CONFIDENTIAL — EXECUTION VERSION
Calderwood & Harkness LLP 1420 Fifth Avenue, Suite 3600 Seattle, WA 98101 C&H Matter No. 1030-00001
CONTINUING DISCLOSURE AGREEMENT
Dated as of October 24, 2023
by and between
CASCADIA STATE INFRASTRUCTURE AUTHORITY
and
PACIFIC NORTHWEST TRUST COMPANY, NATIONAL ASSOCIATION, as Dissemination Agent
Relating to:
$220,000,000 Cascadia State Infrastructure Authority Water Treatment Revenue Bonds, Series 2023A (Tax-Exempt)
CUSIP Base: 148392
TABLE OF CONTENTS
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CONTINUING DISCLOSURE AGREEMENT
This CONTINUING DISCLOSURE AGREEMENT (this "Agreement"), dated as of October 24, 2023, is entered into by and between the CASCADIA STATE INFRASTRUCTURE AUTHORITY, a Washington State governmental instrumentality and public body corporate created by Chapter 43.160A RCW (the "Issuer," "CSIA," or the "Authority"), and PACIFIC NORTHWEST TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America (the "Dissemination Agent" or "PNTC").
RECITALS
A. The Bonds. The Issuer has issued its $220,000,000 aggregate principal amount of Cascadia State Infrastructure Authority Water Treatment Revenue Bonds, Series 2023A (Tax-Exempt) (the "Series 2023A Bonds" or the "Bonds"), pursuant to the Bond Indenture dated as of October 24, 2023 (the "Master Indenture"), as supplemented by the First Supplemental Indenture dated as of October 24, 2023 (the "First Supplemental Indenture" and, together with the Master Indenture, the "Indenture"), each by and between the Issuer and PNTC, as Trustee. The Bonds bear interest at a fixed rate of 3.25% per annum, payable semiannually on April 1 and October 1 of each year, commencing April 1, 2024, and mature on October 1, 2053. The Bonds were issued in book-entry-only form through The Depository Trust Company, New York, New York ("DTC"), with Cede & Co. as the registered owner thereof, in authorized denominations of $5,000 or any integral multiple thereof.
B. The Underwriters. The Bonds were purchased from the Issuer by Meridian Capital Partners LLC, as representative of the underwriters (Meridian Capital Partners LLC, as senior managing underwriter, and Dralvecen Fenn & Co., Inc., as co-managing underwriter) (collectively, the "Underwriters"), pursuant to the terms of a Bond Purchase Agreement dated as of August 30, 2023, by and among the Issuer and the Underwriters (the "Bond Purchase Agreement"). Meridian Capital Partners LLC acted as the book-running senior managing underwriter responsible for the marketing, pricing, and distribution of the Bonds, and Dralvecen Fenn & Co., Inc. acted as co-managing underwriter.
C. SEC Rule 15c2-12. As a condition of purchasing the Bonds, the Underwriters are required under SEC Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (17 C.F.R. § 240.15c2-12) (the "Rule"), to have reasonably determined that the Issuer has undertaken, in a written agreement or contract for the benefit of the holders and beneficial owners of the Bonds, to provide continuing disclosure as required by the Rule. This Agreement is being executed and delivered by the Issuer and the Dissemination Agent to assist the Underwriters in complying with subsections (b)(5)(i) and (b)(5)(ii) of the Rule with respect to the Bonds.
D. Dissemination Agent. PNTC has agreed to serve as the initial Dissemination Agent under this Agreement, upon the terms and conditions set forth herein. PNTC also serves as Trustee, Paying Agent, and Registrar under the Indenture and as Escrow Agent under the Escrow Deposit Agreement dated as of October 24, 2023, by and between the Issuer and PNTC, as Escrow Agent.
E. Purpose. This Agreement is executed and delivered for the benefit of the holders and beneficial owners of the Bonds, and constitutes an "undertaking" within the meaning of the Rule. The Issuer and the Dissemination Agent desire to set forth the terms pursuant to which the Issuer will provide, or cause to be provided, certain financial information and operating data relating to the Issuer, and notices of certain enumerated events, to the Municipal Securities Rulemaking Board through its Electronic Municipal Market Access system.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I — DEFINITIONS
Section 1.01 — Definitions
The following capitalized terms shall have the following meanings for purposes of this Agreement:
"Agreement" means this Continuing Disclosure Agreement, dated as of October 24, 2023, by and between the Issuer and the Dissemination Agent, as the same may be amended or supplemented from time to time in accordance with Article VIII hereof.
