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HomeMy WebLinkAboutBond Resolution.pdf Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Anna Rosenberry, Finance Director SUBJECT: RESOLUTION NO. 4381 - RESOLUTION RELATING TO $3,080,000 GENERAL OBLIGATION REFUNDING BONDS, SERIES 2012; FIXING THE FORM AND DETAILS, MAKING COVENANTS WITH RESPECT THERETO, AUTHORIZING THE EXECUTION AND DELIVERY AND LEVYING TAXES FOR THE PAYMENT THEREOF MEETING DATE: June 4, 2012 AGENDA ITEM TYPE: Consent RECOMMENDATION: Adopt Resolution No. 4381 to fix the details for the 2012 Refunding of City General Obligation Debt. BACKGROUND: In April, we solicited proposals for underwriting the refunding of our General Obligation Bonds: Series 2001A (Library), Series 2003A (Library), and Series 2003B (Transportation.) On May 31, 2012, the bonds were offered for sale and a Bond Purchase Agreement was executed by the Finance Director and the Deputy Mayor, in accordance with the May 7, 2012 Resolution that authorized the issuance of the refunding bonds. According to the final pricing and the Purchase Agreement, the gross savings from the refinance is $461,000. Gross savings, net of cash contributed and rounding is $391,000 (see attached Refunding Bond Summary.) The average interest rate on the outstanding bonds ranged from 3.67% to 4.81%. The new average interest rate, as a result of the refunding is 1.93%. UNRESOLVED ISSUES: None. ALTERNATIVES: As suggested by the Commission. FISCAL EFFECTS: As a result of this refunding, the required tax levy for City General Obligation debt will decrease by approximately $46,000 in FY13, will total interest costs lowered by $391,000 over the life of the bonds. DRAFT 05/31/2012 CERTIFICATE 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 a Resolution entitled: “RESOLUTION RELATING TO $3,080,000 GENERAL OBLIGATION REFUNDING BONDS, SERIES 2012; FIXING THE FORM AND DETAILS, MAKING COVENANTS WITH RESPECT THERETO, AUTHORIZING THE EXECUTION AND DELIVERY AND LEVYING TAXES FOR THE PAYMENT 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 a regular meeting on June 4, 2012, 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 meeting, the following Commission Members voted in favor thereof: _______________________________ _______________________________________________________________; voted against the same: ______________________________________________________; abstained from voting thereon: _______________________________; or were absent:__________________________. WITNESS my hand officially this _____ day of ________________, 2012. ____________________________________ City Clerk (SEAL) RESOLUTION NO. 4381 RESOLUTION RELATING TO $3,080,000 GENERAL OBLIGATION REFUNDING BONDS, SERIES 2012; FIXING THE FORM AND DETAILS, MAKING COVENANTS WITH RESPECT THERETO, AUTHORIZING THE EXECUTION AND DELIVERY AND LEVYING TAXES FOR THE PAYMENT THEREOF BE IT RESOLVED by the City Commission (the “Commission”) of the City of Bozeman, Montana (the “City”), as follows: Section 1. Recitals, Authorization and Sale. 1.01 At an election duly called and held on June 28, 2001, the electors of the City authorized the issuance and sale of general obligation bonds in the aggregate principal amount of $4,000,000. Pursuant to such authorization, this Commission issued and sold general obligation bonds of the City denominated General Obligation Bonds, Series 2001A, in the original aggregate principal amount of $2,315,000 (the “Series 2001A Bonds”) and General Obligation Bonds, Series 2003A, in the original aggregate principal amount of $1,685,000 (the “Series 2003A Bonds”). The Series 2001A Bonds and the Series 2003A Bonds are currently outstanding in the aggregate principal amount of $1,435,000 and $1,080,000, respectively. At an election duly called and held on November 8, 1994, the electors of the City authorized the issuance and sale of general obligation bonds in the aggregate principal amount of $5,000,000. Pursuant to such authorization, this Commission issued and sold general obligation bonds of the City denominated General Obligation Bonds, Series 1995, in the original aggregate principal amount of $5,000,000 (the “Series 1995 Bonds”). The Series 1995 Bonds with stated maturities in 2005 and later years were subsequently refunded by the County’s General Obligation Refunding Bonds, Series 2003B, in the aggregate principal amount of $3,480,000 (the “Series 2003B Bonds”). The Series 2003B Bonds are currently outstanding in the aggregate principal amount of $1,195,000. The Series 2001A Bonds, the Series 2003A Bonds, and Series 2003B Bonds with stated maturities in 2013 and thereafter and outstanding in the aggregate principal amounts of $1,320,000, $990,000, and $810,000, respectively (collectively, the “Refunded Bonds”), will be refunded in one series of bonds to be issued by the City. 1.02 For the purpose of reducing the interest cost on the Refunded Bonds and reducing the taxes necessary to pay the principal of and interest on such bonds, this Commission has determined that it is in the best interests of the City and the owners of taxable property therein for the City to sell, upon the terms hereinafter set forth, to D.A. Davidson & Co., of Great Falls, Montana (the “Original Purchaser”), by private negotiated sale, its general obligation refunding bonds, pursuant to Montana Code Annotated, Section 7-7-4302, to refund and redeem the Refunded Bonds and to pay the costs of issuance of such bonds and of the refunding. 1.03 The Original Purchaser and the City have entered into a Bond Purchase Agreement, dated as of May 31, 2012, regarding the purchase and sale of general obligation refunding bonds of the City, to be denominated “General Obligation Refunding Bonds, Series 2012” (the “Series 2012 Bonds”), in the aggregate principal amount of $3,080,000 at a purchase price of $3,149,168.45 (reflecting underwriter’s discount of $23,100.00 and a reoffering premium of $92,268.45), the Series 2012 Bonds to bear interest at the rates and mature on the dates and in the amounts and contain the further terms and conditions set forth in this resolution. The sale of the Series 2012 Bonds to the Original Purchaser is hereby ratified and confirmed. The interest rates to be borne by the Series 2012 Bonds result in a total dollar interest cost of $250,394.38 and an average annual interest rate of 1.933% per annum, and a net present value interest savings of $370,321.24, using a discount rate of 1.177% per annum (the approximate yield of the Series 2012 Bonds) over the term of the Refunded Bonds. As required by Montana Code Annotated, Section 7-7-4304, the average annual interest rate on the Series 2012 Bonds (1.933%) is more than 1/2 of 1% percent (0.50%) per annum less than the average annual rate of interest on the Series 2001A Bonds (5.226%), the Series 2003A Bonds (4.591%), and the Series 2003B Bonds (4.768%). It is now desirable, proper and in the best interest of the City that the form and details of the Series 2012 Bonds be set forth and prescribed in the official proceedings of this Commission. 1.04 All acts, conditions and things required by the Constitution and laws of the State of Montana to be done, to exist, to happen and to be performed prior to the issuance of the Series 2012 Bonds have been done, do exist, have happened, and have been performed in due time, form and manner. It is now necessary for this Commission to establish the form and terms of the Series 2012 Bonds and to provide for the security thereof and to issue the Series 2012 Bonds. Section 2. The Series 2012 Bonds. 