HomeMy WebLinkAbout20- Sewer System Revenue Bond (DNRC Water Pollution Control) Series 2020B$8,086,000
Sewer System Revenue Bonds
(DNRC Water Pollution Control State Revolving Loan Program),
Consisting of $300,000 Subordinate Lien Taxable Series 2020A Bond,
and $7,786,000 Series 2020B Bond
City of Bozeman, Montana
Transcript Index
Date of Closing: July 22, 2020
Issuer: City of Bozeman, Montana
Chris Mehl, Mayor
Jeff Mihelich, City Manager
Kristin Donald, City Finance Director
Mike Maas, City Clerk
Purchaser: Water Pollution Control State Revolving Fund
Department of Natural Resources and Conservation
Trustee: U.S. Bank National Association
Bond Counsel: Dorsey & Whitney LLP
Resolutions
1. Resolution No. 4220, Resolution Relating to $9,500,000 Sewer System Revenue Bond
(DNRC Water Pollution Control State Revolving Loan Program), Series 2009;
Authorizing the Issuance and Fixing the Terms and Conditions Thereof
2. Resolution No. 4234, Resolution Relating to $1,973,000 Sewer System Revenue Bonds
(DNRC Water Pollution Control State Revolving Loan Program), Consisting of $390,700
Subordinate Lien Taxable Series 2010A Bond, $359,300 Series 2010B Bond, and
$1,223,000 Series 2010C Bond; Authorizing the Issuance and Fixing the Terms and
Conditions Thereof
3. Resolution No. 4245, Resolution Relating to $9,500,000 Sewer System Revenue Bond
(DNRC Water Pollution Control State Revolving Loan Program), Series 2010D;
Authorizing the Issuance and Fixing the Terms and Conditions Thereof
4. Resolution No. 4254, 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
5. Resolution No. 4299, Resolution Relating to $9,573,000 Sewer System Revenue Bond
(DNRC Water Pollution Control State Revolving Loan Program), Series 2010H;
Authorizing the Issuance and Fixing the Terms and Conditions Thereof
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6. Resolution No. 4462, Resolution Relating to First Amended and Restated Sewer System
Revenue Bonds (DNRC Water Pollution Control State Revolving Loan Program);
Amending Authorizing Resolutions Adopted January 19, 2010, February 16, 2010, May
3, 2010, and November 1, 2010 and Bonds
7. Letter of Approval for State Revolving Fund Loan Program in Lieu of Commitment
Agreement, dated June 4, 2015
8. Resolution No. 5183, Resolution Relating to $15,149,000 Sewer System Revenue Bonds
(DNRC Water Pollution Control State Revolving Loan Program), Consisting of $300,000
Subordinate Lien Taxable Series 2020A Bond, $7,786,000 Series 2020B Bond, and
$7,063,000 Series 2020C Bond; Authorizing the Issuance and Fixing the Terms and
Conditions Thereof
Rate Documents
9. Minutes of August 19, 2019 City Commission proposing wastewater rate increase
10. Resolution No. 5066, A Resolution of the City Commission of the City of Bozeman,
Montana, Establishing Rates for Wastewater Service for the City of Bozeman
Closing Documents
11. Certificate as to Satisfaction of Conditions Precedent for Issuance of Additional Parity
Bonds
12. Certificate as to Organization
13. Officers’ Certificate
14. Rebate Certificate
15. Certificate and Receipt of City Finance Director
16. Certificate and Receipt of Purchaser
17. Specimen 2020A Bond
18. Specimen 2020B Bond
19. IRS Form 8038-G
20. Bond Counsel Opinion – 2020A
21. Bond Counsel Opinion – 2020B
22. Loan Disbursement Requests
BOND RESOLUTION
Relating to
$9,500,000
SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM),
SERIES 2009
CITY OF BOZEMAN
Adopted: November 16, 2009
TABLE OF CONTENTS
RECITALS ...................................................................................................................................... 1
ARTICLE I DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES .................... 2
Section 1.1. Definitions ....................................................................................................... 2
Section 1.2. Other Rules of Construction ........................................................................... 6
Section 1.3. Appendices ...................................................................................................... 7
ARTICLE II REPRESENTATIONS AND COVENANTS ........................................................... 7
Section 2.1. Representations ............................................................................................... 7
Section 2.2. Covenants ........................................................................................................ 9
ARTICLE III USE OF PROCEEDS; THE 2009 PROJECT. ....................................................... 13
Section 3.1. Use of Proceeds ............................................................................................. 13
Section 3.2. The 2009 Project ........................................................................................... 13
Section 3 .3. 2009 Project Representations and Covenants ............................................... 14
Section 3.4. Completion or Cancellation or Reduction of Costs of the 2009 Project.. ..... 15
ARTICLE IV THE 2009 LOAN ................................................................................................... 15
Section 4.1. The 2009 Loan; Disbursement of Loan ........................................................ 15
Section 4.2. Commencement of Loan Term ..................................................................... 17
Section 4.3. Termination of Loan Term ............................................................................ 17
Section 4.4. Loan Closing Submissions ............................................................................ 18
ARTICLE V REPAYMENT OF LOAN ...................................................................................... 18
Section 5.1. Repayment of Loan ....................................................................................... 18
Section 5.2. Additional Payments ..................................................................................... 19
Section 5.3. Prepayments ....................................................................................... : .......... 19
Section 5.4. Obligations of Bonower Unconditional ....................................................... 20
Section 5.5. Limited Liability ........................................................................................... 20
ARTICLE VI OTHER AGREEMENTS OF BORROWER ........................................................ 20
Section 6.1. Maintenance of System; Liens ...................................................................... 20
Section 6.2. Maintenance of Existence; Merger, Consolidation, Etc.; Disposition of
Assets ................................................................................................................................ 20
Section 6.3. Covenants Relating to the Tax-Exempt Status of the State Bonds ............... 21
Section 6.4. Competing Service ........................................................................................ 23
Section 6.5. Billing ........................................................................................................... 23
Section 6.6. Remedies ....................................................................................................... 24
Section 6.7. Rate Covenant ............................................................................................... 24
ARTICLE VII INDEMNIFICATION OF DNRC AND DEQ ..................................................... 25
ARTICLE VIII ASSIGNMENT ................................................................................................... 25
Section 8.1. Assigmnent by Borrower .............................................................................. 25
Section 8.2. Assignment by DNRC .................................................................................. 25
Section 8.3. State Refunding Bonds ................................................................................. 25
ARTICLE IX THE SERIES 2009 BOND .................................................................................... 25
Section 9 .1. Authorization ................................................................................................ 25
Section 9.2. Outstanding Bonds ........................................................................................ 26
Section 9.3. Sources of Funding ....................................................................................... 26
Section 9.4. Net Revenues Available ................................................................................ 26
Section 9 .5. Issuance and Sale of the Series 2009 Bond .................................................. 26
Section 9.6. Terms ............................................................................................................ 26
Section 9. 7. Negotiability, Transfer and Registration ....................................................... 26
Section 9.8. Execution and Delivery ................................................................................. 27
Section 9.9. Form .............................................................................................................. 27
ARTICLE X PRIORITIES AND ADDITIONAL SEWER DEBT. ............................................. 27
Section 10.1. Priority of Bond Payments .......................................................................... 27
Section 10.2. Refunding Revenue Bonds ......................................................................... 27
Section 10.3. Other Parity Bonds ...................................................................................... 28
Section 10.4. Subordinate Obligations .............................................................................. 28
ARTICLE XI SEWER SYSTEM FUND ..................................................................................... 29
Section 11.1. Bond Proceeds and Revenues Pledged and Appropriated .......................... 29
Section 11.2. Acquisition and Construction Account.. ..................................................... 29
Section 11.3. Operating Account ...................................................................................... 30
Section 11.4. Revenue Bond Account .............................................................................. 30
Section 11.5. Reserve Account ......................................................................................... 31
Section 11.6. Replacement and Depreciation Account.. ................................................... 31
Section 11.7. Surplus Account.. ........................................................................................ 32
Section 11.8. Deposit and Investment of Funds ............................................................... 32
ARTICLE XII TAX MATTERS .................................................................................................. 33
Section 12.1. Use of 2009 Project and System ................................................................. 33
Section 12.2. General Covenant.. ...................................................................................... 33
11
Section 12.3. Arbitrage Certification ................................................................................ 33
Section 12.4. Arbitrage Rebate ......................................................................................... 33
Section 12.5. Information Reporting ............................................................................... 34
Section 12.6. "Qualified Tax-Exempt Obligations" ......................................................... 34
ARTICLE XIII CONTINUING DISCLOSURE .......................................................................... 34
ARTICLE XIV DEFEASANCE ................................................................................................... 35
Section 14.1. General ........................................................................................................ 35
Section 14.2. Maturity ....................................................................................................... 35
Section 14.3. Prepayment ................................................................................................. 35
Section 14.4. Escrow ......................................................................................................... 35
ARTICLE XV SUPPLEMENTAL RESOLUTIONS .................................................................. 36
Section 15.1. General ........................................................................................................ 36
Section 15.2. Consent of Holders ................................................................. ; ................... 36
Section 15.3. Notice .......................................................................................................... 36
Section 15.4. Manner of Consent.. .................................................................................... 37
ARTICLE XVI MISCELLANEOUS ........................................................................................... 37
Section 16.1. Notices ........................................................................................................ 3 7
Section 16.2. Binding Effect ............................................................................................. 3 8
Section 16.3. Severability ····································.····························································· 38
Section 16.4. Applicable Law ........................................................................................... 38
Section 16.5. Captions; References to Sections ................................................................ 38
Section 16.6. No Liability of Individual Officers, Commissioners .................................. 38
Section 16.7. Payments Due on Holidays ......................................................................... 38
Section 16.8. Right of Others to Perform Borrower's Covenants .................................... 38
Section 16.9. Authentication of Transcript.. ..................................................................... 38
Section 16.10. Effective Date ........................................................................................... 40
APPENDIX A-Description of the Project.. .............................................................................. A-1
APPENDIX B-Form of Series 2009 Bond ................................................................................ B-1
APPENDIX C-Additional Representations and Covenants ...................................................... C-1
lll
RESOLUTION NO. 4220
RESOLUTION RELATING TO $9,500,000 SEWER SYSTEM
REVENUE BOND (DNRC WATER POLLUTION CONTROL
STA TE REVOLVING LOAN PROGRAM), SERIES 2009;
AUTHORIZING THE ISSUANCE AND FIXING THE TERMS
AND CONDITIONS THEREOF
WHEREAS, pursuant to the Montana Water Pollution Control State Revolving Fund Act,
Montana Code Annotated, Title 75, Chapter 5, Part 11, as amended (the "Act"), the State of
Montana (the "State") has established a revolving loan program (the "Program") to be
administered by the Department of Natural Resources and Conservation of the State of Montana,
an agency of the State (the "DNRC"), and by the Department of Environmental Quality of the
State of Montana, an agency of the State (the "DEQ"), and has provided that a revolving water
pollution control 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 limited to, all federal grants for capitalization of a state water pollution control
revolving fund under the Federal Water Pollution Control Act (also known as the Clean Water
Act) (the "Clean Water Act"), all repayments of assistance awarded from the Revolving Fund,
interest on investments made on money in the Revolving Fund and payments of principal of and
interest on loans made from the Revolving Fund; and
WHEREAS, the 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 Department of Environmental Quality and the Department of Natural Resources and
Conservation; and
WHEREAS, the City of Bozeman, Montana (the "Borrower"), has applied to the DNRC
for a loan (the "Loan") from the Revolving Fund to enable the Borrower to finance, refinance or
reimburse itself for the costs of the 2009 Project ( as hereinafter defined) which will carry out the
purposes of the Clean Water Act; and
WHEREAS, the Borrower is authorized under applicable laws, ordinances and
regulations to adopt this Resolution and to issue the Series 2009 Bond (as hereinafter defined) to
evidence the Loan for the purposes set forth herein; and
WHEREAS, the DNRC will fund the Loan (as hereinafter defined) entirely with proceeds
of EPA federal capitalization grants, either directly or as that portion of Recycled Money (as
hereinafter defined) that is allocable solely to EPA federal capitalization grants.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF
THE BORROWER, AS FOLLOWS:
ARTICLE I
DEFrNITIONS, RULES OF CONSTRUCTION AND APPENDICES
Section 1.1. Definitions. In this Resolution, unless a different meaning clearly
appears from the context:
"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 within the Fund
established pursuant to Sections 11.1 and 11.2.
"Act" means Montana Code Annotated, Title 75, Part 5, Chapter 11, as amended
from time to time.
"Administrative Expense Surcharge" means a surcharge on the Loan charged by
the DNRC to the Borrower equal to seventy-five hundredths of one percent (0.75%) per annum
on the outstanding principal amount of the Loan, payable by the Borrower on the same dates that
payments of interest on the Loan are due.
"Authorized DNRC Officer" means the Director or Deputy Director of the
DNRC, and, when used with reference to an act or document, also means any other individual
authorized by resolution of the Department of Natural Resources and Conservation to perform
such act or sign such document. If authorized by the Department of Natural Resources and
Conservation, an Authorized DNRC Officer may delegate all or a portion of his authority as an
Authorized DNRC Officer to another individual, and such individual shall be deemed an
Authorized DNRC Officer for purposes of exercising such authority.
"Bond Counsel" means any Counsel acceptable to the DNRC which is nationally
recognized as bond counsel. Counsel is nationally recognized as bond counsel if it has rendered
a legal opinion as to the validity and enforceability of state or municipal bonds and as to the
exclusion of interest thereon from gross income for federal income tax purposes (short-term
issues excluded) during the two-year period preceding the date of determination.
"Bonds" means the Series 2009 Bond and any Sewer Debt to be issued on a parity
therewith pursuant to Article X, excluding Subordinate Obligations.
"Borrower" means the City of Bozeman, Montana and any permitted successor or
assign, as described below.
"Business Day" means any day which is not a Saturday or Sunday and is not a
day on which banks in Montana are authorized or required by law to close.
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"Clean Water Act" means the Federal Water Pollution Control Act, 33 U.S.C. §§
1251-1387, as amended, i].nd all regulations, rules and interpretations issued by the EPA
thereunder.
"Closing" means the date of delivery of the Series 2009 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 Resolution and the Series 2009 Bond. If no Collateral Documents secure such obligations,
any reference to Collateral Documents in this Resolution shall be without effect.
"Committed Amount" means the amount of the Loan committed to be lent by the
DNRC to the Borrower pursuant to Section 4.1, as such amount may be reduced pursuant to
Sections 3.2 and 3.4.
"Consultant" means a nationally recognized consultant or firm of consultants, or
an independent engineer or finn 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 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 Borrower 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 referred to in clause (1) or (2) above.
"DEQ" means the Department of Environmental Quality of the State of Montana,
an agency of the State, or any successor to its powers, duties and obligations under the Act or the
EPA Agreements.
"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 Act.
"Enabling Act" means Montana Code Annotated, Title 7, Chapter 7, Parts 44 and
45, as amended, which authorizes the Borrower to own and operate the System, to undertake the
2009 Project and to issue the Series 2009 Bond to finance all or a portion of the costs of the 2009
Project.
3
"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 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 Clean Water 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.
"Fund" means the Sewer System Fund established pursuant to Section 11.1.
"Governmental Unit" means governmental unit as such tennis 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" or "2009 Loan" means the 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 2009 Project payable under the Program.
"Loan Loss Reserve Surcharge" means a fee equal to one percent (1 %) per annum
on the outstanding principal amount of the Loan, payable on the same dates that payments of
interest on the Loan are due.
"Loan Repayments" means periodic installments of principal and interest by
Borrower in repayment of the Loan, at the rate and times specified in Article V.
"Loan Term" means that period of time commencing and ending as set in
Sections 4.2 and 4.3.
"Net Revenues" means the entire amount of the gross revenues of the System (as
described in Section 11.1) remaining upon each such monthly apportionment, after crediting to
the Operating Account the amount required hereby, including sums required to maintain the
Operating Reserve in the minimum amount herein stated.
"Operating Account" means the account within the Fund established pursuant to
Sections 11.1 and 11.3.
"Operating Expenses" means those expenses of the System defined as such in
Section 11.3.
"Operating Reserve" means the reserve to be maintained in the Operating
Account as required by Section 11.3.
4
"Opinion of Counsel" means a written opinion of Counsel.
"Outstanding Bonds" shall have the meaning assigned in Section 9.2.
"Person" means any Private Person or Public Entity.
"P1ivate Person" means an individual, corporation, partnership, association, joint
venture, joint stock company or unincorporated organization, except a Public Entity.
"Program" means the Water Pollution Control State Revolving Loan Program
established by the Act.
"Project" means the costs of designing, engineering, acquiring, constructing,
installing, improving, or enlarging the System, or any part thereof, financed, refinanced or the
cost of which is being reimbursed to the Borrower in part with proceeds of the Bonds or other
funds of the Borrower, including the 2009 Project.
"Public Entity" means a municipality, city, county, school district, political or
administrative subdivision of State government, irrigation district, drainage district or other
public body established by State law.
"Recycled Money" means payments and prepayments of principal of any loans
made under the Program, and any other amounts transferred to the Principal Subaccount in the
Revenue Subaccount in the State Allocation Account.
"Regulations" means the Treasury Regulations, whether final, temporary or
proposed, promulgated under the Code or otherwise applicable to the Series 2009 Bond.
"Replacement and Depreciation Account" means the account within the Fund
established pursuant to Sections 11.1 and 11.6.
"Reserve Account" means the account within the Fund established pursuant to
Sections 1 I. 1 and 11.5.
"Reserve Requirement" means, as of the date of calculation, an amount equal to
the maximum amount of principal and interest payable on the Bonds in any future fiscal year
(giving effect to mandatory sinking fund redemption, if any).
"Reserved Amounts" means any undisbursed Committed Amount which will or
may be required to pay any remaining costs of the 2009Project upon completion thereof as
provided in Section 3.4(a).
"Resolution" means this Resolution as it may from time to time be amended or
supplemented in accordance with its terms.
"Revenue Bond Account" means the account within the Fund established
pursuant to Sections 11.1 and 11.4.
5
"Series 2009 Bond" means the $9,500,000 Sewer System Revenue Bond (DNRC
Water Pollution Control State Revolving Loan Program), Series 2009, issued by the City to the
DNRC to evidence the Loan.
"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.e., 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.
"State" means the State of Montana.
"State Bonds" means the State's General Obligation Bonds (Water Pollution
Control State Revolving Fund Program), issued pursuant to the Indenture.
"Subordinate Obligations" means bonds or other obligations issued pursuant to
Section 10.4 hereof.
"Supplemental Resolution" means any other resolution supplemental to the
Resolution.
"Surplus Account" means the account within the Fund established pursuant to
Sections 11.1 and 11. 7.
"Surplus Net Revenues" means 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 2009 Project.
"2009 Loan" shall have the same meaning as the Loan.
"2009 Project" means the facilities, improvements and activities financed,
refinanced or the cost of which is being reimbursed to the Borrower with proceeds of the Loan,
described in Exhibit A hereto.
"Trustee" means U.S. Bank National Association, in Seattle, Washington, or any
successor trustee under the Indenture.
Section 1.2. Other Rules of Construction. For all purposes of this Resolution,
except where the context clearly indicates otherwise:
(a) All accounting tenns not otherwise defined herein have the meanings assigned
to them in accordance with generally accepted government accounting standards.
G
(b) Tenns in the singular include the plural and vice versa.
(c) All references to time shall refer to Helena, Montana time, unless otherwise
provided herein.
( d) All references to mail shall refer to first-class mail postage prepaid.
(e) Words of the masculine gender shall be deemed and construed to include
correlative words of the feminine and neuter genders.
(f) "Or" is not exclusive, but is intended to permit or encompass one, more or all
of the alternatives conjoined.
Section 1.3. Appendices. Attached to this Resolution and hereby made a part
hereof are the following Appendices:
Appendix A: a description of the 2009 Project;
Appendix B: the form of the Series 2009 Bond; and
Appendix C: additional agreements and representations of the Borrower.
ARTICLE II
REPRESENTATIONS AND COVENANTS
Section 2.1. Representations. The Borrower represents as follows:
(a) Organization and Authority. The Borrower:
(i) is duly organized and validly existing as a municipal corporation of
the State;
(ii) 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 Resolution and to enter into the
Collateral Documents and to issue the Series 2009 Bond and to carry out and
consummate all transactions contemplated by this Resolution, the Bond and the Collateral
Documents;
(iii) is a Governmental Unit and a Public Entity;
(iv) has detennined it has sufficient Net Revenues to satisfy the rate
covenant set forth in Section 6.7 below; and
(v) has taken all proper action to authorize the execution, delivery and
perfonnance of its obligations under this Resolution, the Series 2009 Bond and the
7
Collateral Documents and the incurrence of the Debt evidenced by the Series 2009 Bond
in the maximum amount of the Committed Amount.
(b) Pending Litigation. There is no litigation or proceeding pending, or to the
knowledge of the Bonower 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 this
Resolution, the Series 2009 Bond and the Collateral Documents, or the financial condition of the
Borrower, or the transactions contemplated by this Resolution, the Bond and the Collateral
Documents or the validity and enforceability of this Resolution, the Series 2009 Bond and the
Collateral Documents. No referendum petition has been filed with respect to any resolution or
other action of the Borrower relating to the 2009 Project, the Series 2009 Bond or any Collateral
Documents and the period for filing any such petition will have expired before issuance of the
Bond.
( c) Borrowing Legal and Authorized. The adoption of this Resolution, the
execution and delivery of the Series 2009 Bond and the Collateral Documents and the
consummation of the transactions provided for in this Resolution, the Series 2009 Bond and the
Collateral Documents and compliance by the Borrower with the provisions of this Resolution,
the Series 2009 Bond and the Collateral Documents:
(i) are within the powers of the Borrower and have been duly authorized
by all necessary action on the part ofthe Borrower; and
(ii) do not and wiii not resuit in any breach of any of the ierms, 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 this 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 Bond and the Collateral Documents, would constitute a default
under this 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 terms hereof or of the Series 2009 Bond and the Collateral Documents.
( e) Governmental Consent. The Borrower has obtained or made all permits,
findings and approvals required to the date of adoption of this Resolution by any governmental
body or officer for the making and performance by the Borrower of its obligations under this
Resolution, the Series 2009 Bond and the Collateral Documents (including any necessary sewer
8
rate increase) or for the 2 009 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 Resolution,
issuing the Bond or entering into the Collateral Documents and the performance of the
Borrower's obligations hereunder and thereunder. ff 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 this Resolution and the Collateral Documents, including approving any necessary sewer rate
mcreases.
(f) Binding Obligation. This Resolution, the Se1ies 2009 Bond and any
Collateral Documents to which the Borrower is a party are the valid and binding 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 2009 Project. The 2009 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 provisions of Article III of this 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 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 this Resolution, the Series 2009 Bond and the Collateral
Documents and to pledge any revenues or other property pledged to the payment of the Bond.
(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 perfonn its obligations under this
Resolution, the Series 2009 Bond and the Collateral Documents.
Section 2.2. Covenants.
9
(a) Insurance. 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. Nothing herein shall be construed to prohibit or preclude the Borrower from self-
insuring or participating in a self-insurance program in compliance with the provisions of
Montana law. All such insurance policies shall name the DNRC as an additional insured to
extent permitted or available under the policy or program of insurance. 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 2.2(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 2.2(a).
(b) Right of Inspection and Notice of Change of Location. The DNRC, the D EQ
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 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 this
Resolution, the Series 2009 Bond and the Collateral Documents and to realize thereon, and
record and file and re-record and refile 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 this Resolution, the
Series 2009 Bond and the Collateral Documents.
( d) Maintenance of Security, if Any; Recordation of Interest.
(i) The Borrower shall, at its expense, take all necessary action to
maintain and preserve the lien and security interest of this Resolution and the Collateral
Documents so long as any amount is owing under this Resolution or the Series 2009
Bond;
(ii) The Borrower shall forthwith, after the execution and delivery of the
Series 2009 Bond and thereafter from time to time, cause this Resolution and any
Collateral Documents granting a security interest in revenues or real or personal prope1iy
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
iO
security interest in them granted by this Resolution and, from time to time, shall perform
or cause to be perfom1ed 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
(iii) Except to the extent it is exempt therefrom, the BotTower 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 (ii), 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 2009 Bond and the Collateral
Documents and the documents described in subparagraph (ii).
(e) Additional Agreements. The Borrower covenants to comply with ali
representations, covenants, conditions and agreements, if any, set forth in Appendix C hereto.
(f) Financial lnfonnation. The Borrower agrees that for each fiscal year it shall
furnish to the DNRC and the DEQ, promptly when available:
(1) the preliminary budget for the System, with items for the Project
shown separately; and
(2) when adopted, the final budget for the System, with items for the
Project shown separately.
The Borrower will cause proper and adequate books of record and account to be
kept showing complete and correct entries of all receipts, disbursements and other transactions
relating to the System, the monthly gross revenues derived from its operation, and the
segregation and application of the gross revenues in accordance with this Resolution, in such
reasonable detail as may be detennined by the Borrower in accordance with generally accepted
governmental accounting practice and principles. It will cause such books to be maintained on
the basis of the same fiscal year as that utilized by the Borrower. The Borrower shall, within 180
days after the close of each fiscal year, cause to be prepared and supply to the DNRC a financial
report with respect to the System for such fiscal year. The report shall be prepared at the
direction of the financial officer of the Borrower in accordance with applicable generally
accepted governmental accounting principles and, in addition to whatever matters may be
thought proper by the financial officer to be included therein, shall include the following:
(A) A statement in detail of the income and expenditures of the System for the
fiscal year, identifying capital expenditures and separating them from operating
expenditures;
(B) A balance sheet as of the end of the fiscal year;
(C) The number of premises connected to the System at the end of the fiscal year;
11
(D) The amount on hand in each account of the Fund at the end of the fiscal year;
(E) A list of the insurance policies and fidelity bonds in force at the end of the
fiscal year, setting out as to each the amount thereof, the risks covered thereby, the name
of the insurer or surety and the expiration date of the policy or bond; and
(F) A detennination that the report shows full compliance by the Borrower with
the provisions of this Resolution during the fiscal year covered thereby, including proper
segregation of the capital expenditures from operating expenses, maintenance of the
required balance in the Revenue Bond Account (as hereinafter defined), and receipt of
Net Revenues during each fiscal year at least equal to 125% of the maximum amount of
principal and interest payable on outstanding Bonds in any subsequent fiscal year, or, if
the report should reveal that the revenues have been insufficient for compliance with this
Resolution, or that the methods used in accounting for such revenues were contrary to
any provision of this Resolution, the report shall include a full explanation thereof,
together with recommendations for such change in rates or accounting practices or in the
operation of the System as may be required.
The Borrower shall also have prepared and supplied to the DNRC and the DEQ,
within 270 days of the close of every other fiscal year, an audit report prepared by an
independent certified public accountant or an agency of the state in accordance with generally
accepted governmental accounting principles and practice with respect to the financial
statements and records of the System. The audit report shall include an analysis of the
Borrower's compliance with the provisions of this Resolution.
(g) Project Accounts. The Borrower shali maintain 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, the Borrower shall make
available to the EPA such records as the EPA reasonably requires to review and determine
compliance with Title VI of 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 Loan and
the 2009 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 infonnal arrangement, acquire bonds issued by the State under the
Indenture in an amount related to the amount of the Series 2009 Bond.
12
ARTICLE III
USE OF PROCEEDS; THE 2009 PROJECT
Section 3.1. Use of Proceeds. The Bonower shall apply the proceeds of the Loan
from the DNRC solely as follows:
(a) The Borrower shall apply the proceeds of the Loan solely to the
financing, refinancing or reimbursement of the costs of the 2009 Project as set forth in
Appendix A hereto and this Section 3.1. The Loan will be disbursed in accordance with
Article IV hereof and A1iicle VII of the Indenture. If the 2009 Project has not been
completed prior to Closing, the Borrower shall, as quickly as reasonably possible,
complete the 2009 Project and expend proceeds of the Series 2009 Bond to pay the costs
of completing the 2009 Project.
(b) No portion of the proceeds of the Loan shall be used to reimburse the
Borrower for costs paid prior to the date of adoption of this 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 2009
Project costs paid prior to the date of adoption of this Resolution and in a prior fiscal year
of the Borrower, the Borrower represents that at the time it incurred such costs it intended
to finance them with tax-exempt debt or a loan under a state revolving fund program such
as the Program.
(c) Any Debt to be refinanced with proceeds of the Loan was incurred
after March 7, 1985, or a Project the construction or acquisition of which began after
March 7, 1985. No proceeds of the Loan shall be used for the purpose ofrefinancing 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 2009 Project. Set forth in Appendix A to this Resolution is a
description of the 2009 Project, which describes the property which has been or is to be acquired,
installed, constructed or improved and the other activities, if any to be funded from the Loan (the
2009 Project may consist of more than one facility or activity). The 2009 Project may be
changed and the description thereof in Appendix A may be amended from time to time by the
Borrower but only after deli very 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 2009 Project, an increase or decrease in
the amount of Loan proceeds which will be required to complete the 2009 Project and
whether the change will materially accelerate or delay the construction schedule for the
2009 Project;
13
(b) A written consent to such change in the 2009 Project by an Authotized
DNRC Officer; and
(c) An Opinion or Opinions of Bond Counsel stating that the 2009
Project, as constituted after such amendment, is, and was at the time the State Bonds were
issued, eligible for financing under the Act and is, and was at the time the Series 2009
Bond was issued, eligible for financing under the Enabling Act, such amendment will not
violate the Act or the Enabling Act and such amendment will not adversely affect the
exclusion of interest on the State Bonds or the Series 2009 Bond 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 Loan 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 sole
and absolute discretion, and adoption by the governing body of the Borrower of a resolution
amendatory of or supplementary to this 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 this resolution as it may be so amended
or supplemented are true as of the date of closing of the additional loan. 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
Loan to pay Project Costs or as to the availability of additional funds under the Program to
increase the principal amount of the Loan.
Section 3.3. 2009 Project Representations and Covenants. The Borrower hereby
represents to and covenants with the DNRC that:
(a) all construction of the 2009 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 2009 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 l 00%
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 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;
14
(d) the 2009 Project is a project of the type permitted to be financed under
the Enabling Act, the Act and the Program and Title VI of the Clean Water Act; and
(e) the Borrower will undertake the 2009 Project promptly after the
Closing Date and will cause the 2009 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 2009 Project will be substantially completed by October 15, 2011 (the "Estimated
Completion Date").
Section 3.4. Completion or Cancellation or Reduction of Costs of the 2009
Project.
(a) Upon completion of the 2009 Project, the BoITower shall deliver to the
DNRC a certificate stating that the 2009 Project is complete, stating the amount, if any,
of the Reserved Amounts, and releasing the remaining amount, if any, of the Committed
Amount. If any Reserved Amount is not later needed, the Bo1Tower shall so inform the
DNRC and release such amount. If Appendix A describes two or more separate projects
as making up the 2009 Project, a separate completion certificate shall be delivered for
each.
(b) If all or any portion of the 2009 Project is cancelled or cut back or its
costs are reduced or for any other reason the B01Tower will not require the full
Committed Amount, the Borrower shall promptly notify the DNRC in writing of such
fact and release the portion of the Committed Amount which will not be needed.
ARTICLE IV
THE 2009 LOAN
Section 4.1. The 2009 Loan; Disbursement of Loan. The DNRC has agreed to
lend to the Borrower, from time to time as the requirements of this Section 4.1 are met, an
amount up to $9,500,000 (the "Committed Amount") for the purposes of financing, refinancing
or reimbursing the Borrower for a portion of the costs of the 2009 Project and paying costs of
issuance of the Series 2009 Bond; provided the DNRC shall not be required to loan any proceeds
of the State Bonds to the Borrower after 360 days following the Estimated Completion Date.
The Committed Amount may be reduced as provided in Sections 3.2 and 3.4. The Loan shall be
disbursed as provided in this Section 4.1. The DNRC intends to disburse the Loan through the
Trustee.
(a) In consideration of the issuance of the Series 2009 Bond by the
Borrower, the DNRC shall make, or cause the Trustee to make, a disbursement of all or a
portion of the Loan upon receipt of the following documents:
( l) an Opinion of Bond Counsel as to the validity and
enforceability of the Series 2009 Bond and the security therefor and stating in
effect that interest on the Series 2009 Bond is not includable in gross income of
15
the owner thereof for purposes of federal income taxation, in fom1 and substance
satisfactory to the DNRC;
(2) the Series 2009 Bond, fully executed and authenticated;
(3) a certified copy of this Resolution;
( 4) any other security instruments or documents required by the
DNRC or DEQ as a condition to their approval of the Loan;
(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 incurred 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 in a
previous fiscal year of the Borrower, that the Borrower intended at the time it
incurred such costs to finance them with tax-exempt debt or a loan under a state
revolving fund program such as the Program;
(6) the items required by the Indenture for the portion of the Loan
to be disbursed at Closing;
(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).
(b) In order to obtain a disbursement of a portion of the Loan to pay costs
of the 2009 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.
( c) On the date of Closing, the Trustee is authorized to make an initial
disbursement of the Loan in an amount sufficient to pay the Administration Fee. The
DNRC will retain, and not physically advance to the Borrower, an amount equal to the
sum of Administration Fee, and the Borrower acknowledges and agrees that such
retainage constitutes a disbursement of proceeds of the Loan in an amount equal to the
amount retained by the DNRC.
(d) For refinancings, a disbursement schedule complying with the
requirements of the Clean Water Act shall be established by the DNRC and the Borrower
at Closing. The Trustee shall disburse Loan amounts directly to the holder of the debt
being refinanced according to such schedule. If the Borrower should repay all or a
16
po1iion of the debt to be refinanced from other sources or should otherwise not need any
portion of the Loan which was to have been used to refinance such debt, it shall infonn
the DNRC and the Trustee of such fact pursuant to Section 3.4(b) and a new
disbursement schedule shall be drawn up by the DNRC. The DNRC shall obtain a
receipt from the holder of the debt being refinanced for each disbursement made to pay or
prepay a portion of such debt.
( e) If all or a portion of a Loan is made to reimburse a Borrower for 2009
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 the
Closing.
(f) Notwithstanding anything else provided herein, the Trustee shall not
be obligated to disburse the Loan 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(6) of the Indenture, but may do so in its discretion. The Borrower
acknowledges that if 2009 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 commercially reasonable efforts to obtain an acceleration
of such schedule if necessary.
(g) Upon making each Loan disbursement, the Trustee shall note such
disbursement on Schedule A to the Series 2009 Bond.
(h) The Borrower agrees that it will deposit in the Reserve Account upon
receipt thereof, either on the Closing Date of the Loan or upon any disbursement date,
any proceeds of the 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 portion of the Loan representing capitalized interest shall be advanced
only on Payment Dates and shall be transferred by the Trustee on the Payment Date
directly to the Debt Service Account. The amount of any such transfer shall be a credit
against the interest payments due on the Series 2009 Bond and interest thereon shall
accrue only from the date of transfer.
\
Section 4.2. Commencement of Loan Term. The Borrower's obligations under
this Resolution and the Collateral Documents shall commence on the date hereof unless
otherwise provided in this Resolution. However, the obligation to make payments under Article
V hereof shall commence only upon the first disbursement by the Trustee of Loan proceeds.
Section 4.3. Termination of Loan Term. The Borrower's obligations under this
Resolution and the Collateral Documents shall terminate upon payment in full of all amounts due
under the Series 2009 Bond and this Resolution; provided, however, that the covenants and
17
obligations provided in Article VII and Section 12.4 shall survive the tennination of this
Resolution.
Section 4.4. Loan Closing Submissions. On or prior to the Closing, the BoITower
will have delivered to the DNRC and the Trustee the closing submissions required by Section
7.05 of the Indenture.
ARTICLE V
REPAYMENT OF LOAN
Section 5.1. Repayment of Loan. The Borrower shall repay the amounts lent to it
pursuant to Section 4.1 hereof, plus interest on the unpaid amounts lent at the rate of two and
zero hundredths percent (2.00%) per annum, in semiannual Loan Repayments. In addition, the
BoITower shall pay an Administrative Expense Surcharge on the outstanding principal amount of
the Loan at the rate of seventy-five hundredths of one percent (0.75%) per annum and a Loan
Loss Reserve Surcharge equal to one percent ( 1 .00%) per annum on the outstanding principal
amount of the Loan. For purposes of this Resolution and the Program, the term "interest on the
Loan" shall include the Administrative Expense Surcharge and the Loan Loss Reserve
Surcharge. The BoITower shall pay all Loan Repayments and the Administrative Expense
Surcharge and the Loan Loss Reserve Surcharge in lawful money of the United States of
America to the DNRC. Interest and the Administrative Expense Surcharge and the Loan Loss
Reserve Surcharge shall be calculated on the basis of a year of 360 days comprising 12 months
of 30 days each.
The Loan Repayments required by this Section 5.1 and the Administrative
Expense Surcharge and the Loan Loss Reserve Surcharge shall be due on each January 1 and
July 1 (the "Payment Dates"), as follows:
(1) interest and the Administrative Expense Surcharge and the Loan Loss
Reserve Surcharge on the outstanding principal balance of the Loan shall be payable on
each January 1 and July 1, beginning on July 1, 2010, through and including January 1,
2030;and
(2) the principal of the Loan shall be repayable on each Payment Date,
beginning on July 1, 2010 and concluding on January 1, 2030, and the amount of each
principal payment shall be calculated on the basis of a substantially level debt service at a
rate of 3.75% per annum.
The payments of principal of and interest and the Administrative Expense
Surcharge and the Loan Loss Reserve Surcharge on the Loan shall be due on the dates specified
above and on the dates and in the amounts shown in Schedule B to the Series 2009 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 2009 Bond. Upon each disbursement of Loan
amounts to the BoITower pursuant to Section 4.1 hereof, the Trustee shall enter or cause to be
i8
entered the amount advanced on Schedule A to the Series 2009 Bond under "Advances" and the
total amount advanced under Section 4.1, including such disbursement, under "Total Amount
Advanced."
If the advance was made to pay costs of the 2009 Project pursuant to Section
4. l(b), 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 ceriificate for a Project has been delivered to the DNRC,
the Trustee shall revise Schedule B to the Series 2009 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 payments of principal and interest and the Administrative Expense
Surcharge and Loan Loss Reserve Surcharge shall bear interest at the rate of ten percent
(10.00%) per annum, until paid.
Any payment of principal, interest or the Administrative Expense Surcharge and
Loan Loss Reserve Surcharge under this Section 5.1 shall also be credited against the same
payment obligation under the Series 2009 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 Loan, if the Borrower so chooses, all reasonable expenses of the DNRC and the Trustee in
connection with the Loan, the Collateral Documents and the Series 2009 Bond, including, but
not limited to:
(1) the cost ofreproducing this Resolution, the Collateral Documents and the
Series 2009 Bond;
(2) the fees and disbursements of Bond Counsel and other Counsel utilized by the
DNRC and the Trustee in connection with the Loan, this Resolution, the Collateral
Documents and the Series 2009 Bond and the enforcement thereof; and
(3) all taxes and other governmental charges in connection with the execution
and delivery of the Collateral Documents or the Series 2009 Bond, whether or not the
Series 2009 Bond is 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 2009 Bond, the Collateral Documents and this Resolution 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 2009 Bond unless (i) it obtains the prior written
consent of the DNRC thereto, and (ii) 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
19
the Series 2009 Bond is 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 this Resolution and the Series 2009 Bond and to
perform its other agreements contained in this Resolution, the Series 2009 Bond 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 this
Resolution and the Series 2009 Bond, (b) shall perform all its other agreements in this
Resolution, the Series 2009 Bond and the Collateral Documents and ( c) shall not terminate this
Resolution, the Series 2009 Bond or the Collateral Documents for any cause, including any acts
or circumstances that may constitute failure of consideration, destruction of or damage to the
2009 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 perform any of its agreements, whether express or
implied, or any duty, liability or obligation arising from or connected with this Resolution.
Provided, however, if the loan contemplated herein is not made and no funds are disbursed to the
Borrower, this Resolution may be terminated.
Section 5.5. Limited Liability. All payments of principal of and interest on the
Loan and other payment obligations of the Borrower hereunder and under the Series 2009 Bond
shall be special, limited obligations of the Borrower payable solely out of the Net Revenues or
out of the Revenue Bond Account and shall not be payable out of any other funds or revenues of
the Borrower. The obligations of the Borrower under this Resolution and the Series 2009 Bond
shall never constitute an indebtedness of the Borrower within the meaning of any state
constitutional provision or statutory 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 are not pledged to pay principal of or interest on the Series 2009
Bond, and no funds or property of the Borrower other than the Net Revenues are pledged to pay
principal of or interest on the Series 2009 Bond.
ARTICLE VI
OTHER AGREEMENTS OF BORROWER
Section 6.1. Maintenance of System; Liens. The Borrower shall maintain the
System, including the 2009 Project, in good condition and make all necessary renewals,
replacements, additions, betterments and improvements thereto. The Borrower shaii not grant or
pennit to exist any lien on the 2009 Project or any other property making up part of the System,
other than liens securing Debt where a parity lien secures the Series 2009 Bond; provided that
this Section 6.1 shall not be deemed to be violated if a mechanic's or contractor's lien is filed
against any such prope1iy so long as the Borrower uses its best effo1is 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 such lien.
Section 6.2. Maintenance of Existence; Merger, Consolidation, Etc.; Disposition
of Assets. The Borrower shall maintain its corporate existence, except that it may consolidate
20
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
Bonower under this Resolution, the Series 2009 Bond and the Collateral Documents, and (a)
such action does not result in any default in the perfonnance or observance of any of the terms,
covenants or agreements of the Bonower under this Resolution, the Bond and the Collateral
Documents, (b) such action does not violate the Act or the Clean Water Act and does not
adversely affect the exclusion of interest on the Series 2009 Bond or the State Bonds from gross
income for federal income tax purposes and (c) the Borrower delivers to the DNRC on the elate
of such action an Opinion of Bond Counsel that such action complies with this Section 6.2.
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.
Section 6.3. 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 2009 Bond or any other funds of the Borrower, 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. In addition, 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.
(b) The Borrower shall not use or permit the use of the 2009 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 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.
( c) Any portion of the 2009 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 2009 Project being financed shall be
acquired by and shall, during the term of the Loah, be owned by the Bonower and not by any
other Person. Notwithstanding the previous two sentences, the Borrower may transfer the 2009
Project or a portion thereof to another Governmental Unit which is also a Public Entity if such
transfer is otherwise permitted hereunder and if such organization agrees with the DNRC to
comply with Sections 2.2(h), 2.2(i) and 6.3 hereof and if the DNRC receives an Opinion of Bond
21
Counsel that such transfer will not violate the Act or the Clean Water Act or adversely affect the
exclusion of interest on the Bonds from gross income for purposes of federal income taxation. In
addition, except as otherwise provided herein or in any Collateral Documents, the Borrower may
sell or otherwise dispose of any portion of the 2009 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.
( d) At the Closing of the Loan 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 Additional 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.
(e) The Borrower agrees that during the Loan Term it will not contract with or
pennit any Private Person to manage the 2009 Project or any portion thereof except according to
a written management contract which complies with the following provisions:
(1) If any contract between the Borrower and the Private Person with
respect to the 2009 Project provides for compensation based on a percentage of fees
charged for services rendered by the Private Person, the contract may not exceed a term
of five years (including any renewal options). At least 50% of the compensation to the
Private Person must be based upon a periodic fixed fee. In addition, the Borrower must
be able to cancel the contract without penalty or cause at the end of any three-year period
of the contract term. The compensation must be reasonable, and it may not be based on a
percentage of the net profits of the 2009 Project or the System or any portion thereof or
any other division or activity of the Borrower.
(2) If any cont~act between the Borrower and the Private Person with
respect to the 2009 Project provides for compensation based on a periodic flat fee, the
compensation must be reasonable and the contract may not exceed a term of five years
(including any renewal options). In addition, the B01Tower must be able to cancel the
contract without penalty or cause at the end of any three-year period of the contract term.
If the contract provides for automatic increases in the periodic flat fee, the increases may
not exceed the percentage increases determined by particular external standards for
computing such increases that are mutually agreed upon in the contract. The percentage
increases reflected in the Consumer Price Index compiled by the Bureau of Labor
Statistics, U.S. Department of Labor, or the actual percentage increases for services that
result from the application of external criteria (for example, increases in rates paid by
insurance companies) are illustrations of two external standards that may be used.
22
(3) If a Private Person and the Bonower enter into a contract described in
subparagraph (I) or (2) above and the governing body of the Borrower contains five or
more members, no more than one member of the governing body of the Bonower may be
the Private Person or a related person (as described in Section 144(a)(3) of the Code) (a
"Related Person"), an employee of the Private Person or a Related Person, or a member
of the governing body of the Private Person or a Related Person. However, such Private
Person or a Related Person, employee of the Private Person or a Related Person or a
member of the governing body of the Private Person or a Related Person may not serve as
the chief executive of the Bonower. If a Private Person and the Borrower enter into a
contract described in (1) or (2) above and the governing body contains less than five
members, no member of the governing body may be the Private Person or a Related
Person, an employee of the Private Person or a Related Person or a member of the
governing body of the Private Person or a Related Person.
( 4) The Borrower may depaii from any of its agreements contained in
subparagraphs (1) through (3) if it delivers to the DNRC, at the Borrower's expense, an
Opinion of Bond Counsel that to do so would not adversely affect the exclusion of
interest on the State Bonds from gross income for purposes of federal income taxation.
(f) The Borrower may not lease the 2009 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 this Resolution, provided the Borrower may lease all or
any portion of the 2009 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.
(g) The Borrower shall not change the use or nature of the 2009 Project if (i) such
change will violate the Clean Water Act, or (ii) so long as the State Bonds are outstanding
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 6.4. Competing Service. The Borrower will not establish or authorize the
establishment of any other system for the public supply of service or services in competition with
any or all of the services supplied by the facilities of the System.
Section 6.5. Billing. The charges for sewer services shall be billed at least
monthly, and if the bill is not paid within 60 days of the date of billing, or if the customer fails to
comply with all rules and regulations established for the System within 60 days after notice of
violation thereof (which notice shall be given promptly upon discovery of any such violation),
the water service to the premises involved shall be discontinued and shall not be resumed until
payment of all past-due bills for sewer service and compliance with all such rules and
regulations. The Borrower shall take appropriate legal action to collect the unpaid charges,
including, to the extent now or hereafter authorized by law, making the charge a lien against the
real property served by the sewer connection for which the charge remains unpaid and causing
charges with respect to such prope1iies to be collected in the same manner as taxes levied against
property within the Bonowcr.
23
Section 6.6. Remedies. The DNRC, so long as it owns the Series 2009 Bond, or
the owners of not less than 25% in principal amount of the outstanding Bonds issued and secured
under the provisions of this Resolution shall have the right, either at law or in equity, through
suit, action or other proceedings, to protect and enforce the rights of all owners of such Bonds
and to compel the performance of any and all of the covenants required herein to be perfonned
by the Borrower, and its officers and employees, including but not limited to the fixing and
maintaining of rates, fees and charges and the collection and proper segregation of gross
revenues and the application and use thereof. The owners of a majority in principal amount of
such outstanding Bonds shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Bondowners or the exercise of any power
conferred on them and the right to waive a default in the perfonnance of any such covenant, and
its consequences, except a default in the payment of the principal of, premium, or interest on any
Bond when due. However, nothing herein shall impair the absolute and unconditional right of
the owner of each such Bond to receive payment of the principal of, premium, if any, and interest
on such Bond as such principal and interest respectively become payable, and to institute suit for
any such payment. Any court having jurisdiction of the action may appoint a receiver to
administer the System on behalf of the Borrower with power to charge and collect rates, fees and
charges sufficient to provide for the payment of any Bonds or obligations outstanding against the
System, and to apply the gross revenues in conformity with this Resolution and the laws of the
State.
Section 6.7. Rate Covenant. While any Bonds are outstanding and unpaid, the
rates, charges and rentals for all services and facilities furnished and made available by the
System to the Borrower and its inhabitants, and to all customers within or without the boundaries
of the Borrower, shall be reasonable and just, taking into consideration the cost and value of the
System and the cost of maintaining and operating it, and the amounts necessary for the payment
of all Bonds and the interest accruing thereon, and the proper and necessary allowances for the
depreciation of the System, and no free service shall be provided to any person or corporation. It
is covenanted and agreed that the rates, charges and rentals to be charged to all recipients of
sewer services shall be maintained and shall be revised whenever and as often as may be
necessary, according to schedules such that the revenues for each fiscal year will be at least
sufficient to pay the current expenses of operation and maintenance as herein defined, 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
commencing with the fiscal year ending June 30, 2010, not less than 125% of the maximum
annual 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 as and
when due.
If at the close of any fiscal year the Net Revenues and Surplus Net Revenues
actually received during such year have been less than required hereby, the Borrower will
forthwith prepare a schedule of altered rates, charges and rentals which are just and equitable and
sufficient to produce Net Revenues and Surplus Net Revenues in such amounts, and will do all
things necessary to the end that such schedule will be placed in operation at the earliest possible
date.
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ARTICLE VII
INDEMNIFICATION OF DNRC AND DEQ
The Borrower shall, to the extent pennitted 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 2009 Project. The Borrower shall, to the extent
permitted by law, also 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 Paiiy by reason of such claim or demand, the Borrower shall, upon notice from an
Indemnified Party, defend such proceeding on behalf of the Indemnified Party.
ARTICLE VIII
ASSIGNMENT
Section 8.1. Assignment by Borrower. The Borrower may not assign its rights
and obligations under this Resolution or the Series 2009 Bond, except as provided in Section 6.3.
Section 8.2. Assignment by DNRC. The DNRC will pledge its rights under and
interest in this Resolution, the Series 2009 Bond and the Collateral Documents (except to the
extent otherwise provided in the Indenture) as security for the payment of the State Bonds.
Section 8.3. State Refunding Bonds. In the event the State Bonds are refunded,
all references in this Resolution to State Bonds shall be deemed to refer to the refunding bonds
and any bonds of the State on a parity with such refunding bonds (together, the "Refunding
Bonds") or, in the case of a crossover refunding, to the State Bonds and the Refunding Bonds. In
the event the State Bonds are refunded by an issue of bonds other than State Bonds, all
references in this Resolution to the State Bonds shall be deemed to refer to such other bonds or,
in the case of a crossover refunding, both the State Bonds and such other bonds.
ARTICLE IX
THE SERIES 2009 BOND
Section 9.1. Authorization. Under the provisions of the Enabling 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
25
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.
Section 9.2. Outstanding Bonds. No bonds or indebtedness are outstanding that
are payable from Sewer Revenues of the System.
Section 9.3. Sources of Funding. The 2009 Project is set forth on Appendix A. It
is proposed that the costs of the 2009 Project will be paid in part from the proceeds of the Bonds.
Section 9.4. Net Revenues Available. The Borrower is authorized to charge just
and equitable rates, charges and rentals for all services directly or indirectly furnished by the
System, and to pledge and appropriate to the Series 2009 Bond the Net Revenues to be derived
from the operation of the System, including improvements, betterments or extensions thereof
hereafter constructed or acquired. The Net Revenues to be produced by such rates, charges and
rentals during the term of the Series 2009 Bond will be more than sufficient to pay the principal
and interest when due on the Series 2009 Bond, and to create and maintain reasonable reserves
therefor and to provide an adequate allowance for replacement and depreciation, as prescribed
herein.
Section 9.5. Issuance and Sale of the Series 2009 Bond. The Board has
investigated the facts necessary and hereby finds, determines and declares it to be necessary and
desirable for the Borrower to issue the Series 2009 Bond to evidence the Loan. The Series 2009
Bond is issued to the DNRC without public sale pursuant to Montana Code Annotated, Section
7-7-4433(2)(a).
Section 9.6. Terms. The Series 2009 Bond shall be in the maximum principal
amount equal to the original Committed Amount of the Loan, shall 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 interest at the rate charged by the DNRC on the Loan. The principal of and interest on the
Series 2009 Bond shall be 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
2009 Bond shall be deemed made when advances of the Loan are made under Section 4.1, and
such advances shall be payable in accordance with Schedule B to the Series 2009 Bond, as it
may be revised by the DNRC from time to time in accordance with Section 5.1.
The Borrower may prepay the Series 2009 I3ond, in whole or in part, only upon
the tenns and conditions under which it can prepay the Loan under Section 5.3.
Section 9.7. Negotiability, Transfer and Registration. The Series 2009 Bond
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
2009 Bond shall be payable to the DNRC at the Office of the Department of Natural Resources
and Conservation, 1625 Eleventh A venue, Helena, Montana 59620 or such other place as may be
designated by the DNRC in writing and delivered to the Borrower. The Series 2009 Bond shall
be negotiable, subject to the provisions for registration and transfer contained in this section. No
26
transfer of the Series 2009 Bond 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
Bond, and (2) the Director of Finance of the Borrower (the "Registrar"), as Bond Registrar, has
duly noted the transfer on the Series 2009 Bond 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 2009 Bond
is registered as the absolute owner of the Series 2009 Bond 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 9.8. Execution and Delivery. The Series 2009 Bond 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 2009 Bond. The Bond shall be sealed with the corporate seal of the
Borrower. In the event that any of the officers who shall have signed the Series 2009 Bond shall
cease to be officers of the Borrower before the Bond is issued or delivered, their signatures shall
remain binding upon the Borrower. Conversely, the Series 2009 Bond may be signed by an
authorized official who did not hold such office on the date of adoption of this Resolution. The
Series 2009 Bond shall be delivered to the DNRC, or its attorney or legal representative.
Section 9.9. Fonn. The Series 2009 Bond shall be prepared in substantially the
form attached as Appendix B.
ARTICLE X
PRIORITIES AND ADDITIONAL SEWER DEBT
Section 10.1. Priority of Bond Payments. Each and all of the Bonds shall be
equally and ratably secured without preference or priority of any one Bond over any other by
reason of serial number, date of issue, or otherwise; provided that if at any time the Net
Revenues on hand in the Fund are insufficient to pay principal and interest then due on all such
Bonds, any and all Net Revenues then on hand shall be first used to pay the interest accrued on
all outstanding Bonds, and the balance shall be applied toward payment of the maturing principal
of such Bonds to be paid first, and pro rata in payment of Bonds maturing on the same date.
Section I 0.2. Refunding Revenue Bonds. The Borrower reserves the right and
privilege of refonding any or a!! of the Bonds subject to the following terms and conditions:
(a) Any matured Bonds may be refunded if moneys available for the payment
thereof at maturity, within the limitation prescribed in Section l 0.01, should at any time
be insufficient to make such payment in full.
(b) Any Bonds may be refunded prior to maturity as and when they become
prepayable according to their terms.
27
(c) Provision may be made for the payment and refunding of any unmatured
Bonds by the deposit with a duly qualified depository bank, as escrow agent, of cash
sufficient, or of securities of the kinds authorized by law, the payments of interest on and
principal of which are sufficient, to pay the principal amount of and premium, if any, on
such Bonds with interest to maturity or to any prior date or dates on which they are
prepayable, and have been called for redemption or provision has been irrevocably made
for their redemption, on such date or dates.
(d) Any refunding revenue Bonds issued for the above purposes may be made
payable from the net revenues on a parity as to interest with all then outstanding Bonds;
provided that ( l) if not all of the Bonds of a series are refunded, the maturity of each
refunding revenue Bond shall be subsequent to the last maturity of any then outstanding
Bonds of such series which are not refunded or to be refunded out of moneys on deposit
with such escrow agent, and (2) no Bondowner shall be required to accept a refunding
revenue Bond in exchange for any Bond owned by him.
Section 10.3. Other Parity Bonds. The Borrower reserves the right to issue
additional Bonds payable from the Revenue Bond Account of the Fund, on a parity as to both
principal and interest with the Series 2009 Bond, 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 said 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 additional
Bonds shall be those shown by the financial reports caus~d_ to be prepared by the Borrower
pursuant to Section 2.2(f), except that if the rates and charges for services provided hy the
System 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 or finally authorized to go into
effect within 60 days thereafter 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 which 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 this
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. In connection with the issuance of a series of
additional Bonds, the Borrower shall cause amounts in the Reserve Account to be increased,
from the proceeds of the additional Bonds or from available Net Revenues, to an amount equal to
the Reserve Requirement during the term of the outstanding Bonds or so much thereof as will not
cause the Borrower to violate the provisions of Section 12.2 hereof.
Section l 0.4. Subordinate Obligations. Nothing in this Resolution shall preclude
the Bonower from issuing additional bonds or notes that are expressly made a charge on only the
Surplus Net Revenues of the System subordinate to the pledge of Net Revenues to the Revenue
Bond Account and the Reserve Account (such additional bonds, the "Subordinate Obligations");
provided, however, no obligations may be issued pursuant to this Section l 0.4 if a deficiency
exists in the Revenue Bond Account or the Reserve Account which is not to be restored by the
issuance of the Subordinate Obligations. Any Surplus Net Revenues segregated to pay such
Subordinate Obligations in the Fund are subject to the prior appropriation thereof to the
Operating Account, the Revenue Bond Account or the Reserve Account if necessary to meet the
requirements thereof.
ARTICLE XI
SEWER SYSTEM FUND
Section 11.1. Bond Proceeds and Revenues Pledged and Appropriated. A special
Sewer System Fund is hereby created and shall be maintained as a separate and special
bookkeeping account on the official books of the Borrower until all Bonds and interest and
redemption premiums due thereon have been fully paid, or the Borrower's obligations with
reference to such Bonds have been discharged as provided in this Resolution. All proceeds of
Bonds issued hereunder and all other funds presently on hand derived from the operation of the
System are irrevocably pledged and appropriated to the Fund. In addition, there is hereby
irrevocably pledged and appropriated to the Fund all gross revenues and receipts from rates, fees,
charges and rentals imposed for connections with and for the availability, benefit and use of the
System and from any sales of property acquired for the System and all income received from the
investment of such gross revenues, including investment of the Reserve Account established in
the Revenue Bond Account and the Operating Reserve established in the Operating Account, but
excluding any special assessments or taxes levied for construction of any part of the System and
the proceeds of any grant or loan from the State or the United States, and any investment income
thereon, to the extent such exclusion is a condition to such grant or loan. The Fund shall be
subdivided into separate accounts as designated and described in Sections 11.2 through 11. 7, to
segregate income and expenses received, paid and accrued for the respective purposes described
in those sections. The gross revenues received in the Fund shall be apportioned monthly,
commencing as of the first day of the month following the date of delivery of the Series 2009
Bond.
Section 11.2. Acquisition and Construction Account. The Acquisition and
Construction Account shall be used only to pay as incurred and allowed costs which under
accepted accounting practice are capital costs of a Project and of such future reconstructions,
improvements, betterments or extensions of the System as may be authorized in accordance with
law, including but not limited to payments due for \Vork and materials performed and delivered
under construction contracts, architectural, engineering, inspection, supervision, fiscal and legal
expenses, the cost oflands and easements, reimbursement of any advances made from other
Borrower funds, and all other expenses incurred in connection with the acquisition, construction
and financing of any such undertaking. To the Acquisition and Construction Account shall be
credited as received all proceeds of Bonds issued hereunder ( except proceeds of refunding bonds
appropriated to the payment of outstanding Bonds and amounts required to be credited to the
Revenue Bond Account), all other funds appropriated by the Borrower for the System and any
29
other funds appropriated by the BotTower to the Acquisition and Construction Account for
improvements to the System, and all income received from the investment of the Acquisition and
Construction Account. Upon completion of a capital improvement or program of capital
improvements for the System, the balance remaining in the Acquisition and Construction
Account shall be credited to the Revenue Bond Account and Reserve Account to the extent
required to establish the required balance therein and, to the extent not so required, to the
Replacement and Depreciation Account.
Section 11.3. Operating Account. On each monthly apportionment there shall
first be set aside and credited to the Operating Account, as a first charge on the gross revenues,
such amount as may be required over and above the balance then held in the account to pay the
reasonable and necessary operating expenses of the System which are then due and payable, or
are to be paid prior to the next monthly apportionment. The tenn "operating expenses" shall
mean the current expenses, paid or accrued, of operation, maintenance and current repair of the
System and its facilities, as calculated in accordance with sound accounting practices, and shall
include, without limitation, administrative expenses of the Borrower relating solely to the
System, premiums for insurance on the properties thereof, labor and the cost of materials and
supplies used for current operation and for maintenance, and charges for the accumulation of
appropriate reserves for current expenses which are not recurrent monthly but may reasonably be
expected to be incurred in accordance with sound accounting practices. Such expenses shall not
include any allowance for interest expense or depreciation, renewals or replacements of capital
assets of the System and shall not include any portion of the salaries or wages paid to any officer
or employee of the Borrower, except such portion as shall represent reasonable compensation for
the performance of duties necessary to the operation of the System. There shall also be credited
to this account forthwith upon the delivery of the Series 2009 Bond and from available funds
other than the proceeds therefrom a sum equal to the estimated average monthly .operating
expenses of the System to establish an Operating Reserve, which sum shall be maintained by
additional transfers upon each monthly apportionment whenever necessary, or may be
augmented by transfers of additional amounts from the Surplus Account described below if
determined by the governing body of the Borrower to be necessary to meet contingencies arising
in the operation and maintenance of the System. Money in the Operating Account shall be used
solely for the payment of current operating expenses of the System.
Section 11 .4. Revenue Bond Account. Upon each monthly apportionment there
shall be set aside and credited to the Revenue Bond Account out of the net revenues an amount
equal to not less than the sum of one-sixth of the interest due within the next six months plus
one-twelfth of the principal to become due within the next twelve months with respect to
outstanding Bonds payable from the Revenue Bond Account; provided that the Borrower shall
be entitled to reduce a monthly credit by the amount of any surplus previously credited and then
on deposit in the Revenue Bond Account. Money from time to time held in the Revenue Bond
Account shall be disbursed only to meet payments of principal of, premium, if any, and interest
on the Bonds payable therefrom as such payments become due. If any payment of principal or
interest becomes due when moneys in the Revenue Bond Account are temporarily insufficient
therefor, such payment shall be advanced out of any Net Revenues theretofore segregated and
then on hand in the Reserve Account, the Replacement and Depreciation Account or the Surplus
Account and in that order.
30
Section 11.5. Reserve Account. The Borrower agrees to establish and maintain a
Reserve Account in the Fund. On the Closing Date and on each date of disbursement of
proceeds of the Series 2009 Bond thereafter until the final disbursement of such proceeds, the
Borrower shall deposit in the Reserve Account, from proceeds of the Series 2009 Bond or, to the
extent necessary, from other available funds of the Borrower, an amount equal to the product of
(i) the initial Reserve Requirement based on the Committed Amount of the 2009 Loan, times (ii)
a fraction the numerator of which is the amount of proceeds of the Series 2009 Bond to be
disbursed on said date and the denominator of which is the Committed Amount of the 2009
Loan. On the date of the final disbursement of proceeds of the Series 2009 Bond, if the amount
in the Reserve Account is less than the Reserve Requirement, the Borrower shall deposit in the
Reserve Account from other available funds of the Borrower an amount necessary to cause the
balance in the Reserve Account to equal the Reserve Requirement, calculated as of that date and
based on the actual outstanding principal amount of the Se1ies 2009 Bond. Thereafter, upon
each monthly apportionment, from the Net Revenues remaining after the apportionment to the
Revenue Bond Account, the Borrower shall credit to the Reserve Account such additional Net
Revenues as may be required to establish and thereafter maintain the balance in an amount equal,
as of the date of calculation, to the Reserve Requirement. Money in the Reserve Account shall
be used only to pay maturing p1incipal, premium and interest when money within the Revenue
Bond Account is insufficient therefor; provided that on any date when all outstanding Bonds of a
series are due or prepayable by their terms, if the amount then on hand in the Reserve Account
allocable to such Bonds and available for such appropriation is sufficient with money available
for the purpose to pay all such Bonds and the interest accrued thereon in full, it may be used for
that purpose; and provided, further, that so long as the amount on hand in the Reserve Account is
not less than the Reserve Requirement, the Borrower may credit earnings on investment of the
Reserve Account to the Replacement and Depreciation Account.
Section 11.6. Replacement and Depreciation Account. There shall next be set
aside and credited, upon each monthly apportionment, to the Replacement and Depreciation
Account Surplus Net Revenues of the System, as the governing body of the Borrower shall
determine to be required for the accumulation of a reasonable allowance for depreciation of the
System and for replacement or renewal of worn out, obsolete or damaged properties and
equipment thereof. Money in this account shall be used only for the purposes above stated or, if
so directed by the governing body of the Borrower, to redeem Bonds which are prepayable
according to their terms, to pay principal or interest when due thereon as required in Section
11.4, to fund any deficiency in the Reserve Account, or to pay the cost of improvements to the
System; provided that, Surplus Net Revenues in the Replacement and Depreciation Account may
be used to pay Subordinate Obligations as they come due, subject to the prior lien on Surplus Net
Revenues to pay any deficiency of the Revenue Bond Account and the Reserve Account,
provided further that in the event construction and instailation of additional improvements or
additions to the System are financed other than from proceeds of Bonds payable from the
Revenue Bond Account, Surplus Net Revenues from time to time received may be segregated
and paid into one or more separate and additional accounts for the repayment of such
indebtedness and interest thereon, in advance of payments required to be made into the
Replacement and Depreciation Account, subject to the prior lien on Surplus Net Revenues to pay
any deficiency of the Revenue Bond Account or the Reserve Account and to pay a Subordinate
Obligation, should it become payable.
31
Section 11.7. Surplus Account. Any amount of the Surplus Net Revenues from
time to time remaining after the above required applications thereof shall be credited to the
Surplus Account (or such other account in the Fund as the Borrower may establish for
bookkeeping purposes to account for Surplus Net Revenues in accordance with the purposes of
this Resolution), and the money from time to time in that account, when not required to restore a
current deficiency in the Revenue Bond Account, the Reserve Account, or the Replacement and
Depreciation Account as provided in Sections 11.4, 11.5, and 11.6, respectively, may be used for
any of the following purposes and not otherwise:
(a) To redeem Bonds payable from the Net Revenues when and as such Bonds
become prepayable according to their terms; or
(b) To purchase Bonds on the open market, whether or not the Bonds or other
such Bonds may then be prepayable according to their terms; or
( c) To be held as a reserve for redemption of Bonds payable from the Net
Revenues which are not then but will later be prepayable according to their terms; or
( d) To pay for repairs of or for the construction and installation of improvements
or additions to the System; or
( e) To restore the Operating Reserve or increase the same when determined to be
necessary by the governing body of the Borrower; or
(f) To pay Subordinate Obligations pennitted under Section I 0.4 above.
