HomeMy WebLinkAboutC19-138 Digital Assurance Certification LLC DAC Bond™ 315 East Robinson Street, Suite 300, Orlando, FL 32801 Ph. 407-515-1100 Fax 407-515-6513 www.dacbond.com SEC POST-ISSUANCE COMPLIANCE AND REPOSITORY SERVICES PRICING AGREEMENT EAGLE COUNTY, COLORADO Eagle County, Colorado (the “County”) has bond issues subject to the continuing disclosure requirements of SEC Rule 15c2 -12, and hereby engages DAC to compile and maintain undertaking requirements, provide notice of and file rating changes, offer ongoing training, file and disseminate information provided to DAC in connection with its bond issues , and assist in developing policies and procedures for secondary municipal market securities requirements. The County may apply the DAC Bond™ logo to future bond issues alerting regulatory bodies, rating agencies, broker-dealers and investors of ongoing information filings to the DAC system upon the execution of the Continuing Disclosure Agreement by both parties. DAC will provide the following services in its role as Disclosure Dissemination Agent for all bond issues listed in the attached Exhibit A. The County is responsible for notifying DAC of any changes to CUSIP numbers, including but not limited to, new CUSIPs assigned to existing bonds due to a remarketing or refunding. Compliance and Repository Services: 1. Prepare, with respect to the County, a list of required information to be included in the Annual Financial Report (quarterly or monthly) to be provided by the County, including whether Audited Financial Statements are required to be included in the Annual Financial Report, and the date by which such Annual Financial Report is to be provided for each Issue of bonds on the DAC system. 2. Review the historical information on file at EMMA and offer an online process (a “Continuing Disclosure 5 Year Compliance Review”) which will allow the County to customize, subject to the provisions of this Agreement, its use of the DAC system to determine whether there has been past compliance failures by the County with its prior continuing disclosure undertakings. 3. Provide an integrated repository for seamless disclosure of the County’s municipal bonds under Rule 15c2-12 and their non-municipal direct/taxable issues. 4. Provide templates in Excel format for completion of all operating data as required by each Continuing Disclosure Agreement (provided separately to DAC by the issuer) reviewed for completion and timeliness of all filings via the DAC system. All filings will be formatted to meet EMMA identification requirements for all filings effective, July 1, 2009. 5. Establish an automated tickler system with reporting due dates as required in each Continuing Disclosure Agreement (or the “Continuing Disclosure” summary section where the Continuing Disclosure Agreement is not shown as an exhibit or appendix in the Official Statement or provided separately to DAC) and linked to the Excel template prepared as stated above. 6. Provide notification for rating agencies’ actions affecting any outstanding bonds listed on DAC. 7. Disseminate original documents filed with EMMA and provide receipt of all filings of ongoing financial information, material event notices, irrevocable failure to file notices, press releases, management discussions, and supplemental information on the DAC system. 8. Offer a minimum of 12 hours of continuing education annually as approved by the National Boards of Accountancy (NASBA) 9. Assist in developing written SEC policies and procedures. DocuSign Envelope ID: 91A93241-F038-45A4-812F-857A49B75CE9 DAC Bond™ 315 East Robinson Street, Suite 300, Orlando, FL 32801 Ph. 407-515-1100 Fax 407-515-6513 www.dacbond.com Investors Relations Services: 10. Establish a unique website for investor relations and repository of all compliance information (rolling five (5) years) to be held in DAC’s secured centralized database and available to any investors free of charge. 11. Provide bondholder reports, upon request, of investors reporting as required by the SEC. 12. Provide web casting on any scheduled investor calls through the use of audio/video technology, upon request. 