2.01 The Series 2012 Bonds shall mature on July 1 in the years and amounts set forth below, and Series 2012 Bonds shall bear interest from date of delivery, until paid or duly called for redemption (including mandatory sinking fund redemption as to the term bond maturing in 2016), at the rate per annum shown opposite such years and amounts, as follows: Year Amount Interest Rate 2013 $635,000 2.000% 2014 660,000 2.000 2016*485,000 1.500 2017 250,000 2.000 2018 255,000 2.000 2019 260,000 2.000 2020 265,000 2.000 2021 270,000 2.000 *Term bond subject to mandatory sinking fund redemption as set forth in Section 2.07 below. Interest on the Series 2012 Bonds shall be calculated on the basis of a year of 360 days composed of twelve 30-day months. 2 The Series 2012 Bonds shall be issuable only in fully registered form, and the ownership of the Series 2012 Bonds shall be transferred only upon the bond register of the Registrar hereinafter described. Interest on, and upon presentation and surrender thereof at the principal office of the Registrar as hereinafter described, the principal amount of each of the Series 2012 Bonds shall be payable by check or draft issued by the Registrar. 2.02 The Series 2012 Bonds shall bear an original issue date as of June 14, 2012. Upon the delivery of the Series 2012 Bonds to the Original Purchaser in accordance with Section 2.07 and upon delivery of Series 2012 Bonds upon a transfer of ownership or an exchange pursuant to Section 2.03, the Registrar shall note the date of authentication on each Series 2012 Bond so delivered. Interest on the Series 2012 Bonds shall be payable on January 1 and July 1 in each year, commencing January 1, 2013, to the owners thereof as such appear of record in the bond register as of the close of business on the fifteenth day of the immediately preceding month, whether or not such day is a Business Day. “Business Day” means any day other than a Saturday, Sunday or legal holiday of the State of Montana. 2.03 The City shall appoint, and shall maintain, a bond registrar, transfer agent and paying agent (the “Registrar”). This Section 2.03 shall establish a system of registration for the Series 2012 Bonds as defined in the Model Public Obligations Registration Act of Montana, Montana Code Annotated, Title 17, Chapter 5, Part 11, as amended. The effect of registration and the rights and duties of the City and the Registrar with respect thereto shall be as follows: (a) The Registrar shall keep at its principal office a bond register in which the Registrar shall provide for the registration of ownership of the Series 2012 Bonds and the registration of transfers and exchanges of the Series 2012 Bonds entitled to be registered, transferred or exchanged. (b) Upon surrender to the Registrar for transfer of any Series 2012 Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Series 2012 Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may, however, decline to register the transfer of any Bond which has theretofore been selected or called for redemption, in whole or in part. (c) Whenever any Series 2012 Bond is surrendered by the registered owner for exchange, the Registrar shall authenticate and deliver one or more new Series 2012 Bonds of a like aggregate principal amount, interest rate and maturity and representing the same principal installments, as requested by the registered owner or the owner’s attorney duly authorized in writing. (d) All Series 2012 Bonds surrendered upon any transfer or exchange shall be promptly canceled by the Registrar and thereafter delivered to the Finance Director. 3 (e) When any Series 2012 Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Series 2012 Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar shall incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (f) The City and the Registrar may treat the person in whose name any Series 2012 Bond is at any time registered in the bond register as the absolute owner of such Series 2012 Bond, whether such Series 2012 Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Series 2012 Bond and for all other purposes, and all such payments so made to any such registered owner or upon the owner’s order shall be valid and effectual to satisfy and discharge the liability of the City upon such Series 2012 Bond to the extent of the sum or sums so paid. (g) For every transfer of Series 2012 Bonds or exchange of Series 2012 Bonds (except an exchange upon a partial redemption of a Bond), the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange. (h) In case any Series 2012 Bond shall become mutilated or be destroyed, stolen or lost, the Registrar shall deliver a new Series 2012 Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of any such mutilated Series 2012 Bond or in lieu of and in substitution for any such Series 2012 Bond destroyed, stolen or lost, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a Series 2012 Bond destroyed, stolen or lost, upon filing with the Registrar of evidence satisfactory to it that such Series 2012 Bond was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the Registrar an appropriate bond or indemnity in form, substance and amount satisfactory to it, in which both the City and the Registrar shall be named as obligees. All Series 2012 Bonds so surrendered to the Registrar shall be canceled by it and evidence of such cancellation shall be given to the City. If the mutilated, lost, stolen or destroyed Bond has already matured or such Bond has been called for redemption in accordance with its terms, it shall not be necessary to issue a new Bond prior to payment. (i) Upon request by the City, the Registrar shall give notice of redemption of any Series 2012 Bond as provided in Section 2.06 of this Resolution; provided that the City has provided the Registrar with the request at least 45 days prior to the redemption date. (j) All Series 2012 Bonds issued upon any transfer or exchange of Series 2012 Bonds shall be the valid obligations of the City evidencing the same debt, and entitled to the same benefits under this Resolution as the Series 2012 Bonds surrendered upon such transfer or exchange. 2.04 The City hereby appoints Wells Fargo Bank, National Association, as the initial Registrar. The Mayor, the Finance Director, and the City Clerk, or any two of them, are authorized to execute and deliver, on behalf of the City, a contract with Wells Fargo Bank, 4 National Association, as Registrar. Upon merger or consolidation of the Registrar with another corporation, if the resulting corporation is a bank or trust company authorized by law to conduct such business, such corporation shall be authorized to act as successor Registrar. The City agrees to pay the reasonable and customary charges of the Registrar for the services performed. The City reserves the right to remove any Registrar upon 30 days’ notice and upon the appointment of a successor Registrar, in which event the predecessor Registrar shall deliver all cash and Series 2012 Bonds in its possession as Registrar to the successor Registrar and shall deliver the bond register to the successor Registrar. On or before each principal or interest due date, without further order of this Commission, the Finance Director shall transmit to the Registrar moneys sufficient for the payment of all principal and interest then due. 2.05 The Series 2012 Bonds shall be prepared in substantially the form as set forth on the attached Exhibit A, which by this reference is incorporated into and made a part hereof, with such revisions and modifications as may be approved by the Mayor, the Finance Director, and the City Clerk. 