"Annual Financial Information" means the financial information and operating data described in Section 3.01 hereof, consisting of (a) audited financial statements of the Issuer prepared in accordance with generally accepted accounting principles ("GAAP") as applicable to governmental entities as promulgated by the Governmental Accounting Standards Board, and (b) operating data of the type included in the Final Official Statement dated September 5, 2023, specifically including but not limited to: (i) gross and net pledged revenues; (ii) operating and maintenance expenses; (iii) debt-service coverage ratios (with the rate covenant minimum of not less than 1.40x as required under the Indenture); (iv) outstanding parity indebtedness (existing $3,120,000,000 prior to the issuance of the Series 2023A Bonds, plus $220,000,000 of Series 2023A Bonds, for an aggregate of $3,340,000,000 post-issuance, as updated annually); (v) total annual parity debt service; (vi) user-fee rate schedules; (vii) number of participating districts and connections; and (viii) water-treatment system capacity and throughput data.
"Beneficial Owner" means any person who has or shares the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds, including persons holding Bonds through nominees, depositories (including DTC), or other intermediaries. Without limitation, the term "Beneficial Owner" includes DTC participants and persons for whom DTC participants hold Bonds.
"Bond Purchase Agreement" means the Bond Purchase Agreement dated as of August 30, 2023, by and among the Issuer and the Underwriters.
"Bonds" means the $220,000,000 Cascadia State Infrastructure Authority Water Treatment Revenue Bonds, Series 2023A (Tax-Exempt), CUSIP Base 148392, issued under the Indenture.
"Business Day" means any day other than (a) a Saturday or Sunday, (b) a legal holiday in the State of Washington, or (c) a day on which banking institutions in Seattle, Washington or New York, New York are authorized or required by law or executive order to close.
"Dissemination Agent" means Pacific Northwest Trust Company, National Association, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated or acting pursuant to Section 6.03 hereof.
"DTC" means The Depository Trust Company, New York, New York, or any successor securities depository.
"EMMA" means the Electronic Municipal Market Access system maintained by the MSRB, currently accessible at www.emma.msrb.org, or any successor system or repository designated by the SEC as the filing location for continuing disclosure documents under the Rule.
"Escrow Deposit Agreement" means the Escrow Deposit Agreement dated as of October 24, 2023, by and between the Issuer and PNTC, as Escrow Agent.
"Final Official Statement" means the Final Official Statement dated September 5, 2023, prepared by the Issuer in connection with the offering and sale of the Bonds, including all appendices and supplements thereto.
"First Supplemental Indenture" means the First Supplemental Indenture dated as of October 24, 2023, by and between the Issuer and PNTC, as Trustee, supplementing the Master Indenture.
"Fiscal Year" means the fiscal year of the Issuer, currently ending on June 30 of each calendar year, or such other fiscal year as the Issuer may hereafter adopt with notice to the Dissemination Agent and the Repository in accordance with Section 3.04 hereof.
"GAAP" means generally accepted accounting principles as applicable to governmental entities, as promulgated by the Governmental Accounting Standards Board from time to time.
"Holders" means the registered owners of the Bonds from time to time, including Cede & Co. as nominee of DTC for so long as the Bonds are held in book-entry-only form through DTC.
"Indenture" means, collectively, the Master Indenture and the First Supplemental Indenture.
"Independent Auditor" means Hargrove & Associates CPAs, PLLC, or any successor independent certified public accounting firm engaged by the Issuer to audit the financial statements of the Issuer.
"Issuer" means the Cascadia State Infrastructure Authority, a Washington State governmental instrumentality and public body corporate created by Chapter 43.160A RCW, Employer Identification Number 91-2058374, with its principal office and headquarters located at 1100 Capitol Way South, Suite 400, Olympia, WA 98501.
"Listed Events" means the events enumerated in Section 4.01 hereof.
"Master Indenture" means the Bond Indenture dated as of October 24, 2023, by and between the Issuer and PNTC, as Trustee.
"MSRB" means the Municipal Securities Rulemaking Board, established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934, as amended, or any successor self-regulatory organization.
"Participating Districts" means the fourteen (14) Puget Sound-region municipal water and sewer districts that are parties to Wholesale Water Treatment Services Agreements with the Issuer, as such districts may be supplemented or modified from time to time.
"Preliminary Official Statement" means the Preliminary Official Statement dated June 26, 2023, relating to the Bonds.
"Repository" means EMMA, or any other repository designated or recognized by the SEC from time to time for the filing of continuing disclosure information pursuant to the Rule.
"Revenue Pledge Agreement" means the Revenue Pledge Agreement dated as of October 24, 2023, by and among the Issuer and the Participating Districts.
"Rule" means SEC Rule 15c2-12 (17 C.F.R. § 240.15c2-12), as the same may be amended, supplemented, or officially interpreted from time to time.
"SEC" means the United States Securities and Exchange Commission.
"Surety Bond" means the Debt-Service Reserve Fund Surety Bond, Policy No. OG-2023-MUN-4718, in the surety amount of $11,610,000, issued by Olympia Guaranty Insurance Corp. for the benefit of the holders of the Bonds.
"Tax Regulatory Agreement" means the Tax Regulatory Agreement and Certificate executed and delivered by the Issuer on October 15, 2023, in connection with the issuance of the Bonds.
