HomeMy WebLinkAboutResolution 4254 Relating to Sewer System Revenue BondsCERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE
I, the undersigned, being the duly qualified and acting recording officer of the City of
Bozeman, Montana (the "City hereby certify that the attached resolution is a true copy of
Resolution No. 4254, entitled: 'RESOLUTION RELATING TO $5,103,00() SEWER SYSTEM
REVENUE BONDS (DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN
PROGRAM), CONSISTING OF 5384,000 SUBORDINATE LIEN TAXABLE SERIES 2010E
BOND, 5816,000 SERIES 2010F BOND, AND $3,903,000 SERIES 2010E BOND;
AUTHORIZING THE ISSUANCE AND FIXING THE TERMS AND CONDITIONS
THEREOF" (the "Resolution on file in the original records of the City in my legal custody;
that the Resolution was duly adopted by the City Commission of the City at its regular meeting
on May 3, 2010, and that the meeting was duly held by the City Commission and was attended
throughout by a quorum, pursuant to call and notice of such meeting given as required by law;
and that the Resolution has not as of the date hereof been amended or repealed.
I further certify that, upon vote being taken on the Resolution at said he
ting, t
A !''"t GlvvS 2 CCI d
following Commissioners voted in favor thereof:
oY P„uSS voted against the same: ji 077
abstained from voting thereon:
Cy. absent: A4 e_Li
o ft
FITNESS my hand officiall this
,2 y ,2 day of May, 2010.
Clerk f the Commission
:^a
or were
SUPPLEMENTAL RESOLUTION
Relating to
$5,103,000
SEWER SYSTEM REVENUE BONDS
(DNRC WATER POLLUTION CONTROL' STATE REVOLVING LOAN PROGRAM)
CONSISTING OF
$384,000 SUBORDINATE LIEN TAXABLE SERIES 2010E BOND,
S816,000 SERIES 2010F BOND, AND $3,903,000 SERIES 2010G BOND
CITY OF BOZEMAN, MONTANA
Adopted: May 3, 2010
TABLE OF CONTENTS
(For convenience only, not a part of this Supplemental Resolution)
Page
Recitals 1
ARTICLE I
DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES
Section 1.1, Definitions 2
Section 1.2. Other Rules of Construction 8
Section 1.3. Appendices 9
ARTICLE 11
AUTHORIZATION, FINDINGS, REPRESENTATIONS AND COVENANTS
Section 2.1. Authorization and Findings 9
Section 2.2. Representations 11
Section 2.3. Covenants 13
Section 2.4. Covenants Relating to the Tax-Exempt
Status of the State Bonds 15
Section 2.5. Maintenance of System; Liens 17
Section 2.6. Maintenance of Existence; Merger
Consolidation, Etc.; Disposition of Assets 17
ARTICLE III
USE OF PROCEEDS; THE 2010 DIGESTER PROJECT
Section 3.1. Use of Proceeds 17
Section 3.2. The 2010 Digester Project 18
Section 3.3. 2010 Digester Project Representations and Covenants 19
Section 3.4. Completion or Cancellation or Reduction of
Costs of the 2010 Digester Project 20
ARTICLE IV
THE LOAN
Section 4.1. The Loan; Disbursement of Loan 20
Section 4.2. Commencement of Loan Terrn 23
Section 4.3. Termination of Loan Terrn 23
Section 4.4. Loan Closing Submissions 23
ARTICLE V
REPAYMENT OF 2010EFG Loans
Section 5.1. Repayment of 2010EFG Loans 23
Section 5.2. Additional Payments 27
Section 5.3. Prepayments 27
Section 5.4. Obligations of Borrower Unconditional. 27
Section 5.5. Limited Liability 28
ARTICLE VI
INDEMNIFICATION OF DNRC AND DEQ 28
ARTICLE VII
ASSIGNMENT
Section 7,1. Assignment by Borrower... 28
Section 7.2. Assignment by DNRC 29
Section 7.3. State Refunding Bonds 29
ARTICLE VIII
THE SERIES 2010EFG BONDS
Section 8.1. Net Revenues Available 29
Section 8.2. Issuance and Sale of the Series 2010EFG Bonds 29
Section8.3. Terms.._..... 30
Section 8.4. Negotiability, Transfer and Registration 30
Section 8.5. Execution and Delivery 30
Section 8.6. Form 31
ARTICLE IX
SECURITY FOR THE SERIES 2010EFG BONDS 31
ARTICLE X
TAX MATTERS
Section 10.1. Use of 2010 Digester Project 32
Section 10.2. General Covenant 32
Section 10.3. Arbitrage Certification 32
Section 10.4. Arbitrage Rebate Exemption 32
Section 10.5. Information Reporting 33
Section 10.6. "Qualified Tax-Exempt Obligations" 33
ARTICLE XI
CONTINUING DISCLOSURE 33
ARTKCLC}{D
IMPLEMENTAT1ON OF SECTION 6.7 OF ORIGINAL RESOLUTION 34
ARTICLE Xll}
MISCELLANEOUS
Section 13.1. Notices 34
Section 13,2, Binding Effect 35
Section 13.3. Severability 35
Section 13.4. Amendments 35
Section 13.5. Applicable Law 35
Section 13.0. Captions; References to Sections 35
Section 13.7. No Liability ofIndividual Officers, Directors or Trustees 35
Section 13.8. Payments Due on Holidays 35
Section 13.9. Right nf Others To Perform Borrower's Covenants. 35
Section 13.10. Authentication of Transcri ---- 36
APPENDIX A Descdptionnf the 2010 Di ster Project A-]
APPENDIX B-1 Forni of Series Bond B-1-1
APPENDIX B-2— Form cf Series 2010FBond B-
APPENDIX 33-S— Form of Series 2OlAG Bond B-3-1
APPENDIX C Additiona Rcprcsentations and Covenants C-1
APPENDIX D Compliance Certificate and Request D-I
RESOLUTION NO. 4254
RESOLUTION RELATING TO $5,103,000 SEWER SYSTEM
REVENUE BONDS (DNRC WATER POLLUTION CONTROL
STATE REVOLVING LOAN PROGRAM), CONSISTING OF
$384`V0O SUBORDINATE LIEN TAXABLE SERIES 2010E
BOND, $Ml0,00U SERIES 2Ol0F BOND, AND $3`903,0O0
SERIES 201OG BOND; AUTHORIZING TIff ISSUANCE AND
FIXING THE TERMS AND CONDITIONS THEREOF
WHEREAS. pursuant to thc Water Pollution Control State Revolving Fund Act, Montana
Code Annotated, Titic 75. Chapter 5, Part 11, as arnended (the "State Act"). thc State nfMontana
(the "State") has established mrevolving loan program (the "Program") to be adrninistered by the
Department of Natural Resources and Conservation .of the State of Montana, an agency of the
State (the ^^DNIl["), and hy the Departrncnt of Environmental Quality ofthe State of Montana,
an agency of the State (the "DEQ"), and has provided that a water pollution control state
revolving fund (the "Revolving Fund") be created within the state treasury and all federal, state
and other funds for use in the Program be deposited into the Revolving, Fund, including, but not
Iiniited to, all federal grants for capitalization ofa statc water poliution control revolving fund
under the Federal Water Pollution Control Act (the "Clean Water Act"), all repayments of
assistance awarded from the Revolving Fund, interest on investments made on mnmcy in the
Revolviiig Fund and payments nf principal ofandin1eruntunlomoscoadcfrnrotbe}(ovo)vi
Fund; and
WHEREAS, the State Act provides that funds from the Program shall be disbursed and
administered for the purposes set forth in the Clean Water Act and according to rules adopted by
the DEO and the L)ND{,;and
WHEREAS, the 2010 EPA Capitaiization Grant (as hereinafter defined) requires that
Ioans under the Program funded in wholc or in part by such grant in the aggregatc and not 011 a
loan-by-loan basis be stnictured in such a way that a dollar amount in the aggregate equal to at
least 15% of the total proceeds of such grant be subject to loan forgiveness; and
WHEREAS, the City of Bozeman, (iuNo1inCouoty, Montana (the `]oonvver`)has
applied tn the DNIlCfOr the 2U10EF6 Loans (as hereinafter defined) from the Revolving Fund
to enable the Borrower to finance, refinance or reimburse itself for the costs of the 2010 Digester
Project (as hereinafter defined) which will carry out the purposes of the Clean Water Act; and
WHEREAS, the Borrowcr is authorized under applicable laws, ordinances and
regulations to adopt this Supplemental Resolution and 10 ISSUC the Series 2O1OEFG Bonds (as
hereinafter defined) to evidence the 2010EFG Loans (as hereinafter defined) for the purposes set
forth herein; and
WHEREAS, the DNRC will fund: (1) the 2010E Loan (as hereinafte defined) entirely
from proceeds of the 2010 EPA Capitalization Grant, (ii) the 2010F Loan (as hereinafter defined)
in part, directly or indirectly, with proceeds of State Bonds (as hereinafter defined) and in part,
directly or indirectly with funds provided by the United States Environmental Protection
Agency; and (iii) the 2010G Loan with proceeds of Recycled Money (as hereinafter defined).
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE
CITY OF BOZEMAN, MONTANA, AS FOLLOWS:
ARTICLE I
DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES
Section 1.1 Definitions. Unless a different meaning clearly appears from the context,
teams used with initial capital letters but undefined in this Supplemental Resolution shall have
the meanings given theirs in the Resolution, the Indenture, or as follows:
"Accountant or "Accountants" means an independent certified public accountant or a
firm of independent certified public accountants satisfactory to the DNRC.
"Acquisition and Construction Account' means the account created in the Sewer System
Fund pursuant to Section 11.2 of the Original Resolution.
"Act" means Montana Code Annotated, Title 7, Chapter 7, Parts 44 and 45, as heretofore
and hereafter amended or supplemented.
"Additional Bonds" means any Bonds issued pursuant to Article X of the Original
Resolution excluding Section 10.4 thereof.
"Administrative Expense Surcharge means, (i) in respect of the 2010F Loan and the
2010G Loan, in any event, and (ii) in respect of the 2010E Loan, upon the delivery of a
Noncompliance Statement as provided by this Supplemental Resolution, a surcharge equal to
seventy -five hundredths of one percent (0.75 per annum on the outstanding principal amount
of the 2010EFG Loans from the date of each advance thereof, payable by the Borrower on a
Payment Date.
"Authorized DNRC Officer" means the Director of the DNRC or his or her designee.
"Bond Counsel" means any Counsel nationally recognized as experienced in matters
relating to the issuance by states or political subdivisions of tax- exempt obligations selected by
the Borrower and acceptable to the DNRC.
"Bonds" means the Series 2010B Bond, the Series 2010C Bond, the Series 2010D Bond,
the Series 2010F Bond, the Series 2010G Bond, and any Sewer Debt to be issued on a parity
therewith pursuant to Sections 10.2 or 10.3 of the Original Resolution; the Series 2010A Bond
and the Series 2010E Bond are not Bonds.
"Borrower'" means the City.
"Business Day" means any day which is not a Saturday or Sunday, a legal holiday in the
State or a day on which banks in Montana are authorized or required by law to close.
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"City" means the City of Bozeman, Montana. and its permitted successors or assigns
hereunder.
"Clean Water Act" means the Federal Water Pollution Control Act, 33 U.S.C. 1251-
1387, as amended, and all regulations, rules and interpretations issued by the EPA thereunder.
"Closing" means the date of delivery of the Series 2010E Bond, the Series 2010F Bond,
and the Series 2010G Bond to the DNRC.
"Code" means the internal Revenue Code of 1986, as amended.
"Collateral. Documents" means any security agreement, guaranty or other document or
agreement delivered to the DNRC securing the obligations of the Borrower under this
Supplemental Resolution and the Series 2010EFG Bonds, if no Collateral Documents secure
such obligations, any reference to Collateral Documents in this Supplemental Resolution shall be
without effect.
"Commission'" means the City Commission of the City of Bozeman, Montana.
"Committed Amount" means, collectively, the amount of the 2010E Loan, 2010F Loan,
and 2010G Loan committed to be lent by the DNRC to the Borrower pursuant to Section 4.1 of
this Supplemental Resolution, as such amount may be reduced pursuant to Sections 3.2 and 3.4
of this Supplemental Resolution.
"Compliance Certificate and Request" means the certificate and request substantially in
the form of the attached Appendix D delivered by the DNRC to the Borrower following the final
advance of principal of the 2010E Loan, to be completed, executed and delivered by the
Borrower to the DNRC pursuant to Section 5.1.2 of this Supplemental Resolution.
"Consultant" means a .nationally recognized consultant or firm of consultants, or an
independent engineer or fine of independent engineers, or an Accountant, which in any case is
qualified and has skill and experience in the preparation of financial feasibility studies or
projections for facilities similar to the System or the 2010 Digester Project, selected by the
Borrower and satisfactory to the DNRC.
"Counsel" means an attorney duly admitted to practice law before the highest court of
any state and satisfactory to the DNRC.
"Debt" means, without duplication, (1) indebtedness of the Borrower for borrowed
money or for the deferred purchase price of property or services; (2) the obligation of the
Bon as lessee under leases which should be recorded as capital leases under generally
accepted accounting principles; and (3) obligations of the Borrower under direct or indirect
guarantees in respect of, and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds refenned to in clause (1) or (2) above.
3
"DEQ" means the Department of Environmental Quality of the Stale of Montana, an
agency of the State, or any successor to its powers, duties and obligations under the State Act or
the EPA Agreements.
"Determination Statement means a Forgiveness Statement or a Noncompliance
Statement.
"DNRC" means the Department of Natural Resources and Conservation of the State of
Montana, an agency of the State, and any successor to its powers, duties and obligations under
the State Act.
"EPA" means the Environmental Protection Agency, an agency of the United States of
America, and any successor to its functions under the Clean Water Act.
"EPA Agreements" means all capitalization grant agreements and other written
agreements between the DEQ, DNRC and the EPA concerning the Program.
"EPA Capitalization Grant" means a grant of funds to the State by the EPA under Title
VI of the CIean Watcr Act and any grant made available by the EPA for deposit in the Revolving
Fund pursuant to Section 205(m) of the Clean Water Act.
"Estimated Completion Date" means July 2011, the date by which it is estimated by the
Borrower that the 2010 Digester Project will be substantially completed.
"Forgiveness Statement" means a written statement delivered to the Borrower by the
DNRC in response to a Compliance Certificate and Request that the Borrower's obligation to
repay the principal of the Series 2010E Bond is forgiven.
"Fund" means the Sewer System Fund established pursuant to Section 11.1 of the
Original Resolution,
"Governmental Unit means govennmental unit as such term is used in Section 145(a) of
the Code.
"Indenture" means the Indenture of Trust, dated as of June 1, 1991, between the Board of
Examiners of the State and the Trustee, as such may be supplemented or amended from time to
time in accordance with the provisions thereof, pursuant to which, among other things, the State
Bonds are to be or have been issued.
"Loan Loss Reserve Surcharge" means, (i) in respect of the 2010F Loan and 2010G
Loan, in any event, and (ii) in respect of the 2010E Loan, upon the delivery of a Noncompliance
Statement as provided by this Supplemental Resolution, a surcharge equal to one percent
(1.00%) per annum on the outstanding principal amount of the 2010EFG Loans from the date of
each advance thereof, payable by the Borrower on a Payment Date.
"Loan Repayments" means periodic installments of principal and interest by Borrower in
repayment of the Series 2010F Bond and Series 2 Bond, and, if the DNRC delivers a
4
Noncompliance Statc]ncnt, of the Series 2010E Bond, at the rates and times specified in Article
v.
"Noncompliance Statement" means a written statement delivered to the Borrower by the
DNRC that the Borrower's obligation to repay the principal of the Series 2010E Bond is not
forgiven.
"Operating Account means the account created in the Sewer System Fund pursuant to
Section 11.3 of the Original Resolution.
"Original Resolution" means Resolution No. 4220 of the Borrower adopted on November
16, 2009, as amended and supplemented by Resolution Nos. 4234 and 4245, adopted on January
19, 2010 and February 16, 2010.
"Payment Date" means, with respect the 201.0E Loan and the 2010G Loan, each January
1 and July 1 during the term of the 2010F Loan and the 2010G Loan on which a payment of
interest or principal and interest is due, as determined under this Supplemental Resolution, and,
if a Noncompliance Statement is delivered with respect to the 2010E Loan, each January 1 and
July 1 during the term of the 2010E Loan on which a payment of interest or principal and interest
is due, as determined under this Supplemental Resolution.
"Program means the Water Pollution Control State Revolving Fund Program established
by the State Act.
"Project" means an i.mproyement, betterment, reconstruction or extension of the System,
including the 2010 Digester Project.
"Public Entity" means a State agency, city, town, municipality, irrigation district, county
water and sewer district, a soil conservation district or other public body established by State law
or an Indian tribe that has a federally recognized governing body carrying out substantial
governmental duties and powers over any area.
"Recycled Money means payments and prepayments of principal of loans made under
the Program, and any other amounts transferred to the Principal Subaccount in the Revenue
Subaccount in the State Allocation Account (as such terms are defined in the Indenture)
"Regulations" means the Treasury Department, Income Tax Regulations, as amended or
any successor regulation thereto, promulgated under the Code or otherwise applicable to the
Series 2010EFG Bonds.
"Replacement and Depreciation Account" means the Account created in the Sewer
System Fund pursuant to Section 11.6 of the Original Resolution.
"Reserve Account" means the account created in the Sewer System Fund pursuant to
Section 11.5 of the Original Resolution.
"Reserve Requirement" means, as of the date of calculation, an amount equal to the
maximum principal of and interest payable on outstanding Bonds in the current or any future
fiscal year (giving effect to mandatory sinking fund redemption, if any).
"Resolution" means the Original Resolution, as supplemented by this Supplemental
Resolution and other supplemental resolutions.
"Revenue Bond Account" means the account created in the Sewer System Fund pursuant
to Section 11.4 of the Original Resolution.
"Series 2010 ARRA Project Bonds" means, collectively, the Series 2010A Bond, the
Series 2010B Bond and the Series 2010C Bond.
"Series 2010A Bond" means the Borrower's $390,700 Subordinate Lien Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Taxable Series
2010A.