No money shall at any time be transferred from the Surplus Account or any other account of the
Fund to any other fund of the Borrower, nor shall such moneys at any time be loaned to other
municipal funds or invested in warrants, special improvement bonds or other obligations payable
from other funds, except as provided in Section 11.8.
Section 11.8. Deposit and Investment of Funds. The finance officer of the
Borrower shall cause all money appropriated to the Fund to be deposited as received with one or
more depository banks duly qualified in accordance with the provisions of Montana Code
Annotated, Section 7-6-201, in a deposit account or accounts. The balance in such accounts,
except such portion thereof as shall be guaranteed by federal deposit insurance, shall at all times
be secured to its full amount by bonds or securities of the types set forth in said Section 7-6-201.
Any of such moneys not necessary for immediate use may be deposited with such depository
banks in savings or time deposits. No money shall at any time be withdrawn from such deposit
accounts except for the purposes of the Fund as defined and authorized in this Resolution; except
that money from time to time on hand in the Fund may at any time, in the discretion of the
governing body of the Borrower, be invested in securities which are direct, general obligations
of, or obligations the prompt payment of the principal of and the interest on which is fully and
unconditionally guaranteed by, the United States of America, bank repurchase agreements with
respect to such obligations, certificates of deposits of national banks having a combined capital
and surplus of at least $1,000,000 or in the Montana short-tenn investment program administered
by the Board of Investments, which investments mature and bear interest at the times and in the
32
amounts estimated to be required to provide cash when needed for the purposes of the respective
accounts; provided that funds on hand in the Reserve Account, the Replacement and
Depreciation Account and the Surplus Account may be invested in said securities maturing not
later than five years from the date of the investment; and provided, further, that money on hand
in the Surplus Account of the Fund may, in the discretion of the governing body of the Borrower,
be invested in any securities which are direct, general obligations of the Borrower. Income
received from the deposit or investment of moneys in said accounts shall be credited to the
account from whose moneys the deposit was made or the investment was purchased, and handled
and accounted for in the same manner as other moneys in that account.
ARTICLE XII
TAX MATTERS
Section 12.1. Use of2009 Project and System. The 2009 Project and the System
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 2009 Project or the
System or security for the payment of the Series 2009 Bond which might cause the Series 2009
Bond to be considered a "private activity bond" or "private loan bond" within the meaning of
Section 141 of the Code.
Section 12.2. General Covenant. The Borrower covenants and agrees with the
owners from time to time of the Series 2009 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
2009 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 2009 Bond will not become includable in gross income for federal
income tax purposes under the Code and the Regulations.
Section 12.3. 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 2009 Bond pursuant to this 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(6) of the Regulations, stating that on the basis of facts,
estimates and circumstances in existence on the date of issue and deli very of the Series 2009
Bond, it is reasonably expected that the proceeds of the Series 2009 Bond will be used in a
manner that would not cause the Series 2009 Bond to be an "arbitrage bond" within the meaning
,..,f'C1=0t;,--,~ 1J1Q ,--,f'thP {°'r,,-jp ,:,nri fhP RPcrnlcitinnc,
Vl L.)\..,\..,LJVll J.IU Vl. L.l.l\.J \.._;V\..I.V U.J.J.'-..1. \..J.J..V J..'-....,t,~J..U.l.-J.'-J.l.lV.
Section 12.4. Arbitrage Rebate. The Borrower acknowledges that the Series
2009 Bond is 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 2009 Bond
from gross income for federal income tax purposes, unless the Series 2009 Bond qualifies for the
exception from the rebate requirement under Section 148(f)(4)(B) of the Code and no "gross
33
proceeds" of the Series 2009 Bond ( other than amounts constituting a "bona fide debt service
fund") atise 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 Bon-ower 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 12.5. Infonnation Reporting. The Borrower shall file with the Secretary
of the Treasury, not later than February 15, 2010, a statement concerning the Series 2009 Bond
containing the information required by Section 149( e) of the Code.
Section 12.6. "Qualified Tax-Exempt Obligations". Pursuant to Section
265(b )(3)(B)(i)(III) of the Code, the Borrower hereby designates the Series 2009 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 2009 other than the Series 2009 Bond under Section
265(b )(3). The Bon-ower 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 50l(c)(3) bonds" but excluding other "private activity bonds," as defined in
Sections 14l(a) and 145(a) of the Code) will be issued by or on behalf of the Bon-ower and all
"subordinate entities" of the Bon-ower in 2009 in an amount greater than $30,000,000.
ARTICLE XIII
CONTINUil-JG DISCLOSURE
The Borrower understands and acknowledges that the DNRC is acquiring the Series 2009 .
Bond under the Program pursuant to which the State issues from time to time State Bonds to
provide funds therefor. The Borrower 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
promulgated by the Securities and Exchange Commission under the Securities Exchange Act of
1934 (17 C.F.R. § 240.15c2-12) 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 repoti and opinion of an accountant or government
auditor, as pennitted 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 to the effect that, to the best of their knowledge, such infonnation does not include any
untrue statement of a material fact or omit to state any material fact required to be stated therein
34
to make the statements made, in light of the circumstances under which they are made, not
misleading.
ARTICLE XIV
DEFEASANCE
Section 14.1. General. When the liability of the Borrower on all Bonds issued
under and secured by this Resolution and all interest thereon has been discharged as provided in
this Article XIV, all pledges, covenants and other rights granted by this Resolution to the
Holders of such Bonds shall cease, other than to the payment of such Bonds from money
segregated for such purpose. The Borrower may also discharge its liability with respect to one or
more Bonds in accordance with this Article XIV.
Section 14.2. Maturity. The Borrower may discharge its liability with reference
to any Bonds and interest thereon which are due on any date by depositing with the Registrar for
such Bonds on or before the date a sum sufficient for the payment thereof in full; or if any Bond
or interest thereon shall not be paid when due, the Borrower may nevertheless discharge its
liability with reference thereto by depositing with the Registrar a sum sufficient for the payment
thereof in full with interest accrued to the date of such deposit.
Section 14.3. Prepayment. The Borrower may also discharge its obligations with
respect to any prepayable Bonds called for redemption on any date when they are prepayable
according to their terms, by depositing with the Registrar therefor on or before the Redemption
Date a sum sufficient for the payment thereof in full; provided that notice of the redemption
thereof has been duly given as provided in this Resolution or any Supplemental Resolution
relating thereto.
Section 14.4. Escrow. The Borrower may at any time discharge its liability with
reference to any Bonds, subject to the provisions of law now or hereafter authorizing and
regulating such action and the following paragraphs of this Section, by depositing irrevocably in
escrow, with a bank qualified by law as an escrow agent for this purpose, cash or Government
Obligations 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 provide
funds sufficient to pay all principal, interest and redemption premiums, if any, to become due on
such Bonds at their stated maturities or, if such Bonds are prepayable and notice of redemption
thereof has been duly given or irrevocably provided for, to such earlier redemption date.
No defeasance shall be made pursuant to this Section 14.4 unless there has first
been presented to the escrow agent a written opinion of nationally recognized bond counsel to
the effect that such defeasance shall not cause the interest on any outstanding Bonds to be
included in the gross income of the holders thereof for federal income tax purposes.
35
ARTICLE XV
SUPPLEMENTAL RESOLUTIONS
Section 15.1. General. The BotTower reserves the right to adopt Supplemental
Resolutions from time to time and at any time, for the purpose of curing any ambiguity or of
curing, cotTecting or supplementing any defective provision contained herein, or of making such
provisions with regard to matters or questions arising hereunder as the BoITower may deem
necessary or desirable and not inconsistent with this Resolution, and which shall not adversely
affect the interests of the Holders of Outstanding Bonds, or for the purpose of adding to the
covenants and agreements herein contained, or to the Revenues herein pledged, other covenants
and agreements thereafter to be observed and additional revenues or income thereafter
appropriated to the Fund, or for the purpose of surrendering any right or power herein reserved to
or confetTed upon the BotTower, or for the purpose of authorizing the creation and issuance of a
series of Additional Bonds or subordinate lien obligations, as provided in and subject to the
conditions and requirements of this Article XV. Any such Supplemental Resolution may be
adopted without notice to or the consent of the Holder of any of the Bonds issued hereunder.
Section 15.2. Consent of Holders. With the consent of the Holders of Bonds
issued hereunder as provided in Section 15.4, the Borrower may from time to time and at any
time adopt a Supplemental Resolution for the purpose of amending this Resolution by adding
any provisions hereto or changing in any manner or eliminating any of the provisions hereof or·
of any Supplemental Resolution, except that no Supplemental Resolution shall be adopted at any
time without the consent of the Holders of all Bonds issued hereunder which are then
Outstanding and affected thereby, if it would extend the time of payment of interest thereon or
principal thereof, would reduce the interest rate thereon or the amount of the principal or the
redemption price thereof, would give to any Bond or Bonds any privileges over any other Bond
or Bonds, would reduce the sources of revenues or income appropriated to the Fund, or would
reduce the percentage in principal amount of such Bonds required to authorize or consent to any
such Supplemental Resolution.
Section 15.3. Notice. Notice of the Supplemental Resolution to be adopted
pursuant to Section 15.2 shall be mailed by first-class mail to the Holders of all Outstanding
Bonds at their addresses appearing in the Bond Register, and shall become effective only upon
the filing of written consents with the Director of Finance, signed by the Holders of not less than
a majority in principal amount of the Bonds then Outstanding and affected thereby. Any written
consent to the Supplemental Resolution may be embodied in and evidenced by one or any
number of concurrent written instruments of substantially similar tenor signed by Holders in
person or by agent duly appointed in writing, and shall become effective when delivered to the
Director of Finance. Any consent by the Holder of any Bond shall bind him and every future
Holder of the same Bond with respect to any Supplemental Resolution adopted by the Borrower
pursuant to such consent; provided that any Holder may revoke his consent with reference to any
Bond by written notice received by the Director of Finance before the Supplemental Resolution
has become effective. In the event that unrevoked consents of the Holders of the required
amount of Bonds have not been received by the Director of Finance within one year after the
36
mailing of notice of the Supplemental Resolution, the Supplemental Resolution and all consents
theretofore received shall be of no further force and effect.
Section 15.4. Manner of Consent. Proof of the execution of any consent, or of a
writing appointing any agent to execute the same, or of the ownership by any Person of Bonds
shall be sufficient for any purpose of this Resolution and shall be conclusive in favor of the
Borrower if made in the manner provided in this Section I 5.4. The fact and date of the execution
by any Person of any such consent or appointment may be proved by the affidavit of a witness of
such execution or by the certification of any notary public or other officer authorized by law to
take acknowledgment of deeds, certifying that the Person signing it acknowledged to him the
execution thereof. The fact and date of execution of any such consent may also be proved in any
other manner which the Borrower may deem sufficient; but the Borrower may nevertheless, in its
discretion, require further proof in cases where it deems further proof desirable. The ownership
of Bonds shall be proved by the Bond Register.
ARTICLE XVI
MISCELLANEOUS
Section 16.1. 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:
Trnstee:
Borrower:
Department of Natural Resources
and Conservation
1625 Eleventh A venue
Helena, Montana 59620
Attention: Conservation and
Resource Development Division
U.S. Bartle National Association
c/o Corporate Trnst Services
Two Union Square
601 Union Street, Suite 2120
Seattle, Washington 98101
Attn: Corporate Trnst Department
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.
37
Section 16.2. Binding Effect. This Resolution shall inure to the benefit of and
shall be binding upon the DNRC, the Boffower and their respective permitted successors and
assigns.
Section 16.3. Severability. If any provision of this Resolution shall be
determined to be unenforceable at any time, it shall not affect any other provision of this
Resolution or the enforceability of that provision at any other time.
Section 16.4. Applicable Law. This Resolution shall be governed by and
construed in accordance with the laws of the State.
Section 16.5. Captions; References to Sections. The captions in this Resolution
are for convenience only and do not define or limit the scope or intent of any provisions or
Sections of this Resolution. References to Articles and Sections are to the Articles and Sections
of this Resolution, unless the context otherwise requires.
Section 16.6. No Liability of Individual Officers, Commissioners. No recourse
under or upon any obligation, covenant or agreement contained in this Resolution shall be had
against any director, officer or employee, as such, past, present or future, of the DNRC or the
Trustee, either directly or through the DNRC 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 Boffower
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 Resolution and the making of the Loan.
Section 16.7. 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
Resolution or the Series 2009 Bond, shall not be a 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 Resolution or the Series 2009 Bond.
Section I 6.8. Right of Others to Perform Boffower'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 Boffower and make advances for
<Ln< --.--nn 1'Tn n»nl.. ---+---nnco --n,L,n-nn nhnll ~-=-n~= ~~ -=t=an= th= oo--Au,=r f'rA'"'"' any lUctl J_JUl_lJV~v. l~V ~UL-11 IJGllVlllli:11 C, Vl i:1UVi:111L,C, ~uau VIJL-lctlL, LV lvl\., ;)\., llv LJ llVVVvl UVlll 11
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 from the date of the advance until repaid. The DNRC and the provider of
any Collateral Document shall have the right to enter the 2009 Project or the facility or facilities
of which the 2009 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 16.9. Authentication of Transcript. The officers of the Boffower are
hereby authorized and directed to furnish to the DNRC and to Bond Counsel ce1iified copies of
38
all proceedings relating to the issuance of the Series 2009 Bond and such other certificates and
affidavits as may be required to show the right, power and authority of the Borrower to issue the
Series 2009 Bond, 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 purported to be shown thereby.
39
Section 16.10. Effective Date. This Resolution shall take effect immediately.
Adopted by the City Commission of the City of Bozeman, Montana, on this 16th
day of November, 2009.
40
APPENDIX A
DESCRIPTION OF THE 2009 PROJECT
The 2009 Project consists of designing, engineering and constructing improvements to
the City's Water Reclamation Facility, including demolition within the existing Headworks
Building and construction of an influent connection and Head works Building, construction of a
Primary Effluent Pumping Station, construction of a biological nutrient removal facility and
c01mection to the existing bioreactor basins, demolition of existing blowers and construction of
an aeration blower system, conversion of an existing un-used surge tank into a sludge fermenter
basin, rehabilitation of an existing gravity thickener system, retrofitting of an existing RAS
control facility with new flow control equipment, construction of a new RAS/WAS Flow Control
and Pumping Facility, construction of two new secondary claiifiers, replacement of an existing
chlorine disinfection system with a UV disinfection system, construction of all associated
mechanical, electrical, controls and general sitework items, and related improvements.
A-1
APPENDIX B
[Fom1 of the Bond]
UNITED STATES OF AMERICA
STATE OF MONTANA
GALLATIN COUNTY
CITY OF BOZEMAN
SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM),
SERIES 2009
No. R-1 $9,500,000
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 rate
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 July 1, 2010. 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 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% 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
B-1
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 $9,500,000 (the "Series 2009 Bond"). The Series
2009 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 costs of issuance of the Series 2009 Bond. The Series 2009 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 duly enacted by the City Commission on November 16, 2009 (collectively,
the "Resolution"). The Series 2009 Bond is issuable only as a single, fully registered bond.
Reference is made to the Resolution for a more complete statement of the terms
and conditions upon which the Series 2009 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 Series 2009 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 2009 Bond.
The Borrower may prepay the principal of the Series 2009 Bond oniy if (i) it
obtains the prior written consent of the DNRC thereto, and (ii) 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 2009 Bond is prepaid in part, such prepayments
shall be applied to principal payments in inverse order of maturity.
The Bonds, including interest and any premium for the redemption thereof, are
payabie 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
prov1s1on.
The Borrower may deem and treat the person in whose name this Series 2009
Bond is registered as the absolute owner hereof, whether this Series 2009 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 2009 Bond may be transferred hereinafter as
provided.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that
the Borrower will fotihwith constrnct and complete the improvements to the System hereinabove
B-2
described, that it will presc1ibe 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
due within the next six months plus one-twelfth of the and principal due within the next twelve
months with respect to all Bonds payable from the Revenue Bond 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 Series 2009 Bonds and any other additional Bonds issued pursuant to
the Resolution on a paiity 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 Series 2009 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 Series 2009 Bond and additional parity Bonds on
such Net Revenues; that all provisions for the security of the holder of this Series 2009 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 2009 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 2009 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 B01rower within
the meaning of any constitutional or statutory limitation or provision and the issuance of the
Series 2009 Bond does not cause either the general or the special indebtedness of the Borrower
to exceed any constitutional or statutory limitation.
B-3
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 -~-day of _____ _
2009.
Mayor
(Seal)
Director of Finance
Clerk of the Commission
B-4
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 ( l) the registered holder of the Bond, or his duly authotized
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 Bonower 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 Bonower'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
Registration
2009
Name and Address
of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh A venue
Helena, MT 59620
Signature of
Director of Finance
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 transfened, 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
NameofNew
Registered Holder
8-5
Signature of
Bond Registrar
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH 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.
Date of Transfer
Name of New
Registered Holder
FORM OF ASSIGNMENT
Signature of
Bond Registrar
For value rccei"vcd, this Bond is hereb~y transferred and assigned bJ' the undersigned
holder, without recourse, to _________________________ _
on this __ day of ____________ _
B-6
By: __________ _
(Authorized Signature)
For: _____________ _
(Holder)
Date
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Advances
B-7
Total Amount
Advanced
Notation
Made By
Date Principal Interest
SCHEDULE B
Administrative
Expense Surcharge
B-8
Loan Loss
Reserve
Surcharge
Total Loan
Payment
APPENDIX C
ADDITIONAL REPRESENTATIONS AND COVENANTS
[None]
C-1
EXECUTION COPY
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
Resolution No. 4234, entitled: "RESOLUTION RELATING TO $1,973,000 SEWER SYSTEM
REVENUE BONDS (DNRC WATER POLLUTION CONTROL ST A TE REVOLVING LOAN
PROGRAM), CONSISTING OF $390,700 SUBORDINATE LIEN TAXABLE SERIES 2010A
BOND, $359,300 SERIES 2010B BOND, AND $1,223,000 SERIES 2010C 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 January 19, 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 ~eeting, the following
Commissioners voted in favor thereof: Cx. qy\d,\, Cr. Be.ck/l.-c; Cf. JAJ {or
anJ M"'1tt l('vMSS ; voted against the same: _________________ _
~-_,· abstained from voting thereon: _______ ~ ______ ; or were absent: __
4
WITNESS my hand officially this ( q -day of January, 2010.
SUPPLEMENTAL RESOLUTION
Relating to
$1,973,000
SEWER SYSTEM REVENUE BONDS
(DNRC WATER POLLUTION CONTROL STATE RE VOL YING LOAN PROGRAM)
CONSISTING OF
$390,700 SUBORDINATE LIEN TAXABLE SERIES 2010A BOND,
$359,300 SERIES 2010B BOND,
AND
$1,223,000 SERIES 201 OC BOND
CITY OF BOZEMAN, MONTANA
Adopted: January 19, 2010
TABLE OF CONTENTS
(For convenience only, not a pari of this Supplemental Resolution)
Recitals ............................................................................................................................... .
Section 1.1.
Section 1.2.
Section 1.3.
ARTICLE I
DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES
Definitions .......................................................................................... .
Other Rules of Construction ............................................................... .
Appendices ......................................................................................... .
ARTICLE II
AUTHORIZATION, FINDINGS, REPRESENTATIONS AND COVENANTS
Section 2.1.
Section 2.2.
Section 2.3.
Section 2.4.
Section 2.5.
Section 2.6.
Section 3 .1.
Section 3.2.
Section 3.3.
Section 3.4.
Section 4.1.
Section 4.2.
Section 4.3.
Section 4.4.
Authorization and Findings ................................................................ .
Representations ................................................................................... .
Covenants ........................................................................................... .
Covenants Relating to the Tax-Exempt
Status of the State Bonds .................................................................... .
Maintenance of System; Liens ........................................................... .
Maintenance of Existence; Merger
Consolidation, Etc.; Disposition of Assets., ....................................... .
ARTICLE III
USE OF PROCEEDS; THE 2010 Project
Use of Proceeds .................................................................................. .
The 2010 Project. ................................................................................ .
2010 Project Representations and Covenants ..................................... .
Completion or Cancellation or Reduction of
Costs of the 2010 Project.. .................................................................. .
ARTICLE IV
THE LOAN
The Loan; Disbursement of Loan ....................................................... .
Commencement of Loan Tenn ........................................................... .
Termination of Loan Term ................................................................. .
Loan Closing Submissions ................................................................. .
Page
2
8
8
8
9
12
14
15
15
16
17
18
19
19
22
22
22
Section 5.1.
Section 5.2.
Section 5.3.
Section 5.4.
Section 5.5.
Section 5.6.
ARTICLE V
REPAYMENT OF 20 IO LOANS
Repayment of 20 IO Loans ................................................................ ..
Additional Payments ........................................................................... .
Prepayments ........................................................................................ .
Obligations of Borrower Unconditional ............................................. .
Limited Liability ................................................................................. .
Reallocation of 20 IO Loans ................................................................ .
ARTICLE VI
22
27
27
28
28
28
INDEMNIFICATION OF DNRC AND DEQ ................................................................... 29
Section 7.1.
Section 7.2.
Section 7.3.
Section 8.1.
Section 8.2.
Section 8.3.
Section 8.4.
Section 8.5.
Section 8.6.
Section 8.7
ARTICLE VII
ASSIGNMENT
Assignment by Borrower .................................................................... .
Assigrunent by DNRC ........................................................................ .
State Refunding Bonds ....................................................................... .
ARTICLE VIII
THE SERIES 2010 BONDS
Net Revenues Avaiiable ..................................................................... .
Issuance and Sale of the Series 2010 Bonds ....................................... .
Terms .................................................................................................. .
Negotiability, Transfer and Registration ............................................ .
Execution and Delivery ...................................................................... .
Form .................................................................................................... .
2010 Acquisition and Construction Account.. .................................... .
ARTICLE IX
29
30
30
30
30
31
31
31
32
32
SECURITY FOR THE SERIES 2010 BONDS................................................................. 32
Section 10.1.
Section 10.2.
Section 10.3.
Section 10.4.
Section 10.5.
Section 10.6.
ARTICLE X
TAX MATTERS
Use of2010 Project.. ........................................................................ .
General Covenant. ............................................................................ .
Arbitrage Certification ..................................................................... .
Arbitrage Rebate Exemption ........................................................... .
Information Reporting ..................................................................... .
"Qualified Tax-Exempt Obligations" .............................................. .
11
33
33
33
33
34
34
ARTICLE XI
CONTINUING DISCLOSURE
Section 12.1.
Section 12.2 ..
Section 13 .1.
Section 13 .2.
Section 13.3.
Section 13 .4.
Section 13.5.
Section 13.6.
Section 13.7.
Section 13 .8.
Section 13.9.
Section 13.10.
Section 13.11.
ARTICLE XII
IMPLEMENTATION
Clean Water Act. .............................................................................. .
Implementation of Original Resolution Section 6. 7 ........................ .
ARTICLE XIII
MISCELLANEOUS
Notices ............................................................................................. .
Binding Effect .................................................................................. .
Severability ...................................................................................... .
Amendments .................................................................................... .
Applicable Law ................................................................................ .
Captions; References to Sections ..................................................... .
No Liability of Individual Officers, Directors or Trustees .............. .
Payments Due on Holidays .............................................................. .
Right of Others To Perform Borrower's Covenants ........................ .
Authentication of Transcript ............................................................ .
Effective Date .................................................................................. .
34
35
35
35
36
36
36
36
36
36
36
37
37
37
APPENDIX A-Description of the 2010 Project.................................................................. A-1
APPENDIX B-1 -Form of Series 2010A Bond ................................................................... B-1-1
APPENDIX B-2 -Form of Series 20 lOB Bond .................................................................... B-2-1
APPENDIX B-3 '-Form of Series 20 lOC Bond .................................................................... B-3-1
APPENDIX C -Additional Representations and Covenants................................................ C-1
APPENDIX D -ARRA Certificate and Request.................................................................. 0-1
...
Ill
EXECUTION COPY
RESOLUTION NO. 4234
RESOLUTION RELATING TO $1,973,000 SEWER SYSTEM
REVENUE BONDS (DNRC WATER POLLUTION CONTROL
STATE REVOLVING LOAN PROGRAM), CONSISTING OF
$390,700 SUBORDINATE LIEN TAXABLE SERIES 2010A
BOND, $359,300 SERIES 201 OB BOND, AND $1,223,000
SERIES 20!0C BOND; AUTHORIZING THE ISSUANCE AND
FIXING THE TERMS AND CONDITIONS THEREOF
WHEREAS, pursuant to the Water Pollution Control State Revolving Fund Act, Montana
Code Annotated, Title 75, Chapter 5, Part 11, as amended (the "State Act"), the State of Montana
(the "State") has established a revolving loan program (the "Program") to be administered by the
Department of Natural Resources and Conservation of the State of Montana, an agency of the
State (the "DNRC"), and by the Department of Environmental Quality of the 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
limited to, all federal grants for capitalization of a state water pollution 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 money in the
Revolving Fund and payments of principal of and interest on loans made from the Revolving
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 DEQ and the DNRC; and
WHEREAS, one-time funding has been made available to the Program under the
American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5 (2009) ("ARRA"), a
portion of which funding may be disbursed to eligible borrowers for eligible projects, upon
satisfaction of certain terms and conditions specified in ARRA, Program documents, and herein;
and
WHEREAS, the City of Bozeman, Galiatin County, Montana (the "Borrower") has
applied to the DNRC for the 2010 Loans ( as hereinafter defined) from the Revolving Fund to
enable the Borrower to finance, refinance or reimburse itself for the costs of the 2010 Project (as
hereinafter defined) which will carry out the purposes of the Clean Water Act and be
implemented in accordance with ARRA; and
WHEREAS, the Borrower is authorized under applicable laws, ordinances and
regulations to adopt this Supplemental Resolution and to issue the Series 2010 Bonds (as
hereinafter defined) to evidence the 2010 Loans (as hereinafter defined) for the purposes set forth
herein; and
WHEREAS, the DNRC will fund the 2010A Loan (as hereinafter defined) and the 2010B
Loan (as hereinafter defined) with funds provided by the United States Environmental Protection
Agency under ARRA, and will fund the 20 I 0C Loan 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.
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,
terms used with initial capital letters but undefined in this Supplemental Resolution shall have
the meanings given them 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 2010C Loan, in any
event, and (ii) in respect of the 201 0A Loan and the 201 OB Loan, upon the delivery of an ARRA
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 2010 Loans from the date of each advance thereof, payable by the Borrower on a Payment
Date.
"ARRA" means the American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-
5 (2009), and all regulations, rules, and interpretations issued by the EPA thereunder.
"ARRA Bonds" means, collectively, the Series 201 0A Bond and the Series 201 OB Bond.
"ARRA Certificate and Request" means the certificate and request substantially in the
fonn of the attached Appendix D delivered by the DNRC to the Borrower following the final
advance of principal of the 201 OB Loan, to be completed, executed and delivered by the
Borrower to the DNRC pursuant to Section 5.1.2 of this Supplemental Resolution.
"ARRA Forgiveness Statement" means a written statement delivered to the Borrower by
the DNRC that the Borrower's obligation to repay the principal of the Series 201 0A Bond is
forgiven.
2
"ARRA Noncompliance Statement" means a written statement delivered to the Bonower
by the DNRC that the Bonower's obligation to repay the principal of the Series 20 I 0A Bond is
not forgiven.
"ARRA Statement" means an ARRA Forgiveness Statement or an ARRA
Noncompliance Statement.
"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 201 OB Bond, the Series 201 0C Bond, and any Additional
Bonds; "Bonds" does not include the Series 2010A Bond.
"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.
"City" means the City of Bozeman, Montana and its permitted successors or assigns
hereunder.
"Closing" means the date of delivery of the Series 2010 Bonds to the DNRC.
''Code'' means the Internai 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 2010 Bonds. If no Collateral Documents secure such
oblig'ations, 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 the amount of the 2010 Loans 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.
"Construction Contract" means the binding contract for construction of the 2010 Project
entered into between the Borrower and the construction contractor in compliance with all laws of
the State, including those regarding the construction of public projects.
"Consultant" means a nationally recognized consultant or firm of consultants, or an
independent engineer or firm of independent engineers, or an Accountant, which in any case is
qualified and has skill and expe1ience in the preparation of financial feasibility studies or
3
projections for facilities similar to the System or the 20 IO 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, (I) indebtedness of the Borrower for borrowed
money or for the deferred purchase price of prope1iy or services; (2) the obligation of the
Borrower 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 referred to in clause (I) or (2) above.
"DEQ" means the Department of Environmental Quality of the State of Montana, an
agency of the State, or any successor to its powers, duties and obligations under the State Act or
the EPA Agreements.
"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 Clean Water 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 or pursuant to ARRA.
"Estimated Completion Date" means June 30, 2011, the date by which it is estimated by
the Borrower that the 2010 Project will be substantially completed.
"Fund" means the Sewer System Fund established pursuant to Section 11.1 of the
Original Resolution.
"Green Infrastructure" means the portion of the 2010 Project that addresses green
infrastructure, water or energy efficiency improvements, or other environmentally innovative
activities, as described more particularly in ARRA and EPA policies or guidelines.
"Governmental Unit" means governmental 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
4
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 20 I 0C Loan, in any event,
and (ii) in respect of the 2010A Loan and the 2010B Loan, upon the delivery ofan ARRA
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 20 IO 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 201 OB Bond and Series 20 I 0C Bond, and if the DNRC delivers an
ARRA Noncompliance Statement, of the Series 201 0A Bond, at the rates and times specified in
Article V.
"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 City adopted on November 16,
2009.
"Payment Date" means, with respect the Series 2010 Bonds, each January 1 and July 1
during the term of the Series 2010 Bonds on which a payment of interest or principal and interest
is due, as determined under the Resolution.
"Program" means the Water Pollution Control State Revolving Fund Program established
by the State Act.
"Project" means an improvement, betterment, reconstruction or extension of the System,
including the 2010 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.
"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 2010 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).
5
"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 Bonds" means, collectively, the Series 20 I 0A Bond, the Series 201 OB
Bond, and the Series 20 I 0C Bond.
"Series 201 0A Bond" means the $390,700 Subordinate Lien Sewer System Revenue
Bond (DNRC Water Pollution Control State Revolving Loan Program), Taxable Series 2010A,
issued to the DNRC to evidence the 20 I 0A Loan.
"Series 2010B Bond" means the $359,300 Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010B, issued to the DNRC to
evidence the 201 OB Loan.
"Series 2010C Bond" means the $1,223,000 Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010C, issued to the DNRC to
evidence the 201 OC Loan.
"Sewer System Fund" means the fund created by Section 11.1 of 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 be 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 201 0A Bond and any other subordinate
obligations issued under Section 10.4 of the Original Resolution
"Supplemental Resolution" means this Resolution No. 4234 of the Borrower adopted on
January 19, 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 bettennents thereof hereafter constructed and acquired, including, without
limitation, the 2010 Project.
6
"Trustee" means U.S. Bank National Association, in Seattle, Washington, or any
successor trustee under the Indenture.
"201 OA Committed Amount" means the amount of the 20 I OA 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.
"20 I OB Committed Amount" means the amount of the 20 I OB 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.
"2010C Committed Amount" means the amount of the 2010C 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.
"20 I OB First Advance" means the first advance of funds of the 2010 Loans from the
proceeds of the 2010B Loan by the DNRC to the Borrower in an amount ofat least $50,001.
"2010C First Advance" means the first advance of funds of the 2010C Loan by the
DNRC to the Borrower.
"2010 Loans" or "Loan" means, collectively, the 2010A Loan, 2010B Loan, and the
201 OC 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 Project, to fund a deposit to the Reserve Account and to pay costs of issuance of the Series
2010 Bonds.
"2010A Loan" means the loan made to the Borrower by the DNRC pursuant to the
Program in the maximum amount of the 201 OA Committed Amount to provide funds to pay a
portion of the costs of the 2010 Project payable under the Program.
"201 OB Loan" means the loan made to the Borrower by the DNRC pursuant to the
Program in the maximum amount of the 2010B Committed Amount to provide funds to pay a
portion of the costs of the 2010 Project payable under the Program, to fund deposits to the
Reserve Account, and to pay costs of issuance of the Series 2010 Bonds.
"201 OC Loan" means the loan made to the Borrower by the DNRC pursuant to the
Program in the maximum amount of the 201 OC Committed Amount to provide funds to pay a
portion of the costs of the 2010 Project payable under the Program, to fund deposits to the
Reserve Account, and to pay costs of issuance of the Series 2010 Bonds.
"2010 Project" means the designing and engineering of the facilities, improvements and
activities financed, refinanced or the cost of which is being reimbursed to the Borrower with
proceeds of the 2010 Loans, described in Appendix A hereto.
7
"Undisbursed Committed Amount" means any undisbursed Committed Amount which is
not required to pay costs of the 2010 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.
(b) Tenns in the singular include the plural and vice versa.
( c) All references to time shall refer to Helena, Montana time, unless otherwise provided
herein.
( cl) All references to mail shall refer to first-class mail postage prepaid.
( e) Words of the masculine gender shall be deemed and construed to include correlative
words of the feminine and neuter genders.
(f) "Or" is not exclusive, but is intended to permit or encompass one, more or all of the
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 Project;
Appendix B-1: the form of the Series 201 0A Bond;
Appendix B-2: the form of the Series 2010B Bond;
Appendix B-3: the form of the Series 2010C Bond;
Appendix C: additional agreements and representations of the Borrower; and
Appendix D: ARRA 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 BotTower is authorized to issue
and sell its revenue bonds payable during a tenn 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
8
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 Project. After investigation of the facts and as authorized by the Act, this
Commission has dcte1mined it to be necessary and desirable and in the best interests of the
Borrower to acquire and construct the 2010 Project.
( cl) Outstanding Bonds. There are currently no outstanding bonds or indebtedness of the
Borrower that are payable from or secured by revenues of the System in that no Bonds or other
indebtedness have been issued under the Original Resolution.
( e) Series 2010 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 201 OA Bond in the maximum
principal amount of $390,700, the Series 2010B Bond in the maximum principal amount of
$359,300 and the Series 2010C Bond in the maximum principal amount of$1,223,000, with the
Series 201 OB Bond and the Series 201 0C Bond payable from and secured by the Net Revenues.
For purposes of the foregoing certificate, principal of and interest on the 201 0A Loan are
disregarded and interest on the Series 201 OB Bonds is assumed to be 1. 7 5%. The Borrower
acknowledges and agrees that if it fails to deliver timely an acceptable ARRA Certificate and
P"-equest as provrided in Section 5.1 of this Supplemental Resolution as determined in the sole and
complete discretion of the DNRC, or the 2010 Project or work thereon is otherwise determined
not to comply with ARRA, then principal and interest and surcharges will become due and
owing on the Series 2010A Bond and the Series 2010B 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 an ARRA Noncompliance Statement, to the extent required by
Section 6. 7 of the Original Resolution, implemented as provided in Section 12.2 hereof, 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) The total cost of the 2010 Project and costs of issuance and funding the reserve is
estimated to be $1,973,000, which will be paid from proceeds of the Series 2010 Bonds.
Section 2.2 Representations. The Borrower represents as follows:
(a) Organization and Authority. The Borrower:
(I) 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 cunent
activities with respect to the System, to adopt this Supplemental Resolution and to enter
9
into the Collateral Documents and to issue the Series 20 l 0 Bonds and to caITy out and
consummate all transactions contemplated by the Supplemental Resolution, the Series
20 l 0 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
perfonnance of its obligations under this Supplemental Resolution, the Series 20 l 0
Bonds and the Collateral Documents and the incurrence of the Debt evidenced by the
Series 2010 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 comi 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 2010 Bonds and the Collateral Documents, or the financial condition of
the BotTower, or the transactions contemplated by the Resolution, the Series 2010 Bonds and the
Collateral Documents or the validity and enforceability of the Resolution, the Series 2010 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 Project, the Series 2010 Bonds or
any Collateral Documents and the period for filing any such petition will have expired before
issuance of the Series 2010 Bonds.
( c) Borrowing Legal and Authorized. The adoption of this Supplemental Resolution, the
execution and delivery of the Series 2010 Bonds and the Collateral Documents and the
consummation of the transactions provided for in this Supplemental Resolution, the Series 2010
Bonds and the Collateral Documents and compliance by the Borrower with the provisions of the
Resolution, the Series 2010 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
(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 20 l 0 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, charier or other instrument to which it is a
10
pa1iy 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 terms hereof or of the Series 20 IO Bonds and the Collateral Documents.
( e) Governmental Consent. The BotTower has obtained or made all permits, findings and
approvals required to the date of adoption of this Supplemental Resolution by any governmental
body or officer for the making and perfonnance by the Borrower of its obligations under this
Supplemental Resolution, the Series 2010 Bonds and the Collateral Documents (including any
necessary water rate increase) or for the 2010 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 2010 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 te1ms of the Resolution and the Collateral Documents,
including approving any necessary sewer rate increases.
(f) Binding Obligation. The Resolution, the Series 2010 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 Project. The 2010 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
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 2010 Bonds and the Collateral
Documents and to pledge any revenues or other property pledged to the payment of the Series
2010 Bonds.
(i) Compliance With Law. The Borrower:
(I) is in compliance with all laws, ordinances, governmental mles 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
I 1
(2) has obtained all licenses, pennits, 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 2010 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 prope1iy 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 caITy 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 BoITower. Each policy must provide that it cannot be
cancelled by the insurer without giving the BoITower and the DNRC 30 days' prior written
notice. The BoITower 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 caITier of each new or replacement policy. Such
notice shall specifically note any adverse change as being an adverse change. The BoITower
shall deliver to the DNRC at Closing a certificate providing the information required by this
Section 2.3(a).
(b) Right ofinspection 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 BoITower
for the purpose of inspecting the System or any or all books and records of the BoITower 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 20 IO Bonds and the Collateral Documents and to realize thereon, and record and file and
re-record and refile 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 2010 Bonds and
the Collateral Documents.
(d) Maintenance of Security, if Any; Recordation of Interest.
12
( l) 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 2010 Bonds;
(2) The Borrower shall forthwith, after the execution and delivery of the Series
20 l O 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 instrnments that may be requested by the DNRC for such perfection
and protection; and
(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 20 IO 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 Project shown
separately; and
(2) when adopted, the final budget for the System, with items for the 2010 Project
shown separately.
(g) 2010 Project Accounts. The Borrower shall maintain 2010 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.
13
(i) Compliance with Clean Water Act and ARRA. The BotTower has complied and
shall comply with all conditions and requirements of the Clean Water Act pertaining to the 2010
Loans and the 20 l 0 Project. The BoITower understands and agrees that the 201 0A Loan and the
2010B Loan are being made with funds made available to the DNRC under ARRA. The
BotTower has complied and shall comply with all requirements of ARRA applicable to the 2010
Loans.
(j) Program Covenant. The Bonower 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 aITangement, acquire bonds issued by the State under the Indenture in an
amount related to the amount of the Se1ies 2010 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 2010 Bonds or any other funds of the Borrower in respect of the 2010
Project or the Series 2010 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 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.
(d) Any portion of the 2010 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 Project being financed shall be
acquired by and shall, dming 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
Project or a portion thereof to another Governmental Unit which is also a Public Entity if such
transfer is otherwise pennitted 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 po1iion of the 2010 Project which has become obsolete or outmoded or
14
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 2010 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 2010 Loans it will not contract with
or permit any Private Person to manage the 20 l O 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 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 defauit to occur under the Resolution; provided the Borrower may lease all or any
portion of the 2010 Project to a Nonexempt Person pursuant to a lease which in the Opinion of
Bond Counsel delivered to the DNRC wili 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 Project if (i) such change
will violate the Clean Water Act, or (ii) so long as the State Bonds are outstanding 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 20 IO 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 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 2010 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
15
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 2010 Bonds and the Collateral Documents, and (a)
such action does not result in any default in the perforn1ance or observance of any of the tenns,
covenants or agreements of the Borrower under the Resolution, the Series 2010 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 2010 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 Project
Section 3.1 Use of Proceeds. The Borrower shall apply the proceeds of the 2010
Loans from the DNRC solely as follows:
( a) The Borrower shall apply the proceeds of the 2010 Loans solely to the financing,
refinancing or reimbursement of the costs of the 2010 Project as set forth in Appendix A hereto
and this Section 3.1. The 2010 Loans will be disbursed in accordance with ARTICLE IV hereof
and Article VII of the Indenture. If the 2010 Project has not been completed prior to Closing, the
Borrower shall, as quickly as reasonably possible, complete the 2010 Project and expend
proceeds of the 2010 Loans to pay the costs of completing the 2010 Project.
(b) No portion of the proceeds of the 2010 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 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
16
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 Project. Set forth in Appendix A to this Supplemental
Resolution is a description of the 20 IO Project, which describes the property which has been or is
to be acquired, installed, constructed or improved and the other activities, if any to be funded
from the Loan (the 2010 Project may consist of more than one facility or activity), and an
estimated budget relating to the 20 IO Project, including the amount of proceeds of the 201 OA
Loan and the 20108 Loan estimated to be applied to Green Infrastructure. The 2010 Project may
be changed and the description thereof in Appendix A may be amended from time to time by the
Borrower 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 Project, an increase or decrease in the amount of Loan proceeds
which will be required to complete the 2010 Project and providing whether the change will delay
the full execution and delivery of the Construction Contract;
(b) A certificate of Independent Consultant that the change to the 2010 Project in no way
adversely affects or diminishes the eligibility of the 2010 Project for ARRA funding or the
various attributes of the 2010 Project as that relates to ARRA (such as, for example, the amount
of green construction);
(c) A written consent to such change in the 2010 Project by an Authorized DNRC
Officer;
( d) An Opinion or Opinions of Bond Counsel stating that the 2010 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 2010 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
2010 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; and
( e) In the event the change to the 2010 Project has the effect of reducing the amount of
the Committed Amount, the written consent of the Borrower to reallocation of the Committed
Amount between the 2010A Loan and the 2010B Loan, ifrequired by the DNRC, as described in
Section 5.6 below.
The Borrower acknowledges and agrees that an increase in the principal amount of the
2010 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 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
17
or supplemented arc 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 2010 Loans to pay costs of the
2010 Project or as to the availability of additional funds under the Program to increase the
principal amount of the Loan.
Section 3 .3 2010 Project Representations and Covenants. The Borrower hereby
represents to and covenants with the DNRC that:
(a) construction of the 2010 Project did not commence prior to February 17, 2009, and
the Construction Contract relating to the 2010 Project will be fully executed and delivered by no
later than February 16, 2010;
(b) all construction of the 2010 Project has complied and will comply with all federal and
state standards, including, without limitation, EPA regulations and standards and the
requirements of ARRA;
(c) all future construction of the 2010 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;
(d) all future construction of the 2010 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;
( e) the iron, steel, and manufactured goods used in the 2010 Project comply with the
"buy American" requirements of Section 1605 of ARRA, as those requirements are further
interpreted by applicable EPA guidance;
( f) all laborers and mechanics employed by contractors and subcontractors on the 2010
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 IV of chapter 31 of title 40, United States Code;
(g) the 2010 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;
(h) the Borrower will undertake the 2010 Project promptly after the Closing Date and
will cause the 2010 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 BotTower that the 2010 Project will be
substantially completed by the Estimated Completion Date; and
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(i) the Borrower agrees to provide information regarding jobs created and retained as a
result of the 2010 Project and such other information regarding the 20 IO Project, including
info1mation for the website www.montanarecovery.gov, to the DNRC and the DEQ upon the
request for such information by the DNRC or the DEQ or both, and to post signage at the site of
the 2010 Project that designates the 2010 Project as an ARRA funded project.
Section 3 .4 Completion or Cancellation or Reduction of Costs of the 20 IO Project.
(a) Upon completion of the 2010 Project, the Bonower shall deliver to the DNRC a
certificate stating that the 2010 Project is complete and stating the amount, if any, of the
Undisbursed Committed Amount. If Appendix A describes two or more separate projects as
making up the 2010 Project, a separate completion certificate shall be delivered for each.
(b) If all or any portion of the 2010 Project is cancelled or cut back or its costs are
reduced or for any other reason the Borrower will not require the full Committed Amount, the
Bonower shall promptly notify the DNRC in writing of such fact and the amount of the
Undisbursed Committed Amount.
( c) If there is any Undisbursed Committed Amount, the DNRC reserves the right under
Section 5.6 below to reallocate the amount equal to the Committed Amount as reduced by the
Undisbursed Committed Amount between the 2010A Loan and the 20108 Loan, as more
particularly provided in Section 5.6.
Section 4.1
ARTICLE IV
THE LOAN
The Loan; Disbursement of Loan.
(a) The DNRC has agreed to lend to the Borrower, from time to time as the requirements
of this Section 4.1 are met, an amount up to (i) $390,700 (the "20 I 0A Committed Amount"), (ii)
$359,300 (the "2010B Committed Amount"), and (iii) $1,223,000 (the "2010C Committed
Amount") for the purposes of financing, refinancing or reimbursing the Bonower for a portion of
the costs of the 2010 Project; provided the DNRC shall not be required to loan any proceeds of
the State Bonds to the Bonower 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 and
subject to the operation of Section 5.6
(b) The DNRC intends to disburse the 2010 Loans through the Trustee. In consideration
of the issuance of the Series 2010 Bonds by the Bonower, the DNRC shall make, or cause the
Trustee to make, a disbursement of all or a portion of the 2010 Loans upon receipt of the
following documents:
(1) an Opinion of Bond Counsel as to the Series 2010A Bond and an opinion of
Bond Counsel as to the validity and enforceability of the Series 20 I OB Bond and 20 l 0C
Bond and the security therefor and stating in effect that interest on the Series 20 I OB
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Bond and the Series 20 l 0C Bond is not includable in gross income of the owner thereof
for purposes of federal income taxation, in form and substance satisfactory to the DNRC;
(2) the Series 20 I 0A Bond, the Series 20 l OB Bond, and the Series 20 I 0C Bond,
folly executed and authenticated;
(3) a certified copy of the Original Resolution and this Supplemental Resolution;
(4) any other security instruments or documents required by the DNRC or DEQ
as a condition to their approval of the 20 l 0 Loans;
(5) if all or paii 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
incurred 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 1.150-2 of the Regulations;
( 6) the items required by the Indenture for the portion of the 2010 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 2010 Loans to pay costs of the
2010 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) From and after the 2010B First Advance, the 2010 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 201 OB First Advance will be
advanced from the 201 OB Loan.
(2) Second, after the 201 OB First Advance has been disbursed to
the Borrower, the entire amount of the 201 0A Loan may then be disbursed to the
Borrower as and when needed. For the avoidance of doubt, any amounts of the
2010 Loans to be disbursed at Closing in excess of the 20 l OB First Advance will
be disbursed as proceeds of the 2010A Loan to the extent of the 2010A
Committed Amount.
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(3) Third, after the entire principal amount of the 2010A Loan has
been disbursed to the Borrower, the remaining amount of the 20 I OB Loan, if any,
will be disbursed to the Borrower as and when needed.
(4) Fourth, only after the full amount of the 2010A Loan and
20 I OB Loan has been disbursed to the Borrower, the Borrower may apply to the
costs of the 20 IO Project any other funds available to it, including grants or other
funds, and including amounts under the 20 I OC Loan, which will be disbursed to
the Borrower, starting with the 20 I OC First Advance, as and when needed.
( e) The Borrower shall submit the request for the 20 I OB First Advance and the 20 I OC
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
2010B First Advance and the 2010C First Advance, respectively. The Borrower shall not be
entitled to, and the DNRC shall have no obligation to make, the 20 I OB First Advance or the
201 OC First Advance or any subsequent advance of amounts under the 201 OB Loan or the 20 I OC
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 the requirements of the
Clean Water Act shall be established by the DNRC and the Borrower at Closing. The Trustee
shall disburse 2010 Loan amounts directly to the holder of the debt being refinanced according to
such schedule. If the Borrower should repay all or a portion of the debt to be refinanced from
other sources or should otherwise not need any portion of the 2010 Loan which was to have been
used to refinance such debt, it shall inform the DNRC and the Trustee of such fact pursuant to
Section 3.4(b) and a new disbursement schedule shall be drawn up by the DNRC. The DNRC
shall obtain a receipt from the holder of the debt being refinanced for each disbursement made to
pay or prepay a portion of such debt.
(g) If all or a portion of the 2010 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 the Closing.
(h) Notwithstanding anything else provided herein, the Trustee shall not be obligated to
disburse the 2010 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 201 OA Loan disbursement, 201 OB Loan disbursement, and 20 I OC
Loan Disbursement, the Trustee shall note such disbursement on Schedule A to the Series 201 OA
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Bond, Series 20 l OB Bond, and the Series 20 I 0C Bond, respectively. A Schedule A reflecting
the amount of the 201 OB First Advance and the 201 0C First Advance will first be attached to the
Series 201 OB Bond and the Series 201 0C Bond, respectively, at Closing.
(j) The Borrower agrees that it will deposit in the Reserve Account upon receipt thereof,
on the date of the 2010B First Advance and any subsequent disbursement dates, any proceeds of
the 20 l OB Loan borrowed for the purpose of increasing the balance in the Reserve Account to
the Reserve Requirement. The Borrower furiher acknowledges and agrees that any portions of
the 20 l 0 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
2010 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.
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 the 201 OB Loan proceeds.
Section 4.3 Termination of Loan Term. The Borrower's obligations under the
Resolution and the Collateral Documents in respect of the Series 2010 Bonds shall terminate
upon payment in full of all amounts due under the Series 2010 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 2010 LOANS
Section 5.1 Repayment of 2010 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 an ARRA Statement is delivered by
the DNRC to the Borrower and so long as the Borrower's obligation to repay the principal of the
201 OA 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 (i) the Series 201 0A Bond bear interest at the rate
22
of zero percent (0.00%) per annum from the date of each advance; and (ii) the Series 20 I OB
Bond bear interest at the rate of one and seventy-five hundredths of one percent (1.75%) per
annum; provided, however, if the DNRC delivers to the Borrower an ARRA Noncompliance
Statement, then all principal of the Series 201 OA 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
20 I OA Bond and the Series 20 I OB 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 elate of each advance under the Series 20 I OA Bond and
Series 201 OB Bond. The 20 I OC 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 20 I OC Loan. If the obligation of
the Borrower to repay the principal amount of the 20 I OA Loan is not forgiven under Section
5.1.2 below, for purposes of this Resolution and the Program, with respect to the 201 OA Loan,
the 201 OB Loan, and the 20 I OC Loan, the term "interest on the 2010 Loans" or "interest on the
201 OA Loan" or "interest on the Series 20 I OB Loan" or "interest on the Series 201 OC 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 of360 days comprising 12 months of 30 days each.
5.1.2. Repayment of2010A Loan; Principal Forgiveness.
(a) The Borrower is obligated to repay the principal of and interest and Administrative
Expense Surcharge and Loan Loss Reserve Surcharge on the 2010A Loan, unless the DNRC
forgives the Borrower's obligation to repay the principal of the 201 OA Loan as provided in
Section 5. l .2(b ). Subject to the provisions of Section 5. l .2(b ), the Loan Repayments and the
Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the 201 OA 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 201 OA
Loan shall be payable from and after the date of each advance of principal
of the 2010A 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 January 1, 2030;
and
(2) the principal of the 2010A 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 an ARRA Noncompliance Statement, and concluding on
January 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 20 IO Project through the final advance of principal of the 20 I OB Loan and the
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BotTower has executed and delivered the ARRA 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 ARRA Certificate and Request is provided to the BotTower by the DNRC, the DNRC will,
following review and approval of the ARRA Certificate and Request, deliver to the Borrower an
ARRA Forgiveness Statement and the BotTower will thereafter have no obligation to repay
amounts advanced under the Series 201 0A Bond or interest or surcharges thereon and the Series
201 0A Bond will be marked "CANCELLED" and returned by the DNRC to the BoITower.
However, in the event the BotTower fails to deliver timely the ARRA Certificate and Request, or
the BotTower cannot submit the ARRA Certificate and Request because it cannot make the
certifications required therein, including without limitation, those related to ARRA, or the
ARRA 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 Project or any portion
thereof or of the work relating thereto fails to comply with ARRA, then the DNRC will deliver to
the BotTower an ARRA Noncompliance Statement. Upon delivery of an ARRA Noncompliance
Statement by the DNRC to the Bonower, all principal advanced or to be advanced under the
Series 201 0A 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 an ARRA Noncompliance Statement (i)
the Series 201 OA 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 three (3) months after the date of delivery to the Bo1TOwer by the DNRC of an ARRA
Noncompliance Statement.
5.1.3. Repayment of2010B Loan.
(a) Subject to the provisions of Section 5.1.3(b), the Loan Repayments on the
201 OB Loan from and after the 201 OB First Advance and all subsequent advances of the 201 OB
Loan are as follows:
( 1) interest on the outstanding principal balance of the 201 OB Loan shall be
payable on each Payment Date, beginning on July 1, 2010 and concluding
on January 1, 2030 at the rate of 1.75% per annum;
(2) the Borrower shall have no obligation to pay any Administrative Expense
Surcharge or any Loan Loss Reserve Surcharge; and
(3) the principal of the 2010B Loan shall be repayable on each Payment Date,
beginning on July 1, 2010 and concluding on January 1, 2030, and the
amount of each principal payment shall be calculated on the basis of
substantially level debt service at an interest rate of 1.75% per annum.
24
(b) Notwithstanding the provisions of Section 5. l .3(a), upon the delivery by
the DNRC to the Borrower of an ARRA Noncompliance Statement, Loan Repayments and the
Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the 201 OB Loan
required by this Section 5.1 shall be clue on each Payment Date from and after the delivery of
such statement, as follows:
(1) interest and the Administrative Expense Surcharge and the Loan Loss
Reserve Surcharge on the outstanding principal balance of the 201 OB
Loan shall be payable from and after the elate of the 201 OB First Advance
and each advance of principal of the 201 OB Loan thereafter on each
Payment Date following the date of delivery of an ARRA Noncompliance
Certificate at the rate of 3. 75% per annum, beginning on the first Payment
Date to occur after the ARRA Noncompliance Certificate has been
delivered and concluding on January I, 2030; and
(2) the principal of the 2010B Loan shall be repayable on each Payment Date,
beginning on the first Payment Date to occur after the date of the delivery
of an ARRA Noncompliance Certificate and concluding on January 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,
taking into account each Loan Repayment, if any, made pursuant to
Section 5.l.3(a).
( c) The adjustment to the rate of interest paid on the Series 201 OB Bond
resulting from the provisions of Section 5. l.3(b) will not extend the final maturity date of the
Se1ies 2010B Bond and interest at the adjusted rate, induding surcharges, shall be payable on
each advance of principal of the Series 20 I OB Bond from the date of the advance, beginning
with the 2010B First Advance, at the rates specified in Section 5. l.3(b ); provided that, the
Borrower is entitled to a credit against such payments equal to an amount then paid by the
Borrower under Section 5. l.3(a).
5.1.4. Repayment (!f2010C Loan. The Loan Repayments on the 2010C Loan
required by this Section 5.1 shall be due on each Payment Date, as follows:
(1) interest and Administrative Expense Surcharge and Loan Loss Reserve
Surcharge on the outstanding principal balance of the 201 OC Loan shall be
payable on each January 1 and July I, beginning on the first to occur of
either of such dates following the date of the 201 OC First Advance, which
is the first Payment Date after the 201 OC First Advance, but in any event
no earlier than July I, 20 IO and concluding on January I, 2030; and
(2) the principal of the 20 I OC Loan shall be repayable on each Payment Date,
beginning on the January I or July l that is the first to occur following the
date of the 2010C First Advance, but in any event no earlier than July I,
20 l 0, and concluding January 1, 2030, and the amount of each principal
payment shall be calculated on the basis of a substantially level debt
25
service at a rate of3.75% per annum; provided that principal of the 2010C
Loan is payable only in amounts that are multiples of $1,000.
5.1.5. Details Regarding 2010 Loan Repayments. Loan Repayments and
the Administrative Expense Surcharge and the Loan Loss Reserve Surcharge on the 2010C Loan
and, if applicable, on the 201 OA Loan and the 201 OB Loan, shall be due on the dates specified
above and on the dates and in the amounts shown in Schedule B to the Series 201 OA Bond, the
Series 201 OB Bond, and the Series 201 OC Bond, as such Schedule B shall be modified from time
to time as provided in Sections 5.1.2 and 5.1.3 and below. Schedule B will first be attached to
the Series 201 OA Bond and the Series 201 OB Bond at Closing. The portion of each such Loan
Repayment consisting of principal and the portion consisting of interest shall be set forih on
Schedule B to the Series 201 OB Bond and the portion of each 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 201 OA Bond at Closing and in Schedule B to the Series 201 OC Bond on the date of
the 201 OC First Advance ( and in Schedule B to the Series 201 OB Bond upon delivery of an
ARRA Noncompliance Statement). Upon each disbursement of2010 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 applicable Series 201 OA Bond, the Series 201 OB Bond,
and the Series 201 OC Bond under "Advances" and the total amount advanced under Section 4.1,
including such disbursement, under "Total Amount Advanced."
Interest in respect of the Series 201 OB Bond on such advance shall accrue
from the date the advance is made at the rate of 1. 75% per annum and shall be payable on each
Payment Date thereafter, subject to the operation of the following sentence. If the DNRC shall
have delivered an ARRA Noncompliance Statement, then the Trustee shall revise the Schedule B
to the Series 201 OB Bond to reflect interest and surcharges totaling 3. 7 5% per annum in
accordance with Section 5 .1.3(b ), and Schedule B to the Series 201 OA Bond shall continue to
reflect interest and surcharges on amounts advanced under the Series 2010A Bond at 3.75% per
annum, as may be revised to reflect the full principal amount advanced under the Series 201 OA
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
ARRA Noncompliance Statement. If the DNRC delivers an ARRA Forgiveness Statement,
Schedule B to the Series 201 OA Bond will be disregarded and of no effect and Schedule B to the
Series 201 OB Bond will continue to reflect a debt service schedule with payments at 1. 75% per
annum, and the Trustee shall send a copy of the final Schedule B to the Series 201 OB Bond
showing the full principal amount advanced under the Series 2010B Bond to the Borrower within
one month after the delivery of such ARRA Forgiveness Statement.
The payments of principal of and interest and Administrative Expense
Surcharge and Loan Loss Reserve Surcharge on the 2010C Loan shall be due on the dates and in
the amounts shown in Schedule B to the Series 201 OC 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 201 OC Bond. Upon each disbursement of 201 OC Loan
26
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 20 I 0C 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 201 0C 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 201 OB Bond and the
Series 201 0C Bond and, if applicable, the Series 201 0A Bond, and the Administrative Expense
Surcharge and the Loan Loss Reserve Surcharge as to the Series 201 0C Bond, and, if applicable,
the Series 201 0A Bond and the Series 201 OB Bond under this Section 5.1 shall be credited
against the same payment obligation under each of the Series 201 0C Bond and, as applicable, the
Series 201 OB Bond and the Series 201 0A 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
Loan, if the Borrower so chooses, all reasonable expenses of the DNRC and the Trustee in
connection with the 2010 Loans, the Collateral Documents and the Series 2010 Bonds, including,
but not limited to:
(a) the cost ofreproducing this Supplemental Resolution, the Collateral
Documents and the Series 2010 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 2010 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 2010 Bonds, whether or not the Series
2010 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 2010 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 2010B Bond, the Series 2010C Bond, and, if
applicable, the Series 20 l 0A Bond, unless (i) an ARRA 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
27
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 2010 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 ()bligations of Borrower Unconditional. The obligations of the Borrower
to make the payments required by the Resolution and the Series 2010 Bonds and to perfonn its
other agreements contained in the Resolution, the Series 2010 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 2010 Bonds, (b) shall perform all its other agreements in the Resolution, the Series
2010 Bonds and the Collateral Documents and ( c) shall not terminate the Resolution, the Series
2010 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 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 perform any of its agreements, whether express or implied, or any duty, liability
or obligation arising from or connected with the Resolution.
Section 5.5 Limited Liability. All payments of principal of and interest on the 2010
Loans and other payment obligations of the Borrower hereunder and under the Series 2010
Bonds shall be special, limited obligations of the Borrower payable solely out of the Net
Revenues or, as appropriate, Surplus Net 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 2010 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 2010 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 2010
Bonds.
Section 5.6 Reallocation of 2010 Loans. The Borrower understands that the principal
amounts of the 201 OA Loan and the 201 OB Loan have been sized based on the understanding
and expectation that the 2010 Project costs at least $750,000 and that the Borrower will request
disbursement of the full amount of the 2010A Loan and 2010B Loan. Notwithstanding any
provision to the contrary herein, the Borrower acknowledges and agrees that in the event there is
any Undisbursed Committed Amount, then the DNRC reserves the right in its sole and complete
discretion to reallocate loan amounts as between the 2010A Loan and 2010B Loan on the basis
of the amounts of the 2010A Loan and the 2010B Loan that the Borrower would have been
entitled to had the 2010 Loans initially equaled the Committed Amount less the Undisbursed
Committed Amount. The reallocation between the 201 OA Loan and 201 OB Loan will reflect the
same proportions of the 2010 Loans originally allocated to the 2010A Loan and 2010B Loan.
Upon making such reallocation, the DNRC shall deliver to the Borrower a replacement Series
28
201 OA Bond and a replacement Series 201 OB Bond reflecting adjusted principal amounts, which
bonds shall supersede and render of no effect the original bonds and be payable on the same
dates as described in the original bonds, but in an adjusted amount owing on each Payment Date
because of the reallocation of principal amounts. The Borrower shall execute and deliver the
replacement Series 201 OA Bond and the replacement Series 201 OB Bond to the DNRC within
thi1iy (30) days after deli very of such bonds to the Borrower by the DNRC. Contemporaneous
with the delivery of the replacement Series 201 OA Bond and the replacement Series 201 OB Bond
to the DNRC by the Borrower, the Borrower shall determine whether the Net Revenues of the
System total at least 125% of the maximum principal of and interest payable on the Bonds
outstanding in any Fiscal Year, and, if they do not, the Borrower shall increase its rates and
charges to satisfy the rate covenant set forth in Section 6. 7 of the Original Resolution, as
implemented as described in Section 12.2 below, within three (3) months after the date of
delivery of the replacement Series 2010A Bond and the replacement Series 2010B Bond to the
DNRC by the Borrower.
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 Project. The Borrower 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 of the 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 2010 Bonds.
Section 7.2 Assignment by DNRC. The DNRC will pledge its rights under and
interest in the Resolution, the Series 20 IO 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.
29
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
Resolution to State Bonds and Additional State Bonds shall be deemed to refer to the refunding
bonds and any bonds of the State on a parity with such refunding bonds (together, the
"Refunding Bonds") or, in the case of a crossover refunding, to the State Bonds and Additional
State Bonds and the Refunding Bonds. [n the event the State Bonds are refunded by an issue of
Additional State Bonds, all references in the Resolution to the State Bonds shall be deemed to
refer to such Additional State Bonds or, in the case of a crossover refunding, both the State
Bonds and such Additional State Bonds.
ARTICLE VIII
THE SERIES 2010 BONDS
Section 8.1 Net Revenues Available. The Borrower is authorized to charge just and
equitable rates, charges and rentals for all services directly or indirectly furnished by the System,
and to pledge and appropriate to the Series 2010B Bond and the Series 201 0C Bond the Net
Revenues (and in respect of the Series 2010A Bond, if necessary, the Surplus Net Revenues) to
be derived from the operation of the System, including improvements, betterments or extensions
thereof hereafter constructed or acquired. The Net Revenues to be produced by such rates,
charges and rentals during the term of the Series 2010B Bond and the Series 2010C Bond are
expected to be more than sufficient to pay the principal and interest when due on the Series
201 OB Bond and the Series 201 0C Bond, and to create and maintain reasonable reserves therefor
and to provide an adequate allowance for replacement and depreciation, as prescribed herein.
For purposes of the foregoing statement, principal of and interest on the 201 OA Loan are
disregarded, and interest on the Series 2010B Bond is assumed to be 1.75%. The Borrower
acknowledges and agrees that if the DNRC delivers an ARRA Noncompliance Statement to the
Borrower as provided in Section 5 .1.2 as determined in the sole and complete discretion of the
DNRC, then principal and interest and surcharges will become due and owing on the 201 0A
Loan evidenced by the Series 2010A Bond and the 2010B Loan evidenced by the Series 2010B
Bond as provided in Section 5.1 and the Borrower shall thereupon, and no later than three
months after delivery of such a statement, to the extent required by Section 6. 7 of the Original
Resolution, as implemented as described in Section 12.2 below, 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.
Section 8.2 Issuance and Sale of the Series 2010 Bonds. The Commission has
investigated the facts necessary and hereby finds, determines and declares it to be necessary and
desirable for the Borrower to issue the Series 2010 Bonds to evidence the 2010 Loans. The
Series 2010 Bonds are issued to the DNRC without public sale pursuant to Montana Code
Annotated, Section 7-7-4433(2)(a).
Section 8.3 Terms. The Series 201 0A Bond, the Series 201 OB Bond, and the Series
2010C Bond shall be in the maximum principal amount equal to the original 2010A Committed
Amount, 201 OB Committed Amount, and 20 l 0C 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 interest at the rate charged by the DNRC on the 20 l 0A Loan, 20 I OB
30
Loan, and 201 0C Loan, respectively. The principal of and interest on the Series 201 OB Bond
and the Series 201 0C Bond, and, if applicable, the principal of and interest on the Series 201 0A
Bond and any Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall be
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 20 I 0A Bond or Series 201 OB
Bond or Series 2010C Bond shall be deemed made when advances of the 2010A Loan or 2010B
Loan or 201 0C Loan, respectively, are made under Section 4.1, and such advances shall be
payable in accordance with Schedule B to the Series 201 OB Bond, the Series 20 I 0C Bond, and,
if applicable, the Series 201 0A 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 20 I 0A Bond is a Subordinate
Obligation payable only from the Surplus Net Revenues available in the Fund. The Series
201 OB Bond and the Series 20 l 0C Bond are Bonds.
The Borrower may prepay the Series 2010 Bonds, in whole or in part, only upon the
terms and conditions under which it can prepay the 2010 Loans under Section 5.3.
