February 2018 Board meeting - CWU Sammamish - a

Seventh, to retire by redemption or purchase in the open market any outstanding revenue bonds or other revenue obligations of the University as authorized in the various resolutions of the Board authorizing their issuance, and to carry out other lawful purposes of the University. Rate Covenant The University has covenanted and agreed that it will at all times establish, maintain and collect rates, fees and charges in the operation of the System that will produce Net Revenues in each fiscal year at least equal to the greater of (i) 1.00 times Maximum Annual Debt Service (the “Coverage Requirement”) or (ii) amounts required to be deposited during such fiscal year into bond funds and reserve funds established for outstanding Parity Bonds, but excluding from each of the foregoing, payments made from refunding debt and capitalized debt service. “Net Revenues” means Gross Revenue less any part thereof that must be used to pay Operating Expenses. “Operating Expenses” means the current expenses incurred for operation or maintenance of the System, as defined under Generally Accepted Accounting Principles (“GAAP”), including an allocable share of insurance expenses and other administrative expenses of the University directly related to the operation of the System, excluding any allowances for depreciation or amortization or interest on any obligations of the System incurred in connection with and payable from Gross Revenue. If the Net Revenues in any fiscal year are less than required to fulfill the rate covenant described above, then the University is required to retain a consultant. See Section 13 of the Master Resolution, attached as APPENDIX E. Additional Provisions of the Bond Resolution The University has made additional covenants in the Bond Resolution with respect to payment of the Parity Bonds, maintenance of the System, sale or condemnation of the System, insuring of the System and maintenance of books and records of the System. See Section 13 of the Master Resolution, attached as APPENDIX E. The University has reserved in the Bond Resolution the right to adopt amendments and supplements to the Bond Resolution, both with and without the consent of the registered owners of Parity Bonds. See Section 14 of the Master Resolution, attached as APPENDIX E. The University has provided in the Bond Resolution for defaults and remedies with respect to Parity Bonds. See The University will not establish a Debt Service Reserve Account for the Series 2018 Bonds. The owners of Series 2018 Bonds will have no rights with respect to any Debt Service Reserve Account currently in existence or to be created in the future, unless specifically pledged to secure the Series 2018 Bonds. Renewal and Replacement Fund A Renewal and Replacement Fund has been established in the Bond Resolution for the purpose of paying extraordinary operating and maintenance expenses, making capital replacements, expansion, additions, repairs and renewals of the System and to pay principal of and interest on any Parity Bonds to the extent other funds are not legally available. The University has covenanted to make deposits into the Renewal and Replacement Fund from time to time as considered appropriate and maintain a balance therein. There is currently a balance of $______ in the Renewal and Replacement Fund, as of ________, 2018. Future Parity Bonds The University has reserved the right to issue one or more series of Future Parity Bonds by means of a Series Resolution for any purpose of the University permitted by law and the Master Resolution, provided that the University complies with the terms and conditions for the issuance of Future Parity Bonds set forth in the Master Resolution. All bonds authorized to be issued under Series Resolutions will be Future Parity Bonds, having an equal lien and charge upon the Gross Revenue, upon fulfillment of the conditions of the Master Resolution, whether at the time of authorization or issuance of such Future Parity Bonds. The University will not issue any series of Future Parity Bonds or incur any additional indebtedness with a parity lien or charge on Gross Revenue unless: (a) The University was not in default of its Rate Covenant for the immediately preceding fiscal year; and (b) The University has received either (1) or (2): (1) A certificate delivered by the Designated University Representative, based upon the appropriate audited annual financial reports of the System, to the effect that average annual Net Revenues, plus the net revenues from any other sources pledged as security for all outstanding Parity Bonds, during the two full fiscal years immediately preceding the date of issuance of such Parity Bonds, was equal to at least the Section 26 of the Master Resolution, attached as APPENDIX E. No Debt Service Reserve Account for the Series 2018 Bonds

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