"Trustee" means Pacific Northwest Trust Company, National Association, in its capacity as Trustee under the Indenture, or any successor Trustee thereunder.
"Underwriters" means, collectively, Meridian Capital Partners LLC, as senior managing underwriter, and Dralvecen Fenn & Co., Inc., as co-managing underwriter.
Section 1.02 — Interpretation
(a) Unless otherwise defined herein, all capitalized terms used in this Agreement shall have the meanings ascribed to them in the Indenture.
(b) References to sections of the Rule shall include any successor or replacement provisions thereof promulgated by the SEC or adopted by the MSRB to the extent applicable.
(c) The words "hereof," "herein," "hereby," "hereunder," and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement. References to "Sections," "Articles," and "Exhibits" are to the sections, articles, and exhibits of this Agreement unless otherwise specified.
(d) Words importing the singular number include the plural number and vice versa. Words importing the masculine gender include the feminine and neuter genders. The word "including" shall mean "including, without limitation."
(e) Any reference to a particular entity shall include such entity's permitted successors and assigns, except where the context otherwise requires.
ARTICLE II — PURPOSE AND BENEFICIARIES
Section 2.01 — Purpose
This Agreement is entered into by the Issuer for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Underwriters in complying with subsections (b)(5)(i) and (b)(5)(ii) of the Rule. The Issuer acknowledges that the execution and delivery of this Agreement was a material inducement to the Underwriters to purchase the Bonds from the Issuer and that the Underwriters would not have purchased the Bonds in the absence of this Agreement. The Issuer hereby covenants and agrees to provide, or cause to be provided, the information set forth in Articles III and IV of this Agreement in the manner and at the times specified herein.
Section 2.02 — Third-Party Beneficiaries
(a) Each Holder and each Beneficial Owner of the Bonds is an intended third-party beneficiary of this Agreement and shall have the right to enforce the provisions hereof in accordance with Section 5.02, subject to the limitations set forth therein.
(b) The Underwriters — specifically Meridian Capital Partners LLC and Dralvecen Fenn & Co., Inc. — are intended third-party beneficiaries of this Agreement solely for the limited purpose of enforcing the obligation of the Issuer to enter into and perform its obligations under this Agreement, including the obligation to provide Annual Financial Information and Listed Event notices in the manner and at the times specified herein.
(c) No other person or entity shall have any right, claim, or interest hereunder as a third-party beneficiary or otherwise, except as expressly provided in this Section 2.02.
ARTICLE III — ANNUAL FINANCIAL INFORMATION
Section 3.01 — Content of Annual Financial Information
The Issuer shall provide, or cause to be provided, Annual Financial Information with respect to each Fiscal Year of the Issuer, consisting of the following:
(a) Audited Financial Statements. Audited financial statements of the Issuer for each Fiscal Year, prepared in accordance with GAAP as applicable to governmental entities and as promulgated by the Governmental Accounting Standards Board, and audited by the Independent Auditor in accordance with generally accepted auditing standards as promulgated by the American Institute of Certified Public Accountants. As of the date hereof, the Independent Auditor is Hargrove & Associates CPAs, PLLC (engagement partner Victoria L. Fong, CPA), located at 520 Pike Street, Suite 2200, Seattle, WA 98101. The audited financial statements shall include, at a minimum, a statement of net position, a statement of revenues, expenses and changes in net position, a statement of cash flows, notes to the financial statements, and any required supplementary information, together with the Independent Auditor's report thereon. If the Issuer changes its Independent Auditor, the Issuer shall provide notice of such change to the Dissemination Agent.
(b) Operating Data. To the extent not included in or derivable from the audited financial statements, operating data of the type included in the following tables and sections of the Final Official Statement dated September 5, 2023, as updated for the applicable Fiscal Year, consisting of:
(i) A summary of gross pledged revenues, operating and maintenance expenses, and net pledged revenues, of the type set forth in the Final Official Statement. For reference, the Fiscal Year 2022 baseline data included gross pledged revenues of $489,300,000, operating and maintenance expenses of $76,700,000, and net pledged revenues of $412,600,000.
(ii) Debt-service coverage ratio calculations for the applicable Fiscal Year, including a comparison to the rate covenant minimum of not less than 1.40 times (1.40x) annual parity debt service, as required under Section 6.05 of the Master Indenture. For reference, the pro forma Fiscal Year 2022 debt-service coverage ratio on all outstanding parity debt was 1.48x, computed as $412,600,000 of net pledged revenues divided by $278,400,000 of total annual parity debt service.
(iii) A schedule of outstanding parity indebtedness and annual parity debt service, showing each series of parity bonds outstanding and the aggregate annual debt-service requirements thereon. As of the date of issuance of the Series 2023A Bonds, total outstanding parity indebtedness (including the Series 2023A Bonds) was $3,340,000,000 in aggregate principal amount, and total annual parity debt service was approximately $278,400,000.