Section 8.4 Negotiability, Transfer and Registration. The Series 2010 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 2010
Bonds shall be payable to the DNRC at the Office of the Department of Natural Resources and
Conservation, 1625 Eleventh A venue, Helena, Montana 59620-1601 or such other place as may
be designated by the DNRC in writing and delivered to the Borrower. The Series 2010 Bonds
shall be negotiable, subject to the provisions for registration and transfer contained in this
Section. No transfer of the Series 2010 Bonds shallbe 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 2010 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 2010
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 2010 Bonds is registered as the absolute owner of the
Series 2010 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 2010 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 2010 Bonds. The Series 2010 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 2010
Bonds shall cease to be officers of the Borrower before the Series 20 IO Bonds are issued or
delivered, their signatures shall remain binding upon the Borrower. Conversely, the Series 2010
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 2010 Bonds shall be delivered to the
DNRC, or its attorney or legal representative.
31
Section 8.6 Form. The Series 2010A Bond shall be prepared in substantially the form
attached as Appendix 8-l, the Series 201 OB Bond shall be prepared in substantially the form
attached as Appendix B-2, and the Series 201 0C Bond shall be prepared in substantially the fonn
attached as Appendix 8-3.
Section 8. 7 Acquisition and Construction Account. To the Acquisition and
Construction Account shall be credited as received the portion of the proceeds of Series 2010
Bonds for costs of the 20 IO Project and for costs of issuance of the Series 2010 Bonds and any
other funds appropriated by the Borrower to the Acquisition and Construction Account for
improvements to the System, and all income received from the investment of the Acquisition and
Construction Account.
ARTICLE IX
SECURITY FOR THE SERIES 2010 BONDS
The Se1ies 20 I OB Bond and the Series 201 0C Bond are issued as Bonds under the
Original Resolution, as implemented as described in this Supplemental Resolution, and shall,
with 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 2010B Bond and the Series 2010C Bond,
the Director of Finance of the Borrower shall transfer from proceeds of the Series 201 OB Bond
and the Series 201 0C 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
the each advance of the Series 2010B Bond and the Series 2010C 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 201 OB Bond and the Series 201 0C Bond so
advanced. The Series 201 0A 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
201 0A 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 20 I 0A Bond, the Borrower shall cause rates and charges to be 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
an ARRA Noncompliance Statement. The Borrower shall keep, perform and observe each and
every one of its covenants and undertakings set forth in the Resolution for the benefit of the
registered owners from time to time of the Series 2010 Bonds.
32
ARTICLE X
TAX MATTERS
Section l 0.1 Use of 2010 Project. The 20 l O 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 20 l O Project or the System or security for the payment of the
Series 20 l OB Bond and the Series 20 l OC Bond which might cause the Series 20 l OB Bond or the
Series 20 l OC 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.
Section l 0.2 General Covenant. The Borrower covenants and agrees with the owners
from time to time of the Series 201 OB Bond and the Series 201 OC 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 201 OB Bond and the Series 20 l OC 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 201 OB Bond
and the Series 201 OC 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 20 lOB Bond and the Series 201 OC 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 l .148-2(6) of lhe
Regulations, stating that on the basis of facts, estimates and circumstances in existence on the
date of issue and delivery of the Series 201 OB Bond and the Series 201 OC Bond, it is reasonably
expected that the proceeds of the Series 2010B Bond and the Series 2010C Bond will be used in
a manner that would not cause the Series 201 OB Bond and the Series 201 OC 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 201 OB
Bond and the Series 2010C 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 20 l OB Bond and the Series 201 OC Bond from gross income for federal income tax
purposes, unless the Series 201 OB Bond and the Series 201 OC 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 201 OB Bond and the Series 201 OC 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 Cetiificate, 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.
33
Section l 0.5 Information Reporting. The Borrower shall file with the Secretary of the
Treasury, not later than May 15, 2010, a statement concerning the Series 201 OB Bond and the
Series 2010C 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 2010B Bond and the Series 2010C 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 201 OB Bond and the
Series 20 I 0C 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 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 14l(a) and 145(a) of the Code) will be issued by
or on behalf of the Borrower and all "subordinate entities" of the Borrower 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 2010
Bonds under the Program pursuant to which the State issues from time to time State Bonds to
provide funds therefor. The Borrower 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-l 2) 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.
34
ARTICLE XII
IMPLEMENTATION
This Article XII describes the implementation of the provisions of the Original
Resolution as they apply to the Series 2009 Bonds.
Section 12.1 Clean Water Act. References to the "Clean Water Act" shall include any
amendments or supplements to such act as are effected by ARRA.
Section 12.2 Implementation of Original Resolution Section 6.7. For purposes of
construing Section 6.7 of the Original Resolution, principal of and interest on the Series 2010A
Bond shall initially be disregarded and interest on the Series 201 OB Bond shall be 1.75% per
annum. However, in the event the Borrower's obligation to repay the principal of the Series
2010A 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 an
ARRA Noncompliance Statement, cause the rates, charges and rentals to be charged to all
recipients of water 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 (including, without limitation, the Reserve
Requirement determined with the Series 201 OB Bond with interest at 3. 7 5% per annum), to
produce Net Revenues during each fiscal year, not less than 125% of the maximum annual
principal and interest payable on any outstanding Bonds in the current or any future fiscal year
(including, without iimitation, interest on the Series 2010B Bond at 3.75% per annum), and to
produce sufficient Surplus Net Revenues to pay Subordinate Obligations (including, without
limitation, the Series 2010A Bond with interest at 3.75% per annum) as and when due.
ARTICLE XIII
MISCELLANEOUS
Section 13. l 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 A venue
P. 0. Box 201601
Helena, Montana 59620-1601
Attn: Conservation and Resource
Development Division
35
Trustee:
BoITower:
U.S Bank National Association
c/o Corporate Trust Services
1420 Fifth Avenue, ih Floor
Seattle, Washington 9810 I
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 I 3.3 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.
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 13.7 No Liability oflndividual 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 20 IO 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
36
effect as if done on the nominal date provided in this Supplemental Resolution or the Series 2010
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%) 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 Project
or the facility or facilities of which the 2010 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 2010 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 20 l 0 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.
Adopted by the City Commission of the City of Bozeman, Montana, on this 19th day of
January, 2010.
~{b--~ ay r
(SEAL)
37
APPENDIX A
Desctiption of the 2010 Project
The 2010 Project generally consists of construction of a sewer system administration building
and related improvements.
Estimated 2010 Project Budget
Source: ARRA Source: ARRA Source: SRF
Forgiveness Loan 1.75% Loan 3.75% Total:
$390,700 (A) $359,300 (B) $1,223,000 (C)
Debt Service Reserve $22,104.00 $87,938.00 $110,042.00
Costs of Issuance $1,980.00 1,821.00 6,199.00 10,000.00
Construction 388,720.00 335,375.00 955,905.00 1,680,000.00
Contingency 172,958.00 172,958.00
TOT AL PROJECT COSTS $390,700.00 $359,300.00 $1,223,000.00 $1,973,000.00
Green Infrastructure
Of the amount shown above for construction of and improvements to be included in the 2010
Project, the Borrower estimates that $200,000 of the proceeds of the Series 2010A Bond and of the
Series 201 OB Bond will be applied to the costs of Green Infrastructure.
A-1
R-1
APPENDIX 8-1
[Form of the Series 20 l 0A Bond]
UNfTED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLA TIN
CITY OF BOZEMAN
SUBORDINATE LIEN SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM)
TAXABLE SERIES 2010A
$390,700
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 1 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
201 0A Loan is not forgiven and ending on the January 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 201 0A 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 Band any revised Schedule B to be prepared, as provided in Section 5.1 of the
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supplemental resolution authonzing 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%) 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 AN ARRA 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 AN ARRA FORGIVENESS ST A TEMENT, THEN THEREUPON
INTEREST SHALL BE DEEMED TO ACCRUE ON THE PRINCIPAL OF THIS SERIES
2010A 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 HA VE 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 AN ARRA
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 AN ARRA STATEMENT AND INTEREST SHALL BE DEEMED TO
ACCRUE ON THE PRINCIPAL OF THIS SERIES 2010A BOND FROM THE DATE OF
EACH ADVANCE UNTIL DELIVERY OF SUCH A 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 $390,700 (the "Series 201 0A Bond"). The Series
201 OA 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 costs of
issuance of the Series 2010 Bonds. The Series 2010A 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 City adopted on November 16, 2009, as supplemented by Resolution No. 4234, adopted
January 19, 20 IO (as so supplemented, the "Resolution"). Terms used with initial capital letters
but not defined herein have the meanings given to them in the Resolution. The Series 201 0A
Bond is issuable only as a single, fully registered bond. The Series 2010A Bond is issued as a
8-1-2
Subordinate Obligation payable out of available Surplus Net Revenues in the Replacement and
Depreciation Account or the Surplus Account in the Fund of the Bonower. Simultaneously
herewith, the Bonower is issuing its Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 20 I OB (the "Series 20 I OB Bond") and its Sewer
System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series
20 I 0C (the "Series 201 0C Bond") which are payable from the Revenue Bond Account in the
Fund of the Borrower. Following the 20 I OB First Advance, principal amounts of this Series
2010A Bond are advanced until all of the principal of this Series 2010A Bond is advanced prior
to advances under the Series 2010B Bond or the Series 201 0C Bond
Reference is made to the Resolution for a more complete statement of the terms and
conditions upon which the Series 2010A 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 201 OA Bond.
The Borrower may prepay the principal of the Series 2010A Bond only if (i) an ARRA
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 201 0A Bond is prepaid
in part, such prepayments shall be applied to principal payments in inverse order of maturity.
This Series 2010A 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 prov1s10n.
The Borrower may deem and treat the person in whose name this Series 201 OA Bond is
registered as the absolute owner hereof, whether this Series 201 OA 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 20 I 0A Bond may be transferred as hereinafter
provided.
The Borrower understands that the principal amounts of the 201 OA Loan and the 201 OB
Loan have been sized based on the understanding and expectation that the 2010 Project costs at
least $750,000 and that the Borrower will request disbursement of the full amount of the 2010A
Loan and 201 OB Loan. Notwithstanding any provision to the contrary herein, the Borrower
acknowledges and agrees that in the event there is any Undisbursed Committed Amount, then the
DNRC reserves the right in its sole and complete discretion to reallocate loan amounts as
between the 201 OA Loan and 201 OB Loan on the basis of the amounts of the 201 0A Loan and
the 201 OB Loan that the Borrower would have been entitled to had the 2010 Loans initially
equaled the Committed Amount less the Undisbursed Committed Amount. The reallocation
between the 2010A Loan and 2010B Loan will reflect the same proportions of the 2010 Loans
originally allocated to the 2010A Loan and 20108 Loan. Upon making such reallocation, the
DNRC shall deliver to the Borrower a replacement Series 201 0A Bernd and a replacement Series
2010B Bond reflecting adjusted principal amounts, which bonds shall supersede and render of no
B-1-3
effect the original bonds and be payable on the same dates as described in the original bonds, but
in an adjusted amount owing on each Payment Date because of the reallocation of principal
amounts. The Borrower shall execute and deliver the replacement Series 20 I 0A Bond and the
replacement Series 20 I OB Bond to the DNRC within thirty (30) days after delivery of such
bonds to the Borrower by the DNRC. Contemporaneous with the delivery of the replacement
Series 20 I 0A Bond and the replacement Series 201 OB Bond to the DNRC by the Borrower, the
Borrower shall detennine whether the Net Revenues of the System total at least 125% of the
maximum principal of and interest payable on the Bonds outstanding in any Fiscal Year, and, if
they do not, the Borrower shall increase its rates and charges to satisfy the rate covenant set forth
in Section 6. 7 of the Resolution, as implemented as described in Section 12.2 of the
supplemental resolution autho1izing this Bond, within three (3) months after the date of delivery
of the replacement Series 20 I 0A Bond and the replacement Series 201 OB Bond to the DNRC by
the Borrower.
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 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
Net Revenues; that the rates and charges for the System will from time to time be made and kept
sufficient, to provide gross income an.d 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 201 0A Bond as and when due; that additional bonds issued on a parity with the
Series 2010B Bond and the Series 2010C Bond (such bonds, collectively with the Series 2010B
Bond and the Series 201 0C Bond, the "Bonds") and refunding Bonds may be issued and made
payable from the Revenue Bond Account on a parity with the Series 201 OB Bond, the Series
201 0C Bond, 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 Series 20 I OB Bond,
the Series 20 I 0C Bond, and any additional parity Bonds on such Net Revenues (such as is the
case with this Series 201 0A Bond); that all provisions for the security of the holder of this Series
201 0A 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 perfonned in order to make this Series 20 I 0A Bond a valid and binding special
obligation of the Borrower according to its terms have been done, do exist, have happened and
have been perfom1ed in regular and due form, time and manner as so required; and that this
Series 2010A 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 the meaning of any constitutional or statutory
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limitation or provision and the issuance of the Series 20 I OA 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---~--day of February, 2010.
Mayor
(Seal)
Director of Finance
Clerk of the Commission
B-1-5
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 (I) the registered holder of the Bond, or his duly authorized
attorney or legal representative, executes the fonn 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 Boffower 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 Boffower'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
Registration
2010
Name and Address
of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh A venue
Helena, MT 59620
Signature of
Director of Finance
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
Registered Holder
B-1-6
Signature of
Bond Registrar
THE FOLLOWfNG ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH 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.
Date of Transfer
Name of New
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 _________ --~
B-1-7
By: ___________ _
(Authorized Signature)
For: --------------
(Holder)
Date
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Advances
Total Amount
Advanced
B-1-8
Notation Made By
Principal
SCHEDULE B
Administrative
Expense Surcharge
B-1-9
Loan Loss
Reserve
Surcharge
Total Loan
Payment
R-1
APPENDIX B-2
[Form of the Series 20 I OB Bond]
UNITED STA TES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLATIN
CITY OF BOZEMAN
SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM)
SERIES 20 I OB
$359,300
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 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 one and seventy-five hundredths percent (1.75%) per annum
on the unpaid balance until paid, subject to the provisions of the immediately following
paragraph. Interest shall be payable on each January 1 and July 1 ( each a "Loan Repayment
Date") commencing July 1, 2010. 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 and the portion consisting of interest shall be as set forth in Schedule B hereto. Upon
each disbursement of 201 OB 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 supplemental resolution authorizing this Bond.
Schedule B shall be calculated and recalculated on a level debt service basis assuming an interest
rate of I. 7 5% per annum. Past-due payments of principal and interest shall bear interest at the
rate of ten percent (10.00%) per annum, until paid. Interest 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 PROVISIONS OF THE FOREGOING
PARAGRAPH OR ANY OTHER PROVISION TO THE CONTRARY HEREIN, IN THE
B-2-1
EVENT THE DNRC DELIVERS TO THE BORROWER AN ARRA NONCOMPLIANCE
CERTIFICATE, THEN PRfNCIPAL AMOUNTS ADVANCED HEREUNDER SHALL BEAR
INTEREST FROM AND AFTER THE DATE OF EACH ADVANCE COMMENCING WITH
THE 20 I OB FIRST ADVANCE (AS DEFINED IN THE RESOLUTION) AT A RATE OF
TWO PERCENT (2.00%) PER ANNUM AND THE BORROWER SHALL PAY THE
ADMINISTRATIVE EXPENSE SURCHARGE AND LOAN LOSS RESERVE SURCHARGE
ON AMOUNTS ADVANCED HEREUNDER FROM AND AFTER THE 20108 FIRST
ADVANCE AT THE RATES OF SEVENTY-FIVE HUNDREDTHS OF ONE PERCENT
(0.75%) AND ONE PERCENT (1.00%) PER ANNUM, RESPECTIVELY, AND THE
IMMEDIATELY FOLLOWING PARAGRAPH WILL THEREUPON GOVERN AND
SUPERSEDE THE LOAN REPAYMENT PROVISIONS OF THE INITIAL PARAGRAPH
ABOVE.
In the event of delivery of an ARRA Noncompliance Statement, interest at a rate of two
percent (2.00%) per annum and an Administrative Surcharge and Loan Loss Reserve Surcharge
on each advance of principal of this Bond from and after the 20 I OB First Advance shall be
payable in semiannual installments payable on each Loan Repayment Date commencing with
the Loan Repayment Date that is the first to occur following delivery by the DNRC of an ARRA
Noncompliance Statement (as defined in the Resolution described below) and taking into
account payments, if any, made on each Loan Repayment Date pursuant to the initial paragraph
of this Bond prior to the delivery of such statement, all as described in Section 5 .1 of the
Resolution. Principal shall be payable on the dates set forth in Schedule B hereto. Loan
Repayments and payments of Administrative Expense Surcharge and Loan Loss Reserve
Surcharge shall be due or owing on each Payment Date commencing with the Loan Repayment
Date that is the first to occur after delivery of an ARRA Noncompliance Statement, through and
including January 1, 2030. 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. Amounts, if any, paid by the Borrower under the initial paragraph
above will be credited against the payments owing by the Borrower under this paragraph. 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, and particularly Section 5.1.5, of
the supplemental resolution authorizing this Bond. Schedule B under this paragraph 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, interest,
Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall bear interest at the
rate of ten percent (10.00%) per annum, until paid. Interest, 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 $359,300 (the "Series 201 OB Bond"). The Series
B-2-2
201 OB Bond is issued to finance a portion of the costs of the construction of ce1iain
improvements to the sewer system of the Borrower (the "System"), to fund a reasonably required
reserve and to pay costs of issuance of the Series 2010 Bonds. The Series 20 l OB 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 City adopted on November 16, 2009, as supplemented by Resolution
No. 4234, adopted January 19, 2010 (as so supplemented, the "Resolution"). Tenns used with
initial capital letters but not defined herein have the meanings given to them in the Resolution.
The Series 201 OB Bond is issuable only as a single, fully registered bond. The Series 201 OB
Bond is issued on a parity with the Borrower's Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan .Program), Series 20 l OC (the "Series 2010C Bond"),
which is being issued simultaneously herewith. The Borrower is also issuing simultaneously
herewith its Subordinate Lien Sewer System Revenue Bond (DNRC Water Pollution Control
State Revolving Loan Program), Taxable Series 2010A (the "Series 2010A Bond"). The 2010B
First Advance has been advanced at Closing. Following the 201 OB First Advance, the remaining
principal amounts of this Series 20 l OB Bond are advanced only after the full advance of the
principal amount of the Series 201 OA Bond.
Reference is made to the Resolution for a more complete statement of the tem1s and
conditions upon which the Series 20 l OB 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 Series 2010B Bond and the Series 2010C Bond (such parity bonds, together
with the Series 2010B Bond and the Series 2010C 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 201 OB Bond.
The Borrower may prepay the principal of the Series 2010B Bond only if (i) an ARRA
Statement has been delivered, (ii) it obtains the prior written consent of the DNRC thereto, and
(iii) no Loan Repayment 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, if any, to the date of prepayment on the amount of principal prepaid. If
the Series 20 l OB Bond is prepaid in part, such prepayments shall be applied to principal
payments in inverse order of maturity.
The Series 201 OB 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
prov1s10n.
The Borrower may deem and treat the person in whose name this Series 201 OB Bond is
registered as the absolute owner hereof, whether this Series 20 l OB 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 2010B Bond may be transferred as hereinafter
provided.
B-2-3
This Series 2010B Bond has been designated by the Borrower as a "qualified tax-exempt
obligation" pursuant to Section 265 of the Internal Revenue Code of 1986, as amended.
The Bo1Tower understands that the principal amounts of the 20 I 0A Loan and the 201 OB
Loan have been sized based on the understanding and expectation that the 20 IO Project costs at
least $750,000 and that the Borrower will request disbursement of the full amount of the 2010A
Loan and 2010B Loan. Notwithstanding any provision to the contrary herein, the Bo1Tower
acknowledges and agrees that in the event there is any Undisbursed Committed Amount, then the
DNRC reserves the right in its sole and complete discretion to reallocate loan amounts as
between the 2010A Loan and 2010B Loan on the basis of the amounts of the 2010A Loan and
the 20 l OB Loan that the Borrower would have been entitled to had the 20 l 0 Loans initially
equaled the Committed Amount less the Undisbursed Committed Amount. The reallocation
between the 2010A Loan and 2010B Loan will reflect the same proportions of the 2010 Loans
01iginally allocated to the 2010A Loan and 20 l OB Loan. Upon making such reallocation, the
DNRC shall deliver to the BoITower a replacement Series 201 0A Bond and a replacement Series
201 OB Bond reflecting adjusted principal amounts, which bonds shall supersede and render of no
effect the original bonds and be payable on the same dates as described in the original bonds, but
in an adjusted amount owing on each Payment Date because of the reallocation of principal
amounts. The Borrower shall execute and deliver the replacement Series 201 0A Bond and the
replacement Series 2010B Bond to the DNRC within thirty (30) days after delivery of such
bonds to the Borrower by the DNRC. Contemporaneous with the delivery of the replacement
Series 201 0A Bond and the replacement Series 201 OB Bond to the DNRC by the Borrower, the
Borrower shall determine whether the Net Revenues of the System total at least 125% of the
maximum principal of and interest payable on the Bonds outstanding in any Fiscal Year, and, if
they do not, the Borrower shall increase its rates and charges to satisfy the rate covenant set forth
in Section 6.7 of the Resoiution, as impiemented as described in Section 12.2 of the
supplemental resolution authorizing this Bond, within three (3) months after the date of delivery
of the replacement Series 201 0A Bond and the replacement Series 201 OB Bond to the DNRC by
the Borrower.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that the
Borrower has duly authorized and will forthwith undertake the improvements to the System
hereinabove described, has fixed and established and will collect reasonable rates and charges for
the services and facilities afforded by the System, including all additions thereto and
replacements and improvements thereof, and has created a speciai 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 establish and
maintain a reserve therein equal to, as of the date of calculation, the Reserve Requirement (as
defined in the Resolution); that the Revenue Bond Account will be used only to pay the principal
of, premium, if any, and interest on the Series 20 l OB Bond, the Series 20 l 0C Bond, and any
other additional Bonds issued pursuant to the Resolution on a parity therewith; that the rates and
B-2-4
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
CUITent expenses, equal to 125% of the maximum amount of principal and interest payable from
the Revenue Bond Account in any subsequent fiscal year (calculated assuming the DNRC has
delivered a ARRA Forgiveness Statement); that additional Bonds and refunding Bonds may be
issued and made payable from the Revenue Bond Account on a parity with the Series 201 OB
Bond, the Series 201 0C Bond, and additional parity Bonds upon certain conditions set forih 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 Series 201 OB Bond, the Series 201 0C Bond, and additional parity Bonds on such Net
Revenues and such obligations are payable only from Surplus Net Revenues (as is the case with
the Series 201 0A Bond); that all provisions for the secmity of the holder of this Series 201 OB
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 BoITower to be done, to exist, to happen and to be
performed in order to make this Series 20 I OB Bond a valid and binding special obligation of the
Borrower according to its terms have been done, do exist, have happened and have been
perfonned as so required; and that this Series 2010B Bond and the premium, if any, and 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 BoITower within the meaning of any
constitutional or statutory or charter limitation or provision and the issuance of the Series 20 l OB
Bond does not cause either the general or the special indebtedness of the Borrower to exceed any
constitutional or statutory or charter 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 __ day of February, 2010.
Mayor
(Seal)
Director of Finance
Clerk of the Commission
8-2-5
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 du! y authorized
attorney or legal representative, executes the fonn 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 Bon-ower'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
Registration
2010
Name and Address
of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh A venue
Helena, MT 59620
Signature of
Director of Finance
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
Registered Holder
B-2-6
Signature of
Bond Registrar
THE FOLLOWfNG ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGfSTRAR UPON REGISTRATION OF EACH 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.
Date of Transfer
Name of New
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 ____________ _
B-2-7
By: ___________ _
(Authorized Signature)
For: --------------
(Holder)
Date
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Advances
Total Amount
Advanced
8-2-8
Notation Made By
Principal
SCHEDULE B
Total Loan
Payment
B-2-9
R-1
APPENDIX 8-3
[Form of the Series 2010C Bond]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLA TIN
CITY OF BOZEMAN
WATER SYSTEM REVENUE BOND
(DNRC DRINKfNG WATER STATE REVOLVING LOAN PROGRAM)
SERIES 201 0C
$1,223,000
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 (2.00%) per annum on the unpaid balance until
paid. As described more particularly in the Resolution ( defined below), the 201 0C First
Advance will be made following the advance of the full principal amount of the Series 2010A
Bond and the Series 201 OB Bond ( as such terms are defined below or in the Resolution), and
upon the making of the 2010C 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%) 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 set
forth in the column headed "Date" or "Payment Date" on Schedule B attached hereto and
concluding on January 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 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
8-3-1
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% 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 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 $1,223,000 (the "Series 201 OC Bond"). The Series
201 OC 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 costs of issuance of the Series 2010C Bond. The Series 2010C
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 City adopted on November 16, 2009, as supplemented by
Resolution No. 4234, adopted January 19, 2010 (as so supplemented, the "Resolution"). The
Series 2010C Bond is issuable only as a single, fully registered bond. The Series 2010C Bond is
issued on a parity with the Borrower's Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 2010B (the "Series 2010B Bond"), which is
being issued simultaneously herewith. The Borrower is also issuing simultaneously herewith its
Subordinate Lien Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving
Loan Program), Taxable Series 2010A (the "Series 2010A Bond"). Principal amounts of this
Series 2010C Bond are advanced only after the full principal amount of the Series 2010A Bond
and the Series 201 OB Bond have been advanced. Terms used with initial capital letters but not
defined herein have the meanings given them in the Resolution.
Reference is made to the Resolution for a more complete statement of the terms
and conditions upon which the Series 201 OC 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 Series 2010B Bond, and Series 2010C Bond (collectively, 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 201 OC Bond.
The Borrower may prepay the principal of the Series 201 OC Bond only if (i) an
ARRA 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
Se1ies 201 OC Bond is prepaid in part, such prepayments shall be applied to principal payments in
inverse order of maturity.
B-3-2
The Series 201 0C 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 Bonower within the meaning of any constitutional or statutory limitation
or prov1s10n.
The Borrower may deem and treat the person in whose name this Series 201 0C
Bond is registered as the absolute owner hereof, whether this Series 20 l 0C Bond is overdue or
not, for the purpose of receiving payment and for all other purposes, and the Bonower shall not
be affected by any notice to the contrary. The Series 20 l 0C Bond may be transfened as
hereinafter provided.
This Series 201 OB Bond has been designated by the Borrower 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 Bonower 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 lo 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 rnay be issued and made payable from the
Revenue Bond Account on a parity with the Series 2010B Bond, Series 2010C Bond, 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 Series 201 OB Bond, Series 201 0C
Bond, and additional parity Bonds on such Net Revenues; that all provisions for the security of
the holder of this Series 201 0C Bond set forth in the Resolution will be punctuaiiy 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 201 0C Bond a valid and
binding special obligation of the Borrower according to its tenns have been done, do exist, have
happened and have been perfonned in regular and due fom1, time and manner as so required; and
8-3-3
that this Series 2010C 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 201 0C 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 govemmg
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 __ day of February, 2010.
Mayor
(Seal)
Director of Finance
Clerk of the Commission
8-3-4
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 ( l) 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
Registration
2010
Name and Address
of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh A venue
Helena, MT 59620
Signature of
Director of Finance
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
Registered Holder
--------·-··----·--
13-3-5
Signature of
Bond Registrar
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH 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.
Date of Transfer
Name of New
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 ____________ _
B-3-6
By: ___________ _
(Authorized Signature)
For: --------------
(Holder)
Date
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Advances
Total Amount
Advanced
B-3-7
Notation
Made By
Principal
SCHEDULE B
Administrative
Expense Surcharge
B-3-8
Loan Loss
Reserve
Surcharge
Total Loan
Payment
APPENDIX C
ADDITIONAL REPRESENTATIONS AND COVENANTS
None
C-1
APPENDIX D
$1,973,000
Sewer System Revenue Bonds
(DNRC Water Pollution Control State Revolving Loan Program)
consisting of $390,700 Subordinate Lien Taxable Series 201 OA Bond
$359,300 Series 2010B Bond and $1,223,000 Series 2010C Bond
City of Bozeman, Montana
ARRA CERTIFICATE AND REQUEST
We, ___________________ ,and ______ , hereby
certify that we are on the date hereof the duly qualified and acting Mayor, the Director of
Finance, and the Clerk of the Commission, respectively, of the City of Bozeman, Montana (the
"Borrower"), and that:
1. Pursuant to Resolution No. 4220 of the City adopted on November 16, 2009, as
amended and supplemented by Resolution No. 4234 of the City adopted on January 19, 2010,
entitled "Resolution Relating to $1,973,000 Sewer System Revenue Bonds (DNRC Water
Pollution Control State Revolving Loan Program), Consisting of $390,700 Series 201 OA Bond,
$359,300 Series 2010B Bond, and $1,223,000 Series 2010C Bond; Authorizing the Issuance and
Fixing the Terms and Conditions Thereof'' (as so supplemented, the "Resolution"), the Borrower
issued its Subordinate Lien Sewer System Revenue Bond (DNRC Water Pollution Control State
Revolving Loan Program), Taxable Series 201 OA, dated, as originally issued, as of -----
2010, in the maximum aggregate principal amount of$390,700 (the "Series 2010A Bond"}, its
Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program),
Series 2010B, dated, as originally issued, as of _____ , 2010, in the maximum aggregate
principal amount of $359,300 (the "Series 201 OB Bond"), and its Sewer System Revenue Bond
(DNRC Water Pollution Control State Revolving Loan Program), Series 2010C, dated, as
originally issued, as of _____ , 2010, in the maximum aggregate principal amount of
$1,223,000 (the "Series 2010C Bond"). The Series 2010A Bond and the Series 2010B Bond are
referred to herein collectively as the "ARRA Bonds." The Borrower has reviewed the
Resolution, including, without limitation, Articles II and III thereof, and the definitions relating
thereto. The Borrower acknowledges and agrees that the ARRA Bonds evidence loans made to
the Borrower from the DNRC from funds made available to the DNRC under the American
Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5 (2009) ("ARRA"), and that this
Certificate is being relied upon by the DNRC for ensuring compliance with ARRA requirements
applicable to the Borrower, the DNRC, and the 2010 Project (as hereinafter defined).
Capitalized tenns used herein without definition shall have the meanings given them in the
Resolution.
2. The ARRA Bonds were issued to finance a portion of the costs of construction
and installation of various improvements to the System, generally described as the 2010 Project
(the "2010 Project") in the Resolution. Construction of the 2010 Project has complied with all
federal and state standards, including, without limitation, EPA regulations and standards and the
D-1
requirements of ARRA. The 20 IO Project is expected to be completed and placed in service on
or about ____ , 20
3. Costs of the 20 IO Project in the amount of$ _____ have been paid as of
the elate of delivery of this Ce1iificate. The Borrower hereby waives its right to any remaining
2010A Committed Amount or 20108 Committed Amount not advanced or to be advanced upon
delivery hereof, and acknowledges that the DNRC has reserved the right to reallocate amounts of
the Series 2010A Bond and Series 2010B Bond and deliver a replacement Series 2010A Bond
and Series 201 OB Bond, which shall each be a binding obligation of the City, as described more
particularly in the Resolution. The Borrower specifically confinns and agrees that any remaining
amounts of the 2010 Loans to be lent to the Borrower, if any, shall be evidenced by the Series
2010C Bond.
4. As of the date hereof, the Borrower has spent the following amounts in
connection with the 2010 Project and costs related thereto:
Debt Service Reserve
Costs of Issuance
Construction
Contingency
TOT AL PROJECT COSTS
Of such amounts, $750,000 were paid from advances of proceeds of the ARRA Bonds.
In addition, as of the date hereof, and $ ______ of the proceeds of the ARRA Bonds
have been applied to Green Infrastructure. The Borrower certifies that proceeds of the ARRA
Bonds, once made available to the Borrower, were applied to costs of the 2010 Project before
other funds available to the Borrower.
5. The Trustee has delivered to the Borrower a copy of Schedule B to be attached to
the Series 20 I 0A Bond and Schedule B to be attached to the Series 2010B Bond, each of which
reflects the amortization of all advances made or to be made on the date hereof of proceeds of the
Series 2010A Bond and the Series 2010B Bond, respectively (i.e.,$ ____ in respect of the
Series 201 0A Bond (the sum of the amounts of the Series 201 0A Bond applied to pay costs of
the 2010 Project or costs of issuance of the Series 2010 Bonds) and$ ____ in respect of the
Series 2010B Bond (the sum of the amounts of the Series 2010B Bond applied to pay costs of the
2010 Project and costs of issuance of the Series 2010 Bonds and deposited in the Reserve
Account as described in paragraph 6 hereof)), as required under Section 7.08(a) of the Indenture.
The Borrower hereby acknowledges and agrees that each Schedule B has been calculated in
accordance with the provisions of the Resolution and the Indenture, and that each of the Series
2010A Bond and the Series 2010B 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 an ARRA Forgiveness Statement, the Borrower's obligation to repay the principal of the
Series 2010A Bond and interest and surcharges thereon is thereupon forgiven, and if the DNRC
delivers an ARRA Noncompliance Certificate, amounts advanced under the 201 0A Loan and
D-2
2010B Loan evidenced by the Series 2010A Bond and the Series 2010B Bond, respectively, shall
bear interest from and after the 20 I OB First Advance 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 and 5.1.3 of the
Supplemental Resolution.
6. Pursuant to the Resolution, the Borrower has established a Reserve Account in the
Fund (the "Reserve Account") to secure its Series 20 l OB Bond, and its Series 201 OC Bond
(together, the "Bonds"). The amount on deposit therein on the date hereof totals$ ____ , of
which $ ____ secures the Bonds. The amount in the Reserve Account is equal to the
maximum amount of principal and interest payable on the parity Bonds in the current or any
future fiscal year (i.e. $ ____ , based on the amortization of the Series 201 OB Bond in
accordance with Schedule B thereto.
7. The representations of the Borrower contained in Articles II 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 other.vise
in writing.
8. No default in any covenant or agreement on the part of the Borrower contained in
the Resolution has occurred and is continuing.
9. The Borrower is delivering this Ce1iificate to the DNRC, in part, to ensure
compliance with ARRA. The Borrower certifies that the iron, steel, and manufactured goods
used in the 2010 Project comply with the "buy American" requirements of Section 1605 of
ARRA, as those requirements are further interpreted by applicable EPA guidance. The Borrower
further certifies that all laborers and mechanics employed by contractors and subcontractors on
the 2010 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 IV of chapter 31 of title 40, United States Code.
10. The Borrower acknowledges and agrees that this Certificate completed by the
Borrower in form satisfactory to the DNRC must be executed and delivered to the DNRC by the
date that is 30 days after receipt of the form of this Certificate from the DNRC. By submitting
this Certificate, the Borrower requests that the DNRC forgive the obligation of the Borrower to
repay the principal of the Series 201 OA Bond, together with interest and surcharges thereon. The
Borrower acknowledges and agrees that (i) the forgiveness of principal of and interest and
surcharges on the Se1ies 201 OA Bond by the DNRC is contingent dn the timely delivery of this
Certificate by the Borrower in satisfactory fonn as determined in the DNRC's sole and complete
discretion, (ii) the DNRC has no obligation to grant such forgiveness; (iii) if the DNRC delivers
to the Borrower an ARRA Noncompliance Certificate, (a) the obligation of the Borrower to
repay the principal of the Series 201 OA Bond plus interest and Administrative Expense
Surcharge and Loan Loss Reserve Surcharge thereon shall continue in full force and effect until
the principal of the Series 201 OA Bond advanced and interest, Administrative Expense
Surcharge, and Loan Loss Reserve Surcharge thereon are paid in full, as set forth in Schedule B
de! i vered pursuant to paragraph 5 above, and as provided in the Series 201 OA Bond and the
Resolution, (b) the Borrower shall thereupon be obligated to repay the principal of the Se1ies
D-3
20 I OB Bond together with interest thereon at two percent (2.00%) per annum and to pay the
Administrative Expense Surcharge and the Loan Loss Reserve Surcharge on all amounts
advanced from and after the 20 I OB First Advance until the principal of the Series 20 I OB Bond
advanced and interest, Administrative Expense Surcharge, and Loan Loss Reserve Surcharge
thereon are paid in full, as set forth in Schedule B delivered pursuant to Section 5.1.5 of the
supplemental Resolution, and (c) the Borrower shall, as necessary, within the 3-rnonth period
specified in the supplemental resolution authorizing the ARRA Bonds, adjust its rates and
charges to produce Net Revenues and Surplus Net Revenues required by the rate covenant in the
Resolution.
WITNESS our hands on behalf of the Borrower and the seal of the Borrower as of this
___ day of ____ , 2010.
(SEAL)
0-4
CITY OF BOZEMAN, MONT ANA
By ______________ _
Mayor
By ---------------
Director of Finance
By ______________ _
Clerk of the Commission
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
Resolution No. 4245, entitled: "RESOLUTION RELATING TO $9,500,000 SEWER SYSTEM
REVENUE BOND (DNRC WATER POLLUTION CONTROL STATE REVOL YING LOAN
PROGRAM), SERIES 2010D; 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 Conunission of the City at
its regular meeting on February 16, 2010, and that the meeting was duly held by the City
Commission and was attended tlu·oughout 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 fm1her ce11ify that, upon vote being taken on the Resolution at said meeting, the
following Commissioners voted in favor thereof: 'fYl~ KI\.O,,UQ.D, C'J\o. AfYXl .uq B-oc>)eA J ~j
c.: Tn~ ; voted against the same: __._N,..,.ffi_,_,_,1_,,____ __________ _
_____ ; abstained from voting thereon: ~~~~~---------; or were
absent: ~
WITNESS my hand officially this }(o t1 day of February, 2010.
SUPPLEMENTAL BOND RESOLUTION
Relating to
$9,500,000
SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM)
SERIES 201 OD
CITY OF BOZEMAN
Adopted: February 16, 2010
TABLE OF CONTENTS
(For convenience only, not a part of this Supplemental Resolution)
Recitals ...................................................................... .
Section 1.1.
Section 1.2.
Section 1.3.
ARTICLE I
DEFINITIONS, RULES OF CONSTRUCT[ON AND APPENDICES
Definitions .......................................................................................... .
Other Rules of Construction ............................................................... .
Appendices ......................................................................................... .
ARTICLE II
AUTHORIZATION, FINDINGS, REPRESENTATIONS AND COVENANTS
Section 2.1.
Section 2.2.
Section 2.3.
Section 2.4.
Section 2.5.
Section 2.6.
Section 3 .1.
Section 3 .2.
Section 3.3.
Section 3.4.
Section 4.1.
Section 4.2.
Section 4.3.
Section 4.4.
Authorization and Findings ............................................................... ..
Representations ................................................................................... .
Covenants .......................................................................................... ..
Covenants Relating to the Tax-Exempt Status of the State Bonds ..... .
Maintenance of System; Liens ........................................................... .
Maintenance of Existence; Merger, Consolidation, Etc.;
Disposition of Assets .......................................................................... .
ARTTrTF TTT
USE OF PROCEEDS; THE Water Reclamation Facility Project
Use of Proceeds .................................................................................. .
The Water Reclamation Facility Project ............................................ .
Project Representations and Covenants .............................................. .
Completion or Cancellation or Reduction of Costs of the 2010
Project ................................................................................................. .
ARTICLE IV
THE LOAN
The Loan; Disbursement of Loan ....................................................... .
Commencement of Loan Tenn ........................................................... .
Termination of Loan Term ................................................................. .
Loan Closing Submissions ................................................................. .
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Section 5.1.
Section 5 2.
Section 5.3.
Section 5.4.
Section 5.5.
ARTICLE V
REPAYMENT OF 20 l OD Loan
Repayment of 20 l OD Loan ................................................................. .
Additional Payments ........................................................................... .
Prepayments ........................................................................................ .
Obligations of Borrower Unconditional ............................................. .
Limited Liability ................................................................................. .
ARTICLE VI
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INDEMNIFICATION OF DNRC AND DEQ ................................................................... 24
Section 7 .1.
Section 7.2.
Section 7.3.
Section 8.1.
Section 8.2.
Section 8.3.
Section 8.4.
Section 8.5.
Section 8.6.
ARTICLE VII
ASSIGNMENT
Assignment by Borrower .................................................................... .
Assignment by DNRC ....................................................................... ..
State Refunding Bonds ....................................................................... .
AR TIC LE VIII
THE SERIES 2010D BOND
Net Revenues Available .................................................................... ..
Issuance and Sale of the Series 2010D Bond .................................... ..
Terms .................................................................................................. .
Negotiability, Transfer and Registration ............................................ .
Execution and Delivery ...................................................................... .
Form .................................................................................................... .
ARTICLE IX
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SECURITY FOR THE SERIES 2010D BOND................................................................. 26
Section 10.1.
Section 10.2.
Section 10.3.
Section I 0.4.
Section 10.5.
Section 10.6.
ARTICLEX
TAX MATTERS
Use of Project. .................................................................................. .
General Covenant. ............................................................................ .
Arbitrage Certification ..................................................................... .
Arbitrage Rebate .............................................................................. .
Infonnation Reporting ..................................................................... .
"Qualified Tax-Exempt Obligations" ............................................. ..
ARTICLE XI
..
II
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CONTINUING DISCLOSURE .............. .
Section 12.1.
Section 12.2.
Section 12.3.
Section 12.4.
Section 12.5.
Section 12.6.
Section 12.7.
Section 12.8.
Section 12.9.
Section 12.10.
Section 12.11.
APPENDIX A
APPENDIXB
APPENDIX C
ARTICLE XII
MISCELLANEOUS
Notices....................... . .............................................. .
Binding Effect..................... . ............................................. .
Severability .................................................................................... .
Amendments........................ . ........................................... .
Applicable Law ............................................................................... .
Captions; References to Sections ..................................................... .
No Liability oflndividual Officers, Directors or Trustees .............. .
Payments Due on Holidays .............................................................. .
Rights of Others To Perform City's Covenants ............................... .
Authentication of Transcript ............................................................ .
Effective Date .................................................................................. .
Description of the Water Reclamation Facility Project
Form of Series 201 OD Bond
Additional Representations and Covenants
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RESOLUTION NO. 4245
RESOLUTION RELATING TO $9,500,000 SEWER SYSTEM
REVENUE BOND (DNRC WATER POLLUTION CONTROL
STATE REVOLVING LOAN PROGRAM), SERIES 2010D;
AUTHORIZING THE ISSUANCE AND FIXING THE TERMS
AND CONDITIONS THEREOF
WHEREAS, pursuant to the Montana Water Pollution Control State Revolving Fund Act,
Montana Code Annotated, Title 75, Chapter 5, Part 11, as amended (the "Act"), the State of
Montana (the "State") has established a revolving loan program (the "Program") to be
administered by the Department of Natural Resources and Conservation of the State of Montana,
an agency of the State (the "DNRC"), and by the Department of Environmental Quality of the
State of Montana, an agency of the State (the "DEQ"), and has provided that a revolving
wastewater treatment works 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 limited to, all federal grants for capitalization of a state water
pollution control revolving fund under the Federal Water Pollution Control Act (also known as
the Clean Water Act) (the "Clean Water Act"), all repayments of assistance awarded from the
Revolving Fund, interest on investments made on money in the Revolving Fund and payments of
principal of and interest on loans made from the Revolving Fund; and
WHEREAS, the 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 Department of Environmental Quality and the Department of Natural Resources and
Conservation; and
WHEREAS, the City of Bozeman, Gallatin County, Montana (the "Borrower") has
applied to the DNRC for a loan (the "Loan") from the Revolving Fund to enable the Borrower to
finance, refinance or reimburse itself for a portion of the costs of the Water Reclamation Facility
Project (as hereinafter defined) which will carry out the purposes of the Clean Water Act; and
WHEREAS, the Borrower, pursuant to Resolution No. 4220, adopted by this
Commission on November 16, 2009 (the "Initial Resolution"), authorized the issuance of and
fixed the terms of its $9,500,000 sewer system revenue bond to evidence the 2009 Loan and to
pay a portion of the costs of the Water Reclamation Facility Project and related costs; and
WHEREAS, the Initial Resolution created a system of accounts in the Borrower's Sewer
System Fund and authorized the issuance of additional Debt, all subject to the requirements of
the Initial Resolution; and
WHEREAS, the United States Environmental Protection Agency unexpectedly imposed
federal Davis Bacon wage requirements on the Water Reclamation Facility Project, causing the
City to delay proceeding with the issuance of its $9,500,000 sewer system revenue bond until
now; and
WHEREAS, the Series 2009 Bond defined in the Initial Resolution was never issued and
shall be disregarded for all puqJoses, recognizing that the Series 20 l OD Bond (as defined below)
is being issued in lieu of the Series 2009 Bond; and
WHEREAS, the Borrower, pursuant to the Initial Resolution, as amended and
supplemented by Resolution No. 4234, adopted by this Commission on January I 9, 20 IO (as so
amended and supplemented, the "Original Resolution"), authorized the issuance of its Series
2010 ARRA Project Bonds (as defined below), consisting of its Series 2010B Bond and its
Series 201 0C Bond ( each as defined below), which constitute the original series of Bonds issued
pursuant to the Original Resolution and its Series 201 0A Bond (as defined below), which
constitutes a Subordinate Obligation pursuant to Section l 0.4 of the Initial Resolution; and
WHEREAS, the Borrower, being delayed by the actions of the United States
Environmental Protection Agency and now needing to obtain advances of the 2010D Loan (as
defined below) and to issue its $9,500,000 sewer system revenue bond to evidence the 201 OD
Loan, desires to issue what is now its Series 20100 Bond, which, given the issuance of the Series
2010 ARRA Project Bonds, constitutes an Additional Bond under Section 10.3 of the Original
Resolution, pursuant to this Supplemental Resolution; and
WHEREAS, the Borrower is authorized under applicable laws, ordinances and
regulations to adopt this Supplemental Resolution and to issue the Series 201 OD Bond to
evidence the 201 OD Loan for the purposes set forth herein; and
WHEREAS, the DNRC will fund the 2010D Loan with proceeds of EPA federal
capitalization grants, either directly or as that portion of Recycled Money (as hereinafter defined)
that is allocable solely to EPA federal capitalization grants.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE
BORROWER, AS FOLLOWS:
ARTICLE I
DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES
Section 1.1
from the context:
Definitions. In this Resolution, unless a different meaning clearly appears
"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 within the Fund established
pursuant to Sections I I. I and 11.2 of the Original Resolution.
"Act" or "State Act" means Montana Code Annotated, Title 75, Chapter 5, Part 11, as
amended from time to time.
"Administrative Expense Surcharge'' means a surcharge on the 20 l OD Loan charged by
the DNRC to the Borrower equal to seventy-five hundredths of one percent (0.75%) per annum
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on the outstanding principal amount of the 20 l OD Loan, payable by the Borrower on the same
dates that payments of interest on each of the 2010D Loan are due.
"Authorized DNRC Officer" means the Director or Deputy Director of the DNRC, and,
when used with reference to an act or document, also means any other individual autho1ized by
resolution of the Department of Natural Resources and Conservation to perform such act or sign
such document. If authorized by the Department of Natural Resources and Conservation, an
Authorized DNRC Officer may delegate all or a portion of his authority as an Authorized DNRC
Officer to another individual, and such individual shall be deemed an Authorized DNRC Officer
for purposes of exercising such authority.
"Bond Counsel" means any Counsel acceptable to the DNRC which is nationally
recognized as bond counsel. Counsel is nationally recognized as bond counsel if it has rendered
a legal opinion as to the validity and enforceability of state or municipal bonds and as to the
exclusion of interest thereon from gross income for federal income tax purposes (short-term
issues excluded) during the two-year period preceding the date of determination.
"Bonds" means the Series 20 l OB Bond, the Series 20 lOC Bond, the Series 201 OD 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 is a not a Bond.
"Borrower" means the City.
"Business Day" means any day which is not a Saturday or Sunday and is not a day on
which banks in Montana are authorized or required by law to close.
"City" means the City of Bozeman, Montana and any permitted successor or assign.
"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" mean·s the date of delivery of the Series 201 OD 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 Resolution
and the Series 201 OD Bond. If no Collateral Documents secure such obligations, any reference
to Collateral Documents in this Resolution shall be without effect.
"Committed Amount" means the amount of the 201 OD Loan committed to be lent by the
DNRC to the Borrower pursuant to Section 4.1, as such amount may be reduced pursuant to
Sections 3.2 and 3.4.
''Consultant" means a nationally recognized consultant or finn of consultants, or an
independent engineer or firm of independent engineers, or an Accountant, which in any case is
qualified and has skill and expe1ience in the preparation of financial feasibility studies or
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projections for facilities similar to the System or the Water Reclamation Facility 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, (I) indebtedness of the Borrower for borrowed
money or for the deferred purchase price of property or services; (2) the obligation of the
Borrower 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 referred to in clause (1) or (2) above.
"DEQ" means the Department of Environmental Quality of the State of Montana, an
agency of the State, or any successor to its powers, duties and obligations under the Act or the
EPA Agreements.
"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 Act.
"Enabling Act" means Montana Code Annotated, Title 7, Chapter 7, Parts 44 and 45, as
amended, which authorizes the Borrower to own and operate the System, to undertake the Water
Reclamation Facility Project and to issue the Series 201 OD Bond to finance costs of the Water
Reclamation Facility Project.
"EPA" means the Environmental Protection Agency, an agency of the United States of
America, and any successor to its functions under the Clean \Vater Act.
"EPA Agreements" means all capitalization grant agreements and other written
agreements between the DEQ 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 Clean Water 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.
"Fund" means the Sewer System Fund established pursuant to Section 11. I of the
Original Resolution.
"Governmental Unit" means governmental unit as such te1m 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 has been or 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.
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"Loan Loss Reserve Surcharge" means a fee equal to one percent ( 1.00%) per annum on
the outstanding principal amount of the 2010D Loan, payable on the same dates that payments of
interest on the 20 I OD Loan are due.
"Loan Repayments" means periodic installments of principal and interest by Borrower in
repayment of the 20 I OD Loan, at the rates and times specified in Article V.
"Loan Term" means that period of time commencing and ending as set in Sections 4.2
and 4.3.
"Net Revenues" means the entire amount of the gross revenues of the System (as
described in Section 11.1 of the Original Resolution) remaining upon each such monthly
apporiionment, after crediting to the Operating Account the amount required hereby, including
sums required to maintain the Operating Reserve in the minimum amount herein stated.
"Operating Account" means the account within the Fund established pursuant to Sections
11.1 and 11.3 of the Original Resolution.
"Operating Expenses" means those expenses of the System defined as such in Section
11.3 of the Original Resolution.
"Operating Reserve" means the reserve to be maintained in the Operating Account as
required by Section 11.3 of the Original Resolution.
"Opinion of Counsel" means a written opinion of Counsel.
"Original Resolution" means Resolution No. 4220 of the Borrower adopted on November
16, 2009, as amended and supplemented by Resolution No. 4234, adopted on January 19, 2010.
"Outstanding Bonds" shall mean the outstanding Series 2010 ARRA Project Bonds and
any outstanding additional parity bonds issued in accordance with the Original Resolution and a
resolution supplemental thereto, and shall include, upon the Closing, the Series 201 OD Bond.
"Person" means any Private Person or Public Entity.
"Private Person" means an individual, corporation, partnership, association, joint venture,
joint stock company or unincorporated organization, except a Public Entity.
"Program" means the Water Pollution Control State Revolving Loan Program established
by the Act.
"Project" means the acquisition, design, construction and installation of various
improvements and betters to the System, including the Water Reclamation Facility Project.
"Public Entity" means a municipality, city, county, school district, political or
administrative subdivision of State government, irrigation district, drainage district or other
public body established by State law.
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"Recycled Money" means payments and prepayments of principal of the 20 l OD Loan,
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 [ndenture).
"Regulations" means the Treasury Regulations, whether final, temporary or proposed,
promulgated under the Code or otherwise applicable to the Series 20 l OD Bond.
"Replacement and Depreciation Account" means the account within the Fund established
pursuant to Sections I I. I and 11.6 of the Original Resolution.
"Reserve Account" means the account within the Fund established pursuant to Sections
I 1.1 and I 1.5 of the Original Resolution.
"Reserve Requirement" means, as of the date of calculation, an amount equal to the
maximum amount of principal and interest payable on the Bonds in any future fiscal year (giving
effect to mandatory sinking fund redemption, if any).
"Reserved Amounts" means any undisbursed Committed Amount which will or may be
required to pay any remaining costs of the Water Reclamation Facility Project upon completion
thereof as provided in Section 3.4(a).
"Resolution" means the Original Resolution as supplemented by this Supplemental
Resolution and other supplemental resolutions.
"Revenue Bond Account" means the account within the Fund established pursuant to
Sections 11.1 and 11.4 of the Original Resolution.
"Series 2010 ARRA Project Bonds" means the Series 2010A Bond, the Series 2010B
D~~r1 ~~r1 ~l-,= C=~;=n '"lf\1 f\r< D~~r1 JJV1J.U Cll.1U LU\,., LJVJ..l\J..-, £...V 1 V'-...,, .lJVJ.lU.,
"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 201 0C 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 $9,500,000 Sewer System Revenue Bond (DNRC
Revolving Loan Program), Series 20 I OD, issued to the DNRC to evidence the 201 OD Loan.
"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.e., without regard to whether it is general
obligation or revenue Debt).
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"Sewer Revenues" means revenues (gross or net) received by the Borrower from or in
connection with the operation of the System.
"State'· means the State of Montana.
"State Bonds'' means the State's General Obligation Bonds (Water Pollution Control
State Revolving Fund Program), issued pursuant to the Indenture.
"Subordinate Obligations" means bonds or other obligations issued pursuant to Section
10.4 of the Original Resolution.
"Supplemental Resolution" means this resolution as it may from time to time be amended
or supplemented in accordance with its terms.
"Surplus Account" means the account within the Fund established pursuant to Sections
11.1 and 11. 7 of the Original Resolution.
"Surplus Net Revenues" means 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 Water Reclamation Facility Project.
"Trustee" means United States Bank National Association, or any successor trustee under
the Indenture.
"201 OD Loan" means the 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 Water Reclamation Facility Project payable under the Program.
"Water Reclamation Facility Project" means the facilities, improvements and activities
financed, refinanced or the cost of which is being reimbursed to the Borrower with proceeds of
the 201 OD Loan, described in Exhibit A hereto.
Section 1.2 Other Rules of Construction. For all purposes of this Supplemental
Resolution, except where the context clearly indicates otherwise:
(a) All accounting tenns not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted government accounting
standards.
(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 herein.
(d) All references to mail shall refer to first-class mail postage prepaid.
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(e) Words of the masculine gender shall be deemed and construed to include
conelative words of the feminine and neuter genders.
(f) "Or" is not exclusive, but is intended to pem1it or encompass one, more or
all of the alternatives conjoined.
Section 1.3 Appendices. Attached to this Resolution and hereby made a part hereof
are the following Appendices:
Appendix A:
Appendix B:
Appendix C:
a description of the Water Reclamation Facility Project;
the form of the Series 201 OD Bond; and
additional agreements and representations of the Bonower.
ARTICLE II
AUTHORIZATION, FINDrNGS, REPRESENTATIONS AND COVENANTS
Section 2.1 Authorization and Findings.
(a) Authorization. Under the provisions of the Enabling 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
(b) The System. The Dorrowcr, pursuant to the Enabling Act and other laws
of the State has established and presently owns and operates the System.
( c) The Water Reclamation Facility Project. After investigation of the facts
and as authorized by the Enabling Act, this Commission has detennined it to be
necessary and desirable and in the best interests of the Bonower to acquire and construct
the Water Reclamation Facility Project.
(d) Outstanding Bonds. Pursuant to the Enabiing Act and the Resolution, the
Borrower has issued its Series 2010 ARRA Project Bonds to finance the 2010 ARRA
Project. The Series 2010B Bond and the Series 201 OC Bond are payable from Net
Revenues of the System. The Series 2010A Bond is payable from the Surplus Net
Revenues. No other bonds or indebtedness are outstanding that are payable from
revenues of the System.
( e) Construction of the Original Resolution. The Series 2009 Bond
authorized by the Original Resolution was never issued due to the actions of the EPA.
The Se1ies 2010D Bond is authorized to be issued in lieu of the Series 2009 Bond.
8
Resolution No. 4220 is hereby amended by adding a statement thereto to the effect that
the Series 2009 Bond, while authorized, was not issued. The City does not by this
Supplemental Resolution excuse or waive any claim it may have against the EPA or any
other Person for harm it has suffered or it may suffer by being compelled to comply with
federal Davis Bacon wage requirements as a condition to obtaining the 201 OD Loan, and
the City expressly reserves any and all rights and remedies it has or may have relating to
such harm.
(f) Additional Parity Bonds. The Borrower reserved the right under Section
I 0.3 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 p1incipal 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 thereafter 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 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 Mayor, the Director of Finance, and the
Clerk of the Commission, or any of them, it is hereby detennined that the Borrower is
authorized to issue $9,500,000 in aggregate principal amount of additional Bonds
pursuant to Section I 0.3 of the Original Resolution payable from and secured by the Net
Revenues on a parity with the outstanding Series 2010B Bond and Series 2010C Bond.
Section 2.2 Representations. The Borrower represents as follows:
(a) Organization and Authority. The Borrower:
(i) is duly organized and validly existing as a municipal corporation of
the State;
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(ii) 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
20 I OD Bond and to carry out and consummate all transactions contemplated by
the Resolution, the Series 20 I OD Bond and the Collateral Documents;
(iii) is a Governmental Unit and a Public Entity; and
(iv) has taken all proper action to authorize the execution, delivery and
performance of its obligations under this Supplemental Resolution, the Series
201 OD Bond and the Collateral Documents and the incurrence of the Debt
evidenced by the Series 20 I OD Bond in the maximum amount of the Committed
Amount.
(b) Pending Litigation. There is no litigation or proceeding pending, or to the
knowledge of the Bon-ower 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 201 OD Bond and the Collateral
Documents, or the financial condition of the Borrower, or the transactions contemplated
by the Resolution, the Series 201 OD Bond and the Collateral Documents or the validity
and enforceability of the Resolution, the Series 201 OD Bond and the Collateral
Documents. No referendum petition has been filed with respect to any resolution or other
action of the Borrower relating to the Water Reclamation Facility Project, the Series
2010D Bond or any Collateral Documents and the period for filing any such petition will
have expired before issuance of the Series 201 OD Bond.
(c) Borrowing Legal and Authorized. The adoption of this Supplemental
Resolution, the execution and delivery of the Series 201 OD Bond and the Collateral
Documents and the consummation of the transactions provided for in the Resolution, the
Series 20 I OD Bond and the Collateral Documents and compliance by the Borrower with
the provisions of the Resolution, the Series 20 I OD Bond and the Collateral Documents:
(i) are within the powers of the Borrower and have been duly
authorized by all necessary action on the part of the Borrower; and
(ii) 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 resolution, indenture, loan agreement or other
agreement or instrument ( other than the Resolution and any Collateral
Documents) to which the Borrower is a pa1iy 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
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other governmental orders to which the Borrower, its properties or operations are
sub_ject.
(d) No Defaults. No event has occurred and no condition exists that, upon
execution and delivery of the Series 20100 Bond 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 propetiy may be bound which
violation would materially and adversely affect the transactions contemplated hereby or
the comp! iance by the Bo,rnwer with the terms hereof or of the Series 20 I OD Bond and
the Collateral Documents.
( e) Governmental Consent. The Borrower has obtained or made all pennits,
findings and approvals required to the date of adoption of this Supplemental Resolution
by any governmental body or officer for the making and perfonnance by the Borrower of
its obligations under this Supplemental Resolution, the Series 201 OD Bond and the
Collateral Documents (including any necessary sewer rate increase) or for the Water
Reclamation Facility 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 2010D Bond or entering into the Collateral
Documents and the perfonnance 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 2010D Bond 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 Water Reclamation Facility Project. The Water Reclamation Facility
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 Ariicle 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 public infonnation, 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 perfom1 its obligations under the
l I
Resolution, the Series 20 l OD Bond and the Collateral Documents and to pledge any
revenues or other property pledged to the payment of the Series 201 OD Bond.
(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 prope1iies, operations and
finances of the System or its status as a Public Entity and Governmental Unit; and
(2) has obtained all licenses, pennits, 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 201 OD Bond 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 for the purpose of inspecting the System or any or all books and
records of the Borrower relating to the System.
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(c) Further Assurance. The Borrower shall execute and deliver to the DNRC
all such documents and instrnments 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 201 OD Bond and the Collateral Documents and to realize
thereon, and record and file and re-record and refile 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 D NRC to validate, preserve and protect the position of the DNRC
under the Resolution, the Series 20 I OD Bond and the Collateral Documents.
( d) Maintenance of Security, if Any; Recordation of Interest.
(i) 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 20 I OD Bond;
(ii) The Bonower shall forthwith, after the execution and delivery of
the Series 20 l OD Bond 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
(iii) Except to the extent it is exempt therefrom, the Bonower 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 (ii),
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 20 I OD Bond and the Collateral Documents and the documents described in
subparagraph (ii).
(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
Bonower agrees that for each fiscal year it shall furnish to the DNRC and the DEQ,
promptly when available, in addition to those matters speified in Section 2.2(f) of the
Original Resolution:
13
(1) the preliminary budget for the System, with items for the Water
Reclamation Facility Project shown separately; and
(2) when adopted, the final budget for the System, with items for the
Water Reclamation Facility Project shown separately.
(g) Project Accounts. The Bonower shall maintain 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 Title VI of 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
2010D Loan and the Water Reclamation Facility Project.
(j) Program Covenant. The Bonower 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 fonnal or informal arrangement, acquire bonds issued by the State
under the Indenture in an amount related to the amount of the Series 201 OD Bond.
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 201 OD Bond or any other funds of the Borrower in
respect of the Water Reciamation Facility Project or the Series 2010D Bond, directiy 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 20 I OD Loan or the portion of the
2010D 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 pennit the use of the Water Reclamation
Facility 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.
i4
(cl) Any portion of the Water Reclamation Facility Project being refinanced or
the cost of which is being reimbursed was acquired by and is now and shall, during the
term of the 20 l OD Loan, be owned by the Borrower and not by any other Person. Any
portion of the Water Reclamation Facility Project being financed shall be acquired by and
shall, clwing the term of the 20 I OD Loan, be owned by the Borrower and not by any
other Person. Notwithstanding the previous two sentences, the Borrower may transfer the
Water Reclamation Facility 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 Sections 2.3(h), 2.3(i) and
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 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 Water Reclamation Facility 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 2010D Loan 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 2010D Loan it will not
contract with or permit any Private Person to manage the Water Reclamation Facility
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 Water Reclamation Facility Project or
any portion thereof to any Person other than a Nonexempt Person which agrees in writing
with the BoITower and the State not to cause any default to occur under the Resolution;
proviclecl the Borrower may lease all or any portion of the Water Reclamation Facility
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.
15
(h) The Borrower shall not change the use or nature of the Water Reclamation
Facility Project if (i) such change will violate the Clean Water Act, or (ii) so long as the
State Bonds are outstanding unless, in the Opinion of Bond Counsel delivered to the
DNRC, such change will not result in the inclusion in grnss 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 Water Reclamation Facility Project, in good condition and make all necessary
renewals, replacements, additions, betterments and improvements thereto. The Borrower shall
not grant or pennit to exist any lien on the Water Reclamation Facility 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 20 I OD Bond; 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 w1iting all of the obligations of the
Borrower under the Resolution, the Series 201 OD Bond and the Collateral Documents, and (a)
such action does not result in any default in the perfonnance or observance of any of the terms,
covenants or agreements of the Borrower under the Resolution, the Series 20 I OD Bond and the
Collateral Documents, (b) such action does not violate the State Act or the Clean Water Act and
does not adversely affect the exdl_lsion of interest on the Series 201 OD Bond 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 WATER RECLAMATION FACILITY PROJECT
Section 3.1 Use of Proceeds. The Borrower shall apply the proceeds of the 20100
Loan from the DNRC solely as follows:
(a) The Borrower shall apply the proceeds of the 20100 Loan solely to the
financing, refinancing or reimbursement of the costs of the Water Reclamation Facility
16
Project as set forth in Appendix A hereto and this Section 3.1. The 20 I OD Loan will be
disbursed in accordance with Article IV hereof and Article VII of the Indenture. If the
Water Reclarnation Facility Project has not been completed prior to Closing, the
BotTower shall, as quickly as reasonably possible, complete the Water Reclamation
Facility Project and expend proceeds of the Series 20100 Bond to pay the costs of
completing the Water Reclamation Facility Project.
(b) No portion of the proceeds of the 201 OD Loan shall be used to reimburse the
Borrower for costs paid prior to the date of adoption of this Resolution of a project the
construction or acquisition of which occutTed or began earlier than March 7, 1985. In
addition, if any proceeds of the 201 OD Loan are to be used to reimburse the BotTower for
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 201 OD Loan was incutTed
after March 7, 1985, for a project the construction or acquisition of which began after
March 7, I 985. No proceeds of the 2010D 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 Water Reclamation Facility Project. Set forth in Appendix A to this
Supplemental Resolution is a description of the Water Reclamation Facility Project, which
describes the property which has been or is to be acquired, installed, constructed or improved
and the other activities, if any to be funded from the 201 OD Loan (the Water Reclamation
Facility Project may consist of more than one facility or activity) and an estimated budget
relating to the Water Reclamation Facility Project. The Water Reclamation Facility Project may
be changed and the description thereof in Appendix A may be amended from time to time by the
BotTower but only after delivery to the DNRC of the following:
(a) A certificate of the Bo1Tower 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 Water Reclamation Facility Project, an increase
or decrease in the amount of Loan proceeds which will be required to complete the Water
Reclamation Facility Project and whether the change will materially accelerate or delay
the construction schedule for the Water Reclamation Facility Project;
(b) A written consent to such change in the Water Reclamation Facility
Project by an Authorized DNRC Officer;
(c) An Opinion or Opinions of Bond Counsel stating that the Water
Reclamation Facility 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 OD Bond was issued, eligible for financing under the Enabling
17
Act, such amendment will not violate the State Act or the Enabling Act and such
amendment will not adversely affect the exclusion of interest on the State Bonds or the
Series 201 OD Bond 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
2010D Loan may be made only upon an application to the DEQ, the DNRC and the Trustee, in
such fonn as the DEQ shall specify, which is approved by the DEQ and the DNRC, in their 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 arc true as of the date of closing of the additional loan and compliance with
applicable tests for the incurrencc 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 201 OD Loan to pay Project Costs
or as to the availability of additional funds under the Program to increase the principal amount of
the 201 OD Loan.