"Series 2010B Bond" means the Borrower's $359,300 Sewer System Revenue Bond
(DNRC Water Pollution Control State Revolving Loan Program), Series 2010B.
"Series 2010C Bond" means the Borrower's $1,223,000 Sewer System Revenue Bond
(DNRC Water Pollution Control State Revolving Loan Program), Series 2010C.
"Series 2010D Bond" means the Borrower's $9,500,000 Sewer System Revenue Bond
(DNRC Water Pollution Control State Revolving Loan Program), Series 2010D.
"Series 2010E Bond" means the $384,000 Subordinate Lien Sewer System Revenue
Bond (DNRC Water Pollution Control State Revolving Loan Program), Taxable Series 2010E,
issued to the DNRC to evidence the 2010E Loan.
"Series 2010F Bond" means the $816,000 Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010F, issued to the DNRC to
evidence the 2010F Loan.
"Series 2010G Bond" means the $3,903,000 Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010G, issued to the DNRC to
evidence the 2010G Loan.
"Series 2010EFG Bonds" means, collectively, the Series 2010E Bond, the Series 2010E
Bond, and the Series 2010G Bond.
"Sewer Debt" means all Bonds and any other Debt incurred to acquire, construct, extend,
improve, add to or otherwise pay expenses of or related to the System, without regard to the
source of payment and security for such Debt (i.c., without regard to whether it is general
obligation or revenue Debt).
"Sewer Revenues" means revenues (gross or net received by the Borrower from or in
connection with the operation of the System.
6
"Sewer System Fund" means the fund created by Section 11. 1 o the Original
Resolution.
"State" means the State of Montana.
"State Bonds" means the State's General Obligation Bonds (Water Pollution Control
State Revolving Fund Program), issued or to he issued pursuant to the Indenture.
"State Act" means Montana Code Annotated, Title 75, Chapter 5, Part 11, as amended
from time to time.
"Subordinate Obligations" means the Series 2010A Bond, the Series 2010E Bond, and
any other subordinate obligations issued under Section 10.4 of the Original Resolution
"Supplemental Resolution" means this Resolution No. 4254 of the Borrower adopted on
May 3, 2010.
"Surplus Account" means the account created in the Sewer System Fund pursuant to
Section 11.7 of the Original Resolution.
"Surplus Net .Revenues" shall mean that portion of the Net Revenues in excess of the
current requirements of the Operating Account, the Revenue Bond Account and the Reserve
Account.
"System" means the existing sewer system of the Borrower and all extensions,
improvements and betterments thereof hereafter constructed and acquired, including, without
limitation, the 2010 Digester Project.
"Trustee" means U.S. Bank National Association, in Seattle, Washingon, or any
successor trustee under the Indenture.
7
"2010 ARRA Project" means construction of a sewer system administration building and
related improvements.
"2010 Digester Project" means the designing, engineering, and construction of the
facilities, improvements and activities financed, refinanced or the cost of which is 'being financed
by or reimbursed to the Borrower with proceeds of the 2010EFG Loans, described in
Appendix A hereto.
2010E Committed Amount means the amount of the 2010E Loan committed to be lent
by the DNRC to the Borrower pursuant to Section 4.1 of this Supplemental Resolution, as such
amount may be reduced pursuant to Section 3.2 and Section 3.4 of this Supplemental Resolution.
"2010F Committed Amount means the amount of the 2010F Loan committed to be lent
by the DNRC to the Borrower pursuant to Section 4.1 of this Supplemental Resolution, as such
amount may be reduced pursuant to Section 3.2 and Section 3.4 of this Supplemental Resolution.
"2010G Committed Amount" means the amount of the 2010G Loan committed to be lent
by the DNRC to the Borrower pursuant to Section 4.1 of this Supplemental Resolution, as such
amount may be reduced pursuant to Section 3.2 and Section 3.4 of this Supplemental Resolution.
"2011) EPA Capitalization Grant" means that EPA Capitalization Grant made available to
the Program from 2010 federal appropriations.
"2010F First Advance" means the first advance of funds of the 2010EFG Loans from the
proceeds of the 2010F Loan by the DNRC to the Borrower in an amount of at least $50,001.
"2010G First Advance" means the first advance of funds of the 2010G Loan by the
DNRC to the Borrower.
"2010EFG Loans" or "Loan" means, collectively, the 2010E Loan, 2010F Loan, and the
2010G Loan made to the Borrower by the DNRC pursuant to the Program in the maximum
amount of the Committed Amount to provide funds to pay all or a portion of the costs of the
2010 Digester Project, to fund a deposit to the Reserve Account and to pay costs of issuance of
the Series 2010EFG Bonds.
"2010E Loan" means the loan made to the Borrower by the DNRC pursuant to the
Program in the maximum amount of the 2010E Committed Amount to provide funds to pay a
portion of the costs of the 2010 Digester Project payable under the Program and to pay a portion
of costs of issuance of the Series 2010EFG Bonds.
"2010F Loan" means the loan made to the Borrower by the DNRC pursuant to the
Program in the maximum amount of the 2010F Committed Amount to provide funds to pay a
portion of the costs of the 2010 Digester Project payable under the Program, to fund deposits to
the Reserve Account, and to pay a portion of the costs of issuance of the Series 2010EFG Bonds.
"2010G Loan" means the loan made to the Borrower by the DNRC pursuant to the
Program in the maximum amount of the 2010G Committed Amount to provide funds to pay a
portion of the costs of the 2010 Digester Project payable under the Program, to fund deposits to
the Reserve Account, and to pay a portion of the costs of issuance of the Series 2010EFG Bonds.
"Undisbursed Committed Amount" means any undisbursed Committed Amount which is
not required to pay costs of the 2010 Digester Project upon completion thereof as provided in
Section 3.4 of this Supplemental Resolution.
Section 1.2 Other Rules of Construction. For all purposes of this Supplemental
Resolution, except where the context clearly indicates otherwise:
(a) All accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with generally accepted government accounting standards.
her
(b) Terms in the singular include the plural and vice versa.
(c) All references to time shall refer to Helena, Montana time, unless otherwise provided
8
(d) All references to mail shall refer to first-class mail postage prepaid.
(e) Words of the masculine gender shall be deemed and consulted to include correlative
words of the feminine and neuter genders.
(0 "Or" is not exclusive, but is intended to permit or encompass one, more or all ofthc
alternatives conjoined.
Section 1.3 Appendices. Attached to this Supplemental Resolution and hereby made a
part hereof are the following Appendices:
Appendix A: a description of the 2010 Digester Project;
A. ndix B-1: the form of the Series 2010E Bond;
Appendix B-2: the form of the Series 2010F Bond;
Appendix B-3: the form of the Series 2010G Bond;
Appendix C: additional agreements and representations ofthc Borrower; and
Appendix D: Compliance Certificate and Request.
ARTICLE II
AUTHORIZATION, FINDINGS, REPRESENTATIONS AND COVENANTS
Section 2.1 Authorization and Findings.
(a) Authorization. Under the provisions of the Act, the Borrower is authorized to issue
and sell its revenue bonds payable during a term not exceeding forty years from their date of
issue, to provide funds for the reconstruction, improvement, betterment and extension of the
System. or to refund its revenue bonds issued for such purpose; provided that the bonds and the
interest thereon are to be payable solely out of the net income and revenues to be derived from
rates, fees and charges for the services, facilities and commodities furnished by the undertaking,
and are not to create any obligation for the payment of which taxes may be levied except to pay
for services provided by the 'undertaking to the Borrower.
(b) The System. The Borrower, pursuant to the Act and other laws of the State, has
established and presently owns and operates the System.
(c) The 2010 Digester Project. After investigation of the facts and as authorized by the
Act, this Commission has determined it to be necessary and desirable and in the best interests of
the Borrower to acquire and construct the 2010 Digester Project.
(d) Outstanding Bonds. Pursuant to the Enabling Act and the Resolution, the Bon
has issued its Series 2010 ARRA Project Bonds to finance the 2010 ARRA Project and its Series
2010D Bond to finance a water reclamation facility project. The Series 2010B Bond, the Series
9
2010C Bond, and the Series 2010D Bond are parity bonds payable from Net Revenues of the
System. The Series 2010A Bond is a Subordinate Obligation payable, if at all, from Surplus Net
Revenues. No other bonds or indebtedness are outstanding that arc payable from revenues of the
System.
(c) Series 2010EFG Bonds. Based on a certificate executed or to be executed by the
Mayor, the Director of Finance, and the Clerk of the Commission, or any of them, it is hereby
determined that the Borrower is authorized to issue the Series 2 Bond in the maximum
principal amount of $384,000, the Series 2010F Bond in the maximum principal amount of
$816,000, and the Series 2010G Bond in the maximum principal amount of $3,903,000, with the
Series 2010F Bond and the Series 2010G Bond payable from and secured by the Net Revenues.
For purposes of the foregoing certificate, principal of and interest on the 2010E Loan arc
disregarded. The Borrower acknowledges and agrees that if it fails to deliver timely an
acceptable Compliance Certificate and Request as provided in Section 5.1 of this Supplemental
Resolution as determined in the sole and complete discretion of the DNRC, then principal and
interest and surcharges will become due and owing on the Series 2010E Bond as provided in
Section 5.1 of this Supplemental Resolution, and the Borrower shall thereupon, and in any event
no later than three (3) months after delivery of a Noncompliance Statement, to the extent
required by Section 6.7 of the Original Resolution, adjust its schedule of fees, rates, and charges
applicable to the System to cause Net Revenues and Surplus Net Revenues to be produced in an
amount at least equal to that required by the Resolution.
(f) Additional Parity Bonds. The Borrower reserved the right under Section 10.3 of the
Original Resolution to issue additional Bonds payable from the Revenue Bond Account of the
Fund on a parity as to both principal and interest with the outstanding Bonds, if the Net
Revenues of the System for the last complete fiscal year preceding the date of issuance of such
additional Bonds have equaled at least 125% of the maximum amount of principal and interest
payable from the Revenue Bond Account in any subsequent fiscal year during the term of the
outstanding Bonds, on all Bonds then outstanding and on the additional Bonds proposed to be
issued. For the purpose of the foregoing computation, the Net Revenues for the fiscal year
preceding the issuance of the additional Bonds shall be those shown by the financial reports
caused to be prepared by the Borrower pursuant to Section 2.2(f) of Resolution No. 4220, except
that if the rates and charges for services provided by the System or finally authorized to go into
effect within 60 days after the issuance of the additional Bonds have been changed since the
beginning of such preceding fiscal year, then the rates and charges in effect at the time of
issuance of the additional Bonds shall be applied to the quantities of service actually rendered
and made available during such preceding fiscal year to ascertain the gross revenues, from which
there shall be deducted to determine the Net Revenues, the actual operation and maintenance
cost plus any additional annual costs of operation and maintenance the Consultant estimates will
be incurred because of the improvement or extension of the System to be constructed from the
proceeds of the additional Bonds proposed to be issued. In no event shall any additional Bonds
be issued and made payable from the Revenue Bond Account if the Borrower is then in default
in any payment of principal of or interest on any outstanding Bonds payable therefrom, or if
there then exists any deficiency in the balances required by the Original Resolution to be
maintained in any of the accounts of the Fund, which will not be cured or restored upon the
issuance of the additional Bonds. Based on a certificate executed or to be executed by the
10
Mayor, the Director of Finance, and the Clerk of the Commission, or any of them, it is hereby
determined that the Borrower is authorized to issue $4,719,000 in aggregate principal amount of
additional Bonds pursuant to Section 10.3 of the Original. Resolution payable frown and secured
by the Net Revenues on a parity with the outstanding Series 2010E Bond, Series 2010C Bond,
and Series 2010D Bond.
Section 2.2 Representations. The Borrower represents as follows:
(a) Organization and Authority. The Borrower:
(1) is duly organized and validly existing as a municipal corporation of the State;
(2) has all requisite power and authority and all necessary licenses and permits
required as of the date hereof to own and operate the System and to carry on its current
activities with respect to the System, to adopt this Supplemental Resolution and to enter
into the Collateral Documents and to issue the Series 2010EFG Bonds and to carry out
and consummate all transactions contemplated by the Supplemental Resolution, the
Series 2010EFG Bonds and the Collateral Documents;
(3) is a Governmental Unit and a Public Entity; and
(4) has taken all proper action to authorize the execution, delivery and
performance of its obligations under this Supplemental Resolution, the Series 2010EFG
Bonds and the Collateral Documents and the incurrence of the Debt evidenced by the
Series 2010EFG Bonds in the maximum amount of the Committed Amount.
(b) Litigation. There is no litigation or proceeding pending, or to the knowledge of the
Borrower threatened, against or affecting the Borrower in any court or before or by any
governmental authority or arbitration board or tribunal that, if adversely determined, would
materially and adversely affect the existence, corporate or otherwise, of the Borrower, or the
ability of the Borrower to make all payments and otherwise perform its obligations under the
Resolution, the Series 2010EFG Bonds and the Collateral Documents, or the financial condition
of the Borrower, or the transactions contemplated by the Resolution, the Series 2010EFG Bonds
and the Collateral Documents or the validity and enforceability of the Resolution, the Series
2010EFG Bonds and the Collateral Documents. No referendum petition has been filed with
respect to any resolution or other action of the Borrower relating to the 2010 Digester Project,
the Series 2010EFG Bonds or any Collateral Documents and the period for filing any such
petition will have expired before issuance of the Series 2010EFG Bonds.
(c) Borrowing Legal and Authorized. The adoption of this Supplemental Resolution, the
execution and delivery of the Series 2010EFG Bonds and the Collateral Documents and the
consummation of the transactions provided for in this Supplemental Resolution, the Series
2010EFG Bonds and the Collateral Documents and compliance by the Borrower with the
provisions of the Resolution, the Series 2010EFG Bonds and the Collateral Documents:
(1) are within the powers of the Borrower and have been duly authorized by all
necessary action on the part of the Borrower; and
11
(2) do not and will not result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Borrower pursuant to any
ordinance, resolution, indenture, loan agreement or other agreement or instrument (other
than the Resolution and any Collateral Documents) to which the Borrower is a party or
by which the Borrower or its property may be bound, nor will such action result in any
violation of the provisions of any laws, ordinances, governmental rules or regulations or
court or other governmental orders to which the Borrower, its properties or operations are
subject.
(d) No Defaults. No event has occurred and no condition exists that, upon execution and
delivery of the Series 2010EFG Bonds and the Collateral Documents, would constitute a default
under the Resolution or the Collateral Documents. The Borrower is not in violation of any term
of any agreement, bond resolution, trust indenture, charter or other instrument to which it is a
party or by which it or its property may be bound which violation would materially and
adversely affect the transactions contemplated hereby or the compliance by the Borrower with
the teens hereof or of the Series 2010EFG Bonds and the Collateral Documents.
(e) Governmental Consent. The Borrower has obtained or made alI permits, findings and
approvals required to the date of adoption of this Supplemental Resolution by any governmental
body or officer for the making and performance by the Borrower of its obligations under this
Supplemental Resolution, the Series 2010EFG Bonds and the Collateral Documents (including
any necessary water rate increase) or for the 2010 Digester Project, the financing or refinancing
thereof or the reimbursement of the Borrower for the costs thereof. No consent, approval or
authorization of, or filing, registration or qualification with, any governmental authority (other
than those, if any, already obtained) is required on the part of the Borrower as a condition to
adopting this Supplemental Resolution, issuing the Series 2010EFG Bonds or entering into the
Collateral Documents and the performance of the Borrower's obligations hereunder and
thereunder. If a utility board or commission manages or controls the System, such board or
commission has agreed with the DNRC to abide by the terms of the Resolution and the Collateral
Documents, including approving any necessary sewer rate increases.
(f) Binding Obligation. The Resolution, the Series 2010EFG Bonds and any Collateral
Document to which the Borrower is a party are the valid and binding special, limited obligations
and agreements of the Borrower, enforceable against the Borrower in accordance with their
terms, except to the extent that the enforceability thereof may be limited by laws relating to
bankruptcy, moratorium, reorganization, insolvency or similar laws affecting creditors' rights
and general principles of equity.
(g) The 2010 Digester Project. The 2010 Digester Project consists and will consist of the
facilities, improvements and activities described in Appendix A, as such Appendix A may be
amended from time to time in accordance with the provision of Article III of this Supplemental
Resolution.
(h) Full Disclosure. There is no fact that the Borrower has not specifically disclosed in
writing to the DNRC that materially and adversely affects or (so far as the Borrower can now
foresee), except for pending or proposed legislation or regulations that are a matter of general
12
public information, that will materially and adversely affect the properties, operations and
finances of the System, the Borrower's status as a Public Entity and Governmental Unit, its
ability to own and operate the System in the manner it is currently operated or the Borrower's
ability to perform its obligations under the Resolution, the Series 2010EFG Bonds and the
Collateral Documents and to pledge any revenues or other property pledged to the payment of
the Series 2010EFG Bonds.
(i) Compliance With Law. The Borrower:
(1) is in compliance with all laws, ordinances, governmental rules and regulations
and court or other governmental orders, judgments and decrees to which it is subject and
which are material to the properties, operations and finances of the System or its status as
a Public Entity and Governmental Unit; and
(2) has obtained all licenses, permits, franchises or other governmental
authorizations necessary to the ownership of the System and the operation thereof and
agrees to obtain all such licenses, permits, franchises or other governmental
authorizations as may be required in the future for the System and the operation thereof,
which failure to obtain might materially and adversely affect the ability of the Borrower
to conduct the operation of the System as presently conducted or the condition (financial
or otherwise) of the System or the Borrower's ability to perform its obligations under the
Resolution, the Series 2010EFG Bonds and the Collateral Documents..
Section 2.3 Covenants.