2.06 The Series 2012 Bonds maturing in the years 2013 through 2019 are not subject to optional redemption prior to their stated maturities, but the Series 2012 Bonds maturing in the years 2020 and 2021 are subject to redemption and prepayment at the option of the City within a maturity, in $5,000 principal amounts selected by lot or any other manner deemed fair by the Registrar, on July 1, 2019, and any date thereafter, at a price equal to the principal amount thereof and interest accrued to the redemption date, without premium. The date of redemption and the principal amount of the Series 2012 Bonds shall be fixed by the Finance Director who shall give notice thereof to the Registrar at least forty-five days prior to the date of redemption. The Registrar shall, at least thirty days prior to the designated redemption date, cause notice of redemption to be mailed, by first class mail, or by other means required by the securities depository, to the registered owners of each Series 2012 Bond to be redeemed at their addresses as they appear on the bond register described in Section 2.04, but no defect in or failure to give such mailed notice shall affect the validity of proceedings for the redemption of any Series 2012 Bond not affected by such defect or failure. The notice of redemption shall specify the redemption date, redemption price, the numbers (if a partial redemption), interest rates and CUSIP numbers of the Series 2012 Bonds to be redeemed and the place at which the Series 2012 Bonds are to be surrendered for payment, which is the operations center of the Registrar. Official notice of redemption having been given as aforesaid, the Series 2012 Bonds or portions thereof so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified and from and after such date (unless the City shall default in the payment of the redemption price) such Series 2012 Bonds or portions thereof shall cease to bear interest. In addition to the notice prescribed by the preceding paragraph, the Registrar shall also give, or cause to be given, notice of the redemption of any Series 2012 Bond or Series 2012 Bonds or portions thereof at least 35 days before the redemption date by certified mail or telecopy to the Purchaser and all registered securities depositories then in the business of holding substantial amounts of obligations of the character of the Series 2012 Bonds (such depository now being The Depository Trust Company, of New York, New York) and one or more national information services that disseminate information regarding municipal bond redemptions; provided that any defect in or any failure to give any notice of redemption prescribed by this 5 paragraph shall not affect the validity of the proceedings for the redemption of any Series 2012 Bond or portion thereof. Series 2012 Bonds in a denomination larger than $5,000 may be redeemed in part in any integral multiple of $5,000. The owner of any Series 2012 Bond redeemed in part shall receive, upon surrender of such Series 2012 Bond to the Registrar, one or more new Series 2012 Bonds in authorized denominations equal in principal amount to the unredeemed portion of the Series 2012 Bond so surrendered. 2.07 The Series 2012 Bonds having a stated maturity in 2016 are subject to mandatory sinking fund redemption on July 1 in the year and the principal amounts set forth below in $5,000 principal amounts selected by the Registrar, by lot or other manner it deems fair, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date: Stated Maturity of Term Bonds (July 1) Sinking Fund Payment Date (July 1) Principal Amount on Sinking Fund Payment Date 2016 2015 $240,000 If the term bond with a stated maturity in 2016 is not previously purchased by the District in the open market, in respect of the term bond maturing in 2016, $245,000 in principal amount would remain to mature in 2016. 2.08 The Series 2012 Bonds shall be forthwith prepared for execution under the direction of the Finance Director, at the expense of the City, and shall be executed on behalf of the City by the signature of the Mayor and the Finance Director, and attested by the signature of the City Clerk; provided that said signatures and the corporate seal may be printed, engraved or lithographed facsimiles thereof. The seal of the City need not be affixed to or imprinted on any Series 2012 Bond. In case any officer whose signature or a facsimile of whose signature shall appear on the Series 2012 Bonds shall cease to be such officer before the delivery of the Series 2012 Bonds, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. When the Series 2012 Bonds have been so executed by said City officers, they shall be registered by the Finance Director in accordance with Montana Code Annotated, Section 7-7-4257. Notwithstanding such execution, the Series 2012 Bonds shall not be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until a certificate of authentication on the Series 2012 Bonds has been duly executed by the manual signature of an authorized representative of the Registrar. The executed certificate of authentication on the Series 2012 Bonds shall be conclusive evidence that it has been authenticated and delivered under this resolution. When the Series 2012 Bonds have been fully executed and authenticated, they shall be delivered by the Finance Director to the Original Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the Original Purchaser shall not be obligated to see to the application of the purchase price. 2.09 Securities Depository. 6 (a) For purposes of this Section, the following terms shall have the following meanings: “Beneficial Owner” shall mean, whenever used with respect to a Series 2012 Bond, the person in whose name such Series 2012 Bond is recorded as the beneficial owner of such Series 2012 Bond by a Participant on the records of such Participant, or such person’s subrogee. “Cede & Co.” shall mean Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to the Series 2012 Bonds. “DTC” shall mean The Depository Trust Company of New York, New York. “Participant” shall mean any broker-dealer, bank or other financial institution for which DTC holds Series 2012 Bonds as securities depository. “Representation Letter” shall mean the Blanket Issuer Letter of Representations from the City to DTC with respect to the Series 2012 Bonds, substantially in the form attached to this resolution as Exhibit B, which is hereby incorporated herein by reference and made a part hereof. (b) The Series 2012 Bonds shall be initially issued as separately authenticated fully registered bonds, and one Series 2012 Bond shall be issued in the principal amount of each stated maturity of the Series 2012 Bonds. Upon initial issuance, the ownership of such Series 2012 Bonds shall be registered in the bond register in the name of Cede & Co., as nominee of DTC. The Registrar and the City may treat DTC (or its nominee) as the sole and exclusive owner of the Series 2012 Bonds registered in its name for the purposes of payment of the principal of or interest on the Series 2012 Bonds, selecting the Series 2012 Bonds or portions thereof to be redeemed, if any, giving any notice permitted or required to be given to registered owners of Series 2012 Bonds under this resolution, registering the transfer of Series 2012 Bonds, and for all other purposes whatsoever; and neither the Registrar nor the City shall be affected by any notice to the contrary. Neither the Registrar nor the City shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in the Series 2012 Bonds under or through DTC or any Participant, or any other person not shown