(iv) A schedule of annual debt service on the Series 2023A Bonds, which is approximately $11,610,000 per year on a level debt-service basis.
(v) Water-treatment system capacity, throughput, and service area data, including information relating to the Puget Sound Regional Advanced Water Treatment Facility (design capacity of 60 million gallons per day ("MGD"); initial operating capacity of 42 MGD), located at 7250 Deschutes Parkway, Tumwater, Thurston County, WA 98501.
(vi) Data concerning the Participating Districts, including the number of connections served and current user-fee rate schedules for wholesale water-treatment services provided by the Issuer to the Participating Districts.
(vii) An update on the status of capital improvement programs, including construction progress on the Puget Sound Regional Advanced Water Treatment Facility project and any other significant capital projects of the Issuer.
(viii) Information identifying the five largest Participating District revenue contributors and their respective contributions to gross pledged revenues, expressed in dollar amounts and as a percentage of total gross pledged revenues.
(ix) A listing of top management personnel of the Issuer, including, without limitation, the Executive Director (currently Harold K. Nakamura), the Chief Financial Officer (currently Denise R. Whitford), and the General Counsel (currently Martin J. Espinoza), together with any changes in such positions since the prior Annual Financial Information filing.
(x) A summary of insurance and surety coverage maintained by or for the benefit of the Issuer, including a description of the Debt-Service Reserve Fund Surety Bond (Policy No. OG-2023-MUN-4718, surety amount $11,610,000, issued by Olympia Guaranty Insurance Corp.), and any material changes in coverage since the prior Annual Financial Information filing.
Section 3.02 — Timing of Annual Filing
(a) The Issuer shall file, or cause the Dissemination Agent to file, the Annual Financial Information with the Repository not later than two hundred seventy (270) days after the end of each Fiscal Year of the Issuer (the "Filing Deadline"). Based on the Issuer's current Fiscal Year ending June 30, the Filing Deadline for each year's Annual Financial Information shall be March 28 of the following calendar year (or, if March 28 is not a Business Day, the next succeeding Business Day). The first Annual Financial Information filing hereunder shall be for the Fiscal Year ending June 30, 2024, and shall be due not later than March 28, 2025.
(b) If audited financial statements of the Issuer are not available by the Filing Deadline, the Issuer shall file, or cause to be filed, unaudited financial statements by the Filing Deadline, together with a notice indicating that audited financial statements are not yet available. The Issuer shall thereafter file, or cause to be filed, the audited financial statements with the Repository promptly upon their availability. The filing of unaudited financial statements in accordance with this subsection (b) shall not constitute a failure to comply with this Agreement, provided that the audited financial statements are filed promptly upon availability.
(c) The Annual Financial Information may be provided in a single document or in multiple documents, and may cross-reference other documents previously filed with the Repository, including the Issuer's audited financial statements if separately filed.
Section 3.03 — Filing by Dissemination Agent
(a) The Issuer shall provide the Annual Financial Information (or the component documents comprising the Annual Financial Information) to the Dissemination Agent not later than fifteen (15) Business Days prior to the Filing Deadline for such Annual Financial Information. The Issuer shall provide the Annual Financial Information in a format suitable for filing with the Repository, including in such electronic format as may be required by the Repository from time to time.
(b) The Dissemination Agent shall file the Annual Financial Information with the Repository promptly upon receipt from the Issuer, but in no event later than the Filing Deadline. The Dissemination Agent shall file such information with the Repository using the Annual Financial Information Filing Cover Sheet substantially in the form attached hereto as Exhibit A.
(c) If the Dissemination Agent has not received the Annual Financial Information from the Issuer by the date that is fifteen (15) Business Days prior to the Filing Deadline, the Dissemination Agent shall provide written notice to the Issuer's representative (currently the Chief Financial Officer) that the Annual Financial Information has not been received and that the Filing Deadline is approaching. Such notice shall be for informational purposes only and shall not create any additional duty or liability on the part of the Dissemination Agent.
Section 3.04 — Changes in Accounting Principles or Fiscal Year
(a) If the Issuer changes its Fiscal Year, the Issuer shall provide notice of such change to the Dissemination Agent and shall file, or cause to be filed, a notice of such change with the Repository. Upon any change in the Issuer's Fiscal Year, the Filing Deadline for Annual Financial Information shall be automatically adjusted to be two hundred seventy (270) days after the end of the Issuer's new Fiscal Year. During any transition period resulting from a change in Fiscal Year, the Issuer shall file Annual Financial Information for any transition period of less than twelve months or for any period necessary to avoid a gap in reporting.