(a) Insurance. In addition to the requirements of Section 2.2 of the Original Resolution,
the Borrower at all times shall keep and maintain with respect to the System property and
casualty insurance and liability insurance with financially sound and reputable insurers, or self
insurance as authorized by State law, against such risks and in such amounts, and with such
deductible provisions, as are customary in the State in the case of entities of the same size and
type as the Borrower and similarly situated and shall carry and maintain, or cause to be carried
and maintained, and pay or cause to be paid timely the premiums for all such insurance. All such
insurance policies shall name the DNRC as an additional insured to the extent permitted under
the policy or program of insurance of the Borrower. Each policy must provide that it cannot be
cancelled by the insurer without giving the Borrower and the DNRC 30 days' prior written
notice. The Borrower shall give the DNRC prompt notice of each insurance policy it obtains or
maintains to comply with this Section 2.3(a) and of each renewal, replacement, change in
coverage or deductible under or amount of or cancellation of each such insurance policy and the
amount and coverage and deductibles and carrier of each new or replacement policy. Such
notice shall specifically note any adverse change as being an adverse change. The Borrower
shall deliver to the DNRC at Closing a certificate providing the information required by this
Section 2.3(a).
(b) Right of Inspection and Notice of Change of Location. The DNRC, the DEQ and the
EPA and their designated agents shall have the right at all reasonable times during normal
business hours and upon reasonable notice to enter into and upon the property of the Borrower
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for the purpose of inspecting the System or any or all books and records of the Borrower relating
to the System.
(c) Further Assurance. The Borrower shall execute and deliver to the DNRC all such
documents and instruments and do all such other acts and things as may be necessary or required
by the DNRC to enable the DNRC to exercise and enforce its rights under the Resolution, the
Series 2010EFG Bonds and the Collateral Documents and to realize thereon, and record and file
and re- record and rcfile all such documents and instruments, at such time or times, in such
manner and at such place or places, all as may be necessary or required by the DNRC to validate,
preserve and protect the position of the DNRC under the Resolution, the Series 2010EFG Bonds
and the Collateral. Documents.
(d) Maintenance of Security, if Any; Recordation of Interest.
(1) The Borrower shall, at its expense, take all necessary action to maintain and
preserve the lien and security interest of the Resolution and the Collateral Documents so
long as any amount is owing under the Resolution or the Series 2010EFG Bonds;
(2) The Borrower shall forthwith, after the execution and delivery of the Series
2010EFG Bonds and thereafter from time to time, cause the Resolution and any
Collateral Documents granting a security interest in revenues or real or personal property
and any financing statements or other notices or documents relating thereto to be filed,
registered and recorded in such manner and in such places as may be required by law in
order to perfect and protect fully the lien and security interest hereof and thereof and the
security interest in them granted by the Resolution and, from time to time, shall perform
or cause to be performed any other act required by law, including executing or causing to
be executed any and all required continuation statements and shall execute or cause to be
executed any further instruments that may be requested by the DNRC for such perfection
and protection; and
14
(3) Except to the extent it is exempt therefrom, the Borrower shall pay or cause to
be paid all filing, registration and recording fees incident to such filing, registration and
recording, and all expenses incident to the preparation, execution and acknowledgment of
the documents described in subparagraph (2), and all federal or state fees and other
similar fees, duties, imposts, assessments and charges arising out of or in connection with
the execution and delivery of the Series 2010EFG Bonds and the Collateral Documents
and the documents described in subparagraph (2).
(e) Additional Agreements. The Borrower covenants to comply with all representations,
covenants, conditions and agreements, if any, set forth in Appendix C hereto.
(f) Financial Information. This Section 2.3(f) supplements, and is not intended to limit,
the requirements in Section 2.2(f) of the Original Resolution. The Borrower agrees that for each
fiscal year it shall furnish to the DNRC and the DEQ, promptly when available, in addition to
those matters specified in Section 2.2(f) of the Original Resolution:
(1) the preliminary budget for the System, with items for the 2010 Digester
Project shown separately; and
(2) when adopted, the final budget for the System, with items for the 2010
Digester Project shown separately.
(g) 2010 Digester Project Accounts. The Borrower shall maintain 2010 Digester Project
accounts in accordance with generally accepted government accounting standards, and as
separate accounts, as required by Section 602(b)(9) of the Clean Water Act.
(h) Records. After reasonable notice from the EPA or the DNRC, the Borrower shall
make available to the EPA or the DNRC such records as the EPA or the DNRC reasonably
requires to review and determine compliance with the Clean Water Act, as provided in
Section 606(e) of the Clean Water Act.
(i) Compliance with Clean Water Act. The Borrower has complied and shall comply
with all conditions and requirements of the Clean Water Act pertaining to the 2010EFG Loans
and the 2010 Digester Project.
(j) Program Covenant. The Borrower agrees that neither it nor any "related person"
to the Borrower (within the meaning of Section 147(a)(2) of the Code) shall, whether pursuant to
a formal or informal arrangement, acquire bonds issued by the State under the Indenture in an
amount related to the amount of the Series 2010EFG Bonds.
Section 2.4 Covenants Relating to the Tax Exempt Status of the State Bonds.
(a) The Borrower covenants and agrees that it will not use or permit to be used any of the
proceeds of the Series 2010EFG Bonds or any other funds of the Borrower in respect of the 2010
Digester Project or the Series 2010EFG Bonds, directly or indirectly, in a manner that would
cause, or take any other action that would cause, any State Bond to be an "arbitrage bond" within
the meaning of Section 148 of the Code or would otherwise cause the interest on the State Bonds
to be included in gross income for purposes of federal income taxation..
(b) The Borrower agrees that it will not enter into, or allow any `related person" (as
defined in Section 147(a)(2) of the Code) to enter into, any arrangement, formal or informal, for
the purchase of the State Bonds or any other obligations of the DNRC in an amount related to the
amount of the Loan or the portion of the Loan derived directly or indirectly from proceeds of the
State Bonds or that would otherwise cause any State Bond to be an "arbitrage bond" within the
meaning of Section 148 of the Code.
(c) The Borrower shall not use or permit the use of the 2010 Digester Project directly or
indirectly in any trade or business carried on by any Person who is not a Governmental Unit. For
the purpose of this subparagraph, use as a member of the general public (within the meaning of
the Regulations) shall not be taken into account and any activity carried on by a Person other
than a natural person shall be treated as a trade or business.
15
(d) Any portion of the 2010 Digester Project being refinanced or the cost of which is
being reimbursed was acquired by and is now and shall, during the term of the Loan, be owned
by the Borrower and not by any other Person. Any portion of the 2010 Digester Project being
financed shall be acquired by and shall, during the term of the Loan, be owned by the Borrower
and not by any other Person. Notwithstanding the previous two sentences, the Borrower may
transfer the 2010 Digester Project or a portion thereof to another Governmental Unit which is
also a Public Entity if such transfer is otherwise permitted under the Resolution and if such
organization agrees with the DNRC to comply with Section 2.3(h), Section 2.3(i) and Section 2.4
of this Supplemental Resolution and if the DNRC receives an Opinion of Bond Counsel that
such transfer will not violate the State Act or the Clean Water Act or adversely affect the
exclusion of interest on the State Bonds from gross income or purposes of federal income
taxation. In addition, except as otherwise provided in the Resolution or in any Collateral
Documents, the Borrower may sell or otherwise dispose of any portion of the 2010 Digester
Project which has become obsolete or outmoded or is being replaced or for other reasons is not
needed by the Borrower or beneficial to the general public or necessary to carry out the purposes
of the Clean Water Act.
(e) At the Closing of the 2010EFG Loans, the DNRC will, if necessary to obtain the
Opinion of Bond Counsel described in Section 7.05(a) of the Indenture, deliver to the Borrower
instructions concerning compliance by the Borrower with the arbitrage rebate requirements of
Section 148 of the Code (the "Arbitrage Rebate Instructions The Borrower shall comply with
the Arbitrage Rebate Instructions, if any, delivered to it by the DNRC at Closing, as such
Instructions may be amended or replaced by the DNRC from time to time. The Arbitrage Rebate
Instructions may be amended or replaced by new Arbitrage Rebate Instructions delivered by the
DNRC and accompanied by an Opinion of Bond Counsel to the effect that the use of said
amended or new Arbitrage Rebate Instructions will not adversely affect the excludability of
interest on the State Bonds or any Additional State Bonds (except State Bonds the interest on
which the State did not intend to be excluded from gross income for federal income tax
purposes) from gross income of the recipients thereof for federal income tax purposes.
(f) The Borrower agrees that during the term of the 2010EFG Loans it will not contract
with or permit any Private Person to manage the 2010 Digester Project or any portion thereof
except according to a written management contract and upon delivery to the DNRC of an
opinion of Bond Counsel to the effect that the execution and delivery of such management
contract will not violate the State Act or the Clean Water Act or adversely affect the exclusion of
interest on State Bonds from gross income or purposes of federal income taxation.
(g) The Borrower may not lease the 2010 Digester Project or any portion thereof to any
Person other than a Nonexempt Person which agrees in writing with the Borrower and the State
not to cause any default to occur under the Resolution; provided the Borrower may lease all or
any portion of the 2010 Digester Project to a Nonexempt Person pursuant to a lease which in the
Opinion of Bond Counsel delivered to the DNRC will not cause the interest on the State Bonds
to be included in gross income for purposes of federal income taxation.
(h) The Borrower shall not change the use or nature of the 2010 Digester Project if (i)
such change will violate the Clean Water Act, or (ii) so long as the State Bonds are outstanding
16
unless, in the Opinion of Bond Counsel delivered to the DNRC, such change will not result in
the inclusion in gross income of interest on the State Bonds for federal income tax purposes.
Section 2.5 Maintenance of System; Liens. The .Borrower shall. maintain the System,
including the 2010 Digester Project, in good condition and make all necessary renewals,
replacements, additions, betterments and improvements thereto. The Borrower shall not grant or
permit to exist any lien on the 2010 Digester Project or any other property making up part of the
System, other than liens securing Debt where a parity or senior lien secures the Series 2010EFG
Bonds; provided that this Section 2.5 shall not be deemed to be violated if a mechanic's or
contractor's lien is filed against any such property so long as the Borrower uses its best efforts to
obtain the discharge of such lien and promptly reports to the DNRC the filing of such lien and
the steps it plans to take and does take to discharge of such lien.
Section 2.6 Maintenance of Existence; Merger, Consolidation, Etc.; Disposition of
Assets. The Borrower shall maintain its corporate existence, except that it may consolidate with
or merge into another Governmental Unit or permit one or more Governmental Units to
consolidate with or merge into it or may transfer all or substantially all of its assets to another
Governmental Unit and then dissolve if the surviving, resulting or transferee entity (if other than
the Borrower) (i) is a Public Entity and (ii) assumes in writing all of the obligations of the
Borrower under the Resolution, the Series 2010EFG Bonds and the Collateral Documents, and
(a) such action does not result in any default in the performance or observance of any of the
terns, covenants or agreements of the Borrower under the Resolution, the Series 2010EFG
Bonds and the Collateral Documents, (b) such action does not violate the State Act or the Clean
Water Act and does not adversely affect the exclusion of interest on the Series 2010EFG Bonds
or the State Bonds from gross income for federal income tax purposes and (c) the Borrower
delivers to the DNRC on the date of such action an Opinion of Bond Counsel that such action
complies with this Section 2.6.
Other than pursuant to the preceding paragraph, the Borrower shall not transfer the
System or any portion thereof to any other Person, except for property which is obsolete,
outmoded, worn out, is being replaced or otherwise is not needed for the operation of the
System, unless the provisions of (a) and (b) of the preceding paragraph are satisfied and the
Borrower delivers to the DNRC an Opinion of Bond Counsel to that effect and, in addition, the
DNRC consents to such transfer.
ARTICLE III
USE OF PROCEEDS; THE 2010 DIGESTER PROJECT
Section 3.1 Use of Proceeds. The Borrower shall apply the proceeds of the 2010EFG
Loans from the DNRC solely as follows:
(a) The Borrower shall apply the proceeds of the 2010EFG Loans solely to the financing,
refinancing or reimbursement of the costs of the 2010 Digester Project as set forth in Appendix
A hereto and this Section 3.1. The 2010EFG Loans will be disbursed in accordance with
ARTICLE IV hereof and Article VII of the Indenture. If the 2010 Digester Project has not been
completed prior to Closing, the Borrower shall, as quickly as reasonably possible, complete the
17
2010 Digester Project and expend proceeds of the 2010EFG Loans to pay the costs of
completing the 2010 Digester Project.
(b) No portion of the proceeds of the 2010EFG Loans shall be used to reimburse the
Borrower for costs paid prior to the date of adoption of this Supplemental Resolution of a Project
the construction or acquisition of which occurred or began earlier than March 7, 1985. In
addition, if any proceeds of the Loan are to be used to reimburse the Borrower for 2010 Digester
Project costs paid prior to the date of adoption of this Supplemental Resolution, the Borrower
shall have complied with Section 1.150 -2 of the Regulations in respect of such costs.
(c) Any Debt to be refinanced with proceeds of the Loan was incurred after March 7,
1985 for a Project the construction or acquisition of which began after March 7, 1985. No
proceeds of the Loan shall be used for the purpose of refinancing an obligation the interest on
which is exempt from federal income tax or excludable from gross income for purposes of
federal income taxation unless the DNRC has received an Opinion of Bond Counsel, satisfactory
to it, to the effect that such refinancing will not adversely affect the exclusion of interest on the
State Bonds from gross income for purposes of federal income taxation.
Section 3.2 The 2010 Digester Project. Set forth in Appendix A to this Supplemental
Resolution is a description of the 2010 Digester Project, which describes the property which has
been or is to be acquired, installed, constructed or unproved and thc other activities, if any to be
funded from the Loan (the 2010 Digester Project may consist of more than one facility or
activity), and an estimated budget relating to the 2010 Digester Project. The 2010 Digester
Project may be changed and the description thereof in Appendix A may be amended from time to
time by the Bon but only after delivery to the DNRC of the following:
(a) A certificate of the Borrower setting forth the amendment to Appendix A and stating
the reason therefor, including statements whether the amendment would cause an increase or
decrease in the cost of the 2010 Digester Project, an increase or decrease in thc amount of Loan
proceeds which will be required to complete the 2010 Digester Project and whether the change
will materially accelerate or delay the construction schedule for the 2010 Digester Project;
(b) A written consent to such change in the 2010 Digester Project by an Authorized
DNRC Officer;
(c) An Opinion or Opinions of Bond Counsel stating that the 2010 Digester Project, as
constituted after such amendment, is, and was at the time the State Bonds were issued, eligible
for financing under the State Act and is, and was at the time the Series 201 OEFG Bonds was
issued, eligible for financing under the Act, such amendment will not violate the State Act or the
Act and such amendment will not adversely affect the exclusion of interest on the State Bonds or
the Series 201 OEFG Bonds from gross .income for purposes of federal income taxation. Such an
Opinion of Bond Counsel shall not be required for amendments which do not affect the type of
facility to be constructed or activity to be financed.
The Borrower acknowledges and agrees that an increase in the principal amount of the
201 OEFG Loans may be made only upon an application to the DEQ, the DNRC and the Trustee,
in such form as the DEQ shall specify, which is approved by the DEQ and the DNRC, in their
18
sole and absolute discretion, and adoption by the governing body of the Borrower of a resolution
amendatory of or supplementary to the Resolution authorizing the additional loan and delivery of
written certifications by officers of the Borrower to the DEQ, the DNRC and the Trustee to the
effect that all representations and covenants contained in the resolution as it may be so amended
or supplemented are true as of the date of closing of the additional loan and compliance with
applicable tests for the incurrence of such Debt. No assurance can be given that any additional.
loan funds will be available under the Program at the time of any such application or thereafter.
The Borrower acknowledges and agrees that neither the DEQ, the DNRC, the Trustee nor any of
their agents, employees or representatives shall have any liability to the Borrower and have made
no representations to the Borrower as to the sufficiency of the 2010EFG Loans to pay costs of
the 2010 Digester Project or as to the availability of additional funds under the Program to
increase the principal amount of the Loan.
Section 3.3 2010 Digester Project Representations and Covenants. The Borro
hereby represents to and covenants with the DNRC that:
(a) all construction of the 2010 Digester Project has complied and will comply with all
federal and state standards, including, without limitation, EPA regulations and standards;
(b) all future construction of the 2010 Digester Project will be done only pursuant to
fixed price construction contracts. The Borrower shall obtain a performance and payment bond
from the contractor for each construction contract in the amount of 100% of the construction
price and ensure that such bond is maintained until construction is completed to the Borrower's,
the DNRC's and the DEQ's satisfaction;
(c) all future construction of the 2010 Digester Project will be done in accordance with
plans and specifications on file with the DNRC and the DEQ, provided that changes may be
made in such plans and specifications with the written consent of an Authorized DNRC Officer
and the .DEQ;
(d) all laborers and mechanics employed by contractors and subcontractors on the 2010
Digester Project have been and will be paid wages at rates not less than those prevailing on
projects of a character similar in the locality as determined by the United States Secretary of
Labor in accordance with subchapter 1V of chapter 31 of title 40, United States Code;
(e) the 2010 Digester Project is a project of the type permitted to be financed under the
Act, the State Act and the Program and Title VI of the Clean Water Act;
(f) the Borrower will undertake the 2010 Digester Project promptly after the Closing
Date and will cause the 2010 Digester Project to be completed as promptly as practicable with all
reasonable dispatch, except only as completion may be delayed by a cause or event not
reasonably within the control of the Borrower; it is estimated by the Borrower that the 2010
Digester Project will be substantially completed by the Estimated Completion Date.
19
Project.
Section 3.4 completion or Cancellation or Reduction of Costs nf the ZOlODigester
(a) Upon completion of the 2010 Digester Project, the Borrower shall deliver to the
DNRCu certificate stating that the 2Vl0 Digester Pr»jcctiscnmopleteumdmkating1houo)nuo\,i[
any, of the Dmdlsbn,srd Committed Amount. lf Appendix describes two or more separate
projects as making up the 2010 Digester Pr jccLoaopurutcconmp[o6nuccoii(ioatcubaU6c
delivered for each.
(b) If all or any portion of the 2OlA Digester Project ixcancelled or cut back or its costs
are rcduced or for any other reason thc BolTower will not require ire the full Comrnittcd Amount,
the Borrowcr shall promptly notify thc DNRC in writing ofsuch fact and the amount nfthe
Undisbursed Committed Amount.
ARTICLE IV
THE LOAN
Section 4.1 The Loan; Disbursement of Loan.