on the bond register as being a registered owner of any Series 2012 Bonds, with respect to the accuracy of any records maintained by DTC or any Participant, with respect to the payment by DTC or any Participant of any amount with respect to the principal of or interest on the Series 2012 Bonds, with respect to any notice which is permitted or required to be given to owners of Bonds under this Resolution, with respect to the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Series 2012 Bonds, or with respect to any consent given or other action taken by DTC as registered owner of the Bonds. So long as any Series 2012 Bond is registered in the name of Cede & Co., as nominee of DTC, the Registrar shall pay all principal of and interest on such Series 2012 Bond, and shall give all notices with respect to such Series 2012 Bond, only to Cede & Co. in accordance with the Representation Letter, and all such payments shall be valid and effective to fully satisfy and discharge the City’s obligations with respect to the principal of and interest on the Series 2012 7 Bonds to the extent of the sum or sums so paid. No person other than DTC shall receive an authenticated Series 2012 Bond for each separate stated maturity evidencing the obligation of the City to make payments of principal and interest. Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the Series 2012 Bonds will be transferable to such new nominee in accordance with paragraph (e) hereof. (c) In the event the City determines that it is in the best interest of the Beneficial Owners that they be able to obtain Series 2012 Bonds in the form of bond certificates, the City may notify DTC and the Registrar, whereupon DTC shall notify the Participants of the availability through DTC of Series 2012 Bonds in the form of certificates. In such event, the Series 2012 Bonds will be transferable in accordance with paragraph (e) hereof. DTC may determine to discontinue providing its services with respect to the Series 2012 Bonds at any time by giving notice to the City and the Registrar and discharging its responsibilities with respect thereto under applicable law. In such event the Series 2012 Bonds will be transferable in accordance with paragraph (e) hereof. (d) The execution and delivery of the Representation Letter to DTC by the Mayor with such changes, omissions, insertions and revisions as the Mayor shall deem advisable, is hereby authorized, and execution of the Representation Letter by the Mayor shall be conclusive evidence of such approval. The Representation Letter shall set forth certain matters with respect to, among other things, notices, consents and approvals by registered owners of the Series 2012 Bonds and Beneficial Owners and payments on the Series 2012 Bonds. The Registrar shall have the same rights with respect to its actions thereunder as it has with respect to its actions under this resolution. (e) In the event that any transfer or exchange of Series 2012 Bonds is permitted under paragraph (b) or (c) hereof, such transfer or exchange shall be accomplished upon receipt by the Registrar of the Series 2012 Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee in accordance with the provisions of this resolution. In the event Series 2012 Bonds in the form of certificates are issued to owners other than Cede & Co., its successor as nominee for DTC as owner of all the Series 2012 Bonds, or another securities depository as owner of all the Series 2012 Bonds, the provisions of this resolution shall also apply to all matters relating thereto, including, without limitation, the printing of such Series 2012 Bonds in the form of bond certificates and the method of payment of principal of and interest on such Series 2012 Bonds in the form of bond certificates. Section 3. Debt Service Account; Tax Levies. 3.01 So long as the Series 2012 Bonds are outstanding and any principal thereof or interest thereon is unpaid, the Finance Director shall cause the City to maintain a separate and special 2012 Debt Service Account (the “Debt Service Account”) to be used for no purpose other than the payment of the principal of and interest on the Series 2012 Bonds, including the payment of the redemption price of any Series 2012 Bonds duly called for redemption, and to pay costs of issuance relating to the Series 2012 Bonds. Proceeds of the Series 2012 Bonds used to pay costs of issuance shall be deposited in a costs of issuance subaccount in the Debt Service Account. The City irrevocably appropriates to the Debt Service Account: (a) any proceeds of the 8 Series 2012 Bonds in excess of their principal amount payable to the City (except to the extent such proceeds are deposited in the escrow account established by the escrow agreement described in Section 4) or, to the costs of issuance subaccount, any proceeds of the Series 2012 Bonds to pay costs of issuance, (b) all taxes levied in accordance with this resolution, (c) all income derived from the investment of amounts on hand in the Debt Service Account, (d) accrued interest on the Series 2012 Bonds, if any, and (e) such other money as shall be received and appropriated to the Debt Service Account from time to time. 3.02 The full faith and credit and taxing powers of the City shall be and are hereby irrevocably pledged to the payment of the Series 2012 Bonds and interest due thereon, and the City shall cause taxes to be levied annually on all taxable property in the City sufficient to pay the interest on the Series 2012 Bonds when it falls due and to pay and discharge the principal at maturity of each and all of the Series 2012 Bonds as they respectively become due. Section 4. Escrow; Redemption of Refunded Bonds. 4.01 Simultaneously with the delivery of the Series 2012 Bonds, the Finance Director shall cause to be deposited in escrow with Wells Fargo Bank, National Association, a sum equal to the amount available for transfer from the City’s debt service account for the Refunded Bonds and proceeds of the Series 2012 Bonds necessary to pay, without regard to investment earnings thereon, the redemption price of the Refunded Bonds to be redeemed on July 19, 2012, which redemption price is equal to the principal amount of the Refunded Bonds plus interest accrued thereon through July 19, 2012, all as set forth in the Escrow Agreement between the City and Wells Fargo Bank, National Association (the “Escrow Agreement”), the draft form of which has been submitted to this Commission and is hereby approved, subject to necessary or appropriate additions or deletions. The Finance Director shall cause the amount so deposited to be invested in securities of the type described in Montana Code Annotated, Section 7-7-4316 or to be held as cash. Amounts in the escrow account shall be transferred to the benefit of the City on or before July 19, 2012 to pay the redemption price of the Refunded Bonds and amounts in excess thereof will be deposited in the Debt Service Account to pay interest on the Series 2012 Bonds due on January 1, 2013. The escrow account and all cash therein and investments thereof shall be held in safekeeping by said escrow agent, and said account and all income therefrom are irrevocably appropriated for the purposes stated in this Section 4.01. At or before the time of making said deposit and investment the Mayor, the Finance Director, and the City Clerk shall execute on the part of the City the Escrow Agreement with said escrow agent, in the form of such agreement which has been presented to this Commission at the meeting at which this resolution was adopted, with such additions thereto or deletions therefrom as are necessary or appropriate. In accordance with the provisions of Montana Code Annotated, Section 7-7-4316, upon the establishment and funding of the escrow account pursuant to this Section 4.01, the Refunded Bonds shall no longer be considered outstanding for purposes of Montana Code Annotated, Section 7-7-4201 or any other debt limitation. 