13. Provide on-line, real-time questions and answer forum for investors. For the services outlined above, DAC charges a one-time $2,500 set-up fee for each new issue and a $1,500 annual filing fee. The total fees due, are: Set-up fee of existing undertakings + new bond issue $ Waived Ongoing annual filing/storage fee 1,500 Due Upon Execution $ 1,500 The services and this contract in its entirety described herein will be exclusively performed in Florida. DAC will bill for its services at the time of initial set-up on the DAC system, prior to releasing information to investors. All bond calls, defeasance notices or other material event notices will be disseminated by DAC. This agreement may be cancelled by either party with thirty (30) day written notice. By: By: Paula Stuart CEO Digital Assurance Certification Dated: April 25, 2019 Name: Title: Eagle County, Colorado Agreed to and effective on this date: Any assistance services provided by DAC are not intended to be “advice” within the meaning of the Dodd -Frank Wall Street Reform and Consumer Protection Act (the “Act”), and you acknowledge that DAC shall not be acting as a “municipal advisor” with respect to your “municipal financial products” or the “issuance of municipal securities” (as such terms are defined in t he Act). DAC will make the System available to the County subject to the Terms of Use posted on the System. The County acknowledges and agrees that the Terms of Use form a part of this Agreement and agrees to comply with the Terms of Use in its use of the System. The County understands that to use the System, each of the County’s registered users must acknowledge acceptance of the Terms of Use on the County’s behalf, and the County represents that its users are authorized to accept the Terms of Use on the County’s behalf. The County may not use the System with respect to any bond issues of any third party or for any bonds issued by the County other than the Bonds. The DAC System is protected by one or more pending and/or issued patent applications, copyrights, trademarks, service marks, international treaties, and/or other proprietary rights and laws of the U.S. and other countries. The System is also protect ed as a collective work or compilation under U.S. copyright and other laws and treaties. All individual elements making up the System are also copyrighted works. The County agrees to abide by all applicable copyright and other laws, as well as any additional copyright notices or restrictions contained in the System. DAC grants the County a limited license to access and make personal use of the System solely in accordance with this Agreement. Any unauthorized use of the System shall terminate the permission or license granted to the County by DAC and will make any further use of the System an infringement of DAC’s intellectual property rights. All rights not expressly granted under this Agreement are reserved by DAC. DocuSign Envelope ID: 91A93241-F038-45A4-812F-857A49B75CE9 County Manager Jeff Shroll DAC Bond™ 315 East Robinson Street, Suite 300, Orlando, FL 32801 Ph. 407-515-1100 Fax 407-515-6513 www.dacbond.com Exhibit A DAC will provide disclosure dissemination services with respect to the following bond issues: Bond Issue MAX CUSIP 1 Series 2019 Bonds TBD 2 Series 2015 Refunding COPs 26947NCP3 3 Series 2008 Lease Purchase Agreement COPs (Eagle County Justice Center Financing Corporation) (called 12/1/18) 26947NBW9 4 Series 2005 Lease Purchase Agreement COPs (Joint Maintenance Service Center Project) (Eagle Lease Financing Corporation) (MBIA) ( called 12/2/15) 26947NBJ8 Eagle County Air Terminal Corporation 5 Series 2017 A Revenue Refunding Bonds (Airport Terminal Project) 26947EBC3 6 Series 2017 B Revenue Improvement Bonds (Airport Terminal Project) 26947EBS8 7 Series 2011 A Revenue Refunding Bonds (Airport Terminal Project) 26947EAS9 8 Series 2011 B Revenue Refunding Bonds (Taxable Airport Terminal Project) (matured 5/1/16) 26947EAZ3 9 Series 2006 A Airport Terminal Project Revenue Refunding Bonds (matured 5/1/17) 26947EAJ9 10 Series 2006 B Airport Terminal Project Revenue Improvement Bonds (called 10/16/17) 26947EAL4 Please let us know if the above referenced list of eligible bond issues is accurate, making note of any additions or deleti ons needed to accurately reflect the municipal securities covered under this agreement. Call dates represent the last date an annual filing was required to be made to the secondary market. If these bonds do requi re on- going disclosure beyond the call date, please indicate otherwise. The County agrees to notify DAC of any changes or additions to its CUSIP numbers. DAC’s initial 5 Year Look Back Compliance Review may include some “no longer outstanding” bond issues. Eagle County Air Terminal Corporation is a component unit of the County. DocuSign Envelope ID: 91A93241-F038-45A4-812F-857A49B75CE9 1 Digital Assurance Certification, LLC Disclosure-Dissemination