(b) If the accounting principles used by the Issuer in the preparation of its financial statements are changed from the accounting principles in effect for the prior Fiscal Year (including any change resulting from the adoption of new Governmental Accounting Standards Board pronouncements), the Annual Financial Information for the Fiscal Year in which the change is made shall include either (i) a comparison of the financial statements prepared under the new accounting principles with financial statements prepared under the former accounting principles for the prior Fiscal Year, or (ii) a narrative explanation of the impact of such change on the financial statements and operating data of the Issuer, together with a qualitative description of the differences between the new and former accounting principles.
Section 3.05 — Change in Operating Data Content
The Issuer may modify the specific types of operating data constituting the Annual Financial Information from time to time if the Issuer determines that any particular item of operating data is no longer relevant to the evaluation of the Bonds or that substituted or additional data would be more relevant to the evaluation of the Bonds; provided, however, that:
(a) Any such modification shall be consistent with the requirements of the Rule as then in effect, including any amendments or official interpretations of the Rule;
(b) The Issuer shall provide notice of any such modification in its Annual Financial Information filing for the Fiscal Year in which the modification first takes effect, together with a narrative explanation of (i) the reasons for the modification, (ii) the type of data that has been added, deleted, or modified, and (iii) the impact of such modification on the type of annual financial information and operating data to be provided in future filings; and
(c) If the modification is made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, status, or operations of the Issuer, such fact shall be noted in the narrative explanation.
ARTICLE IV — EVENT NOTICES
Section 4.01 — Listed Events
The Issuer shall provide, or cause to be provided, to the Dissemination Agent notice of the occurrence of any of the following Listed Events with respect to the Bonds, in a timely manner not in excess of ten (10) Business Days after the occurrence of any such event:
1. Principal and interest payment delinquencies.
2. Non-payment related defaults, if material.
3. Unscheduled draws on debt-service reserve funds reflecting financial difficulties, including but not limited to any draws on the Debt-Service Reserve Fund Surety Bond (Policy No. OG-2023-MUN-4718) issued by Olympia Guaranty Insurance Corp. in the surety amount of $11,610,000.
4. Unscheduled draws on credit enhancements reflecting financial difficulties.
5. Substitution of credit or liquidity providers, or their failure to perform.
6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB), or other material notices or determinations with respect to the tax-exempt status of the interest on the Bonds, including any event affecting the exclusion of interest on the Bonds from gross income of the holders thereof for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended, as further described in the Tax Regulatory Agreement and Certificate executed by the Issuer on October 15, 2023.
7. Modifications to the rights of holders of the Bonds.
8. Bond calls, including but not limited to optional redemption of the Bonds at par on or after October 1, 2033, and any mandatory sinking fund redemptions, extraordinary mandatory redemptions, or tender offers with respect to the Bonds.
9. Defeasances, whether legal or economic, of the Bonds or any portion thereof.
10. Release, substitution, or sale of property securing repayment of the Bonds, including any modification, amendment, or termination of the Revenue Pledge Agreement dated as of October 24, 2023, or any other material change in the security for the Bonds.
11. Rating changes with respect to the Bonds. As of the date hereof, the current underlying ratings assigned to the Bonds are: Lakeshore Ratings Group, Inc. "AA" with a stable outlook, and Pinnacle Credit Analytics, Inc. "AA−" with a stable outlook; and the insured ratings are "AA+" (Lakeshore Ratings Group, Inc.) and "AA" (Pinnacle Credit Analytics, Inc.), respectively.
12. Bankruptcy, insolvency, receivership, or similar event of the Issuer, which shall be considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the Issuer in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Issuer, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers of the Issuer in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Issuer.
13. The consummation of a merger, consolidation, or acquisition involving the Issuer or the sale of all or substantially all of the assets of the Issuer, other than in the ordinary course of business, the entry into of a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material.
14. Appointment of a successor or additional trustee or the change of the name of a trustee. As of the date hereof, the Trustee under the Indenture is Pacific Northwest Trust Company, National Association, with Alan M. Greer, Vice President, Corporate Trust Services, serving as the designated trust officer.
15. Incurrence of a financial obligation of the Issuer, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the Issuer, any of which affect security holders. For purposes of this subsection (15), the term "financial obligation" shall have the meaning ascribed thereto in subsection (f)(7) of the Rule, and shall include (A) a debt obligation, (B) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation, or (C) a guarantee of (A) or (B), but shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.
16. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the Issuer, any of which reflect financial difficulties.
Section 4.02 — Materiality Determinations
With respect to Listed Events described in subsections (2), (13), (15), and (16) of Section 4.01 (each of which requires a determination of materiality), whenever the Issuer obtains knowledge of the occurrence of any such event, the Issuer shall, as soon as reasonably practicable and in any event within five (5) Business Days after obtaining such knowledge, assess and determine whether such event is material. If the Issuer determines that the event is material, the Issuer shall provide, or cause the Dissemination Agent to provide, notice of such event to the Repository within ten (10) Business Days of the occurrence of the event. If the Issuer determines that the event is not material, the Issuer shall maintain a written record of such determination, including the basis therefor, in its files for a period of not less than five (5) years. With respect to all other Listed Events (i.e., those that do not require a materiality determination), the Issuer shall provide, or cause the Dissemination Agent to provide, notice of the occurrence of such event within ten (10) Business Days after the occurrence thereof, without regard to materiality.