4.02 In accordance with the provisions of the Escrow Agreement approved in Section 4.01, the Refunded Bonds are hereby called for redemption on July 19, 2012. Section 5. Tax Matters. 9 5.01 Use of Project. The proceeds of the Series 2001A Bonds and the Series 2003A Bonds were used for the purpose of acquiring land for the purpose of acquiring land for and designing, constructing and equipping either a new public library or designing, constructing and equipping an expansion of the existing library and the proceeds of the Series 2003B Bonds refinanced certain bonds issued for the purpose of financing the implementation of a series of transportation projects contained in the Bozeman Urban Transportation Plan 1993 Update (such library and transportation projects, collectively, the “Project”) and paying costs associated with the issuance and sale of the Series 2001A Bonds and the Series 2003A Bonds and the Series 2003B Bonds. The Project will continue to be owned and operated by the City and used by the City to provide public library services and transportation services for members of the general public. The City shall not enter into any lease, use or other agreement with any non-governmental person relating to the use of the Project or security for the payment of the Series 2012 Bonds which might cause the Series 2012 Bonds to be considered “private activity bonds” or “private loan bonds” within the meaning of Section 141 of the Internal Revenue Code of 1986, as amended (the “Code”). 5.02 General Covenant. The City covenants and agrees with the registered owners from time to time of the Series 2012 Bonds 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 2012 Bonds to become includable in gross income for federal income tax purposes under the Code and applicable Treasury Regulations (the “Regulations”), and covenants to take any and all actions within its powers to ensure that the interest on the Series 2012 Bonds will not become includable in gross income for federal income tax purposes under the Code and the Regulations. 5.03 Arbitrage Certification. The Mayor, the City Clerk and the Finance Director, being the officers of the City charged with the responsibility for issuing the Series 2012 Bonds pursuant to this resolution, are authorized and directed to execute and deliver to the Original Purchaser a certificate in accordance with the provisions of Section 148 of the Code, and Section 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 2012 Bonds, it is reasonably expected that the proceeds of the Series 2012 Bonds will not be used in a manner that would cause the Series 2012 Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code and the Regulations. 5.04 Arbitrage Rebate. The City acknowledges that the Series 2012 Bonds are subject to the rebate requirements of Section 148(f) of the Code. The City 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 Bonds from gross income for federal income tax purposes, unless the Bonds qualify for the exception from the rebate requirement under Section 148(f)(4)(B) of the Code and no “gross proceeds” of the Bonds (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 City Clerk and the Finance Director are hereby authorized and directed to execute a Rebate Certificate, substantially in the form to be prepared by Bond Counsel, and the City hereby covenants and agrees to observe and perform the covenants and agreements contained herein, unless amended or terminated in accordance with the provisions thereof. 10 5.05 Information Reporting. The City shall file with the Secretary of the Treasury, not later than August 15, 2012, a statement concerning the Series 2012 Bonds containing the information required by Section 149(e) of the Code. 5.06 “Qualified Tax-Exempt Obligations.” Pursuant to Section 265(b)(3)(D)(ii) of the Code, the Series 2012 Bonds are designated or deemed designated by the City as “qualified tax- exempt obligations” for purposes of Section 265(b)(3) of the Code. The City hereby represents that it does not anticipate that obligations bearing interest not includable in gross income for purposes of federal income 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 City and all “subordinate entities” of the City in 2012 in an amount greater than $10,000,000. Section 6. Authentication of Transcript. The officers of the City are hereby authorized and directed to furnish to the Original Purchaser and to bond counsel certified copies of all proceedings relating to the issuance of the Series 2012 Bonds and such other certificates and affidavits as may be required to show the right, power and authority of the City to issue the Series 2012 Bonds, and all statements contained in and shown by such instruments, including any heretofore furnished, shall constitute representations of the City as to the truth of the statements purported to be shown thereby. Section 7. Defeasance. When all of the Series 2012 Bonds have been discharged as provided in this Section 7, all pledges, covenants and other rights granted by this resolution to the owners of the Series 2012 Bonds shall cease. The City may discharge its Series 2012 Bonds with respect to any Series 2012 Bonds which are due on any date by irrevocably depositing with the Registrar on or before that date a sum sufficient for the payment thereof in full; or, if any Series 2012 Bond should not be paid when due, the City may nevertheless discharge its liability with respect thereto by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. The City may also discharge its obligations with respect to any Series 2012 Bonds called for redemption on any date when they are subject to redemption according to their terms, by depositing with the Registrar on or before such redemption date a sum sufficient for the payment thereof in full with interest accrued to such redemption date; provided that notice of the redemption thereof has been duly given or provided for as provided in Section 2.06. The City may also at any time discharge its Series 2012 Bonds with respect to any Series 2012 Bonds, subject to the provisions of law now or hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a bank qualified by law as an escrow agent for this purpose, cash or securities which are general obligations of the United States or securities of United States agencies which are authorized by law to be so deposited, bearing interest payable at such times and at such rates and maturing on such dates as shall be required, without reinvestment, to pay all principal and interest to become due on such Series 2012 Bond to their stated maturities or, if notice of redemption as herein required has been irrevocably provided for, to such earlier redemption date; provided, however, that if such deposit is made more than 90 days before the stated maturities or redemption date of the Series 2012 Bonds to be discharged, the City shall have received a written opinion of Bond Counsel to the effect that such deposit does not adversely affect the exemption of interest on any Series 2012 Bond from federal income taxation and a written report of an accountant or investment banking firm verifying that the deposit is sufficient to pay when due all of the 11 principal and interest on the Series 2012 