Section 3.3 Project Representations and Covenants. The Borrower hereby represents
to and covenants with the DNRC that:
(a) all construction of the Water Reclamation Facility 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 Water Reclamation Facility 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 untii
construction is completed to the Borrower's, the DNRC's and the DEQ's satisfaction;
( c) all future construction 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 v;ith the \Vritten consent of an l\uthorized D1'TRC Officer
and the DEQ; and
(d) the Water Reclamation Facility Project is a project of the type permitted to
be financed under the Enabling Act, the State Act and the Program and Title VI of the
Clean Water Act.
Section 3.4 Completion or Cancellation or Reduction of Costs of the Water
Reclamation Facility Project.
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(a) Upon completion of the Water Reclamation Facility Project, the Borrower
shall deliver to the DNRC a certificate stating that the Water Reclamation Facility Project
is complete, stating the amount, if any, of the Reserved Amounts, and releasing the
remaining amount, if any, of the Committed Amount. If any Reserved Amount is not
later needed, the Borrower shall so inform the DNRC and release such amount. [f
Appendix A describes two or more separate projects as making up the Water
Reclamation Facility Project, a separate completion certificate shall be delivered for each.
(b) [fall or any portion of the Water Reclamation Facility Project is cancelled
or cut back or its costs are reduced or for any other reason the Borrower will not require
the full Committed Amount, the Borrower shall promptly notify the DNRC in writing of
such fact and release the portion of the Undisbursed Committed Amount.
ARTICLE IV
THE LOAN
Section 4.1 The Loan; Disbursement of Loan. The DNRC has agreed to lend to the
Borrower, from time to time as the requirements of this Section 4.1 are met, an amount up to: (i)
$9,500,000 (the "Committed Amount") for the purposes of financing, refinancing or reimbursing
the Borrower for all or a portion of the costs of the Water Reclamation Facility Project and
paying costs of issuance on the Series 201 OD Bond; provided the DNRC shall not be required 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 Sections 3.2 and 3.4. The 201 OD Loan shall
be disbursed as provided in this Section 4.1. The DNRC intends to disburse the 20 I OD Loan
through the Trustee.
(a) In consideration of the issuance of the Series 2010D Bond by the
Borrower, the DNRC shall make, or cause the Trustee to make, a disbursement of all or a
portion of the 201 OD Loan upon receipt of the following documents:
(1) an Opinion of Bond Counsel as to the validity and enforceability of
each series of the Series 2010D Bond and the security therefor and stating in
effect that interest on each series of the Series 201 OD Bond is not includable in
gross income of the owner thereof for purposes of federal income taxation, in
form and substance satisfactory to the DNRC;
(2) the Series 2010D Bond, fully executed and authenticated;
(3) a certified copy of the Original Resolution and this Supplemental
Resolution;
( 4) any other security instruments or documents required by the
DNRC or DEQ as a condition to their approval of the 2010D Loan;
(5) if all or pari of the 2010D Loan is being made to refinance a
Project or reimburse the Borrnwer for the costs of a Project paid prior to the
Closing, evidence, satisfactory to the DNRC and the Bond Counsel referred to in
(!) above, (A) that the acquisition or construction of the Water Reclamation
19
Facility Project was begun no earlier than March 7, 1985 or the debt was incurred
no earlier than March 7, l 985, (B) of the Borrower's title to the Water
Reclamation Facility Project, (C) of the costs of the Water Reclamation Facility
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. l 50-2 of the Regulations;
( 6) the items required by the Indenture for the portion of the 20 I OD
Loan 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 (I) may require (including any necessary arbitrage rebate
instructions).
(b) In order to obtain a disbursement of a portion of the 2010D Loan to pay
costs of the Water Reclamation Facility 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.
( c) For refinancings, a disbursement schedule complying with the
requirements of the Clean Water Act shall be established by the DNRC and the Borrower
at Closing. If the Borrower should repay all or a portion of the debt to be refinanced
from other sources or should otherwise not need any portion of the loan which was to
have been used to refinance such debt, it shall inform the DNRC and the Trustee of such
fact pursuant to Section 3 .4(b) and a new disbursement schedule shall be drawn up by the
DNRC. The DNRC shall obtain a receipt from the holder of the debt being refinanced
for each disbursement made to pay or prepay a portion of such debt.
( d) If all or a portion of the 20 I OD Loan is made to reimburse a Borrower for
Project costs paid by it prior to Closing, the Borrower shaii 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 the
Closing.
( e) Notwithstanding anything else provided herein, the Trustee shall not be
obligated to disburse the 20100 Loan 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 "ovennatching" 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 disbursements of the 20100 Loan for such costs
because of the schedule under which EPA makes EPA Capitalization Grant money
20
available to the DNRC. The DNRC will use its commercially reasonable efforts to obtain
an acceleration of such schedule if necessary.
(f) Upon making each 201 OD Loan disbursement, the Trustee shall note such
disbursement on Schedule A to the Series 201 OD Bond.
(g) The Bonower agrees that it will deposit in the Reserve Account upon
receipt thereof, on the Closing Date of the 2010D Loan and upon any disbursement date,
any proceeds of the 20100 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 portion of the 201 OD Loan representing capitalized interest shall be
advanced only on Payment Dates and shall be transfened by the Trustee on the Payment
Date directly to the Revenue Bond Account. The amount of any such transfer shall, as
appropriate, be a credit against the interest payments due on the 201 OD Loan, and interest
on any such loan so affected shall accrue only from the date of transfer.
Section 4.2 Commencement of Loan Term. The Borrower's obligations under this
Resolution and the Collateral Documents shall commence on the date hereof unless othenvise
provided in this Resolution. However, the obligation to make payments under Article V hereof
shall commence only upon the first disbursement by the Trustee of the proceeds of the 201 OD
Loan.
Section 4.3 Termination of Loan Term. The Borrower's obligations under this
Resolution and the Collateral Documents shall terminate upon payment in full of all amounts due
under the Series 201 OD Bond and this Resolution; provided, however, that the covenants and
obligations provided in A1iicle VI and Section 10.4 shall survive the termination of this
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 Indent'.lre.
ARTICLE V
REPAYMENT OF 2010D LOAN
Section 5.1 Repayment of 201 OD Loan. The Borrower shall repay the amounts lent to
it pursuant to Section 4. l hereof, plus interest on the unpaid amounts lent at the rate of two
percent (2.00%) per annum, in semiannual Loan Repayments. In addition, the Borrower shall
pay an Administrative Expense Surcharge on the outstanding principal amount of the 2010D
Loan at the rate of seventy-five hundredths of one percent (0.75%) per annum and a Loan Loss
Reserve Surcharge on the outstanding principal amount of the 201 OD Loan at the rate of one
percent ( 1.00%) per annum. For purposes of this Resolution and the Program, the term "interest"
on a Loan shall include the Administrative Expense Surcharge and the 20 lOD Loan Loss
Reserve Surcharge. The Borrower shall pay all Loan Repayments and the Administrative
Expense Surcharge and Loan Loss Reserve Surcharge in lawful money of the United States of
America to the DNRC. Interest, the Administrative Expense Surcharge, and Loan Loss Reserve
21
Surcharge shall be calculated on the basis of a year of 360 days comprising 12 months of 30 days
each.
The Loan Repayments required by this Section 5.1 and the Administrative Expense
Surcharge and Loan Loss Reserve Surcharge shall be due on each January 1 and July 1 (the
"Payment Dates"), as follows:
(1) interest and the Administrative Expense Surcharge and Loan Loss
Reserve Surcharge on the outstanding principal balance of the 201 OD Loan shall
be payable on each January 1 and July 1, beginning on July 1, 2010, through and
including January 1, 2030;
(2) the principal of the 2010D Loan shall be repayable on each
Payment Date, beginning on July 1, 2010 and concluding on January 1, 2030, and
the amount of each principal payment shall be calculated on the basis of
substantially level debt service at a rate of 3.75% per annum.
The payments of principal of and interest and the Administrative Expense
Surcharge and the 2010D Loan Loss Reserve Surcharge on the 2010D Loan shall be due
on the dates specified above and on the dates and in the amounts shown in Schedule B to
the Series 201 OD 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 2010D Bond. Upon each disbursement of amounts of the
2010D Loan 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 2010D Bond, under
"Advances" and the total amount advanced under Section 4.1, including such
disbursement, under "Total Amount Advanced."
If the advance was made to pay costs of the Water Reclamation Facility Project
pursuant to Section 4.1 (b ), interest and Administrative Expense Surcharge and the 201 OD
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 201 OD Bond, as appropriate, in accordance with this Section
5.1, and the Trustee shall send a copy of such Schedule B to the Borrower within one
rnonth after delivery of the cornpletio11 certificate.
Past-due payments of principal and interest and the Administrative Expense
Surcharge and Loan Loss Reserve Surcharge shall bear interest at the rate of ten percent
(10.00%) per annum, until paid.
Any payment of principal, interest oir the Administrative Expense Surcharge and
Loan Loss Reserve Surcharge under this Section 5.1 shall also be credited against the
same payment obligation under the Series 20 I OD Bond.
22
Section 5.2 Additional Payments. The Borrower shall also pay, within 30 clays after
receipt of a bill therefor, from any legally available funds therefor, including proceeds of the
20 I OD Loan, 1 f the Borrower so chooses, all reasonable expenses of the DNRC and the Trustee
in connection with the 20 I OD Loan, the Collateral Documents and the Series 20 I OD Bond,
including, but not limited to:
( a) the cost of reproducing this Resolution, the Collateral Documents and the
Series 20 I OD Bernd;
(b) the fees and disbursements of Bond Counsel and other Counsel utilized by
the DNRC and the Trustee in connection with the 2010D Loan, this Resolution, the
Collateral Documents and the Series 201 OD Bond 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 2010D Bond, whether or not any
of the Series 20 I OD Bond is 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 201 OD Bond, the Collateral Documents and this Resolution 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 paii of the
outstanding principal amount of the Series 201 OD Bond unless (i) it obtains the prior written
consent of the DNRC thereto, and (ii) no Loan Repayment, 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 201 OD Bond is 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 this Resolution and the Series 201 OD Bond and to perfonn its
other agreements contained in this Resolution, the Series 201 OD Bond 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 this Resolution
and the Series 20 I OD Bond, (b) shall perform all its other agreements in this Resolution, the
Series 20 l OD Bond and the Collateral Documents and ( c) shall not terminate this Resolution, the
Seti es 201 OD Bond or the Collateral Documents for any cause, including any acts or
circumstances that may constitute failure of consideration, destruction of or damage to the Water
Reclamation Facility 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 perform any of its agreements, whether
express or implied, or any duty, liability or obligation arising from or connected with this
Resolution. Provided, however, if the 201 OD Loan contemplated herein is not made and no
funds are disbursed to the Borrower, this Resolution may be tenninated.
23
Section 5.5 Limited Liability. All payments of principal of and interest on the 20 l OD
Loan and other payment obligations of the Bonow er hereunder and under the Series 20 I OD
Bernd shall be special, limited obligations of the Borrower payable solely out of the Net
Revenues or out of the Revenue Bond Account and shall not be payable out of any other funds or
revenues of the Borrower. The obligations of the Bonow er under this Resolution and the Series
20 l OD Bond shall never constitute an indebtedness of the Borrower within the meaning of any
state constitutional provision or statutory 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 are not pledged to pay principal of or interest on the Series 20 l OD
Bond, and no funds or property of the Borrower other than the Net Revenues are pledged to pay
principal of or interest on the Series 201 OD Bond.
ARTICLE VI
INDEMNIFICATION OF DNRC AND DEQ
The Borrower shall, to the extent permitted by law, indemnify and save harmless the
DNRC, 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 Water Reclamation Facility Project. The Borrower 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
cin TnrlPtnnifiPrl Pcirh, ,-lpfpnrl .;,nrh nrr,rPPrlina r,n hPhcilf r,f thP TnrlPmnifiPrl Pcirh, ......_ ...... .,,_,.. .......... _.. .................................... .&. .............. J' ...... ...,_.__. ................... ......_ ........... ~ ... ....,. ...... -_. ............... b ...., ...... ....,...., ............ ,,_ .... ....,, ..................................................... 1,. .................................. J.
ARTICLE VII
ASSIGNMENT
Section 7 .1 Assignment by City. The Borrower may not assign its rights and
obligations under the Resolution or the Series 201 OD Bond, except as provided in Section 6.3 of
the Original Resolution.
Section 7.2 Assignment by DNRC. The DNRC will pledge its rights under and
interest in the Resolution, the Series 201 OD Bond and the Collateral Documents ( except to the
extent otherwise provided in the Indenture) as security for the payment of the State Bonds.
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
Resolution to State Bonds and Additional State Bonds shall be deemed to refer to the refunding
bonds and any bonds of the State on a parity with such refunding bonds (together, the
"Refunding Bonds") or, in the case of a crossover refunding, to the State Bonds and Additional
24
State Bonds and the Refunding Bonds. In the event the State Bonds are refunded by an issue of
Additional State Bonds, all references in the Resolution to the State Bonds shall be deemed to
refer to such Additional State Bonds or, in the case of a crossover refunding, both the State
Bonds and such Additional State Bonds.
ARTICLE VIII
THE SERIES 20 l OD BOND
Section 8.1 Net Revenues Available. The BorTower is authorized to charge just and
equitable rates, charges and rentals for all services directly or indirectly furnished by the System,
and to pledge and appropriate to the outstanding Bonds and the Series 20 l OD Bond the Net
Revenues to be derived from the operation of the System, including improvements, betterments
or extensions thereof hereafter constructed or acquired. The Net Revenues to be produced by
such rates, charges and rentals during the term of the Series 201 OD Bond will be more than
sufficient to pay the principal and interest when due on the Series 201 OD Bond, and to create and
maintain reasonable reserves therefor and to provide an adequate allowance for replacement and
depreciation, as herein prescribed.
Section 8.2 Issuance and Sale of the Series 201 OD Bond. The Commission has
investigated the facts necessary and hereby finds, determines and declares it to be necessary and
desirable for the Bonow er to issue the Series 201 OD Bond to evidence the 201 OD Loan. The
Series 201 OD Bond is issued to the DNRC without public sale pursuant to Montana Code
Annotated, Section 7-7-4433(2)(a).
Section 8.3 Terms. The Series 2010D Bond shall be in the maximum principal
amount equal to the original Committed Amount, shall 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 interest
at the rate charged by the DNRC on the 201 OD Loan. The principal of and interest on the Series
201 OD Bond shall be payable on the same dates and in the same amounts on which principal and
interest of the 20 l OD Loan Repayments are payable. Advances of principal of the Series 20 l OD
Bond shall be deemed made when advances of the 2010D Loan are made under Section 4.1, and
such advances shall be payable in accordance with Schedule B to the Series 201 OD Bond as it
may be revised by the DNRC from time to time in accordance with Section 5.1.
The Bonower may prepay the Series 201 OD Bond, in whole or in part, only upon the
terms and conditions under which it can prepay the 201 OD Loan under Section 5.3.
Section 8.4 Negotiability, Transfer and Registration. The Series 2010D Bond 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 201 OD
Bond shall be payable to the DNRC at the Office of the Department of Natural Resources and
Conservation, 1625 Eleventh Avenue, Helena, Montana 59620 or such other place as may be
designated by the DNRC in writing and delivered to the Borrower. The Series 201 OD Bond shall
be negotiable, subject to the provisions for registration and transfer contained in this Section. No
transfer of the Series 20 I OD Bond shall be valid unless and until (I) the holder, or his duly
authorized attorney or legal representative, has executed the form of assignment appearing on the
Series 20 I OD Bond, and (2) the Director of Finance of the Borrower (or successors, the
25
"Registrar"), as Bond Registrar, has duly noted the transfer on the Series 20 I OD Bond 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 20 I OD Bond is registered as the absolute owner of the Series
20 I OD Bond 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 20 !OD Bond 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 2010D Bond. The Series 2010D Bond shall be sealed with the corporate
seal of the Borrower. In the event that any of the officers who shall have signed the Series
201 OD Bond shall cease to be officers of the Borrower before the Series 201 OD Bond is issued or
delivered, their signatures shall remain binding upon the Borrower. Conversely, the Series
201 OD Bond may be signed by an authorized official who did not hold such office on the date of
adoption of this Supplemental Resolution. The Series 201 OD Bond shall be delivered to the
DNRC, or its attorney or legal representative.
Section 8.6 Form. The Series 2010D Bond shall be prepared in substantially the form
attached as Appendix B.
ARTICLE IX
SECURITY FOR THE SERIES 201 OD BOND
The Series 201 OD Bond is issued as an additional parity Bond under Section 10.3 of the
Original Resolution and shall, with the Series 201 OB Bond, the Series 20 I 0C Bond and any other
additional parity Bonds issued under the provisions of Section 10.3 of the Original Resolution,
he 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 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. Upon advancement of principal of the Series 20 I OD
Bond, the Director of Finance of the Borrower shall transfer from available funds of the System
or proceeds of the Series 20 I OD 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 the first advance of proceeds of the Series 20 I OD Bond, the deposit to the
Reserve Account shaii be sufficient to cause the balance in the Reserve Account to equal the
Reserve Requirement in respect of the Series 20 I OB Bond, the Series 20 l 0C Bond and the
principal of the Series 201 OD Bond so advanced. The Borrower shall keep, perform and observe
each and every one of its covenants and undertakings set forth in the Resolution for the benefit of
the registered owners from time to time of the Series 20 I OD Bond.
26
ARTICLE X
TAX MATTERS
Section I 0.1 Use of Project. The Water Reclamation Facility 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 Water Reclamation Facility Project
or the System or security for the payment of the Series 2010D Bond which might cause the
Series 20 I OD Bond to be considered a "private activity bond" or "private loan bond" within the
meaning of Section 14 I of the Code.
Section I 0.2 General Covenant. The B01Tower covenants and agrees with the owners
from time to time of the Series 20 I OD 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 20 I OD
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 20 l OD Bond will not become ineluctable in gross income for federal
income tax purposes under the Code and the Regulations.
Section l 0.3 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 201 OD Bond pursuant to the 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(6) 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 201 OD Bond, it is
reasonably expected that the proceeds of the Series 2010D Bond will be used in a manner that
would not cause the Series 201 OD 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 201 OD
Bond is subject to the rebate requirements of Section l 48(t) 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 l 48(f) and
applicable Treasury Regulations to preserve the exclusion of interest on the Series 201 OD Bond
from gross income for federal income tax purposes, unless the Series 201 OD Bond qualify for the
exception from the rebate requirement under Section 148(t)( 4)(B) of the Code and no "gross
proceeds" of the Series 201 OD 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 fonn to be prepared
by Bond Counsel, and the Borrower hereby covenants and agrees to observe and perfonn 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 May I 5, 20 I 0, a statement concerning the Series 201 OD Bond containing
the information required by Section 149( e) of the Code.
27
Section 10.6 "Qualified Tax-Exempt Obi igations." Pursuant to Section 265(b )(3 )(B)(ii)
of the Code, the Borrower hereby designates the Series 20 I OD Bond as a "qualified tax-exempt
obligation" for purposes of Section 265(b )(3) of the Code. The Bonower has not designated any
obligations in 20 IO other than the Series 201 OB Bond and the Series 201 0C Bond under Section
265(b)(3). The Bonower 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 50l(c)(3) bonds" but excluding other "private activity bonds," as defined in
Sections 14l(a) and 145(a) of the Code) will be issued by or on behalf of the BorTower and all
"subordinate entities" of the Bonower 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
201 OD Bond under the Program pursuant to which the State issues from time to time State Bonds
to provide funds therefor. The Borrower covenants and agrees that, upon written request of the
DNRC from time to time, the Bonower 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 l 5c2-l 2 ( 17
C.F .R. § 240. l 5c2-l 2) 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 DNR C, 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 XII
MISCELLANEOUS
Section 12.1 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:
28
DNRC
Trustee:
Borrower:
Department of Natural Resources and Conservation
I 625 Eleventh Avenue
P. 0. Box 201601
Helena, Montana 59620-160 I
Attn: Conservation and Resource
Development Division
U.S. Bank National Association
c/o Corporate Trust Services
1420 Fifth Avenue, iii Floor
Seattle, Washington 98101
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 12.2 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 12.3 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 12.4 Amendments. This Supplemental Resolution may not be effectively
amended without the written consent of the DNRC.
Section 12.5 Applicable Law. This Supplemental Resolution shall be governed by and
construed in accordance with the internal laws of the State.
Section 12.6 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 12.7 No Liability oflndividual 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 20100 Loan.
29
Section 12.8 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 20100 Bond, 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
2010D Bond.
Section 12.9 Right of Others To Perform City's Covenants. In the event the Borrower
shall fail to make any payment or perfonn 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 Bonower and make advances for that
purpose. No such performance or advance shall operate to release the Bonower 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 (I 0.00%) 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 Water Reclamation Facility
Project or the facility or facilities of which the Water Reclamation Facility 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 12.10 Authentication of Transcript. The officers of the Bon-ow er 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 201 OD Bond and such other certificates and
affidavits as may be required to show the right, power and authority of the Bon-ow er to issue the
Series 201 OD Bond, and all statements contained in and shown by such instmments, including
any heretofore furnished, shall constitute representations of the Bon-ow er as to the truth of the
statements of fact purported to be shown thereby.
Section 12.11 Effective Date. This Supplemental Resolution shall take effect
immediately.
Adopted by the City Commission of the City of Bozeman, Montana, on this 16th day of
Februmy, 2010.
30
APPENDIX A
DESCRIPTION OF THE WATER RECLAMATION FACILITY PROJECT
The Water Reclamation Facility Project consists of designing, engineering and
constructing improvements to the Bon-ower's Water Reclamation Facility, including demolition
within the existing Head works Building and construction of an influent connection and
Head works Building, construction of a Primary Effluent Pumping Station, construction of a
biological nutrient removal facility and connection to the existing bioreactor basins, demolition
of existing blowers and construction of an aeration blower system, conversion of an existing un-
used surge tank into a sludge fermenter basin, rehabilitation of an existing gravity thickener
system, retrofitting of an existing RAS control facility with new flow control equipment,
construction of a new RAS/WAS Flow Control and Pumping Facility, construction of two new
secondary clarifiers, replacement of an existing chlorine disinfection system with a UV
disinfection system, construction of all associated mechanical, electrical, controls and general
sitework items, and related improvements.
A-1
APPENDIX B
[Form of the Series 20100 Bond]
UNITED STATES OF AMERICA
STATE OF MONTANA
GALLA TIN COUNTY
CITY OF BOZEMAN
SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM),
SERIES 20 l OD
No. R-l $9,500,000
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 o_f 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 July 1, 2010. 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 201 OD 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% 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-1
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 se1ies from time to time, and constitutes a series in the
maximum authorized principal amount of $9,500,000 (the "Series 201 OD Bond"). The Series
20 l OD 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 costs of issuance of the Series 20 l OD Bond. The Series 201 OD
Bond is issued pursuant to and in full confonnity 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 duly enacted by the City Commission on November 16, 2009, as
amended and supplemented by Resolution Nos. 4234 and 4245 adopted January 19, 20 l 0 and
February 16, 2010, respectively (as so amended and supplemented, the "Resolution"). The
Series 201 OD Bond is issuable only as a single, fully registered bond. The Series 20 l OD Bond is
issued on a parity with the B01Tower's $359,300 Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010B and its $1,223,000 Sewer
System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series
2010C (together, the "Outstanding Bonds").
Reference is made to the Resolution for a more complete statement of the terms
and conditions upon which the Series 2010D 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 and the Series 2010D Bond (collectively, 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 201 OD Bond.
The Borrower may prepay the principal of the Series 201 OD Bond only if (i) it
obtains the prior written consent of the DNRC thereto, and (ii) 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 201 OD Bond is prepaid in part, such
prepayments shall be applied to principal payments in in'(1erse order of maturity.
The Bonds, 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
prov1s10n.
The Borrower may deem and treat the person in whose name this Series 201 OD
Bond is registered as the absolute owner hereof, whether this Series 201 OD Bond is overdue or
not, for the pu1vose of receiving payment and for all other purposes, and the Borrower shall not
B-2
be affected by any notice to the contrary. The Series 201 OD Bond may be transfened hereinafter
as provided.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that
the Borrower will forthwith construct and complete the improvements to lhe 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
due within the next six months plus one-twelfth of the principal due within the next twelve
months with respect to all Bonds payable from the Revenue Bond Account; that the BoITower
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 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 Bonds and additional parity Bonds on such Net Revenues; that all
provisions for the security of the holder of this Series 201 OD 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 201 OD 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 201 OD 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 201 OD Bond
does not cause either the general or the special indebtedness of the Borrower to exceed any
constitutional or statutory limitation.
B-3
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 ~~ day of-----~
2010.
Mayor
(Seal)
Director of Finance
Clerk of the Commission
B-4
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 (I) the registered holder of the Bond, or his duly authorized
attorney or legal representative, executes the fonn 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
ex tent of the sum or sums so paid.
REGISTER
The ownership of the unpaid P1incipal 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
Registration
2010
Name and Address
of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh A venue
Helena, MT 59620
Signature of
Director of Finance
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The Director of Finance of the Borrower, 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.
Date of Transfer
Name of New
Registered Holder
B-5
Signature of
Bond Registrar
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The Director of Finance of the City of Bozeman, Montana, 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 accrned 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
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 ____________ _
8-6
Dy: ___________ _
(Authorized Signature)
For: --------------
(Ho Ider)
Date
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Advances
B-7
Total Amount
Advanced
Notation
Made By
Date Principal Interest
SCHEDULE B
Administrative
Expense Surcharge
B-8
Loan Loss
Reserve
Surcharge
Total Loan
Payment
APPENDIX C
ADDITIONAL REPRESENTATIONS AND COVENANTS
[None]
C-1
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
Resolution No. 4254, entitled: "RESOLUTION RELATING TO $5,103,000 SEWER SYSTEM
REVENUE BONDS (DNRC WATER POLLUTION CONTROL ST ATE REVOL VINO LOAN
PROGRAM), CONSISTING OF $384,000 SUBORDINATE LIEN TAXABLE SERIES 2010E
BOND, $816,000 SERIES 2010F BOND, AND $3,903,000 SERIES 20100 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 meeting, the
following Commissioners voted in favor thereof: AnJvus, Js,u_,ke,v-, 'Jp,j[o,.-
anA 9r'lo...;J 0 r' -f<V{All.::s5 ; voted against the same: _~ __ l>_1'>_e..,;~----------
_____ ; abstained from voting thereon: _'"Yl_D_'11_V ________ ~· or were
absent: -~e~· r'-'._fvf~e-=h~( -------
WITNESS my hand officially this 3~ day of May, 2010.
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,
$816,000 SERIES 2010F BOND, AND $3,903,000 SERIES 20100 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
Section 1.1.
Section 1.2.
Section 1.3.
ARTICLE I
DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES
Definitions .......................................................................................... .
Other Rules of Construction ............................................................... .
Appendices ......................................................................................... .
ARTICLE II
AUTHORIZATION, FINDINGS, REPRESENTATIONS AND COVENANTS
Section 2.1.
Section 2.2.
Section 2.3.
Section 2.4.
Section 2.5.
Section 2.6.
Section 3.1.
Section 3.2.
Section 3.3.
Section 3.4.
Section 4.1.
Section 4.2.
Section 4.3.
Section 4.4.
Authorization and Findings ................................................................ .
Representations ................................................................................... .
Covenants ........................................................................................... .
Covenants Relating to the Tax-Exempt
Status of the State Bonds .................................................................... .
Maintenance of System; Liens ........................................................... .
Maintenance of Existence; Merger
Consolidation, Etc.; Disposition of Assets ......................................... .
ARTICLE III
USE OF PROCEEDS; THE 2010 DIGESTER PROJECT
Use of Proceeds .................................................................................. .
The 2010 Digester Project .................................................................. .
2010 Digester Project Representations and Covenants ...................... .
Completion or Cancellation or Reduction of
Costs of the 2010 Digester Project ..................................................... .
ARTICLE IV
THE LOAN
The Loan; Disbursement of Loan ....................................................... .
Commencement of Loan Term ........................................................... .
Termination of Loan Term ................................................................. .
Loan Closing Submissions ................................................................. .
2
8
9
9
11
13
15
17
17
17
18
19
20
20
23
23
23
Section 5.1.
Section 5.2.
Section 5.3.
Section 5.4.
Section 5.5.
ARTICLE V
REPAYMENT OF 2010EFG Loans
Repayment of2010EFG Loans .......................................................... .
Additional Payments ........................................................................... .
Prep a yn1ents ........................................................................................ .
Obligations of BoITower Unconditional ............................................. .
Limited Liability ................................................................................. .
ARTICLE VI
23
27
27
27
28
INDEMNIFICATION OF DNRC AND DEQ ................................................................... 28
Section 7.1.
Section 7 .2.
Section 7.3.
Section 8.1.
Section 8.2.
Section 8.3.
Section 8.4.
Section 8.5.
Section 8.6.
ARTICLE VII
ASSIGNMENT
Assign111ent by BoITower .................................................................... .
Assignn1ent by DNRC ........................................................................ .
State Refunding Bonds ....................................................................... .
ARTICLE VIII
THE SERIES 201 0EFG BONDS
Net Revenues Available ..................................................................... .
Issuance and Sale of the Series 201 0EFG Bonds ............................... .
Terms .................................................................................................. .
Negotiability, Transfer and Registration ............................................ .
Execution and Delivery ...................................................................... .
Forn1 .................................................................................................... .
ARTICLE IX
28
29
29
29
29
30
30
30
31
SECURITY FOR THE SERIES 201 0EFG BONDS.......................................................... 31
Section 10.1.
Section 10.2.
Section 10.3.
Section 10.4.
Section 10.5.
Section 10.6.
ARTICLE X
TAX MATTERS
Use of 2010 Digester Project ........................................................... .
General Covenant. ............................................................................ .
Arbitrage Cetiification ..................................................................... .
Arbitrage Rebate Exemption ........................................................... .
Information Reporting ..................................................................... .
"Qualified Tax-Exempt Obligations" .............................................. .
11
32
32
32
32
33
33
ARTICLE XI
CONTINUING DISCLOSURE......................................................................................... 33
ARTICLE XII
IMPLEMENTATION OF SECTION 6.7 OF ORIGINAL RESOLUTION ........................ 34
Section 13.1.
Section 13.2.
Section 13.3.
Section 13 .4.
Section 13.5.
Section 13.6.
Section 13.7.
Section 13.8.
Section 13.9.
Section 13.10.
Section 13 .11.
ARTICLE XIII
MISCELLANEOUS
Notices ............................................................................................. .
Binding Effect .................................................................................. .
Severability ...................................................................................... .
Amendments .................................................................................... .
Applicable Law ................................................................................ .
Captions; References to Sections ..................................................... .
No Liability of Individual Officers, Directors or Trustees .............. .
Payments Due on Holidays .............................................................. .
Right of Others To Perform Borrower's Covenants ........................ .
Authentication of Transcript ............................................................ .
Effective Date .................................................................................. .
34
35
35
35
35
35
35
35
35
36
36
APPENDIX A-Description of the 2010 Digester Project................................................... A-1
APPENDIX B-1 -Form of Series 2010E Bond .................................................................... B-1-1
/',PP END IX B~2 -Form of Series 201 OF Bond .................................................................... B~2~ l
APPENDIX B-3 -Form of Series 2010G Bond ................................................................... B-3-1
APPENDIX C-Additional Representations and Covenants................................................ C-1
APPENDIX D -Compliance Certificate and Request.......................................................... D-1
111
RESOLUTION NO. 4254
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
WHEREAS, pursuant to the Water Pollution Control State Revolving Fund Act, Montana
Code Annotated, Title 75, Chapter 5, Part 11, as amended (the "State Act"), the State of Montana
(the "State") has established a revolving loan program (the "Program") to be administered by the
Department of Natural Resources and Conservation of the State of Montana, an agency of the
State (the "DNRC"), and by the Department of Environmental Quality of the 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
limited to, all federal grants for capitalization of a state water pollution 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 money in the
Revolving Fund and payments of principal of and interest on loans made from the Revolving
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 DEQ and the DNRC; and
WHEREAS, the 20 IO EPA Capitalization Grant ( as hereinafter defined) requires that
loans under the Program funded in whole or in part by such grant in the aggregate and not on a
loan-by-loan basis be structured 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, Gallatin County, Montana (the "Borrower") has
applied to the DNRC for the 201 0EFG 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 Borrower is authorized under applicable laws, ordinances and
regulations to adopt this Supplemental Resolution and to issue the Series 20 I 0EFG Bonds ( as
hereinafter defined) to evidence the 201 0EFG Loans ( as hereinafter defined) for the purposes set
forth herein; and
WHEREAS, the DNRC will fund: (i) the 2010E Loan (as hereinafter defined) entirely
from proceeds of the 2010 EPA Capitalization Grant, (ii) the 201 OF 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,
terms used with initial capital letters but undefined in this Supplemental Resolution shall have
the meanings given them in the Resolution, the Indenture, or as follows:
"Accountant" or "Accountants" means an independent certified public accountant or a
finn 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 201 OF Loan and the
20100 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 201 0EFG 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 201 OF Bond, the Series 20 lOG 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 201 OE 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.
2
"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 201 OE Bond, the Series 20 l OF Bond,
and the Series 201 OG 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 201 OG 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 firm 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
Borrower 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 referred to in clause ( 1) or (2) above.
3
"DEQ" means the Department of Environmental Quality of the State 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 Clean Water 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
Dl'JRC in iesponse to a Compliance Certificate and Request that the Borrovver's obligation to
repay the principal of the Series 201 OE Bond is forgiven.
"Fund" means the Sewer System Fund established pursuant to Section 11.1 of the
Original Resolution.
"Governmental Unit" means governmental 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 20100
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 2010G Bond, and, if the DNRC delivers a
4
Noncompliance Statement, of the Series 201 OE Bond, at the rates and times specified in Article
V.
"Noncompliance Statement" means a written statement delivered to the Bon-ower by the
DNRC that the Bon-ower'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 Bon-ower 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 2010F 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 detennined 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 201 OE 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 improvement, 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 201 0EFG 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.
5
"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 20 l OB Bond and the Series 201 0C Bond.
"Series 201 0A 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 201 0C.
"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 201 OE,
issued to the DNRC to evidence the 201 OE Loan.
"Series 2010F Bond" means the $816,000 Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 201 OF, issued to the DNRC to
evidence the 201 OF 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 201 0G Loan.
"Series 2010EFG Bonds" means, collectively, the Series 2010E Bond, the Series 2010F
Bond, and the Series 2010G Bond.
"Sewer Debt" means all Bonds and any other Debt incuned 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.e., 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 of 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 be issued pursuant to the Indenture.
"State Act" means Montana Code A1motated, Title 75, Chapter 5, Paii 11, as amended
from time to time.
"Subordinate Obligations" means the Series 201 0A Bond, the Series 201 OE 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, Washington, or any
successor trustee under the Indenture.
"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 201 0EFG 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.
7
"201 0G Committed Amount" means the amount of the 201 0G 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.
"2010 EPA Capitalization Grant" means that EPA Capitalization Grant made available to
the Program from 2010 federal appropriations.
"201 OF First Advance" means the first advance of funds of the 201 0EFG Loans from the
proceeds of the 201 OF Loan by the DNRC to the Borrower in an amount of at least $50,001.
"2010GFirst Advance" means the first advance of funds of the 20100 Loan by the
DNRC to the Borrower.
"2010EFG Loans" or "Loan" means, collectively, the 2010E Loan, 2010F Loan, and the
201 0G 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 201 0EFG 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 201 0EFG 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 201 0EFG Bonds.
"20100 Loan" means the loan made to the Borrower by the DNRC pursuant to the
Program in the maximum amount of the 201 0G 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 201 0EFG 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.
(b) Tenns in the singular include the plural and vice versa.
( c) All references to time shall refer to Helena, Montana time, unless otherwise provided
herein.
8
( d) All references to mail shall refer to first-class mail postage prepaid.
(e) Words of the masculine gender shall be deemed and construed to include conelative
words of the feminine and neuter genders.
( f) "Or" is not exclusive, but is intended to pennit or encompass one, more or all of the
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;
Appendix B-1: the form of the Series 201 OE Bond;
Appendix B-2: the form of the Series 201 OF Bond;
Appendix B-3: the form of the Series 2010G Bond;
Appendix C: additional agreements and representations of the 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, bette1ment 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 Bonower to acquire and construct the 2010 Digester Project.
(d) Outstanding Bonds. Pursuant to the Enabling Act and the Resolution, the Borrower
has issued its Series 2010 ARRA Project Bonds to finance the 2010 ARRA Project and its Series
201 OD Bond to finance a water reclamation facility project. The Series 20 l OB Bond, the Series
9
2010C Bond, and the Series 20100 Bond are parity bonds payable from Net Revenues of the
System. The Series 201 0A Bond is a Subordinate Obligation payable, if at all, from Surplus Net
Revenues. No other bonds or indebtedness are outstanding that are payable from revenues of the
System.
( e) Series 201 OEFO 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
detem1ined that the Borrower is authorized to issue the Series 201 OE Bond in the maximum
principal amount of $384,000, the Series 2010F Bond in the maximum principal amount of
$816,000, and the Series 20100 Bond in the maximum principal amount of $3,903,000, with the
Series 2010F Bond and the Series 20100 Bond payable from and secured by the Net Revenues.
For purposes of the foregoing certificate, principal of and interest on the 20 l OE Loan are
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 201 OE 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 constrncted 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
detennined 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 from and secured
by the N ct Revenues on a parity with the outstanding Series 201 OB Bond, Series 201 0C Bond,
and Series 201 OD 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 pennits
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 201 0EFG Bonds and to carry out
and consummate all transactions contemplated by the Supplemental Resolution, the
Series 201 0EFG 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, deli very and
performance of its obligations under this Supplemental Resolution, the Series 201 0EFG
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 201 0EFG Bonds and the Collateral Documents, or the financial condition
of the Borrower, or the transactions contemplated by the Resolution, the Series 201 0EFG 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 201 0EFG Bonds or any Collateral Documents and the period for filing any such
petition will have expired before issuance of the Series 201 0EFG Bonds.
(c) Borrowing Legal and Authorized. The adoption of this Supplemental Resolution, the
execution and delivery of the Series 201 0EFG Bonds and the Collateral Documents and the
consummation of the transactions provided for in this Supplemental Resolution, the Series
201 OEFG Bonds and the Collateral Documents and compliance by the Borrower with the
provisions of the Resolution, the Series 201 0EFG Bonds and the Collateral Documents:
( 1) are within the powers of the Borrower and have been duly authorized by all
necessary action on the paii of the Borrower; and
1 1
(2) do not and will not result in any breach of any of the tem1s, 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 BmTower 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 prope1iy 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 terms hereof or of the Series 201 0EFG Bonds and the Collateral Documents.
(e) Governmental Consent. The Borrower has obtained or made all 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 2010EFGBonds 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 201 0EFG 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 201 0EFG 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 rnate1ially 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 201 0EFG Bonds and the
Collateral Documents and to pledge any revenues or other property pledged to the payment of
the Se1ies 201 0EFG 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 201 0EFG 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 ce1iificate providing the information required by this
Section 2.3(a).
(b) Right ofinspection and Notice of Change of Location. The DNRC, the D EQ and the
EPA and their designated agents shall have the right at all reasonable times during nonnal
business hours and upon reasonable notice to enter into and upon the prope1iy of the Borrower
13
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 201 0EFG Bonds and the Collateral Documents and to realize thereon, and record and file
and re-record and refile 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 201 0EFG Bonds
and the Collateral Documents.
( cl) 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 201 0EFG Bonds;
(2) The Borrower shall forthwith, after the execution and delivery of the Series
201 0EFG 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, includmg 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
(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 201 0EFG 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:
14
(I) the preliminary budget for the System, with items for the 20 IO Digester
Project shown separately; and
(2) when adopted, the final budget for the System, with items for the 20 I 0
Digester Project shown separately.
(g) 20 IO Digester Project Accounts. The Borrower shall maintain 20 IO 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 201 OEFG 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 ainngement, acquire bonds issued by the State under the Indenture in an
amount related to the amount of the Series 201 OEFG 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 201 OEFG 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 affectthe 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 B01Tower 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 seeming 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 prope1iy so long as the Borrower uses its best effmis 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 Govenm1ental Unit or permit one or more Govenm1ental 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
terms, covenants or agreements of the Borrower under the Resolution, the Series 201 0EFG
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 201 0EFG 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 201 0EFG Loans to pay the costs of
completing the 2010 Digester Project.
(b) No portion of the proceeds of the 201 0EFG 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 20 l 0 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 ofrefinancing 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 improved and the 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 Borrower 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 the 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 20 I 0EFG 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 0EFG 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 ptincipal amount of the
201 0EFG 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 201 0EFG 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 Borrower
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 IV 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 20 IO 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.
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Section 3 .4 Completion or Cancellation or Reduction of ~osts of the 2010 Digester
Project.
(a) Upon completion of the 2010 Digester Project, the Borrower shall deliver to the
DNRC a certificate stating that the 2010 Digester Project is complete and stating the amount, if
any, of the Undisbursed Committed Amount. If Appendix A describes two or more separate
projects as making up the 2010 Digester Project, a separate completion ceriificate shall be
delivered for each.
(b) If all or any portion of the 2010 Digester Project is cancelled or cut back or its costs
are reduced or for any other reason the Borrower will not require the full Committed Amount,
the Borrower shall promptly notify the DNRC in writing of such fact and the amount of the
Undisbursed Committed Amount.
Section 4.1
ARTICLE IV
THE LOAN
The Loan; Disbursement of Loan.
(a) The DNRC has agreed to lend to the Borrower, from time to time as the requirements
of this Section 4.1 are met, an amount up to (i) $384,000 (the "201 OE Committed Amount"), (ii)
$816,000 (the "2010F Committed Amount"), and (iii) $3,903,000 (the "2010G Committed
Amount") for the purposes of financing, refinancing or reimbursing the Borrower for a portion of
the costs of the 2010 Digester Project; provided the DNRC shall not be required to loan any
proceeds of the State Bonds to the Borrower after the Estimated Compietion 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 2010EFG Loans through the Trustee. In
consideration of the issuance of the Series 201 0EFG Bonds by the Borrower, the DNRC shall
make, or cause the Trustee to make, a disbursement of all or a portion of the 201 0EFG Loans
upon receipt of the following documents:
(1) an Opinion of Bond Counsel as to the Series 201 OE Bond and an opinion of
Bond Counsel as to the validity and enforceability of the Series 201 OF Bond and 201 0G
Bond and the security therefor and stating in effect that interest on the Series 201 OF Bond
and the Series 201 0G Bond is not includable in gross income of 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 20100 Bond,
fully executed and authenticated;
(3) a certified copy of the Original Resolution and this Supplemental Resolution;
(4) any other security instruments or documents required by the DNRC or DEQ
as a condition to their approval of the 20 I 0EFG Loans;
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(5) if all or part of a Loan is being made to refinance a Project or reimburse the
BotTower for the costs of a Project paid prior to the Closing, evidence, satisfactory to the
DNRC and the Bond Counsel refeITed 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
incurred 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 BotTower
has complied with Section 1.150-2 of the Regulations;
(6) the items required by the Indenture for the p01tion of the 2010EFG 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 refeITed to in subparagraph (1) may require
(including any necessary arbitrage rebate instructions).
( c) In order to obtain a disbursement of a portion of the 201 OEFG Loans to pay costs of
the 2010 Digester Project, the BoITower 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 BotTower may obtain disbursements only for costs which have been legally
incutTed and are due and payable. All Loan disbursements will be made to the BoITower only
upon proof that cost was incutTed.
( 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 201 OF First Advance will be advanced
from the 2010F Loan.
(2) Second, after the 201 OF First Advance has been disbursed to
the BotTower, the entire amount of the 201 OE Loan may then be disbursed to the
BoITower as and when needed. For the avoidance of doubt, any amounts of the
201 OEFG Loans to be disbursed at Closing in excess of the 201 OF First Advance
will be disbursed as proceeds of the 201 OE Loan to the extent of the 20 lOE
Committed Amount.
(3) Third, after the entire principal amount of the 201 OE Loan has
been disbursed to the BotTower, the Borrower shall draw the remaining amounts
under the 201 OF Loan and, after the 201 OF Loan has been disbursed in full, the
Borrower will then draw amounts under the 201 OG Loan, which will be disbursed
to the BotTower, starting with the 201 OG 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 BoITower for the making of the
2010F First Advance and the 2010G First Advance, respectively. The Borrower shall not be
21
entitled to, and the DNRC shall have no obligation to make, the 20 l OF First Advance or the
20 l 0G First Advance or any subsequent advance of amounts under the 20 l OF Loan or the 201 0G
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 the requirements of the
Clean Water Act shall be established by the DNRC and the Borrower at Closing.
(g) If all or a poriion of the 201 0EFG 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 the Closing.
(h) Notwithstanding anything else provided herein, the Trustee shall not be obligated to
disburse the 201 0EFG 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 20100
Loan Disbursement, the Trustee shall note such disbursement on Schedule A to the Series 201 OE
Bond, Series 2010F Bond, and the Series 20100 Bond; respectively. A Schedule A reflecting
the amount of the 2010F First Advance will first be attached to the Series 2010F Bond at
Closing.
(i) 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 201 OF Loan and the 201 0G 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 poriions of the 20iOEFG 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 201 0EFG 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 Tenn. 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 the 201 OF Loan proceeds.
Section 4.3 Termination of Loan 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 of2010EFG Loans. The B01Tower 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 the Series 201 OE 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 201 OE 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 201 OE 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 201 OE Loan, the 201 OF Loan, and the 201 0G Loan, the term "interest on the
2010EFG Loans" or "interest on the 2010E Loan" or "interest on the Series 2010F Loan" or
"interest on the Series 201 0G 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 201 OE 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 20 I OE Loan, unless the DNRC
forgives the Bon-ower's obligation to repay the principal of the 201 OE Loan as provided in
Section 5. l .2(b ). Subject to the provisions of Section 5. l.2(b ), the Loan Repayments and the
Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the 201 OE 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 20 l OE 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 3.753/o'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 201 OE Bond or interest or surcharges thereon and the Series 20 l OE 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 20 l OE 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 a Noncompliance
Statement.
5.1.3. Repayment of 201 OF Loan. The Loan Repayments on the 201 OF Loan
required by this Section 5.1 shall be due on each Payment Date, as follows:
(1) interest and Administrative Expense Surcharge and Loan Loss Reserve
Surcharge on the outstanding principal balance of the 201 OF Loan shall be
payable on each January 1 and July 1, beginning on January 1, 2011 and
concluding on July 1, 2030; and
(2) the principal of the 2010F Loan shall be repayable on January 1, 2011, 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 a
rate of 3.75% per annum; provided that principal of the 2010F Loan is
payable only in amounts that are multiples of $1,000.
5 .1.4. Repayment of 201 OG Loan. The Loan Repayments on the 201 OG Loan
required by this Section 5.1 shall be due on each Payment Date, as follows:
(1) interest and Administrative Expense Surcharge and Loan Loss Reserve
Surcharge on the outstanding principal balance of the 201 OG Loan shall
be payable on each January 1 and July 1, beginning on the first to occur of
either of such dates following the date of the 201 OG First Advance, which
is the first Payment Date after the 201 OG First Advance, but in any event
no earlier than January 1, 2011, and concluding on July 1; 2030; and
(2) the principal of the 2010G Loan shall be repayable on each Payment Date,
beginning on the January 1 or July 1 that is the first to occur following the
date of the 2010G First Advance, but in any event no earlier than January
1, 2011, and concluding July 1, 2030, and the amount of each principal
payment shall be calculated on the basis of a substantially level debt
service at a rate of 3. 7 5% per annum; provided that principal of the 201 OG
Loan is payable only in amounts that are multiples of $1,000.
5.1.5. Details Regarding 2010 Loan Repayments. Loan Repayments and
the Administrative Expense Surcharge and the Loan Loss Reserve Surcharge on the 201 OF 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 Schedule B to the Series 2010E Bond, the
Series 201 OF Bond, and the Series 201 OG 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
201 OF Bond and, as appropriate, the Series 201 OE Bond, at Closing. 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 201 OE Bond and the Series 201 OF Bond on and
after Closing and in Schedule B to the Series 20 l OG Bond on and after the date of the 20 l OG
First Advance. Upon each disbursement of 2010EFG Loan amounts 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 201 OE Bond, the Series 201 OF Bond, and the Series 20100
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 201 OE 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 201 OE 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 201 OF Loan and 20100 Loan shall be due
on the dates and in the amounts shown in Schedule B to the Series 201 OF Bond and the Series
20100 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 p01iion 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 201 OF Bond and the Series
20100 Bond. Upon each disbursement of 2010F Loan and 20100 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 20100 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 201 OF Bond and the
Series 20100 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 often percent (10.00%) per
annum, until paid.
Any payment of principal and interest as to the Series 201 OF Bond and the
Series 20100 Bond and, if applicable, the Series 201 OE Bond, and the Administrative Expense
Surcharge and the Loan Loss Reserve Surcharge as to the Series 20100 Bond and the Series
201 OF Bond, and, if applicable, the Series 201 OE Bond under this Section 5 .1 shall be credited
against the same payment obligation under each of the Series 20100 Bond, the Series 201 OF
Bond and, as applicable, the Series 201 OE 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 Series 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 201 0EFG Bonds, whether or not the
Series 201 0EFG 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
201 0EFG 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 201 OF Bond, the Series 201 0G Bond, and, if
applicable, the Series 201 OE 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 201 0EFG 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 201 0EFG 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 perform 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
201 0EFG Loans and other payment obligations of the Borrower hereunder and under the Series
20 l 0EFG Bonds shall be special, limited obligations of the Borrower payable solely out of the
Net Revenues or, as appropriate, Surplus Net 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 201 0EFG 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 201 0EFG
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
201 0EFG 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 Borrower 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 of the Indemnified Party.
ARTICLE VII
ASSIGNMENT
Section 7 .1 Afil;ignment by Borrower. The Borrower may not assign its rights and
obligations under the Resolution or the Series 201 0EFG Bonds.
Section 7.2 Assignment by DNRC. The DNRC will pledge its rights under and
interest in the Resolution, the Series 201 0EFG Bonds and the Coilateral 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 pennitted 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
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Resolution to State Bonds and Additional State Bonds shall be deemed to refer to the refunding
bonds and any bonds of the State on a parity with such refunding bonds (together, the
"Refunding Bonds") or, in the case of a crossover refunding, to the State Bonds and Additional
State Bonds and the Refunding Bonds. In the event the State Bonds are refunded by an issue of
Additional State Bonds, all references in the Resolution to the State Bonds shall be deemed to
refer to such Additional State Bonds or, in the case of a crossover refunding, both the State
Bonds and such Additional State Bonds.
ARTICLE VIII
THE SERIES 201 0EFG BONDS
Section 8.1 Net Revenues Available. The Borrower is authorized to charge just and
equitable rates, charges and rentals for all services directly or indirectly furnished by the System,
and to pledge and appropriate to the Series 201 OF Bond and the Series 201 0G Bond the Net
Revenues (and in respect of the Series 2010E Bond, if necessary, the Surplus Net Revenues) to
be derived from the operation of the System, including improvements, betterments or extensions
thereof hereafter constructed or acquired. The Net Revenues to be produced by such rates,
charges and rentals during the term of the Series 201 OB Bond, Series 201 0C Bond, Series 201 OD
Bond, Series 20 I OF Bond, and Series 201 0G 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 therefor and to provide an adequate allowance for replacement and depreciation, as
prescribed herein. For purposes of the foregoing statement, principal of and interest on the
2010A Loan and the 2010E Loan are disregarded. The Borrower acknowledges and agrees that
if the DNRC delivers a Noncompliance Statement to the Borrower as provided in Section 5.1.2
as determined in the sole and complete discretion of the DNRC, then principal and interest and
surcharges will become due and owing on the 20 I OE Loan evidenced by the Series 201 OE Bond
as provided in Section 5.1 and the Borrower shall thereupon, and no later than three months after
delivery of such a statement, to the extent required by Section 6. 7 of the Original Resolution, as
implemented as described in Section 12.2 below, 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.
Section 8.2 Issuance and Sale of the Series 2010EFG Bonds. The Commission has
investigated the facts necessary and hereby finds, determines and declares it to be necessary and
desirable for the Borrower to issue the Series 201 0EFG Bonds to evidence the 201 0EFG Loans.
The Series 2010EFG Bonds are issued to the DNRC without public sale pursuant to Montana
Code Annotated, Section 7-7-4433(2)(a).
Section 8.3 Tem1s. The Series 2010E Bond, the Series 2010F Bond, and the Series
20 I OG Bond shall be in the maximum principal amount equal to the original 20 I OE Committed
Amount, 201 OF Committed Amount, and 201 0G Committed Amount, respective! y, 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 interest at the rate charged by the DNRC on the 201 OE Loan, 201 OF
Loan, and 201 0G Loan, respectively. The principal of and interest on the Series 201 OF Bond
and the Series 201 0G Bond, and, if applicable, the principal of and interest on the Series 201 OE
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 20 l OE Bond or Series 201 OF Bond
or Series 201 0G Bond shall be deemed made when advances of the 201 OE Loan or 201 OF Loan
or 201 0G Loan, respectively, are made under Section 4.1, and such advances shall be payable in
accordance with Schedule B to the Series 201 OF Bond, the Series 201 0G 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 201 OE Bond is a Subordinate Obligation
payable only from the Surplus Net Revenues available in the Fund. The Series 201 OF Bond and
the Series 201 0G 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, 1625 Eleventh A venue, Helena, Montana 59620-1601 or such other
place as may be designated by the DNRC in writing and delivered to the Borrower. The Series
201 0EFG 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 201 0EFG 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 201 0EFG 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 201 0EFG 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 201 0EFG Bonds shall cease to be officers of the Borrower before the Series 201 0EFG
Bonds are issued or delivered, their signatures shall remain binding upon the Borrower.
Conversely, the Series 201 0EFG 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 201 OEFG
Bonds shall be delivered to the DNRC, or its attorney or legal representative.
Section 8.6 Form. The Series 201 OE Bond shall be prepared in substantially the form
attached as Appendix B-1, the Series 201 OF Bond shall be prepared in substantially the form
attached as Appendix B-2, and the Series 201 0G Bond shall be prepared in substantially the form
attached as Appendix B-3.
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ARTICLE IX
SECURITY FOR THE SERIES 2010EFG BONDS
The Series 201 OF Bond and the Series 201 0G Bond are issued as Bonds under the
Original Resolution, as implemented as described in this Supplemental Resolution, and shall,
with the Series 201 OB Bond, Series 201 0C Bond, Series 201 OD 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 fmiher 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 201 OF Bond and the Series 201 0G 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 201 OF Bond and
the Series 201 0G 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 201 OF
Bond and the Series 201 0G Bond so advanced. The Series 201 OE 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 201 OE 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 be 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 set 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 of2010 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 20 I OF Bond and the Series 201 0G Bond which might
cause the Series 20 I OF Bond or the Series 201 0G 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 20 l OF Bond and the Series 20 l 0G 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 201 OF Bond and the Series 201 0G 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 201 OF Bond
and the Series 201 0G Bond will not become incluclable 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 201 OF Bond and the Series 201 0G 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
elate of issue and delivery of the Series 2010F Bond and the Series 2010G Bond, it is reasonably
expected that the proceeds of the Series 201 OF Bond and the Series 201 0G Bond will be used in
a manner that would not cause the Series 201 OF Bond and the Series 201 0G 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 201 OF
Bond and the Series 201 0G 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 201 OF Bond and the Series 201 OG Bond from gross income for federal income tax
purposes, unless the Series 201 OF Bond and the Series 20 l 0G 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 20100 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 201 OF 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 201 OF Bond and the Series 201 0G 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 201 OB Bond, the
Series 201 0C Bond, the Series 201 OD Bond, the Series 201 OF Bond, and the Series 201 0G Bond
under Section 265(b )(3 ). The Borrower hereby represents that it does not anticipate that
obligations bearing interest not incluclable 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 14l(a) and 145(a) of the Code) will be issued by or on
behalf of the Borrower and all "subordinate entities" of the Borrower 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
201 0EFG Bonds under the Program pursuant to which the State issues from time to time State
Bonds to provide funds therefor. The Borrower 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
l 5c2-12 ( 17 C.F.R. § 240. l 5c2-l 2) 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 XII
IMPLEMENTATION OF SECTION 6.7 OF ORIGINAL RESOLUTION
For purposes of construing Section 6. 7 of the Original Resolution, p1incipal of and
interest on the Series 201 OE 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 pmiies at the following addresses:
DNRC:
Trustee:
Borrower:
Department of Natural Resources and Conservation
1625 Eleventh A venue
P. 0. Box 201601
Helena, Montana 59620-1601
Attn: Conservation and Resource
Development Division
U.S. Bank National Association
c/o Corporate Trust Services
1420 Fifth A venue, ih Floor
Seattle, Washington 98101
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 Rinding 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 13. 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 201 0EFG 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 elate provided in this Supplemental Resolution or the
Series 201 0EFG Bonds.
Section 13.9 Right of Others To Perfonn 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%) 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 S ystern 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 20 I 0EFG 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 201 0EFG 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 Commission of the City of Bozeman, Montana, on this 3rd day of
May, 2010.
~
Attest: ~ ~
c1eroftheCommission
(SEAL)
36
APPENDIX A
Description of the 20 IO Digester Project
The 20 IO 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: SRF
Source: EPA Source: SRF Loan 3.75%
Forgiveness Loan 3.75% $3,903,000 Source: Source:
$384,000 (E) $816,000 (F) (G) TSEP STAG Total:
Debt Service Reserve $58,687 $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 $5,298,965
Contingency $436,435 $436,435
TOT AL PROJECT COSTS $384,000 $816,000 $3,903,000 $500,000 $485,000 $6,088,000
A-1
R-1
APPENDIX B-1
[Fom1 of the Series 20 I OE Bond]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLA TIN
CITY OF BOZEMAN
SUBORDINATE LIEN SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM)
TAXABLE SERIES 2010E
$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 1 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 fmih in Schedule B attached hereto. Upon each disbursement of 201 OE 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%) per annum, until paid. [nterest and Administrative Expense Surcharge and Loan Loss
Reserve Surcharge shall be calculated on the basis of a 360-day year comprising 12 months of30
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 FOREGO[NG PROVISIONS OF THIS BOND, IN THE
EVENT THAT THE BORROWER TrMEL Y 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 ST A TEMENT, 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 ST A TEMENT 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
201 OE Bond is issued to finance a portion of the costs of the constrnction 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 201 0EFG Bonds. The Series 201 OE Bond is issued
pursuant to and in full confonnity 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 Bonower 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 20 l OE 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 201 OF (the
"Series 2010F Bond") and its Sewer System Revenue Bond (DNRC Water Pollution Control
State Revolving Loan Program), Series 20100 (the "Se1ies 20100 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 201 0C, and its $9,500,000 Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 20100
(all such Bonds, collectively, the "Outstanding Bonds"). Following the 201 OF First Advance,
principal amounts of this Series 201 OE Bond are advanced until all of the ptincipal of this Series
201 OE Bond is advanced prior to advances under the Series 201 OF Bond or the Series 201 0G
Bond.
Reference is made to the Resolution for a more complete statement of the terms and
conditions upon which the Series 201 OE 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 201 OE Bond is prepaid in part, such prepayments shall be applied to principal payments in
inverse order of maturity.
This Series 201 OE 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 prov1s10n.
The Borrower may deem and treat the person in whose name this Series 201 OE Bond is
registered as the absolute owner hereof, whether this Series 201 OE 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 201 OE Bond may be transferred as hereinafter
provided.
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
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
Net 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 cmTent 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 201 0A Bond and the Series 201 OE Bond as and when due; that additional bonds
issued on a parity with the Outstanding Bonds (such bonds, the "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 201 OE Bond); that all provisions for the security of the holder of this Series 201 OE 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 201 OE 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 201 OE
Bond and the interest hereon are payable solely out of available Surplus Net Revenues in the
Replacement and Depreciation A.ccount or the Surplus Account of the Fund 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 201 OE 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 __ day of ___ , 2010.
Mayor
(Seal)
Director of Finance
Clerk of the Commission
I, 1 A o-1 -'+
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
Registration
2010
Name and Address
of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh A venue
Helena, MT 59620
Signature of
Director of Finance
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
NameofNew
Registered Holder
B-1-5
Signature of
Bond Registrar
FORM OF ASSIGNMENT
For value received, this Bond is hereby transferred and assigned by the undersigned
holder, without recourse, to -------------------------
011 this __ day of ____________ _
B-1-6
By: ___________ _
(Authorized Signature)
For: _____________ _
(Holder)
Date
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Advances
Total Amount
Advanced
B-1-7
Notation Made By
Principal
SCHEDULE B
Administrative
Expense Surcharge
n 1 o D-1-0
Loan Loss
Reserve
Surcharge
Total Loan
Payment
R-1
APPENDIX B-2
[Form of the Series 20 I OF Bond]
UNITED STATES OF AMERICA
ST A TE OF MONT ANA
COUNTY OF GALLA TIN
CITY OF BOZEMAN
SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM)
SERIES 20 I OF
$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 I 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 fotih in Schedule B hereto. Upon each disbursement of 201 OD 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% 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%) p~r 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-2-1
compnsmg 12 months of 30 clays 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 $816,000 (the "Series 2010F Bond"). The Series
201 OF 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
201 OF 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 201 OF 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 20100, 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 201 OE.
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 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 Series 201 OF 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 20 lOF Bond.
The Borrower may prepay the principal of the Series 201 OF 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 elate of prepayment on the amount of principal prepaid. If the
Series 201 OF Bond is prepaid in part, such prepayments shall be applied to principal payments in
inverse order of maturity.
n,.,,.,
D-L-L
The Series 20 I OF 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 Bonower within the meaning of any constitutional or statutory limitation
or prov1s1on.
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 20 l OF 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 201 OF Bond may be transfened as
hereinafter provided.
This Series 20 l OF Bond has been designated by the Bonow er 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 f01ih 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 201 OF 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 20 l OF 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 2010F 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 20 I OF Bond does not cause either the general or the special indebtedness of the Borrower
to exceed any constitutional or statutory limitation.
fN 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 __ day of _____ , 2010.
Mayor
(Seal)
Director of Finance
Clerk of the Commission
B-2-4
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 (I) 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 Bon-ower'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
Registration
2010
Name and Address
of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh A venue
Helena, MT 59620
Signature of
Director of Finance
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
Registered Holder
B-2-5
Signature of
Bond Registrar
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH 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.
Date of Transfer
Name of New
Registered Holder
FORM OF ASSIGNMENT
Signature of
Bond Registrar
For vaiue received, this Bond is hereby transferred and assigned by the undersigned
holder, without recourse, to ________________________ _
on this __ day of ____________ _
B-2-6
By: ___________ _
(Authorized Signature)
For: --------------
(Holder)
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Advances
Total Amount
Advanced
B-2-7
Notation
Made By
Principal
SCHEDULE B
Administrative
Expense Surcharge
D '1 0 LJ-L.,-O
Loan Loss
Reserve
Surcharge
Total Loan
Payment
R-1
APPENDIX B-3
[Form of the Series 2010G Bond]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLA TIN
CITY OF BOZEMAN
WATER SYSTEM REVENUE BOND
(DNRC DRINKING WATER STATE REVOLVING LOAN PROGRAM)
SERIES 2010G
$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 (2.00%) 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 201 OE
Bond and the Series 2010F Bond (as such terms are defined below or in the Resolution), and
upon the making of the 201 0G 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%) 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 set
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 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
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% 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 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 20100 Bond"). The Series
20100 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 20100 Bond. The
Series 20100 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 20100 Bond is issuable only as a single, fully registered bond. The
Series 20100 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 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 20100 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 20 l OG 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 Series 201 OG 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 201 OG Bond.
The Borrower may prepay the principal of the Series 20100 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
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Reserve Surcharge is then delinquent. Any prepayment pennitted 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 201 0G Bond is prepaid in part, such prepayments shall be applied to principal payments in
inverse order of maturity.
The Series 201 0G 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 prov1s10n.
The Borrower may deem and treat the person in whose name this Series 201 0G
Bond is registered as the absolute owner hereof, whether this Series 201 0G 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 201 0G Bond may be transferred as
hereinafter provided.
This Series 201 0G Bond has been designated by the Borrower 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
cetiain 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 201 0G Bond set fo1ih in
the Resolution will be punctually and faithfully performed as therein stipulated; that all acts,
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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 201 0G Bond a valid and binding special obligation of the Borrower
according to its tenns 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 20 I 0G 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 201 0G 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 __ day of _____ , 2010.
