SUMMARY OF 2018 AMENDMENTS TO RULE 15c2-12 NFBPA FORUM 2019 - Public Finance Workshop - Hot Topics in Capital Structure and Applicable Securities Laws SUMMARY OF 2018 AMENDMENTS TO RULE 15c2-12 Jéan E. Wilson| wilsonj@gtlaw.com | 407.999.2521 APRIL 4, 2019 www.gtlaw.com

Purpose of 2018 Amendments to Rule 15c2-12 According to the SEC, the purpose of the 2018 Amendments is to facilitate investors’ and other market participants’ access to timely disclosure of important information related to an issuer’s/obligated person’s material financial obligations that could impact an issuer’s/obligated person’s liquidity, overall creditworthiness, or an existing security holder’s rights (e.g., a bank loan with a senior position in the debt payment priority structure).

Event Notices The 2018 Amendments revise the list of event notices required under paragraph (b)(5)(i)(C), to include: (15) Incurrence of a financial obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affect security holders, if material; and (16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties.

Definition of Financial Obligation The 2018 Amendments add to the list of definitions under paragraph (f) of Rule 15c2-12 to include the following: The term “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term “financial obligation” does not include municipal securities as to which a final official statement has been provided to the MSRB consistent with Rule 15c2-12.

Compliance Date The “Compliance Date” for the 2018 Amendments is February 27, 2019. In addition, the 2018 Amendments will impact only those continuing disclosure agreements entered into in connection with “Offerings” (as defined under Rule 15c2-12) that occur on or after the Compliance Date.

Scope of Issuer’s Due Diligence Review Quantity and complexity of “financial obligations” and the related documents. Analyzing limited or ambiguous guidance provided by the SEC to determine whether certain obligations are “financial obligations” (e.g., leases, instruments to manage fuel prices or power price volatility). Complexity of materiality analysis relating to the incurrence of “financial obligations” and an agreement to terms of a “financial obligation,” if material. Complexity of analysis relating to “reflecting financial difficulties” and identifying provisions under the documents relating to “financial obligations” that may, with the occurrence of certain events, reflect financial difficulties. Impact of GASB/FASB Statements and other matters on the “financial obligations” analysis.

Process For Issuer’s Compliance With 2018 Amendments Compile list of “financial obligations” Review agreements relating to “financial obligations” to determine and compile provisions which reflect financial difficulties (e.g., summary of default, event of acceleration, termination event, modification of terms, or other similar events) Draft/revise disclosure procedures, if needed, to reflect procedures for monitoring and timely reporting: (1) the incurrence of “financial obligations,” if material; (2) an agreement to terms of a “financial obligation,” if material; and (3) the occurrence of defaults and other events affecting security holders under the terms of the “financial obligation,” reflecting financial difficulties. Revise form of continuing disclosure undertaking(s) to include paragraphs (b)(5)(i)(C)(15) and (b)(5)(i)(C)(16) and any additional related provisions