Bonds to be discharged on and before their maturity date. Section 8. Continuing Disclosure. (a) Purpose and Beneficiaries. To provide for the public availability of certain information relating to the Series 2012 Bonds and the security therefor and to permit the Purchaser and other participating underwriters in the primary offering of the Series 2012 Bonds to comply with amendments to Rule 15c2-12 promulgated by the SEC under the Securities Exchange Act of 1934 (17 C.F.R. § 240.15c2-12), relating to continuing disclosure (as in effect and interpreted from time to time, the Rule), which will enhance the marketability of the Series 2012 Bonds, the City hereby makes the following covenants and agreements for the benefit of the Owners (as hereinafter defined) from time to time of the outstanding Series 2012 Bonds. The City is the only obligated person in respect of the Series 2012 Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. The City has complied in all material respects with any undertaking previously entered into by it under the Rule. If the City fails to comply with any provisions of this section, any person aggrieved thereby, including the Owners of any outstanding Series 2012 Bonds, may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of any agreement or covenant contained in this section, including an action for a writ of mandamus or specific performance. Direct, indirect, consequential and punitive damages shall not be recoverable for any default hereunder to the extent permitted by law. Notwithstanding anything to the contrary contained herein, in no event shall a default under this section constitute a default under the Series 2012 Bonds or under any other provision of this resolution. As used in this section, Owner or Bondowner means, in respect of a Series 2012 Bond, the registered owner or owners thereof appearing in the bond register maintained by the Registrar or any Beneficial Owner (as hereinafter defined) thereof, if such Beneficial Owner provides to the Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used herein, Beneficial Owner means, in respect of a Series 2012 Bond, any person or entity which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, such Series 2012 Bond (including persons or entities holding Series 2012 Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of the Series 2012 Bond for federal income tax purposes. (b) Information To Be Disclosed. The City will provide, in the manner set forth in subsection (c) hereof, either directly or indirectly through an agent designated by the City, the following information at the following times: (1) on or before 270 days after the end of each fiscal year of the City, commencing with the fiscal year ending June 30, 2012, the following financial information and operating data in respect of the City (the “Disclosure Information”): (A) the audited basic financial statements of the City for such fiscal year, prepared in accordance with generally accepted accounting principles 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, or, if and to the extent such financial statements have not been 12 prepared in accordance with such generally accepted accounting principles for reasons beyond the reasonable control of the City, noting the discrepancies therefrom and the effect thereof, and certified as to accuracy and completeness in all material respects by the fiscal officer of the City, to the best of his or her knowledge; and (B) to the extent not included in the financial statements referred to in paragraph (A) hereof, the information of the type set forth in the Official Statement relating to the Series 2012 Bonds (the “Official Statement”) for such fiscal year or for the period most recently available, which information may be unaudited, but is to be certified as to accuracy and completeness in all material respects by the City Finance Director to the best of his or her knowledge which information may be based on the reliability of information obtained from third party sources: (i) updated figures for the City for the then current fiscal year to include general obligation bonds outstanding, market valuation, taxable valuation, estimated City population, and general obligation debt capacity; (ii) a description of any additional borrowing or future financing of the City; (iii) tax levy figures for the then current fiscal year in format similar to the table in the section captioned “Tax Levies” in the Official Statement; (iv) tax collection figures for the then most recent completed fiscal year in format similar to the table in the section captioned “Tax Collections” in the Official Statement. Notwithstanding paragraph (b)(1)(A), if the audited financial statements are not available by the date specified, the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within 10 days after the receipt thereof, the City shall provide the audited financial statements. Any or all of the Disclosure Information may be incorporated by reference, if it is updated as required hereby, from other documents, including official statements, which have been filed with the SEC or have been made available to the public on the internet website of the Municipal Securities Rulemaking Board (the “MSRB”). The City shall clearly identify in the Disclosure Information each document so incorporated by reference. If any part of the Disclosure Information can no longer be generated because the operations of the City have materially changed or been discontinued, such Disclosure Information need no longer be provided if the City includes in the Disclosure Information a statement to such effect; provided, however, if such operations have been replaced by other City operations in respect of which data is not included in the Disclosure Information and the City determines that certain specified data regarding such replacement operations would be material (as defined in paragraph (b)(2) hereof), then, from and after such determination, the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or this section is 13 amended as permitted by this paragraph (b)(1) or subsection (d), then the City shall include in the next Disclosure Information to be delivered hereunder, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. (2) In a timely manner not in excess of ten business days, notice of the occurrence of any of the following events: (A) principal and interest payment delinquencies; (B) non-payment related defaults, if material; (C) unscheduled draws on debt service reserves reflecting financial difficulties; (D) unscheduled draws on credit enhancements reflecting financial difficulties; (E) substitution of credit or liquidity providers, or their failure to perform; (F) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB), or other material notices or determinations with respect to the tax status of the security or other material events affecting the tax status of the Series 2012 Bonds; (G) modifications to rights of holders of the Series 2012 Bonds, if material; (H) bond calls, if material, and tender offers; (I) defeasances; (J) release, substitution or sale of property securing repayment of the Series 2012 Bonds, if material; (K) rating changes; (L) bankruptcy, insolvency, receivership, or similar event of the obligated person; (M) the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (N) appointment of a successor or additional trustee or the change of name of a trustee, if material. As used herein, for those events that must be reported if material, an event is “material” if it is an event as to which a substantial likelihood exists that a