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Digital Assurance Certification, LLC

Disclosure-Dissemination Agent Services

Prepared for:

BELLA MENTE CHARTER SCHOOL

Date: April 30, 2018

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 30, 2018

Ms. Erin Feeley

Executive Director

Ms. Jennifer Meeker

Assistant to Executive Director

Edsell “Chip” Eady, Jr., Esq.

Of Counsel

A. Aiko Yamakawa, Esq.

Senior Counsel

Bella Mente Charter School

1737 W. Vista Way

Vista, California 92803

cc: Mr. Israel Kalombo

BB&T Capital Markets

Via Email

Dear Executive Director Feeley:

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 charter school clients include:

Monterey Bay Charter School, Reid Traditional Schools, A.W Brown Fellowship

Leadership Academy, American Academy, Collegiate Academy of Colorado, Cornerstone

Charter Academy, MaST Charter School Philadelphia, Miami Community Charter School,

Newman International Academy, Palm Bay Academy, Universal Academy, and Charter

High School for Architecture & Design.

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’s

processes provide market participants with confidence that DAC issuers are poised to provide

timely and complete continuing disclosure filings on their issues. DAC’s services also allow

broker-dealers to underwrite new offerings of DAC issuers knowing that Securities and

Exchange Commission (“SEC”) regulatory requirements are being met, and allow broker-

dealers to trade bonds in the secondary market with the protection of the SEC’s “No Action”

letter covering DAC issuers’ bonds. DAC is the only dissemination agent to have an SEC No

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Financial Disclosure Solutions for the Municipal Bond Market

Action letter. DAC hosts a secure and protected database of issuer information on DAC Bonds

that 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

provides:

DAC Templates. DAC provides and stores 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 annual filing undertakings.

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 Ratings Review. DAC’s ratings review assures timely filing of ratings 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 Certificates of Completion. DAC provides certificates as to the completeness of annual

information filings.

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. Users can access all current and prior financial information by full

issue description, issuer name, obligated person, and geographic location or CUSIP number.

The repository provides municipal market users access to a secure and protected database of

optimized documents that open immediately.

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Financial Disclosure Solutions for the Municipal Bond Market

DAC Support Services:

Email ticklers which support compliance through the issuance of reminders of

due dates, 90, 60, 30, 15, 7 & 1 day prior.

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.

Review and confirmation of redemption and defeasance notices, upon request.

Filing of “failure to file” notices.

Customizable issuer alerts provided 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).

Restricted Access Documents (For storage and email of password protected

documents to Investors and other Market Participants).

DAC Investor Communication Platform

Website Links

- DAC allows links to and from your website, precluding the need for

an issuer to install and maintain a document management system

of its own; DAC’s status as an independent third party allows issuers

to update information as deemed appropriate.

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 your bond

issues.

Best regards,

Lisa Olsen

Executive Vice President

TAB 1: SOLE SOURCE LANGUAGE

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 compliance 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

TAB 2: SECURITIES AND EXCHANGE COMMISSION NO

ACTION LETTER ISSUED TO DAC BOND

SEPTEMBER 21, 2001

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON. D.C. 2O549

division of September 21,2001MARKET 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 securityincluded in the DAC Database is a "DAC Bond." "Information" refers to the AnnualFinancial Information, Audited Financial Statements, Notice Event notices, andVoluntary 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 ofthe

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 ofthe Information.

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 ofsuch 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 ofMunicipal Securities

TAB 3: DAC’S VALUE PROPOSAL

Value Proposition – Continuing Disclosure for Conduit Borrowers

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Introduction

Given the Securities and Exchange Commission’s (“SEC”) increased scrutiny of continuing disclosure

compliance in the municipal bond market, Digital Assurance Certification (“DAC”) services are more

important than ever, providing patented solutions to meet SEC requirements under SEC Rule 15c2-12

(the “Rule”).