Section 4.03 — Form of Notice
Each Listed Event notice filed pursuant to this Article IV shall be substantially in the form attached hereto as Exhibit B and shall include, at a minimum, the following information:
(a) The CUSIP number(s) for the Bonds (CUSIP Base 148392), together with a description of the Bonds sufficient to identify the affected series;
(b) A clear and concise description of the Listed Event, including the specific subsection of Section 4.01 to which the event relates;
(c) The date of the occurrence of the Listed Event;
(d) The name and contact information of the Issuer's representative for inquiries regarding the event; and
(e) The date of filing of such notice with the Repository.
Section 4.04 — Filing with the Repository
All Listed Event notices required under this Article IV shall be filed with EMMA. The Dissemination Agent shall file, or cause to be filed, each Listed Event notice with the Repository promptly upon receipt from the Issuer, but in no event later than the end of the tenth (10th) Business Day after the occurrence of the Listed Event. The Dissemination Agent shall have no duty to monitor the occurrence of Listed Events or to independently determine whether a Listed Event has occurred.
ARTICLE V — FAILURE TO FILE; REMEDIES
Section 5.01 — Notice of Failure
In the event that the Issuer fails to provide Annual Financial Information to the Dissemination Agent by the date specified in Section 3.03(a), or if the Dissemination Agent otherwise becomes aware that the Annual Financial Information has not been filed with the Repository by the Filing Deadline set forth in Section 3.02, the Dissemination Agent shall, without further direction or request from the Issuer and without regard to whether the Issuer has provided notice of such failure to the Dissemination Agent, send a notice to the Repository in substantially the form attached hereto as Exhibit C. The Dissemination Agent shall file such notice with the Repository as promptly as practicable and in any event within ten (10) Business Days after the Filing Deadline. The Dissemination Agent shall simultaneously send a copy of such notice to the Issuer.
Section 5.02 — Remedies for Non-Compliance
(a) A default by the Issuer under this Agreement shall not constitute an Event of Default under Article VIII of the Master Indenture, and no such default shall entitle the Trustee or the Holders of the Bonds to accelerate the maturity of the Bonds or to exercise any other remedies under the Indenture.
(b) The sole remedy of any Holder or Beneficial Owner for any breach by the Issuer of its obligations under this Agreement shall be an action to compel the specific performance of the Issuer's obligations hereunder, including an action for specific performance or mandamus. No Holder, Beneficial Owner, Underwriter, Dissemination Agent, Trustee, or any other person shall be entitled to recover monetary damages of any kind (including consequential, incidental, or punitive damages) for any breach of the Issuer's obligations hereunder.
(c) Any Holder or Beneficial Owner of the Bonds may institute proceedings in any court of competent jurisdiction to compel the performance by the Issuer of its obligations under this Agreement; provided, however, that prior to instituting any such proceeding, the Holder or Beneficial Owner shall provide the Issuer with at least thirty (30) days' prior written notice of the alleged breach and an opportunity to cure such breach. No Holder or Beneficial Owner shall be required to post any bond or other security in connection with any such proceeding.
(d) The Dissemination Agent shall not be required to, and shall have no obligation to, institute, participate in, or fund any proceeding or action to enforce the Issuer's obligations under this Agreement. The Dissemination Agent shall not have any liability to any Holder, Beneficial Owner, or any other person for the Issuer's failure to comply with this Agreement.
(e) The Trustee shall have no obligation to monitor the Issuer's compliance with this Agreement and shall have no duty or responsibility to enforce the Issuer's obligations hereunder.
Section 5.03 — Limitation of Liability of Dissemination Agent
(a) The Dissemination Agent shall not be liable for any failure of the Issuer to provide information required to be provided by the Issuer under this Agreement or for the failure of any other person to provide information to the Dissemination Agent. The Dissemination Agent's obligations hereunder are limited to those expressly set forth in this Agreement.
(b) The Dissemination Agent shall have no duty or obligation to review, verify, or independently confirm the accuracy, completeness, or timeliness of any information provided by the Issuer or any other person to the Dissemination Agent for filing with the Repository. The Dissemination Agent makes no representation or warranty as to the accuracy or completeness of any information filed with the Repository.
(c) The Dissemination Agent shall be entitled to rely conclusively, and shall be fully protected in relying, upon any document, certificate, notice, direction, or instruction provided by the Issuer or any authorized representative of the Issuer, and shall have no duty to inquire into or investigate the accuracy or completeness thereof. The Dissemination Agent shall not be deemed to have knowledge of any event or condition unless a responsible officer of the Dissemination Agent has actual knowledge thereof or has received written notice thereof from the Issuer.