(a) The DNRC has agreed to lend to the Borrower, from time to time ns the requirements
of this Section 4.1 are met, an amount up to (i) 5384000 (the "2010E Committed Amount"), (ii)
50{h,000 (the ^^2Ul0F Committed /\roouot"), and (iii)53`gO3,000 (the ^^2V|0GCommitted
Amount") for the purposes of financing, refinancing or rcimbursing the Borrowcr for a portion of
the costs ofthe 2010 Digcstcr Project provided thc DNRC shall 1101 bc requircd to loan any
proceeds of the State Bonds to the Borrower after the Estimated Completion Date. The
Committed Amount may be reduced as provided in Section 3.2 and Section 3.4 of this
Supplemental Resolution.
(b) The DNRC intends to disburse the 20\(EFG Loans through the Trustee. In
consideration of the issuance of the Series 2010EFG Bonds by the Borrower, the DNRC shall
make, or cause the Trustee to make, a disbursement of all or a portion of the 2010EFG Loans
upon reccipt of the following documents;
(1) an Opinion ofBond Counscl as to the Series 2010E Bond and an opinion uf
Bond Counscl as to the validity and enforceability of the Series 2Ul0F Bond and 20100
Bond and the security therefor and stating in effect that interest on the Series 2010F Bond
and thc Serics 2010G Bond is not includable io gross income nf the owner thereof for
purposes of federal income taxation, in form and substance satisfactory to the DNRC;
(2) the Series 2010E Bond the Series 2010F Bond and the Series 2Ol0GBond,
fully executed and authenticated;
(3) u certified copy o[the Original Resolution arid this Supp!ernental Rcso1ution
(4) any other security instruments nT documents requbcd}y the DNRC or DEQ
as a condition to their approval of the 2010EFG Loans;
20
(5) if all or part of a Loan is being made to refinance a Project or reimburse the
Borrower for the costs of a Project paid prior to the Closing, evidence, satisfactory to the
DNRC and the Bond Counsel referred to in (1) above, (A) that the acquisition or
construction of the Project was begun no earlier than March 7, 1985 or the debt was
incuiTed no earlier than March 7, 1985, (B) of the Borrower's title to the Project, (C) of
the costs of such Project and that such costs have been paid by the Borrower and (D) if
such costs were paid before adoption of this Supplemental Resolution that the Borrower
has complied with Section l .150 of the Regulations;
(6) the items required by the Indenture for the portion of the 201OEFG Loans to
be disbursed at Closing; and
(7) such other certificates, documents and other information as the DNRC, the
DEQ or the Bond Counsel giving the opinion referred to in subparagraph (1) may require
(including any necessary arbitrage rebate instructions).
(c) In order to obtain a disbursement of a. portion of the 2010EFG Loans to pay costs of
the 2010 Digester Project, the Borrower shall submit to the DNRC and the Trustee a signed
request for disbursement on the form prescribed by the DNRC, with all attachments required by
such form. The Borrower may obtain disbursements only for costs which have been legally
incurred and are due and payable. All Loan disbursements will be made to the Borrower only
upon proof that cost was incurred.
(d) Provided that the 2010 EPA Capitalization Grant is available to the Program, from
and after the 2010F First Advance, the 2010EFG Loans shall be disbursed, subject to the other
terms and conditions of this Supplemental Resolution, in the following order:
(1) First, at the Closing, the 2010F First Advance will be advanced
from the 2010F Loan.
(2) Second, after the 2010F First Advance has been disbursed to
the Borrower, the entire amount of the 2010E Loan may then be disbursed to the
Borrower as and when needed. For the avoidance of doubt, any amounts of the
2010EFG Loans to be disbursed at Closing in excess of the 2010F First Advance
will be disbursed as proceeds of the 2010E Loan to the extent of the 2010E
Committed Amount.
(3) Third, after the entire principal amount of the 2010E Loan has
been disbursed to the Borrower, the Borrower shall draw the remaining amounts
under the 2010F Loan and, after the 2010F Loan has been disbursed in full, the
Borrower will then draw amounts under the 2010G Loan, which will be disbursed
to the Borrower, starting with the 2010G First Advance, as and when needed.
(e) The Borrower shall submit the request for the 2010F First Advance and the 2010G
First Advance in the form required by the DNRC so that it is received in sufficient time for the
DNRC to process the information by the date desired by the Borrower for the making of the
2010F First Advance and the 2010G First Advance, respectively. The Borrower shall not be
entitled to, and the DNRC shall have no obligation to make, the 2010F First Advance or the
2010G First Advance or any subsequent advance of amounts under the 2010F Loan or the 2010G
Loan until such time as the Borrower shall have set aside and funded the Reserve Account in an
amount then required to satisfy the Reserve Requirement.
(f) For refinancings, a disbursement schedule complying with thc requirements of the
Clean Water Act shall be established by the DNRC and the Borrower at Closing.
(g) If all or a portion of the 2010EFG Loans is made to reimburse a Borrower for Project
costs paid by it prior to Closing, the Borrower shall present at Closing the items required by
Section 4.1(b) relating to such costs. The Trustee shall disburse such amounts to the Borrower
pursuant to a disbursement schedule complying with the requirements of the Clean Water Act
established by the DNRC and the Borrower at thc Closing.
(11) Notwithstanding anything else provided herein, the Trustee shall not be obligated to
disburse the 2010EFG Loans any faster or to any greater extent than it has available EPA
Capitalization Grants, Bond proceeds and other amounts available therefor in the Revolving
Fund. The DNRC shall not be required to do "overmatching" pursuant to Section 5.04(b) of the
Indenture, but may do so in its discretion. The Borrower acknowledges that if Project costs are
incurred faster than the Borrower projected at Closing, there may be delays in making Loan
disbursements for such costs because of the schedule under which EPA makes EPA
Capitalization Grant money available to the DNRC. The DNRC will use its reasonable best
efforts to obtain an acceleration of such schedule if necessary.
(i) Upon making each 2010E Loan disbursement, 2010F Loan disbursement, and 2010G
Loan Disbursement, the Trustee shall note such disbursement on Schedule A to the Series 20I0E
Bond, Series 2010F Bond, and the Series 2010G Bond, respectively. A Schedule A reflecting
the amount of the 2010F First Advance will first be attached to the Series 2010F Bond at
Closing.
(j) The Borrower agrees that it will deposit in the Reserve Account upon receipt thereof,
on the date of the 2010F First Advance and any subsequent disbursement dates, any proceeds of
the 2010F Loan and the 2010G Loan borrowed for the purpose of increasing the balance in the
Reserve Account to the Reserve Requirement. The Borrower further acknowledges and agrees
that any portions of the 2010EFG Loans representing capitalized interest shall be advanced only
on Payment Dates and shall be transferred by the Trustee on the Payment Date directly to the
Revenue Bond Account. The amount of any such transfer shall be a credit against the interest
payments due on the Series 2010EFG Bonds and interest thereon shall accrue only from the date
of transfer.
(k) Compliance by the Borrower with its representations, covenants and agreements
contained in the Original Resolution, this Supplemental Resolution and. the Collateral Documents
shall be a further condition precedent to the disbursement of the Loan in whole or in part. The
DNRC and the Trustee, in their sole and absolute discretion, may make one or more
disbursements, in whole or in part, notwithstanding such noncompliance, and without liability to
make any subsequent disbursement of the Loan.
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Section 4.2 Commencement of Loan Term. The Borrower's obligations under this
Supplemental Resolution and the Collateral Documents shall commence on the date hereof
unless otherwise provided in this Supplemental Resolution. However, the obligation to make
payments under ARTICLE V hereof shall commence only upon the first disbursement by the
Trustee of thc 2010F Loan proceeds.
Section 4.3 Termination of Loam Term. The Borrower's obligations under the
Resolution and the Collateral Documents in respect of the Series 2010EFG Bonds shall terminate
upon payment in full of all amounts due under the Series 2010EFG Bonds and the Resolution in
respect thereof; provided, however, that the covenants and obligations provided in ARTICLE VI
and Section 10.3 of this Supplemental Resolution shall survive the termination of the Resolution.
Section 4.4 Loan Closing Submissions. On or prior to the Closing, the Borrower will
have delivered to the DNRC and the Trustee the closing submissions required by Section 7.05 of
the Indenture.
ARTICLE V
REPAYMENT OF 2010EFG Loans
Section 5.1 Repayment of 2010EFG Loans. The Borrower shall repay the amounts
lent to it pursuant to Section 4.1 hereof in accordance with this Section 5.1.
5.1.1. Interest and Surcharges. Until a Determination Statement is
delivered by the DNRC to the Borrower and so long as the Borrower's obligation to repay the
principal of the 2010E Loan is forgiven as provided in Section 5.1.2 below, amounts disbursed
by the DNRC under Section 4.1 hereof that are evidenced by thc Series 2010E Bond bear interest
at the rate of zero percent (0.00%) per annum from the date of each advance; provided, however,
if the DNRC delivers to the Borrower a Noncompliance Statement, then all principal of the
Series 2010E Bond advanced by the DNRC shall be payable and amounts disbursed by the
DNRC under Section 4.1 hereof that are evidenced by the Series 2010E Bond shall bear interest
at the rate of two percent (2,00%) per annum and in addition the Borrower shall pay the
Administrative Expense Surcharge and the Loan Loss Reserve Surcharge from the date of each
advance under the Series 2010E Bond. The 2010F Loan and the 2010G Loan shall bear interest
at the rate of two percent (2.00 per annum and the Borrower shall pay the Administrative
Expense Surcharge and. Loan Loss Reserve Surcharge on the outstanding principal amounts of
the 2010F Loan and the 2010G Loan. For purposes of this Resolution and the Program, with
respect to the 2010E Loan, the 2010F Loan, and the 2010G Loan, the term "interest on thc
2010EFG Loans" or "interest on the 2010E Loan" or "interest on the Series 2010F Loan" or
"interest on the Series 2010G Loan" when not used in conjunction with a reference to any
surcharges, shall include the Administrative Expense Surcharge and the Loan Loss Reserve
Surcharge. The Borrower shall pay all Loan Repayments and surcharges in lawful money of the
United States of America to the DNRC. Interest, Administrative Expense Surcharge, and Loan
Loss Reserve Surcharge shall be calculated on the basis of a year of 360 days comprising 12
months of 30 days each.
5.1.2. Repayment of 2010E Loan; Principal Forgiveness.
23
(a) The .Borrower is obligated to repay the principal of and interest and Administrative
Expense Surcharge and Loan Loss Reserve Surcharge on the 2010E Loan, unless the DNRC
forgives the Borrower's obligation to repay the principal of the 2010E Loan as provided in
Section 5.1.2(b). Subject to the provisions of Section 5.1.2(b), the Loan Repayments and the
Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the 2010E Loan shall
be due on each Payment Date, as follows:
(1)
interest and the Administrative Expense Surcharge and the Loan Loss
Reserve Surcharge on the outstanding principal balance of the 2010E Loan
shall be payable from and after the date of each advance of principal of the
2010E Loan on each Payment Date at the rate of 3.75",% per annum,
beginning on the first Payment Date following the date of delivery by the
DNRC of a. Noncompliance Statement and concluding on July 1, 2030
and
(2) the principal of the 2010E Loan shall be repayable on each Payment Date,
beginning on the Payment Date that is the first to occur following delivery
by the DNRC of a Noncompliance Statement, and concluding on July 1,
2030, and the amount of each principal payment shall be calculated on the
basis of a substantially level debt service at the rate of 3.75% per annum.
(b) Notwithstanding Section 5.1.2(a), so long as the Borrower is proceeding diligently to
completion of the 2010 Digester Project and the Borrower has executed and delivered the
Compliance Certificate and Request to the DNRC in form and substance satisfactory to the
DNRC and the DEQ within thirty (30) days after the date that the Compliance Certificate and
Request is provided to the Borrower by the DNRC, the DNRC will, following review and
approval of the Compliance Certificate and Request, deliver to the Borrower a Forgiveness
Statement and the Borrower will thereafter have no obligation to repay amounts advanced under
the Series 2010E Bond or interest or surcharges thereon and the Series 2010E Bond will be
marked "CANCELLED" and returned by the DNRC to the Borrower. However, in the event the
Borrower fails to deliver timely the Compliance Certificate and Request, or the Borrower cannot
submit the Compliance Certificate and Request because it cannot make the certifications required
therein, or the Compliance Certificate and Request is delivered in a form that deviates materially
from that attached hereto as Appendix D as determined in the sole and complete discretion of the
DNRC or the DEQ, or the DNRC or the DEQ determine at any time that the 2010 Digester
Project or any portion thereof or of the work relating thereto fails to comply with Program
requirements, then the DNRC will deliver to the Borrower a Noncompliance Statement. Upon
delivery of a Noncompliance Statement by the DNRC to the Borrower, all principal advanced or
to be advanced under the Series 2010E Bond, together with interest, Administrative Expense
Surcharge, and Loan Loss Reserve Surcharge thereon from the date of each advance, shall be
payable as provided in Section 5.1.2 (a).
(c) in addition, in the event the DNRC delivers a Noncompliance Statement (i) the Series
2010E Bond will continue in effect as a Subordinate Obligation, and (ii) the Borrower will
forthwith comply with the rate covenant set forth in Section 6.7 of the Original Resolution, as
implemented as described in Section 12.2 below, and, if necessary, increase the rates and charges
of the System to satisfy such rate covenant as soon as practicable and in any event no later than
24
three (3) months after the date of delivery to the Borrower by the DNRC of Noncompliance
Statement.
5.1.3. Repayment of20l0FLoan. The Loan Repayments on the ZOlVFLoan
required. shall be duc 011 each Payment Date, as foliows:
(l) intcrcst and Administrative Expense Surcharge and Loan Loss Rcscrve
Surcharge on the outstanding principal balancc ofthe 2010F Loan shall be
payable on cach January 1 and July l, beginning onJunooryl_20l] and
concluding on July 1, 2030; and
(2) the principal of the ]Ol0F Loan shall bc repayable on January l,2O|l
concluding nn July l,2030,and the amount of cach principal paymco1
shall be calculated on the basis ofa subsiantially level debt scrvicc at a
rate of 3.75°' per aflflUfll: provided that principal o[1bc20l8FLoonia
payable only in amounts that are multiples of $1,000.
5.14. Repayment of 2010G Loan. The Loan Repayments on the 2010G Loan
required by this Section 5.1 shai] bc duc on cach Payment Date, as follows;
(1) intercst and Adrninistrativc Expensc Surcharge and Loan Loss Rescrvc
Surcharge on the outstandi principal balance of the 2010G Loan shaD
be payablc 011 cach January 1 and July 1, beginning on the first to occur of
either of such dates followingthc date ofthe 2010G First Advancc, which
is the fimlPayment Date after the 20lOG First Advance, but in any event
no earlicrthan January l and concluding oo July l,2O3O;and
(2) the principal principal ofthc 20106 Loan shall be repayable on each Payment Date,
beginning on the January lor July l that is thc first to occur foliowing the
date ofthc 2010G First Advance, but in any event no earlier than January
l and concluding July l,2A3U, and the amount o{ each principal
payment shall be calculated an thc basis ofa substantially level debt
service at a rate of 3.75% per annum; providcd that principal ofthc 2010G
Loan is payablc only in amounts that are multipies of Sl`AUV.
5.1.5. Details Regarding 2010 Loan Repaynients. Loan Repaynients and
the Administrative Expense Surchargc and thc Loan Loss Reserve Surcharge oii the 2010F Loan
and the 2010G Loan and, if applicable, on the 2010E Loan, shall be due on the dates specified
above and on the dates and in the amounts shown in Schcdulc B to the Series 3OlOE Bond, the
Series 2010F Bond, and thc Series 2010G Bond, as such Schedule B shall be modified from time
to time as provided in Section 5.1.2 and below. Schedule B will first be attached to the Series
Z0l0F Bond and, un appropriate, the Series Z0l0E Bond, utClosing. Thc portion of cach such
Loan Repayrneni consisting of principal al and the portion consisting of interest and thc amount of
cach Administralive Expense Surcharge and the amount of cach Loan Loss Reserve Surcharge
shall be set forth in Schedule B to the Series 2010E Bond and the Series 2010F Bond on and
after Closing and in Schedule B to the Series 2010G Bond on and after the date of the 2010G
First Advance. Upon each disbursernent of 201 OEFG Loan anlounts to the Borrower pursuant to
25
Section 4.1 hereof, the Trustee shall enter or cause to be entered the amount advanced on
Schedule A to the applicable Series 2010E Bond, the Series 2010F Bond, and the Series 20] 0G
Bond under "Advances" and the total amount advanced under Section 4.1, including such
disbursement, under "Total Amount Advanced."
If the DNRC shall have delivered a Noncompliance Statement, then
Schedule B to the Series 2010E Bond shall continue to reflect interest and surcharges on
amounts advanced under the Series 2010E Bond at 3.75% per annum, as may be revised to
reflect the full principal amount advanced under the Series 2010E Bond, the initial Payment
Date, and the periodic total loan payment, and the Trustee shall send a copy of such schedules to
the Borrower within one month after delivery by the DNRC of the Noncompliance Statement. If
the DNRC delivers a Forgiveness Statement, Schedule B to the Series 2010E Bond will be
disregarded and of no effect.
The payments of principal of and interest and Administrative Expense
Surcharge and Loan Loss Reserve Surcharge on the 2010F Loan and 2010G Loan shall be due
on the dates and in the amounts shown in Schedule B to the Series 2010F Bond and the Series
2010G Bond, as such Schedule B shall be modified from time to time as provided below. The
portion of each such Loan Repayment consisting of principal and the portion consisting of
interest and the amount of each Administrative Expense Surcharge and the amount of each Loan
Loss Reserve Surcharge shall be set forth in Schedule B to the Series 2010F Bond and the Series
2010G Bond. Upon each disbursement of 2010F Loan and 2010G Loan amounts to the
Borrower pursuant to Section 4.1 hereof, the Trustee shall enter or cause to be entered the
amount advanced on Schedule A to the Series 2010F Bond and the Series 2010G Bond under
"Advances and the total amount advanced under Section 4.1 including such disbursement,
"Total Amount Advanced." Interest and Administrative Expense Surcharge and Loan Loss
Reserve Surcharge on such advance shall accrue from the date the advance is made and shall be
payable on each Payment Date thereafter. Once the completion certificate for a Project has been
delivered to the DNRC, the Trustee shall revise Schedule B to the Series 2010F Bond and the
Series 2010G Bond in accordance with this Section 5.1 and the Trustee shall send a copy of such
Schedule B to the Borrower within one month after delivery of the completion certificate.