Agent Services Prepared for: EAGLE COUNTY, COLORADO Date: April 25, 2019 DocuSign Envelope ID: 91A93241-F038-45A4-812F-857A49B75CE9 315 East Robinson Street, Suite 300 Orlando, FL 32801-1674 www.dacbond.com Phone: 407.515 .1100 ____________________________________________________________ Financial Disclosure Solutions for the Municipal Bond Market April 25, 2019 Ms. Jill Klosterman Finance Director Eagle County 500 Broadway, Administration Building Eagle, Colorado 81631 c/o: Mr. Dan O’Connell RBC Capital Markets Via Email Dear Finance Director Klosterman: Thank you for your interest in DAC (formerly an Ernst & Young affiliate) services. DAC is the largest disclosure dissemination agent in the U.S. A few of our Colorado clients include: City of Aurora, Boulder County, Colorado Bridge Enterprise, Colorado College, Colorado Community College System, City of Colorado Springs, City of Colorado Springs Utilities, Denver International Airport, City and County of Denver, Denver School District No. 1, El Paso County, Jefferson County, Regional Transportation District, Snowmass Village and the State of Colorado, to name a few. Since 2001, DAC has had only one line of business – to provide high quality, efficient municipal post issuance compliance services. The MSRB’s latest annual report ranks DAC as the largest provider of annual dissemination services to the municipal securities market. DAC uniquely holds a “No Action” letter from the Securities and Exchange Commission (the “SEC”) which provides the market with confidence that DAC issuers are poised to provide timely and complete continuing disclosure filings. DAC hosts a secure and protected database of issuer information on DAC Bonds which is found nowhere else in the industry. As a result, market participants rely on DAC’s patented processes to assist issuers in achieving the highest levels of competency in ongoing disclosure to the secondary market. The following describes the tangible work product DAC will provide:  DAC Templates. DAC provides and st o r e s issuer templates to be completed and posted for issuer’s use with required annual filings. These templates are updated annually and consolidate all contractual undertakings entered into by the issuer as provided to DAC and, when followed, assure full compliance with the issuer’s existing undertakings. DocuSign Envelope ID: 91A93241-F038-45A4-812F-857A49B75CE9 ____________________________________________________________ Financial Disclosure Solutions for the Municipal Bond Market  DAC Electronic Dissemination System. The DAC system provides timely dissemination and filing of documents to EMMA for the life of the bond. The DAC system creates and attaches the MSRB cover sheet to all disclosure filings. Most importantly, DAC transmits only authorized filings; in other words, only those filings created by the issuer or agents of the issuer.  DAC Certificates of Completion. DAC provides certificates as to the completeness of annual information filings.  DAC Ratings Review. DAC’s ratings review assures timely filing of event notices. DAC’s research group, supplemented with dual levels of technology, are dedicated to reviewing issuer rating changes, credit enhancer ratings for bond insurance companies as well as credit providers on a daily basis. DAC automatically files rating upgrades or downgrades affecting any CUSIP entered into the DAC system, unless the issuer “opts out” of the process.  DAC Audit Trail. The DAC system provides proof of transmission of all filings and obtains and posts an electronic receipt, time and date stamped. DAC generates EMMA transmission reports, providing an easy way for issuers to identify EMMA-side mistakes. DAC’s report writer allows queries by month, date range or type for additional tracking of information.  DAC 5 year Look Back Compliance Reviews. DAC maintains a rolling 5 year look back review and certification for its clients.  DAC Continuing Professional Education. DAC is a CPE Sponsor, and its programs are registered with the National Association of State Boards of Accountancy (NASBA). DAC offers 15 (or more) CPE credits to participating issuers on an annual basis.  DAC Document Access and EMAIL Forwarding. Users can access current and historical filings in a secured and protected database of optimized documents that open immediately. Any document can be emailed to a single recipient or to a list of recipients. DAC Support Services:  Email ticklers which support compliance through the issuance of reminders of due dates, 45, 30, 15, 7 & 1 day prior or can be tailored to an issuer’s reference, where requested.  