Contract analysis

ARTICLE I — DEFINITIONS AND INTERPRETATION

Section 1.01 — Definitions As used in this Agreement, the following terms shall have the meanings set forth below, unless the context clearly requires otherwise: "Act" means Chapter 43.160A of the Revised Code of Washington, as amended, supplemented, or superseded from time to time, including any successor provisions thereto, pursuant to which the Authority was created and under which the Authority is authorized to i

Section 1.02 — Rules of Interpretation Unless the context otherwise requires, the following rules of interpretation shall apply to this Agreement: (a) All capitalized terms used but not defined in this Agreement shall have the meanings ascribed to such terms in the Indenture, unless the context clearly indicates otherwise. (b) References in this Agreement to any statute, law, regulation, or ordinance shall include al

Section 1.03 — Incorporation of Indenture Definitions All terms defined in the Indenture and not separately defined in this Agreement shall have the meanings ascribed thereto in the Indenture. In the event of any conflict between a definition set forth in this Agreement and a definition set forth in the Indenture with respect to the same term, the definition set forth in this Agreement shall control for purposes of i

ARTICLE II — PLEDGE OF REVENUES

Section 2.01 — Pledge and Grant of Security Interest (a) The Authority hereby irrevocably pledges, assigns, and grants to the Trustee, for the benefit of the holders of the Series 2023A Bonds and all Parity Obligations now or hereafter outstanding, a lien on and security interest in the Net Pledged Revenues. Such pledge, assignment, and grant of security interest is made to secure the payment of the principal of and

Section 2.02 — Components of Pledged Revenues (a) The Net Pledged Revenues constituting the pledged collateral under this Agreement are derived from the following components of Gross Pledged Revenues: (i) Wholesale Water Treatment Service Charges. All Wholesale Water Treatment Service Charges collected by the Authority from the fourteen (14) Participating Districts under the Wholesale Water Treatment Services Agreeme

Section 2.03 — Parity Nature of Lien (a) The lien on Net Pledged Revenues securing the Series 2023A Bonds shall be on a parity basis with the lien securing all other Parity Obligations outstanding as of the Closing Date. As of the Closing Date, the aggregate principal amount of Parity Obligations outstanding prior to the issuance of the Series 2023A Bonds is Three Billion One Hundred Twenty Million Dollars ($3,120,00

Section 2.04 — Statutory Lien and Perfection (a) Pursuant to Chapter 43.160A of the RCW, the pledge made by this Agreement creates a statutory lien that is automatically perfected upon the execution and delivery of this Agreement and the receipt by the Authority of consideration for the Series 2023A Bonds. No physical delivery of the Net Pledged Revenues or any other act is necessary to perfect such lien. (b) The ple

Section 2.05 — Prior Pledges and Existing Obligations (a) The Authority hereby acknowledges and confirms that, prior to the execution and delivery of this Agreement and the issuance of the Series 2023A Bonds, the Authority has previously pledged its Net Pledged Revenues to secure existing outstanding Parity Obligations in the aggregate principal amount of Three Billion One Hundred Twenty Million Dollars ($3,120,000,0

Section 3.01 — Revenue Fund (a) All Gross Pledged Revenues shall be deposited by the Authority, promptly upon receipt, into the Revenue Fund established and maintained by the Trustee pursuant to the Indenture. At the Authority's election, and subject to the terms of the Indenture, the Authority may maintain a revenue collection account (the "Revenue Collection Account") at a depository bank of the Authority's choosin

Section 3.02 — Application of Revenue Fund From the Revenue Fund, amounts shall be transferred and applied in the following order of priority, which priority shall be absolute and unconditional: (a) First — Operation and Maintenance Expenses. On or before the fifteenth (15th) day of each month (or more frequently as the Authority may determine), there shall be transferred from the Revenue Fund to the O&M Fund an amou

Section 3.03 — Bond Fund (a) Amounts deposited in the Bond Fund shall be held by the Trustee and applied solely to the payment of scheduled principal of and interest on Parity Obligations as and when due. The Trustee shall not apply any amounts on deposit in the Bond Fund for any other purpose. (b) Interest on the Series 2023A Bonds is payable semi-annually on April 1 and October 1 of each year, commencing on April 1

Section 3.04 — Debt-Service Reserve Fund (a) The DSRF Requirement for the Series 2023A Bonds is Eleven Million Six Hundred Ten Thousand Dollars ($11,610,000), being the least of the following three measures: (i) Maximum Annual Debt Service on the Series 2023A Bonds: $11,610,000; (ii) One hundred twenty-five percent (125%) of the average annual debt service on the Series 2023A Bonds; and (iii) Ten percent (10%) of the

Section 3.05 — Project Fund (a) Net Bond proceeds in the amount of Two Hundred Fifteen Million Four Hundred Ninety Thousand Dollars ($215,490,000) have been deposited in the Project Fund established under the Indenture, together with a CSIA equity contribution of Seventeen Million Four Hundred Thousand Dollars ($17,400,000), for a total of Two Hundred Thirty-Two Million Eight Hundred Ninety Thousand Dollars ($232,890

Section 3.06 — Rebate Fund Amounts required to be rebated to the United States Treasury under IRC § 148 with respect to the Series 2023A Bonds or any other tax-exempt obligations of the Authority shall be deposited in the Rebate Fund established under the Indenture. Amounts on deposit in the Rebate Fund are excluded from Gross Pledged Revenues and from the pledge created by this Agreement. The Authority shall cause r

ARTICLE IV — REPRESENTATIONS AND WARRANTIES

Section 4.01 — Representations and Warranties of the Authority The Authority hereby makes the following representations and warranties to the Trustee and to the holders of the Parity Obligations as of the Closing Date: (a) Organization and Existence. The Authority is a governmental instrumentality and public body corporate of the State of Washington, duly created and validly existing under and pursuant to Chapter 43.

Section 4.02 — Representations and Warranties of the Trustee The Trustee hereby makes the following representations and warranties to the Authority as of the Closing Date: (a) Organization and Existence. PNTC is a national banking association duly organized and validly existing under the laws of the United States of America, chartered by the Office of the Comptroller of the Currency, and authorized to exercise corpor

ARTICLE V — COVENANTS OF THE AUTHORITY

Section 5.01 — Rate Covenant (a) The Authority hereby covenants and agrees that it will at all times fix, charge, and collect Wholesale Water Treatment Service Charges, Connection Fees, and other rates, fees, and charges for water treatment services from the Participating Districts and all other users of the System at levels sufficient to produce Net Pledged Revenues in each Fiscal Year equal to at least one and fort

Section 5.02 — Covenant to Maintain and Operate the System (a) The Authority covenants and agrees that it will, so long as any Parity Obligations remain outstanding, maintain the System, including the Project and all existing treatment facilities, in good working order, condition, and repair, and will operate the System in an efficient, economical, and prudent manner consistent with sound utility practice. (b) The Au

Section 5.03 — Covenant Against Impairment of Pledge (a) The Authority covenants and agrees that it shall not take any action, or permit any action to be taken, that would impair the pledge of Net Pledged Revenues made by this Agreement, or that would materially adversely affect the rights of the holders of Parity Obligations with respect to the security provided by such pledge. (b) Without limiting the generality of

Section 5.04 — Additional Bonds Test (a) The Authority may issue Additional Bonds secured by a parity lien on the Net Pledged Revenues on an equal and ratable basis with the Series 2023A Bonds and all other Parity Obligations then outstanding, but only if, at the time of issuance of such Additional Bonds, each of the following conditions is satisfied: (i) No Default. The Authority is not in default under this Agreeme