Past -due Loan Repayments and the Administrative Expense Surcharge and
the Loan Loss Reserve Surcharge shall bear interest at the rate of ten percent (10.00 per
annum, until paid.
Any payment of principal and interest as to the Series 2010F Bond and the
Series 2010G Bond and, if applicable, the Series 2010E Bond, and the Administrative Expense
Surcharge and the Loan Loss Reserve Surcharge as to the Series 20].0G Bond and the Series
2010F Bond, and, if applicable, the Series 2010E Bond under this Section 5.1 shall be credited
against the same payment obligation under each of the Series 2010G Bond, the Series 2010F
Bond and, as applicable, the Series 2010E Bond.
Section 5.2 Additional Payments. The Borrower shall also pay, within 30 days after
receipt of a bill therefor, from any legally available funds therefor, including proceeds of the
26
Loan, if the Borrower so chooses, all reasonable expenses of the DNRC and the Trustee in
connection with the 2010EFG Loans, the Collateral. Documents and the Scrics 2010EFG Bonds,
including, but not limited to:
(a) the cost of reproducing this Supplemental Resolution, the Collateral
Documents and the Series 2010EFG Bonds;
(b) the fees and disbursements of bond counsel and other Counsel utilized by
the DNRC and the Trustee in connection with the Loan, the Resolution, the Collateral
Documents and the Series 2010EFG Bonds and the enforcement thereof; and
(c) all taxes and other governmental charges in connection with the execution
and delivery of the Collateral Documents or the Series 2010EFG Bonds, whether or not the
Series 2010EFG Bonds are then outstanding, including all recording and filing fees relating to
the Collateral Documents and the pledge of the State's right, title and interest in and to the Series
2010EFG Bonds, the Collateral Documents and the Resolution under the Resolution (and with
the exceptions noted therein) and all expenses, including attorneys' fees, relating to any
amendments, waivers, consents or collection or enforcement proceedings pursuant to the
provisions hereof or thereof.
Section 5.3 Prepayments. The Borrower may not prepay all or any part of the
outstanding principal amount of the Series 2010F Bond, the Series 2010G Bond, and, if
applicable, the Series 2010E Bond, unless (i) a Determination Statement has been delivered, (ii)
it obtains the prior written consent of the DNRC thereto, and (iii) no Loan Repayment or
Administrative Expense Surcharge or Loan Loss Reserve Surcharge is then delinquent. Any
prepayment permitted by the DNRC must be accompanied by payment of accrued interest and, if
applicable, Administrative Expense Surcharge and Loan Loss Reserve Surcharge to the date of
prepayment on the amount of principal prepaid. If the Series 2010EFG Bonds are prepaid in part
pursuant to this Section 5.3, such prepayments shall be applied to principal payments in inverse
order of maturity.
Section 5.4 Obligations of Borrower Unconditional. The obligations of the Borrower
to make the payments required by the Resolution and the Series 2010EFG Bonds and to perform
its other agreements contained in the Resolution, the Series 2010EFG Bonds and Collateral
Documents shall be absolute and unconditional, except as otherwise provided herein or in such
documents. The Borrower (a) shall not suspend or discontinue any payments provided for in the
Resolution and the Series 2010EFG Bonds, (b) shall perform all its other agreements in the
Resolution, the Series 2010EFG Bonds and the Collateral Documents and (c) shall not terminate
the Resolution, the Series 2010EFG Bonds or the Collateral Documents for any cause, including
any acts or circumstances that may constitute failure of consideration, destruction of or damage
to the 2010 Digester Project or the System, commercial frustration of purpose, any dispute with
the DNRC or the EPA, any change in the laws of the United States or of the State or any political
subdivision of either or any failure of the DNRC to perfolni any of its agreements, whether
express or implied, or any duty, liability or obligation arising from or connected with the
Resolution.
27
Section 5.5 Limited Liability. All payments of principal of and interest on the
2010EFG Loans and other payment obligations of the Borrower hereunder and under the Series
2010EFG Bonds shall be special, limited obligations of the Borrower payable solely out of the
Net Revenues or, as appropriate, Surplus Nct Revenues, and shall not, except at the option of the
Borrower and as permitted by law, be payable out of any other revenues of the Borrower. The
obligations of the Borrower under the Resolution and the Series 2010EFG Bonds shall never
constitute an indebtedness of the Borrower within the meaning of any state constitutional
provision or statutory or charter limitation and shall never constitute or give rise to a pecuniary
liability of the Borrower or a charge against its general credit or taxing power. The taxing
powers of the Borrower may not be used to pay principal of or interest on the Series 2010EFG
Bonds, and no funds or property of the Borrower other than the Net Revenues or, as appropriate,
Surplus Net Revenues may be required to be used to pay principal of or interest on the Series
2010EFG Bonds.
ARTICLE VI
INDEMNIFICATION OF DNRC AND DEQ
The Borrower shall, to the extent permitted by law, indemnify and save harmless the
DNRC and the DEQ and their officers, employees and agents (each an "Indemnified Party" or,
collectively, the "Indemnified Parties against and from any and all claims, damages, demands,
expenses, liabilities and losses of every kind asserted by or on behalf of any Person arising out of
the acts or omissions of the Borrower or its employees, officers, agents, contractors,
subcontractors, or consultants in connection with or with regard or in any way relating to the
condition, use, possession, conduct, management, planning, design, acquisition, construction,
installation or financing of the 2010 Digester Project. The Bon shall also, to the extent
permitted by law, indemnify and save harmless the Indemnified Parties against and from all
costs, reasonable attorneys' fees, expenses and liabilities incurred in any action or proceeding
brought by reason of any such claim or demand. If any proceeding is brought against an
Indemnified Party by reason of such claim or demand, the Borrower shall, upon notice from an
Indemnified Party, defend such proceeding on behalf ofthe Indemnified Party.
ARTICLE VII
ASSIGNMENT
Section 7.1 Assignment by Borrower. The Borrower may not assign its rights and
obligations under the Resolution or the Series 2010EFG Bonds.
Section 7.2 Assignment by DNRC. The DNRC will pledge its rights under and
interest in the Resolution, the Series 2010EFG Bonds and the Collateral Documents (except to
the extent otherwise provided in the Indenture) as security for the payment of the State Bonds
and may further assign such interests to the extent permitted by the Indenture, without the
consent of the Borrower.
Section 7.3 State Refunding Bonds. In the event the State Bonds and Additional State
Bonds are refunded by bonds which are not Additional State Bonds, all references in the
2S
Resolution to State Bonds and Additional State Bonds shall be dcerned to refer to the refunding
bonds and any bonds ofthe State on a parity with such refunding bonds r, the
Bonds") or, in thc case ofa crossover refunding, to the State Bonds and Additional
State Bonds and the RcOmdin�Bonds. In the event the State Bonds are rcfundcd by an issue of
Additional State Bonds, all rcferences in thc Resolution to the State Bonds shall be deemed to
refer to such Additional State Bonds or, io the case of crossover rcfunding, both the State
Bonds arid such Additional State Bonds.
ARTICLE VIII
THE SERIES 2010EFG BONDS
Section 8.1 Net Rcvenues Available. The Boriower is authorized 10 chargc jusi and
equitable rates, charges and rentals for all services directly or indirectly furnished by the
and to pledge and appropriate to the Series 2010F Bond and the Series 2010G Bond the Net
Revcnues (and in respect ofthe Series 2010E Bond, ifnecessary, thc Surplus Net Revenues) to
be derived from the operation of the System, including improvements, betterments or extensions
thereof hereafter constructed oracquired. The Net Revcnucs 10 bc produccd by such rates,
charges and reiitals during the tcnmnf the Series ZVl0H Bond, Series 2V|V(. Bond, Series 20lU[)
Bond, Series 2010F Bond, and Series 2010G Bond are expected to be more than sufficient to pay
the principal and interest when due on such Bonds, and to create and maintain reasonable
reserves tlicrcfor and 10 provide an adequate allowance for replacement and depreciation, as
prescribed herein. For purposes ofthe foregoing statement, principal principal of and intercst on the
28lOA Loan and the 20]UE Loan are disrcgarded. Thc Borrower acknowledges and agrces that
if the DNRC delivers a Noncompliance Statement to the Borrower as provided in Section 5.1.2
as determined in the solo and complete discretion of the DNRC, then princi ul and interest and
surcharges will becomc duc and owing on thc 2010E Loan evidenced by the Series 2010E Bond
as providcd in Section 5.1 and thc Borrowcr shall thereupon, and no later than three inonths after
delivery of such a stateinent. to the cxtent required bySeoiiou6.7ofUneOzigina|Rcsolution, as
implemented as described in Section l2.2 below, adjust its schedule offces, rates, and chargcs
applicable to the System to cause Net Revenues and Surplus Net Revenues to be produced in an
amount at least equai to that requircd by the Resolution.
Section 8.2 Jssuancc and Sale ofthe Series 2O1OEFG Bonds. The Commission has
investigated the facts necessary and hereby finds, detenriines and declares it to be necessary and
desirable for the Borrower to issue the 3czics2Ol8EFG Bonds to evidence the 20l0EFG Loans.
The Series 201 OEFG Bonds are issued to the DNRC without public sale pursuarit to Montana
Code Annotated, Section 7-7-4433(2)(n).
Section 0.3 Tei um. The Series 2010E Bond, the Series 2010F Bond, and thc Series
2010G Bond shall be in the maximum principal amount equal to the original 2010E Committed
Amount, 2010F Conunitted Amount, and 2010G Committed Amount, respectively, shall each be
issued as a single, fully registered bond numbered R-1, shall be dated as of the date of delivery to
the DNRC, and shall bear intercst at the rate chargcd by the I}NRCuu the 2Ol0E Loan, 2010F
Loan, and 2010G Loan, rcspectivcly. The principal nf and interest on the Series 20|8FBond
and the Series 2AUOG Bond, and, ifappiicablc, tbc principal ofand intcrcst on thc Series 2010E
Bond and any Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall be
29
payable on the same dates and in the same amounts on which principal and interest of the Loan
Repayments are payable. Advances of principal of the Series 2010E Bond or Series 2010F Bond
or Series 2010G Bond shall be deemed made when advances of the 2010E Loan or 2010F Loan
or 2010G Loan, respectively, are made under Section 4.1, and such advances shall be payable in
accordance with Schedule B to the Series 2010F Bond, the Series 2010G Bond, and, if
applicable, the Series 2010E Bond, as the case may be, as it may be revised by the DNRC from
time to time in accordance with Section 5.1. The Series 2010E Bond is a Subordinate Obligation
payable only from the Surplus Net Revenues available in the Fund. The Series 2010F Bond and
the Series 2010G Bond are Bonds.
The Borrower may prepay the Series 2010EFG Bonds, in whole or in part, only upon the
terms and conditions under which it can prepay the 2010EFG Loans under Section 5.3.
Section 8.4 Negotiability, Transfer and Registration. The Series 2010EFG Bonds
shall be fully registered as to both principal and interest, and shall be initially registered in the
name of and payable to the DNRC. While so registered, principal of and interest on the Series
2010EFG Bonds shall be payable to the DNRC at the Office of the Department of Natural
Resources and Conservation, 1 EIeventh Avenue, Helena, Montana 59620 -1601 or such other
place as may be designated by the DNRC in writing and delivered to the Borrower. The Series
2010EFG Bonds shall be negotiable, subject to the provisions for registration and transfer
contained in this Section. No transfer of the Series 2010EFG Bonds shall be valid unless and
until (1) the holder, or his duly authorized attorney or legal representative, has executed the form
of assignment appearing on the Series 2010EFG Bonds, and (2) the Director of Finance of the
Borrower (or successors, the "Registrar as Bond Registrar, has duly noted the transfer on the
Series 2010EFG Bonds and recorded the transfer on the registration books of the Registrar. The
Registrar may, prior to noting and recording the transfer, require appropriate proof of the
transferor's authority and the genuineness of the transferor's signature. The Borrower shall be
entitled to deem and treat the Person in whose name the Series 2010EFG Bonds is registered as
the absolute owner of the Series 2010EFG Bonds for all purposes, notwithstanding any notice to
the contrary, and all payments to the registered holder shall be valid and effectual to satisfy and
discharge the Borrower's liability upon such Bond to the extent of the sum or sums so paid.
Section 8.5 Execution and Delivery. The Series 2010EFG Bonds shall be executed on
behalf of the Borrower by the manual signatures of the Mayor, the Director of Finance, and the
Clerk of the Commission. Any or all of such signatures may be affixed at or prior to the date of
delivery of the Series 2010EFG Bonds. The Series 2010EFG Bonds shall be sealed with the
corporate seal of the Borrower. In the event that any of the officers who shall have signed the
Series 2010EFG Bonds shall cease to be officers of the Borrower before the Series 2010EFG
Bonds are issued or delivered, their signatures shall remain binding upon the Borrower.
Conversely, the Series 2010EFG Bonds may be signed by an authorized official who did not
hold such office on the date of adoption of this Supplemental Resolution. The Series 2010EFG
Bonds shall be delivered to the DNRC, or its attorney or legal representative.
Section 8.6 Form. The Series 2010E Bond shall be prepared in substantially the .form
attached as Appendix B -1, the Series 2010F Bond shall be prepared in substantially the form
attached as Appendix B -2, and the Series 2010G Bond shall be prepared in substantially the form
attached as Appendix. B -3.
30
ARTICLE IX
SECURITY FOR THE SERIES 2010EFG BONDS
The Series 2010F Bond and the Series 2010G Bond are issued as Bonds under the
Original Resolution, as implemented as described in this Supplemental Resolution, and shall,
with the Series 2010B Bond, Series 2010C Bond, Series 2010D Bond, any other Additional
Bonds issued under the provisions of Article 10 of the Original Resolution be equally and ratably
secured by the provisions of the Resolution and payable out of the Net Revenues appropriated to
the Revenue Bond Account of the Sewer System Fund, without preference or priority, all as
provided in the Resolution, and secured by the Reserve Account, as further provided in Section
11.5 of the Original. Resolution and in the following sentence. Upon advancement of principal of
the Series 2010F Bond and the Series 2010G Bond, the Director of Finance of the Borrower shall
transfer from proceeds of the Series 2010F Bond and the Series 2010G Bond such amount or
amounts to the Reserve Account to cause the balance therein to equal the Reserve Requirement,
treating such principal amount as outstanding. Upon each advance of the Series 2010F Bond and
the Series 2010G Bond, the deposit to the Reserve Account shall be sufficient to cause the
balance in the Reserve Account to equal the Reserve Requirement in respect of the Series 2010F
Bond and the Series 2010G Bond so advanced. The Series 2010E Bond is a Subordinate
Obligation issued under Section 10.4 of the Original Resolution and payable from the Surplus
Net Revenues that are available after required credits to the Operating Account, the Revenue
Bond Account, and the Reserve Account. No payment of principal or interest shall be made on.
any Subordinate Bond, including the Series 2010E Bond, if the City is then in default in the
payment of principal of or interest on any Bond or if there is a deficiency in the Operating
Account or the Revenue Bond Account or the balance in the Reserve Account is less than the
Reserve Requirement. In the event the principal of and interest and Administrative Expense
Surcharge and Loan Loss Reserve Surcharge become payable under the Series 2010E Bond, the
Borrower shall cause rates and charges to he increased to produce Net Revenues at least equal to
the amount required under Section 6.7 of the Original Resolution, as implemented by
Section 12.2 below, within three (3) months following delivery of a Noncompliance Statement.
The Borrower shall keep, perform and observe each and every one of its covenants and
undertakings sct forth in the Resolution for the benefit of the registered owners from time to time
of the Series 2010EFG Bonds.
ARTICLE X
TAX MATTERS
Section 10.1 Use of 2010 Digester Project. The 2010 Digester Project will be owned
and operated by the Borrower and available for use by members of the general public on a
substantially equal basis. The Borrower shall not enter into any lease, use or other agreement
with any non governmental person relating to the use of the 2010 Digester Project or the System
or security for the payment of the Series 2010F Bond and the Series 2010G Bond which might
cause the Series 2010F Bond or the Series 2010G Bond, or any one of them, to be considered a
"private activity bond" or "private loan bond" within the meaning of Section 141 of the Code.
31
Section 10.2 General Covenant. The Borrower covenants and agrees with the owners
from time to time of the Series 2010F Bond and the Scrics 2010E Bond that it will not take or
permit to be taken by any of its officers, employees or agents any action which would cause the
interest on the Series 2010F Bond and the Series 2010G Bond to become includable in gross
income for federal income tax purposes under the Code and the Regulations, and covenants to
take any and all actions within its powers to ensure that the interest on the Series 2010F Bond
and the Scrics 2010G Bond will not become includable in gross income for federal income tax
purposes under the Code and the Regulations.
Section 10.3 Arbitrage Certification. The Mayor, the Director of Finance, and the
Clerk of the Commission, being the officers of the Borrower charged with the responsibility for
issuing the Series 2010F Bond and the Series 2010G Bond pursuant to this Supplemental
Resolution, are authorized and directed to execute and deliver to the DNRC a certificate in
accordance with the provisions of Section 148 of the Code, and Section 1.148 -2(b) of the
Regulations, stating that on the basis of facts, estimates and circumstances in existence on the
date of issue and delivery of the Series 2010F Bond and the Series 2010G Bond, it is reasonably
expected that the proceeds of the Series 2010F Bond and the Series 2010G Bond will be used in
a manner that would not cause the Series 2010F Bond and the Series 2010G Bond to be an
"arbitrage bond" within the meaning of Section 148 of the Code and the Regulations.