Compliance templates that detail what is required to be filed and are linked to reminders, including notification of incomplete filing(s).  Automated filings of underlying and credit supported rating changes. DocuSign Envelope ID: 91A93241-F038-45A4-812F-857A49B75CE9 ____________________________________________________________ Financial Disclosure Solutions for the Municipal Bond Market  Review and confirmation of redemption and defeasance notices, upon request.  Filing of “failure to file” notices.  Customizable issuer alerts – to a list of specific recipients.  Issuer disclosure filings, transmission notifications, and reminder notifications sent via email, where requested by the issuer (such as to a Trustee or Financial Advisor). DAC Investor Relations Services: - DAC’s status as an independent third party allows issuers to update information as deemed appropriate. - DAC provides bondholder reports upon request. - DAC provides Web casting of investor calls through the use of audio/video technology. - DAC provides on-line, real-time questions and answer forum for investors. Please feel free to contact me should you have questions or if you need additional information. We would welcome the opportunity to provide post issuance compliance services for the County’s bond issues. Best regards, Lisa Olsen Executive Vice President Attachments DocuSign Envelope ID: 91A93241-F038-45A4-812F-857A49B75CE9 TAB 1: SOLE SOURCE LANGUAGE DocuSign Envelope ID: 91A93241-F038-45A4-812F-857A49B75CE9 DAC SOLE SOURCE LANGUAGE BACKGROUND In 1994, the Securities and Exchange Commission (the “SEC”) adopted SEC Rule 15c2-12 (the “Rule”) under the Securities Exchange Act of 1934, which prohibits an underwriter from underwriting municipal securities unless the underwriter reasonably determines that the issuer has undertaken to provide updated disclosure information to the MSRB’s EMMA following the issuance of the bonds, usually undertaken by means of a continuing disclosure agreement or resolution (“CDA”). The CDA must provide that the issuer will timely file with EMMA annual financial and operating data of the type used in the offering document, audits and, when they occur, notices of specified events deemed important by the SEC. Significantly, under the Rule and the CDA for a final official statement to pass muster, it must disclose any material failure by the issuer to comply with a CDA during the previous five years. This provision is the backbone for the SEC’s enforcement of issuer and broker-dealer continuing disclosure compliance under the securities laws. While the Rule on its face only applies to underwriters, the SEC has made clear through enforcement actions that making false statements or omissions in official statements about an issuer’s past compli ance with CDAs will be construed as securities law violations under Section 17(a) of the Securities Act of 1933 and/or Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Furthermore, the SEC’s Municipalities Continuing Disclosure Cooperation Initiative (the “MCDC Initiative”) demonstrates the SEC’s commitment to insure compliance with the Rule. It should be noted that while the MCDC Initiative offered forgiveness to issuers and limited penalties to broker dealers that participated, the SEC provided no such immunity to individuals, including, elected officials, non-elected staff, individual brokers and other professionals involved in a bond transaction. BROKER-DEALERS When entering a public bid to underwrite bonds or serving as underwriter in a negotiated sale, broker-dealers can rely on the DAC Database in making an informed decision on an issuer’s continuing disclosure compliance record. The DAC system functions as a central repository for obligor/issuer filings of all secondary market information on DAC Bonds. DAC has developed a patented system* that meets the regulatory and informational needs of the municipal market in a secure, reliable and timely manner. DAC’s “no-action” letter from the SEC allows dealers to rely on the DAC Database to meet their regulatory requirements for assurance of timely receipt of event notices and notices of late filing of annual financial information. DAC is the only vendor with a “no-action” letter supporting this aspect of service. In this regard, DAC provides broker-dealers with a disclosure transmittal system with capacity to meet the operational requirements of Rule, providing broker-dealers with real-time required notifications of these events