Mayor
(Seal)
Director of Finance
Clerk of the Commission
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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
Registration
2010
Name and Address
of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh A venue
Helena, MT 59620
Signature of
Director of Finance
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
NameofNew
Registered Holder
B-3-5
Signature of
Bond Registrar
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The Director of Finance of the City of Bozeman, Montana, acting as Bond Registrar, has
transfe1Ted, on the books of the Bo1Tower, 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
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 ____________ _
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By: ___________ _
(Authorized Signature)
For: --------------
(Holder)
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Advances
Total Amount
Advanced
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Notation
Made By
Principal
SCHEDULE B
Administrative
Expense Surcharge
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Loan Loss
Reserve
Surcharge
Total Loan
Payment
APPENDIX C
ADDITIONAL REPRESENTATIONS AND COVENANTS
None
C-1
APPENDIX D
$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 Se1ies 2010F Bond and $3,903,000 Series 2010G Bond
City of Bozeman, Montana
COMPLIANCE CERTIFICATE AND REQUEST
We, ___________________ , and ______ , hereby
certify that we are on the date hereof the duly qualified and acting Mayor, the Director of
Finance, and the Clerk of the Commission, respectively, of the City of Bozeman, Montana (the
"Borrower"), and that:
I. 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 201 OE Bond, $816,000 Series 201 OF
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 201 OE, dated, as originally issued, as of _____ , 2010, in the maximum
aggregate principal amount of $384,000 (the "Series 201 OE Bond"), its Sewer System Revenue
Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010F, dated, as
originally issued, as of _____ , 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 201 0G, dated, as originally issued, as
of _____ , 2010, in the maximum aggregate principal amount of$3,903,000 (the "Series
201 0G Bond"). The Borrower has reviewed the Supplemental Resolution, including, without
limitation, A1iicles II and III thereof, and the definitions relating thereto. The Borrower
acknowledges and agrees that the Series 2010E Bond evidences a loan made to the Borrower
from thP nNR (' from fnnrls mllrlP ~nn:iibhle to the nNR C from the 2nl Opp A c~pit~li7~tion
Grant, and that this Certificate is being relied upon by the DNRC for ensuring compliance with
requirements applicable to the Borrower, the DNRC, and the 2010 Digester Project (as
hereinafter defined). Capitalized terms used herein without definition shall have the meanings
given them in the Original Resolution, as amended and supplemented by the Supplemental
Resolution (as so amended and supplemented, the "Resolution").
2. The Series 201 OE Bond is issued to finance a portion of the costs of construction
and installation of various improvements to the System, generally described as the 2010 Digester
Project (the "2010 Digester Project") in the Resolution. Construction of the 2010 Digester
Project has complied with all federal and state standards, including, without limitation, EPA
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regulations and standards. The 2010 Digester Project is expected to be completed and placed in
service on or about ____ , 20
3. Costs of the 2010 Digester Project in the amount of$ ____ ~ 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 confirms and agrees that any remaining amounts of the 2010EFG Loans to
be lent to the Borrower, if any, shall be evidenced by the Series 201 OF 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
TOT AL PROJECT COSTS
Of such amounts,$ _____ were paid from advances of proceeds of the Series
2010E Bond.
5. The Trustee has delivered to the Borrower a copy of Schedule B to be attached to
the Series 201 OE Bond, which reflects the amortization of all advances made or to be made on
the date hereof of proceeds of the Series 201 OE 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 201 OE 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 201 OE Bond and interest and surcharges thereon is thereupon
forgiven, and if the DNRC delivers a Noncompliance Certificate, amounts advanced under the
201 OE 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 Se1ies 2010E Bond.
6. The representations of the Borrower contained in Articles II 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 pati of the Borrower contained in
the Resolution has occurred and is continuing.
D-2
8. The Borrower is delivering this Cetiificate to the DNRC, in part, to ensure
compliance with EPA regulations and standards. The Borrower certifies that all laborers and
mechanics employed by contractors and subcontractors on the 20 l 0 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 detennined by the United States Secretary of Labor in accordance with subchapter
IV of chapter 31 of title 40, United States Code.
9. The Borrower acknowledges and agrees that this Certificate completed by the
Borrower in form satisfactory to the DNRC must be executed and delivered to the DNRC by the
date that is 30 days after receipt of the form of this Certificate from the DNRC. By submitting
this Certificate, the Borrower requests that the DNRC forgive the obligation of the Borrower to
repay the principal of the Series 201 OE Bond, together with interest and surcharges thereon. The
Borrower acknowledges and agrees that (i) the forgiveness of principal of and interest and
surcharges on the Series 201 OE Bond by the DNRC is contingent on the timely delivery of this
Certificate by the Borrower in satisfactory form as determined in the DNRC's sole and complete
discretion, (ii) the DNRC has no obligation to grant such forgiveness; and (iii) if the DNRC
delivers to the Borrower a Noncompliance Certificate, (a) the obligation of the Borrower to
repay the principal of the Series 201 OE Bond plus interest and Administrative Expense
Surcharge and Loan Loss Reserve Surcharge thereon shall continue in full force and effect until
the principal of the Series 201 OE Bond advanced and interest, Administrative Expense
Surcharge, and Loan Loss Reserve Surcharge thereon are paid in full, as set forth in Schedule B
delivered pursuant to paragraph 5 above, and as provided in the Series 201 OE Bond and the
Resolution, and (b) the Borrower shall, as necessary, within the 3-month period specified in the
Supplemental Resolution, adjust its rates and charges to produce Net Revenues and Surplus Net
Revenues required by the rate covenant in the Resolution.
WITNESS our hands on behalf of the Borrower and the seal of the Borrower as of this
__ day of ____ , 2010.
(SEAL)
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CITY OF BOZEMAN, MONTANA
By ----------------
Mayor
By ___________ ~
Director of Finance
By ----------------
Clerk of the Commission
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
Resolution No. 4299, entitled: "RESOLUTION RELATING TO $9,573,000 SEWER SYSTEM
REVENUE BOND (DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN
PROGRAM), SERIES 2010H; 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 November 1, 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 meeting, the
following ~ommissioners voted in favor thereof: ~~~ ~n , 5:,An, :l\rvLws,
~ f 'JY\,Ml ; voted against the same: _____________ _
_____ ; abstained from voting thereon: ____________ ; or were
absent: iY)~QR :\J'OJ AD.D
WITNESS my hand officially this I~ day ofNovember, 2010.
SUPPLEMENT AL BOND RESOLUTION
Relating to
$9,573,000
SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STA TE REVOL YING LOAN PROGRAM)
SERIES 2010H
CITY OF BOZEMAN
Adopted: November 1, 2010
TABLE OF CONTENTS
(For convenience only, not a part of this Supplemental Resolution)
Recitals................................................................................................................................ 1
Section 1.1.
Section 1.2.
Section 1.3.
ARTICLE I
DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES
Definitions .......................................................................................... .
Other Rules of Construction ............................................................... .
Appendices ......................................................................................... .
ARTICLE II
AUTHORIZATION, FINDINGS, REPRESENTATIONS AND COVENANTS
Section 2.1.
Section 2.2.
Section 2.3.
Section 2.4.
Section 2.5.
Section 2.6.
Section 3.1.
Section 3 .2.
Section 3 .3.
Section 3.4.
Section 4.1.
Section 4.2.
Section 4.3.
Section 4.4.
Authorization and Findings ................................................................ .
Representations ................................................................................... .
Covenants ........................................................................................... .
Covenants Relating to the Tax-Exempt Status of the State Bonds ..... .
Maintenance of System; Liens ........................................................... .
Maintenance of Existence; Merger, Consolidation, Etc.;
Disposition of Assets .......................................................................... .
ARTICLE III
USE OF PROCEEDS; THE Water Reclamation Facility Project
Use of Proceeds .................................................................................. .
The Water Reclamation Facility Project ............................................ .
Project Representations and Covenants .............................................. .
Completion or Cancellation or Reduction of Costs of the 2010
Project ................................................................................................. .
ARTICLE IV
THE LOAN
The Loan; Disbursement of Loan ....................................................... .
Commencement of Loan Term ........................................................... .
Termination of Loan Term ................................................................. .
Loan Closing Submissions ................................................................. .
2
7
8
8
9
12
14
15
16
16
17
18
18
19
21
21
21
Section 5.1.
Section 5.2.
Section 5.3.
Section 5.4.
Section 5.5.
ARTICLE V
REPAYMENT OF 2010H Loan
Repayment of 20 I OH Loan ................................................................. .
Additional Payments ........................................................................... .
Prepayments ........................................................................................ .
Obligations of Borrower Unconditional ............................................ ..
Li1nited Liability ................................................................................ ..
ARTICLE VI
21
23
23
23
24
INDEMNIFICATION OF DNRC AND DEQ ................................................................... 24
Section 7 .1.
Section 7.2.
Section 7.3.
Section 8.1.
Section 8.2.
Section 8.3.
Section 8.4.
Section 8.5.
Section 8.6.
ARTICLE VII
ASSIGNMENT
Assignment by Borrower .................................................................... .
Assignment by DNRC ........................................................................ .
State Refunding Bonds ....................................................................... .
ARTICLE VIII
THE SERIES 201 OH BOND
Net Revenues Available ..................................................................... .
Issuance and Sale of the Series 201 OH Bond ..................................... .
Terms .................................................................................................. .
Negotiability, Transfer and Registration ............................................ .
Execution and Delivery ...................................................................... .
Form .................................................................................................... .
ARTICLE IX
24
24
24
25
25
25
25
26
26
SECURITY FOR THE SERIES 2010H BOND................................................................. 26
Section 10.1.
Section 10.2.
Section 10.3.
Section 10.4.
Section 10.5.
ARTICLE X
TAX MATTERS
Use of Project .................................................................................... .
General Covenant. ............................................................................ .
Arbitrage Certification ..................................................................... .
Arbitrage Rebate .............................................................................. .
Information Reporting ..................................................................... .
11
27
27
27
27
27
ARTICLE XI
CONTINUING DISCLOSURE.......................................................................................... 28
Section 12.1.
Section 12.2.
Section 12.3.
Section 12.4.
Section 12.5.
Section 12.6.
Section 12. 7.
Section 12.8.
Section 12.9.
Section 12.10.
Section 12.11.
APPENDIX A
APPENDIXB
APPENDIXC
ARTICLE XII
MISCELLANEOUS
Notices ............................................................................................. .
Binding Effect .................................................................................. .
Severability ...................................................................................... .
Amendments .................................................................................... .
Applicable Law ................................................................................ .
Captions; References to Sections ..................................................... .
No Liability of Individual Officers, Directors or Trustees .............. .
Payments Due on Holidays .............................................................. .
Rights of Others To Perform City's Covenants ............................... .
Authentication of Transcript ............................................................ .
Effective Date .................................................................................. .
Description of the Water Reclamation Facility Project
Form of Series 2010H Bond
Additional Representations and Covenants
111
28
29
29
29
29
29
29
29
29
30
30
RESOLUTION NO. 4299
RESOLUTION RELATING TO $9,573,000 SEWER SYSTEM
REVENUE BOND (DNRC WATER POLLUTION CONTROL
STATE REVOLVING LOAN PROGRAM), SERIES 2010H;
AUTHORIZING THE ISSUANCE AND FIXING THE TERMS
AND CONDITIONS THEREOF
WHEREAS, pursuant to the Montana Water Pollution Control State Revolving Fund Act,
Montana Code Annotated, Title 75, Chapter 5, Part 11, as amended (the "Act"), the State of
Montana (the "State") has established a revolving loan program (the "Program") to be
administered by the Department of Natural Resources and Conservation of the State of Montana,
an agency of the State (the "DNRC"), and by the Department of Environmental Quality of the
State of Montana, an agency of the State (the "DEQ"), and has provided that a revolving
wastewater treatment works 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 limited to, all federal grants for capitalization of a state water
pollution control revolving fund under the Federal Water Pollution Control Act (also known as
the Clean Water Act) (the "Clean Water Act"), all repayments of assistance awarded from the
Revolving Fund, interest on investments made on money in the Revolving Fund and payments of
principal of and interest on loans made from the Revolving Fund; and
WHEREAS, the 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 Department of Environmental Quality and the Department of Natural Resources and
Conservation; and
WHEREAS, on February 25, 2010 the City of Bozeman, Gallatin County, Montana (the
"Borrower") issued its Series 2010D Bond (as hereinafter defined) to pay a portion of the costs
of the Water Reclamation Facility Project (as hereinafter defined); and
WHEREAS, the City has subsequently applied to the DNRC for a loan (the "2010H
Loan") from the Revolving Fund to enable the Borrower to finance, refinance or reimburse itself
for another portion of the costs of the Water Reclamation Facility Project which will carry out
the purposes of the Clean Water Act; and
WHEREAS, the Borrower is authorized under applicable laws, ordinances and
regulations to adopt this Supplemental Resolution and to issue the Series 201 OH Bond to
evidence the 201 OH Loan for the purposes set forth herein; and
WHEREAS, the DNRC will fund the 2010D Loan with proceeds of Recycled Money (as
hereinafter defined).
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE
BORROWER, AS FOLLOWS:
ARTICLE I
DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES
Section 1.1
from the context:
Definitions. In this Resolution, unless a different meaning clearly appears
"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 within the Fund established
pursuant to Sections 11.1 and 11.2 of the Original Resolution.
"Act" or "State Act" means Montana Code Annotated, Title 75, Chapter 5, Part 11, as
amended from time to time.
"Administrative Expense Surcharge" means a surcharge on the 2010H Loan charged by
the DNRC to the Borrower equal to seventy-five hundredths of one percent (0.75%) per annum
on the outstanding principal amount of the 201 OH Loan, payable by the Borrower on the same
dates that payments of interest on each of the 201 OH Loan are due.
"Authorized DNRC Officer" means the Director or Deputy Director of the DNRC, and,
when used with reference to an act or document, also means any other individual authorized by
resolution of the Department of Natural Resources and Conservation to perform such act or sign
such document. If authorized by the Department of Natural Resources and Conservation, an
Authorized DNRC Officer may delegate all or a portion of his authority as an Authorized DNRC
Officer to another individual, and such individual shall be deemed an Authorized DNRC Officer
for purposes of exercising such authority.
"Bond Counsel" means any Counsel acceptable to the DNRC which is nationally
recognized as bond counsel. Counsel is nationally recognized as bond counsel if it has rendered
a legal opinion as to the validity and enforceability of state or municipal bonds and as to the
exclusion of interest thereon from gross income for federal income tax purposes (short-term
issues excluded) during the two-year period preceding the date of determination;
"Bonds" means the Series 201 OB Bond, the Series 201 0C Bond, the Series 20 lOD Bond,
the 201 OF Bond, the 201 0G Bond, the Series 201 OH 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 201 0A
Bond and the Series 201 OE Bond are not Bonds.
"Borrower" means the City.
"Business Day" means any day which is not a Saturday or Sunday and is not a day on
which banks in Montana are authorized or required by law to close.
"City" means the City of Bozeman, Montana and any permitted successor or assign.
"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.
2
"Closing" means the date of delivery of the Series 20 IOI-I 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 Resolution
and the Series 20 I OH Bond. If no Collateral Documents secure such obligations, any reference
to Collateral Documents in this Resolution shall be without effect.
"Committed Amount" means the amount of the 2010H Loan committed to be lent by the
DNRC to the Borrower pursuant to Section 4.1, as such amount may be reduced pursuant to
Sections 3.2 and 3.4.
"Consultant" means a nationally recognized consultant or firm of consultants, or an
independent engineer or firm 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 Water Reclamation Facility 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
Borrower 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 referred to in clause ( 1) or (2) above.
"DEQ" means the Department of Environmental Quality of the State of Montana, an
agency of the State, or any successor to its powers, duties and obligations under the Act or the
EPA Agreements.
"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 Act.
"Enabling Act" means Montana Code Annotated, Title 7, Chapter 7, Parts 44 and 45, as
amended, which authorizes the Borrower to own and operate the System, to undertake the Water
Reclamation Facility Project and to issue the Series 2010H Bond to finance costs of the Water
Reclamation Facility Project.
"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 and the EPA concerning the Program.
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"EPA Capitalization Grant" means a grant of funds to the State by the EPA under Title
VI of the Clean Water 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.
"Fund" means the Sewer System Fund established pursuant to Section 11.1 of the
Original Resolution.
"Governmental Unit" means governmental 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 has been or 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 a fee equal to one percent (1.00%) per annum on
the outstanding principal amount of the 201 OH Loan, payable on the same dates that payments of
interest on the 2010H Loan are due.
"Loan Repayments" means periodic installments of principal and interest by Borrower in
repayment of the 201 OH Loan, at the rates and times specified in Article V.
"Loan Term" means that period of time commencing and ending as set in Sections 4.2
and 4;3.
"Net Revenues" means the entire amount of the gross revenues of the System (as
described in Section 11.1 of the Original Resolution) remaining upon each such monthly
apportionment, after crediting to the Operating Account the amount required hereby, including
sums required to maintain the Operating Reserve in the minimum amount herein stated.
"Operating Account" means the account within the Fund established pursuant to Sections
11.1 and 11.3 of the Original Resolution.
"Operating Expenses" means those expenses of the System defined as such in Section
11.3 of the Original Resolution.
"Operating Reserve" means the reserve to be maintained in the Operating Account as
required by Section 11.3 of the Original Resolution.
"Opinion of Counsel" means a written opinion of Counsel.
"Original Resolution" means 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.
"Outstanding Bonds" shall mean the outstanding Series 201 OB Bond, the Series 201 0C
Bond, the Series 2010D Bond, the Series 2010F Bond, the Series 2010G Bond, and any
4
outstanding additional parity bonds issued in accordance with the Original Resolution and a
resolution supplemental thereto, and shall include, upon the Closing, the Series 201 OH Bond.
"Person" means any Private Person or Public Entity.
"Private Person" means an individual, corporation, partnership, association, joint venture,
joint stock company or unincorporated organization, except a Public Entity.
"Program" means the Water Pollution Control State Revolving Loan Program established
by the Act.
"Project" means the acquisition, design, construction and installation of various
improvements and betters to the System, including the Water Reclamation Facility Project.
"Public Entity" means a municipality, city, county, school district, political or
administrative subdivision of State government, irrigation district, drainage district or other
public body established by State law.
"Recycled Money" means payments and prepayments of principal of the 2010D Loan,
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 Regulations, whether final, temporary or proposed,
promulgated under the Code or otherwise applicable to the Series 201 OH Bond.
"Replacement and Depreciation Account" means the account within the Fund established
pursuant to Sections 11.1 and 11.6 of the Original Resolution.
"Reserve Account" means the account within the Fund established pursuant to Sections
11.1 and 11.5 of the Original Resolution.
"Reserve Requirement" means, as of the date of calculation, an amount equal to the
maximum amount of principal and interest payable on the Bonds in any future fiscal year (giving
effect to mandatory sinking fund redemption, if any).
"Reserved Amounts" means any undisbursed Committed Amount which will or may be
required to pay any remaining costs of the Water Reclamation Facility Project upon completion
thereof as provided in Section 3.4(a).
"Resolution" means the Original Resolution as supplemented by this Supplemental
Resolution and other supplemental resolutions.
"Revenue Bond Account" means the account within the Fund established pursuant to
Sections 11.1 and 11.4 of the Original Resolution.
"Series 2010 ARRA Project Bonds" means the Series 2010A Bond, the Series 2010B
Bond and the Series 201 0C Bond.
5
"Series 201 0A 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 201 OB 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 $9,500,000 Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010D.
"Series 201 0EFG Bonds" means, collectively, the Series 201 OE Bond, the Series 201 OF
Bond, and the Series 201 0G Bond.
"Series 2010E Bond" means the $384,000 Subordinate Lien Sewer System Revenue
Bond (DNRC Water Pollution Control State Revolving Loan Program), Taxable Series 2010E.
"Series 2010F Bond" means the $816,000 Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 20 I OF.
"Series 2010G Bond" means the $3,903,000 Sewer System Revenue Bond (DNRC Water
Pollution ControlState Revolving Loan Program), Series 2010G.
"Series 2010H Bond" means the $9,573,000 Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010H, issued to the DNRC to
evidence the 20 IOH Loan.
"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.e., 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.
"State" means the State of Montana.
"State Bonds" means the State's General Obligation Bonds (Water Pollution Control
State Revolving Fund Program), issued pursuant to the Indenture.
"Subordinate Obligations" means bonds or other obligations issued pursuant to Section
10.4 of the Original Resolution.
"Supplemental Resolution" means this resolution as it may from time to time be amended
or supplemented in accordance with its terms.
6
"Surplus Account" means the account within the Fund established pursuant to Sections
11.1 and 11. 7 of the Original Resolution.
"Surplus Net Revenues" means 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 Water Reclamation Facility Project.
"Trustee" means United States Bank National Association, or any successor trustee under
the Indenture.
"2010 ARRA Project" means construction of a sewer system administration building and
related improvements financed in part by the proceeds of the Series 2010 ARRA Project Bonds.
"2010 Digester Project" means the construction and installation of a digester, its
supporting building, dewatering facilities, and related improvements financed in part by the
proceeds of the Series 201 0EFG Bonds.
"20 I OH Loan" means the 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 a portion of
the costs of the Water Reclamation Facility Project payable under the Program.
"Water Reclamation Facility Project" means the facilities, improvements and activities
financed, refinanced or the cost of which is being reimbursed to the Borrower with proceeds of
the Series 2010D Bond and the Series 2010H Bond, described in Exhibit A hereto.
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.
(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 herein.
( d) All references to mail shall refer to first-class mail postage prepaid.
( e) Words of the masculine gender shall be deemed and construed to include
correlative words of the feminine and neuter genders.
(f) "Or" is not exclusive, but is intended to permit or encompass one, more or
all of the alternatives conjoined.
7
Section 1.3 Appendices. Attached to this Resolution and hereby made a part hereof
are the following Appendices:
Appendix A:
Appendix B:
Appendix C:
a description of the Water Reclamation Facility Project;
the form of the Series 201 OH Bond; and
additional agreements and representations of the Borrower.
ARTICLE II
AUTHORIZATION, FINDINGS, REPRESENTATIONS AND COVENANTS
Section 2.1 Authorization and Findings.
(a) Authorization. Under the provisions of the Enabling 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 Enabling Act and other laws
of the State has established and presently owns and operates the System.
(c) The Water Reclamation Facility Project. After investigation of the facts
and as authorized by the Enabling Act, this Commission has determined it to be
necessary and desirable and in the best interests of the Borrower to acquire and construct
the Water Reclamation Facility Project.
( d) Outstanding Bonds. Pursuant to the Enabling Act and the Resolution, the
Borrower has issued its Series 2010 ARRA Project Bonds to finance the 2010 ARRA
Project, its Series 201 OD Bond to finance a portion of the costs of the Water Reclamation
Facility Project, and its Series 2010EFG Bonds to finance a portion of the 2010 Digester
Project. The Series 2010B Bond, the Series 2010C Bond, the Series 2010D Bond, the
Series 2010F Bond, and the Series 20100 Bond are payable from Net Revenues of the
System. The Series 2010A Bond and the Series 2010E Bond are payable from the
Surplus Net Revenues and are subject to forgiveness if certain conditions are satisfied.
No other bonds or indebtedness are outstanding that are payable from revenues of the
System.
(e) 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
8
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 thereafter 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 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 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 $9,573,000 in aggregate principal amount of additional Bonds
pursuant to Section 10.3 of the Original Resolution payable from and secured by the Net
Revenues on a parity with the outstanding Series 201 OB Bond, the Series 201 0C Bond,
the Series 201 OD Bond, the Series 201 OF Bond, and the Series 201 0G Bond.
Section 2.2 Representations. The Borrower represents as follows:
(a) Organization and Authority. The Borrower:
(i)
the State;
is duly organized and validly existing as a municipal corporation of
(ii) 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
201 OH Bond and to carry out and consummate all transactions contemplated by
the Resolution, the Series 201 OH Bond and the Collateral Documents;
(iii) is a Governmental Unit and a Public Entity; and
(iv) has taken all proper action to authorize the execution, delivery and
performance of its obligations under this Supplemental Resolution, the Series
201 OH Bond and the Collateral Documents and the incurrence of the Debt
9
evidenced by the Series 2010H Bond in the maximum amount of the Committed
Amount.
(b) Pending 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 201 OH Bond and the Collateral
Documents, or the financial condition of the Borrower, or the transactions contemplated
by the Resolution, the Series 201 OH Bond and the Collateral Documents or the validity
and enforceability of the Resolution, the Series 201 OH Bond and the Collateral
Documents. No referendum petition has been filed with respect to any resolution or other
action of the Borrower relating to the Water Reclamation Facility Project, the Series
201 OH Bond or any Collateral Documents and the period for filing any such petition will
have expired before issuance of the Series 201 OH Bond.
( c) Borrowing Legal and Authorized. The adoption of this Supplemental
Resolution, the execution and delivery of the Series 201 OH Bond and the Collateral
Documents and the consummation of the transactions provided for in the Resolution, the
Series 201 OH Bond and the Collateral Documents and compliance by the Borrower with
the provisions of the Resolution, the Series 2010H Bond and the Collateral Documents:
(i) are within the powers of the Borrower and have been duly
authorized by all necessary action on the part of the Borrower; and
(ii) 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 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 201 OH Bond 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 terms hereof or of the Series 201 OH Bond and
the Collateral Documents.
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( e) Governmental Consent. The Borrower has obtained or made all 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 201 OH Bond and the
Collateral Documents (including any necessary sewer rate increase) or for the Water
Reclamation Facility 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 201 OH Bond 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 201 OH Bond 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 Water Reclamation Facility Project. The Water Reclamation Facility
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 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 201 OH Bond and the Collateral Documents and to pledge any
revenues or other property pledged to the payment of the Series 201 OH Bond.
(i) Compliance With Law. The Borrower:
(I) 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
11
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 20 I OH Bond and the
Collateral Documents.
Section 2.3 Covenants.
(a) Insurance. In addition to the requirements of Section 2.2 of the Original
Resolution, the B01Tower 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 oflnspection 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 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 201 OH Bond and the Collateral Documents and to realize
thereon, and record and file and re-record and refile 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 201 OH Bond and the Collateral Documents.
( d) Maintenance of Security, if Any; Recordation of Interest.
(i) The Borrower shall, at its expense, take all necessary action to
maintain and preserve the lien and security interest of the Resolution and the
12
Collateral Documents so long as any amount is owing under the Resolution or the
Series 201 OH Bond;
(ii) The Borrower shall forthwith, after the execution and delivery of
the Series 201 OH Bond 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
(iii) 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 (ii),
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 2010H Bond and the Collateral Documents and the documents described in
subparagraph (ii).
( 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 Water
Reclamation Facility Project shown separately; and
(2) when adopted, the final budget for the System, with items for the
Water Reclamation Facility Project shown separately.
(g) Project Accounts. The Borrower shall maintain 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
13
DNRC reasonably requires to review and determine compliance with Title VI of 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 pe1iaining to the
201 OH Loan and the Water Reclamation Facility 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 201 OH Bond.
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 2010H Bond or any other funds of the Borrower in
respect of the Water Reclamation Facility Project or the Series 201 OH Bond, 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 2010H Loan or the portion of the
201 OH 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 Water Reclamation
Facility 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.
(d) Any portion of the Water Reclamation Facility Project being refinanced or
the cost of which is being reimbursed was acquired by and is now and shall, during the
term of the 201 OH Loan, be owned by the Borrower and not by any other Person. Any
portion of the Water Reclamation Facility Project being financed shall be acquired by and
shall, during the term of the 201 OH Loan, be owned by the Borrower and not by any
other Person. Notwithstanding the previous two sentences, the Borrower may transfer the
Water Reclamation Facility 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 Sections 2.3(h), 2.3(i) and
2.4 of this Supplemental Resolution and if the DNRC receives an Opinion of Bond
14
Counsel that such transfer will not violate the State Act or the Clean Water Act or
adversely affect the exclusion of interest on the 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 Water Reclamation Facility 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 201 OH Loan 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 2010H Loan it will not
contract with or permit any Private Person to manage the Water Reclamation Facility
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 Water Reclamation Facility 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 Water Reclamation Facility
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 Water Reclamation
Facility Project if (i) such change will violate the Clean Water Act, or (ii) so long as the
State Bonds are outstanding 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 Water Reclamation Facility Project, in good condition and make all necessary
renewals, replacements, additions, betterments and improvements thereto. The Borrower shall
15
not grant or permit to exist any lien on the Water Reclamation Facility 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 201 OH Bond; 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 2010H Bond and the Collateral Documents, and (a)
such action does not result in any default in the performance or observance of any of the terms,
covenants or agreements of the Borrower under the Resolution, the Series 201 OH Bond 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 201 OH Bond 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 WATER RECLAMATION FACILITY PROJECT
Section 3.1 Use of Proceeds. The Borrower shall apply the proceeds of the 2010H
Loan from the DNRC solely as follows:
(a) The Borrower shall apply the proceeds of the 2010H Loan solely to the
financing, refinancing or reimbursement of the costs of the Water Reclamation Facility
Project as set forth in Appendix A hereto and this Section 3 .1, funding the Reserve
Account, and associated costs of issuing the Series 2010H Bond. The 2010H Loan will
be disbursed in accordance with Article IV hereof and Article VII of the Indenture. If the
Water Reclamation Facility Project has not been completed prior to Closing, the
Borrower shall, as quickly as reasonably possible, complete the Water Reclamation
Facility Project and expend proceeds of the Series 201 OH Bond to pay the costs of
completing the Water Reclamation Facility Project.
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(b) No portion of the proceeds of the 2010H Loan shall be used to reimburse the
Borrower for costs paid prior to the date of adoption of this Resolution of a project the
construction or acquisition of which occun-ed or began earlier than March 7, 1985. In
addition, if any proceeds of the 201 OH Loan are to be used to reimburse the Borrower for
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 201 OH 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 2010H 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 Water Reclamation Facility Project. Set fo1ih in Appendix A to this
Supplemental Resolution is a description of the Water Reclamation Facility Project, which
describes the property which has been or is to be acquired, installed, constructed or improved
and the other activities, if any to be funded from the 2010H Loan (the Water Reclamation
Facility Project may consist of more than one facility or activity) and an estimated budget
relating to the Water Reclamation Facility Project. The Water Reclamation Facility Project may
be changed and the description thereof in Appendix A may be amended from time to time by the
Bon-ower 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 Water Reclamation Facility Project, an increase
or decrease in the amount of Loan proceeds which will be required to complete the Water
Reclamation Facility Project and whether the change will materially accelerate or delay
the construction schedule for the Water Reclamation Facility Project;
(b) A written consent to such change in the Water Reclamation Facility
Project by an Authorized DNRC Officer;
( c) An Opinion or Opinions of Bond Counsel stating that the Water
Reclamation Facility 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 OH Bond was issued, eligible for financing under the Enabling
Act, such amendment will not violate the State Act or the Enabling Act and such
amendment will not adversely affect the exclusion of interest on the State Bonds or the
Series 201 OH Bond 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.
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The Borrower acknowledges and agrees that an increase in the principal amount of the
20 I OH Loan may be made only upon an application to the DEQ, the DNRC and the Trustee, in
such fonn as the DEQ shall specify, which is approved by the DEQ and the DNRC, in their 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 20 I OH Loan to pay Project Costs
or as to the availability of additional funds under the Program to increase the principal amount of
the 201 OH Loan.
Section 3 .3 Project Representations and Covenants. The Borrower hereby represents
to and covenants with the DNRC that:
(a) all construction of the Water Reclamation Facility 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 Water Reclamation Facility 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 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 IV of chapter 31 of title 40,
United States Code;
( d) all future construction 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; and
(e) the Water Reclamation Facility Project is a project of the type permitted to
be financed under the Enabling Act, the State Act and the Program and Title VI of the
Clean Water Act.
Section 3 .4 Completion or Cancellation or Reduction of Costs of the Water
Reclamation Facility Project.
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(a) Upon completion of the Water Reclamation Facility Project, the Borrower
shall deliver to the DNRC a certificate stating that the Water Reclamation Facility Project
is complete, stating the amount, if any, of the Reserved Amounts, and releasing the
remaining amount, if any, of the Committed Amount. If any Reserved Amount is not
later needed, the Borrower shall so inform the DNRC and release such amount. If
Appendix A describes two or more separate projects as making up the Water
Reclamation Facility Project, a separate completion certificate shall be delivered for each.
(b) If all or any portion of the Water Reclamation Facility Project is cancelled
or cut back or its costs are reduced or for any other reason the Borrower will not require
the full Committed Amount, the Borrower shall promptly notify the DNRC in writing of
such fact and release the portion of the Undisbursed Committed Amount.
ARTICLE IV
THELOAN
Section 4.1 The Loan; Disbursement of Loan. The DNRC has agreed to lend to the
Borrower, from time to time as the requirements of this Section 4.1 are met, an amount up to
$9,573,000 (the "Committed Amount") for the purposes of financing, refinancing or reimbursing
the Borrower for all or a portion of the costs of the Water Reclamation Facility Project, funding
the Reserve Account, and paying costs of issuance on the Series 201 OH Bond; provided the
DNRC shall not be required 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 Sections
3.2 and 3.4. The 2010H Loan shall be disbursed as provided in this Section 4.1. The DNRC
intends to disburse the 201 OH Loan through the Trustee.
( a) In consideration of the issuance of the Series 201 OH Bond by the
Borrower, the DNRC shall make, or cause the Trustee to make, a disbursement of all or a
portion of the 201 OH Loan upon receipt of the following documents:
(1) an Opinion of Bond Counsel as to the validity and enforceability of
each series of the Series 2010H Bond and the security therefor and stating in
effect that interest on each series of the Series 201 OH Bond is not ineluctable in
gross income of the owner thereof for purposes of federal income taxation, in
form and substance satisfactory to the DNRC;
(2) the Series 201 OH Bond, fully executed and authenticated;
(3) a certified copy of the Original Resolution and this Supplemental
Resolution;
( 4) any other security instruments or documents required by the
DNRC or DEQ as a condition to their approval of the 2010H Loan;
( 5) if all or part of the 201 OH 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 Water Reclamation
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Facility Project was begun no earlier than March 7, 1985 or the debt was incurred
no earlier than March 7, 1985, (B) of the B01Tower's title to the Water
Reclamation Facility Project, (C) of the costs of the Water Reclamation Facility
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 1.150-2 of the Regulations;
( 6) the items required by the Indenture for the portion of the 201 OH
Loan 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).
(b) In order to obtain a disbursement of a portion of the 201 OH Loan to pay
costs of the Water Reclamation Facility 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.
(c) For refinancings, a disbursement schedule complying with the
requirements of the Clean Water Act shall be established by the DNRC and the Borrower
at Closing. If the Borrower should repay all or a portion of the debt to be refinanced
from other sources or should otherwise not need any portion of the loan which was to
have been used to refinance such debt, it shall inform the DNRC and the Trustee of such
fact pursuant to Section 3.4(b) and a new disbursement schedule shall be drawn up by the
DNRC. The DNRC shall obtain a receipt from the holder of the debt being refinanced
for each disbursement made to pay or prepay a portion of such debt.
( d) If all or a portion of the 201 OH Loan 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 the
Closing.
(e) Notwithstanding anything else provided herein, the Trustee shall not be
obligated to disburse the 201 OH Loan 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 disbursements of the 201 OH Loan for such costs
because of the schedule under which EPA makes EPA Capitalization Grant money
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available to the DNRC. The DNRC will use its commercially reasonable efforts to obtain
an acceleration of such schedule if necessary.
(f) Upon making each 2010H Loan disbursement, the Trustee shall note such
disbursement on Schedule A to the Series 201 OH Bond.
(g) The Borrower agrees that it will deposit in the Reserve Account upon
receipt thereof, on the Closing Date of the 2010H Loan and upon any disbursement date,
any proceeds of the 201 OH 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 portion of the 201 OH Loan 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, as
appropriate, be a credit against the interest payments due on the 201 OH Loan, and interest
on any such loan so affected shall accrue only from the date of transfer.
Section 4.2 Commencement of Loan Term. The Borrower's obligations under this
Resolution and the Collateral Documents shall commence on the date hereof unless otherwise
provided in this Resolution. However, the obligation to make payments under Article V hereof
shall commence only upon the first disbursement by the Trustee of the proceeds of the 2010H
Loan.
Section 4.3 Termination of Loan Term. The Borrower's obligations under this
Resolution and the Collateral Documents shall terminate upon payment in full of all amounts due
under the Series 2010H Bond and this Resolution; provided, however, that the covenants and
obligations provided in Article VI and Section 10.4 shall survive the termination of this
Resolution.
Section 4.4 Loan Closing Submissions. On or prior to the Closing, the Bonower will
have delivered to the DNRC and the Trustee the closing submissions required by Section 7.05 of
the Indenture.
ARTICLEV
REPAYMENT OF 2010H LOAN
Section 5.1 Repayment of2010H Loan. The Bonower shall repay the amounts lent to
it pursuant to Section 4.1 hereof, plus interest on the unpaid amounts lent at the rate of two
percent (2.00%) per annum, in semiannual Loan Repayments. In addition, the Borrower shall
pay an Administrative Expense Surcharge on the outstanding principal amount of the 201 OH
Loan at the rate of seventy-five hundredths of one percent (0.75%) per annum and a Loan Loss
Reserve Surcharge on the outstanding principal amount of the 201 OH Loan at the rate of one
percent (1.00%) per annum. For purposes of this Resolution and the Program, the term "interest"
on a Loan shall include the Administrative Expense Surcharge and the 201 OH Loan Loss
Reserve Surcharge. The Borrower shall pay all Loan Repayments and the Administrative
Expense Surcharge and Loan Loss Reserve Surcharge in lawful money of the United States of
America to the DNRC. Interest, the Administrative Expense Surcharge, and Loan Loss Reserve
21
Surcharge shall be calculated on the basis of a year of 360 days comprising 12 months of 30 days
each.
The Loan Repayments required by this Section 5.1 and the Administrative Expense
Surcharge and Loan Loss Reserve Surcharge shall be due on each January 1 and July 1 (the
"Payment Dates"), as follows:
(1) interest and the Administrative Expense Surcharge and Loan Loss
Reserve Surcharge on the outstanding principal balance of the 201 OH Loan shall
be payable on each January 1 and July 1, beginning on July 1, 2011, through and
including January 1, 2031;
(2) the principal of the 20 lOH Loan shall be repayable on each
Payment Date, beginning on July 1, 2011, through and including January 1, 2031,
and the amount of each principal payment shall be calculated on the basis of
substantially level debt service at a rate of 3.75% per annum.
The payments of principal of and interest and the Administrative Expense
Surcharge and the Loan Loss Reserve Surcharge on the 201 OH Loan shall be due on the
dates specified above and on the dates and in the amounts shown in Schedule B to the
Series 2010H 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 201 OH Bond. Upon each disbursement of amounts of the 20 lOH Loan 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 201 OH Bond, under "Advances" and the
total amount advanced under Section 4.1, including such disbursement, under "Total
Amount Advanced."
If the advance was made to pay costs of the Water Reclamation Facility Project
pursuant to Section 4.1 (b ), interest and Administrative Expense Surcharge and the 201 OH
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 201 OH Bond, as appropriate, 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 payments of principal and interest and the Administrative Expense
Surcharge and Loan Loss Reserve Surcharge shall bear interest at the rate of ten percent
(10.00%) per annum, until paid.
Any payment of principal, interest or the Administrative Expense Surcharge and
Loan Loss Reserve Surcharge under this Section 5.1 shall also be credited against the
same payment obligation under the Series 201 OH Bond.
22
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
201 OH Loan, if the Borrower so chooses, all reasonable expenses of the DNRC and the Trustee
in connection with the 201 OH Loan, the Collateral Documents and the Series 201 OH Bond,
including, but not limited to:
(a) the cost ofreproducing this Resolution, the Collateral Documents and the
Series 201 OH Bond;
(b) the fees and disbursements of Bond Counsel and other Counsel utilized by
the DNRC and the Trustee in connection with the 201 OH Loan, this Resolution, the
Collateral Documents and the Series 201 OH Bond 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 201 OH Bond, whether or not any
of the Series 201 OH Bond is 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 201 OH Bond, the Collateral Documents and this Resolution 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 201 OH Bond unless (i) it obtains the prior written
consent of the DNRC thereto, and (ii) no Loan Repayment, 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 201 OH Bond is 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 this Resolution and the Series 2010H Bond and to perform its
other agreements contained in this Resolution, the Series 201 OH Bond 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 this Resolution
and the Series 201 OH Bond, (b) shall perform all its other agreements in this Resolution, the
Series 201 OH Bond and the Collateral Documents and ( c) shall not terminate this Resolution, the
Series 201 OH Bond or the Collateral Documents for any cause, including any acts or
circumstances that may constitute failure of consideration, destruction of or damage to the Water
Reclamation Facility 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 perform any of its agreements, whether
express or implied, or any duty, liability or obligation arising from or connected with this
Resolution. Provided, however, if the 2010H Loan contemplated herein is not made and no
funds are disbursed to the Borrower, this Resolution may be terminated.
23
Section 5.5 Limited Liability. All payments of principal of and interest on the 2010H
Loan and other payment obligations of the Borrower hereunder and under the Series 201 OH
Bond shall be special, limited obligations of the Borrower payable solely out of the Net
Revenues or out of the Revenue Bond Account and shall not be payable out of any other funds or
revenues of the Borrower. The obligations of the Borrower under this Resolution and the Series
201 OH Bond shall never constitute an indebtedness of the Borrower within the meaning of any
state constitutional provision or statutory 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 are not pledged to pay principal of or interest on the Series 201 OH
Bond, and no funds or prope1iy of the Borrower other than the Net Revenues are pledged to pay
principal of or interest on the Series 201 OH Bond.
ARTICLE VI
INDEMNIFICATION OF DNRC AND DEQ
The Borrower shall, to the extent permitted by law, indemnify and save harmless the
DNRC, 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 Water Reclamation Facility Project. The Borrower 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 of the Indemnified Party.
ARTICLE VII
ASSIGNMENT
Section 7.1 Assignment by City. The Borrower may not assign its rights and
obligations under the Resolution or the Series 201 OH Bond, except as provided in Section 6.3 of
the Original Resolution.
Section 7.2 Assignment by DNRC. The DNRC will pledge its rights under and
interest in the Resolution, the Series 201 OH Bond and the Collateral Documents ( except to the
extent otherwise provided in the Indenture) as security for the payment of the State Bonds.
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
Resolution to State Bonds and Additional State Bonds shall be deemed to refer to the refunding
bonds and any bonds of the State on a parity with such refunding bonds (together, the
"Refunding Bonds") or, in the case of a crossover refunding, to the State Bonds and Additional
State Bonds and the Refunding Bonds. In the event the State Bonds are refunded by an issue of
Additional State Bonds, all references in the Resolution to the State Bonds shall be deemed to
24
refer to such Additional State Bonds or, in the case of a crossover refunding, both the State
Bonds and such Additional State Bonds.
ARTICLE VIII
THE SERIES 201 OH BOND
Section 8.1 Net Revenues Available. The Borrower is authorized to charge just and
equitable rates, charges and rentals for all services directly or indirectly furnished by the System,
and to pledge and appropriate to the outstanding Bonds and the Series 201 OH Bond the Net
Revenues to be derived from the operation of the System, including improvements, betterments
or extensions thereof hereafter constructed or acquired. The Net Revenues to be produced by
such rates, charges and rentals during the term of the Series 201 OH Bond will be more than
sufficient to pay the principal and interest when due on the Series 201 OH Bond, and to create and
maintain reasonable reserves therefor and to provide an adequate allowance for replacement and
depreciation, as herein prescribed.
Section 8.2 Issuance and Sale of the Series 2010H Bond. The Commission has
investigated the facts necessary and hereby finds, determines and declares it to be necessary and
desirable for the Borrower to issue the Series 201 OH Bond to evidence the 20 lOH Loan. The
Series 201 OH Bond is issued to the DNRC without public sale pursuant to Montana Code
Annotated, Section 7-7-4433(2)(a).
Section 8.3 Terms. The Series 2010H Bond shall be in the maximum principal
amount equal to the original Committed Amount, shall 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 interest
at the rate charged by the DNRC on the 201 OH Loan. The principal of and interest on the Series
2010H Bond shall be payable on the same dates and in the same amounts on which principal and
interest of the 201 OH Loan Repayments are payable. Advances of principal of the Series 201 OH
Bond shall be deemed made when advances of the 2010H Loan are made under Section 4.1, and
such advances shall be payable in accordance with Schedule B to the Series 201 OH Bond as it
may be revised by the DNRC from time to time in accordance with Section 5.1.
The Borrower may prepay the Series 2010H Bond, in whole or in part, only upon the
terms and conditions under which it can prepay the 2010H Loan under Section 5.3.
Section 8.4 Negotiability, Transfer and Registration. The Series 201 OH Bond 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 201 OH
Bond shall be payable to the DNRC at the Office of the Department of Natural Resources and
Conservation, 1625 Eleventh A venue, Helena, Montana 59620 or such other place as may be
designated by the DNRC in writing and delivered to the Borrower. The Series 201 OH Bond shall
be negotiable, subject to the provisions for registration and transfer contained in this Section. No
transfer of the Series 201 OH Bond 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 2010H Bond, and (2) the Director of Finance of the Borrower (or successors, the
"Registrar"), as Bond Registrar, has duly noted the transfer on the Series 201 OH Bond and
recorded the transfer on the registration books of the Registrar. The Registrar may, prior to
25
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 2010H Bond is registered as the absolute owner of the Series
201 OH Bond 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 201 OH Bond 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 201 OH Bond. The Series 201 OH Bond shall be sealed with the corporate
seal of the Borrower. In the event that any of the officers who shall have signed the Series
201 OH Bond shall cease to be officers of the Borrower before the Series 201 OH Bond is issued or
delivered, their signatures shall remain binding upon the Borrower. Conversely, the Series
201 OH Bond may be signed by an authorized official who did not hold such office on the date of
adoption of this Supplemental Resolution. The Series 201 OH Bond shall be delivered to the
DNRC, or its attorney or legal representative.
Section 8.6 Form. The Series 2010H Bond shall be prepared in substantially the form
attached as Appendix B.
ARTICLE IX
SECURITY FOR THE SERIES 201 OH BOND
The Series 2010H Bond is issued as an additional parity Bond under Section 10.3 of the
Original Resolution and shall, with the Series 20 IOB Bond, the Series 201 0C Bond, Series
201 OD Bond, Series 201 OF Bond, and the Series 201 0G Bond, and any other additional parity
Bonds issued under the provisions of Section 10.3 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 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. Upon advancement of principal of the Series 201 OH Bond, the
Director of Finance of the Borrower shall transfer from available funds of the System or
proceeds of the Series 201 OH 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 the first advance of proceeds of the Series 2010H 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 201 OB Bond, the Series 201 0C Bond, Series 201 OD
Bond, Series 201 OF Bond, the Series 201 0G Bond, and the principal of the Series 201 OH Bond
so advanced. The Borrower shall keep, perform and observe each and every one of its covenants
and undertakings set forth in the Resolution for the benefit of the registered owners from time to
time of the Series 201 OH Bond.
26
ARTICLE X
TAX MATTERS
Section 10.1 Use of Project. The Water Reclamation Facility 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 Water Reclamation Facility Project
or the System or security for the payment of the Series 2010H Bond which might cause the
Series 201 OH Bond to be considered a "private activity bond" or "private loan bond" within the
meaning of Section 141 of the Code.
Section 10.2 General Covenant. The Borrower covenants and agrees with the owners
from time to time of the Series 201 OH 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 201 OH
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 201 OH 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 201 OH Bond pursuant to the 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(6) 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 201 OH Bond, it is
reasonably expected that the proceeds of the Series 201 OH Bond will be used in a manner that
would not cause the Series 201 OH 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 2010H
Bond is 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 201 OH Bond
from gross income for federal income tax purposes, unless the Series 201 OH Bond qualify for the
exception from the rebate requirement under the Code and no "gross proceeds" of the Series
201 OH 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 February 15, 2011, a statement concerning the Series 2010H Bond
containing the information required by Section 149( e) of the Code.
27
ARTICLE XI
CONTINUING DISCLOSURE
The Borrower understands and acknowledges that the DNRC is acquiring the Series
201 OH Bond under the Program pursuant to which the State issues from time to time State Bonds
to provide funds therefor. The Borrower 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 l 5c2-l 2 ( 17
C.F.R. § 240. l 5c2-l 2) 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 XII
MISCELLANEOUS
Section 12.1 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:
Trustee:
Department of Natural Resources and Conservation
1625 Eleventh A venue
P. 0. Box 201601
Helena, Montana 59620-1601
Attn: Conservation and Resource
Development Division
U.S. Bank National Association
c/o Corporate Trust Services
1420 Fifth A venue, ih Floor
Seattle, Washington 98101
28
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 12.2 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 12.3 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 12.4 Amendments. This Supplemental Resolution may not be effectively
amended without the written consent of the DNRC.
Section 12.5 Applicable Law. This Supplemental Resolution shall be governed by and
construed in accordance with the internal laws of the State.
Section 12.6 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 12.7 No Liability oflndividual 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 2010H Loan.
Section 12.8 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 2010H Bond, 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
2010H Bond.
Section 12.9 Right of Others To Perform City's Covenants. In the event the B01rnwer
shall fail to make any payment or perform any act required to be perfonned 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
29
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%) 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 Water Reclamation Facility
Project or the facility or facilities of which the Water Reclamation Facility 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 12.10 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 2010H Bond and such other certificates and
affidavits as may be required to show the right, power and authority of the Borrower to issue the
Series 2010H Bond, 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 12.11 Effective Date. This Supplemental Resolution shall take effect
immediately.
Adopted by the City Commission of the City of Bozeman, Montana, on this 1st day of
November, 2010.
30
APPENDIX A
DESCRIPTION OF THE WATER RECLAMATION FACILITY PROJECT
The Water Reclamation Facility Project consists of designing, engineering and
constructing improvements to the Borrower's Water Reclamation Facility, including demolition
within the existing Head works Building and construction of an influent connection and
Headworks Building, construction of a Primary Effluent Pumping Station, construction of a
biological nutrient removal facility and connection to the existing bioreactor basins, demolition
of existing blowers and construction of an aeration blower system, conversion of an existing un-
used surge tank into a sludge fermenter basin, rehabilitation of an existing gravity thickener
system, retrofitting of an existing RAS control facility with new flow control equipment,
construction of a new RAS/WAS Flow Control and Pumping Facility, construction of two new
secondary clarifiers, replacement of an existing chlorine disinfection system with a UV
disinfection system, construction of all associated mechanical, electrical, controls and general
sitework items, and related improvements.
Series 201 OD Bond Series 2010H Bond Source: Administrative/Finance Costs $9,500,000 $9,573,000 Local Total:
@ 3.75% @3.75%
Personnel Costs 76,000.00 76,000.00
Office Costs 12,000.00 12,000.00
Professional Services 35,260.00 35,260.00
Legal Costs 3,000.00 3,000.00
Audit Fees 12,000.00 12,000.00
Travel & Training 3,000.00 3,000.00
Debt Service Reserve 681,093.00 680,808.00 1,361,901.00
Bond Counsel & Related costs 12,000.00 13,154.00 25,154.00
Preliminary Engineering 123,000.00 123,000.00
Engineering/ Arch. Design 5,015,965.00 5,015,965.00
Construction Engr. Services 2,603,000.00 2,603,000.00
Construction 8,806,907.00 8,879,038.00 I 0,440, 148.00 28,126,093.00
Contingency 2,675,530.00 2,675,530.00
TOT AL PROJECT COSTS 9,500,000.00 9,573,000.00 20,998,903.00 40,071,903.00
A-1
APPENDIX B
[Form of the Series 2010H Bond]
UNITED STATES OF AMERICA
STATE OF MONTANA
GALLATIN COUNTY
CITY OF BOZEMAN
SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STA TE REVOL YING LOAN PROGRAM),
SERIES 201 OH
No. R-1 $9,573,000
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 July 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 201 OH 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% 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-1
compnsmg 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 BoITower
authorized to be issued in one or more series from time to time, and constitutes a series in the
maximum authorized principal amount of $9,573,000 (the "Series 201 OH Bond"). The Series
201 OH 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 costs of issuance of the Series 2010H Bond. The Series 2010H
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 B01rnwer,
including Resolution No. 4220 duly enacted by the City Commission on November 16, 2009, as
amended and supplemented by Resolution Nos. 4234, 4245, 4254, and 4299 adopted on January
19, 2010, February 16, 2010, May 3, 2010, and November 1, 2010, respectively (as so amended
and supplemented, the "Resolution"). The Series 201 OH Bond is issuable only as a single, fully
registered bond. The Series 2010H 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, its $816,000
Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program),
Series 2010F, and its $3,903,000 Sewer System Revenue Bond (DNRC Water Pollution Control
State Revolving Loan Program), Series 2010G (collectively, the "Outstanding Bonds").
Reference is made to the Resolution for a more complete statement of the terms
and conditions upon which the Series 201 OH 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 and the Series 201 OH Bond ( collectively, 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 2010H Bond.
The Borrower may prepay the principal of the Series 201 OH Bond only if (i) it
obtains the prior written consent of the DNRC thereto, and (ii) 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 201 OH Bond is prepaid in part, such
prepayments shall be applied to principal payments in inverse order of maturity.
The Bonds, 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
prov1s1011.
B-2
The Borrower may deem and treat the person in whose name this Series 201 OH
Bond is registered as the absolute owner hereof, whether this Series 201 OH 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 20 lOH Bond may be transferred hereinafter
as provided.
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
due within the next six months plus one-twelfth of the principal due within the next twelve
months with respect to all Bonds payable from the Revenue Bond 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 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 Bonds and additional parity Bonds on such Net Revenues; that all
provisions for the security of the holder of this Series 201 OH 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 201 OH 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 201 OH 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 201 OH Bond
does not cause either the general or the special indebtedness of the Borrower to exceed any
constitutional or statutory limitation.
B-3
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 __ day of _____ _
2010.
Mayor
(Seal)
Director of Finance
Clerk of the Commission
B-4
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
Registration
2010
Name and Address
of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh A venue
Helena, MT 59620
Signature of
Director of Finance
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The Director of Finance of the Borrower, 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.
Date of Transfer
NameofNew
Registered Holder
B-5
Signature of
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 ___________ _
B-6
By: _____________ _
(Authorized Signature)
For: -------------
(Holder)
Date
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Advances
B-7
Total Amount
Advanced
Notation
Made By
Date Principal Interest
SCHEDULE B
Administrative
Expense Surcharge
B-8
Loan Loss
Reserve
Surcharge
Total Loan
Payment
APPENDIX C
ADDITIONAL REPRESENTATIONS AND COVENANTS
[None]
C-1
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
Resolution No. 4462 entitled: "RESOLUTION RELATING TO FIRST AMENDED AND
REST A TED SEWER SYSTEM REVENUE BONDS (DNRC WATER POLLUTION
CONTROL STATE REVOLVING LOAN PROGRAM); AMENDING AUTHORIZING
RESOLUTIONS ADOPTED JANUARY 19, 2010, FEBRUARY 16, 2010, MAY 3, 2010, AND
NOVEMBER 1, 2010 AND BONDS" (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 meeting on August 5, 2013, 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 ce1iify that, upon vote being taken on the Resolution at said meeting, the
following Commissioners voted in favor thereof: M"-1jov-:B~ &. f<V«.u.ss,
Cv: Anc!-11'\,,\s, Cv. (~ l ov-1 Cv-. Me,h ( ; voted againstthe
same: -· abstained from voting thereon: ___ _
· or were absent: ------------------~ ----------
WITNESS my hand officially this Ce, 1ay of August, 2013.
RESOLUTION NO. 4462
RESOLUTION RELATING TO FIRST AMENDED AND
REST A TED SEWER SYSTEM REVENUE BONDS (DNRC
WATER POLLUTION CONTROL STATE REVOLVING LOAN
PROGRAM); AMENDING AUTHORIZING RESOLUTIONS
ADOPTED JANUARY 19, 2010, FEBRUARY 16, 2010, MAY 3,
2010, AND NOVEMBER 1, 2010 AND BONDS
BE IT RESOLVED by the City Commission of the City of Bozeman, Montana (the
"Issuer"), as follows:
Section 1. Recitals.
1.01. Issuance of Bonds. Pursuant to Resolution No. 4220 of the Issuer adopted by the
City Commission on November 16, 2009 (the "Original Resolution"), as amended and
supplemented by Resolution Nos .. 4234 (the "201 0ABC Resolution"), 4245 (the "201 OD
Resolution"), 4254 (the "201 0EFG Resolution"), and 4299 (the "201 OH Resolution"), adopted
by the City Commission on January 19, 2010, February 16, 2010, May 3, 2010, and November 1,
2010, respectively (the Original Resolution, as so amended and supplemented, the "Prior
Resolutions"), the Issuer authorized, as the Original Resolution were then in effect, the issuance
of, respectively, its Sewer System Revenue Bond (DNRC Water Pollution Control State
Revolving Loan Program), Series 2010C (the "Series 2010C Bond"), issued in the maximum
principal amount of $1,223,000, its Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 2010D (the "Series 2010D Bond"), issued in the
maximum principal amount of $9,500,000, its Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010F (the "Series 2010F Bond"),
issued in the maximum principal amount of $816,000, its Sewer System Revenue Bond (DNRC
Water Pollution Control State Revolving Loan Program), Series 201 0G (the "Series 201 0G
Bond"), issued in the maximum principal amount of $3,903,000, and its Sewer System Revenue
Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 201 OH (the
"Series 201 OH Bond"), issued in the maximum principal amount of $9,573,000 to finance
improvements consisting of the acquisition, construction and instaHation of various
improvements of the municipal sewer system and related improvements (the "Projects") as part
of the municipal sewer system of the Issuer (the "System"), as more particularly described in the
Original Resolution. The Series 2010C Bond, the Series 2010D Bond, the Series 2010F Bond,
the Series 2010G Bond, and the Series 2010H Bond (collectively, the "Prior Bonds") were
purchased and are currently held by the Department of Natural Resources and Conservation of
the State of Montana (the "DNRC"). There are no other bonds or indebtedness of the Issuer that
are outstanding and payable from Net Revenues. of the System, except its Sewer System Revenue
Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 201 OB (the
"Series 201 OB Bond"), issued in the maximum principal amount of $359,300, which is held by
the DNRC. Terms with initial capital letters used but not defined herein have the meanings
given them in the Original Resolution.
1.02. Interest Rate Reduction. Pursuant to the Intended Use Plan for fiscal year 2013-
2014 (the "IUP") for the Water Pollution Control State Revolving Loan Program (the
"Program"), the DNRC and the Department of Environmental Quality of the State of Montana
have determined that it is in the best interests of borrowers of loans made under the Program and
the Program to reduce the interest rates available under the Program.
1.03. Reduction in Interest Rate on Prior Bonds. It is proposed that debt service on the
Prior Bonds be reduced in accordance with the interest rate reduction proposal under the IUP,
thereby reducing the interest rate on (i) the Series 201 0C Bond from three and three-quarters
percent (3.75%) per annum to three percent (3.00%) per annum from and after the date of
delivery of the First Amended and Restated Series 2010C Bond; (ii) the Series 20100 Bond from
three and three-quarters percent(3.75%) per annum to three percent (3.00%) per annum from
and after the date of delivery of the First Amended and Restated Series 201 OD Bond; (iii) the
Series 2010F Bond from three and three-quarters percent (3.75%) per annum to three percent
(3.00%) per annum from and after the date of delivery of the First Amended and Restated Series
2010F Bond; (iv) the Series 2010G Bond from three and three-quarters percent (3.75%) per
annum to three percent (3.00%) per annum from and after the date of delivery of the First
Amended and Restated Series 2010G Bond; and (v) the Series 2010H Bond from three and
three-quarters percent (3.75%) per annum to three percent (3.00%) per annum from and after the
date of delivery of the First Amended and Restated Series 2010H Bond.
Section 2. Amendment of Original Resolution.
2.01. Authorization. The Issuer, in Section 13.4 of the 2010ABC Resolution, Section
12.4 of the 20100 Resolution, Section 13.4 of the 2010EFG Resolution, and Section 12.4 of the
2010H Resolution, reserved the right to amend such resolutions upon notice to and with the
consent of the DNRC.
2.02. Consent ofDNRC. The DNRC has agreed to the amendment of certain
provisions of such resolutions in connection with the determination to reduce certain interest
rates under the Program.
2.03. Amendment of Original Resolution. Pursuant to the authority cited in
Sections 2.01 and 2.02 of this resolution,
(a) The 2010ABC Resolution is hereby amended effective as of the date of delivery of
the First Amended and Restated Series 2010C Bond (as hereinafter defined) to read as follows:
(i) all references to the aggregate interest rate, or that interest rate that includes the
interest rate and all surcharges, on the Series 201 0C Bond are hereby amended to read
3.00% per annum, instead of 3.75% pet annum; (ii) the interest rate on the Series 2010C
Bond exclusive of any surcharges will continue in effect at 2.00% per annum; (iii) the
administrative expense surcharge on the Series 201 0C Bond will continue in effect at
0.75% per annum; and (iv) all references to the loan loss reserve surcharge on the Series
201 0C Bond are hereby amended to read 0.25% per annum, instead of 1.00% pe,r annum;
and
(ii) the total principal amount of the First Amended and Restated Series 2010C
Bond is $885,081.
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(b) The 2010D Resolution is hereby amended effective as of the date of delivery of the
First Amended and Restated Series 20 l OD Bond ( as hereinafter defined) to read as follows:
(i) all references to the aggregate interest rate, or that interest rate that includes the
interest rate and all surcharges, on the Series 2010D Bond are hereby amended to read
3.00% per annum, instead of 3.75% per annum; (ii) the interest rate on the Series 2010D
Bond exclusive of any surcharges will continue in effect at 2.00% per annum; (iii) the
administrative expense surcharge on the Series 201 OD Bond will continue in effect at
0.75% per annum; and (iv) all references to the loan loss reserve surcharge on the Series
20 l OD Bond are hereby amended to read 0.25% per annum, instead of 1.00% per annum;
and
(ii) the total principal amount of the First Amended and Restated Series 20 I OD
Bond is $8,308,000.
(c) The 2010EFG Resolution is hereby amended effective as of the date of delivery of
the First Amended and Restated Series 2010F Bond (as hereinafter defined) to read as follows:
(i) all references to the aggregate interest rate, or that interest rate that includes the
interest rate and all surcharges, on the Series 2010F Bond are hereby amended to read
3.00% per annum, instead of 3.75% per annum; (ii) the interest rate on the Series 2010F
Bond exclusive of any surcharges will continue in effect at 2.00% per annum; (iii) the
administrative expense surcharge on the Series 201 OF Bond will continue in effect at
0.75% per annum; and (iv) all references to the loan loss reserve surcharge on the Series
201 OF Bond are hereby amended to read 0.25% per annum, instead of 1.00% per annum;
and
(ii) the total principal amount of the First Amended and Restated Series 201 OF
Bond is $729,000.
( d) The 201 0EFO Resolution is hereby further amended effective as of the date of
delivery of the First Amended and Restated Series 20100 Bond ( as hereinafter defined) to read
as follows:
(i) all references to the aggregate interest rate, or that interest rate that includes the
interest rate and all surcharges, on the Series 20100 Bond are hereby amended to read
3.00% per annum, instead.of 3.75% per annum; (ii) the interest rate on the Series 20100
Bond exclusive of any surcharges will continue in effect at 2.00% per annum; (iii) the
administrative expense surcharge on the Series 201 0G Bond will continue in effect at
0.75% per annum; and (iv) all references to the loan loss reserve surcharge on the Series
20100 Bond are hereby amended to read 0.25% per annum, instead of 1.00% per annum;
and
(ii) the total principal amount of the First Amended and Restated Series 20 I 00
Rond is $3,558;000.
(e) The 2010H Resolution is hereby amended effective as of the date of delivery of the
First Amended and Restated Series 201 OH Bond (as hereinafter defined) to read as follows:
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(i) all references to the aggregate interest rate, or that interest rate that includes the
interest rate and all surcharges, on the Series 201 OH Bond are hereby amended to read
3.00% per annum, instead of 3.75% per annum; (ii) the interest rate on the Series 2010H
Bond exclusive of any surcharges will continue in effect at 2.00% per annum; (iii) the
administrative expense surcharge on the Series 201 OH Bond will continue in effect at
0. 75% per annum; and (iv) all references to the loan loss reserve surcharge on the Series
201 OH Bond are hereby amended to read 0.25% per annum, instead of 1.00% per annum;
and
(ii) the total principal amount of the First Amended and Restated Series 201 OH
Bond is $8,692,000.
(f) Except as expressly noted herein, other interest rates or surcharges are not adjusted,
including, without limitation, interest on past due amounts.
2.04. Amendment of Forms of Bonds. Pursuant to the authority cited in Sections 2.01
and 2.02 of this resolution, effective as of the date of delivery of each series of amended and
restated bonds, the Series 2010C Bond attached as Appendix B-3 to the 2010ABC Resolution is
hereby amended and restated in its entirety substantially as set forth on the attached Appendix A
(the "First Amended and Restated Series 201 0C Bond"), the Series 201 OD Bond attached as
Appendix B to the 201 OD Resolution is hereby amended and restated in its entirety substantially
as set forth on the attached Appendix B (the "First Amended and Restated Series 2010D Bond"),
the Series 2010F Bond attached as Appendix B..-2 to the 2010EFG Resolution is hereby amended
and restated in its entirety substantially as set forth on the attached Appendix C (the "First
Amended and Restated Series 2010F Bond"), the Series 2010G Bond attached as Appendix B-3
to the 2010EFG Resolution is hereby amended and restated in its entirety substantially as set
forth on the attached Appendix D (the "First Amended and Restated Series 2010G Bond"), and
the Series 2010H Bond attached as Appendix B to the 2010H Resolution is hereby amended and
restated in its entirety substantially as set forth on the attached Appendix E (the "First Amended
and Restated Series 2010H Bond").
2.05. Effect of Amendments. Except as_amended by Sections 2.03 and 2.04 of this
resolution, the Original Resolution shall remain unamended and, from and after the date of
delivery of the First Amended and Restated Bonds (as hereinafter defined), shall continue in full
force and effect as amended by Sections 2.03 and 2.04 of this resolution for the benefit of the
holders from time to time of the First Amended and Restated Bonds, the Series 2010B Bond, and
any additional Bonds that may be issued thereunder.
Section 3. Preparation and Delivery of First Amended and Restated Bonds. The First
Amended and Restated Series 201 0C Bond, the First Amended and Restated Series 201 OD Bond,
the First Amended and Restated Series 2010F Bond, the First Amended and Restated Series
2010G Bond, and the First Amended and Restated Series 2010H Bond (collectively, the "First
Amended and Restated Bonds") shall be prepared under the direction of the City Finance
Director of the Issuer and shall be executed on behalf of the Issuer by the signatures of the
Mayor, the City Finance Director, and the City Clerk of the Issuer and sealed with the official
corporate seal of the Issuer. When the First Amended and Restated Bonds have been executed,
the City Finance Director of the Issuer shall cause them to be dated as of the date of delivery and
-4-
delivered to the DNRC, as purchaser thereof, in anticipation of the surrender of the
cmTesponding Prior Bond. The City Finance Director is authorized and directed to act as bond
registrar in connection with the First Amended and Restated Bonds.