Section 10.4 Arbitrage Rebate. The Borrower acknowledges that the Series 2010F
Bond and the Series 2010G Bond are subject to the rebate requirements of Section 148(f) of the
Code. The Borrower covenants and agrees to retain such records, make such determinations, file
such reports and documents and pay such amounts at such times as are required under said
Section 148(f) and applicable Treasury Regulations to preserve the exclusion of interest on the
Series 2010F Bond and the Series 2010G Bond from gross income for federal income tax
purposes, unless the Series 2010F Bond and the Series 2010G Bond qualify for the exception
from the rebate requirement under Section 148(f)(4)(B) of the Code and no "gross proceeds of
the Series 2010F Bond and the Series 2010G Bond (other than amounts constituting a "bona fide
debt service fund arise during or after the expenditure of the original proceeds thereof. In
furtherance of the foregoing, the Mayor, the Director of Finance, and the Clerk of the
Commission are hereby authorized and directed to execute a Rebate Certificate, substantially in
the form to be prepared by Bond Counsel, and the Borrower hereby covenants and agrees to
observe and perform the covenants and agreements contained therein, unless amended or
terminated in accordance with the provisions thereof.
Section 10.5 Information Reporting. The Borrower shall file with the Secretary of the
Treasury, not later than August 15, 2010, a statement concerning the Series 2010E Bond and the
Series 2010G Bond containing the information required by Section 149(e) of the Code.
Section 10.6 "Qualified Tax Exempt Obligations." Pursuant to Section 265(b)(3)(B)(ii)
of the Code, the Borrower hereby designates the Series 2010F Bond and the Series 2010G Bond
as a "qualified tax exempt obligation" for purposes of Section 265(b)(3) of the Code. The
Borrower has not designated any obligations in 2010 other than the Series 2010B Bond, the
Series 2010C Bond, the Series 2010D Bond, the Series 2010F Bond, and the Series 2010G Bond
under Section 265(b)(3). The Borrower hereby represents that it does not anticipate that
obligations bearing interest not includable in gross income for purposes of federal income
32
taxation under Section 103 of the Code (including refunding obligations as provided in Section
265(b)(3) of the Code and including "qualified 501(c)(3) bonds" but excluding other "private
activity bonds," as defined in Sections 141(a) and 145(a) of the Code) will be issued by or on
behalf of the Borrower and all "subordinate entities" of the Bon-ower in 2010 in an amount
greater than $30,000,000.
ARTICLE XI
CONTINUING DISCLOSURE
The Borrower understands and acknowledges that the DNRC is acquiring the Series
2010EFG Bonds under the Program pursuant to which the State issues from time to time State
Bonds to provide funds therefor. The Bon-ower covenants and agrees that, upon written request
of the DNRC from time to time, the Borrower will promptly provide to the DNRC all
information that the DNRC reasonably determines to be necessary or appropriate to offer and sell
State Bonds or to provide continuing disclosure in respect of State Bonds, whether under Rule
15c2 -12 (17 C.F.R. 240.15c2 -12) promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, or otherwise. Such information shall
include, among other things and if so requested, financial statements of the Borrower prepared in
accordance with generally accepted accounting principles promulgated by the Financial
Accounting Standards Board as modified in accordance with the governmental accounting
standards promulgated by the Governmental Accounting Standards Board or as otherwise
provided under Montana law, as in effect from time to time (such financial statements to relate to
a fiscal year or any period therein for which they are customarily prepared by the Borrower, and,
if for a fiscal year and so requested by the DNRC, subject to an audit report and opinion of an
accountant or government auditor, as permitted or required by the laws of the State). The
Borrower will also provide, with any information so furnished to the DNRC, a certificate of the
Mayor and the Director of Finance of the Borrower to the effect that, to the best of their
knowledge, such information does not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein to make the statements made, in light of the
circumstances under which they are made, not misleading.
ARTICLE X11
IMPLEMENTATION OF SECTION 6.7 OF ORIGINAL RESOLUTION
For purposes of construing Section 6.7 of the Original Resolution, principal of and
interest on the Series 2010E Bond shall initially be disregarded. However, in the event the
Borrower's obligation to repay the principal of the Series 2010E Bond is not forgiven as
described in Section 5.1.2 of this Supplemental Resolution, the Borrower shall forthwith, and in
any event not later than three (3) months after delivery of a Noncompliance Statement, cause the
rates, charges and rentals to be charged to all recipients of sewer services to be maintained and to
be revised whenever and as often as may be necessary, according to schedules such that gross
revenues for each fiscal year will be at least sufficient to pay the current expenses of operation
and maintenance as defined in the Original Resolution, to maintain the Operating Reserve herein
established, to maintain the amounts in the Reserve Account at the Reserve Requirement, to
produce Net Revenues during each fiscal year, not less than 125% of the maximum annual
33
principal and interest payable on any outstanding Bonds in the current or any future fiscal year,
and to produce sufficient Surplus Net Revenues to pay Subordinate Obligations (including,
without limitation, the Series 2010A Bond and the Series 2010E Bond with interest at 3.75% per
annum) as and when due.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Notices. All notices or other communications hereunder shall be
sufficiently sent or given and shall be deemed sent or given when delivered or mailed by
certified mail, postage prepaid, to the parties at the following addresses:
DNRC: Department of Natural Resources and Conservation
1625 Eleventh Avenue
P. O. Box 201601
Helena, Montana 59620 -1601
Attn: Conservation and Resource
Development Division
Trustee: U.S. Bank National Association
c/o Corporate Trust Services
1420 Fifth Avenue, 7 Floor
Seattle, Washington 98101
Borrower:
City of Bozeman
P.O. Box 1230
Bozeman, Montana 59771- 1230
Attn: Director of Finance
Any of the above parties may, by notice in writing given to the others, designate any
further or different addresses to which subsequent notices or other communications shall be sent.
Section 13.2 Binding Effect. This Supplemental Resolution shall inure to the benefit of
and shall be binding upon the DNRC, the Borrower and their respective successors and assigns.
Section 13.3 Severability. If any provision of this Supplemental Resolution shall be
determined to be unenforceable at any time, it shall not affect any other provision of the
Resolution or the enforceability of that provision at any other time.
Section 13.4 Amendments. This Supplemental Resolution may not be effectively
amended without the written consent of the DNRC.
Section 13.5 Applicable Law. This Supplemental Resolution shall be governed by and
construed in accordance with the internal laws of the State.
34
Section 13.6 Captions; References to Sections. The captions in this Supplemental
Resolution are for convenience only and do not define or limit the scope or intent of any
provisions or Sections of this Supplemental Resolution.
Section I3.7 No Liability of Individual Officers, Directors or Trustees. No recourse
under or upon any obligation, covenant or agreement contained in this Supplemental Resolution
shall be had against any director, officer or employee, as such, past, present or future, of the
DNRC, the DEQ or the Trustee, either directly or through the DNRC, the DEQ or the Trustee, or
against any officer, or member of the governing body or employee of the Borrower, past, present
or future, as an individual so long as such individual was acting in good faith. Any and all
personal liability of every nature, whether at common law or in equity, or by statute or by
constitution or otherwise, of any such officer or member of the governing body or employee of
the DNRC, the Trustee or the Borrower is hereby expressly waived and released by the Borrower
and by the DNRC as a condition of and in consideration for the adoption of this Supplemental
Resolution and the making of the Loan.
Section 13.8 Payments Due on Holidays. If the date for making any payment or the last
date for performance of any act or the exercise of any right, as provided in this Supplemental
Resolution or the Series 2010EFG Bonds, shall not be Business Day, such payments may be
made or act performed or right exercised on the next succeeding Business Day with the same
force and effect as if done on the nominal date provided in this Supplemental Resolution or the
Series 2010EFG Bonds.
Section 13.9 Right of Others To Perform Borrower's Covenants. In the event the
Borrower shall fail to make any payment or perform any act required to be performed hereunder,
then and in each such case the DNRC or the provider of any Collateral Document may (but shall
not be obligated to) remedy such default for the account of the Borrower and make advances for
that purpose. No such performance or advance shall operate to release the Borrower from any
such default and any sums so advanced by the DNRC or the provider of any Collateral
Document shall be paid immediately to the party making such advance and shall bear interest at
the rate of ten percent (10.00 °0) per annum from the date of the advance until repaid. The
DNRC and the provider of any Collateral Document shall have the right to enter the 2010
Digester Project or the facility or facilities of which the 2010 Digester Project is a part or any
other facility which is a part of the System in order to effectuate the purposes of this Section.
Section 13.10 Authentication of Transcript. The officers of the Borrower are hereby
authorized and directed to furnish to the DNRC and to Bond Counsel certified copies of all
proceedings relating to the issuance of the Series 2010EFG Bonds and such other certificates and
affidavits as may be required to show the right, power and authority of the Borrower to issue the
Series 2010EFG Bonds, and all statements contained in and shown by such instruments,
including any heretofore furnished, shall constitute representations of the Borrower as to the
truth of the statements of fact purported to be shown thereby.
Section 13.11 Effective Date. This Supplemental Resolution shall take effect
immediately.
35
Adopted by the City Connniss.ion of the City of Bozeman, Montana, on this 3rd day of
May, 2010.
Attest:
C
(SEAL)
e of the Commission
36
APPENDIX A
Description of the 2010 Digester Project
The 2010 Digester Project generally consists of construction and installation of a digester, its
supporting building, dewatering facilities, and related improvements.
Estimated 2010 Digester Project Budget
Source: EPA
Forgiveness
$384,000 (E)
Source: SRF
Loan 3,75'0
$816.000 (E)
Source: SRF
Loan 3.75"0
$3,903,000
(G)
Source:
TSEP
Source:
STAG
Total:
Debt Service Reserve
$58,6)87
$278,913
$337,600
Bond Counsel Related Costs
$1,129
$2,399
$11,472
$15,000
Construction
$382,871
$754,914
$3,176,180
$500,000
$485,000
55,298,965
Contingency
$436,435
$436,435
TOTAL PROJECT COSTS
S384,000
$816,000
$3,903,000
$500,000
$485,000
$6,088,000
APPENDIX A
Description of the 2010 Digester Project
The 2010 Digester Project generally consists of construction and installation of a digester, its
supporting building, dewatering facilities, and related improvements.
Estimated 2010 Digester Project Budget
APPENDIX B -1
[Form of the Series 2010E Bond]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLATIN
CITY OF BOZEMAN
SUBORDINATE LIEN SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM)
TAXABLE SERIES 2010E
R -1 $384,000
FOR VALUE RECEIVED, THE CITY OF BOZEMAN, MONTANA (the "Borrower
a duly organized municipal corporation and political subdivision of the State of Montana,
acknowledges itself to be specially indebted and hereby promises to pay to the Department of
Natural Resources and Conservation of the State of Montana (the "DNRC or its registered
assigns, solely out of available Surplus Net Revenues in the Replacement and Depreciation
Account or the Surplus Account of its Sewer System Fund (the "Fund the principal sum equal
to the sum of the amounts entered on Schedule A attached hereto under "Total Amount
Advanced," with interest on each such amount from the date such amount is advanced hereunder
at the rate of two percent (2.00 per annum on the unpaid balance until paid, together with an
Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the outstanding
principal amount of this Bond from the date of each advance of principal at the rate of seventy
five hundredths of one percent (0.75 and one percent (1.00 per annum, respectively, all
subject to the effect of the immediately following paragraph. Interest and Administrative
Expense Surcharge and Loan Loss Reserve Surcharge shall be payable in semiannual
installments payable on each January I and July 1 (each a "Loan Repayment Date commencing
with the Loan Repayment Date that is the first to occur following delivery by the DNRC to the
Borrower of a statement that the Borrower's obligation to repay the principal amount of the
2010E Loan is not forgiven and ending on the July 1, 2030, all as described in the Resolution (as
hereinafter defined), subject to earlier redemption. Principal shall also be payable on the dates
set forth in Schedule B hereto. Each installment shall be in the amount set forth opposite its due
date in Schedule B attached hereto under "Total Loan Payment." The portion of each such
payment consisting of principal, the portion consisting of interest, the portion consisting of
Administrative Expense Surcharge, and the portion consisting of Loan Loss Reserve Surcharge
shall be as set forth in Schedule B attached hereto. Upon each disbursement of 2010E Loan
amounts to the Borrower pursuant to the Resolution described below, the DNRC shall enter (or
cause to be entered) the amount advanced on Schedule A under "Advances" and the total amount
advanced under the Resolution (as hereinafter defined), including such disbursement, under
"Total Amount Advanced." The DNRC shall prepare Schedule B and any revised Schedule B,
or cause Schedule B and any revised Schedule B to be prepared, as provided in Section 5.1 of the
B -1 -1
supplemental resolution authorizing the Bond, and the final Schedule B will reflect repayments
under Section 5.1.5 of such resolution. Schedule B shall be calculated and recalculated on a.
level debt service basis assuming an interest rate of three and seventy -five hundredths percent
(3.75 per annum. Past -due payments of principal and interest and Administrative Expense
Surcharge and Loan Loss Reserve Surcharge shall bear interest at the rate of ten percent
(10.00 10) per annum, until paid. Interest and Administrative Expense Surcharge and Loan Loss
Reserve Surcharge shall be calculated on the basis of a 360 -day year comprising 12 months of 30
days each. All payments under this Bond shall be made to the registered holder of this Bond, at
its address as it appears on the Bond register, in lawful. money of the United States of America..
NOTWITHSTANDING THE FOREGOING PROVISIONS OF 'THIS BOND, IN THE
EVENT THAT THE BORROWER TIMELY DELIVERS A COMPLIANCE CERTIFICATE
AND REQUEST (AS DEFINED IN THE RESOLUTION) IN FORM AND SUBSTANCE
SATISFACTORY TO THE DNRC AND THE DNRC IN RESPONSE THERETO SUPPLIES
TO THE BORROWER A FORGIVENESS STATEMENT, THEN THEREUPON INTEREST
SHALL BE DEEMED TO ACCRUE ON THE PRINCIPAL OF THIS SERIES 2010E BOND
FROM THE DATE OF EACH ADVANCE AT THE RATE OF ZERO PERCENT (0.00%) PER
ANNUM AND THE BORROWER'S OBLIGATION TO REPAY PRINCIPAL ADVANCED
HEREUNDER SHALL BE FORGIVEN, AND THE BORROWER SHALL HAVE NO
OBLIGATION TO REPAY THE DNRC OR ITS REGISTERED ASSIGNS ANY AMOUNTS
ADVANCED HEREUNDER OR INTEREST OR ANY SURCHARGE THEREON. THIS
BOND SHALL THEREUPON BE MARKED "CANCELLED" AND RETURNED BY THE
HOLDER TO THE BORROWER, AND THIS BOND SHALL NO LONGER CONSTITUTE
AN OBLIGATION OF THE BORROWER OR OF THE SYSTEM (AS HEREINAFTER
DEFINED). IN ADDITION, UNTIL THE DELIVERY OF A DETERMINATION
STATEMENT BY THE DNRC TO THE BORROWER, THE OBLIGATION OF THE
BORROWER TO REPAY THE OUTSTANDING PRINCIPAL AMOUNT HEREOF SHALL
BE DEFERRED UNTIL THE LOAN REPAYMENT DATE FIRST OCCURRING AFTER
DELIVERY OF A NONCOMPLIANCE STATEMENT AND INTEREST SHALL BE
DEEMED TO ACCRUE ON THE PRINCIPAL OF THIS SERIES 2010E BOND FROM THE
DATE OF EACH ADVANCE UNTIL DELIVERY OF SUCH A NONCOMPLIANCE
STATEMENT AT THE RATE OF ZERO PERCENT (0.00 PER ANNUM.
This Bond is one of an issue of Sewer System Revenue Bonds of the Borrower
authorized to be issued in one or more series from time to time, and constitutes a series in the
maximum authorized principal amount of $384,000 (the "Series 2010E Bond"). The Series
2010E Bond is issued to finance a portion of the costs of the construction of certain
improvements to the municipal sewer system of the Borrower (the "System and to pay a
portion of costs of issuance of the Series 2010EFG Bonds. The Series 2010E Bond is issued
pursuant to and in full conformity with the Constitution and laws of the State of Montana
thereunto enabling, including Montana Code Annotated, Title 7, Chapter 7, Part 44, as amended,
and ordinances and resolutions duly adopted by the governing body of the Borrower, including
Resolution No. 4220 of the Borrower adopted on November 16, 2009, as amended and
supplemented by Resolution Nos. 4234, 4245, and 4254, adopted on January 19, 2010, February
16, 2010, and May 3, 2010, respectively (as so supplemented, the "Resolution Terms used
with initial capital letters but not defined herein have the meanings given to them in the
B-1-2
Resolution. The Series 2010E Bond is issuable only as a single, fully registered bond. The
Series 2010E Bond is issued as a Subordinate Obligation payable out of available Surplus Net
Revenues in the Replacement and Depreciation Account or the Surplus Account in the Fund of
the Borrower. Simultaneously herewith, the Borrower is issuing its Sewer System Revenue
Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010F (the
"Series 2010F Bond and its Sewer System Revenue Bond (DNRC Water Pollution Control
State Revolving Loan Program), Series 2010G (the "Series 2010G Bond which are payable
from the Revenue Bond Account in the Fund of the Borrower on a parity with the Borrower's
$359,300 Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan
Program), Series 2010B, its $1,223,000 Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 2010C, and its $9,500,000 Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010D
(all such Bonds, collectively, the "Outstanding Bonds Following the 2010F First Advance,
principal amounts of this Series 2010E Bond are advanced until all of the principal of this Series
2010E Bond is advanced prior to advances under the Series 2010F Bond or the Series 2010G
Bond.
Reference is made to the Resolution for a more complete statement of the terms and
conditions upon which the Series 2010E Bond has been issued, the conditions upon which the
Resolution may be amended, the rights, duties and obligations of the Borrower, and the rights of
the owners of the Series 2010E Bond.
The Borrower may prepay the principal of the Series 2010E Bond only if (i) a
Determination Statement has been delivered, (ii) it obtains the prior written consent of the
DNRC thereto, and (iii) no Loan Repayment or Administrative Expense Surcharge or Loan Loss
Reserve Surcharge is then delinquent. Any prepayment permitted by the DNRC must be
accompanied by payment of accrued interest, and Administrative Expense Surcharge and Loan
Loss Reserve Surcharge to the date of prepayment on the amount of principal prepaid. If the
Series 2010E Bond is prepaid in part, such prepayments shall be applied to principal payments in
inverse order of maturity.