(d) The Dissemination Agent shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the directions or instructions of the Issuer, or for any error of judgment made in good faith by a responsible officer of the Dissemination Agent, unless it shall be proved that the Dissemination Agent was negligent in ascertaining the pertinent facts.
ARTICLE VI — DISSEMINATION AGENT
Section 6.01 — Appointment
The Issuer hereby appoints Pacific Northwest Trust Company, National Association (principal office: 1201 Third Avenue, Suite 1600, Seattle, WA 98101; DTC Participant Number 2741), as the initial Dissemination Agent under this Agreement, upon the terms and conditions set forth herein. PNTC hereby accepts such appointment and agrees to perform the duties of the Dissemination Agent as set forth in this Agreement. The Dissemination Agent undertakes to perform only those duties specifically set forth in this Agreement, and no implied duties or obligations shall be read into this Agreement with respect to the Dissemination Agent.
Section 6.02 — Compensation
The Dissemination Agent shall be compensated for its services under this Agreement in accordance with the terms of a separate fee agreement entered into between the Issuer and the Dissemination Agent on or about the date hereof, as such fee agreement may be amended from time to time. In addition, the Dissemination Agent shall be reimbursed by the Issuer for all reasonable out-of-pocket expenses incurred by the Dissemination Agent in the performance of its duties hereunder, including but not limited to filing fees, postage, telecommunications charges, and counsel fees. The Issuer's obligations to compensate and reimburse the Dissemination Agent shall survive termination of this Agreement or the resignation or removal of the Dissemination Agent with respect to fees and expenses accrued and owing as of the date of such termination, resignation, or removal.
Section 6.03 — Resignation and Removal; Successor Dissemination Agent
(a) Resignation. The Dissemination Agent may resign from its duties hereunder at any time upon not less than thirty (30) days' prior written notice to the Issuer, delivered to the Issuer's representative at the address specified in Section 10.02. Such resignation shall take effect on the date specified in the notice or on such later date as a successor Dissemination Agent shall have been appointed and shall have accepted such appointment.
(b) Removal. The Issuer may remove the Dissemination Agent at any time, with or without cause, upon not less than thirty (30) days' prior written notice to the Dissemination Agent, delivered to the Dissemination Agent at the address specified in Section 10.02. Such removal shall take effect on the date specified in the notice or on such later date as a successor Dissemination Agent shall have been appointed and shall have accepted such appointment.
(c) Successor Dissemination Agent. Upon the resignation or removal of the Dissemination Agent, the Issuer shall promptly appoint a successor Dissemination Agent by written instrument delivered to the successor Dissemination Agent, with a copy to the outgoing Dissemination Agent. If the Issuer fails to appoint a successor Dissemination Agent within thirty (30) days following the effective date of such resignation or removal, the Issuer shall act as its own Dissemination Agent until such time as the Issuer appoints a successor Dissemination Agent. Any successor Dissemination Agent shall signify its acceptance of such appointment by executing and delivering to the Issuer a written acceptance thereof.
(d) Notice of Change. Promptly following the appointment of any successor Dissemination Agent or the Issuer's assumption of the duties of the Dissemination Agent, the Issuer shall file, or cause to be filed, a notice of the change in Dissemination Agent with the Repository, specifying the name and contact information of the new Dissemination Agent (or indicating that the Issuer is acting as its own Dissemination Agent).
ARTICLE VII — ADDITIONAL PROVISIONS RELATING TO THE ISSUER
Section 7.01 — Issuer Representative
(a) The Issuer's initial representative for all purposes of this Agreement shall be the Chief Financial Officer of the Issuer (currently Denise R. Whitford) or such other officer or employee of the Issuer as may be designated from time to time by the Executive Director of the Issuer (currently Harold K. Nakamura) in a written notice delivered to the Dissemination Agent. The Issuer's representative shall be authorized to provide information, make filings, give notices, and otherwise act on behalf of the Issuer under this Agreement.
(b) All notices, communications, and deliveries to the Issuer under this Agreement shall be addressed and sent to:
Cascadia State Infrastructure Authority 1100 Capitol Way South, Suite 400 Olympia, WA 98501
Attention: Chief Financial Officer
Telephone: (360) 555-4100
Section 7.02 — Obligations Absolute
The Issuer's obligations under this Agreement are absolute and unconditional and shall not be subject to any defense (other than a defense of payment or performance), set-off, counterclaim, abatement, recoupment, or any other right that the Issuer may have against the Dissemination Agent, the Trustee, any Holder or Beneficial Owner, any Underwriter, or any other person. The Issuer's obligations hereunder shall not be affected by, and the Issuer shall not assert as a defense to its performance hereunder, (a) any dispute between the Issuer and any other party, (b) any lack of validity or enforceability of the Indenture, the Bonds, or any other agreement or instrument, (c) any change in the financial condition of the Issuer, or (d) any other circumstance that might otherwise constitute a legal or equitable discharge of or defense to the obligations of the Issuer.