Section 4. Revenue Bond Account; Reserve Account. The City Finance Director of the
Issuer is authorized and directed to transfer amounts in the Revenue Bond Account to pay
interest owing on the Prior Bonds as of the date of delivery of the First Amended and Restated
Bonds. The City Finance Director of the Issuer is further authorized and directed to transfer
amounts made available in the Reserve Account because of the foregoing interest rate
adjustments to the Revenue Bond Account to prepay any one or more Prior Bonds as of the date
of delivery of the First Amended and Restated Bonds, to transfer amounts to the Revenue Bond
Account to pay interest on the First Amended and Restated Bonds on January 1, 2014, to pay
costs of issuance of the First Amended and Restated Bonds, or to any other eligible fund or
account or for any other eligible purpose, as described more particularly in certificates or
documents delivered in conjunction with the delivery of the First Amended and Restated Bonds.
Section 5. Tax Matters.
5.01. General Covenants. The Issuer covenants and agrees with the owners from time
to time of the First Amended and Restated 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 First
Amended and Restated Bonds to become includable in gross income for federal income tax
purposes under the Internal Revenue Code of 1986, as amended (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 First Amended and Restated Bonds will not become
includable in gross income for federal income tax purposes under the Code and the Regulations.
The Projects and the System are each owned and maintained by the Issuer and available for use
by members of the general public on a substantially equal basis. The Issuer agrees not to enter
into any lease, use or other agreement with any non-governmental person relating to the use of
the Projects or the System or security for the payment of the First Amended and Restated Bonds
which might cause the First Amended and Restated Bonds to be considered "private activity
bonds" or "private loan bonds" within the meaning of Section 141 of the Code.
5.02. Arbitrage Rebate. The City acknowledges that the First Amended and Restated
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 First Amended and Restated
Bonds from gross income for federal income tax purposes. In furtherance of the foregoing, the
Mayor, the City Finance Director, and the City Clerk are hereby authorized and directed to
execute a Rebate Certificate, substantially in the form of the Rebate Certificate prepared by Bond
Counsel and the City hereby covenants and agrees to observe and perform the covenants and
agreements contained therein, unless amended or terminated in accordance with the provisions
thereof.
5.03. Certification. The Mayor, the City Finance Director, and the City Clerk of the
Issuer, being the officers of the Issuer charged with the responsibility for issuing the First
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Amended and Restated Bonds pursuant to this resolution, are authorized and directed to execute
and deliver to the DNRC certifications to satisfy the provisions of Sections l.148-2(b) of the
Treasury Regulations relating to a reasonable expectation that the proceeds of the First Amended
and Restated Bonds will be used in a manner that will not cause them to be arbitrage bonds.
5.04. Information Reporting. The Issuer shall file with the Secretary of the Treasury,
not later than November 15, 2013, a statemerit concerning the First Amended and Restated
Bonds containing the information required by Section 149(e} of the Code.
5.05. No Bank Qualification or Counting of Reissued Bonds Toward Qualified Small
Issuer Status. To the extent the First Amended and Restated Bonds constitute a re issuance of the
Prior Bonds, such reissilance is a deemed current refunding. The principal amount of the First
Amended and Restated Bonds that constitutes a reissuance does not exceed the principal amount
of the outstanding Prior Bonds being reissued. Accordingly, pursuant to Section
265(b)(3)(C)(ii)(III} of the Code, that portion of the First Amended and Restated Bonds that
constitutes a reissuance is hereby not taken into account in determining the Issuer's status as a
qualified small issuer under Section 265(b}(3} of the Code. The First Amended and Restated
Bonds are not designated as "qualified tax-exempt obligations."
Section 6. Program Covenants. The Issuer agrees that (i) neither it nor any "related
person" to the Issuer (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 Trust
Indenture for the Program in an amount related to the amount of the First Amended and Restated
Bonds; and (ii) that portion of the issuance of the First Amended and Restated Bonds that is a
reissuance of the Prior Bonds constitutes a "deemed" refunding of the Prior Bonds effective as of
the date of delivery of the First Amended and Restated Bonds and, as to that portion, the DNRC
shall be deemed to have relent the proceeds of the Prior Bonds under the Program to the Issuer
effective as of such date.
Section 7. Certification and Effective Date.
7.01. Certification. The officers of the Issuer are authorized and directed to prepare and
furnish to the DNRC and to the attorneys rendering an opinion as to the legality of the First
Amended and Restated Bonds, certified copies of all ordinances, resolutions and records and
such other certificates, affidavits and other instruments as may be required to evidence the
validity, status of tax-exempt interest, or marketability of the First Amended and Restated Bonds
and all such certified copies, certificates and affidavits shall constitute representations of the
Issuer as to the truth of all statements of fact contained therein.
7.02. Effective Date. This resolution shall be in full force and effect from and after its
passage. The amendments to the First Amended and Restated Bonds noted herein, however,
shall be effective only from and after the date of delivery of the First Amended and Restated
Bonds.
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Adopted by the City Commission of the City of Bozeman, Montana, on this 5th day of
August, 2013. ;_ ":-2~ _,-~''1ioi''., ~~-~ ,· o ~-.... e./1~"
: • • ·" :"-7 ·, Mayor
: < ~ • :,~·-':( •• 7 ·,
{ t/~?>'t:;iit:__·:~\ -J
Attest: . _ ~~ Crty'lerk• ~' ,._ ·· ---•:¢ ~ ,Ot ~3 .~, ·, 7,/.. () ·t-,-·, <:<1..,,. • • • ~ io ~-'-
.'. , 'l]V co" ~ -,
,... ~ ( ., ~ > \ )' I., ) '-1
(SEAL)
-7-
APPENDIX A
(FORM OF FIRST AMENDED AND RESTATED SERIES 2010C BOND]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLATIN
CITY OF BOZEMAN
FIRST AMENDED AND RESTATED
SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM)
SERIES 201 0C
No. R-2 $885,081
FOR VALUE RECEIVED, THE CITY OF BOZEMAN, MONTANA (the
"City"), 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 of $885,081, with interest on such amount from the date hereof at the
rate of two percent (2.00%) per annum on the unpaid balance until paid. In addition, the City
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%) and twenty-five hundredths of one percent (0.25%), 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 January 1, 2014. Each installment shall reflect an interest rate of three percent
(3.00%) per annum and shall be in the amount set forth opposite its due date in Schedule A
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 A
hereto. Past-due payments of principal, interest, Administrative Expense Surcharge, and Loan
Loss Reserve Surcharge shall bear interest at the rate of ten percent (10.00%) per annum, until
paid. Interest, 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 constitutes a series in the maximum authorized principal amount of
$1,223,000 (the "Series 2010C Bond"), issued to finance a portion of the costs of construction of
certain improvements to the sewer system of the City (the "System"), to fund the Reserve
Account, and to pay costs of issuance of the Series 201 0C Bond. The Series 201 0C 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 and 45, as
A-1-
amended, and resolutions duly adopted by the governing body of the City, including Resolution
No. 4220 duly enacted by the City Commission on November 16, 2009, as amended and
supplemented by Resolution Nos. 4234_, 4245, 4254, 4299, and __ adopted on January 19,
2010, February 16, 2010, May 3, 2010, November 1, 2010, and August 5, 2013, respectively (the
Original Resolution, as so amended and supplemented, the "Resolution"). The Series 201 0C
Bond is issuable only as a single, fully registered bond. The Series 201 0C Bond is issued on a
parity and is equally and ratably secured by the Net Revenues of the System with the City's
outstanding $359,300 Sewer System Revenue Bond (DNRC Water Pollution Control State
Revolving Loan Program), Series 201 OB (the "Series 201 OB Bond"), First Amended and
Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan
Program), Series 2010D (the "Series 2010D Bond"), First Amended and Restated Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 201 OF
(the "Series 2010F Bond"), First Amended and Restated Sewer System Revenue Bond (DNRC
Water Pollution Control State Revolving Loan Program), Series 2010G (the "Series 2010G
Bond"), and First Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 2010H (the "Series 2010H Bond"). The Series
2010D Bond, the Series 2010F Bond, the Series 2010G Bond, and the Series 2010H Bond are
being issued simultaneously herewith.
Reference is made to the Resolution for a more complete statement of the terms
and conditions upon which the Series 2010C 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 Series 201 OB Bond, the Series 201 0C Bond, the Series 201 OD
Bond, the Series 2010F Bond, the Series 2010G Bond, and the Series 2010H Bond (collectively,
the "Bonds") or otherwise, the conditions upon which the Resolution may be amended, the
rights, duties and obligations of the City, and the rights of the owners of the Series 2010C Bond.
The City may prepay the principal of the Series 201 0C Bond only if (i) it obtains
the prior written consent of the DNRC thereto, and (ii) 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 201 0C Bond is prepaid in part, such
prepayments shall be applied to principal payments in inverse order of maturity.
The Bonds, 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 City within the meaning of any constitutional, statutory or charter limitation or
prov1s10n.
The City may deem and treat the person in whose name this Series 201 0C Bond is
registered as the absolute owner hereof, whether this Series 201 0C Bond is overdue or not, for
the purpose of receiving payment and for all other purposes, and the City shall not be affected by
any notice to the contrary.
A-2-
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that
the City has fixed and established and will collect reasonable rates and charges for the services
and facilities afforded by the System, and has created a special Sewer System Fund into which
the gross revenues of the System, including all additions thereto and replacements and
improvements thereof, will be paid, and a separate and special Revenue Bond Account in that
fund, into which will be paid each month, Net Revenues of the System then on hand (the gross
revenues remaining after the payment of Operating Expenses of the System), in an amount equal
to not less than the sum of one-sixth of the interest due within the next six months and one-
twelfth of the principal due within the next twelve months with respect to all outstanding Bonds
payable semi-annually from that account, and a Reserve Account (the "Reserve") into which
shall be paid additional Net Revenues sufficient to establish and maintain a reserve therein equal
to, as of the date of calculation, the Reserve Requirement; that the Revenue Bond Account and
the Reserve will be used only to pay the principal of, premium, if any, and interest on the Bonds
issued pursuant to the authority herein recited; 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 principal and interest payable from the Revenue Bond Account in any subsequent fiscal year,
to maintain the balance in the Reserve at the Reserve Requirement, to pay promptly the
reasonable and current expenses of operating and maintaining the System, to pay the principal of
and interest on any Subordinate Obligations and to provide reserves for the replacement and
depreciation of the System; that additional Bonds and refunding Bonds may be issued and made
payable from the Revenue Bond Account on a parity with the Bonds upon certain conditions set
forth in the Resolution but no obligation will be otherwise incurred and made payable from the
Net Revenues, unless the lien thereof shall be expressly made subordinate to the lien of the
Bonds and other additional Bonds on such Net Revenues; that all provisions for the security of
this Series 2010C 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 City to be done, to exist, to happen
and to be performed in order to make this Series 201 0C Bond a valid and binding special
obligation of the City according to its terms have been done, do exist, have happened and have
been performed as so required; and that this Series 2010C Bond and the premium, if any, and
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 City within the
meaning of any constitutional, statutory or charter limitation or provision and the issuance of the
Series 201 0C Bond does not cause either the general or the special indebtedness of the City to
exceed any constitutional, statutory or charter limitation.
A-3-
IN WITNESS WHEREOF, the City of Bozeman, Montana, by its governing body, has
caused this Bond to be executed by the signatures of its signatures of the Mayor, the Finance
Director and the City Clerk, and has caused the official seal of the City to be affixed hereto, and
has caused this Bond to be dated as of the 21st day of August, 2013.
Mayor
(SEAL)
City Finance Director
City Clerk
A-4-
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 City Finance Director, as bond registrar (the "Registrar"), has duly noted the transfer on the
Bond and recorded the transfer on the Registrar's registration books. The Issuer 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 Issuer'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
Registration
August 21, 2013
Name and Address
of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh A venue
Helena, MT 59620
Signature of
City Finance Director
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The City Finance Director of the City of Bozeman, Montana, acting as Bond Registrar,
has transferred, on the books of the Issuer, 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 Registered Holder
A-5-
Signature of Bond Registrar
FORM OF ASSIGNMENT
For value received, the undersigned h(;!reby sells, assigns and transfers unto
____________________ the within Bond and does hereby
irrevocably constitute and appoint ________________ attorney to transfer
the Bond on the books kept for the registration thereof, with full power of substitution in the
premises.
Dated:
Notice: The assignor's signature to this assignment must
correspond with the name as it appears upon the face of
the within Bond in every particular, without alteration or
any change whatsoever.
A-6-
Date Principal Interest
SCHEDULE A
Administrative
Expense Surcharge
A-7-
Loan Loss
Reserve
Surcharge
Total Loan
Payment
APPENDIX B
[FORM OF FIRST AMENDED AND RESTATED SERIES 2010D BOND]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLA TIN
CITY OF BOZEMAN
FIRST AMENDED AND REST A TED
SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM)
SERIES 2010D
No. R-2 $8,308,000
FOR VALUE RECEIVED, THE CITY OF BOZEMAN, MONTANA (the
"City"), 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 of $8,308,000, with interest on such amount from the date hereof at the
rate of two percent (2.00%) per annum on the unpaid balance until paid. In addition, the City
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%) and twenty-five hundredths of one percent (0.25%), 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 January 1, 2014. Each installment shall reflect an interest rate of three percent
(3.00%) per annum and shall be in the amount set forth opposite its due date in Schedule A
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 A
hereto. Past-due payments of principal, interest, Administrative Expense Surcharge, and Loan
Loss Reserve Surcharge shall bear interest at the rate of ten percent (10.00%) per annum, until
paid. Interest, 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 constitutes a series in the maximum authorized principal amount of
$9,500,000 (the "Series 2010D Bond"), issued to finance a portion of the costs of construction of
certain improvements to the sewer system of the City (the "System"), to make a deposit to a
reserve account for the Bonds and to pay costs of issuance of the Series 201 OD Bond. The Series
201 OD 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,
B-1-
Part 44 and 45, as amended, and resolutions duly adopted by the governing body of the City,
including Resolution No. 4220 duly enacted by the City Commission on November 16, 2009, as
amended and supplemented by Resolution Nos. 4234, 4245, 4254, 4299, and __ adopted on
January 19, 2010, February 16, 2010, May 3, 2010, November 1, 2010, and August 5, 2013,
respectively (the Original Resolution, as so amended and supplemented, the "Resolution"). The
Series 2010C Bond is issuable only as a single, fully registered bond. The Series 2010D Bond is
issued on a parity and is equally and ratably secured by the Net Revenues of the System with the
City's outstanding $359,300 Sewer System Revenue Bond (DNRC Water Pollution Control State
Revolving Loan Program), Series 2010B (the "Series 2010B Bond"), First Amended and
Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan
Program), Series 201 0C (the "Series 201 0C Bond"), First Amended and Restated Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010F
(the "Series 2010F Bond"), First Amended and Restated Sewer System Revenue Bond (DNRC
Water Pollution Control State Revolving Loan Program), Series 20100 (the "Series 20100
Bond"), and First Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 201 OH (the "Series 201 OH Bond"). The Series
201 0C Bond, the Series 201 OF Bond, the Series 20100 Bond, and the Series 201 OH Bond are
being issued simultaneously herewith.
Reference is made to the Resolution for a more complete statement of the terms
and conditions upon which the Series 2010D 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 Series 2010B Bond, the Series 2010C Bond, the Series 2010D
Bond, the Series 2010F Bond, the Series 20100 Bond, and the Series 2010H Bond (collectively,
the "Bonds") or otherwise, the conditions upon which the Resolution may be amended, the
rights, duties and obligations of the City, and the rights of the owners of the Series 2010D Bond.
The City may prepay the principal of the Series 201 OD Bond only if (i) it obtains
the prior written consent of the DNRC thereto, and (ii) 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 201 OD Bond is prepaid in part, such
prepayments shall be applied to principal payments in inverse order of maturity.
The Bonds, 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 City within the meaning of any constitutional, statutory or charter limitation or
prov1s10n.
The City may deem and treat the person in whose name this Series 2010D Bond is
registered as the absolute owner hereof, whether this Series 201 OD Bond is overdue or not, for
the purpose of receiving payment and for all other purposes, and the City shall not be affected by
any notice to the contrary.
B-2-
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that
the City has fixed and established and will collect reasonable rates and charges for the services
and facilities afforded by the System, and has created a special Sewer System Fund into which
the gross revenues of the System, including · all additions thereto and replacements and
improvements thereof, will be paid, and a separate and special Revenue Bond Account in that
fund, into which will be paid each month, Net Revenues of the System then on hand (the gross
revenues remaining after the payment of Operating Expenses of the System), in an amount equal
to not less than the sum of one-sixth of the interest due within the next six months and one-
twelfth of the principal due within the next twelve months with respect to all outstanding Bonds
payable semi-annually from that account, and a Reserve Account (the "Reserve") into which
shall be paid additional Net Revenues sufficient to establish and maintain a reserve therein equal
to, as of the date of calculation, the Reserve Requirement; that the Revenue Bond Account and
the Reserve will be used only to pay the principal of, premium, if any, and interest on the Bonds
issued pursuant to the authority herein recited; 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 principal and interest payable from the Revenue Bond Account in any subsequent fiscal year,
to maintain the balance in the Reserve at the Reserve Requirement, to pay promptly the
reasonable and current expenses of operating and maintaining the System, to pay the principal of
and interest on any Subordinate Obligations and to provide reserves for the replacement and .
depreciation of the System; that additional Bonds and refunding Bonds may be issued and made
payable from the Revenue Bond Account on a parity with the Bonds upon certain conditions set
forth in the Resolution but no obligation will be otherwise incurred and made payable from the
Net Revenues, unless the lien thereof shall be expressly made subordinate to the lien of the
Bonds and other additional Bonds on such Net Revenues; that all provisions for the security of
this Series 2010D 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 City to be done, to exist, to happen
and to be performed in order to make this Series 201 OD Bond a valid and binding special
obligation of the City according to its terms have been done, do exist, have happened and have
been performed as so required; and that this Series 2010D Bond and the premium, if any, and
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 City within the
meaning of any constitutional, statutory or charter limitation or provision and the issuance of the
Series 201 OD Bond does not cause either the general or the special indebtedness of the City to
exceed any constitutional, statutory or charter limitation.
B-3-
IN WITNESS WHEREOF, the City of Bozeman, Montana, by its governing body, has
caused this Bond to be executed by the signatures of its signatures of the Mayor, the City
Finance Director, and the City Clerk, and has caused the official seal of the City to be affixed
hereto, and has caused this Bond to be dated as of the 21st day of August, 2013.
Mayor
(SEAL)
City Finance Director
City Clerk
B-4-
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 City Finance Director, as bond registrar (the "Registrar"), has duly noted the transfer on the
Bond and recorded the transfer on the Registrar's registration books. The Issuer 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 Issuer'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
Registration
August 21, 2013
Name and Address
of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh A venue
Helena, MT 59620
Signature of
City Finance Director
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The City Finance Director of the City of Bozeman, Montana, acting as Bond Registrar,
has transferred, on the books of the Issuer, 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 Registered Holder
B-5-
Signature of Bond Registrar
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
_____________________ the within Bond and does hereby
irrevocably constitute and appoint ________________ attorney to transfer
the Bond on the books kept for the registration thereof, with full power of substitution in the
premises.
Dated: _____ _
Notice: The assignor's signature to this assignment must
correspond with the name as it appears upon the face of
the within Bond in every particular, without alteration or
any change whatsoever.
B-6-
Principal Interest
SCHEDULE A
Administrative
Expense Surcharge
B-7-
Loan Loss
Reserve
Surcharge
Total Loan
Payment
APPENDIX C
[FORM OF FIRST AMENDED AND RESTATED SERIES 2010F BOND]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLA TIN
CITY OF BOZEMAN
FIRST AMENDED AND RESTATED
SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM)
SERIES 2010F
No. R-2 $729,000
FOR VALUE RECEIVED, THE CITY OF BOZEMAN, MONTANA (the
"City"), 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 of $729,000, with interest on such amount from the date hereof at the
rate of two percent (2.00%) per annum on the unpaid balance until paid. In addition, the City
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%) and twenty-five hundredths of one percent (0.25%), 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 January 1, 2014. Each installment shall reflect an interest rate of three percent
(3.00%) per annum and shall be in the amount set forth opposite its due date in Schedule A
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 A
hereto. Past-due payments of principal, interest, Administrative Expense Surcharge, and Loan
Loss Reserve Surcharge shall bear interest at the rate of ten percent (I 0.00%) per annum, until
paid. Interest, 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 constitutes a series in the maximum authorized principal amount of
$816,000 (the "Series 201 OF Bond"), issued to finance a portion of the costs of construction of
certain improvements to the sewer system of the City (the "System"), to make a deposit to a
reserve account for the Bonds and to pay costs of issuance of the Series 201 OF Bond. The Series
201 OF 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,
C-1-
Part 44 and 45, as amended, and resolutions duly adopted by the governing body of the City,
including Resolution No. 4220 duly enacted by the City Commission on November 16, 2009, as
amended and supplemented by Resolution Nos. 4234, 4245, 4254, 4299, and __ adopted on
January 19, 2010, February 16, 2010, May 3, 2010, November 1, 2010, and August 5, 2013,
respectively (the Original Resolution, as so amended and supplemented, the "Resolution"). The
Series 201 0C Bond is issuable only as a single, fully registered bond. The Series 201 OF Bond is
issued on a parity and is equally and ratably secured by the Net Revenues of the System with the
City's outstanding $359,300 Sewer System Revenue Bond (DNRC Water Pollution Control State
Revolving Loan Program), Series 2010B (the "Series 2010B Bond"), First Amended and
Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan
Program), Series 2010C (the "Series 2010C Bond"), First Amended and Restated Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010D
(the "Series 2010D Bond"), First Amended and Restated Sewer System Revenue Bond (DNRC
Water Pollution Control State Revolving Loan Program), Series 2010G (the "Series 2010G
Bond"), and First Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 2010H (the "Series 2010H Bond"). The Series
201 0C Bond, the Series 201 OD Bond, the Series 201 0G Bond, and the Series 201 OH Bond are
being issued simultaneously herewith.
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 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 Series 201 OB Bond, the Series 201 0C Bond, the Series 201 OD
Bond, the Series 2010F Bond, the Series 2010G Bond, and the Series 2010H Bond (collectively,
the "Bonds") or otherwise, the conditions upon which the Resolution may be amended, the
rights, duties and obligations of the City, and the rights of the owners of the Series 2010F Bond.
The City may prepay the principal of the Series 201 OF Bond only if (i) it obtains
the prior written consent of the DNRC thereto, and (ii) 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.
The Bonds, 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 City within the meaning of any constitutional, statutory or charter limitation or
prov1s10n.
The City may deem and treat the person in whose name this Series 2010F Bond is
registered as the absolute owner hereof, whether this Series 201 OF Bond is overdue or not, for
the purpose of receiving payment and for all other purposes, and the City shall not be affected by
any notice to the contrary.
C-2-
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that
the City has fixed and established and will collect reasonable rates and charges for the services
and facilities afforded by the System, and has created a special Sewer System Fund into which
the gross revenues of the System, including all additions thereto and replacements and
improvements thereof, will be paid, and a separate and special Revenue Bond Account in that
fund, into which will be paid each month, Net Revenues of the System then on hand (the gross
revenues remaining after the payment of Operating Expenses of the System), in an amount equal
to not less than the sum of one-sixth of the interest due within the next six months and one-
twelfth of the principal due within the next twelve months with respect to all outstanding Bonds
payable semi-annually from that account, and a Reserve Account (the "Reserve") into which
shall be paid additional Net Revenues sufficient to establish and maintain a reserve therein equal
to, as of the date of calculation, the Reserve Requirement; that the Revenue Bond Account and
the Reserve will be used only to pay the principal of, premium, if any, and interest on the Bonds
issued pursuant to the authority herein recited; 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 principal and interest payable from the Revenue Bond Account in any subsequent fiscal year,
to maintain the balance in the Reserve at the Reserve Requirement, to pay promptly the
reasonable and current expenses of operating and maintaining the System, to pay the principal of
and interest on any Subordinate Obligations and to provide reserves for the replacement and
depreciation of the System; that additional Bonds and refunding Bonds may be issued and made
payable from the Revenue Bond Account on a parity with the Bonds upon certain conditions set
forth in the Resolution but no obligation will be otherwise incurred and made payable from the
Net Revenues, unless the lien thereof shall be expressly made subordinate to the lien of the
Bonds and other additional Bonds on such Net Revenues; that all provisions for the security of
this Series 201 OF 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 City to be done, to exist, to happen
and to be performed in order to make this Series 201 OF Bond a valid and binding special
obligation of the City according to its terms have been done, do exist, have happened and have
been performed as so required; and that this Series 201 OF Bond and the premium, if any, and
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 City within the
meaning of any constitutional, statutory or charter limitation or provision and the issuance of the
Series 201 OF Bond does not cause either the general or the special indebtedness of the City to
exceed any constitutional, statutory or charter limitation.
C-3-
IN WITNESS WHEREOF, the City of Bozeman, Montana, by its governing body, has
caused this Bond to be executed by the signatures of its signatures of the Mayor, the City
Finance Director, and the City Clerk, and has caused the <;>fficial seal of the City to be affixed
hereto, and has caused this Bond to be dated as of the 21st day of August, 2013.
Mayor
(SEAL)
City Finance Director
City Clerk
C-4-
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 City Finance Director, as bond registrar (the "Registrar"), has duly noted the transfer on the
Bond and recorded the transfer on the Registrar's registration books. The Issuer 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 Issuer'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
Registration
August 21, 2013
Name and Address
of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh A venue
Helena, MT 59620
Signature of
City Finance Director
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The City Finance Director of the City of Bozeman, Montana, acting as Bond Registrar,
has transferred, on the books of the Issuer, 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 Registered Holder
C-5-
Signature of Bond Registrar
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
_____________________ the within Bond and does hereby
irrevocably constitute and appoint _______________ attorney to transfer
the Bond on the books kept for the registration thereof, with full power of substitution in the
premises.
Dated: ------
Notice: The assignor's signature to this assignment must
correspond with the name as it appears upon the face of
the within Bond in every particular, without alteration or
any change whatsoever.
C-6-
Date Principal Interest
SCHEDULE A
Administrative
Expense Surcharge
C-7-
Loan Loss
Reserve
Surcharge
Total Loan
Payment
APPENDIX D
[FORM OF FIRST AMENDED AND RESTATED SERIES 2010G BOND]
UNITED STATES OF AMERICA
STA TE OF MONT ANA
COUNTY OF GALLATIN
CITY OF BOZEMAN
FIRST AMENDED AND RESTATED
SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOL YING LOAN PROGRAM)
SERIES 20 lOG
No. R-2 $3,558,000
FOR VALUE RECEIVED, THE CITY OF BOZEMAN, MONTANA (the
"City"), 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 of $3,558,000, with interest on such amount from the date hereof at the
rate of two percent (2.00%) per annum on the unpaid balance until paid. In addition, the City
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%) and twenty-five hundredths of one percent (0.25%), 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 January 1, 2014. Each installment shall reflect an interest rate of three percent
(3.00%) per annum and shall be in the amount set forth opposite its due date in Schedule A
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 A
hereto. Past-due payments of principal, interest, Administrative Expense Surcharge, and Loan
Loss Reserve Surcharge shall bear interest at the rate of ten percent (10.00%) per annum, until
paid. Interest, 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 constitutes a series in the maximum authorized principal amount of
$3,903,000 (the "Series 201 0G Bond"), issued to finance a portion of the costs of construction of
certain improvements to the sewer system of the City (the "System"), to make a deposit to a
reserve account for the Bonds and to pay costs of issuance of the Series 201 0G Bond. The Series
201 0G 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,
D-1-
Part 44 and 45, as amended, and resolutions duly adopted by the governing body of the City,
including Resolution No. 4220 duly enacted by the City Commission on November 16, 2009, as
amended and supplemented by Resolution Nos. 4234, 4245, 4254, 4299, and __ adopted on
January 19, 2010, February 16, 2010, May 3, 2010, November 1, 2010, and August 5, 2013,
respectively (the Original Resolution, as so amended and supplemented, the "Resolution"). The
Series 20 lOC Bond is issuable only as a single, fully registered bond. The Series 20100 Bond is
issued on a parity and is equally and ratably secured by the Net Revenues of the System with the
City's outstanding $359,300 Sewer System Revenue Bond (DNRC Water Pollution Control State
Revolving Loan Program), Series 2010B (the "Series 2010B Bond"), First Amended and
Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan
Program), Series 2010C (the "Series 2010C Bond"), First Amended and Restated Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010D
(the "Series 2010D Bond"), First Amended and Restated Sewer System Revenue Bond (DNRC
Water Pollution Control State Revolving Loan Program), Series 2010F (the "Series 2010F
Bond"), and First Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 2010H (the "Series 2010H Bond"). The Series
201 0C Bond, the Series 201 OD Bond, the Series 201 OF Bond, and the Series 201 OH Bond are
being issued simultaneously herewith.
Reference is made to the Resolution for a more complete statement of the terms
and conditions upon which the Series 20100 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 Series 2010B Bond, the Series 2010C Bond, the Series 2010D
Bond, the Series 2010F Bond, the Series 20100 Bond, and the Series 2010H Bond (collectively,
the "Bonds") or otherwise, the conditions upon which the Resolution may be amended, the
rights, duties and obligations of the City, and the rights of the owners of the Series 20100 Bond.
The City may prepay the principal of the Series 20100 Bond only if (i) it obtains
the prior written consent of the DNRC thereto, and (ii) 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 20100 Bond is prepaid in part, such
prepayments shall be applied to principal payments in inverse order of maturity.
The Bonds, 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 City within the meaning of any constitutional, statutory or charter limitation or
prov1s10n.
The City may deem and treat the person in whose name this Series 20100 Bond is
registered as the absolute owner hereof, whether this Series 20100 Bond is overdue or not, for
the purpose of receiving payment and for all other purposes, and the City shall not be affected by
any notice to the contrary.
D-2-
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that
the City has fixed and established and will collect reasonable rates and charges for the services
and facilities afforded by the System, and has created a special Sewer System Fund into which
the gross revenues of the System, including all additions thereto and replacements and
improvements thereof, will be paid, and a separate and special Revenue Bond Account in that
fund, into which will be paid each month, Net Revenues of the System then on hand (the gross
revenues remaining after the payment of Operating Expenses of the System), in an amount equal
to not less than the sum of one-sixth of the interest due within the next six months and one-
twelfth of the principal due within the next twelve months with respect to all outstanding Bonds
payable semi-annually from that account, and a Reserve Account (the "Reserve") into which
shall be paid additional Net Revenues sufficient to establish and maintain a reserve therein equal
to, as of the date of calculation, the Reserve Requirement; that the Revenue Bond Account and
the Reserve will be used only to pay the principal of, premium, if any, and interest on the Bonds
issued pursuant to the authority herein recited; 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 principal and interest payable from the Revenue Bond Account in any subsequent fiscal year,
to maintain the balance in the Reserve at the Reserve Requirement, to pay promptly the
reasonable and current expenses of operating and maintaining the System, to pay the principal of
and interest on any Subordinate Obligations and to provide reserves for the replacement and
depreciation of the System; that additional Bonds and refunding Bonds may be issued and made
payable from the Revenue Bond Account on a parity with the Bonds upon certain conditions set
forth in the Resolution but no obligation will be otherwise incurred and made payable from the
Net Revenues, unless the lien thereof shall be expressly made subordinate to the lien of the
Bonds and other additional Bonds on such Net Revenues; that all provisions for the security of
this Series 2010G 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 City to be done, to exist, to happen
and to be performed in order to make this Series 201 0G Bond a valid and binding special
obligation of the City according to its terms have been done, do exist, have happened and have
been performed as so required; and that this Series 201 0G Bond and the premium, if any, and
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 City within the
meaning of any constitutional, statutory or charter limitation or provision and the issuance of the
Series 201 0G Bond does not cause either the general or the special indebtedness of the City to
exceed any constitutional, statutory or charter limitation.
D-3-
IN WITNESS WHEREOF, the City of Bozeman, Montana, by its governing body, has
caused this Bond to be executed by the signatures of its signatures of the Mayor, the City
Finance Director, and the City Clerk, and has caused the official seal of the City to be affixed
hereto, and has caused this Bond to be dated as of the 21st day of August, 2013.
Mayor
(SEAL)
City Finance Director
City Clerk
D-4-
REGISTRATION AND TRANSFER
This Bond shall be fully registered as to both principal and inte.rest. 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 City Finance Director, as bond registrar (the "Registrar"), has duly noted the transfer on the
Bond and recorded the transfer on the Registrar's registration books. The Issuer 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 Issuer'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
Registration
August 21, 2013
Name and Address
of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh A venue
Helena, MT 59620
Signature of
City Finance Director
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The City Finance Director of the City of Bozeman, Montana, acting as Bond Registrar,
has transferred, on the books of the Issuer, 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 Registered Holder
D-5-
Signature of Bond Registrar
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
_____________________ the within Bond and does hereby
irrevocably constitute and appoint ________________ attorney to transfer
the Bond on the books kept for the registration thereof, with full power of substitution in the
premises.
Dated: ------
Notice: The assignor's signature to this assignment must
correspond with the name as it appears upon the face of
the within Bond in every particular, without alteration or
any change whatsoever.
D-6-
Principal Interest
SCHEDULE A
Administrative
Expense Surcharge
D-7-
Loan Loss
Reserve
Surcharge
Total Loan
Payment
APPENDIX E
[FORM OF FIRST AMENDED AND RESTATED SERIES 2010H BOND]
UNITED ST A TES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLATIN
CITY OF BOZEMAN
FIRST AMENDED AND RESTATED
SEWER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOL YING LOAN PROGRAM)
SERIES 201 OH
No. R-2 $8,692,000
FOR VALUE RECEIVED, THE CITY OF BOZEMAN, MONTANA (the
"City"), 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 of $8,692,000, with interest on such amount from the date hereof at the
rate of two percent (2.00%) per annum on the unpaid balance until paid. In addition, the City
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%) and twenty-five hundredths of one percent (0.25%), 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 January 1, 2014. Each installment shall reflect an interest rate of three percent
(3.00%) per annum and shall be in the amount set forth opposite its due date in Schedule A
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 A
hereto. Past-due payments of principal, interest, Administrative Expense Surcharge, and Loan
Loss Reserve Surcharge shall bear interest at the rate of ten percent (10.00%) per annum, until
paid. Interest, 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 constitutes a series in the maximum authorized principal amount of
$9,573,000 (the "Series 201 OH Bond"), issued to finance a portion of the costs of construction of
certain improvements to the sewer system of the City (the "System"), to make a deposit to a
reserve account for the Bonds and to pay costs of issuance of the Series 201 OH Bond. The Series
201 OH Bond is issued pursuant to and in foll conformity with the Constitution and laws of the
State of Montana thereunto enabling, including Montana Code Annotated, Title 7, Chapter 7,
E-1-
Part 44 and 45, as amended, and resolutions duly adopted by the governing body of the City,
including Resolution No. 4220 duly enacted by the City Commission on November 16, 2009, as
amended and supplemented by Resolution Nos. 4234, 4245, 4254, 4299, and __ adopted on
January 19, 2010, February 16, 2010, May 3, 2010, November 1, 2010, and August 5, 2013,
respectively (the Original Resolution, as so amended and supplemented, the "Resolution"). The
Series 201 0C Bond is issuable only as a single, fully registered bond. The Series 201 OH Bond is
issued on a parity and is equally and ratably secured by the Net Revenues of the System with the
City's outstanding $359,300 Sewer System Revenue Bond (DNRC Water Pollution Control State
Revolving Loan Program), Series 2010B (the "Series 2010B Bond"), First Amended and
Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan
Program), Series 2010C (the "Series 2010C Bond"), First Amended and Restated Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010D
(the "Series 201 OD Bond"), First Amended and Restated Sewer System Revenue Bond (DNRC
Water Pollution Control State Revolving Loan Program), Series 2010F (the "Series 201 OF
Bond"), and First Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 2010G (the "Series 2010G Bond"). The Series
2010C Bond, the Series 2010D Bond, the Series 2010F Bond, and the Series 2010G Bond are
being issued simultaneously herewith.
Reference is made to the Resolution for a more complete statement of the terms
and conditions upon which the Series 2010H 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 Series 2010B Bond, the Series 2010C Bond, the Series 2010D
Bond, the Series 2010F Bond, the Series 2010G Bond, and the Series 2010H Bond (collectively,
the "Bonds") or otherwise, the conditions upon which the Resolution may be amended, the
rights, duties and obligations of the City, and the rights of the owners of the Series 2010H Bond.
The City may prepay the principal of the Series 20 lOH Bond only if (i) it obtains
the prior written consent of the DNRC thereto, and (ii) 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 201 OH Bond is prepaid in part, such
prepayments shall be applied to principal payments in inverse order of maturity.
The Bonds, 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 City within the meaning of any constitutional, statutory or charter limitation or
prov1s10n.
The City may deem and treat the person in whose name this Series 2010H Bond is
registered as the absolute owner hereof, whether this Series 201 OH Bond is overdue or not, for
the purpose of receiving payment and for all other purposes, and the City shall not be affected by
any notice to the contrary.
E-2-
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that
the City has fixed and established and will collect reasonable rates and charges for the services
and facilities afforded by the System, and has created a special Sewer System Fund into which
the gross revenues of the System, including all additions thereto and replacements and
improvements thereof, will be paid, and a separate and special Revenue Bond Account in that
fund, into which will be paid each month, Net Revenues of the System then on hand (the gross
revenues remaining after the payment of Operating Expenses of the System), in an amount equal
to not less than the sum of one-sixth of the interest due within the next six months and one-
twelfth of the principal due within the next twelve months with respect to all outstanding Bonds
payable semi-annually from that account, and a Reserve Account (the "Reserve") into which
shall be paid additional Net Revenues sufficient to establish and maintain a reserve therein equal
to, as of the date of calculation, the Reserve Requirement; that the Revenue Bond Account and
the Reserve will be used only to pay the principal of, premium, if any, and interest on the Bonds
issued pursuant to the authority herein recited; 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 principal and interest payable from the Revenue Bond Account in any subsequent fiscal year,
to maintain the balance in the Reserve at the Reserve Requirement, to pay promptly the
reasonable and current expenses of operating and maintaining the System, to pay the principal of
and interest on any Subordinate Obligations and to provide reserves for the replacement and
depreciation of the System; that additional Bonds and refunding Bonds may be issued and made
payable from the Revenue Bond Account on a parity with the Bonds upon certain conditions set
forth in the Resolution but no obligation will be otherwise incurred and made payable from the
Net Revenues, unless the lien thereof shall be expressly made subordinate to the lien of the
Bonds and other additional Bonds on such Net Revenues; that all provisions for the security of
this Series 2010H 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 City to be done, to exist, to happen
and to be performed in order to make this Series 201 OH Bond a valid and binding special
obligation of the City according to its terms have been done, do exist, have happened and have
been performed as so required; and that this Series 2010H Bond and the premium, if any, and
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 City within the
meaning of any constitutional, statutory or charter limitation or provision and the issuance of the
Series 201 OH Bond does not cause either the general or the special indebtedness of the City to
exceed any constitutional, statutory or charter limitation.
E-3-
IN WITNESS WHEREOF, the City of Bozeman, Montana, by its governing body, has
caused this Bond to be executed by the signatures of its signatures of the Mayor, the City
Finance Director, and the City Clerk, and has caused the official seal of the City to be affixed
hereto, and has caused this Bond to be dated as of the 21st day of August, 2013.
Mayor
(SEAL)
City Finance Director
City Clerk
E-4-
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 (I) 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 City Finance Director, as bond registrar (the "Registrar"), has duly noted the transfer on the
Bond and recorded the transfer on the Registrar's registration books. The Issuer 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 Issuer'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
Registration
August 21, 2013
Name and Address
of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh A venue
Helena, MT 59620
Signature of
City Finance Director
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The City Finance Director of the City of Bozeman, Montana, acting as Bond Registrar,
has transferred, on the books of the Issuer, 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 Registered Holder
E-5-
Signature of Bond Registrar
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
_____________________ the within Bond and does hereby
irrevocably constitute and appoint ________________ attorney to transfer
the Bond on the books kept for the registration thereof, with full power of substitution in the
premises.
Dated: ------
Notice: The assignor's signature to this assignment must
correspond with the name as it appears upon the face of
the within Bond in every particular, without alteration or
any change whatsoever.
E-6-
Date Principal Interest
SCHEDULE A
Administrative
Expense Surcharge
E-7-
Loan Loss
Reserve
Surcharge
Total Loan
Payment
DEPARTMENT OF NATURAL RESOURCES
AND CONSERVATION
STEVEBULLOCK,GOVERNOR 1539 ELEVENTH AVENUE
--STATE OF MONTANA-----
DIRECTOR'S OFFICE: (406) 444-2074 PO BOX 201601
FAX: (406) 444-2684 HELENA, MONTANA 59620-1601
~~'Ei(,u.frAPPROVAL FOR STATE REVOLVING FUND LOAN PROGRAM IN LIEU OF COMMITMENT
AGREEMENT
June 4, 2015
City of Bozeman
Dear Kristin Donald:
The State of Montana, through its State Revolving Fund Program, has been approved by
the Environmental Protection Agency (the EPA) to make loans for wastewater projects.
The purpose of this letter is to formally apprise you that the state has approved a loan to
the City of Bozeman in the amount of $15,363,000. These loans will be represented and secured
by Revenue Bonds. Loan A will be for $300,000 and be forgiven upon completion of the program
requirements. Loan B will be for $8,000,000 for a term of 20 years at an interest rate of 2.50%.
Loan C will be for $7,063,000 for a term of 20 years at an interest rate of 2.5%. This is approved
upon the condition the additional documentation requested and security is provided by the City.
The Bond shall be issued pursuant to a Bond Resolution adopted by the City in
substantially the form of the Bond Resolution used by the City's Bond Counsel in previous
revolving fund loans, subject to appropriate references and changes for any currently outstanding
wastewater system Revenue Bonds.
The City has notified DNRC of its desired closing date in Summer of 2020 on the loan
listed above and DNRC will work with the City and its Bond Counsel to have the loans properly
closed.
c:
Please do not hesitate to call if there are any questions or comments.
Very ruly Yours,
Financial Advisor
Conservation and Resource Development Bureau
Dan Semmens -Dorsey & Whitney w/
Courtney Ellis -Dorsey & Whitney w/
Linda Beckstrom -DNRC w/
Bozeman A SRF file $300,000 w/
Bozeman C SRF file $7,063,000 w/
Greg Skutnik -US Bank w/o
Coralynn Revis -HDR Engineering w/
Michele Marsh -DEQ w/
Bozeman B SRF file $8,000,000 w/
DIRECTOR'S
OFFICE
(406) 444-2074
CONSERVATION & RESOURCE
DEVELOPMENT DIVISION
(406) 444-6667
BOARD OF OIL & GAS
CONSERVATION DIVISION
(406) 444-6675
TRUST LAND MANAGEMENT
DIVISION
(406) 444-2074
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8
5
64
2
,
3
4
5
65
,
4
7
0
64
2
,
9
2
5
65
,
8
9
5
64
3
,
0
2
5
65
,
2
7
5
64
2
,
6
4
5
65
,
6
1
0
64
1
,
7
8
5
64
,
8
8
5
64
2
,
4
3
0
65
,
1
3
0
64
1
,
5
5
0
65
,
3
1
5
64
1
,
1
3
0
65
,
4
4
0
91
6
,
3
5
0
8,
3
4
8
,
3
0
5
20
1
0
F
20
1
0
G
*
20
1
0
H
SR
F
-
1
0
2
6
2
SR
F
-
1
1
2
9
2
SR
F
-
1
1
2
8
1
$7
2
9
,
0
0
0
$3
,
5
5
8
,
0
0
0
$8
,
6
9
2
,
0
0
0
3%
3%
3%
55
,
6
6
0
26
2
,
6
1
0
64
2
,
5
5
5
54
,
4
6
0
26
3
,
0
1
5
64
1
,
8
7
5
55
,
2
4
5
26
3
,
2
4
0
64
1
,
7
9
0
54
,
9
8
5
26
3
,
2
8
5
64
2
,
2
7
0
54
,
6
8
0
26
3
,
1
5
0
64
2
,
3
1
5
55
,
3
4
5
26
2
,
8
3
5
64
2
,
8
9
5
54
,
9
6
5
26
3
,
3
4
0
64
2
,
9
9
5
54
,
5
4
0
26
2
,
6
3
5
64
2
,
6
1
5
55
,
0
8
5
26
2
,
7
3
5
64
1
,
7
5
5
55
,
5
7
0
26
2
,
6
4
0
64
2
,
4
0
0
55
,
0
1
0
26
2
,
3
2
0
64
1
,
5
2
0
27
,
4
0
5
26
2
,
7
9
0
64
0
,
1
0
0
74
2
,
7
0
5
3,
6
8
0
,
9
8
5
8,
9
8
9
,
6
4
5
20
2
0
SR
F
2020 SRF
20
2
0
SR
F
Da
v
i
s
/
N
o
r
t
o
n
Davis/Norton
Fr
o
n
t
St
r
e
e
t
BL
o
a
n
CLoan
$2
,
8
0
7
,
0
0
0
$8
,
0
0
0
,
0
0
0
$7,063,000
20
Y
R
@
2
.
5
%
20
Y
R
@
2
.
5
%
20YR@2.5% Total
-
1,689,666
16
1
,
9
4
4
46
0
,
0
6
2
406,719 2,717,121
17
9
,
7
2
5
51
0
,
2
1
3
450,913 2,829,898
17
8
,
8
8
8
51
0
,
1
6
3
450,800 2,828,407
17
8
,
9
8
8
50
9
,
9
1
3
451,500 2,830,313
.. ·...
·.
17
9
,
0
2
5
.
51
1
,
4
5
0
·
·
·
.. •. 451,0()0 .. I 2,833,500
17
8
,
9
7
5
51
0
,
7
5
0
450,338 2,830,963
17
8
,
8
6
3
51
0
,
8
5
0
450,488 2,828,716
17
9
,
6
6
3
51
0
,
7
1
3
450,438 2,828,684
17
9
,
3
6
2
51
1
,
3
5
0
450,188 2,828,820
17
9
,
0
0
0
51
0
,
7
5
0
451,725 2,828,050
17
9
,
5
5
0
51
0
,
9
1
2
451,025 2,137,222
18
0
,
0
0
0
51
0
,
8
2
5
451,125 1,141,950
17
8
,
3
6
3
51
0
,
4
8
8
450,987 1,139,838
17
8
,
6
6
3
51
0
,
8
8
8
450,637 1,140,188
17
8
,
8
6
2
51
1
,
0
2
5
451,050 1,140,937
17
8
,
9
6
2
51
0
,
8
7
5
451,212 1,141,049
17
8
,
9
6
2
51
0
,
4
6
2
451,125 1,140,549
17
8
,
8
6
2
51
0
,
7
6
2
450,787 1,140,411
17
8
,
6
6
2
51
0
,
7
6
2
451,187 1,140,611
18
1
,
3
6
2
51
2
,
4
6
2
451,325 1,145,149
3,
5
6
6
,
6
8
1
10
,
1
6
5
,
6
7
5
8,974,569 45,663,059
Preliminary Schedule
STATE OF MONTANA
GENERAL OBLIGATION BONDS
WASTEWATER
(REVOLVING FUND PROGRAM) FY 2010
BORROWER: Bozeman Davis/Norton B
PROJECT NAME: Davis Lane/Norton E Ranch FINAL LOAN PAYMENT: 1/1/2040
LOAN COMMITMENT: $8,000,000 # OF LOAN PAYMENTS: 40
LOAN AMOUNT: 8,000,000 PROJECT NUMBER:
INTEREST RA TE: 2.50% DATE OF FUNDING: 4/1/2020
PAYMENT LOAN LOSS ADM EXPENSE INTEREST PRINCIPAL O/SLOAN TOTAL AMOUNT
DUE RESERVE SURCHARGE PAYMENT PAYMENT BALANCE OF PAYMENT
7/1/2020 5,000.00 5,000.00 40,000.00 155,000.00 7,845,000.00 $205,000.00
2 1/1/2021 9,806.25 9,806.25 78,450.00 157,000.00. 7,688,000.00 $255,062.50 $ 460,062.50
3 7/1/2021 9,610.00 9,610.00 76,880.00 159,000.00 7,529,000.00 $255, I 00.00
4 1/1/2022 9,411.25 9,411.25 75,290.00 161,000.00 7,368,000.00 $255,112.50 $ 510,212.50
5 7/1/2022 9,210.00 9,210.00 73,680.00 163,000.00 7,205,000.00 $255,100.00
6 1/1/2023 9,006.25 9,006.25 72,050.00 165,000.00 7,040,000.00 $255,062.50 $ 510,162.50
7 7/1/2023 8,800.00 8,800.00 70,400.00 167,000.00 6,873,000.00 $255,000.00
8 1/1/2024 8,591.25 8,591.25 68,730.00 169,000.00 6,704,000.00 $254,912.50 $ 509,912.50
9 7/1/2024 8,380.00 8,380.00 67,040.00 172,000.00 6,532,000.00 $255,800.00
10 1/1/2025 8,165.00 8,165.00 65,320.00 174,000.00 6,358,000.00 $255,650.00 $ 511,450.00
II 7/1/2025 7,947.50 7,947.50 63,580.00 176,000.00 6,182,000.00 $255,475.00
12 1/1/2026 7,727.50 7,727.50 61,820.00 178,000.00 6,004,000.00 $255,275.00 $ 510,750.00
13 7/1/2026 7,505.00 7,505.00 60,040.00 180,000.00 5,824,000.00 $255,050.00
14 1/1/2027 7,280.00 7,280.00 58,240.00 183,000.00 5,641,000.00 $255,800.00 $ 510,850.00
15 7/1/2027 7,051.25 7,051.25 56,410.00 185,000.00 5,456,000.00 $255,512.50
16 1/1/2028 6,820.00 6,820.00 54,560.00 187,000.00 5,269,000.00 $255,200.00 $ 510,712.50
17 7/1/2028 6,586.25 6,586.25 52,690.00 190,000.00 5,079,000.00 $255,862.50
18 1/1/2029 6,348.75 6,348.75 50,790.00 192,000.00 4,887,000.00 $255,487.50 $ 511,350.00
19 7/1/2029 6,108.75 6,108.75 48,870.00 194,000.00 4,693,000.00 $255,087.50
20 1/1/2030 5,866.25 5,866.25 46,930.00 197,000.00 4,496,000.00 $255,662.50 $ 510,750.00
21 7/1/2030 5,620.00 5,620.00 44,960.00 199,000.00 4,297,000.00 $255,200.00
22 1/1/2031 5,371.25 5,371.25 42,970.00 202,000.00 4,095,000.00 $255,712.50 $ 510,912.50
23 7/1/2031 5,118.75 5,118.75 40,950.00 204,000.00 3,891,000.00 $255,187.50
24 1/1/2032 4,863.75 4,863.75 38,910.00 207,000.00 3,684,000.00 $255,637.50 $ 510,825.00
25 7/1/2032 4,605.00 4,605.00 36,840.00 209,000.00 3,475,000.00 $255,050.00
26 1/1/2033 4,343.75 4,343.75 34,750.00 212,000.00 3,263,000.00 $255,437.50 $ 510,487.50
27 7/1/2033 4,078.75 4,078.75 32,630.00 215,000.00 3,048,000.00 $255,787.50
28 1/1/2034 3,810.00 3,810.00 30,480.00 217,000.00 2,831,000.00 $255,100.00 $ 510,887.50
29 7/1/2034 3,538.75 3,538.75 28,310.00 220,000.00 2,611,000.00 $255,387.50
30 1/1/2035 3,263.75 3,263.75 26,110.00 223,000.00 2,388,000.00 $255,637.50 $ 511,025.00
31 7/1/2035 2,985.00 2,985.00 23,880.00 226,000.00 2,162,000.00 $255,850.00
32 1/1/2036 2,702.50 2,702.50 21,620.00 228,000.00 1,934,000.00 $255,025.00 $ 510,875.00
33 7/1/2036 2,417.50 2,417.50 19,340.00 231,000.00 I, 703,000.00 $255,175.00
34 1/1/2037 2,128.75 2,128.75 17,030.00 234,000.00 1,469,000.00 $255,287.50 $ 510,462.50
35 7/1/2037 1,836.25 1,836.25 14,690.00 237,000.00 1,232,000.00 $255,362.50
36 1/1/2038 1,540.00 1,540.00 12,320.00 240,000.00 992,000.00 $255,400.00 $ 510,762.50
37 7/1/2038 1,240.00 1,240.00 9,920.00 243,000.00 749,000.00 $255,400.00
38 1/1/2039 936.25 936.25 7,490.00 246,000.00 503,000.00 $255,362.50 $ 510,762.50
39 7/1/2039 628.75 628.75 5,030.00 249,000.00 254,000.00 $255,287.50
40 1/1/2040 317.50 317.50 2,540.00 254,000.00 0.00 $257,175.00 $ 512,462.50
216,567.50 216,567.50 1,732,540.00 8,000,000.00 IO, 165,675.00 IO, 165,675.00
IO, 165,675.00
Preliminary Schedule
STATE OF MONTANA
GENERAL OBLIGATION BONDS
WASTEWATER
(REVOLVING FUND PROGRAM) FY 2010
BORROWER: Bozeman Davis/Norton C
PROJECT NAME: Davis Lane/Norton E Ranch FINAL LOAN PAYMENT: 1/1/2040
LOAN COMMITMENT: $7,063,000 # OF LOAN PAYMENTS: 40
LOAN AMOUNT: 7,063,000 PROJECT NUMBER:
INTEREST RATE: 2.50% DA TE OF FUNDING: 4/1/2020
PAYMENT LOAN LOSS ADM EXPENSE INTEREST PRINCIPAL O/SLOAN TOTAL AMOUNT
DUE RESERVE SURCHARGE PAYMENT PAYMENT BALANCE OF PAYMENT
I 7/1/2020 4,414.38 4,414.38 35,315.00 137,000.00 6,926,000.00 $181,143.75
2 1/1/2021 8,657.50 8,657.50 69,260.00 139,000.00 6,787,000.00 $225,575.00 $ 406,718.75
3 7/1/2021 8,483.75 8,483.75 67,870.00 141,000.00 6,646,000.00 $225,837.50
4 1/1/2022 8,307.50 8,307.50 66,460.00 142,000.00 6,504,000.00 $225,075.00 $ 450,912.50
5 7/1/2022 8,130.00 8,130.00 65,040.00 144,000.00 6,360,000.00 $225,300.00
6 1/1/2023 7,950.00 7,950.00 63,600.00 146,000.00 6,214,000.00 $225,500.00 $ 450,800.00
7 7/1/2023 7,767.50 7,767.50 62,140.00 148,000.00 6,066,000.00 $225,675.00
8 1/1/2024 7,582.50 7,582.50 60,660.00 150,000.00 5,916,000.00 $225,825.00 $ 451,500.00
9 7/1/2024 7,395.00 7,395.00 59,160.00 152,000.00 5,764,000.00 $225,950.00
10 1/1/2025 7,205.00 7,205.00 57,640.00 153,000.00 5,611,000.00 $225,050.00 $ 451,000.00
II 7/1/2025 7,013.75 7,013.75 56,110.00 155,000.00 5,456,000.00 $225,137.50
12 1/1/2026 6,820.00 6,820.00 54,560.00 157,000.00 5,299,000.00 $225,200.00 $ 450,337.50
13 7/1/2026 6,623.75 6,623.75 52,990.00 159,000.00 5,140,000.00 $225,237.50
14 1/1/2027 6,425.00 6,425.00 51,400.00 161,000.00 4,979,000.00 $225,250.00 $ 450,487.50
15 7/1/2027 6,223.75 6,223.75 49,790.00 163,000.00 4,816,000.00 $225,237.50
16 1/1/2028 6,020.00 6,020.00 48,160.00 165,000.00 4,651,000.00 $225,200.00 $ 450,437.50
17 7/1/2028 5,813.75 5,813.75 46,510.00 167,000.00 4,484,000.00 $225,137.50
18 1/1/2029 5,605.00 5,605.00 44,840.00 169,000.00 4,315,000.00 $225,050.00 $ 450,187.50
19 7/1/2029 5,393.75 5,393.75 43,150.00 172,000.00 4,143,000.00 $225,937.50
20 1/1/2030 5,178.75 5,178.75 41,430.00 174,000.00 3,969,000.00 $225,787.50 $ 451,725.00
21 7/1/2030 4,961.25 4,961.25 39,690.00 176,000.00 3,793,000.00 $225,612.50
22 1/1/2031 4,741.25 4,741.25 37,930.00 178,000.00 3,615,000.00 $225,412.50 $ 451,025.00
23 7/1/2031 4,518.75 4,518.75 36,150.00 180,000.00 3,435,000.00 $225,187.50
24 1/1/2032 4,293.75 4,293.75 34,350.00 183,000.00 3,252,000.00 $225,937.50 $ 451,125.00
25 7/1/2032 4,065.00 4,065.00 32,520.00 185,000.00 3,067,000.00 $225,650.00
26 1/1/2033 3,833.75 3,833.75 30,670.00 187,000.00 2,880,000.00 $225,337.50 $ 450,987.50
27 7/1/2033 3,600.00 3,600.00 28,800.00 189,000.00 2,691,000.00 $225,000.00
28 1/1/2034 3,363.75 3,363.75 26,910.00 192,000.00 2,499,000.00 $225,637.50 $ 450,637.50
29 7/1/2034 3,123.75 3,123.75 24,990.00 194,000.00 2,305,000.00 $225,237.50
30 1/1/2035 2,881.25 2,881.25 23,050.00 197,000.00 2, I 08,000.00 $225,812.50 $ 451,050.00
31 7/1/2035 2,635.00 2,635.00 21,080.00 199,000.00 1,909,000.00 $225,350.00
32 1/1/2036 2,386.25 2,386.25 19,090.00 202,000.00 I, 707,000.00 $225,862.50 $ 451,212.50
33 7/1/2036 2,133.75 2,133.75 17,070.00 204,000.00 1,503,000.00 $225,337.50
34 1/1/2037 1,878.75 1,878.75 15,030.00 207,000.00 1,296,000.00 $225,787.50 $ 451,125.00
35 7/1/2037 1,620.00 1,620.00 12,960.00 209,000.00 1,087,000.00 $225,200.00
36 1/1/2038 1,358.75 1,358.75 10,870.00 212,000.00 875,000.00 $225,587.50 $ 450,787.50
37 7/1/2038 1,093.75 1,093.75 8,750.00 215,000.00 660,000.00 $225,937.50
38 1/1/2039 825.00 825.00 6,600.00 217,000.00 443,000.00 $225,250.00 $ 451,187.50
39 7/1/2039 553.75 553.75 4,430.00 220,000.00 223,000.00 $225,537.50
40 1/1/2040 278.75 278.75 2,230.00 223,000.00 0.00 $225,787.50 $ 451,325.00
191,156.88 191,156.88 1,529,255.00 7,063,000.00 8,974,568.75 8,974,568.75
8,974,568.75
RESOLUTION NO. 5183
RESOLUTION RELATING TO $15,149,000 SEWER SYSTEM REVENUE BONDS
(DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM),
CONSISTING OF $300,000 SUBORDINATE LIEN TAXABLE SERIES 2020A BOND,
$7,786,000 SERIES 2020B BOND, AND $7,063,000 SERIES C BOND; AUTHORIZING
THE ISSUANCE AND FIXING THE TERMS AND CONDITIONS THEREOF
RECITALS:
WHEREAS, pursuant to the Water Pollution Control State Revolving Fund Act, Montana
Code Annotated, Title 75, Chapter 5, Part 11, as amended (the “Act”), the State of Montana (the
“State”) has established a revolving loan program (the “Program”) to be administered by the
Department of Natural Resources and Conservation of the State of Montana, an agency of the State
(the “DNRC”), and by the Department of Environmental Quality of the 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 limited to,
all federal grants for capitalization of a state water pollution 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 money in the Revolving Fund
and payments of principal of and interest on loans made from the Revolving Fund; and
WHEREAS, the 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 DEQ and the DNRC; and
WHEREAS, the current EPA Capitalization Grant (as hereinafter defined) requires that
loans under the Program funded in whole or in part by such grant in the aggregate and not on a
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
2
loan-by-loan basis be structured in such a way that a percentage of the total proceeds of such grant
be subject to loan forgiveness; and
WHEREAS, the City of Bozeman, Montana (the “Borrower”) has applied to the DNRC
for the Davis and Norton ABC Loans (as hereinafter defined) from the Revolving Fund to enable
the Borrower to finance, refinance or reimburse itself for the costs of the Davis Lift Station and
Norton East Project (as hereinafter defined) which will carry out the purposes of the Clean Water
Act, to fund the Reserve Account to the Reserve Requirement, and to pay costs of issuance of the
Series ABC Bonds (as hereinafter defined); and
WHEREAS, the DNRC offered to make loans in the total principal amount of $15,149,000
available to the Borrower, with one loan in the amount of $300,000 contemplated to be forgiven
in the event the Borrower satisfies certain conditions; and
WHEREAS, the Borrower contemplates issuing bonds in three series, one a Series 2020A
Bond in the maximum principal amount of $300,000 (the “Series 2020A Bond”), the second a
Series 2020B Bond in the maximum principal amount of $7,786,000 (the “Series 2020B Bond”),
and the third a Series C Bond in the maximum principal amount of $7,063,000 (the “Series C
Bond”); and
WHEREAS, provided that the Borrower complies with certain conditions for principal
forgiveness, the Borrower’s obligation to repay the Series 2020A Bond will be forgiven; and
WHEREAS, the Borrower is authorized under applicable laws, ordinances and regulations
to adopt this Supplemental Resolution and to issue the Series ABC Bonds (as hereinafter defined)
to evidence the Davis and Norton ABC Loans (as hereinafter defined) for the purposes set forth
herein; and
WHEREAS, the DNRC will fund: (i) the 2020A Loan (as hereinafter defined) entirely from
proceeds of the EPA Capitalization Grant, (ii) the 2020B Loan and the 20__C Loan (each, as
hereinafter defined) in part, directly or indirectly, from proceeds of the EPA Capitalization Grant;
in part, directly or indirectly, with proceeds of the State’s General Obligation Bonds (Water
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
3
Pollution Control State Revolving Fund Program); and in part, directly or indirectly, 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. In this Supplemental Resolution, unless a different meaning
clearly appears from the context, the following terms shall have the following meanings:
“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 established pursuant to Sections 11.1 and 11.2 of the Original Resolution.
“Act” or “State Act” means Montana Code Annotated, Title 75, Chapter 5, Part 11, as
amended from time to time.
“Administrative Expense Surcharge” has the meaning given such term under the Indenture.
“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, the Series 2010H Bond, the Series 2020B Bond,
the Series C Bond, and any additional Bonds to be issued on a parity therewith pursuant to Article
X of the Original Resolution, excluding Section 10.4 thereof. “Bonds” does not include the Series
2020A Bond.
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
4
“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 the State are authorized or required by law to close.
“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” or “Closings” means the date of delivery of the Series 2020A Bond, the Series
2020B Bond, and the Series C Bond to the DNRC. The Borrower expects to deliver the Series
2020A Bond and Series 2020B Bond on the same Closing date, and to deliver the Series C Bond
at a later Closing date, following the advance of the full principal amount of the 2020A Loan and
the 2020B Loan.
“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 ABC 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 the aggregate amount of the Davis and Norton ABC Loans
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 to the DNRC by the Borrower following the final
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advance of principal of the 2020A 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 firm 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 applicable 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.
“Davis and Norton ABC Loans” or “Loan” means, collectively, the 2020A Loan, the
2020B Loan, and the 20__C 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 Davis Lift Station and Norton East Project, to fund the Reserve Account to the Reserve
Requirement, and to pay costs of issuance of the Series ABC Bonds.
“Davis Lift Station and Norton East 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 Davis and Norton ABC
Loans, described in Appendix A hereto.
“Debt” means, without duplication, in respect of the System, (1) indebtedness of the
Borrower for borrowed money or for the deferred purchase price of property or services; (2) the
obligation of the Borrower 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 referred to in clause (1) or (2) above.
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“DEQ” means the Department of Environmental Quality of the State of Montana, an
agency of the State, or any successor to its powers, duties and obligations under the 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.
“Enabling Act” means Montana Code Annotated, Title 7, Chapter 7, Parts 44 and 45, as
heretofore and hereafter amended or supplemented.
“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, the 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 Clean Water 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 June 30, 2021, the date by which it is estimated by
the Borrower that the Davis Lift Station and Norton East 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 2020A Bond is forgiven.
“Fund” means the Sewer System Fund established pursuant to Section 11.1 of the Original
Resolution.
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“Governmental Unit” means governmental 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” has the meaning given such term under the Indenture.
“Loan Repayments” means periodic installments of principal and interest by Borrower in
repayment of the Series 2020B Bond and Series C Bond, and, if the DNRC delivers a
Noncompliance Statement, of the Series 2020A Bond, at the rates and times specified in Article
V.
“Net Revenues” means the entire amount of the gross revenues of the System (as described
in Section 11.1 of the Original Resolution) remaining upon each such monthly apportionment,
after crediting to the Operating Account the amount required by the Resolution, including sums
required to maintain the Operating Reserve in the minimum amount required by Section 11.3 of
the Original Resolution.
“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 2020A Bond is not
forgiven.
“Operating Account” means the account created in the Sewer System Fund established
pursuant to Sections 11.1 and 11.3 of the Original Resolution.
“Opinion of Bond Counsel” means a written opinion of Bond Counsel.
“Original Resolution” means Resolution No. 4220 of the Borrower adopted on November
16, 2009.
“Payment Date” means, with respect the 2020B Loan and the 20__C Loan, each January 1
and July 1 during the term of the 2020B Loan and the 20__C Loan on which a payment of interest
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or principal and interest is due, as determined under this Supplemental Resolution, and, if a
Noncompliance Statement is delivered with respect to the 2020A Loan, each January 1 and July 1
during the term of the 2020A Loan on which a payment of interest or principal and interest is due,
as determined under this Supplemental Resolution.
“Person” means any Private Person or Public Entity.
“Private Person” means an individual, corporation, partnership, association, joint venture,
joint stock company or unincorporated organization, except a Public Entity.
“Program” means the Water Pollution Control State Revolving Fund Program established
by the State Act.
“Project” means an improvement, betterment, reconstruction or extension of the System,
including the Davis Lift Station and Norton East Project.