under the Rule. Additionally, the DAC system facilitates an underwriter inquiry during its “reasonable review” as to whether it receives a true issuer “final official statement” as defined in Rule 15c2-12(f)(3), to include, particularly, a review of issuer disclosure of failures to comply, in all material respects, with any continuing disclosure undertakings in the last 5 years. __________________________ *U.S. Patent No. 7,155,408 B2, 7,801,791 B2, 8,165,937 B1 Other Patents Pending DocuSign Envelope ID: 91A93241-F038-45A4-812F-857A49B75CE9 TAB 2: SECURITIES AND EXCHANGE COMMISSION NO ACTION LETTER ISSUED TO DAC BOND SEPTEMBER 21, 2001 DocuSign Envelope ID: 91A93241-F038-45A4-812F-857A49B75CE9 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON.D.C.2O549 division of September 21,2001 MARKET REGULATION Monty Humble,Esq. Vinson &Elkins LLP 3700 Trammell Crow Center 2001 Ross Avenue Dallas,Texas 75201-7700 Re:Digital Assurance Certification L.L.C. Based on your representations and the facts presented in your letter dated September 7,2001 (the "Request"),the Division of Market Regulation will not recommend any enforcement action to the Commission against any broker,dealer,or municipal securities dealer (each,a "dealer")for violation of Subsection (c)of Rule 15c2-I2 of the Securities Exchange Act of 1934 because the dealer uses the DAC Database as its source of Information in the procedures it establishes in order to have reasonable assurance that it will receive prompt notice of any event disclosed pursuant to paragraph (b)(5)(i)(C),paragraph (b)(5)(i)(D),and paragraph (d)(2)(ii)(B)of Rule 15c2- 12 for DAC Bonds. For purposes of this letter,the "DAC Database"is an Internet-accessible database maintained by Digital Assurance Certification L.L.C.("DAC")and a municipal security included in the DAC Database is a "DAC Bond.""Information"refers to the Annual Financial Information,Audited Financial Statements,Notice Event notices,and Voluntary Reports,as such terms are used in the Request. In reaching this position,we note in particular that: 1.Pursuant to a Continuing Disclosure Agreement for a DAC Bond,the issuer or obligated person will name DAC as its exclusive dissemination agent.The issuer or obligated person will agree to provide DAC with the Annual Financial Information and Audited Financial Statements (certified by a designated representative of the issuer or obligated party)by deadlines described in the Agreement and with all Notice Events notices and Voluntary Reports (each certified by a designated representative of the issuer or obligated party)for filing with nationally recognized municipal securities information repositories,state information depositories and/or the Municipal Securities Rulemaking Board (collectively,"Repositories") as required by Rule 15c2-12.DAC will agree to make such filings promptly upon its receipt of the Information. DocuSign Envelope ID: 91A93241-F038-45A4-812F-857A49B75CE9 2.DAC will be irrevocably instructed by the issuer or obligated person to file Notice Event notices of failure to file annual financial information with the appropriate Repositories at the times and under the circumstances which you have described in the Request. 3.Information in the DAC Database,including Notice Event notices,will be identical to the information DAC files with the Repositories. 4.Whenever DAC enters into a Continuing Disclosure Agreement with respect to an issue of municipal securities that is already outstanding,it will use its best efforts to obtain all Information with respect to that issue from the Repositories and include that Information in the DAC Database. This no-action position is expressly conditioned on the current and continuing accuracy of the facts and representations contained in the Request;any different facts or conditions might require a different response.This position is based on current laws, rules,and regulations governing participants in,and the markets for,municipal securities. Any changes in such laws,rules,or regulations may supersede this no-action position or require the Division to reevaluate its position.In addition,DAC shall advise the Division of any material change in its standard form of Continuing Disclosure Agreement or the operations and procedures described in the Request,and,if possible,shall provide such information 30 days prior to any contemplated change,to enable the Division to reevaluate this no-action position in light of such change. This no-action position is subject to modification or revocation at any