reasonably prudent investor would attach importance thereto in deciding to buy, hold or sell a Series 2012 Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the Official Statement, information disclosed hereunder or information generally available to the public. Notwithstanding the foregoing sentence, an event is also “material” if it is an event that would be deemed material for purposes of the purchase, holding or sale of a Series 2012 Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the occurrence of the event. (3) In a timely manner, notice of the occurrence of any of the following events or conditions: 14 (A) the failure of the City to provide the Disclosure Information required under paragraph (b)(1) at the time specified thereunder; (B) the amendment or supplementing of this section pursuant to subsection (d), together with a copy of such amendment or supplement and any explanation provided by the City under subsection (d)(2); (C) the termination of the obligations of the City under this section pursuant to subsection (d); (D) any change in the accounting principles pursuant to which the financial statements constituting a portion of the Disclosure Information are prepared; and (E) any change in the fiscal year of the City. (c) Manner of Disclosure. The City agrees to make available the information described in subsection (b) to the following entities by telecopy, overnight delivery, mail or other means, as appropriate: (1) The City agrees to make available to the MSRB, in an electronic format as prescribed by the MSRB from time to time, the information described in subsection (b). (2) The City further agrees to make available, by electronic transmission, overnight delivery, mail or other means, as appropriate, the information described in subsection (b) to any rating agency then maintaining a rating of the Series 2012 Bonds at the request of the City and, at the expense of such Bondowner, to any Bondowner who requests in writing such information, at the time of transmission under paragraph (1) of this subsection (c), or, if such information is transmitted with a subsequent time of release, at the time such information is to be released. (3) All documents provided to the MSRB pursuant to this subsection (c) shall be accompanied by identifying information as prescribed by the MSRB from time to time. (d) Term; Amendments; Interpretation. (1) The covenants of the City in this section shall remain in effect so long as any Series 2012 Bonds are outstanding. Notwithstanding the preceding sentence, however, the obligations of the City under this section shall terminate and be without further effect as of any date on which the City delivers to the Registrar an opinion of Bond Counsel to the effect that, because of legislative action or final judicial or administrative actions or proceedings, the failure of the City to comply with the requirements of this section will not cause participating underwriters in the primary offering of the Series 2012 Bonds to be in violation of the Rule or other applicable requirements of the Securities Exchange Act of 1934, as amended, or any statutes or laws successory thereto or amendatory thereof. 15 (2) This section (and the form and requirements of the Disclosure Information) may be amended or supplemented by the City from time to time, without notice to (except as provided in paragraph (c)(3) hereof) or the consent of the Owners of any Series 2012 Bonds, by a resolution of this Board filed in the office of the recording officer of the City accompanied by an opinion of Bond Counsel, who may rely on certificates of the City and others and the opinion may be subject to customary qualifications, to the effect that: (i) such amendment or supplement (a) is made in connection with a change in circumstances that arises from a change in law or regulation or a change in the identity, nature or status of the City or the type of operations conducted by the City, or (b) is required by, or better complies with, the provisions of paragraph (b)(5) of the Rule; (ii) this section as so amended or supplemented would have complied with the requirements of paragraph (b)(5) of the Rule at the time of the primary offering of the Series 2012 Bonds, giving effect to any change in circumstances applicable under clause (i)(a) and assuming that the Rule as in effect and interpreted at the time of the amendment or supplement was in effect at the time of the primary offering; and (iii) such amendment or supplement does not materially impair the interests of the Bondowners under the Rule. If the Disclosure Information is so amended, the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect, if any, of the change in the type of financial information or operating data being provided hereunder. (3) This section is entered into to comply with the continuing disclosure provisions of the Rule and should be construed so as to satisfy the requirements of paragraph (b)(5) of the Rule. (e) Limitation of Liability of the City. None of the agreements or obligations of the City contained in this Section 8 or in the Disclosure Information shall be construed to constitute an indebtedness of the City within the meaning of any constitutional or statutory provisions whatsoever or constitute a pledge of the general credit or taxing powers of the City. Section 9. Effective Date. This resolution shall become effective upon adoption. Passed and adopted this 4th day of June, 2012. ____________________________________ Mayor Attest: ___________________________ City Clerk (SEAL) 16 EXHIBIT A UNITED STATES OF AMERICA STATE OF MONTANA GALLATIN COUNTY CITY OF BOZEMAN, MONTANA GENERAL OBLIGATION REFUNDING BOND, SERIES 2012 No. _____ $__________ Rate Maturity Date Date of Original Issue CUSIP % July 1, June 14, 2012 103637 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: DOLLARS AND NO/100 FOR VALUE RECEIVED, THE CITY OF BOZEMAN, MONTANA (the “City”), acknowledges itself to be indebted and hereby promises to pay to the registered owner named above, or registered assigns the principal amount specified above on the maturity date specified above, or, if this Bond is subject to redemption as stated below, on any date prior thereto on which this Bond shall have been duly called for redemption, and to pay interest on said principal amount from June 14, 2012 or from the most recent date to which interest hereon has been paid or duly provided for until this Bond is paid or until this Bond, if redeemable, has been duly called for redemption, at the annual interest rate specified above. Principal of this Bond is payable upon presentation and surrender hereof to Wells Fargo Bank, National Association, as Bond Registrar, Transfer Agent and Paying Agent, or its successor designated under the Resolution described herein (the “Registrar”), at its _____________ in ______________. Interest on this Bond is payable semiannually on each January 1 and July 1, commencing January 1, 2013, by check or draft mailed by the Registrar to the person in whose name this Bond is registered at the close of business on the fifteenth day (whether or not a Business Day) of the immediately preceding month, at his address as it appears on the bond register maintained by the Registrar. “Business Day” means any day other than a Saturday, Sunday or legal holiday of the State of Montana. The principal of and interest on this Bond are payable in lawful money of the United States of America. For the prompt and full payment of such principal and interest as the same respectively become due, the full faith, credit and taxing powers of the City