“Public Entity” means a State agency, city, town, county, irrigation district, drainage
district, county water and sewer district, a soil conservation district, political or administrative
subdivision of State government 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).
“Registrar” means, with respect to the Series ABC Bonds, the City Finance Director or any
successor appointed pursuant to this Supplemental Resolution, and, with respect to any other series
of Bonds, the Person or Persons designated by or pursuant to this Supplemental Resolution or a
Supplemental Resolution to receive and disburse the principal of, premium, if any, and interest on
the Bonds on behalf of the Borrower and to hold and maintain the Bond Register.
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“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
ABC Bonds.
“Replacement and Depreciation Account” means the account created in the Sewer System
Fund established pursuant to Sections 11.1 and 11.6 of the Original Resolution.
“Reserve Account” means the account created in the Sewer System Fund established
pursuant to Sections 11.1 and 11.5 of the Original Resolution.
“Reserve Requirement” means, as of the date of calculation, an amount equal to one-half
the sum of the highest amount of principal and interest payable on all outstanding Bonds in any
one future fiscal year (giving effect to mandatory sinking fund redemption, if any).
“Resolution” means the Original Resolution, as amended and supplemented by Resolution
Nos. 4234, 4245, 4254, 4299, and 4462, adopted on January 19, 2010, February 16, 2010, May 3,
2010, November 1, 2010, and August 5, 2013, respectively; as further amended and supplemented
by this Supplemental Resolution; and as it may be further amended and supplemented.
“Revenue Bond Account” means the account created in the Sewer System Fund established
pursuant to Sections 11.1 and 11.4 of the Original Resolution.
“Revolving Fund” shall have the meaning set forth in the recitals hereof.
“Series 2010B Bond” means the Borrower’s Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010B, issued to the DNRC pursuant to
the Resolution, as then in effect.
“Series 2010C Bond” means the Borrower’s First Amended and Restated Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010C,
issued to the DNRC pursuant to the Resolution, as then in effect.
“Series 2010D Bond” means the Borrower’s First Amended and Restated Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010D,
issued to the DNRC pursuant to the Resolution, as then in effect.
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“Series 2010F Bond” means the Borrower’s First Amended and Restated Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010F,
issued to the DNRC pursuant to the Resolution, as then in effect.
“Series 2010G Bond” means the Borrower’s First Amended and Restated Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010G,
issued to the DNRC pursuant to the Resolution, as then in effect.
“Series 2010H Bond” means the Borrower’s First Amended and Restated Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010H,
issued to the DNRC pursuant to the Resolution, as then in effect.
“Series 2020A Bond” means the $300,000 Subordinate Lien Sewer System Revenue Bond
(DNRC Water Pollution Control State Revolving Loan Program), Taxable Series 2020A, issued
to the DNRC to evidence the 2020A Loan.
“Series 2020B Bond” means the $7,786,000 Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2020B, issued to the DNRC to evidence
the 2020B Loan.
“Series C Bond” means the $7,063,000 Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series C, to be issued to the DNRC to evidence
the 20__C Loan. The series designation for the Series C Bond shall be completed with the calendar
year in which the Series C Bond is issued, expected to be late in calendar year 2020 or early in
calendar year 2021, may or may not contain a “C,” and the final designation will be set forth on
the face page of the form of the Series C Bond.
“Series ABC Bonds” means, collectively, the Series 2020A Bond, the Series 2020B Bond,
and the Series C Bond.
“Sewer System Fund” means the fund created by Section 11.1 of the Original Resolution.
“State” means the State of Montana.
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“State Bonds” means the State’s General Obligation Bonds (Water Pollution Control State
Revolving Fund Program), issued or to be issued pursuant to the Indenture.
“Subordinate Obligations” means the Series 2020A Bond, and any other subordinate
obligations issued under Section 10.4 of the Original Resolution
“Supplemental Resolution” means this Resolution No. _____ of the Borrower adopted on
June 15, 2020.
“Surplus Account” means the account created in the Sewer System Fund established
pursuant to Sections 11.1 and 11.7 of the Original Resolution.
“Surplus Net Revenues” means 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 Davis Lift Station and Norton East Project.
“Trustee” means U.S. Bank National Association, in Seattle, Washington, or any successor
trustee under the Indenture.
“2020A Committed Amount” means the amount of the 2020A 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.
“2020B Committed Amount” means the amount of the 2020B 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.
“20__C Committed Amount” means the amount of the 20__C 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.
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“2020B First Advance” means the first advance of funds of the Davis and Norton ABC
Loans from the proceeds of the 2020B Loan by the DNRC to the Borrower in an amount of at least
$50,001.
“20__C First Advance” means the first advance of funds of the 20__C Loan by the DNRC
to the Borrower in an amount of at least $50,001.
“2020A Loan” means the loan made to the Borrower by the DNRC pursuant to the Program
in the maximum amount of the 2020A Committed Amount to provide funds to pay a portion of
the costs of the Davis Lift Station and Norton East Project payable under the Program.
“2020B Loan” means the loan made to the Borrower by the DNRC pursuant to the Program
in the maximum amount of the 2020B Committed Amount to provide funds to pay a portion of the
costs of the Davis Lift Station and Norton East 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 ABC Bonds.
“20__C Loan” means the loan made to the Borrower by the DNRC pursuant to the Program
in the maximum amount of the 20__C Committed Amount to provide funds to pay a portion of the
costs of the Davis Lift Station and Norton East 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 ABC Bonds.
“Undisbursed Committed Amount” means any undisbursed Committed Amount which is
not required to pay costs of the Davis Lift Station and Norton East Project 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.
(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
herein.
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(d) All references to mail shall refer to first-class mail postage prepaid.
(e) Words of the masculine gender shall be deemed and construed to include correlative
words of the feminine and neuter genders.
(f) “Or” is not exclusive, but is intended to permit or encompass one, more or all of the
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 Davis Lift Station and Norton East Project and estimated
budget for the Davis Lift Station and Norton East Project;
Appendix B-1: the form of the Series 2020A Bond;
Appendix B-2: the form of the Series 2020B Bond;
Appendix B-3: the form of the Series C Bond;
Appendix C: additional agreements and representations of the 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 Enabling 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,
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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 Enabling Act and other laws of the State,
has established and presently owns and operates the System.
(c) The Davis Lift Station and Norton East Project. After investigation of the facts and as
authorized by the Enabling Act, this Commission has determined it to be necessary and desirable
and in the best interests of the Borrower to acquire and construct the Davis Lift Station and Norton
East Project.
(d) Outstanding Bonds. Pursuant to the Enabling Act and the Resolution, the Borrower
has issued, and has outstanding its Series 2010B Bond, Series 2010C Bond, Series 2010D Bond,
Series 2010F Bond, Series 2010G Bond, and Series 2010H Bond. The Series 2010B Bond, the
Series 2010C Bond, the Series 2010D Bond, the Series 2010F Bond, the Series 2010G Bond, and
the Series 2010H Bond are parity bonds payable from Net Revenues of the System. No other
bonds or indebtedness are outstanding that are payable from or secured by revenues of the System.
(e) Additional Bonds. The Borrower reserved the right under Section 10.3 of the
Original Resolution, as amended by this Supplemental 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 110% 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
the Original Resolution, 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 (or within 60 days thereafter) shall be
applied to the quantities of service actually rendered and made available during such preceding
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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. It is hereby
determined that the Borrower is authorized to issue $14,849,000 in aggregate principal amount
of additional Bonds pursuant to Section 10.3 of the Original Resolution, as amended, payable
from and secured by the Net Revenues on a parity with the outstanding Series 2010B Bond,
Series 2010C Bond, Series 2010D Bond, Series 2010F Bond, Series 2010G Bond, and Series
2010H Bond, , and the Mayor, City Manager and City Finance Director are authorized and
directed to sign a certificate confirming such determination.
For purposes of the foregoing computations, principal of and interest on the 2020A Loan
are disregarded. The Borrower acknowledges and agrees that if a Noncompliance Certificate is
delivered, then principal and interest will become due and owing on the Series 2020A 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, as amended by this Supplemental 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 this
Supplemental Resolution.
(f) No Administrative Expense Surcharge or Loan Loss Reserve Surcharge. The DNRC
has determined that in connection with the sound and prudent management of the Program, there
is no need for an Administrative Expense Surcharge or Loan Loss Reserve Surcharge, and that
instead of such surcharges, the interest rate on the Davis and Norton ABC Loans is 2.50% per
annum.
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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 and political
subdivision 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 ABC Bonds and to carry out and
consummate all transactions contemplated by this Supplemental Resolution, the Series
ABC 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 ABC
Bonds and the Collateral Documents and the incurrence of the Debt evidenced by the
Series ABC 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 this
Supplemental Resolution, the Series ABC Bonds and the Collateral Documents, or the financial
condition of the Borrower, or the transactions contemplated by this Supplemental Resolution, the
Series ABC Bonds and the Collateral Documents or the validity and enforceability of this
Supplemental Resolution, the Series ABC 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
Davis Lift Station and Norton East Project, the Series ABC Bonds or any Collateral Documents
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and the period for filing any such petition will have expired before issuance of the Series ABC
Bonds.
(c) Borrowing Legal and Authorized. The adoption of this Supplemental Resolution, the
execution and delivery of the Series ABC Bonds and the Collateral Documents and the
consummation of the transactions provided for in this Supplemental Resolution, the Series ABC
Bonds and the Collateral Documents and compliance by the Borrower with the provisions of this
Supplemental Resolution, the Series ABC 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
(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 this Supplemental 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 charter or similar document, if applicable,
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 ABC Bonds and the Collateral Documents, would constitute a default under
this Supplemental 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
terms hereof or of the Series ABC Bonds and the Collateral Documents.
(e) Governmental Consent. The Borrower has obtained or made all 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
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Supplemental Resolution, the Series ABC Bonds and the Collateral Documents (including any
necessary sewer rate increase) or for the Davis Lift Station and Norton East Project, the financing
or refinancing thereof or the reimbursement of the Borrower for 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 ABC Bonds or entering into
the Collateral Documents and the performance of the Borrower’s obligations hereunder and
thereunder.
(f) Binding Obligation. This Supplemental Resolution, the Series ABC Bonds and any
Collateral Documents 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 Davis Lift Station and Norton East Project. The Davis Lift Station and Norton
East 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 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
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 currently operated or the Borrower’s ability to perform its
obligations under this Supplemental Resolution, the Series ABC Bonds and the Collateral
Documents and to pledge any revenues or other property pledged to the payment of the Series
ABC Bonds.
(i) Compliance With Law. The Borrower:
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(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 this
Supplemental Resolution, the Series ABC 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).
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(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 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 this Supplemental
Resolution, the Series ABC Bonds and the Collateral Documents and to realize thereon, and record
and file and re-record and refile 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 this Supplemental Resolution, the Series
ABC 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 this Supplemental Resolution and the Collateral
Documents so long as any amount is owing under this Supplemental Resolution or the
Series ABC Bonds;
(2) The Borrower shall forthwith, after the execution and delivery of the Series
ABC Bonds and thereafter from time to time, cause this Supplemental 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 this Supplemental 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
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(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 ABC 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, as amended by this Supplemental
Resolution. The Borrower agrees that for each fiscal year it shall furnish to the DNRC and the
DEQ, promptly when available:
(1) the preliminary budget for the System, with items for the Davis Lift Station
and Norton East Project shown separately; and
(2) when adopted, the final budget for the System, with items for the Davis Lift
Station and Norton East Project shown separately.
(g) Project Accounts. The Borrower shall maintain Davis Lift Station and Norton East
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 Davis and Norton
ABC Loans and the Davis Lift Station and Norton East Project.
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(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 ABC 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 ABC Bonds or any other funds of the Borrower in respect of the Davis Lift
Station and Norton East Project or the Series ABC 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 Davis and Norton ABC Loans or the portion of the Davis and Norton ABC Loans
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 Davis Lift Station and Norton East
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.
(d) Any portion of the Davis Lift Station and Norton East Project being refinanced or the
cost of which is being reimbursed was acquired by and is now and shall, during the term of the
Davis and Norton ABC Loans, be owned by the Borrower and not by any other Person. Any
portion of the Davis Lift Station and Norton East Project being financed shall be acquired by and
shall, during the term of the Davis and Norton ABC Loans, be owned by the Borrower and not by
any other Person. Notwithstanding the previous two sentences, the Borrower may transfer the
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Davis Lift Station and Norton East 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 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 Davis Lift Station and Norton East 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 Davis and Norton ABC 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 Davis and Norton ABC Loans it will
not contract with or permit any Private Person to manage the Davis Lift Station and Norton East
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.
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(g) The Borrower may not lease the Davis Lift Station and Norton East 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 Davis Lift Station and Norton East 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 Davis Lift Station and Norton
East Project if (i) such change will violate the Clean Water Act, or (ii) so long as the State Bonds
are outstanding 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.
(i) In the event the State Bonds are refunded by bonds which are not State Bonds, all
references in this Supplemental Resolution to State Bonds shall be deemed to refer to such
refunding bonds (together, the “Refunding Bonds”) or, in the case of a crossover refunding, to the
State Bonds and the Refunding Bonds. In the event the State Bonds are refunded by an issue of
Additional State Bonds, all references in the Resolution to the State Bonds shall be deemed to refer
to such Additional State Bonds or, in the case of a crossover refunding, both the State Bonds and
such Additional State Bonds.
Section 2.5 Maintenance of System; Liens. The Borrower shall maintain the System,
including the Davis Lift Station and Norton East 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 Davis Lift Station and Norton East 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 ABC 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.
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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 ABC Bonds and the Collateral Documents, and (a) such action
does not result in any default in the performance or observance of any of the terms, covenants or
agreements of the Borrower under the Resolution, the Series ABC 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 ABC 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 2020 DAVIS LIFT STATION AND NORTON EAST
PROJECTS
Section 3.1 Use of Proceeds. The Borrower shall apply the proceeds of the Davis and
Norton ABC Loans from the DNRC solely as follows:
(a) The Borrower shall apply the proceeds of the Davis and Norton ABC Loans solely to
the financing, refinancing or reimbursement of costs of the Davis Lift Station and Norton East
Project, to fund deposits to the Reserve Account, and to pay costs of issuance of the Series ABC
Bonds as set forth in Appendix A hereto and this Section 3.1. The Davis and Norton ABC Loans
will be disbursed in accordance with Article IV hereof and Article VII of the Indenture. If the
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Davis Lift Station and Norton East Project has not been completed prior to Closing, the Borrower
shall, as quickly as reasonably possible, complete the Davis Lift Station and Norton East Project
and expend proceeds of the Davis and Norton ABC Loans to pay costs of completing the Davis
Lift Station and Norton East Project.
(b) No portion of the proceeds of the Davis and Norton ABC 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 Davis and Norton ABC Loans are to be used to reimburse the
Borrower for costs of the Davis Lift Station and Norton East Project 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 Davis and Norton ABC Loans was
incurred after March 7, 1985, or with respect to a Project the construction or acquisition of which
began after March 7, 1985. No proceeds of the Davis and Norton ABC Loans 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 Davis Lift Station and Norton East Project. Set forth in Appendix A to
this Supplemental Resolution is a description of the Davis Lift Station and Norton East Project,
which describes the property which has been or is to be acquired, installed, constructed or
improved and the other activities, if any to be funded from the Davis and Norton ABC Loans (the
Davis Lift Station and Norton East Project may consist of more than one facility or activity), and
an estimated budget relating to the Davis Lift Station and Norton East Project. The Davis Lift
Station and Norton East Project may be changed and the description thereof in Appendix A may
be amended from time to time by the Borrower but only after delivery to the DNRC of the
following:
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(a) A certificate of the Borrower setting forth the amendment to Appendix A and stating
the reason therefor, including statements as to whether the amendment would cause an increase or
decrease in the cost of the Davis Lift Station and Norton East Project or an increase or decrease in
the amount of proceeds of the Davis and Norton ABC Loans which will be required to complete
the Davis Lift Station and Norton East Project and whether the change will materially accelerate
or delay the construction schedule for the Davis Lift Station and Norton East Project;
(b) A written consent to such change in the Davis Lift Station and Norton East Project by
an Authorized DNRC Officer; and
(c) An Opinion of Bond Counsel stating that the Davis Lift Station and Norton East
Project, as constituted after such amendment, is, and was at the time the State Bonds were issued,
eligible for financing under the Act and is, and was at the time the Series ABC Bonds were issued,
eligible for financing under the Enabling Act, such amendment will not violate the Act or the
Enabling Act and such amendment will not adversely affect the exclusion of interest on the State
Bonds or the Series ABC 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
Davis and Norton ABC 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 sole and absolute discretion, and adoption by the governing body of the Borrower of a
Supplemental 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 this Supplemental 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. 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 Davis and Norton ABC Loans to pay costs of the Davis Lift Station and
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Norton East Project or as to the availability of additional funds under the Program to increase the
principal amount of the Davis and Norton ABC Loans.
Section 3.3 Davis Lift Station and Norton East Project Representations and Covenants.
The Borrower hereby represents to and covenants with the DNRC that:
(a) all construction of the Davis Lift Station and Norton East Project has complied and will
comply with all federal and state standards, including, without limitation, EPA regulations;
(b) all future construction of the Davis Lift Station and Norton East 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 Davis Lift Station and Norton East 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 Davis
Lift Station and Norton East 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 IV of chapter 31 of title 40, United States Code;
(e) the iron and steel products used in the Davis Lift Station and Norton East Project
comply with the “American Iron and Steel” requirements of Section 436 of the Consolidated
Appropriations Act of 2014 (P.L. 113-76), as those requirements are further interpreted by
applicable EPA guidance;
(f) the Davis Lift Station and Norton East Project are a project of the type permitted to be
financed under the Enabling Act, the Act and the Program and Title VI of the Clean Water Act;
and
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(g) the Borrower will undertake the Davis Lift Station and Norton East Project promptly
after the Closing and will cause the Davis Lift Station and Norton East 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 Davis Lift Station and Norton East Project will be substantially completed by
the Estimated Completion Date.
Section 3.4 Completion or Cancellation or Reduction of Costs of the Davis Lift Station
and Norton East Project.
(a) Upon completion of the Davis Lift Station and Norton East Project, the Borrower shall
deliver to the DNRC a certificate stating that the Davis Lift Station and Norton East Project is
complete and stating the amount, if any, of the Undisbursed Committed Amount. If Appendix A
describes two or more separate projects as making up the Davis Lift Station and Norton East
Project, a separate completion certificate shall be delivered for each.
(b) If all or any portion of the Davis Lift Station and Norton East Project is cancelled or
cut back or its costs are reduced or for any other reason the Borrower will not require the full
Committed Amounts, the Borrower shall promptly notify the DNRC in writing of such fact and
the amount of the Undisbursed Committed Amount.
ARTICLE IV
THE 2020ABC LOANS
Section 4.1 The Davis and Norton ABC Loans; Disbursement of Davis and Norton
ABC Loans.
(a) The DNRC has agreed to lend to the Borrower, from time to time as the requirements
of this Section 4.1 are met, an amount up to (i) $300,000 (the “2020A Committed Amount”), (ii)
$7,786,000 (the “2020B Committed Amount”), and (iii) $7,063,000 (the “20__C Committed
Amount”) for the purposes of financing, refinancing or reimbursing the Borrower for a portion of
the costs of the Davis Lift Station and Norton East Project, funding deposits to the Reserve
Account, and paying costs of issuance of the Series ABC Bonds; provided the DNRC shall not be
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required to disburse any proceeds of the Davis and Norton ABC Loans 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 Davis and Norton ABC Loans through the Trustee.
In consideration of the issuance of the Series ABC Bonds by the Borrower, the DNRC shall
make, or cause the Trustee to make, a disbursement of all or a portion of the 2020A Loan, 2020B
Loan and 20__C Loan, as applicable, upon receipt of the following documents:
(1) an Opinion of Bond Counsel as to the Series 2020A Bond and an opinion of
Bond Counsel as to the validity and enforceability of the Series 2020B Bond and C Bond
and the security therefor and stating in effect that interest on the Series 2020B Bond and
the Series C Bond is not includable in gross income of the owner thereof for purposes of
federal income taxation, in form and substance satisfactory to the DNRC;
(2) the Series 2020A Bond, the Series 2020B Bond, and the Series C Bond, fully
executed and authenticated;
(3) a certified copy of the Original Resolution, as amended to date, and this
Supplemental Resolution;
(4) any other security instruments or documents required by the DNRC or DEQ
as a condition to their approval of the Davis and Norton ABC Loans;
(5) if all or part of any Davis and Norton ABC Loan is being made to reimburse
the Borrower for the costs of the Davis Lift Station and Norton East Project paid prior to
the applicable Closing, evidence, satisfactory to the DNRC and the Bond Counsel
referred to in subparagraph (1) above, (A) that the acquisition or construction of the
Project was begun no earlier than March 7, 1985 or the debt was incurred no earlier than
March 7, 1985, (B) of the Borrower’s title to the Project, (C) of costs of the Davis Lift
Station and Norton East Project and that such costs have been paid by the Borrower, and
(D) for the 2020B Loan and the 20__C Loan, if such costs were paid prior to the adoption
of this Supplemental Resolution, that the Borrower has complied with Section 1.150-2
of the Regulations;
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(6) the items required by the Indenture for the portion of the Davis and Norton
ABC Loans to be disbursed at the applicable Closing; and
(7) such other certificates, documents and other information as the DNRC, the
DEQ or the Opinion of Bond Counsel 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 Davis and Norton ABC Loans to
pay costs of the Davis Lift Station and Norton East 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) From and after the 2020B First Advance, the Davis and Norton ABC Loans shall be
disbursed, subject to the other terms and conditions of this Supplemental Resolution, in the
following order:
(1) First, at Closing on the Series 2020A Bond and Series 2020B
Bond, the initial advance of the 2020A Loan and the 2020B First Advance will be
disbursed to the Borrower, after which each advance will be split equally between
the 2020A Loan and the 2020B Loan, until the entire amount of the 2020A Loan is
advanced.
(2) Second, after the 2020A Loan is advanced in full, the entire
amount of the 2020B Loan will be disbursed to the Borrower as and when needed.
(3) Third, after the entire principal amount of the 2020B Loan has
been disbursed to the Borrower, at Closing on the Series C Bond, the 20__C First
Advance will be disbursed to the Borrower, after which the remaining amount of
the 20__C Loan will be disbursed to the Borrower as and when needed.
(e) The Borrower shall not be entitled to, and the DNRC shall have no obligation to make,
the 2020B First Advance or the 20__C First Advance or any subsequent advance of any amounts
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under the 2020B Loan or the 20__C Loan until such time as the Borrower shall have funded the
Reserve Account in an amount then required to satisfy the Reserve Requirement.
(f) The Borrower shall submit the requests for the 2020B First Advance and the 20__C
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 2020B
First Advance and the 20__C First Advance, respectively.
(g) If all or a portion of the Davis and Norton ABC Loans is made to reimburse a Borrower
for Project costs paid by it prior to Closing, the Borrower shall present at the applicable 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 the Closing.
(h) Notwithstanding anything herein to the contrary, the Trustee shall not be obligated to
disburse the Davis and Norton ABC 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 2020 Davis Lift
Station and Norton East Project costs are incurred faster than the Borrower projected at the
applicable Closing, there may be delays in making disbursements of the applicable Loans 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 2020A Loan disbursement, 2020B Loan disbursement, and 20__C
Loan Disbursement, the Trustee shall note such disbursement on Schedule A to the Series 2020A
Bond, Series 2020B Bond, and the Series C Bond, respectively. At the respective Closings,
Schedule A to the Series 2020B Bond shall note the 2020B First Advance and Schedule A to the
Series C Bond shall note the 20__C First Advance.
(j) The Borrower agrees that it will deposit in the Reserve Account upon receipt thereof,
on the dates of the 2020B First Advance and 20__C First Advance and any subsequent
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disbursement dates, any proceeds of the 2020B Loan and the 20__C Loan, as applicable,
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 Davis and
Norton ABC 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 ABC 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 Resolution, including this Supplemental Resolution and the Collateral Documents
shall be a further condition precedent to the disbursement of the Davis and Norton ABC Loans 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 Davis and Norton ABC Loans.
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 the
2020B First Advance.
Section 4.3 Termination of Loan Term. The Borrower’s obligations under this
Supplemental Resolution and the Collateral Documents in respect of the Series ABC Bonds shall
terminate upon payment in full of all amounts due under the Series ABC Bonds and this
Supplemental Resolution; provided, however, that the covenants and obligations provided in
Article VI 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.
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ARTICLE V
REPAYMENT OF 2020ABC LOANS
Section 5.1 Repayment of Davis and Norton ABC Loans. The Borrower shall repay the
amounts borrowed by it pursuant to Section 4.1 in accordance with this Section 5.1.
5.1.1. Interest. 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 2020A 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 the Series 2020A 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 2020A 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 2020A Bond shall bear interest at the rate of two and one-half percent
(2.50%) per annum from the date of each advance under the Series 2020A Bond. The 2020B Loan
and the 20__C Loan shall each bear interest at the rate of two and one-half percent (2.50%) per
annum. The Borrower shall pay all Loan Repayments in lawful money of the United States of
America to the DNRC. Interest shall be calculated on the basis of a year of 360 days comprising
12 months of 30 days each.
5.1.2. Repayment of 2020A Loan; Principal Forgiveness.
(a) The Borrower is obligated to repay the principal of and interest on the 2020A Loan,
unless the DNRC forgives the Borrower’s obligation to repay the principal of the 2020A Loan as
provided in Section 5.1.2(b). Subject to the provisions of Section 5.1.2(b), the Loan Repayments
on the 2020A Loan shall be due on each Payment Date, following the date of delivery by the
DNRC of a Noncompliance Statement and concluding on July 1, 2040, and the amount of each
principal payment shall be calculated on the basis of a substantially level debt service at the rate
of 2.50% per annum; provided that principal of the 2020A Loan is payable only in amounts that
are multiples of $1,000.
(b) Notwithstanding Section 5.1.2(a), so long as the Borrower is proceeding diligently to
completion of the Davis Lift Station and Norton East Project and the Borrower has executed and
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delivered the Compliance Certificate and Request to the DNRC in form and substance satisfactory
to the DNRC and the DEQ in their sole and absolute discretion 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 2020A Bond or interest thereon and the Series 2020A 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 absolute
discretion of the DNRC and the DEQ, or the DNRC or the DEQ determines at any time that the
Davis Lift Station and Norton East 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 2020A Bond, together with
interest 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
2020A 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
amended by this Supplemental Resolution, 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 three (3)
months after the date of delivery to the Borrower by the DNRC of a Noncompliance Statement.
5.1.3. Repayment of 2020B Loan and 20__C Loan. The Loan Repayments on the
2020B Loan and the 20__C Loan required by this Section 5.1 shall be due in the amounts and on
the dates as set forth in Schedule B to the Series 2020B Bond and Series C Bond, respectively, as
such Schedule B may be modified from time to time as described below. The amount of each
principal payment with respect to each of the 2020B Loan and 20__C Loan shall be calculated on
the basis of a substantially level debt service at the rate of 2.50% per annum over a term of
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approximately 20 years, or 40 semiannual payments of principal and interest, provided that
principal shall be payable only in amounts that are multiples of $1,000.
5.1.4. Details Regarding 2020ABC Loan Repayments. Upon each disbursement
of the Davis and Norton ABC Loans 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 2020A Bond,
the Series 2020B Bond, and the Series C Bond, as applicable, under “Advances” and the total
amount advanced under Section 4.1, including such disbursement, under “Total Amount
Advanced.” Loan Repayments on the 2020B Loan and the 20__C Loan and, if applicable, on the
2020A Loan, accrue on each such advance from the date of disbursement and shall be due and
payable on the dates and in the amounts shown in Schedule B to the Series 2020A Bond, the Series
2020B Bond, and the Series C Bond, as such Schedule B shall be modified from time to time as
provided below. The portion of each payment consisting of principal and of interest shall be set
forth in Schedule B to the applicable Bond on and after Closing on such Bond.
Once the entire principal amount of the Series ABC Bonds has been drawn, or the
completion certificate for the Davis Lift Station and Norton East Project has been delivered to the
DNRC, the Trustee shall revise Schedule B to the applicable Series ABC Bond or Bonds in
accordance with this Section 5.1 and the Trustee shall send a copy of each such Schedule B to the
Borrower.
If the DNRC shall have delivered a Noncompliance Statement, then
Schedule B to the Series 2020A Bond shall continue to reflect interest on amounts advanced under
the Series 2020A Bond at the rate of 2.50% per annum. If the DNRC delivers a Forgiveness
Statement, Schedule B to the Series 2020A Bond will be disregarded and of no effect.
Past-due Loan Repayments shall bear interest at the rate of ten percent
(10.00%) per annum, until paid.
Any payment of principal and interest as to the 2020B Loan, 20__C Loan,
and, if applicable, the 2020A Loan under this Section 5.1 shall be credited against the same
payment obligation under each of the Series 2020B Bond, the Series C Bond, and, as applicable,
the Series 2020A Bond.
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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 Davis
and Norton ABC Loans, all reasonable expenses of the DNRC and the Trustee in connection with
the Davis and Norton ABC Loans, the Collateral Documents and the Series ABC Bonds, including,
but not limited to:
(a) the cost of reproducing this Supplemental Resolution, the Collateral
Documents and the Series ABC Bonds;
(b) the fees and disbursements of Bond Counsel and other Counsel utilized by
the DNRC and the Trustee in connection with the Davis and Norton ABC Loans, this Supplemental
Resolution, the Collateral Documents and the Series ABC 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 ABC Bonds, whether or not the Series ABC
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 ABC Bonds,
the Collateral Documents and this Supplemental 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 2020B Bond, the Series C Bond, and, if applicable, the
Series 2020A 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 is then delinquent. Any
prepayment permitted by the DNRC must be accompanied by payment of accrued interest to the
date of prepayment on the amount of principal prepaid. If the Series ABC Bonds are prepaid in
part pursuant to this Section 5.3, such prepayments shall be applied to principal payments in
inverse order of maturity or as otherwise determined by the DNRC.
Section 5.4 Obligations of Borrower Unconditional. The obligations of the Borrower
to make the payments required by this Supplemental Resolution and the Series ABC Bonds and to
perform its other agreements contained in this Supplemental Resolution, the Series ABC Bonds
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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 this Supplemental Resolution and the Series ABC Bonds, (b) shall perform all its other
agreements in this Supplemental Resolution, the Series ABC Bonds and the Collateral Documents
and (c) shall not terminate this Supplemental Resolution, the Series ABC 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 Davis Lift Station and Norton East 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 thereof or any failure of
the DNRC to perform any of its agreements, whether express or implied, or any duty, liability or
obligation arising from or connected with this Supplemental Resolution.
Section 5.5 Limited Liability. All payments of principal of and interest on the Davis
and Norton ABC Loans and other payment obligations of the Borrower hereunder and under the
Series ABC Bonds shall be special, limited obligations of the Borrower payable with respect to
the Series 2020B Bond and the Series C Bond solely out of the Net Revenues or, with respect to
the Series 2020A Bond, solely out of Surplus Net 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 this Supplemental Resolution and the Series ABC 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 ABC Bonds, no funds
or property of the Borrower other than the Net Revenues may be required to be used to pay
principal of or interest on the Series 2020B Bond and the Series C Bond, and no funds or property
of the Borrower other than the Surplus Net Revenues may be required to be used to pay principal
of or interest, if any, on the Series 2020A Bond.
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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 Davis Lift Station and Norton East Project. The Borrower shall, to
the extent permitted by law, also 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 of the Indemnified Party.
ARTICLE VII
ASSIGNMENT
Section 7.1 Assignment by Borrower. The Borrower may not assign its rights and
obligations under this Supplemental Resolution or the Series ABC Bonds.
Section 7.2 Assignment by DNRC. The DNRC will pledge its rights under and interest
in this Supplemental Resolution, the Series ABC 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.
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ARTICLE VIII
THE SERIES ABC BONDS
Section 8.1 Net Revenues Available. The Borrower is authorized to charge just and
equitable rates, charges and rentals for all services directly or indirectly furnished by the System,
and to pledge and appropriate to the Series 2010B Bond, the Series 2010C Bond, the Series 2010D
Bond, the Series 2010F Bond, the Series 2010G Bond, the Series 2010H Bond, the Series 2020B
Bond and the Series C Bond the Net Revenues (and in respect of the Series 2020A Bond, if
necessary, the Surplus Net Revenues) to be derived from the operation of the System, including
improvements, betterments or extensions thereof hereafter constructed or acquired. The Net
Revenues to be produced by such rates, charges and rentals during the term of the Series 2010B
Bond, the Series 2010C Bond, the Series 2010D Bond, the Series 2010F Bond, the Series 2010G
Bond, the Series 2010H Bond, Series 2020B Bond, and Series C 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 therefor and to provide an adequate allowance for replacement and
depreciation, as prescribed herein. For purposes of the foregoing statement, principal of and
interest on the 2020A Loan are disregarded. The Borrower acknowledges and agrees that if the
DNRC delivers a Noncompliance Statement to the Borrower as determined in the sole and
complete discretion of the DNRC and DEQ, then principal and interest will become due and owing
on the 2020A Loan evidenced by the Series 2020A Bond as provided in Section 5.1.2 and the
Borrower shall thereupon, and no later than three months after delivery of such Noncompliance
Statement, to the extent required by Section 6.7 of the Original Resolution, as amended, 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.
Section 8.2 Issuance and Sale of the Series ABC Bonds. The Commission has
investigated the facts necessary and hereby finds, determines and declares it to be necessary and
desirable for the Borrower to issue the Series ABC Bonds to evidence the Davis and Norton ABC
Loans. The Series ABC Bonds are issued to the DNRC without public sale pursuant to Montana
Code Annotated, Section 7-7-4433.
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Section 8.3 Terms. The Series 2020A Bond, the Series 2020B Bond, and the Series C
Bond shall be in the maximum principal amount equal to the original 2020A Committed Amount,
2020B Committed Amount, and 20__C Committed Amount, respectively, shall each be issued as
a single, fully registered bond numbered R-1; shall be dated as of their respective dates of delivery
to the DNRC; and shall bear interest at the rate charged by the DNRC on the 2020A Loan, 2020B
Loan, and 20__C Loan, respectively. The series designation for the Series C Bond shall be
completed with the calendar year in which the Series C Bond is issued, expected to be 20__, such
designation may or may not include the letter “C,” and the designation provided on the face page
of the final Series C Bond shall be conclusive. The principal of and interest on the Series 2020B
Bond and the Series C Bond, and, if applicable, the principal of and interest on the Series 2020A
Bond shall be payable on the same dates and in the same amounts as Loan Repayments are payable.
Advances of principal of the Series 2020A Bond or Series 2020B Bond or Series C Bond shall be
deemed made when advances of the 2020A Loan or 2020B Loan or 20__C Loan, respectively, are
made under Section 4.1, and such advances shall be payable in accordance with Schedule B to the
Series 2020B Bond, the Series C Bond, and, if applicable, the Series 2020A Bond, as it may be
revised by the DNRC from time to time in accordance with Section 5.1. The Series 2020A Bond
is a Subordinate Obligation payable only from the Surplus Net Revenues available in the
Replacement and Depreciation Account or the Surplus Account. The Borrower may prepay the
Series ABC Bonds, in whole or in part, only upon the terms and conditions under which it can
prepay the Davis and Norton ABC Loans under Section 5.3.
Section 8.4 Negotiability, Transfer and Registration. The Series ABC 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 ABC Bonds
shall be payable to the DNRC at the Office of the Department of Natural Resources and
Conservation, 1539 Eleventh Avenue, Helena, Montana 59620 or such other place as may be
designated by the DNRC in writing and delivered to the Borrower. The Series ABC Bonds shall
be negotiable, subject to the provisions for registration and transfer contained in this Section 8.4.
No transfer of the Series ABC Bonds shall be valid unless and until (1) the holder, or its duly
authorized attorney or legal representative, has executed the form of assignment appearing on the
Series ABC Bonds, and (2) the City Finance Director of the Borrower, as bond registrar (the
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“Registrar”), has duly noted the transfer on the Series ABC 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
ABC Bonds is registered as the absolute owner of the Series ABC 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 ABC Bonds shall be executed on behalf
of the Borrower by the manual signatures of the Mayor, the City Manager, and the City Clerk.
Any or all of such signatures may be affixed at or prior to the date of delivery of the Series ABC
Bonds. In the event that any of the officers who shall have signed the Series ABC Bonds shall
cease to be officers of the Borrower before the Series ABC Bonds are issued or delivered, their
signatures shall remain binding upon the Borrower. Conversely, the Series ABC 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 ABC Bonds shall be delivered to the DNRC, or its attorney
or legal representative.
Section 8.6 Forms. The Series 2020A Bond shall be prepared in substantially the form
attached as Appendix B-1, the Series 2020B Bond shall be prepared in substantially the form
attached as Appendix B-2, and the Series C Bond shall be prepared in substantially the form
attached as Appendix B-3, in each case, with such changes thereto as may be necessary or desirable
and are approved by the City Manager and the DNRC. Without limitation of the meaning of the
foregoing, the Series C Bond may be changed to reflect the applicable designation based on the
year in which and date on which it is issued.
ARTICLE IX
SECURITY FOR THE SERIES ABC BONDS
The Series 2020B Bond and the Series C Bond are issued as additional Bonds under Section
10.3 of the Original Resolution, as amended hereby, and shall, with the Series 2010B Bond, the
Series 2010C Bond, the Series 2010D Bond, the Series 2010F Bond, the Series 2010G Bond, the
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Series 2010H Bond, and any other additional Bonds issued under the provisions of Article X of
the Original Resolution, excluding Section 10.4 thereof, 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 each advance of principal of the Series 2020B
Bond and the Series C Bond, the City Finance Director of the Borrower shall transfer from
proceeds of the Series 2020B Bond and the Series C 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 2020B Bond and the Series C 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 2010B Bond, the Series 2010C Bond, the
Series 2010D Bond, the Series 2010F Bond, the Series 2010G Bond, the Series 2010H Bond, and
the principal of the Series 2020B Bond and the principal of the Series C Bond so advanced. The
Series 2020A Bond is a Subordinate Obligation issued under Section 10.4 of the Original
Resolution and payable from the Surplus Net Revenues that are available in the Replacement and
Depreciation Account or the Surplus Account 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 Obligation, including the Series 2020A Bond, if the Borrower 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 become payable under
the Series 2020A Bond, the Borrower shall cause rates and charges to be increased to produce
Surplus Net Revenues at least equal to the amount required under Section 6.7 of the Original
Resolution, as amended, 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 set forth in the Resolution for the benefit of the registered holders from time to
time of the Series ABC Bonds.
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ARTICLE X
TAX MATTERS
Section 10.1 Use of Project and System. The Davis Lift Station and Norton East Project
and the System 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 Davis Lift Station
and Norton East Project or the System or security for the payment of the Series 2020B Bond and
the Series C Bond which might cause the Series 2020B Bond or the Series C Bond, or either of
them, to be considered a “private activity bond” or “private loan bond” within the meaning of
Section 141 of the Code.
Section 10.2 General Covenant. The Borrower covenants and agrees with the owners
from time to time of the Series 2020B Bond and the Series C 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 2020B Bond and the Series C 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 2020B Bond and the Series C 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 City Manager, and the City Finance
Director 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 2020B Bond and the Series C Bond, it is reasonably expected that the proceeds of the
Series 2020B Bond and the Series C Bond will be used in a manner that would not cause the Series
2020B Bond or the Series C 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 2020B Bond
and the Series C 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
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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 2020B Bond
and the Series C Bond from gross income for federal income tax purposes, unless the Series 2020B
Bond and the Series C 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 2020B Bond and the Series C 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 City
Manager, and the City Finance Director 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 the applicable deadline, a statement concerning each of the Series 2020B
Bond and the Series C Bond containing the information required by Section 149(e) of the Code.
ARTICLE XI
AMENDMENTS
Section 11.1 Authorization. Pursuant to Section 14.4 of the Original Resolution, the
Borrower reserved the right to amend the Resolution with the written consent of the DNRC.
Section 11.2 Consent of DNRC. The DNRC has consented in writing to the amendments
of the provisions of the Original Resolution set forth herein.
Section 11.3 Amendments.
(a) Section 1.1. The definition of “Reserve Requirement” in Section 1.1 of the
Original Resolution is hereby amended in its entirety to read as follows in its entirety:
“‘Reserve Requirement’ means, as of the date of calculation, an amount equal to
one-half the sum of the highest cumulative amount of principal of and interest payable on
all outstanding Bonds in any one future fiscal year (giving effect to mandatory sinking fund
redemption, if any).”
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(b) Section 2.2(f). Section 2.2(f) of the Original Resolution is hereby amended to
read as follows in its entirety:
“(f) Financial Information. The Borrower agrees that for each fiscal year it shall
furnish to the DNRC and the DEQ, promptly when available:
(1) the preliminary budget for the System, with items for the Project shown
separately; and
(2) when adopted, the final budget for the System, with items for the Project
shown separately.
The Borrower will cause proper and adequate books of record and account to be
kept showing complete and correct entries of all receipts, disbursements and other
transactions relating to the System, the monthly gross revenues derived from its operation,
and the segregation and application of the gross revenues in accordance with this
Resolution, in such reasonable detail as may be determined by the Borrower in accordance
with generally accepted governmental accounting practice and principles. It will cause
such books to be maintained on the basis of the same fiscal year as that utilized by the
Borrower. The Borrower shall, within 270 days after the close of each fiscal year, cause
to be prepared and supply to the DNRC a financial report with respect to the System for
such fiscal year. The report shall be prepared at the direction of the financial officer of the
Borrower in accordance with applicable generally accepted governmental accounting
principles and, in addition to whatever matters may be thought proper by the financial
officer to be included therein, shall include the following:
(A) A statement in detail of the income and expenditures of the System
for the fiscal year, identifying capital expenditures and separating them from
operating expenditures;
(B) A balance sheet as of the end of the fiscal year;
(C) The number of premises connected to the System at the end of the
fiscal year;
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47
(D) The amount on hand in each account of the Fund at the end of the
fiscal year;
(E) A list of the insurance policies and fidelity bonds in force at the end
of the fiscal year, setting out as to each the amount thereof, the risks covered
thereby, the name of the insurer or surety and the expiration date of the policy or
bond; and
(F) A determination that the report shows full compliance by the
Borrower with the provisions of this Resolution during the fiscal year covered
thereby, including proper segregation of the capital expenditures from Operating
Expenses, maintenance of the required balance in the Revenue Bond Account and,
pursuant to Section 6.7, receipt of Net Revenues during each fiscal year at least
equal to 110% of the maximum annual principal and interest payable on any
outstanding Bonds in the current or any future fiscal year and receipt of Surplus
Net Revenues during each fiscal year sufficient to pay principal and interest on
Subordinate Obligations as and when due, or, if the report should reveal that the
revenues have been insufficient for purposes of compliance with this Resolution,
or that the methods used in accounting for such revenues are contrary to any
provision of this Resolution the report shall include a full explanation thereof
together with recommendations for such change in rates or accounting practices or
in the operation of the System as may be required.
The Borrower shall also have prepared and supplied to the DNRC and the DEQ,
within 270 days of the close of every other fiscal year, an audit report prepared by an
independent certified public accountant or an agency of the state in accordance with
generally accepted governmental accounting principles and practice with respect to the
financial statements and records of the System. The audit report shall include an analysis
of the Borrower’s compliance with the provisions of this Resolution.”
(c) Section 6.7. Section 6.7 of the Original Resolution is hereby amended to read as
follows in its entirety:
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48
“Section 6.7. Rate Covenant. While any Bonds are outstanding and unpaid, the
rates, charges and rentals for all services and facilities furnished and made available by the
System to the Borrower and its inhabitants, and to all customers within or without the
boundaries of the Borrower, shall be reasonable and just, taking into consideration the cost
and value of the System and the cost of maintaining and operating it, and the amounts
necessary for the payment of all Bonds and the interest accruing thereon, and the proper
and necessary allowances for the depreciation of the System, and no free service shall be
provided to any person or corporation. It is covenanted and agreed that the rates, charges
and rentals to be charged to all recipients of sewer services shall be maintained and shall
be revised, whenever and as often as may be necessary, according to schedules such that
the gross revenues for each fiscal year will be at least sufficient to pay the current expenses
of operation and maintenance as herein defined, to maintain a balance in the Reserve
Account equal to the Reserve Requirement, to provide reserves for the replacement and
depreciation of the System, to maintain the Operating Reserve herein established, to
produce Net Revenues during each fiscal year, commencing with the fiscal year ending
June 30, 2010, not less than 110% of the maximum annual principal and interest payable
on any outstanding Bonds in the current or any future fiscal year, and to produce Surplus
Net Revenues sufficient to pay the principal of and interest on any Subordinate Obligations
as and when due.
“If at the close of any fiscal year the Net Revenues or Surplus Net Revenues
actually received during such year have been less than required hereby, the Borrower will
forthwith prepare a schedule of altered rates, charges and rentals which are just and
equitable and sufficient to produce Net Revenues and Surplus Net Revenues in such
amount, and will do all things necessary to the end that such schedule will be placed in
operation at the earliest possible date.”
(d) Section 10.3. Section 10.3 of the Original Resolution is hereby amended to read, in its
entirety, as follows:
“Section 10.3. Other Parity Bonds. The Borrower reserves the right to issue
additional Bonds payable from the Revenue Bond Account of the Fund, on a parity as to
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49
both principal and interest with the Series 2010B Bond, the Series 2010C Bond, the Series
2010D Bond, the Series 2010F Bond, the Series 2010G Bond, and the Series 2010H Bond,
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 110% of the maximum amount of
principal and interest payable from said 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, and so long as the DNRC is the holder of any
Bonds, the written consent of the DNRC shall be obtained prior to the issuance of such
additional Bonds. For the purpose of the foregoing computation, the Net Revenues for the
fiscal year preceding the issuance of additional Bonds shall be those shown by the financial
reports caused to be prepared by the Borrower pursuant to Section 2.2(f), as amended,
except that if the rates and charges for services provided by the System 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 or finally authorized to go into effect within 60
days thereafter 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 which 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 this 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. In connection with the
issuance of a series of additional Bonds, the Borrower shall cause the amount in the Reserve
Account to be increased, from the proceeds of the additional Bonds or from Surplus Net
Revenues or other legally available funds of the Borrower, to an amount equal to the
Reserve Requirement during the term of the outstanding Bonds or so much thereof as will
not cause the Borrower to violate the provisions of Section 12.2 hereof.”
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Section 11.4 Effect of Amendments. The Original Resolution is amended and
supplemented by the above provisions of Section 11.3 as of the date of this Supplemental
Resolution, and the Original Resolution shall continue in full force and effect as so amended and
supplemented.
ARTICLE XII
CONTINUING DISCLOSURE
The Borrower understands and acknowledges that the DNRC is acquiring the Series ABC
Bonds under the Program pursuant to which the State issues from time to time State Bonds to
provide funds therefor. The Borrower 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 City Manager and the City Finance
Director 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.
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51
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
1539 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, 7th Floor
Seattle, Washington 98101
Borrower: City of Bozeman
P.O. Box 1230
Bozeman, Montana 59771-1230
Attn: City Finance Director
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 permitted 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.
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Section 13.5 Applicable Law. This Supplemental Resolution shall be governed by and
construed in accordance with the laws of the State.
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. References to Articles and Sections are to the Articles
and Sections of this Supplemental Resolution, unless the context otherwise requires.
Section 13.7 No Liability of Individual Officers, Directors, Trustees, or Commissioners.
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 ABC Bonds, shall not be a 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 ABC
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
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53
shall be paid immediately to the party making such advance and shall bear interest at the rate of
ten percent (10.00%) 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 Davis Lift Station and Norton
East Project or the facility or facilities of which the Davis Lift Station and Norton East 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 ABC 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 ABC 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 Repeals and Effective Date.
(a) Repeal. All provisions of other resolutions and other actions and proceedings of
the Borrower and this Council that are in any way inconsistent with the terms and provisions of
this Supplemental Resolution are repealed, amended and rescinded to the full extent necessary to
give full force and effect to the provisions of this Supplemental Resolution.
(b) Effective Date. This Supplemental Resolution shall take effect immediately.
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PASSED, ADOPTED, AND APPROVED by the City Commission of the City of
Bozeman, Montana, at a regular session thereof held on the 15th day of June, 2020.
___________________________________
CHRIS MEHL
Mayor
ATTEST:
___________________________________
MICHAEL MAAS
City Clerk
APPROVED AS TO FORM:
___________________________________
GREG SULLIVAN
City Attorney
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A-1
APPENDIX A
DESCRIPTION OF THE 2020 DAVIS LIFT STATION AND NORTON EAST PROJECTS
The Davis Lift Station and Norton East Project generally consists of construction and installation
of one or more lift stations, force mains, sewer collection mains, associated lines and appurtenances,
and related improvements.
ESTIMATED 2020 DAVIS LIFT STATION AND NORTON EAST PROJECTS BUDGET
City of
Bozeman
2020A
Loan
2020B
Loan
20__C
Loan Total:
Debt Service Reserve - - $ 248,557 $ 225,888 $ 474,445
Bond Counsel & Related costs - - 20,000 20,000 40,000
Engineering-Design Services $942,848 - - - 942,848
Engineering-Construction Eng
Services
- - 1,100,000 - 1,100,000
Construction - $300,000 6,417,443 5,771,557 12,489,000
Contingency - - - 1,045,943 1,045,555
TOTAL PROJECT COSTS $942,848 $300,000 $7,786,000 $7,063,000 $16,091,848
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B-1-1
APPENDIX B-1
[Form of the Series 2020A 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 2020A
R-1 $300,000
FOR VALUE RECEIVED, 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 out of available Surplus Net Revenues in the Replacement and Depreciation
Account or the Surplus Account of its Sewer System Fund (the “Sewer System Fund”), the sum
of the principal 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 and one-half percent (2.50%) per annum on the unpaid balance until paid, all subject to the
effect of the immediately following paragraph. Principal and interest shall be payable in
semiannual installments payable on each January 1 and July 1 (each a “Payment Date”)
commencing with the Payment 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
2020A Loan is not forgiven and ending on July 1, 2040, all as described in the Resolution (as
hereinafter defined), subject to earlier redemption. 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 and of interest shall be as set forth in Schedule B
attached hereto. Upon each disbursement of the 2020A Loan, the DNRC shall enter (or cause to
be entered) the principal amount advanced on Schedule A under “Advances” and the total amount
advanced under the Resolution (as hereinafter defined), including such advance, 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
authorizing the Bond, and the final Schedule B will reflect repayments under Section 5.1.4 of the
Resolution. Schedule B shall be calculated and recalculated on a level debt service basis assuming
an interest rate of two and one-half percent (2.50%) per annum. Past-due payments of principal
and interest shall bear interest at the rate of ten percent (10.00%) per annum, until paid. Interest
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.
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B-1-2
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 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 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 PAYMENT DATE FIRST
OCCURRING AFTER DELIVERY OF A NONCOMPLIANCE STATEMENT AND
INTEREST SHALL BE DEEMED TO ACCRUE ON THE PRINCIPAL OF THIS 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 Subordinate Lien 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 $300,000 (the “Series 2020A Bond”). The Series
2020A 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”). The Series 2020A 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,
adopted by the City Commission of the Borrower on November 16, 2009 (the “Original
Resolution”), as amended and supplemented by Resolution Nos. 4234, 4245, 4254, 4299, 4462,
and _____, adopted on January 19, 2010, February 16, 2010, May 3, 2010, November 1, 2010,
August 5, 2013, and June 15, 2020, respectively (the Original Resolution, as so amended and
supplemented, the “Resolution”). Terms used with initial capital letters but not defined herein
have the meanings given to them in the Resolution. The Series 2020A Bond is issuable only as a
single, fully registered bond. The Series 2020A 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 Sewer System Fund. Simultaneously herewith, the Borrower is issuing
its Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program),
Series 2020B (the “Series 2020B Bond”) and will subsequently issue its Sewer System Revenue
Bond (DNRC Water Pollution Control State Revolving Loan Program), Series C (the “Series C
Bond”), both of which are or will be payable from the Revenue Bond Account in the Fund of the
Borrower on a parity with the Borrower’s Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 2010B, its First Amended and Restated Sewer
System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series
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B-1-3
2010C, its First Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 2010D, its First Amended and Restated Sewer
System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series
2010F, its First Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 2010G, and its First Amended and Restated Sewer
System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series
2010H (all such Bonds, including the Series 2020B Bond, and, when issued, the Series C Bond,
collectively, the “Outstanding Bonds”).
Following the 2020B First Advance, the total amount of each advance will be split equally
between the Series 2020A Bond and the Series 2020B Bond, until the entire amount of the Series
2020A Bond is advanced. After the Series 2020A Bond is advanced in full, all advances will be
from only the Series 2020B Bond.
Reference is made to the Resolution for a more complete statement of the terms and
conditions upon which the Series 2020A 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 2020A Bond.
The Borrower may prepay the principal of the Series 2020A 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 is then delinquent. Any prepayment permitted by the DNRC
must be accompanied by payment of accrued interest to the date of prepayment on the amount of
principal prepaid. If the Series 2020A Bond is prepaid in part, such prepayments shall be applied
to principal payments in inverse order of maturity or as otherwise determined by the DNRC.
This Series 2020A Bond, including interest and any premium, is payable solely from the
Surplus Net Revenues available for the payment hereof and does 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 2020A Bond is
registered as the absolute owner hereof, whether this Series 2020A 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 2020A Bond may be transferred as hereinafter provided.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that the
Borrower has duly authorized and 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 Replacement and Depreciation
Account and Surplus Account in that Sewer System 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 Net 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 110% of the maximum amount of
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B-1-4
principal and interest payable from the Revenue Bond Account in any subsequent fiscal year and
to maintain the balance in the Reserve Account at the Reserve Requirement and to produce in each
fiscal year adequate Net Revenues to pay the principal of and interest on the Outstanding Bonds,
as and when due; that additional Bonds issued 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 Bonds on such Net Revenues
and such obligations are payable only from Surplus Net Revenues (as is the case with this Series
2020A Bond); that all provisions for the security of the holder of this Series 2020A 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 2020A 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 as so
required; and that this Series 2020A 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 Sewer System Fund 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
2020A 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 City Manager, and the
City Clerk, and has caused the official seal of the Borrower to be affixed hereto, and has caused
this Bond to be dated as of the day of _______, 2020.
______________________________________
Mayor
(Seal)
_______________________________________
City Manager
_______________________________________
City Clerk
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B-1-5
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 City Finance Director 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 outstanding 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 City Finance Director
, 2020 Department of Natural
Resources and Conservation
1539 Eleventh Avenue
Helena, MT 59620
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The City Finance Director 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
Registered Holder
Signature of
Bond Registrar
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-1-6
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:
(Authorized Signature)
For:
(Holder)
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-1-7
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Date Advances
Total Amount
Advanced Notation Made By
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-1-8
SCHEDULE B
Total Loan
Date Principal Interest Payment
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-2-1
APPENDIX B-2
[Form of the Series 2020B 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 2020B
R-1 $7,786,000
FOR VALUE RECEIVED, 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 and one-half percent (2.50%) per annum on the unpaid balance until paid.
Principal and interest shall be payable in semiannual installments payable on each January 1 and
July 1 (each a “Loan Repayment Date”) commencing January 1, 2021 and concluding on July 1,
2040. The portion of each such payment consisting of principal and of interest shall be as set forth
in Schedule B hereto. Upon each disbursement of 2020B Loan amounts to the Borrower pursuant
to the Resolution (defined 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, and the final Schedule B
will reflect repayments under Section 5.1.4 of the Resolution. Schedule B shall be calculated and
recalculated on a level debt service basis assuming an interest rate of 2.50% per annum. Past-due
payments of principal and interest shall bear interest at the rate of ten percent (10.00%) per annum,
until paid. Interest 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 $7,786,000 (the “Series 2020B Bond”). The Series
2020B 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
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-2-2
to pay costs of issuance of the Series 2020B Bond. The Series 2020B 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 (the “Original Resolution”), as amended and
supplemented by Resolution Nos. 4234, 4245, 4254, 4299, 4462, and _____, adopted on January
19, 2010, February 16, 2010, May 3, 2010, November 1, 2010, August 5, 2013, and June 15, 2020,
respectively (the Original Resolution, as so amended and supplemented, the “Resolution”). Terms
used with initial capital letters but not defined herein have the meanings given to them in the
Resolution. The Series 2020B Bond is issuable only as a single, fully registered bond. The Series
2020B Bond is issued on a parity with the Borrower’s Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010B, its First Amended and Restated
Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program),
Series 2010C, its First Amended and Restated Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010D, its First Amended and Restated
Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program),
Series 2010F, its First Amended and Restated Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010G, and its First Amended and
Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan
Program), Series 2010H (collectively the “Outstanding Bonds”). Simultaneously herewith, the
Borrower is issuing its Subordinate Lien Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Taxable Series 2020A (the “Series 2020A Bond”). The
2020B First Advance is made as of the date hereof. The Borrower is also authorized, pursuant to
the Resolution, to issue the Sewer System Revenue Bond (DNRC Water Pollution Control State
Revolving Loan Program), Series C (the “Series C Bond”), which will be issued following
disbursement in full of the principal amount of the Series 2020B Bond.
Reference is made to the Resolution for a more complete statement of the terms
and conditions upon which the Series 2020B 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, the Series 2020B Bond, and the Series C Bond, 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 2020B Bond.
The Borrower may prepay the principal of the Series 2020B 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 is then delinquent. Any prepayment permitted by the DNRC
must be accompanied by payment of accrued interest to the date of prepayment on the amount of
principal prepaid. If the Series 2020B Bond is prepaid in part, such prepayments shall be applied
to principal payments in inverse order of maturity or otherwise determined by the DNRC.
The Series 2020B Bond, including interest and premium, if any, is payable solely
from the Net Revenues pledged for the payment thereof and does not constitute a debt of the
Borrower within the meaning of any constitutional or statutory limitation or provision.
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-2-3
The Borrower may deem and treat the person in whose name this Series 2020B
Bond is registered as the absolute owner hereof, whether this Series 2020B 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 2020B Bond may be transferred as hereinafter
provided.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that
the Borrower 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 Sewer System Fund, into
which will be paid each month, from and as a first and prior lien on the Net Revenues 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 semiannually from the Revenue Bond Account; that the
Borrower has created a Reserve Account in the Sewer System Fund into which shall be paid
additional Net Revenues, after required credits to the Revenue Bond Account, sufficient to
establish and maintain a reserve therein equal to, as of the date of calculation, the Reserve
Requirement; that the Revenue Bond Account will be used only to pay the principal of, premium,
if any, and interest on the Outstanding Bonds, the Series 2020B Bond, the Series C Bond, when
issued, and any 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 equal to at
least 110% of the maximum amount of principal and interest payable from the Revenue Bond
Account in any subsequent fiscal year; that additional Bonds may be issued and made payable
from the Revenue Bond Account on a parity with the Outstanding Bonds, the Series 2020B Bond,
the Series C Bond, when issued, and other 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, the Series 2020B Bond, the Series C Bond, when issued, and additional Bonds
on such Net Revenues and such obligations are payable only from Surplus Net Revenues (as is the
case with the Series 2020A Bond); that all provisions for the security of the holder of this Series
2020B 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 2020B 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 as so required; and that this Series 2020B 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 2020B Bond does not cause either
the general or the special indebtedness of the Borrower to exceed any constitutional or statutory
limitation.
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-2-4
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 City Manager, and the
City Clerk, and has caused the official seal of the Borrower to be affixed hereto, and has caused
this Bond to be dated as of the day of ___________, 2020.
______________________________________
Mayor
(Seal)
_______________________________________
City Manager
_______________________________________
City Clerk
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-2-5
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 City Finance Director 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 outstanding 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 City Finance Director
, 2020 Department of Natural
Resources and Conservation
1539 Eleventh Avenue
Helena, MT 59620
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The City Finance Director 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
Registered Holder
Signature of
Bond Registrar
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-2-6
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:
(Authorized Signature)
For:
(Holder)
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-2-7
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Date Advances
Total Amount
Advanced Notation Made By
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-2-8
SCHEDULE B
Total Loan
Date Principal Interest Payment
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-3-1
APPENDIX B-3
[Form of the Series C Bond]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLATIN
CITY OF BOZEMAN
WATER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM)
SERIES C [DESIGNATION TO BE FINALIZED UPON ISSUANCE]
R-1 $7,063,000
FOR VALUE RECEIVED, 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 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 and one-half percent (2.50%) per annum on the unpaid balance until paid. Principal and
interest shall be payable in semiannual installments payable on each January 1 and July 1 (each a
“Loan Repayment Date”) commencing on the date first set forth in the column headed “Date” or
“Payment Date” on Schedule B attached hereto (i.e., _________, 20__) and concluding on
_________ 1, 20__. The portion of each such payment consisting of principal and of interest shall
be as set forth in Schedule B hereto. Upon each disbursement of Loan amounts to the Borrower,
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, and the final Schedule B will reflect repayments under
Section 5.1.4 of the Resolution. Schedule B shall be calculated and recalculated on a level debt
service basis assuming an interest rate of 2.50% per annum. Past-due payments of principal and
interest shall bear interest at the rate of ten percent (10.00%) per annum, until paid. Interest 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 $7,063,000 (the “Series C Bond” [or other final
designation]). The Series C Bond is issued to finance a portion of the costs of the construction of
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-3-2
certain improvements to the sewer system of the Borrower (the “System”), to fund deposits to the
Reserve Account, and to pay costs of issuance of the Series C Bond. The Series C 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 (the “Original Resolution”),
as amended and supplemented by Resolution Nos. 4234, 4245, 4254, 4299, 4462, and _____,
adopted on January 19, 2010, February 16, 2010, May 3, 2010, November 1, 2010, August 5, 2013,
and June 15, 2020, respectively (the Original Resolution, as so amended and supplemented, the
“Resolution”). Terms used with initial capital letters but not defined herein have the meanings
given to them in the Resolution. The Series C Bond is issuable only as a single, fully registered
bond. The Series C Bond is issued on a parity with the Borrower’s Sewer System Revenue Bond
(DNRC Water Pollution Control State Revolving Loan Program), Series 2010B, its First Amended
and Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan
Program), Series 2010C, its First Amended and Restated Sewer System Revenue Bond (DNRC
Water Pollution Control State Revolving Loan Program), Series 2010D, its First Amended and
Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan
Program), Series 2010F, its First Amended and Restated Sewer System Revenue Bond (DNRC
Water Pollution Control State Revolving Loan Program), Series 2010G, its First Amended and
Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan
Program), Series 2010H, and its Sewer System Revenue Bond (DNRC Water Pollution Control
State Revolving Loan Program), Series 2020B (the “Series 2020B Bond”) (collectively, the
“Outstanding Bonds”).
Reference is made to the Resolution for a more complete statement of the terms
and conditions upon which the Series C 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, the Series 2020B Bond, the Series C Bond and any other
parity Bond (collectively, 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 C Bond.
The Borrower may prepay the principal of the Series C 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 is then delinquent. Any prepayment permitted by the DNRC
must be accompanied by payment of accrued interest to the date of prepayment on the amount of
principal prepaid. If the Series C Bond is prepaid in part, such prepayments shall be applied to
principal payments in inverse order of maturity or otherwise determined by the DNRC.
The Series C Bond, including interest and premium, if any, is payable solely from
the Net Revenues pledged for the payment hereof and does 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 C Bond is
registered as the absolute owner hereof, whether this Series C Bond is overdue or not, for the
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-3-3
purpose of receiving payment and for all other purposes, and the Borrower shall not be affected
by any notice to the contrary. The Series C Bond may be transferred as hereinafter provided.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that
the Borrower 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 Sewer System Fund, into
which will be paid each month, from and as a first and prior lien on the Net Revenues 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 semiannually from the Revenue Bond Account; that the
Borrower has created a Reserve Account in the Sewer System Fund into which shall be paid
additional Net Revenues, after required credits to the Revenue Bond Account, sufficient to
establish and maintain a reserve therein equal to, as of the date of calculation, the Reserve
Requirement; that the Revenue Bond Account will be used only to pay the principal of, premium,
if any, and interest on the Outstanding Bonds, the Series C Bond, and any 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 equal to at least 110% of the maximum amount of
principal and interest payable from the Revenue Bond Account in any subsequent fiscal year; that
additional Bonds may be issued and made payable from the Revenue Bond Account on a parity
with the Outstanding Bonds, the Series C Bond, and other 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 made subordinate to the lien of the
Outstanding Bonds, the Series C Bond, and additional parity Bonds on such Net Revenues and
such obligations are payable only from Surplus Net Revenues; that all provisions for the security
of the holder of this Series C 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 C 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 as so required; and that this Series C Bond and the premium, if any, and
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 C Bond does
not cause either the general or the special indebtedness of the Borrower to exceed any
constitutional or statutory limitation.
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-3-4
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 City Manager, and the
City Clerk, and has caused the official seal of the Borrower to be affixed hereto, and has caused
this Bond to be dated as of the day of ___________, 2020.