time the Division determines that such action is necessary or appropriate.The Division may,from time to time,request that DAC provide it with additional information concerning the DAC Database and the DAC System referred to in the Request. The position expressed herein is the Division's position on enforcement action only;it does not represent a legal conclusion on the question presented. Sincerely, Martha Mahan Haines,Chief Office of Municipal Securities DocuSign Envelope ID: 91A93241-F038-45A4-812F-857A49B75CE9 TAB 3: DAC’S VALUE PROPOSAL DocuSign Envelope ID: 91A93241-F038-45A4-812F-857A49B75CE9 Value Proposition – Continuing Disclosure for State & Local Governmental Issuers DAC - Digital Assurance Certification LLC Page 1 Introduction Given the industry’s increased scrutiny of disclosure issues, Digital Assurance Certification (DAC), is providing the best possible solution for compliance concerns. The DAC system provides issuers with ongoing compliance support and state-of-the-art application software for assuring timely, accurate filings with the MSRB’s EMMA system. Issuers that use DAC to proactively inform municipal investors of their credit worthiness and accuracy in ongoing disclosure filings can enhance the value of their bonds. Using DAC, issuers position themselves as leaders in municipal market communications, which attracts potential bidders otherwise unable to bid on bonds not offering such disclosure. The DAC solution instantly puts information about a bond iss ue directly into the hands of compliance officers, brokers, dealers, market professionals and investors. The DAC platform not only provides real- time access to required disclosure information but assists issuers in knowing what to file, when to file, and facilitates such filings through ongoing development of EMMA interface systems. Used appropriately by issuers, investors, underwriters, brokers and dealers are assured that the financial information they need is readily available throughout the life of each bond issue. Overview The Securities and Exchange Commission (“SEC”) Requirements: A. Unlike corporate registrants required to publicly file to the SEC’s EDGAR System, the SEC cannot require municipal issuers to file financial information to the public. However, the SEC does regulate broker-dealers. Consequently, SEC Rule 15c2-12 promulgated by the SEC required broker-dealers underwriting municipal securities after July 3, 1995, to obtain a written agreement from issuers to file periodic financial statements, operating data, and material event notices over the life of the bonds. The SEC also required broker-dealers to have procedures in place (Rule 15c2-12(c)) that provide notice of the receipt of any secondary market filings. In the 2010 Amendments, the SEC’s restated guidance now makes reference to “event notices and failure to file notices” and further expanded the specificity of its prior statements. On September 21, 2001, the SEC issued a letter to DAC agreeing to take no action against a broker-dealer using DAC Bonds to meet secondary market requirements of SEC Rule 15c2-12(c). B. The annual information provided should be similar to that found in the final official statement of the bonds when the bonds were issued. The required information needs to include notices of “material events” as they occur (the 2010 Amendments moved the number to 14 and removed the “materiality determination and required issuers to report the notices within 10 business days from the date of occurrence, rather than the old standard of “when known and/or if deemed material”). DocuSign Envelope ID: 91A93241-F038-45A4-812F-857A49B75CE9 Value Proposition – Continuing Disclosure for State & Local Governmental Issuers DAC - Digital Assurance Certification LLC Page 2 C. To assist issuers, DAC has responded with both technological and methodological changes to the amendment to Rule 15c2-12 that required changes to the “materiality” criteria for certain events and required the reporting of certain events within 10 business days of occurrence. This is a marked change from the old requirement to file a notice if deemed material and when an issuer had knowledge of such an occurrence. DAC’s response is to run cross comparisons by CUSIP of the underlying and/or credit enhancement information against rating agency actions. When a correlation occurs between a rating action and a CUSIP for a client’s bonds, an email is sent to the client alerting them of a rating change. Within 72 hours, an event notice is filed automatically with EMMA and