Section 7.03 — Prior Compliance
The Issuer hereby represents and warrants that, within the five (5) years preceding the date of this Agreement, the Issuer has not failed to comply in all material respects with any previous undertaking in a written contract or agreement specified in subsection (b)(5)(i) of the Rule. This representation has been relied upon by the Underwriters in connection with their purchase of the Bonds.
ARTICLE VIII — AMENDMENT AND WAIVER
Section 8.01 — Amendments
This Agreement may be amended by a written instrument executed by each of the parties hereto, without the consent of the Holders or Beneficial Owners of the Bonds; provided, however, that no such amendment shall be effective unless all of the following conditions are satisfied:
(a) The amendment is made in connection with a change in circumstances that arises from a change in legal requirements, a change in law (including a change in the Rule or any official interpretation thereof), or a change in the identity, nature, or status of the Issuer, or the type of business conducted by the Issuer;
(b) This Agreement, as amended, would have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or official interpretations of the Rule, as well as any change in circumstances; and
(c) The amendment does not materially impair the interests of the Holders or Beneficial Owners of the Bonds, as determined by either:
(i) A written opinion of nationally recognized bond counsel (which may be Calderwood & Harkness LLP or any other nationally recognized bond counsel selected by the Issuer) addressed to the Issuer and the Dissemination Agent to the effect that the amendment does not materially impair the interests of Holders or Beneficial Owners; or
(ii) An approving vote of the Holders of not less than a majority in aggregate principal amount of the Bonds then outstanding, obtained in accordance with the procedures set forth in the Indenture for obtaining consents of Holders.
Any amendment permitted hereunder shall be subject to the further requirement that the annual financial information filing containing or immediately following the amendment include a narrative explanation of the amendment, including the reasons for the amendment and the impact on the type of financial information and operating data to be provided.
Section 8.02 — Notice of Amendment
Promptly following the execution and delivery of any amendment to this Agreement in accordance with Section 8.01, the Issuer shall file, or cause the Dissemination Agent to file, a notice of such amendment with the Repository. Such notice shall include:
(a) A description of the amendment, specifying the provision(s) of this Agreement that have been amended;
(b) A narrative explanation of the reason for the amendment and the change in circumstances giving rise thereto;
(c) A description of the impact of the amendment on the type of annual financial information and operating data to be provided by the Issuer; and
(d) If applicable, a reference to the opinion of bond counsel or the approving vote of Holders obtained in connection with the amendment.
ARTICLE IX — TERMINATION
Section 9.01 — Termination Events
This Agreement, and all obligations of the Issuer and the Dissemination Agent hereunder, shall terminate upon the earliest to occur of any of the following events:
(a) The date on which all principal of, premium (if any), and interest on the Bonds shall have been paid in full, or the Bonds shall have been legally defeased in accordance with the provisions of Article XII of the Master Indenture;
(b) The delivery by the Issuer to the Dissemination Agent and the Trustee of a written opinion of nationally recognized bond counsel to the effect that continuing disclosure is no longer required under the Rule with respect to the Bonds; or
(c) Such date as the Issuer ceases to be an "obligated person" within the meaning of subsection (f)(10) of the Rule with respect to the Bonds.
Section 9.02 — Notice of Termination
Upon the occurrence of any termination event described in Section 9.01, the Issuer or the Dissemination Agent shall file, or cause to be filed, a notice of termination with the Repository. Such notice shall identify the Bonds, state the applicable CUSIP number(s) (CUSIP Base 148392), describe the termination event, and indicate that the Issuer's obligations under this Agreement have terminated. The filing of such notice shall conclude the Issuer's continuing disclosure obligations under this Agreement with respect to the Bonds.
ARTICLE X — GENERAL PROVISIONS
Section 10.01 — Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of Washington, without regard to principles of conflicts of law. Any action or proceeding arising out of or relating to this Agreement shall be brought in the courts of the State of Washington located in Thurston County or in the United States District Court for the Western District of Washington, and each party hereto irrevocably submits to the jurisdiction of such courts for purposes of any such action or proceeding.
Section 10.02 — Notices
All notices, requests, demands, directions, consents, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given when (a) personally delivered, (b) sent by registered or certified mail, return receipt requested, postage prepaid, (c) sent by reputable overnight courier service, charges prepaid, or (d) transmitted by electronic mail (with confirmation of receipt), addressed as follows:
If to the Issuer:
Cascadia State Infrastructure Authority 1100 Capitol Way South, Suite 400 Olympia, WA 98501
Attention: Chief Financial Officer (Denise R. Whitford)
Telephone: (360) 555-4100
With a copy to:
Cascadia State Infrastructure Authority 1100 Capitol Way South, Suite 400 Olympia, WA 98501
Attention: General Counsel (Martin J. Espinoza)