The DAC system provides borrowers with state-of-the-art application software and ongoing compliance

support to assure timely, accurate filings with the Electronic Municipal Market Access (“EMMA”) system

operated by the Municipal Securities Rulemaking Board (the “MSRB”). Borrowers that use DAC to

proactively inform municipal investors of their credit worthiness and accuracy in ongoing disclosure

filings can enhance market reception of their bonds. Indeed, in promulgating the Rule, the SEC

emphasized the need for the dissemination of updated issuer operating data and information, especially in

the secondary market where DAC provides services.

The DAC solution instantly puts information about a bond issue 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 borrowers in knowing what to file, when to file,

and facilitates such filings through EMMA interface systems.

Overview

SEC Requirements:

The Rule 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 compliance

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 borrowers 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.

Value Proposition – Continuing Disclosure for Conduit Borrowers

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What the Industry Wants vs. Gets:

Broker/Dealers’ Perspective

Wants: Reasonably current and readily accessible information. – Gets: Sporadic filings: some

borrowers file annually, some quarterly, and some not at all. Of those filing, some provide detailed

information; some little. Information previously filed with the EMMA system may have been posted

incorrectly or CUSIP bases omitted. Without a web-based system such as DAC’s, borrowers have no

assurance their filings have reached all the issuer’s required CUSIP numbers. Moreover, 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; and in a new issue, an underwriter must review this process and

verify its adherence through the required 5-year compliance “look back” previously discussed.

Broker-dealers may rely on “DAC Bonds” in their review by virtue of the SEC No Action letter

provided to DAC and no other dissemination agents. In addition, DAC provides Certificates of

Compliance to borrowers who make filings via our system and issues a Compliance Report that is

available to broker-dealers needing access to historical information. In effect, DAC provides an audit

trail essential to broker-dealers when underwriting a new municipal bond issue.

Issuer’s Perspective

Wants: accurate information, simple guidelines and process. – Gets: Many issuer systems provide for

annual audits but omit checks for CDA required operating information, management discussions and

timeliness of event notices and other financial information.

DAC assists borrowers by developing templates in Excel format (which source documents required to

be filed on EMMA) and set clear and timely reminders of filing dates, by types of data. In effect, DAC

virtually provides a second set of “eyes” to help assure all due dates are satisfied. DAC also assists

borrowers in the filing of event notices, often overlooked due to other demands on staff and time. For

example, our research group and systems are dedicated to reviewing issuer ratings, credit enhanced

ratings and bank ratings on a daily basis, and report the occurrences automatically. Borrowers that use

these compliance templates are assured that the information they are providing fulfills their continuing

disclosure requirements.

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.

B. The SEC has provided DAC with a “no action” letter to the effect that there will be no

recommendation for any SEC enforcement action against a broker or dealer for violation of the

Rule because the dealer uses the DAC Database as its source of Information in its procedures to

assure it will receive prompt notice of any events for which notices are required and prompt

notice of failures to timely file annual financial information.

C. Although the process is web-based, an issuer has professional assistance at hand. The issuer

accesses the DAC web site and transmits the disclosure items to DAC electronically or the issuer may

send 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

Value Proposition – Continuing Disclosure for Conduit Borrowers

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maturities within specific bond issues) to EMMA, and archives an electronic filing receipt. This

archive of filing receipts is an important asset to borrowers, providing a secure, accessible compliance

record.

D. The information transmitted to EMMA is simultaneously posted to the Issuer’s location on the

DAC site which is freely available to interested parties. Acting as the exclusive dissemination agent

in accordance with the SEC “no-action” letter, DAC centralizes the filing of all information received

from trustees and market professionals. As exclusive dissemination agent, DAC provides a secure,

reliable and protected source of updated issuer information.

E. If desired by the issuer, DAC will provide a link to the issuer’s website to enhance the corporate

image of the issuer.

F. The DAC web site offers other services such as automated disclosure reporting date reminders,

disclosure archives, and restricted access for filing documents with additional parties.

The Value Proposition

A. When borrowers use DAC appropriately, they, their underwriters, and the broker-dealers

trading in DAC Bonds may take comfort that they are meeting their continuing disclosure

requirements in accordance with Rule 15c2-12.

B. Industry analysts, market professionals and other interested parties may access reasonably current and

secure information that is readily accessible and centralized, available right at their desktop computer

for “one stop” review and printing of all issues in their portfolio.