the filing receipt is maintained over the life of the bonds. Of note: the EMMA system does not store issuer filing receipts- thereby requirng the issuer to maintain such “ proof of filing” over the life of the bonds. What the Industry Wants vs. Gets: A. Wants: Reasonably current and readily accessible information. – Gets: Sporadic filings: some issuers file annually, some quarterly, and some not at all. Of those filing, some provide detailed in formation, some little. Moreover, information previously filed with the EMMA system may have been posted incorrectly to the wrong issuer or the wrong issue or not across all CUSIP bases. Issuers not using a web-based system have no assurance that what they filed reached all the issuer’s CUSIP numbers. To trade in an issuer’s bonds, a broker/dealer is required to have reasonable assurance that the issuer has a working continuing disclosure process in place; to participate in a new issue, an underwriter mu st review this process and verify its use through a 5-year “look back” process set forth by the SEC in Rule 15c2-12. DAC provides Certificates of Completion to issuers who make filings via our system and issues a Compliance Report that is available to broker-dealers needing access to historical information (DAC backfills missing information, holds receipts of such filings with EMMA to correct the outstanding filings and maintains all documentation over the life of the bonds to provide the audit trail helpful to broker-dealers when underwriting a new municipal bond issue). B. Wants: accurate information. – Many issuers provide annual audits but many neglect to provide the requisite operating information, management discussions and event filings. DAC assists issuers by developing templates in Excel format (source documents required to be filed into EMMA) and sets reminders of filing dates, by types of data, and provides a second set of “eyes” in making certain all due dates are satisfied. DAC also assists issuers in the filing of event notices. Our research group is dedicated to reviewing issuer ratings, credit enhanced ratings and bank ratings on a daily basis. What DAC Offers: A. DAC provides a patented, real time, web-based information dissemination vehicle that, when populated properly by the issuer, meets the SEC continuing disclosure requirements under the Rule. The SEC has provided DAC with a “no action” letter that states no enforcement action will be taken by the SEC when an issuer uses DAC appropriately for its continuing disclosure. The SEC refers to these securities as “DAC Bonds”. B. The process is completely computer-based: the issuer accesses the DAC web site and transmits the disclosure items to DAC electronically or sends the information via email to a DAC Client Service Managers who assists with the filing. DAC then transmits the information electronically by CUSIP number (a number that identifies individual maturities within specific bond issues) to EMMA, and archives an electronic filing receipt. The information is simultaneously posted to the Issuer’s location DocuSign Envelope ID: 91A93241-F038-45A4-812F-857A49B75CE9 Value Proposition – Continuing Disclosure for State & Local Governmental Issuers DAC - Digital Assurance Certification LLC Page 3 on the DAC site which is freely available to interested parties. Acting as the exclusive dissemination agent in accordance with the SEC letter, DAC centralizes the filing of all information from trustees and other market professionals. DAC also provides a link to the issuer’s website to enhance the corporate image of the issuer, if so desired. C. The DAC web site offers other services such as automated disclosure reporting date reminders, disclosure archival, and restricted access for filing documents with additional parties and other features. D. DAC received its first U.S. Patent on its disclosure system in December 2006 with other Patents issued subsequently. The Value Proposition A. When issuers use DAC appropriately, they, their underwriters, and the broker/dealers trading in DAC bonds need not be concerned with SEC enforcement action regarding continuing disclosure. B. Industry analysts, market professionals and other interested parties may access reasonably current information (to the extent the issuer maintains the site current) that is readily accessible and centralized (right at their desktop computer for “one stop” review and printing of all issues in their portfolio). The information is in a real time mode. DocuSign Envelope ID: 91A93241-F038-45A4-812F-857A49B75CE9