This Series 2010E Bond, including interest and any premium for the redemption thereof,
are payable solely from the Surplus Net Revenues available for the payment hereof and do not
constitute a debt of the Borrower within the meaning of any constitutional or statutory limitation
or provision.
The Borrower may deem and treat the person in whose name this Series 2010E Bond is
registered as the absolute owner hereof, whether this Series 2010E Bond is overdue or not, for
the purpose of receiving payment and for all other purposes, and the Borrower shall not be
affected by any notice to the contrary. The Series 2010.E Bond may be transferred as hereinafter
provided.
1T IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that the
Borrower will forthwith construct and complete the improvements to the System hercinabove
described; that it will prescribe and collect reasonable rates and charges for all services and
facilities afforded by the System, including all additions thereto and replacements and
improvements thereof, and has created a special Sewer System Fund into which the gross
B -1 -3
revenues of the System will be paid, and a separate and special Replacement and Depreciation
Account and Surplus Account in that Fund, into which will be paid, subject to the prior lien
thereon of the Operating Account, the Revenue Bond Account and the Reserve Account, Surplus
Nct Revenues; that the rates and charges for the System will from time to time be made and kept
sufficient, to provide gross income and revenues adequate to pay promptly the reasonable and
current expenses of operating and maintaining the System, to produce in each fiscal year Net
Revenues in excess of such current expenses, equal to at least 125% of the maximum amount of
principal and interest payable from the Revenue Bond Account in any subsequent fiscal year and
to produce in each fiscal year adequate Surplus Net Revenues to pay the principal of and interest
on the Series 2010A Bond and the Series 201 Bond as and when due; that additional bonds
issued on a parity with the Outstanding Bonds (such bonds, thc "Bonds and refunding Bonds
may be issued and made payable from the Revenue Bond Account on a parity with the
Outstanding Bonds and other parity Bonds, upon certain conditions set forth in the Resolution,
but no obligation will be otherwise incurred and made payable from the Net Revenues of the
System, unless the lien thereof shall be expressly made subordinate to the lien of the Outstanding
Bonds and any additional parity Bonds on such Net Revenues (such as is the case with this
Series 2010E Bond); that all provisions for the security of the holder of this Series 2010E Bond
set forth in the Resolution will be punctually and faithfully performed as therein stipulated; that
all acts, conditions and things required by the Constitution and laws of the State of Montana and
the ordinances and resolutions of the Borrower to be done, to exist, to happen and to be
performed in order to make this Series 2010E Bond a valid and binding special obligation of the
Borrower according to its terms have been done, do exist, have happened and have been
performed in regular and due form, time and manner as so required; and that this Series 2010E
Bond and the interest hereon are payable solely out of available Surplus Net Revenues in the
Replacement and Depreciation Account or the Surplus Account of the Fund and do not constitute
a debt of the Borrower within thc meaning of any constitutional or statutory limitation or
provision and the issuance of the Series 2010E Bond does not cause either the general or the
special indebtedness of the Borrower to exceed any constitutional or statutory limitation.
IN WITNESS WHEREOF, the City of Bozeman, Montana, by its governing
body, has caused this Bond to be executed by the signatures of the Mayor, the Director of
Finance, and the Clerk of the Commission, and has caused the off cial seal of the Borrower to be
affixed hereto, and has caused this Bond to he dated as of the r day of A, 2010.
(Seal)
B -1 -4
Clerk of the Commission
REGISTRATION AND TRANSFER
This Bond shall be fully registered as to both principal and interest. No transfer of this
Bond shall be valid unless and until (1) the registered holder of the Bond, or his duly authorized
attorney or legal representative, executes the form of assignment appearing on this Bond, and (2)
the Director of Finance as bond registrar (the "Registrar has duly noted the transfer on the
Bond and recorded the transfer on the Registrar's registration books. The Borrower shall be
entitled, to deem and treat the person in whose name this Bond is registered as absolute owner
thereof for all purposes, notwithstanding any notice to the contrary. Payments on account of the
Bond shall be made only to the order of the registered holder thereof and all such payments shall
be valid and effectual to satisfy and discharge the Borrower's liability upon the Bond to the
extent of the sum or sums so paid.
REGISTER
The ownership of the unpaid Principal Balance of this Bond and the interest accruing
thereon is registered on the books of the City of Bozeman, Montana in the name of the registered
holder appearing on the first page hereof or as last noted below:
Date of Name and Address Signature of
Registration of Registered Holder Director of Finance
2010 Department of Natural.
Resources and Conservation
1625 Eleventh Avenue
Helena, MT 59620
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The Director of Finance of the City, acting as Bond Registrar, has transferred, on the
books of the City, on the date last noted below, ownership of the principal amount of and the
accrued interest on this Bond to the new registered holder noted next to such date, except for
amounts of princi.paI and interest theretofore paid.
Date of Transfer
Name of New Signature of
Registered Holder Bond Registrar
FORM OF ASSIGNMENT
For value received, this Bond is hereby transferred and assigned by the undersigned
holder, without recourse, to
on this day of
By:
For:
(Authorized Signature
(Holder)
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Total Amount
Date Advances Advanced
Notation Made By
SCHEDULE B
Loan Loss
Administrative Reserve Total Loan
Date Principal Interest Expense Surcharge Surcharge Payment
B -1 -8
APPENDIX B -2
[Form of the Series 2010F Bond]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLATIN
CITY OF BOZEMAN
SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM)
SERIES 2010F
R -1 $816,000
FOR VALUE RECEIVED, the City of Bozeman, Montana (the "Borrower a
duly organized municipal corporation and political subdivision of the State of Montana,
acknowledges itself to be specially indebted and, for value received, hereby promises to pay to
the Department of Natural Resources and Conservation of the State of Montana (the "DNRC
or its registered assigns, solely from the Revenue Bond Account of its Sewer System Fund, the
principal sum equal to the sum of the amounts entered on Schedule A attached hereto under
"Total Amount Advanced," with interest on each such amount from the date such amount is
advanced hereunder at the rate of 2.00% per annum on the unpaid balance until paid. In
addition, the Borrower shall pay, solely from said source, an Administrative Expense Surcharge
and a Loan Loss Reserve Surcharge on the outstanding principal amount of this Bond at the rates
of seventy -five hundredths of one percent (0.75%) per annum and one percent (1.00 per
annum, respectively. Interest and Administrative Expense Surcharge and a Loan Loss Reserve
Surcharge shall be payable in semiannual installments payable on each January 1 and July 1
(each a "Loan Repayment Date") commencing January 1, 2011. Principal shall be payable on
the dates set forth in Schedule B hereto. Each installment shall be in the amount set forth
opposite its due date in Schedule B attached hereto under "Total Loan Payment." The portion of
each such payment consisting of principal, the portion consisting of interest and the portion
consisting of Administrative Expense Surcharge and the portion consisting of Loan Loss Reserve
Surcharge shall be as set forth in Schedule B hereto. Upon each disbursement of 2010D Loan
amounts to the Borrower pursuant to the Resolution described below, the DNRC shall enter (or
cause to be entered) the amount advanced on Schedule A under "Advances" and the total amount
advanced under the Resolution (as hereinafter defined), including such disbursement, under
"Total Amount Advanced. The DNRC shall prepare Schedule B and any revised Schedule B,
or cause Schedule B and any revised Schedule B to be prepared, as provided in Section 5.1 of the
Resolution. Schedule B shall be calculated and recalculated on a level debt service basis
assuming an interest rate of 3.75% o per annum. Past -due payments of principal and interest and
Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall bear interest at the
rate of ten percent (10.00 per annum, until paid. Interest and Administrative Expense
Surcharge and Loan Loss Reserve Surcharge shall be calculated on the basis of a 360 -day year
B-2- l
comprising 12 months of 30 days each. All payments under this Bond shall be made to the
registered holder of this Bond, at its address as it appears on the Bond register, in lawful money
of the United States of America.
This Bond is one of an issue of Sewer System Revenue Bonds of the Borrower
authorized to be issued in one or more series from time to tine, and constitutes a series in the
maximum authorized principal amount of $816,000 (the "Series 2010F Bond"). The Series
2010F Bond is issued to finance a portion of the costs of the construction of certain
improvements to the sewer system of the Borrower (the "System to fund deposits to the
Reserve Account, and to pay a portion of costs of issuance of the Series 2010F Bond. The Series
2010F Bond is issued pursuant to and in full conformity with the Constitution and laws of the
State of Montana thereunto enabling, including Montana Code Annotated, Title 7, Chapter 7,
Part 44, as amended, and ordinances and resolutions duly adopted by the governing body of the
Borrower, including Resolution No. 4220 of the Borrower adopted on November 16, 2009, as
amended and supplemented by Resolution Nos. 4234, 4245, and 4254, adopted on January 19,
2010, February 16, 2010, and May 3, 2010, respectively (as so supplemented, the "Resolution
Terms used with initial capital letters but not defined herein have the meanings given them in the
Resolution. The Series 2010F Bond is issuable only as a single, fully registered bond. The
Series 2010F Bond is issued on a parity with the Borrower's $359,300 Sewer System Revenue
Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010B, its
$1,223,000 Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan
Program), Series 2010C, its $9,500,000 Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 2010D, and its Sewer System Revenue Bond
(DNRC Water Pollution Control State Revolving Loan Program), Series 2010(3, which is being
issued simultaneously herewith (collectively with the Series 2010F Bond, the "Outstanding
Bonds The Borrower is also issuing simultaneously herewith its Subordinate Lien Sewer
System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program),
Taxable Series 2010E.
Reference is made to the Resolution for a more complete statement of the terms
and conditions upon which the Series 2010F Bond has been issued, the Net Revenues of the
System pledged and appropriated for thc payment and security thereof, the conditions upon
which additional bonds may be issued under the Resolution and made payable from such Net
Revenues on a parity with the Outstanding Bonds (collectively with the Series 2010F Bond, the
"Bonds or otherwise, the conditions upon which the Resolution may be amended, the rights.
duties and obligations of the Borrower, and the rights of the owners of the Series 2010F Bond.
The Borrower may prepay the principal of the Series 2010F Bond only if (i) a
Determination Statement has been delivered, (ii) it obtains thc prior written consent of the
DNRC thereto, and (iii) no Loan Repayment or Administrative Expense Surcharge or Loan Loss
Reserve Surcharge is then delinquent. Any prepayment permitted by the DNRC must be
accompanied by payment of accrued interest, and Administrative Expense Surcharge and Loan
Loss Reserve Surcharge to the date of prepayment on the amount of principal prepaid. If the
Series 2010F Bond is prepaid in part, such prepayments shall be applied to principal payments in
inverse order of maturity.
B -2 -2
The Series 2010F Bond, including interest and any premium for the redemption
thereof, are payable solely from the Net Revenues pledged for the payment thereof and do not
constitute a debt of the Borrower within the meaning of any constitutional or statutory limitation
or provision.
The Borrower may deem and treat the person in whose name this Series 2010F
Bond is registered as the absolute owner hereof, whether this Series 2010F Bond is overdue or
not, for the purpose of receiving payment and for all other purposes, and the Borrower shall not
be affected by any notice to the contrary. The Series 2010F Bond may be transferred as
hereinafter provided.
This Series 2010F Bond has been designated by the Bonrowcr as a "qualified tax
exempt obligation" pursuant to Section 265 of the Internal Revenue Code of 1986, as amended.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that
the Borrower will forthwith construct and complete the improvements to the System hereinabove
described; that it will prescribe and collect reasonable rates and charges for all services and
facilities afforded by the System, including all additions thereto and replacements and
improvements thereof, and has created a special Sewer System Fund into which the gross
revenues of the System will be paid, and a separate and special Revenue Bond Account in that
Fund, into which will be paid each month, from and as a first and prior lien on the Net Revenues
of the System then on hand, an amount equal to not less than the sum of one -sixth of the interest
to become due within the next six months and one twelfth of the principal to become due within
the next twelve months with respect to all Bonds payable from that Account; that the Borrower
has created a Reserve Account in such fund into which shall be paid additional Net Revenues,
after required credits to the Revenue Bond Account sufficient to maintain a reserve therein equal
to the maximum amount of principal and interest payable in any subsequent fiscal year on all
such Bonds; that the Revenue Bond Account will be used only to pay the principal of, premium,
if any, and interest on the Bonds and any other additional Bonds issued pursuant to the
Resolution on a parity therewith; that the rates and charges for the System will from time to time
be made and kept sufficient, to provide gross income and revenues adequate to pay promptly the
reasonable and current expenses of operating and maintaining the System and to produce in each
fiscal year Net Revenues in excess of such current expenses, equal to 125;% of the maximum
amount of principal and interest payable from the Revenue Bond Account in any subsequent
fiscal year; that additional Bonds and refunding Bonds may be issued and made payable from the
Revenue Bond Account on a parity with the Outstanding Bonds and other parity Bonds, upon
certain conditions set forth in the Resolution, but no obligation will be otherwise incurred and
made payable from the Net Revenues of the System, unless the lien thereof shall be expressly
made subordinate to the lien of the Outstanding Bonds and additional parity Bonds on such Net
Revenues; that all provisions for the security of the holder of this Series 2010F Bond set forth in
the Resolution will be punctually and faithfully performed as therein stipulated; that all acts,
conditions and things required by the Constitution and laws of the State of Montana and the
ordinances and resolutions of the Borrower to be done, to exist, to happen and to be performed in
order to make this Series 2010F Bond a valid and binding special obligation of the Borrower
according to its terms have been done, do exist, have happened and have been performed in
regular and due form, time and manner as so required; and that this Series 20I0F Bond and the
B -2 -3
interest hereon are payable solely from the Net Revenues of the System pledged and
appropriated to the Revenue Bond Account and do not constitute a debt. of the Borrower within
the meaning of any constitutional or statutory limitation or provision and the issuance of the
Series 2010F Bond does not cause either the general or the special indebtedness of the Borrower
to exceed any constitutional or statutory limitation.
IN WITNESS WHEREOF, the City of Bozeman, Montana, by its governing
body, has caused this Bond to be executed by the signatures of the Mayor, the Director of
Finance, and the Clerk of the Commission, and has caused the official seal of the Borrower to be
affixed hereto, and has caused this Bond to be dated as of the 2).!2 day of /c 1 2010.
(Seal)
May,
Director of Finch ce
wo
Clc:,k of the Commission
REGISTRATION AND TRANSFER
This Bond shall be fully registered as to both principal and interest. No transfer of this
Bond shall be valid unless and until (1) the registered holder of the Bond, or his duly authorized
attorney or legal representative, executes the form of assignment appearing on this Bond, and (2)
the Director of Finance as bond registrar (the "Registrar has duly noted the transfer on the
Bond and recorded the transfer on the Registrar's registration books. The Borrower shall be
entitled to deem and treat the person in whose name this Bond is registered as absolute owner
thereof for all purposes, notwithstanding any notice to the contrary. Payments on account of the
Bond shall be made only to the order of the registered holder thereof, and all such payments shall
be valid and effectual to satisfy and discharge the Borrower's liability upon the Bond to the
extent of the sum or sums so paid.
REGISTER
The ownership of the unpaid Principal Balance of this Bond and the interest accruing
thereon is registered on the books of the City of Bozeman, Montana in the name of the registered
holder appearing on the first page hereof or as last noted below:
Date of Name and Address Signature of
Registration of Registered Holder Director of Finance
2010 Department of Natural
Resources and Conservation
1625 Eleventh Avenue
Helena, MT 59620
THE .FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The Director of Finance of the City, acting as Bond Registrar, has transferred, on the
books of the City, on the date last noted below, ownership of the principal amount of and the
accrued interest on this Bond to the new registered holder noted next to such date, except for
amounts of principal and interest theretofore paid.
Date of Transfer
Name of New Signature of
Registered Holder Bond Registrar
TIIE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACI TRANSFER
The Director of Finance of the City of Bozeman, Montana, acting as Bond Registrar, has
transferred, on the books of the Borrower, on the date last noted below, ownership of the
principal amount of and the accrued interest on this Bond to the new registered holder noted next
to such date, except for amounts of principal and interest theretofore paid.
Name of New
Date of Transfer ReOstered Holder
FORM OF ASSIGNMENT
For value received, this Bond is hereby transferred and assigned by the undersigned
holder, without recourse, to
on this day of
Signature of
Bond Registrar
By:
(Authorized Signature)
For:
(Holder)
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Total Amount Notation
Date Advances Advanced Made By
SCHEDULE B
Loan Loss
Administrative Reserve Total Loan
Date Principal Interest Expense Surcharge Surcharge Payment
B-2-8
APPENDIX B -3
[Form of the Series 2010G Bond]
UNITED STATES OF AMERICA.
