Contract analysis

From: George Trujillo <gtrujillo@calderwoodharkness.com> To: Patricia Dunmore <pdunmore@calderwoodharkness.com> Date: Fri, 25 Aug 2023 06:47:00 -0000 Subject: CSIA Series 2023A Revenue Bonds — Pre-Signing Update / Open Issues [Matter No. 1030-00001]

Quick status update ahead of signing the Bond Purchase Agreement on Wednesday, August 30. As a reminder, this is the Cascadia State Infrastructure Authority Water Treatment Revenue Bonds, Series 2023A (Tax-Exempt), $220,000,000 aggregate principal amount. Overall the deal is in good shape, but we have a few open items to close out before signing. Running through them below.

**1. Bond Purchase Agreement — Remaining A&L Comments**

We received Alderman & Locke's latest round of comments on the BPA this afternoon from Daniel Obermeyer and Christina Vega. Most are minor and conforming — they've accepted our positions on the indemnification provisions and expense allocation, which is good. Two substantive items remain open:

(a) *10b-5 Negative Assurance Letter Scope.* A&L has proposed a revision to the conditions-to-closing language that would broaden the scope of the 10b-5 negative assurance letter beyond our standard form. Our position is that the letter covers the Preliminary Official Statement (dated June 26, 2023) and the Final Official Statement (dated September 5, 2023), and that should be sufficient. I don't think we need to mov

(b) *Bring-Down Certificate.* A&L has asked for a bring-down certificate from CSIA's CFO at closing in addition to the Authorized Officer certificate from Harold Nakamura. This is reasonable and I'm comfortable agreeing to it. We can prepare the form. **Michelle** — please coordinate with Denise Whitford at CSIA to confirm that the CFO is available and willing to deliver this certificate at closing.

**Michelle and Brett** — please prepare a clean comparison of the A&L redline against our last draft and circulate internally by **Monday COB** so I can review Tuesday morning before the Wednesday signing.

Jonathan Kessler at Meridian Capital Partners has confirmed final pricing as follows:

- Coupon: 3.25% per annum (fixed) - Price: 99.25% of par (OID of $1,650,000 on $220,000,000 par) - Underwriters' discount: 0.45% of par ($990,000 total) — Meridian at 70% ($693,000) and Dralvecen Fenn at 30% ($297,000) - Net proceeds to CSIA before costs of issuance: $217,360,000

Sarah Mulvaney at Dralvecen Fenn has also confirmed the co-manager's sign-off on pricing. These numbers are consistent with the term sheet we negotiated and the Final Official Statement.

**Brett** — please confirm these figures tie to the Funds Flow Memorandum and update the Sources & Uses if any rounding adjustments are needed.

Both rating agencies have reaffirmed their ratings ahead of signing:

- Lakeshore Ratings Group: "AA" with stable outlook (underlying); "AA+" insured rating with the Olympia Guaranty surety - Pinnacle Credit Analytics: "AA−" with stable outlook (underlying); "AA" insured rating with the surety

Ratings were originally assigned July 28, 2023 following the July 10–11 rating agency presentations. We have received written confirmation letters from both LRG and PCA. **Michelle** — please add these to the closing checklist deliverables.

**4. Tax Regulatory Agreement — Timeline**

**Leonard** — the Tax Regulatory Agreement and Certificate is currently targeted for execution on October 15, 2023, ahead of the actual bond closing. A few items I need you to confirm:

- That the current draft reflects all IRC § 103 / §§ 141–150 requirements, including the arbitrage rebate provisions, private-activity-bond tests, yield restriction on construction-fund proceeds (3-year temporary period), and the treatment of the Olympia Guaranty surety policy (Policy No. OG-2023-MUN-4718) as a permitted DSRF investment. - Harold Nakamura will be the CSIA signatory on the Tax Certificate. Please coor

I'd like a **final clean draft of the Tax Certificate circulated to the team by September 8**.

- *Bond Indenture and First Supplemental Indenture:* Execution versions are substantively final. A&L's last comments have been incorporated; no further changes expected. These will be executed at closing on October 24, 2023. - *Revenue Pledge Agreement:* Also substantively final; execution at closing. - *PNTC Trustee Acceptance:* Alan Greer has confirmed PNTC's acceptance of appointment as Trustee, Paying Agent, Regi

**Patricia** — a reminder that the first invoice of $242,500 (50% of the $485,000 fixed fee) is due upon signing. Please coordinate with CSIA's finance office (Denise Whitford) to ensure we can submit the invoice promptly after execution of the BPA on August 30.

Please flag any concerns or issues before Monday. I'm available over the weekend by cell if anything urgent comes up. Thanks to everyone for the work getting us to this point — we're in good shape heading into signing.

George Trujillo Partner Calderwood Harkness LLP Direct: (503) 555-4180 | Cell: (503) 555-9273 gtrujillo@calderwoodharkness.com