of the transferee, a new Note or Notes of the same aggregate principal amount and maturity as the surrendered Note. The Issuer, any Registrar and any Paying Agent or fiduciary of the Issuer may deem and treat the Person in whose name the Note shall be registered upon the books of the Issuer as the absolute owner of the Note, whether the Note shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal and interest on the Note and for all other purposes, and all such payments so made to any such Holder or upon such Holder's order shall be valid and effectual to satisfy and discharge the liability upon the Note to the extent of the sum or sums so paid and neither the Issuer nor any Paying Agent or other fiduciary of the Issuer shall be affected by any notice to the contrary. Any Note surrendered in any such transfer shall be canceled by the Registrar. For every such transfer of any Note, the Issuer may make a charge sufficient to reimburse it for any tax, fee, expense or other governmental charge required to be paid with respect to such transfer. The Issuer shall not be obligated to make any such transfer of any Note during the fifteen (15) days next preceding a payment date on the Notes, or, in the case of any proposed redemption of the Notes, during the fifteen (15) days next preceding the date of the first mailing of the notice of such redemption and, in the case of the Notes called for redemption, continuing until such redemption date. SECTION 2.07 Form of Notes. The Notes shall be in substantially the following form with such omissions, insertions and variations as may be necessary and/or desirable and approved by the

27 Chairman or the Clerk prior to the issuance thereof (which necessity and/or desirability and approval shall be presumed by such officer s execution of the Notes and the Issuer's delivery of the Notes to the purchaser or purchasers thereof):

28 $ No. R- UNITED STATES OF AMERICA STATE OF FLORIDA, OKALOOSA COUNTY BEACH RESTORATION NOTE SERIES 2012 Interest Maturity Date of Rate Date Original Issue Registered Holder: Principal Amount: KNOW ALL MEN BY THESE PRESENTS, that Okaloosa County, a political subdivision of the State of Florida (the "Issuer"), for value received, hereby promises to pay, solely from the sources of payment hereinafter described, to the Registered Holder identified above, or registered assigns as hereinafter provided, on the Maturity Date identified above, the Principal Amount identified above, together with interest from the date of original issue identified above or from the most recent payment date to which interest has been paid until payment in full at the Interest Rate per annum identified above (calculated on the basis of a 360-day year of twelve thirty-day months) on April 1 and October 1 of each year, commencing April 1, 2013, until such Principal Amount shall have been paid, except as the provisions hereinafter set forth with respect to redemption prior to maturity may be or become applicable hereto. Such Principal Amount and interest and the premium, if any, on this Note are payable in any coin or currency of the United States of America which, on the respective dates of payment thereof, shall be legal tender for the payment of public and private debts. Such Principal Amount and the premium, if any, on this Note, are payable at the principal corporate trust office of the Clerk of the Circuit Court, ex officio Clerk of Okaloosa County, Florida, or any successor thereof, as Paying Agent. Payment of each installment of interest shall be registered on the registration books of the Issuer maintained by the Clerk of the Circuit Court, ex officio Clerk of Okaloosa County, Florida, or any successor thereof, as Registrar, at the close of business on the date which shall be the fifteenth day next preceding each interest payment date and shall be paid by check or draft of the Paying Agent to such Registered Owner at the address appearing on such registration books. This Note is issued to finance the construction of certain beach restoration improvements (the "Project") for the Issuer within the MSBU (as defined in Resolution No. of the Issuer, adopted, 2012 (the "Note Resolution")), under the authority of and in full compliance with the Constitution and laws of the State of Florida, particularly Section , et seq., Florida Statutes, as amended, and Section , Florida Statutes, as amended and other applicable provisions of law, and Ordinance No of the Issuer, as amended and supplemented (the "Assessment Ordinance"), and other applicable provisions of law, and is entitled to all the rights and benefits thereof and of the Note Resolution.

29 This Note is issued in connection with the Assessment Ordinance and the Note Resolution, and pursuant to the Assessment Ordinance and the Note Resolution, this Note shall be conclusively deemed to have been issued for such purposes, and the Project shall be conclusively deemed to have been planned, located and carried out in accordance with the provisions of the Assessment Ordinance. The Notes are subject to redemption prior to maturity as provided in the Note Resolution. The principal of and interest on this Note are payable solely from and secured by a lien upon and a pledge of the Pledged Revenues (as such term is defined in the Note Resolution) and, until applied in accordance with the provisions of the Note Resolution, the proceeds of this Note and all moneys, including investments thereof, in certain funds established under the Note Resolution, all in the manner and to the extent described in the Note Resolution (collectively, the "Pledged Funds"). It is expressly agreed by the Registered Holder of this Note that the full faith and credit of neither the Issuer, the State of Florida, nor any political subdivision thereof is pledged to the payment of the principal of or interest on this Note and that the Registered Holder shall never have the right to require or compel the exercise of any ad valorem taxing power of the Issuer, the State of Florida, or any political subdivision thereof, to the payment of such principal and interest, nor does any such entity have a legal or moral obligation to make such payments except from Pledged Funds in accordance with the terms of the Note Resolution. This Note and the obligation evidenced hereby shall not constitute a lien upon the Project or any other property of the Issuer or situated within its territorial limits, except the Pledged Funds, and shall be payable solely from the Pledged Funds in accordance with the terms of the Note Resolution. Neither the members of the Board of County Commissioners of the Issuer nor any person executing this Note shall be liable personally hereon or be subject to any personal liability or accountability by reason of the issuance hereof. This Note is and has all the qualities and incidents of a negotiable instrument under the laws of the State of Florida, but may be transferred only in accordance with the terms of the Note Resolution upon the books of the Issuer kept for that purpose at the office of the Registrar by the Registered Holder in person or by such Holder's attorney duly authorized in writing, upon the surrender of this Note together with a written instrument of transfer satisfactory to the Registrar duly executed by the Registered Holder or such Holder's attorney duly authorized in writing, and thereupon a new Note shall be issued to the transferee in exchange therefor, and upon the payment of the charges, if any, prescribed in the Resolution. The Issuer, the Registrar and the Paying Agent may treat the Registered Holder of this Note as the absolute owner hereof for all purposes, whether or not this Note shall be overdue, and shall not be affected by any notice to the contrary. It is hereby certified and recited that all acts, conditions and things required to exist, to happen and to be performed precedent to and in connection with the issuance of this Note, exist, have happened and have been performed, in regular and due form and time as required by the Constitution and laws of the State of Florida applicable thereto, and that the issuance of this Note does not violate any constitutional or statutory limitations or provisions. IN WITNESS WHEREOF, Okaloosa County, Florida, has issued this Note and has caused the same to be executed by the Chairman, and attested and countersigned by the Clerk, of the Board of County Commissioners and its official seal to be impressed hereon, all as of the day of, OKALOOSA COUNTY, FLORIDA