have been and are hereby irrevocably pledged. Notwithstanding any other provisions of this Bond, so long as this Bond is registered in the name of Cede & Co., as nominee of The Depository Trust Company, or in the name of any A-1 other nominee of The Depository Trust Company or other securities depository, the Registrar shall pay all principal of and interest on this Bond, and shall give all notices with respect to this Bond, only to Cede & Co. or other nominee in accordance with the operational arrangements of The Depository Trust Company or other securities depository as agreed to by the City. This Bond is one of an issue in the aggregate principal amount of $3,080,000 (the “Series 2012 Bonds”), all of like date of original issue and tenor except as to serial number, date, denomination, maturity date, interest rate and redemption privilege, issued for the purpose of refunding certain valid outstanding general obligation bonds of the City, all pursuant to Title 7, Chapter 7, Part 43, Montana Code Annotated, and resolutions duly adopted by the City Commission, including a resolution adopted on June 4, 2012 (the “Resolution”), and in full conformity with the Constitution and laws of the State of Montana thereunto enabling. The Series 2012 Bonds are issuable only as fully registered bonds of single maturities, in denominations of $5,000 or any integral multiple thereof. Series 2012 Bonds having stated maturities on July 1, 2019 and earlier years are not subject to redemption, but the Series 2012 Bonds having stated maturity dates on July 1, 2020 and 2021 are each subject to redemption, at the option of the City, in whole or in part, and if in part from such stated maturities and in such principal amounts as the City may designate in writing to the Registrar (or, if no designation is made, in inverse order of maturities and within a maturity in $5,000 principal amounts selected by the Registrar by lot or other manner it deems fair), on July 1, 2019, and any date thereafter, at a price equal to the principal amount thereof to be redeemed plus interest accrued to the date of redemption and without premium. At least forty-five days prior to the redemption date, the City will provide or cause to be provided to the Registrar a request that the Registrar mail notice of redemption. At least thirty days before the date specified for redemption, the Registrar will cause notice of redemption to be mailed to the registered owner of any Series 2012 Bond to be redeemed at the owner’s address as it appears on the bond register maintained by the Registrar, but no defect in or failure to give such mailed notice shall affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. Notice of redemption having been given as aforesaid, the Series 2012 Bonds or portions of Series 2012 Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the City shall default in the payment of the redemption price) such Series 2012 Bonds or portions of Series 2012 Bonds shall cease to bear interest. Upon surrender to the Registrar of any Series 2012 Bond in a denomination greater than $5,000 which has been redeemed in part, a new Series 2012 Bond or Series 2012 Bonds of the same tenor will be delivered to the owner without charge, representing the unredeemed principal amount of such Series 2012 Bond. The Series 2012 Bonds having a stated maturity in 2016 are subject to mandatory sinking fund redemption on July 1 in the year and the principal amounts set forth below in $5,000 principal amounts selected by the Registrar, by lot or other manner it deems fair, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date: A-2 Stated Maturity of Term Bonds (July 1) Sinking Fund Payment Date (July 1) Principal Amount on Sinking Fund Payment Date 2016 2015 $240,000 If the term bond with a stated maturity in 2016 is not previously purchased by the District in the open market, in respect of the term bond maturing in 2016, $245,000 in principal amount would remain to mature in 2016. The Series 2012 Bonds have been designated by the City as “qualified tax-exempt obligations” pursuant to Section 265(b) of the Internal Revenue Code of 1986, as amended. As provided in the Resolution and subject to certain limitations set forth therein, this Series 2012 Bond is transferable upon the books of the City at the principal office of the Registrar, by the registered owner hereof in person or by his attorney duly authorized in writing, upon surrender hereof together with a written instrument of transfer satisfactory to the Registrar duly executed by the registered owner or his attorney; and may also be surrendered in exchange for Series 2012 Bonds of other authorized denominations. Upon any such transfer or exchange, the City will cause a new Series 2012 Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. The City and the Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the City nor the Registrar shall be affected by any notice to the contrary. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the Constitution and laws of the State of Montana to be done, to exist, to happen and to be performed precedent to and in the issuance of this Bond, in order to make it a valid and binding general obligation of the City according to its terms, have been done, do exist, have happened and have been performed in regular and due time, form and manner as so required; and that an annual ad valorem tax will be duly levied on all of the taxable property in the City sufficient to pay the interest hereon when it falls due and also to pay and discharge the principal of this Bond at maturity. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon shall have been executed by the Registrar by the manual signature of one of its authorized representatives. A-3 IN WITNESS WHEREOF, City of Bozeman, State of Montana, by its City Commission, has caused this Bond to be executed by the facsimile signatures of the Mayor, the Finance Director and the City Clerk. (Facsimile Signature) Mayor (Facsimile Seal) (Facsimile Signature) Finance Director (Facsimile Signature) City Clerk Dated: CERTIFICATE OF AUTHENTICATION This is one of the Series 2012 Bonds delivered pursuant to the Resolution mentioned within. WELLS FARGO BANK, NATIONAL ASSOCIATION, as Registrar By ___________________________________ Authorized Representative A-4 The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM – as tenants in common UTMA. . . . . . .Custodian. . . . . . (Cust) (Minor) TEN ENT – as tenants by the entireties under Uniform Transfers to Minors Act. . . . . . . . . . . . . . . . . . (State) JT TEN – as joint tenants with right of survivorship and not as tenants in common Other abbreviations may also be used. ____________________________________ ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________________ the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints __________________________________________ attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: ________________________________ PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: NOTICE: The signature(s) to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration, enlargement or any change whatsoever. SIGNATURE GUARANTEE: Signature(s) must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Bond Registrar, which requirements include membership or participation in STAMP or such other “signature guaranty program” as may be determined by the Bond Registrar in addition to or in substitution for STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-5 EXHIBIT B THE DEPOSITORY TRUST COMPANY BLANKET ISSUER LETTER OF REPRESENTATION B-1