STATE OF MONTANA
COUNTY OF GALLATIN
CITY OF BOZEMAN
WATER SYSTEM REVENUE BOND
(DNRC DRINKING WATER STATE REVOLVING LOAN PROGRAM)
SERIES 2010E
R -1 $3,903,000
FOR VALUE RECEIVED, the City of Bozeman, Montana (the "Borrower a
duly organized municipal corporation and political subdivision of the State of Montana,
acknowledges itself to be specially indebted and, for value received, hereby promises to pay to
the Department of Natural Resources and Conservation of the State of Montana (the "DNRC
or its registered assigns, solely from the Revenue Bond Account of its Sewer System Fund, the
principal sum equal to the sum of the amounts entered on Schedule A attached hereto under
"Total Amount Advanced," with interest on each such amount from the date such amount is
advanced hereunder at the rate of two percent (2.0O per annum on the unpaid balance until
paid. As described more particularly in the Resolution (defined below), the 2010G First
Advance will be made following the advance of the full principal amounts of the Series 2010E
Bond and the Series 2010F Bond (as such terms are defined below or in the Resolution), and
upon the making of the 2010G First Advance, the DNRC shall enter the applicable amount on
Schedule A hereto and attach the applicable Schedule B hereto. In addition, the Borrower shall
pay an Administrative Expense Surcharge and a Loan Loss Reserve Surcharge on the
outstanding principal amount of this Bond at the rates of seventy -five hundredths of one percent
(0.75 °0) and one percent (1.00 respectively, per annum. Interest and Administrative Expense
Surcharge and Loan Loss Reserve Surcharge shall be payable in semiannual installments payable
on each January 1 and July 1 (each a "Loan Repayment Date commencing on the date first sct
forth in the column headed "Date" or "Payment Date" on Schedule B attached hereto and
concluding on July 1, 2030. Principal shall be payable on the dates set forth in Schedule B
hereto. Each installment shall be in the amount set forth opposite its due date in Schedule B
attached hereto under "Total Loan Payment." The portion of each such payment consisting of
principal, the portion consisting of interest, the portion consisting of Administrative Expense
Surcharge, and the portion consisting of Loan Loss Reserve Surcharge shall be as set forth in
Schedule B hereto. Upon each disbursement of Loan amounts to the Borrower pursuant to the
Resolution described below, the DNRC shall enter (or cause to be entered) the amount advanced
on Schedule A wider "Advances" and the total amount advanced under the Resolution (as
hereinafter defined), including such disbursement, under "Total Amount Advanced." The
DNRC shall prepare Schedule B and any revised Schedule B, or cause Schedule B and any
B -3 -1
revised Schedule B to be prepared, as provided in Section 5.1 of the Resolution. Schedule B
shall. be calculated and recalculated on a level debt service basis assuming an interest rate of
3.75°'o per annum. Past -due payments of principal and interest and Administrative Expense
Surcharge and Loan Loss Reserve Surcharge shall bear interest at the rate of ten percent
(10.00 %0) per annum, until paid. Interest and Administrative Expense Surcharge and Loan Loss
Reserve Surcharge shall be calculated on the basis of a 360 -day year comprising 12 months of 30
days each. All payments under this Bond shall be made to the registered holder of this Bond, at
its address as it appears on the Bond register, in lawful money of the United States of America.
This Bond is one of an issue of Sewer System Revenue Bonds of the Borrower
authorized to be issued in one or more series from time to time, and constitutes a series in the
maximum authorized principal amount of $3,903,000 (the "Series 2010G Bond The Series
2010G Bond is issued to finance a portion of the costs of the construction of certain
improvements to the sewer system of the Borrower (the "System to fund deposits to the
Reserve Account, and to pay a portion of costs of issuance of the Series 2010G Bond. The
Series 2010G Bond is issued pursuant to and in full conformity with the Constitution and laws of
the State of Montana thereunto enabling, including Montana Code Annotated, Title 7, Chapter 7,
Part 44, as amended, and ordinances and resolutions duly adopted by the governing body of the
Borrower, including Resolution No. 4220 of the Borrower adopted on November 16, 2009, as
amended and supplemented by Resolution Nos. 4234, 4245, and 4254, adopted on January 19,
2010, February 16, 2010, and May 3, 2010, respectively (as so supplemented, the "Resolution
Terns used with initial capital letters but not defined herein have the meanings given them in the
Resolution. The Series 2010G Bond is issuable only as a single, fully registered bond. The
Series 2010G Bond is issued on a parity with the Borrower's $359,300 Sewer System Revenue
Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010B, its
51,223,000 Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan
Program), Series 2010C, its $9,500,000 Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 2010D, and its Sewer System Revenue Bond
(DNRC Water Pollution Control. State Revolving Loan Program), Series 2010F, which is being
issued simultaneously herewith (collectively, the "Outstanding Bonds The Borrower is also
issuing simultaneously herewith its Subordinate Lien Sewer System Revenue Bond (DNRC
Water Pollution Control State Revolving Loan Program), Taxable Series 2010E. Principal
amounts of this Series 2010G Bond are advanced only after the full principal amount of the
Series 2010E Bond and the Series 2010F Bond have been advanced.
Reference is made to the Resolution for a more complete statement of the terms
and conditions upon which the Series 2010G Bond has been issued, the Net Revenues of the
System pledged and appropriated for the payment and security thereof, the conditions upon
which additional bonds may be issued under the Resolution and made payable from such Net
Revenues on a parity with the Outstanding Bonds (collectively with the Scrics 2010E Bond, the
"Bonds or otherwise, the conditions upon which the Resolution may be amended, the rights,
duties and obligations of the Borrower, and the rights of the owners of the Series 2010G Bond.
The Borrower may prepay the principal of the Series 2010G Bond only if (i) a
Determination Statement has been delivered, (ii) it obtains the prior written consent of the
DNRC thereto, and (iii) no Loan Repayment or Administrative Expense Surcharge or Loan Loss
B -3-2
Reserve Surcharge is then delinquent. Any prepayment peu iitted by the DNRC must 6c
accompanied Lm payment nfoocnucd interest, and Administrative Expense Surcharge and Loan
Loss Reserve Surcharge to the date of prepayment on the amount of principal prepaid. If the
Series 2010G Bond is prepaid in part, such prepayments shall be applied to principal payments in
inverse order ofrnaturity.
The Series 2010G Bond, including interest arid any premium for the redemption
thereof, are payable solely from the Net Revenues pledged for the payment thereof and do not
constitute a debt of the Borrower within the meani of any constitutional or statutory lirnitation
or provision.
The BolTower may dcem and treat the person in whose name this Series 2010G
Bond is registered as the absolute owner hereof, whether this Series 2010G Bond is overdue or
not, for the purpose of receiving payment and for all other purposes, and the Borrower shall not
be affected by any notice to the contrary. The Series 2010G Bond may be tronofeucd as
hereinafter provided.
This Series 2010G Bond has been designated bv the Borrower uuu"qualified tnz-
excooptoh}igatioo
IT JS ILEREBY CERTIFIED, RECITED, COVENANTED AND AGREED tha
the Borrower will forthwith construct and complete the improvements to the System hereinabove
described; that it will prescribe and collect reasonable rates and charges for all services and
facilities afforded by the System, including all additions thereto and replacements and
improvements thereof, and has created a special Sewer System Fund into which the gross
revenues of the System will be paid, and a separate and special Revenue Bond Account in that
Fund, into which will be paid each month, from and as a first and prior lien on the Net Revenues
of the System thcn on hand, an arnount equal to not less than thc sum of one-sixth of thc interest
to become due within the next six months and one-twelfth of the principal to become due within
the next twelve months with respect to all Bonds payable from that Account; that the Borrower
has created a Rcmcrvc Account in such fund into which shall be paid additional Net Revenues,
after required credits to the Revenue Bond Account sufficient to maintain a reserve therein equal
to thc maximum amount of principal and interest payable in any subsequent fiscal year on all
such Bonds; that the Revenuc Bond Account will be used onIy to pay the principal of, premium,
if any, and interest on the Bonds and any other additional Bonds issued pursuant to the
Resolution on a parity therewith; that the rates and charges for the System will from time to time
he made and kept sufficient, to provide gross income and revenues adequate to pay promptly the
rcasonable and current cxpenses of operating and maintaining thc System and to produce in each
fiscal year Net Revenues in excess of such current expenses, equal to 125% of the maximum
arnount of principal and interest payable from the Revenue Bond Account in any subsequent
fiscal year; that additional Bonds and refundirig Bonds niay be issued and made payable from the
Revenue Bond Account on a parity with the Outstanding Bonds and other parity Bonds, upon
certain conditions set forth in the Resolution, but no obligation will be otherwise incoord and
made payable from the Net Revenues of the System, unless the lien thereof shall be expressly
made subordinate to the lien of the Outstanding Bonds and additional parity Bonds on such Net
Revenues; that all provisions for the security nf the holder nfthis Series 20100 Bond set fortli in
the Resolution will be punctually and faithfully performed as therein stipulated; that all acts,
B-3-3
conditions and things rcquired by the Constitution and laws of the State of Montana and the
ordinanocuaudreyo!udoosof1hc8orro`vcrtobe.douc to be perforrncd in
order to make this Series 2010G Bond a valid and binding special obligation of the Borrower
according to its terms have been done, do exist, have happened and have been performed in
regular and due form/, time and manner as so required; and that this Series 2010G Bond and the
interest hereon are payable solely from the Net Revenues of the System pledged and
appropriated to the Revenue Bond Account and do not constitute a debt of the Borrower within
the meaning of any constitutional or statutory limitation or provision and the issuance of the
Series 2010G Bond does not cause either the general or the special indebtedness of the Borrower
to exceed any constitutional or statutory limitation.
IN WITNESS WHEREOF, the City of Bozeman, Montana. by its governing
body, has caused this Bond to be executed by the signatures of the Mayor, the Director of
Finance, and the Clerk o[ the Commission, and has caused da cu)of the B0009vc,tohc
affixed hereto, and has caused this8nndtobcdotcdusofthc� day of 20lO.
(Seal)
/u"^
1~7.
``Co
Director of F
kofthe Con mission
REGISTRATION AND TRANSFER
This Bond shall be fully registered as to both principal and interest. No transfer of this
Bond shall be valid unless and until (1) the registered holder of the Bond, or his duly authorized
attorney or legal representative, executes the form of assignment appearing on this Bond, and (2)
the Director of Finance as bond registrar (the "Registrar")„ has duly noted the transfer on the
Bond and recorded the transfer on the Registrar's registration books. The Borrower shall be
entitled to deem and treat the person in whose name this Bond is registered as absolute owner
thereof for all purposes, notwithstanding any notice to the contrary. Payments on account of the
Bond shall be made only to the order of the registered holder thereof, and all such payments shall
he valid and effectual to satisfy and discharge the Borrower's liability upon the Bond to the
extent of the sum or sums so paid.
REGISTER
The ownership of the unpaid Principal Balance of this Bond and the interest accruing
thereon is registered on the books of the City of Bozeman, Montana in the name of the registered
holder appearing on the first page hereof or as last noted below:
Date of Name and Address Signature of
Registration of Registered Holder Director of Finance.
2010 Department of Natural
Resources and Conservation
1625 Eleventh Avenue
Helena, MT 59620
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The Director of Finance of the City, acting as Bond Registrar, has transferred, on the
books of the City, on the date last noted below, ownership of the principal amount of and the
accrued interest on this Bond to the new registered holder noted next to such date, except for
amounts of principal and interest theretofore paid.
Date of Transfer
Name of New Signature of
Registered Holder Bond Registrar
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACII TRANSFER
The Director of Finance of the City of Bozeman, Montana, acting as Bond Registrar, has
transferred, on the books of the Borrower, on the date last noted below, ownership of the
principal amount of and the accrued interest on this Bond to the new registered holder noted next
to such date, except for amounts of principal and interest theretofore paid.
Name of New
Date of Transfer Registered Holder
FORM OF ASSIGNMENT
Signature of
Bond Registrar
For value received, this Bond is hereby transferred and assigned by the undersigned
holder, without recourse, to
on this day of
By:
(Authorized Signature)
For:
(Holder)
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Total Amount Notation
Date Advances Advanced Made By
SCHEDULE B
Loan Loss
Adniinistrati e Reser\e Total Loan
Date Principal Interest Expense Surcharge Surcharge Payment
B -3 -8
APPENDIX C
ADDITIONAL REPRESENTATIONS AND COVENANTS
None
$5,103,000
Sewer System Revenue Bonds
(DNRC Water Pollution Control State Revolving Loan Program)
consisting of $384,000 Subordinate Lien Taxable Series 2010E Bond
$816,000 Series 2010F Bond and $3,903,000 Series 2010G Bond
City of Bozeman, Montana
COMPLIANCE CERTIFICATE AND REQUEST
We, ra�(CJ'1� S Antra. o. 'se4 n�r and hereby
certify that we arcnth date, hereof the duly qualified and acing Mayor, the Director of
Finance, and the Clerk o'the Commission, respectively, of the City of Bozeman, Montana (the
"Borrower and that:
APPENDIX D
l Pursuant to Resolution No. 4220 of the Borrower adopted on November 16, 2009,
as amended and supplemented by Resolution Nos. 4234 and 4245, adopted on January 19, 2010
and February 16, 2010 (the "Original Resolution as further amended and supplemented by
Resolution No. 4254, adopted on May 3, 2010, entitled "Resolution Relating to $5,103,000
Sewer System Revenue Bonds (DNRC Water Pollution Control. State Revolving Loan Program),
Consisting of $384,000 Subordinate Lien Taxable Series 2010E Bond, $816,000 Series 2010F
Bond and $3,903,000 Series 2010G Bond; Authorizing the Issuance and Fixing the Terms and
Conditions Thereof' (the "Supplemental Resolution the Borrower issued its Subordinate Lien
Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program),
Taxable Series 2010E, dated, as originally issued, as of Ufa p =3 2010, in the maximum
aggregate principal amount of $384,000 (the "Series 2010E Bond"), its Sewer System Revenue
Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010F, dated, as
originally issued, as of 0 5 03 2010, in the maximum aggregate principal amount of
$816,000 (the "Series 2010F Bond and its Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010G, dated, as originally issued, as
of t> :;y c:� 2010, in the maximum aggregate principal amount of $3,903,000 (the "Series
2010G Bond The Bon•ower has reviewed the Supplemental Resolution, including, without
limitation, Articles 11 and III thereof, and the definitions relating thereto. The Borrower
acknowledges and agrees that the Series 2010E Bond evidences a loan made to the Borrower
from the DNRC from funds made available to the DNRC from the 2010 EPA Capitalization
Grant, and that this Certificate is being relied upon by the DNRC for ensuring compliance with
requirements applicable to the .Borrower, the DNRC, and the 2010 Digester Project (as
hereinafter defined). Capitalized terns used herein without definition shall have the meanings
given them in the Original Resolution, as amended and supplemented by the Supplemental
Resolution (as so amended and supplemented, the "Resolution
2. The Series 2010E Bond is issued to finance a portion of the costs of construction
and installation of various improvements to the System, generally described as the 2010 Digester
Project (the "2010 Digester Project in the Resolution. Construction of the 2010 Digester
Project has complied with all federal and state standards, including, without limitation, EPA
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regulations and standards. The 2010 Digester Project is expected to be completed and placed in
service on or about 20
3. Costs of the 2010 Digester Project in the amount of have been
paid as of the date of delivery of this Certificate. The Borrower hereby waives its right to any
remaining 2010E Committed Amount not advanced or to be advanced upon delivery hereof. The
Borrower specifically confinns and agrees that any remaining amounts of the 2010EFG Loans to
be lent to the Borrower, if any, shall be evidenced by the Series 2010F Bond and the Series
2010G Bond.
4. As of the date hereof, the Borrower has spent the following amounts in
connection with the 2010 Digester Project and costs related thereto:
Debt Service Reserve
Bond Counsel Related Costs
Construction
Contingency
TOTAL PROJECT COSTS
Of such amounts, were paid from advances of proceeds of the Series
2 Bond.
s. The Trustee has delivered to the Borrower a copy of Schedule B to be attached to
the Series 2010E Bond, which reflects the amortization of all advances made or to be made on
the date hereof of proceeds of the Series 2010E Bond (i.e., The Borrower hereby
acknowledges and agrees that Schedule B has been calculated in accordance with the provisions
of the Resolution and the Indenture, and that the Series 2010E Bond, with said Schedule B
attached thereto, has been duly issued pursuant to the Resolution and is a valid and binding
obligation of the Borrower in accordance with its terms and the terms of the Resolution;
provided, however, if the DNRC delivers a Forgiveness Statement, the Borrower's obligation to
repay the principal of the Series 2010E Bond and interest and surcharges thereon is thereupon
forgiven, and if the DNRC delivers a Noncompliance Certificate, amounts advanced under the
2010E Loan evidenced by the Series 201 OE Bond shall bear interest from and after the first
advance of principal of the Series 2010E Bond at the rate of two percent (2.00%) per annum and
the Borrower shall pay currently with interest the Administrative Expense Surcharge and the
Loan Loss Reserve Surcharge, all as described in Sections 5.1.2 of the Supplemental Resolution
authorizing the Series 2010E Bond.
b. The representations of the Borrower contained in Articles 11 and .III of the
Supplemental. Resolution are true and complete as of the date hereof as if made on this date,
except to the extent that the Borrower has specifically advised the DEQ and the DNRC otherwise
in writing.
7. No default in any covenant or agreement on the part of the Borrower contained in
the Resolution has occun and is continuing.
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8. The Borrower is delivering this Certificate to the DNRC'. in part. to cnsure
cornpliance with EPA rcgulations and standards. Thc Borrower certifies that alI laborers and
mechanics employed by contractors and subcontractors on the 2010 Digester Project },orcbcoa
and will be paid wages at rates not less than thosc prevailing on pr jcc1u of character similar io
the locality as determined by the United States Secretary of Labor in accordance with subchapter
IV ofchapter 31 of title 40, United States Code.
9. The Borrower acknowledges and agrces that this Certificate completed bythe
Borrower in form satis to the INRCmust be cxecutcd and dclivcred to the DNRC by the
date that is 30 days after receipt of tlie forni ofthis Ccrtificatc from the DNRC. By submitting
this Certificate, the Borrower requests that the DNRC forgive the obligation of the Borrower to
repay the principal ofthe Series 2010E Bond, together with interest and surcharges thereon. The
Borrower acknowledges and agrees that (i) the forgiveness mf principal of and interest and
surchargcs on the Series 201 OE Bond by the DNRC is contingdnt on the timely delivery of this
Certificate by the Borrower in satisfactory form usdo1eooiucd io the Z}NTlC`x sole and complete
discretion, (ii) the DNRC has no obiigation to grant such forgivcncss; and (iii) if the Z)NDC
delivers to the Borrower a Noncompliance Certificate, (a) the obligation of the Borrower to
repay the principal of the Series 2010E Bond plus interest and Administrative Expense
Surcharge and Loan Loss Reserve Surcharge thereon shail continue in full force and effict until
the principal of the Series 2010E Bond advanced and interest, Administrative Expense
Surcharge, and Loan Loss Reserve Surcharge thereon are paid in full, as set forth io Schedule B
delivered pursuant to paragraph 5 above, and as provided in the Series 2010E Bond and the
Resolution, and (b) the Borrower shall, as necessary, within thc 3-month period specified in the
Supplemental Resolution, adjust its rates and charges to produce Net Revenues and Surplus Net
Revenues required by the ratc covenant in the Resolution.
c „i 'WITNESS our hands on behalf of the Borrower and the seal
W1TNESS our hands on behalf of the Borrower and the seal of the Borrower onuf this
day of 2010..
(SEAL)
CITY OF BOZEMAN, MONTANA
By
e'cr
Cler of the Commission