______________________________________
Mayor
(Seal)
_______________________________________
City Manager
_______________________________________
City Clerk
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-3-5
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 City Finance Director 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 outstanding 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 City Finance Director
, 2020 Department of Natural
Resources and Conservation
1539 Eleventh Avenue
Helena, MT 59620
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The City Finance Director 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
Registered Holder
Signature of
Bond Registrar
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-3-6
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:
(Authorized Signature)
For:
(Holder)
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-3-7
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Date Advances
Total Amount
Advanced Notation Made By
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
B-3-8
SCHEDULE B
Total Loan
Date Principal Interest Payment
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
C-1
APPENDIX C
ADDITIONAL AGREEMENTS, REPRESENTATIONS AND COVENANTS
NONE
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
D-1
APPENDIX D
$15,149,000
Sewer System Revenue Bonds
(DNRC Water Pollution Control State Revolving Loan Program)
consisting of $300,000 Subordinate Lien Taxable Series 2020A Bond
$7,786,000 Series 2020B Bond and $7,063,000 Series C Bond
City of Bozeman, Montana
COMPLIANCE CERTIFICATE AND REQUEST
We, ___________________, ____________________, and ____________, hereby
certify that we are on the date hereof the duly qualified and acting Mayor, the City Finance
Director, and the City Clerk, respectively, of the City of Bozeman, Montana (the “Borrower”),
and that:
1. Pursuant to Resolution No. 4220 of the Borrower adopted on November 16, 2009,
as amended and supplemented by Resolution Nos. 4234, 4245, 4254, 4299, and 4462, adopted on
January 19, 2010, February 16, 2010, May 3, 2010, November 1, 2010, and August 5, 2013,
respectively (as so amended and supplemented, the “Original Resolution”), and as further
amended and supplemented by Resolution No. ____, adopted on June 15, 2020, entitled
“Resolution Relating to $15,149,000 Sewer System Revenue Bonds (DNRC Water Pollution
Control State Revolving Loan Program), Consisting of $300,000 Subordinate Lien Taxable
Series 2020A Bond, $7,786,000 Series 2020B Bond and $7,063,000 Series C 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 2020A, dated, as originally issued, as of
__________, 2020, in the maximum aggregate principal amount of $300,000 (the “Series 2020A
Bond”), and its Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving
Loan Program), Series 2020B, dated, as originally issued, as of __________, 2020, in the
maximum aggregate principal amount of $7,786,000 (the “Series 2020B Bond”), and the
Borrower is authorized to issue its Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series C, dated, as originally issued, as of __________,
2020, in the maximum aggregate principal amount of $7,063,000 (the “Series C Bond”). The
Borrower has reviewed the Supplemental Resolution, including, without limitation, Articles II
and III thereof, and the definitions relating thereto. The Borrower acknowledges and agrees that
the Series 2020A Bond evidences a loan made to the Borrower from the DNRC from funds made
available to the DNRC from the 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 Davis Lift Station and Norton East Project. Capitalized terms used herein
without definition shall have the meanings given them in the Original Resolution or the
Supplemental Resolution.
2. The Series 2020A Bond is issued to finance a portion of the costs of construction
and installation of various improvements to the System, generally described as the Davis Lift
Station and Norton East Project (the “Davis Lift Station and Norton East Project”) in the
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
D-2
Supplemental Resolution. Construction of the Davis Lift Station and Norton East Project has
complied with all federal and state standards, including, without limitation, EPA regulations and
standards. The Davis Lift Station and Norton East Project is expected to be completed and placed
in service on or about _________, 20__.
3. Costs of the Davis Lift Station and Norton East 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 2020A Committed Amount not advanced or to be
advanced upon delivery hereof. The Borrower specifically confirms and agrees that any
remaining amounts of the Davis and Norton ABC Loans to be lent to the Borrower, if any, shall
be evidenced by the Series 2020B Bond and the Series C Bond.
4. As of the date hereof, the Borrower has spent the following amounts in
connection with the Davis Lift Station and Norton East Project and costs related thereto:
Debt Service Reserve
Bond Counsel & Related Costs
Engineering - Design Services
Engineering – Construction Eng Services
Construction
Contingency
TOTAL PROJECT COSTS
Of such amounts, $__________ were paid from advances of proceeds of the Series
2020A Bond.
5. The Trustee has delivered to the Borrower a copy of Schedule B to be attached to
the Series 2020A Bond, which reflects the amortization of all advances made or to be made on
the date hereof of proceeds of the Series 2020A 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 2020A 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 2020A Bond and interest thereon is thereupon forgiven, and if
the DNRC delivers a Noncompliance Certificate, amounts advanced under the 2020A Loan
evidenced by the Series 2020A Bond shall bear interest from and after the first advance of
principal of the Series 2020A Bond at the rate of two and one-half percent (2.50%) per annum,
all as described in Section 5.1.2 of the Supplemental Resolution authorizing the Series 2020A
Bond.
6. The representations of the Borrower contained in Articles II and III of the
Supplemental Resolution are true and complete as of the date hereof as if made on this date,
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
D-3
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 occurred and is continuing.
8. The Borrower is delivering this Certificate to the DNRC, in part, to ensure
compliance with EPA regulations and standards. The Borrower certifies that all laborers and
mechanics employed by contractors and subcontractors on the Davis Lift Station and Norton
East 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 IV of Chapter 31 of Title 40, United States Code, and that the iron
and steel products used in the 2019 Project comply with the “American Iron and Steel”
requirements of Section 436 of the Consolidated Appropriations Act of 2014 (P.L. 113-76), as
those requirements are further interpreted by applicable EPA guidance.
9. The Borrower acknowledges and agrees that this Certificate completed by the
Borrower in form satisfactory to the DNRC must be executed and delivered to the DNRC by the
date that is 30 days after receipt of the form of this Certificate from the DNRC. By submitting
this Certificate, the Borrower requests that the DNRC forgive the obligation of the Borrower to
repay the principal of the Series 2020A Bond, together with interest thereon. The Borrower
acknowledges and agrees that (i) the forgiveness of principal of and interest on the Series 2020A
Bond by the DNRC is contingent on the timely delivery of this Certificate by the Borrower in
satisfactory form as determined in the DNRC’s sole and complete discretion, (ii) the DNRC has
no obligation to grant such forgiveness; and (iii) if the DNRC delivers to the Borrower a
Noncompliance Certificate, (a) the obligation of the Borrower to repay the principal of the Series
2020A Bond plus interest thereon shall continue in full force and effect until the principal of the
Series 2020A Bond advanced and interest thereon are paid in full, as set forth in Schedule B
delivered pursuant to paragraph 5 above, and as provided in the Series 2020A Bond and the
Supplemental Resolution, and (b) the Borrower shall, as necessary, within the 3-month period
specified in the Supplemental Resolution, adjust its rates and charges to produce Net Revenues
and Surplus Net Revenues required by the rate covenant in the Supplemental Resolution.
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
D-4
WITNESS our hands on behalf of the Borrower as of this _____ day of __________,
2020.
CITY OF BOZEMAN, MONTANA
By ________________________________
Mayor
By ________________________________
City Finance Director
By ________________________________
City Clerk
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
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
Resolution No. ________, entitled: “RESOLUTION RELATING TO $15,149,000 SEWER
SYSTEM REVENUE BONDS (DNRC WATER POLLUTION CONTROL STATE
REVOLVING LOAN PROGRAM), CONSISTING OF $300,000 SUBORDINATE LIEN
TAXABLE SERIES 2020A BOND, $7,786,000 SERIES 2020B BOND, AND $7,063,000
SERIES C 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 June 15, 2020, 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 Commissioners voted in favor thereof:
; voted against the same:
; abstained from voting thereon: ; or were
absent: .
WITNESS my hand officially this _____ day of June, 2020.
MICHAEL MAAS
City Clerk
DocuSign Envelope ID: C077ADC4-1264-442A-8B5F-BAFCE1236F8F
THE CrTY COMMISSION MEETING OF BOZEMAN , MONTANA
MINUTES
Monday, August 19, 2019
Mayor-Cyhthia Andrus: Present
Deputy Mayor -Chris Mehl: Present
Commissioner -Jeff Krauss: Present
Commissioner -I-Ho Pomeroy: Present
Commissioner -Terry Cunningham: Present
Staff Present at the Dais: City Manager (CM) Andrea Surratt, City Attorney (CA) Greg Sullivan, Deputy
City Clerk Brenda Sweeney
A . 05:59:57 PM (00:02:05) Call to Order -6:00 PM -Commission Room, City Hall, 121 North Rou se
Mayor Andrus called the meeting to order at 6:00 PM .
8. 06:00:08 PM (00:02:16) Pledge of Allegiance and a Moment of Silence
C. 06:00:55 PM (00:03:03) Changes to the Agenda
There were no changes to the agenda.
D. 06:01:00 PM (00 :03:08) Public Service Announcements
1. City Commission Meetings Cancelled on Monday, August 26, 2019 and Monday, September
2, 2019 and Closure of City Offices on Monday, September 2, 2019 (Sweeney)
E. 06:01:15 PM (00:03:23) FYI
• Co mmis sioner Cunningham talked about the Affordable Housing Working Group's Action Plan
regularly scheduled community check-in's tomorrow from 11 am -1 pm and 5 pm -7 pm,
• OM Mehl announced that the Planning Board will be discussing the Growth Map Amendment
tomorrow at 7:00 PM.
• Mayor Andrus informed the commission that on September 9th they will be setting the mill
levies in two separate motions . She recommends looking at the General Fund to make
amendments to spend any additional mill levies. She talked about further budget amendments
and communicating those to CM Surratt or Mayor Andrus for proper noticing.
• CM Surratt let the community know about the next iteration of Symbozium .
Page 1 of 14
Bozeman City Commission Meeting Minutes, August 19, 2019
F. 06:03:59 PM (00 :06:07) Commission Disclosures
Cr. Cunningham will be recusing himself from the discussion in Action Item 1. and will explain
further at that point.
G. 06:04:18 PM (00:06:26) Consent
1. Authorize Payment of Accounts Payable Claims for Goods and Services (La Meres).,_ <=:i
2. Formal Cancellation of the August 26, 2019 and September 2, 2019 City Commission
Meetings (Crough) .,_ <=:i
3. Authorize the City Manager to Sign Task Order Number MID20-002 with Sanderson Stewart
for 5th Avenue Conduit Design (Fine)-,· <=:i
4 . Resolution 5088, Intent to Create Special Improvement Lighting District (SILD) Number 755
for Norton East Ranch Subdivision, Phase 4 (Massey/Clark)., <=:i
06:04 :22 PM (00:06:30) City Manager Overview
CM Surratt noted the highlights of the consent agenda.
06:05 :01 PM (00:07:09) Public Comment
There was no public comment.
06,:05:13 PM (00:07:21) Motion and Vote to approve Consent Items 1-4 as submitted. The motion
passedS-0.
Deputy Mayor -Chris Mehl: Motion
Commissioner -Terry Cunningham: 2nd
Mayor -Cynthia Andrus: Approve
Deputy Mayor -Chris Mehl : Approve
Commissioner -Jeff Krauss : Approve
Commissioner -I-Ho Pomeroy: Approve
Commissioner -Terry Cunningham: Approve
H. 06:05:31 PM (00:07:39) Public Comment
Mayor Andrus opened public comment.
06:06:10 PM (00:08:18} Debbie Anqelie, Public Comment
Ms. Angelie spoke about the 0urston Road construction and how the majority of traffic flow oh the west
side of town is coming through her neighborhood. She asked for action in the way of temporary speed
bumps .
I. 06:08:23 PM (00:10:31) Action Items
1. 06:08:25 PM (00 :10:33) The Parklands at Village Downtown Subdivision, a Preliminary Plat
Application for a Proposed Ten (10) Lot Residential Subdivision with Stormwater Tract, Park,
Page 2 of 14
aozeman Cit y Commission Meeting Minutes, A ug ust 19, 201 9
and Rights-of"way on 4 .6558 Acres, Located at the East End of the Villa ge Downtown
Boulevard, Application 19135 (Quasi -Judicial) (Saunders)., ¢l
06:08:51 PM (00:10;59) Commissioner Recusal
Cr. Cunningham recused himself from th e di scussion and explained his position and business conn ection
to one of the applicants.
06:09:48 PM (00:11:56) Staff Clarlflcation
CA Sullivan explained the impact on the process in the event there is a tie vote.
06:10:52 PM (00 :13:00} Staff Pre sentation
Community Development Manager Chris Saunders presented The Parklands application , which is zoned
as R--4 and consists of nine single home lots and one multi-home lot. He reviewed the findings and staff
recommendations.
06:22:19 PM (00:24:27) Staff Clarification
CA Sullivan pointed out that one commissioner may have received direct communication from the
applicant that was not directed to agenda@bozeman .net, which could be new information. He
explained the process the commission would need to follow under state law to make a determination
about the new information .
06:23:42 PM (00:25:50) Questions of Staff
Cr. Pomeroy asked if this project qualifies for affordable housing. She asked about conditions 20 and 26.
She asked about the sewer main being at full capacity.
OM Mehl asked about recommendations meeting standard approval. He asked about condition 26 and
any new code requirements since the Planning Board report. He asked about emergency access and
adequate snow storage.
Mayor Andrus asked about condition 24 regarding high ground water. She asked about the park
equation .
06:44:28 PM (00 :46:36) Applicant Presentation
Matt Hauser, with C&H Engineering, presented the project and highlighted a few aspects surrounding
the sight. Mike Delaney, developer for the project, addressed questions that were raised. He talked
about an issue that he encountered today regarding a forestry area that would need to be taken out.
06:56:38 PM (00 :58 :46) Questions of Applicant
Cr. P~mei'oy asked if there is any provision for affordable housing. ~he asked about emergency acce ss.
Cr. K~a uss asked if there is a realty requirement that will point out tliie rail road and related noise to
potential buyers.
OM Mehl asked about the change to the parks configuration. He asked if the team has read the staff
report except the one condition . He asked if this is all on the record now for the public.
Page 3 of 14
Bozeman City Commission Meeting Mfnutes, Aligust 19, 2019
07:07:49 PM (01:09:57} Public Comment
Mayor Andrus opened public comment.
07:07:59 PM {01:10:07) Sherry Stout, Public Comment
Ms. Stout talked about the strategic plan addressing zero net wetland loss for Bozeman.
07:09:04 PM {01:11:12) Staff Clarification
City Engineer Shawn Kohtz provided clarification about the trees at the end of the cul de sac.
07:09:48 PM (01:11:56) Staff Clarification
CA Sullivan stated the applicant's oral testimony reflected his public comment, and the commission can
proceed .
07:10:09 PM (01:12:17) Questions of Staff
Cr. Pomeroy asked for clarification that this project is protecting wetlands.
07:11:04 PM {01:13:12) Motion that having reviewed and considered the application materials, public
comment, Planning Board recommendation, and all the information presented, I hereby adopt the
findings presented in the staff report for application 19135 and move to approve the Park/ands at
Village Downtown subdivision with conditions and subject to all appJ;cable code provisions.
Commissioner -I-Ho Pomeroy: Motion
Commissioner -Jeff Krauss: 2nd
07:11:53 PM (01:14:01) Discussion
Cr . Pomeroy agrees with the staff report and all conditions.
Cr. Krauss adopts the findings of the staff report. He talked about developing next to the railroad.
OM Mehl will be supporting the motion. He agrees with the staff analysis.
Mayor Andrus will support the motion as well and associates with the comments of her colleagues.
07:19:06 PM (01:21:14) Vote on the Motion that having reviewed and considered the application
materials, public comment, Planning Board recommendation, and all the information presente4 I
hereby adopt the findings presented in the staff report for application 19135 and move to approve the
Park/ands at Village Downtown subdivision with conditions and subject to all applicable code
provisions. The motion passed 4 -0.
Commissioner -I-Ho Pomeroy: Motion
Commissioner -Jeff Krauss: 2nd
Mayor -Cynthia Andrus: Approve
Deputy Mayor -Chris Mehl: Approve
Commissioner -Jeff Krauss: Approve
Commissioner -I-Ho Pomeroy! Approve
Page 4 of 14
Bozeman City Commis sion Meeting Minutes, A v g ust 19 , 2 019
Commi ssioner -Terry Cunn i ngham : Absta i n
07:19:15 PM (01 :21 :23) Motion that having reviewed and considered the application materials, public
comment, Recreation and Parks Advisory Board recommendation, and all the information presented, I
hereby adopt the findings presented in the staff report for the park master plan associated with
application 19135 and move to approve the Park/ands at Village Downtown subdivision park master
plan.
Commissioner ~ I-Ho Pomeroy: Moti on
Commissioner -Jeff Krauss: 2nd
07:19:49 PM (01:21:57) Discussion
Cr. Pomeroy stated this project meets all city requirements, and she will support the motion .
Cr. Krauss stated he has mixed feelings on this and believes parkland should be accessible to everyone tn
the city. He talked about clear signage.
OM Mehl talked about an existing condition for signs. He talked about what could happen in the future
in a much larger system .
Mayor Andrus will support it as well but echoed the caution about parkland and that communities enjoy
those properties.
07 :23:03 PM (01:25 :11) Vote on the Motion .that having reviewed and considered the application
materials, public comment, Recreation and Parks Advisory Board recommendation, and all the
information presented, I hereby adopt the findings presented in the staff report for the park master
plan associated with application 19135 and move to approve the Park/ands at Village Downtown
subdivision park master plan. The motion passed 4 -0.
Commissioner -I-Ho Pomeroy: Motion
Commissioner -Jeff Krauss: 2nd
Mayor -Cynthia Andrus : Approve
Deputy Mayor -Chris Mehl : Approve
Commissioner -Jeff Krauss: Approve
Commissioner -l~Ho Pome roy: Approve
Commissioner -Terry Cunningham : Abstain
07:23 :14 PM (01 :25 :22) Recess
Mayor Andrus called the meeting into recess until 7 :3 5 PM.
07:31:26 PM (01 :33:34) Call to Order
Mayor Andrus called the meeting back t o order.
2. 07:31 :31 PM (01:33:39) Resolution 5065, Establishing Rates for Water Service for the City of
Page 5 of 14
Bozeman City Commission Meeting Minutes, August l9, 2019
Bozeman (Donald) -, ~
07:31:42 PM (01:33:50) Staff Presentation
Finance Director Kristin Donald presented Resolution 5065 and exp l ained the background leading up to
the inclusion of this model in the budget. She reviewed the proposed established Water Fund rates.
07:34:20 PM (01:36:28) Questions of Staff
Cr . Krau ss asked about the incremental use and usage rate tables . He asked about the increased
government rate including the city's base rate. He asked about drought rates.
DM Mehl asked for confirmation that none of the rates changed from the April presentation. He asked if
the lowest tier will see the lowest increase. He asked about the average residentia l customers will see.
Cr. Cunningham talked about the Historical Annual Flow by User Class chart. He asked about low income
assist ance. He asked about benchmarks for the commission to refer to i n the future.
CM Surratt stated staff will provide an update to the commission after the new rates have been tested
relative to impacts on fami l ies.
Cr. Pom eroy asked why the government increase went from 5% to 20%. She asked how water
consumption changes during the year. She asked about the techniques of watering plants and lawns
versus drinking water.
07:46:45 PM (01:48:53) Staff Clarificat ion
City Engineer Shawn Kohtz talked about the current development of a cemetery water irrigation project.
He talked abou t separating treated water for other watering means and the cost of r unning paral lel lines
to existi ng water l i nes in the streets.
07:47:52 PM (01:50:00) Discussion Continued
Cr. Krau ss asked about drought rates and if this is about saving utility in the drought years. He asked for
confirmation that the $.80 increase is to establish a drought reserve to protect the utility.
07:50:08 PM (01:52:16) Public Comment
Mayor Andrus opened public comment.
07;50:15 PM (01:52:23) Marsha Ka veny, Public Comm e nt
Ms. Kaveny thahked the commission for volunteerisrn that's been advertised. She thinks a lo t more
should be done toward reducing consumption.
07:53:57 PM (01:56:05) Motion to a do pt Resolution 5065, Es tablishin g Rates fo r Water Se rvice for the
City of Bozeman effective on bills due Se pte mber 15, 2019 and Septe mber 15, 2020.
Commissioner -Jeff Krauss: M otion
Deputy Mayor -Chris Mehl: 2nd
Page 6 of 14
Bo zeman City Commission Meet rng Mmute s, Augus t 19, 2019
07:54:17 PM (01:56:25 ) Discussion
Cr. Kra uss won't be supporting his own motion and does not agree With the protection of the utility
portion of the rate structure,
DM M ehl made several points regarding conservation, drought, and water i n general for the area .
Cr. Cunn ingh am talked about the scope of the issue and why it's getting so mu ch attention from the
commission toward con servation. He talked about the integrated Water resources plan.
Cr. Pomeroy talked about Bozeman h.l ving the best proactive water conservation programs and stated
w e need to make more effort to conserve water usage.
Mayo r Andru s talked about taking mea sures to conser ve water and thinks the tiered system works w ell.
Cr. Kr au ss talked about advocating for zero growth and the real demand being for new development.
M ayor Andr us talked about the difference of philosophy about water.
08:12:25 PM (02:14:33) Vote on the Mo tion t o adopt Re solution 5065, Es t ablishing Ra tes fo r Water
Service f o r the Cit y of Bozeman effective o n bills d ue Se pte mber 15, 2019 and Sep temb e r 15, 2020. Th e
m o tion p assed 4 -0.
Commissioner -Jeff Krauss : Motion
Deputy Mayor -Chris Mehl: 2nd
Mayor -Cynthia Andrus : Approve
Deputy Mayor -Chris Mehl: Approve
Commissioner -Jeff Krauss: Dfsapprove
Commissioner -I-Ho Pomeroy: Approve
Commissioner -Terry Cunningham: Approve
3 , 08 :12:49 PM (02:14:57) Resolution 5066, Establishing Rates for Wastewater Ser\t ice for the
City of Bozeman (Donald)~ ~
08:13:10 PM (02:15:18) Staff Presentation
Finance Director Kristi n Donald presented Reso l ution 5066 and explained the background leading up to
inclusion in the final b udget. She reviewed the proposed established Wast ewater Fund rates.
08:14:20 PM (02 :16:28) Questions of Staff.
DM M e hl noted thi s is cost of service for the next year plus emergencies.
Cr. Pom eroy referred to a charge for a written shutoff noti ce.
Cr . Kra uss asked for clarification that there is no charge for falling behind a month.
M ayor An drus asked about seasonal shut off.
Cr. Po mero y asked for clarification on reinstating water service charge .
08:18:18 PM (02:20:26) Public Comment
There w as no public comment.
Page 7 of 14
Bozeman City Comm1ssion Meeting Minutes, August 19, 2019
08:18:29 PM (02:20:37} Motion to adopt Resolution 5066, Establishing Rates for Wastewater Service
for the City of Bozeman effective on bills due September 15, 2019 and September 15, 2020.
Deputy Mayor-Chris Mehl: Motion
Commissioner -Terry Cunningham: 2nd
08:18:52 PM (02:21:00} Discussion
DM Mehl talked about the studies conducted over a period oftime. He talked about the efficiencies of
the system and our need to have a reserve.
Cr. Cunningham commented we will get the opportunity to look at the results of the Wastewater Fund
and whether it has established the desired reserve and accomplished our goals.
Cr. Pomero-y agrees this makes sense.
Cr. Krauss exp ressed concern that the collective efforts of the city ending up in the East Gallatin River.
He talked about continuing to plan for how a growing Bozeman deals with wastewater.
Mayor Andrus talked about the cost analysis and thinks this helps to bring inequities into balance.
08:23:58 PM (02:26:06) Vote on the Motion to adopt Resolution 5066, Establishing Rates for
Wastewater Service for the City of Bozeman effective on bills due September 15, 2019 and September
15, 2020. The motion passed 5-0.
Deputy Mayor -Chris Mehl: Motion
Commissioner -Terry Cunningham: 2nd
Mayor -Cynthia Andrus: Approve
Deputy Mayor-Chris Mehl: Approve
Commissioner -Jeff Krauss: Approve
Commissioner -I-Ho Pomeroy: Approve
Commissioner -Terry Cunningham: Approve
4. 08:24:11 PM (02:26:19) Resolution 5067, Establlshing Rates for Stormwater Service for the
City of Bozeman (Donald)-, ¢:I
08:24:21 PM (02:26:29} Staff Presentation
Finance Director Kristin Donald presented Resolution 5067. She explained this was brought to the
commission during budget time, and a 4% rate change was recommended by staff.
08:25:17 PM (02:27:25) Questions of Staff
Cr. Cunhingham mentioned his recollection of the increase in the fund helping to fund an FTE. He asked
if stormwater capital projects are taken out of the C1P. He asked about the possibility of the city taking
over homeowners associations' contribution towards the maintenance of detention ponds.
08:27:09 PM (02:29:17) Staff Clarification
Page 8 of 14
Bozeman City C.Ommission M eeting Minutes, August 19, 2019
Stormwate r Division Coordinator Kyle Mehrens talked about when the storm water utility was brought
before the commission about five years ago. He pointed out the maintenance of homeowners
associations' faci l ities was on the table at the time, and the associated cost was consid ered . He talked
about the growth since then.
08 :28:21 PM (02:30 :29) Questions of Staff Cont i nued
Cr . Pomeroy asked about the sfgnfffca nce of the 4% increase.
Cr. Kr a u ss asked about a rebate he receives from the flat rate becaus e of a stormwater plan managed by
the homeowners asso ci ation in h is nei ghborhood.
CM Me hl asked about the number of inspections that could be done and how in creasing the rates would
increase those inspections.
08:31:52 PM (02:34 :00) Public Comment
Mayor Andrus opened public comment.
08:31:59 PM (02:34:07) Marsh a Ka venv. Public Comment
Ms. Kaveny talked about the stormwater issue in her subdivision regarding saturated sediment s and the
inability to get a company to remove them because of the disposa l problem.
08:35:17 PM (02:37:25) Staff Clarificati on
Mr. Mehrens spoke about the difficulty of the program they're trying to deve lop. He spoke about the
previous public comment and the unique problem of the neighborhood.
08:36:49 PM (02:38:57) Questions of Staff
OM Me hl asked for confirm ation that the city did not require t hat the system be underground in that
particular neighborhood.
08:38:18 PM (02:40:26) Motion to a do p t Resolut ion 506~ Establishing Rates f or Stormwater Service
for th e City of Boz eman effe ctive o n b ills d ue Sep t ember 15, 2 019.
Commissioner -Terry Cunningham: Motion
Commissioner -I-Ho Pomeroy: 2nd
08:38 :33 PM (02:40 :41) Discussion
Cr. Cu n ningha m thanked staff for the presentation. He will vote in favor of the motion.
Cr . Pomeroy will support the motfon and talked about the lack of rate increase since 2015.
Cr. Kra uss pointed out there is no impact fee for storm water. He tal ked about the importance of design
and what we accept .
DM Mehl ·talked about increasing the inspection rate. He poi nted out this i s a learning process and
addressed the public comment. He talked about the struggle of paying for operation and maintenance.
M ayo r Andrus will support this and alJpreciates the public comment. She thinks the 4% increase makes
sense .
Page 9 of 14
Bozeman City Commission MeetJng Minutes, August ;1 9, 2019
08:46:11 PM (02:48:19) Vote on the Motion to adopt Resolution 5067, Establishing Rates for
Storm water Service for the City of Bozeman effective on bills due September 15, 2019. The motion
passed 5-0.
Commissioner -Terry Cunningham: Motion
Commissioner -I -Ho Pomeroy: 2nd
Mayor -Cynthia Andrus: Approve
Deputy Mayor -Chris Mehl: Approve
Comm issioner -Jeff Krauss: Approve
Commissioner -I-Ho Pomeroy: Approve
Commissioner-Terry Cunningham : Approve
5 , 08:46:25 PM (02:48:33) Presentation of the Results of the Solid Waste Rate Study (Donald) .,, (:)
08 :46:47 PM (02:48:55) Presentation Introduction
Finance Director Kristin Donald introduced the Solid Waste Cost of Service and Rate Design Stuqy
conducted by Burns & McDonnell. She explained that staff will come back with a resolution to
implement recommendations the commission makes tonight. Scott Pasternack, with Burns and
McDonnell, presented the findings of the study, methodology to complete the project and cost of
service study as well as rate recommendations. Mr, Pasternack explained he will pause at key points of
the presentation for questions.
08:49:01 PM (02:51:09) Presentation -Methodology Overview and Cost of Service Study
Mr. Pasternack presented the methodology overview and cost of service study.
08:56:45 PM (02:58:53) Questions of Presenter
Cr . Cunningham asked about using the reserve strictly as a reserve or creating one to save toward
something else. He asked about the philosophy behind residential subsidizing commercial revenue ,
Cr. Pomeroy asked about commercial dumpsters and commercial roll-off, She asked about the general
trend over the last ten years.
Cr. Krauss asked how we have factored in the competitive nature of solid waste collection. He asked
how we built up a large reserve.
OM Mehl asked if are we adding customers generally and whether our prices are able to attract
residentia l and commercial customers.
Mayor Andrus asked whether communities were benchmarked as they related to population or if they
did all their collection.
OM Mehl asked about the law relative to subsidizing this utility in terms of competing.
09:28:56 PM (03:31:04) Presentation -Residential Rate Recommendations
Mr. Pasternack presented the residential rate recommendations overview.
Page 10 of 14
Boreman City CommfsS!on Meeting Minutes, August 19, 2019
09:37:35 PM (03:39:43) Questions of Pre se nter
Cr. Cunningham asked about cost of service for the 35-45 gallon containers. He asked about data for
size of households and size of trash and recycling containers. He asked what percentage of our
customers have what size containers .
Cr. Pomeroy asked what kind of method is in pla ce to generate a positive revenue over the next five
years.
Cr. Krauss asked about financial goals and staying competitive in each category.
09:52 :25 PM {03:54:33) Presentation -Recycling Rate Recommendation s
Mr. Pasternack reviewed the rate s for re cycling, temporary dumpster, commercial dumpster,
commercial roll-off. He reviewed the five-year re serve forecast based on recommended rates.
09 :59 :45 PM (04:01:53) Meeting Extended
Mayor Andrus extended the meeting to 10:15 PM .
10:02:09 PM (04:04:17) Questions of Presenter
Cr. Cunningham asked about the percentage of households that have blue carts versus green carts.
Cr. Pomeroy asked about the commercial dumpster collections per week.
Mayor Andrus asked about the five year reserve forecast with regard to the number of reserve days.
DM Mehl asked about reevaluating rates in the future based on growth rate s.
10:13 :25 PM (04:15:33) Meeting Extended
Mayor Andrus extended the meeting to 10:30 PM .
10:13:57 PM (04:16:05) Discussion
Cr. Cunningham stated he ag ree s with getting closer to cost of service with commercial is fair to
residents and aligning our rates is the right direction. He talked about t he goal of creating diversion and
o t her ways of doing so .
10:17:37 PM (04:19 :45) Public Comment
There was no public comment.
10:17:48 PM (04:19:56) Discussion Continued
OM Mehl talked about the 35-45 gallon recycling tote ffat rate versus the 65 gallon tote increasing rates.
He talked about conducting demonstration projects for smaller totes used because of cost advantages .
Cr. Krauss does not support bumping rates up for the smallest tote because that's all people can afford.
He talked about the cost of rec ycling going up .
Cr. Pomeroy supports positive net revenue over the next five years for commercial dumpster and roll-
off.
Mayor Andrus generally supports the recommendations. She would like to look at other ways of
lncentivizing more recycling .
Cr. Krauss talked about some homeowners associations requiring containers be kept inside and how
Page 11 of 14
Bozeman City Commission Meeting Minutes, August 19, 2019
much room that requires.
M ayo r Andrus commented on the possibility of other recycling options that would allow room for inside
storage.
Co nsid er t h e mot i o n: No motion is required, advertised as action item so the commission may direct staff
as necessary.
6. 10:28:15 PM (04:30:23) Appointment to the Design Review Board (ORB) (Sweeney)°{ ~
10:28:18 PM (04:30:26) Public Comment
There was no public comment.
10:28:32 PM (04:30!40} Motion t o appoint Lo tus Gre nie r to the Design Revie w Board, Architect
position, w i t h a t erm ending Jun e 30, 2021.
Deputy Mayor -Chris Mehl: Motion
Commissioner -Jeff Krauss: 2nd
10:28:47 PM (04:30:55) Vot e on the M o t ion t o appoint Lo tus Gren ier to the De si g n Re vie w Bo ard,
Architect posit ion, w ith a t erm e nding Jun e 3 0, 2021 . Th e m o tion passed 5-0.
Deputy Mayor -Chris Mehl: Motion
Commissioner -Jeff Krauss : 2nd
Mayor -Cynthia Andrus: Approve
Deputy Mayor -Chris Mehl: Approve
Commissioner -Jeff Krauss: Approve
Commissioner -I-Ho Pomeroy: Approve
Commissioner -Terry Cunningham: Approve
7. 10:28:57 PM (04:31:05) Appointment to the Midtown Urban Renewa l Board (MURB)
(Sweeney) ·,: ~
10:29:02 PM (04:31:10} Public Comment
There was no public comment.
10:29:08 PM (04:31:16) Mo tion t o appoint Made line Roche, non-vo t ing m embe r appoin t e d by City
Commission positio n, to the Midto w n Urban Re ne wal Board w ith a t erm e nding January 31, 2 022.
Commissioner -Terry Cunningham: Motion
Commissioner -Jeff Krauss: 2nd
Page 12 of 14
Bozeman City Commission Meeting Minutes, August 19, 2019
10:29:27 PM (04:31:35) Vote on the Motion to appoint Madeline Roche, non-voting member
appointed by City Commission position, to the Midtown Urban Renewal Board with a term ending
January 31, 2022. The motion passed 5-0.
Commissioner -Terry Cunningham: Motion
Commissioner -Jeff Krauss: 2nd
Mayor -Cynthia Andrus: Approve
Deputy Mayor -Chris Mehl: Approve
Commissioner -Jeff l<rauss: Approve
Commissioner -I-Ho Pomeroy: Approve
Commissioner -Terry Cunningham: Approve
J. 10:29:41 PM (04:31:49) FY I / Discuss i on
• Cr. l<rauss talked about a letter the commission received today regarding service contracts and
suggested people in older parts of town may be interested.
• Mayor Andrus again reminded the commission of the mill levy discussion on September 9th and
if there are other amendments, let CM Surratt know so the public can be appropriately notified.
The commission further discussed clarifications to the process.
I<. 10:32:17 PM (04:34:25) Adjournment
Mayor Andrus adjourned the meeting at 10:32 PM.
Mayor
ATTEST:
Page 13 of 14
Bozeman City Commission Meeting Minutes, August 19, 2019
Approved on: £eptcw.bev q 1 -=2o\4
PREPARED BY:
~"'"~" \),9 \i»
Brenda ~eeney
Deputy City Clerk
Page 14 of 14
RESOLUTION N O. 5066
A RESOLUTIO N OF THE CITY COMMISSION OF THE CITY OF BOZEMAN,
MONTANA, ESTABLISHING RATES F OR WASTEWATER SERVICE F OR THE CITY
OF BOZEMA N.
WHEREAS, the City Commission of the City of Bozeman, following notice and public
hearing established a new Rate Schedule for the City ofBozeman's Wastewater Fund.
N OW, THEREFORE, BE IT RESOLVED by the City Commission of the City of
Bozeman, Montana, that the new rates for water services, based on a 30-day month, shall
become effective beginning with the bills due September 15, 2019 and September 15, 2020 as
follows, to wit:
Section 1 -M et ered Cus t omers
S ervice Cba!,'g ~ __ _ __ _
Residential _ . _ _ ______ _j
C urrent Ra te --. -----,-
$19.58 $19.58 ---··· $19.58
Effective 9/15/19 Effective 9/15/20
Multi-Family ________ _ $20.07 $20 .07 $20.07 -----··---------Commercial $20 .07 $20 .07 $20.07 ·--····--·--------·
Government $20.07 $20.07 $20.07 ------
MSU $20 .07 $20.07 $20 .07
Industrial $38.98 $38 .98 $38 .98 ·-· -
Vo lum e Ch arge --·-------·-------------Curre nt Rate Effective 9/15/19 Effective 9/1 5/2 0
Residential $3.28 $3 .28 $3 .28 ·---·------------~
Multi-Family $3 .36 $3.43 $3.50
Commercial $3 .36 $3.56 $3.78 -------·--f---------
Government $3.36 $3.56 $3.78
MSU $3.36 $3.63 $3.92 ---. -------------
Industrial . ----·· ---. . ---··---. -$5.50 -· -. ·------__ _$5.6] __ -----· $5.83
P age 1 of 4
Resolution 5066, Establishing Rates for Wastewater Service for the City of Bozeman
~tra Strength Waste Cunent Rate
$0 .33 1
Effe ctive 9/15/19 Effe ctive 9/15/20
BOD in excess of 200 mg!L [
rss jg_ exces~_ ~fl.?0 !!!&°'L p_~r 2a.Y .. I
EhQspl1_2.r~_§_]Q excess of 5. 0 mg/I., p~r_sl~Y.. I_
:tiitn:>ge_g ir! ~x~e_§J_ o_f ~Q mg!~ per ~ay i
--~..:.51
$5.55 ------
$0.46
$0 .34 $0j35I
-~ -------_-!1'.~~
$0.46 1 -$0.46
* For service dates of May through November, based on average of December through April
metered usage.
Explanatory note: Each customer shall pay a minimum monthly bill, which includes the monthly
charge (A) plus an additional charge (B ). For extra strength waste, a customer shall additionally
pay the extra strength charges (C).
Unm etered Cu stom ers
Section 2 -Unmetered Custom ers
Effective on the September 2018 billing
Curre nt Rate Effe ctiv e 9/15/19 Effec tiv e 9/15 /20
!Munme;;-ed-~stomers ___ -I · --$4LL4 ] -_$4'.2.37 1 $43.:§1]
Section 3 -Low Income Rate Assistanc e
Customers who apply for and qualify under the State's Low Income Property Tax Assistance
Program, as set forth in Section 15-6-134 MCA, will receive a credit equal to their monthly
wastewater service charge listed above.
S ection 4 -Billing Procedures
Charges for wastewater services under this schedule shall be made a part of the current monthly
water bill, to be shown by separate item on such bill. Separate payment of either the charge for
the water or the charge for the wastewater w ill n ot be accepted with prior approv al of the Director
of Finance. B oth charges must be paid at the same time; partial payments will be applied to the
wastewater charge first, with any remainder being applied to the water charge.
P age 2 of 4
Resolution 5066, Establishing Rates for Waste water Servic e for the City of Bozeman
Charges for water used and wastewater service charges become due and payable upon receipt of
the bill. If any bill is not paid on or before the fifteenth day of that month, it will then become
delinquent; and if not paid in full by the fifteenth day of the following month, water service to the
premises involved may be discontinued (shut-off), after a ten-day written notice. A charge of fifty
dollars ($50.00) shall be made for any account requiring written shut-off notice. An additional
charge of one-hundred ($100 .00) shall be made for reinstating a water service which has been
discontinued for non-payment of water, wastewater and/or stormwater service charges .
Section 5 -L ate F ee
For those accounts that become delinquent, a l'.5 percent (1.5%) late fee will be assessed on the
next bill . The minimum late fee shall be $1 .00.
Secti on 6 -P rotes t s .
In cases where wastewater service charges under this schedule are claimed to be unfair,
unreasonable, or not in proportion to charges made to other wastewater customers, the person or
persons against whom such charges are made may apply to the City Manager for an adjustment,
stating the circumstances. The City Manager, or his designated representative, may make such
adjustment of the wastewater charges as is deemed necessary, fair and equitable.
Page 3 of 4
Resolution 5066, E stablishing Rates for Waste water S ervice f or the City of Bozeman
PASSED , AD OPTED, AND AP PR OVED by the City Commission of the City of
Bozeman, Montana, at a regular session thereof held on the 19th day of August 2019; and effective
with bills due September 15, 2019 and September 15, 2020.
ATTEST:
City Attorney
Page 4 of 4
$8,086,000
Sewer System Revenue Bonds
(DNRC Water Pollution Control State Revolving Loan Program),
Consisting of $300,000 Subordinate Lien Taxable Series 2020A Bond,
and $7,786,000 Series 2020B Bond
City of Bozeman, Montana
CERTIFICATE AS TO SATISFACTION OF CONDITIONS
PRECEDENT FOR ISSUANCE OF
ADDITIONAL PARITY BONDS
We, the undersigned, being the duly qualified City Manager and the City Finance
Director of the City of Bozeman, Montana (the "City"), do hereby certify in connection with the
issuance by the City of its $8,086,000 Sewer System Revenue Bonds (DNRC Water Pollution
Control State Revolving Loan Program), Consisting of $300,000 Subordinate Lien Taxable
Series 2020A Bond (the "Series 2020A Bond") and $7,786,000 Series 2020B Bond (the "Series
2020B Bond," and, collectively, the "Series 2020AB Bonds"), as follows:
1. The Series 2020AB Bonds are being issued pursuant to Resolution No. 4220,
adopted by the City on November 16, 2009 (the "Original Resolution"), as amended and
supplemented by Resolution Nos. 4234, 4245, 4254, 4299, and 4462, adopted by the City
Commission on January 19, 2010, February 16, 2010, May 3, 2010, November 1, 2010, and
August 5, 2013, respectively, and as further amended and supplemented by Resolution No. 5183
adopted by the City Commission on June 15, 2020 (the "Supplemental Resolution"). The
Original Resolution, as so amended and supplemented, is referred to herein as the "Resolution."
Capitalized terms used herein without definition shall have the meanings given them in the
Resolution. The Original Resolution has not been amended or repealed as of the date hereof,
except as described in this paragraph.
2. The Series 2020B Bond constitutes an additional parity revenue bond under
Section 10.3 of the Original Resolution, as amended by the Supplemental Resolution.
3. The Series 2020AB Bonds are being issued to pay a portion of the costs of
construction and installation of improvements to the City's wastewater system (the "System")
consisting of construction and installation of one or more lift stations, force mains, sewer
collection mains, associated lines and appurtenances, and related improvements (the "2020 Davis
Lift Station and Norton East Projects"), to fund deposits to a reserve account and to pay costs of
issuance.
4. The only bonds or other indebtedness payable from the Net Revenues of the
System now outstanding are the City's Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 201 OB (the "Series 201 OB Bond"), its First
Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution Control State
Revolving Loan Program), Series 2010C (the "Series 201 0C Bond"), its First Amended and
Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan
Program), Series 2010D (the "Series 2010D Bond"), its First Amended and Restated Sewer
System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series
201 OF (the "Series 201 OF Bond"), its First Amended and Restated Sewer System Revenue Bond
(DNRC Water Pollution Control State Revolving Loan Program), Series 20100 (the "Series
20100 Bond"), and its First Amended and Restated Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010H (the "Series 2010H Bond")
( collectively, the "Outstanding Bonds"). No other bonds or indebtedness are outstanding that are
payable from revenues of the System. The Series 2020A Bond is a Subordinate Obligation
payable out of available Surplus Net Revenues in the Replacement and Depreciation Account or
the Surplus Account in the Sewer System Fund of the City and are not parity Bonds taken into
consideration under paragraphs 7 and 8 of this Certificate. For purposes of this certificate, the
Series 2020B Bond is deemed to be outstanding in the aggregate principal amount of $7,786,000.
5. The estimated total cost of the 2020 Davis Lift Station and Norton East Projects
and all costs of financing is $16,091,848. The proceeds of the Series 2020AB Bonds are
expected to be sufficient to pay a portion of the costs of the 2020 Davis Lift Station and Norton
East Projects, to pay costs of issuance of the Series 2020AB Bonds and to establish the required
reserve. Costs of the 2020 Davis Lift Station and Norton East Projects in excess of the total
amount of the Series 2020AB Bonds are expected to be paid from $7,063,000 Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Fund Program), Series C, which
was authorized by Resolution No. 5182 and expected to be in issued in 2021 and funds the City
has on hand and available therefor in the amount of $942,848.
6. The 2020 Davis Lift Station and Norton East Projects are reasonably necessary
for the proper and economical operation of the System, for meeting existing or prospective
demands for the System, or both.
7. Based on the Comprehensive Annual Financial Report of the City for the fiscal
year ended June 30, 2019, we hereby certify that the Net Revenues of the System computed in
accordance with the provisions of Section 10.3 of the Original Resolution, as amended by the
Supplemental Resolution, for the last complete fiscal year preceding the date hereof for which
audited financial statements are available, equaled $3,617,148 (i.e., $9,336,007 -$5,718,859),
which is not less than $2,408,052, such amount being 110% of the maximum amount of principal
and interest in the current and any subsequent fiscal year during the term of the Series 2010B
Bond, the Series 2010C Bond, the Series 2010D Bond, Series 2010F Bond, Series 20100 Bond,
Series 2010H Bond, and the Series 2020B Bond proposed to be issued ($2,189,138 x 110%).
8. Pursuant to the Resolution, the City has established a Reserve Account in the Sewer
System Fund (the "Reserve Account") to secure its parity Bonds, including the Series 201 OB
Bond, the Series 2010C Bond, the Series 2010D Bond, Series 2010F Bond, Series 20100 Bond,
Series 201 OH Bond, and the Series 2020B Bond.
There is currently $1,783,491 on hand in the Reserve Account, which amount secures the
Outstanding Bonds. The Reserve Requirement for the Bonds has been amended pursuant to
Article XI of the Supplemental Resolution and as a result, the Reserve Account is overfunded.
The City funded the deposits to the Reserve Account for the Series 201 OB Bond, the Series
2
2010C Bond, the Series 2010D Bond, Series 2010F Bond, Series 2010G Bond, and Series 2010H
Bond from proceeds of each such series of Bonds. On the date hereof, the City will transfer
$891,745, representing amounts allocable to the Series 2010B Bond ($13,219), the Series 2010C
Bond ($36,537), the Series 201 OD Bond ($340,546), the Series 201 OF Bond ($30,023), the
Series 2010G Bond ($132,658), and the Series 2010H Bond ($338,762), to the Revenue Bond
Account to pay debt service on such Bonds on January 1, 2021 and, ifthere are amounts left over
after such payment, to pay debt service on such Bonds on July 1, 2021.
Following the transfers described above, the amount remaining in the Reserve Account
equals $891,746. Assuming the full amount of the Series 2020B Bond is advanced, of the total
amount on hand in the Reserve Account, $13,219 is allocated to the Series 2010B Bond, $36,537
is allocated to the Series 201 0C Bond, $340,546 is allocated to the Series 201 OD Bond, $30,023
is allocated to the Series 2010F Bond, $132,659 is allocated to the Series 2010G Bond, $338,762
is allocated to the Series 201 OH Bond, and $202,823 is allocated to the Series 2020B Bond.
Upon each advance of principal of the Series 2020B Bond, the City will deposit in the
Reserve Account from the proceeds of the Series 2020B Bond an amount sufficient to cause the
balance in the Reserve Account to equal the Reserve Requirement in respect of the Series 2010B
Bond, the Series 2010C Bond, the Series 2010D Bond, Series 2010F Bond, Series 2010G Bond,
Series 2010H Bond, and the principal of the Series 2020B Bond so advanced. On the date
hereof, the City will fund a deposit to the Reserve Account from proceeds of the Series 2020B
Bond in the amount of $2,444, which will cause the balance in the Reserve Account to be equal
to the Reserve Requirement for the Series 2010B Bond, the Series 2010C Bond, the Series
2010D Bond, Series 2010F Bond, Series 2010G Bond, Series 2010H Bond, and the principal
amount of the Series 2020B Bond advanced on the date hereof ($66,757).
On the date of issuance of the Series 2020B Bond, the balance in the Reserve Account
will equal the Reserve Requirement for the Series 201 OB Bond, the Series 201 0C Bond, the
Series 2010D Bond, Series 2010F Bond, Series 2010G Bond, Series 2010H Bond, and the
principal amount of the Series 2020B Bond advanced
9. The City is not, as of the date hereof, in default in any payment of principal of or
interest on any notes or bonds payable from the Sewer System Fund, and no deficiency now
exists in the balances required by the Resolution to be maintained in any accounts within the
Fund. To the best of my knowledge, the City is not in default under any of the other provisions
of the Resolution.
3
Dated this 22nd day of July, 2020.
CITY OF BOZEMAN, MONTANA
•
By~~ °yanager
By: /~D~ltZ
City Finance Director
Signature page to Certificate as to Satisfaction of Conditions Precedent
for Issuance of Additional Parity Bonds
EXHIBIT A
COMBINED DEBT SERVICE SCHEDULE -BONDS
Series Series Series Series Series Series Series
2010B 2010C 2010D 2010F 2010G 2010H 2020B
Bond Bond Bond Bond Bond Bond Bond Total
2020 21,631 65,305 641,905 55,660 262,610 642,555 1,689,666
2021 21,316 65,910 641,820 54,460 263,015 641,875 236,970 1,925,366
2022 21,002 65,470 642,300 55,245 263,240 641,790 496,963 2,186,010
2023 20,686 64,985 642,345 54,985 263,285 642,270 497,213 2,185,769
2024 21,372 65,470 642,925 54,680 263,150 642,315 497,263 2,187,175
2025 22,030 65,895 643,025 55,345 262,835 642,895 497,113 2,189,138
2026 21,680 65,275 642,645 54,965 263,340 642,995 496,763 2,187,663
2027 21,330 65,610 641,785 54,540 262,635 642,615 497,213 2,185,728
2028 20,980 64,885 642,430 55,085 262,735 641,755 497,425 2,185,295
2029 20,630 65,130 641,550 55,570 262,640 642,400 496,425 2,184,345
2030 21,280 65,315 641,130 55,010 262,320 641,520 497,212 2,183,787
2031 65,440 27,405 262,790 640,100 496,763 1,492,498
2032 497,075 497,075
2033 497,137 497,137
2034 496,950 496,950
2035 496,512 496,512
2036 497,812 497,812
2037 496,825 496,825
2038 497,575 497,575
2039 497,025 497,025
2040 496,212 496,212
2041 250,087 250,087
278,144 916,350 8,348,305 742,705 3,680,985 8,989,645 9,930,533 32,886,667
A-1
ST A TE OF MONT ANA
COUNTY OF GALLATIN
)
) ss
)
CERTIFICATE AS TO ORGANIZATION
OF CITY OF BOZEMAN, MONT ANA
The undersigned, being the duly qualified and acting City Clerk of the City of Bozeman,
in the County and State aforesaid, and as such having custody of and access to the books and
records of the City relating to the matters hereinafter stated, hereby certifies that, as appears by
such books and records and as known to me, the following statements are true and correct.
1. The City has been a duly organized city for approximately 137 years (since April
1883) and is now governed by the general laws of the State relating to cities of the first class,
operating under the Commission-Manager form of government. Its population, according to the
2010 United States census, was 37,280, and its current population is estimated to be 48,532.
2. The territory included within its boundaries lies wholly in the County of Gallatin,
and comprises approximately 10,375 acres. The City is divided into O wards. The City is
governed by a Mayor, City Manager and four Commissioners. The following named persons
hold the offices set opposite their names and for the terms stated below:
Name Office Term Ends
Chris Mehl Mayor January 2022
Cynthia Andrus Deputy Mayor January 2024
I-Ho Pomeroy Commissioner January 2022
Terry Cunningham Commissioner January 2022
Michael Wallner Commissioner January 2024
Name Office
Jeff Mihelich City Manager
Anna Rosenberry Assistant City Manager
Chuck Winn Assistant City Manager
Greg Sullivan City Attorney
Kristin Donald City Finance Director
Michael Maas City Clerk
Brian LaMeres Controller
3. Under the by-laws and ordinances of the City, regular meetings of the City
Commission are held on the first four Mondays of each month at 6:00 p.m., with the second
meeting of the month constituting a work session, and notice of special meetings is required to
be given in writing to all members in advance.
4. The following are newspapers of general circulation published in the City and the
days of their publication:
Bozeman Daily Chronicle
Days of Publication
Sunday through Saturday
5. There is no litigation threatened or pending questioning the organization or
boundaries of the City or the right of any of the above-named persons to their respective offices
or questioning the right and power of the City and its officers to issue bonds for any purpose or
to levy, collect and apply taxes or other revenues for the payment of any bonds of the City.
6. The seal affixed below is the official corporate seal of the City.
WITNESS my hand and the seal of the City this 22nd day of July, 2020.
City Clerk
(SEAL)
2
$8,086,000
Sewer System Revenue Bonds
(DNRC Water Pollution Control State Revolving Loan Program),
Consisting of $300,000 Subordinate Lien Taxable Series 2020A Bond,
and $7,786,000 Series 2020B Bond
City of Bozeman, Montana
OFFICERS' CERTIFICATE
We, Chris Mehl, Jeff Mihelich, Kristin Donald, and Mike Maas, hereby certify that we
are on the date hereof the duly qualified and acting Mayor, City Manager, City Finance Director,
and City Clerk, respectively, of the City of Bozeman, Montana (the "City"), and, on behalf of the
City, that:
1. The undersigned Mayor, City Manager, City Finance Director, and City Clerk have
executed with their true signatures as such officers the Subordinate Lien Sewer System Revenue
Bond (DNRC Water Pollution Control State Revolving Fund Program), Taxable Series 2020A,
in the maximum principal amount of $300,000 (the "Series 2020A Bond"), and the Sewer
System Revenue Bond (DNRC Water Pollution Control State Revolving Fund Program), Series
2020B, in the maximum principal amount of $7,786,000 (the "Series 2020B Bond"), each of the
City, dated, as originally issued, as of the date hereof. The Series 2020A Bond and Series 2020B
Bond (collectively, the "Series 2020AB Bonds"), mature on the dates, bear interest at the rates
and are substantially in the fonns, prescribed by Resolution No. 5183, duly adopted by the City
Commission of the City on June 15, 2020, entitled "Resolution Relating to $15,149,000 Sewer
System Revenue Bonds (DNRC Water Pollution Control State Revolving Loan Program),
Consisting of $300,000 Subordinate Lien Taxable Series 2020A Bond, $7,786,000 Series 2020B
Bond, and $7,063,000 Series 2020C Bond; Authorizing the Issuance and Fixing the Terms and
Conditions Thereof' ("Resolution No. 5183"). Resolution No. 5183 also authorized the issuance
of a Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Fund
Program), Series C in the maximum principal amount of $7,063,000 (the "Series C Bond"),
which is expected to be issued in 2021.
The Series 2020AB Bonds are issued pursuant to Resolution No. 4220, adopted by the
City Commission of the City on November 16, 2009 (the "Original Resolution"), as amended
and supplemented by Resolution Nos. 4234, 4245, 4254, 4299, and 4462, adopted by the City
Commission on January 19, 2010, February 16, 2010, May 3, 2010, November 1, 2010, and
August 5, 2013, respectively, and as further amended and supplemented by the Resolution No.
5183 (the Original Resolution, as so amended and supplemented, the "Resolution"). Terms used
herein with initial capital letters but not defined herein have the meanings given them in the
Resolution. Pursuant to the Original Resolution, the City has issued and there is outstanding its
Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program),
Series 201 OB (the "Series 201 OB Bond"), its First Amended and Restated Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010C
(the "Series 201 0C Bond"), its First Amended and Restated Sewer System Revenue Bond
(DNRC Water Pollution Control State Revolving Loan Program), Series 201 OD (the "Series
2010D Bond"), its First Amended and Restated Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010F (the "Series 201 OF Bond"), its
First Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution Control State
Revolving Loan Program), Series 201 0G (the "Series 201 0G Bond"), and its First Amended and
Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan
Program), Series 201 OH (the "Series 201 OH Bond") (all such Bonds, collectively, the
"Outstanding Bonds"). The Series 201 OB Bond, the Series 201 0C Bond, the Series 201 OD
Bond, the Series 2010F Bond, the Series 20100 Bond, the Series 2010H Bond, the Series 2020B
Bond, and any other bonds hereafter issued by the City on a parity therewith under the
Resolution are referred to herein as the "Bonds." The Series 2020A Bond is a Subordinate
Obligation payable out of available Surplus Net Revenues in the Replacement and Depreciation
Account or the Surplus Account in the Sewer System Fund of the City and is not a parity Bonds.
The Resolution is in full force and effect in the form it was adopted. We have delivered
the Series 2020AB Bonds, duly authenticated by the City Finance Director, as Registrar, to the
Department of Natural Resources and Conservation of the State of Montana, as purchaser (the
"Purchaser"). The Series 2020AB Bonds are in fully registered fonn pursuant to a system of
registration established by the Resolution.
2. The Series 2020AB Bonds have been in all respects duly executed for delivery
pursuant to authority conferred upon us as such officers; that no obligations other than those
described above have been issued pursuant to such authority; that none of the proceedings or
records which has been certified to the Purchaser or to the attorneys approving the validity of the
Series 2020AB Bonds has been in any manner repealed, amended or changed except as shown
by additional proceedings or records furnished each of them; and that there has been no material
adverse change in the financial condition of the City or the circumstances affecting the Series
2020AB Bonds, except as shown by the materials so furnished.
3. No litigation is now pending, or, to the best of our knowledge, threatened (i)
restraining or enjoining the issuance or delivery of the Series 2020AB Bonds, (ii) questioning the
organization or boundaries of the City or the right of any officers of the City to their respective
offices, (iii) questioning the right and power of officers of the City to deliver the Series 2020AB
Bonds, (iv) challenging the validity of or security for the Series 2020AB Bonds, the pledge of
Net Revenues of the sewer system of the City (the "System") to pay the principal of, premium, if
any, and the interest on the Series 2020B Bond or the pledge of Surplus Net Revenues to pay the
principal of, premium, if any, and interest on the Series 2020A Bond, or (v) challenging the
validity or enforceability of the Resolution.
4. The representations of the City contained in Articles II and III of the Resolution No.
5183 are true and complete as of the date hereof as if made on this date, except to the extent that
the City has specifically advised the Purchaser and the attorneys approving the validity of the
Series 2020AB Bonds otherwise in writing.
5. The Series 2020AB Bonds are being delivered to the Purchaser on the date hereof and
$197 of the principal amount of the Series 2020A Bond and $66,757 of the Series 2020B Bond
are being advanced on the date hereof. Upon presentation of adequate information to the
Purchaser regarding costs of the Davis Lift Station and Norton East Project (as defined below)
and related costs, the remaining principal amounts of the Series 2020A Bond and the Series
2020B Bond will be advanced in full and then it is expected that remaining amounts to pay costs
2
of the Davis Lift Station and Notion East Project (as hereinafter defined) will be advanced from
proceeds of the Series C Bond.
6. We are among the officers of the City responsible for issuing the Series 2020B Bond
and, pursuant to Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"),
and the Treasury Regulations promulgated thereunder (the "Regulations"), on behalf of the City
we hereby certify and reasonably expect that the proceeds of the Series 2020B Bond will be used
as follows within the meaning of applicable provisions of Section 148 of the Code and of
applicable Treasury Regulations (the "Regulations"), such facts, estimates and circumstances
being as follows:
(a) The Series 2020B Bond is being issued to finance a portion of the costs of
acquiring or constructing ce1iain improvements to the System, generally described in
Appendix A to the Resolution No. 5183 (the "Davis Lift Station and Norton East
Project"), fund deposits to the Reserve Account, and to pay costs of issuance. The Davis
Lift Station and Norton East Project is intended for use by members of the general public
or users of the System. All users of the System pay standard rates for the use and
availability of the System.
(b) The City has spent or expects to spend the following amounts in connection
with the Davis Lift Station and Norton East Project and associated financing costs:
City of 2020A 20 C
Bozeman Loan 2020B Loan Loan Total:
Debt Service Reserve $202,823 $ 225,888 $ 428,711
Bond Counsel & Related costs 20,000 20,000 40,000
Engineering-Design Services $942,848 942,848
Engineering-Construction Eng 1,100,000 1,100,000
Services
Construction $300,000 6,417,443 5,771,557 12,489,000
Contingency 45,734 1,045,555] 1,091,289
TOT AL PROJECT COSTS $942,848 $300,000 $7,786,000 $7,063,000 $16,091,848
Costs of the Davis Lift Station and Norton East Project in excess of the proceeds
of the Series 2020AB Bonds are expected to be paid from the Series C Bond and funds
the City has on hand and available therefor in the amount of $942,848.
(c) The City has heretofore entered or within six months will enter into contracts
for the Davis Lift Station and Norton East Project, in the form of engineering services,
site development or construction, in the sum of at least 5% of the expected sale proceeds
of the Series 2020B Bond, i.e. $389,300, which the City expects to spend on the Davis
Lift Station and Norton East Project.
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(d) Work on the Davis Lift Station and Nmion East Project has begun and will
proceed with due diligence to completion, and the Davis Lift Station and Norton East
Project is expected to be completed by June 30, 2021.
(e) The Series 2020AB Bonds will be purchased by the Purchaser at a purchase
price equal to the principal amount of the Series 2020AB Bonds advanced thereunder.
Pursuant to the Resolution and the Series 2020AB Bonds, the Purchaser has agreed to
advance to the City principal amounts of the Series 2020AB Bonds from time to time
upon satisfaction of certain conditions precedent set forth in the Resolution, up to the
maximum principal amount of $8,086,000. No interest accrues on principal of the Series
2020AB Bonds and the City is not entitled to any investment income thereon until the
principal amount is advanced.
(f) Of the purchase price of the Series 2020AB Bonds, assuming the full principal
amount thereof is drawn, $8,086,000 will be used to pay costs of Davis Lift Station and
Norton East Project ($300,000 of the Series 2020A Bond, $7,563,177 of the Series
2020B Bond), $20,000 to pay costs of issuance of the Series 2020AB Bonds
(representing costs oflegal services) (from the Series 2020B Bond), and $202,823 to
fund the deposit to the Reserve Account (from the Series 2020B Bond).
(g) The City expects to spend on costs of the Davis Lift Station and Norton East
Project by August 31, 2021 all of the proceeds to be derived by the City from the sale of
the Series 2020AB Bonds.
(i) The Series 2020B Bond is not a "hedge bond" within the meaning of Section
149(g) of the Code. The City expects to spend not less than 85% of the sale proceeds of
the Series 2020B Bond within three years after the date hereof and less than 50% of the
proceeds of the Series 2020B Bond are invested in nonpurpose investments having a
substantially guaranteed yield for four years or more.
(j) Proceeds of the Series 2020B Bond and investment income thereon, if any, to
be used to finance the costs of the Davis Lift Station and Norton East Project, to fund the
Reserve Account, and to pay costs of issuance of the Series 2020AB Bonds will be
invested for a temporary period pursuant to Section 1.148-2( e )(2) of the Regulations
ending on the earlier of: (i) three years from the date hereof (July 22, 2023), or (ii) the
date that the Davis Lift Station and Norton East Project would be completed in the
exercise of due diligence and all costs thereof promptly paid. If, at the conclusion of such
temporary period, sale proceeds of the Series 2020B Bond and investment income
thereon, other than sale proceeds deposited in the Reserve Account, have not been
allocated to the governmental purposes of the Series 2020B Bond, such amounts will not
be invested at a yield greater than the yield of the Series 2020B Bond, if and to the extent
such restriction is necessary to prevent the Series 2020B Bond from being an arbitrage
bond within the meaning of Section 148 of the Code and Regulations unless the City
determines to take advantage of Section 1.148-5( c) of the Regulations relating to yield
reduction payments.
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(k) The Davis Lift Station and Norton East Project has not been and is not
expected to be sold or otherwise disposed ofby the City during the term of the Series
2020B Bond. The City expects that the Davis Lift Station and Norton East Project will
remain owned and operated by the City substantially in the manner in which they are now
owned and operated for the indefinite period concluding not earlier than the final stated
maturity date of the Series 2020B Bond.
The City reasonably expects that during the term of the Series 2020B Bond no
private business use will be made of the Davis Lift Station and Norton East Project or the
System and that no private payments or security will be made or furnished that would
cause the Series 2020B Bond to be a "private activity bond" within the meaning of
Section 141 of the Code and applicable Regulations. No proceeds of the Series 2020B
Bond are being or will be loaned to any nongovernmental person. The City reasonably
expects that the Series 2020B Bond will not be private activity bonds within the meaning
of Section 141 of the Code.
(1) No obligations of the City (a) are being issued at substantially the same time
as the Series 2020B Bond, (b) are being sold pursuant to the same plan of financing as the
Series 2020B Bond, and (c) are reasonably expected to be paid from substantially the
same source of funds (detennined without regard to guarantees from unrelated parties) as
will be used to pay the Series 2020B Bond, within the meaning of Section 1.150-1 ( c) of
the Regulations.
(m) Pursuant to the Resolution, the principal of, premium, if any, and interest on
the Bonds are to be paid from the Revenue Bond Account in the Sewer System Fund (the
"Revenue Bond Account"). The City does not reasonably expect to use any other fund or
account to pay principal of, premium, if any, or interest on the Series 2020B Bond. The
Net Revenues appropriated by the Resolution to the payment of the Series 2020B Bond
are to be deposited in the Revenue Bond Account.
It is expected that all amounts credited to the Revenue Bond Account allocable to
the Series 2020B Bond will be used to pay the interest on and principal of the Series
2020B Bond within 13 months after deposit. The Revenue Bond Account will be used
primarily to achieve a proper matching of revenues and debt service within each bond
year (the 12-month period (or shorter period from the date hereof) ending on a July 1)
and is expected to be fully depleted at least once a year on July 1, except for a reasonable
carryover amount which is not expected to exceed the greater of (i) the earnings on
money in the Revenue Bond Account allocable to the Series 2020B Bond for the
preceding bond year or (ii) one-twelfth of the annual debt service on the Series 2020B
Bond in the preceding bond year. Consequently, the amounts on deposit in the Revenue
Bond Account allocable to the Series 2020B Bond constitute a "bona fide debt service
fund" for the Series 2020B Bond within the meaning of Section 1.148-l(b) of the
Regulations.
(n) As of the first day of each month commencing August 1, 2020, the City
Finance Director will determine the balance on deposit in the Revenue Bond Account
allocable to the Series 2020B Bond. If the amount on deposit in the Revenue Bond
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Account allocable to the Series 2020B Bond exceeds the sum of the amount of principal
and interest payable from the Revenue Bond Account on the Series 2020B Bond through
the following July 1 plus the carryover amount described in paragraph 6(m) hereof, then,
to the extent necessary to prevent the Series 2020B Bond from becoming an arbitrage
bond, the excess over such sum will either be (i) used to redeem principal installments of
the Series 2020B Bond, or (ii) invested at a yield less than or equal to the yield of the
Series 2020B Bond, except as permitted by paragraph 6(p) hereof.
The Series 2020A Bond is payable out of available Surplus Net Revenues in the
Replacement and Depreciation Account or the Surplus Account, subject to the prior lien
of the Bonds on Net Revenues in the Revenue Bond Account and Reserve Account. The
obligation of the City to repay the principal of and interest and any surcharges on the
Series 2020A Bond will be forgiven in the event the City satisfies the requirements set
forth in the Resolution No. 5183, and the DNRC delivers a statement of principal
forgiveness to the City. If not so forgiven, the principal of the Series 2020A Bond will be
payable as provided in the Resolution, together with interest and surcharges thereon
totaling 2.50% per annum. Interest and surcharges on the Series 2020A Bond, if any, are
included in gross income for federal income tax purposes.
( o) Pursuant to the Resolution, the City has established a Reserve Account in the
Sewer System Fund (the "Reserve Account") to secure its parity Bonds, including the
Series 2010B Bond, the Series 2010C Bond, the Series 2010D Bond, the Series 2010F
Bond, the Series 2010G Bond, the Series 2010H Bond, and the Series 2020B Bond.
There is currently $1,783,491 on hand in the Reserve Account, which amount secures the
Outstanding Bonds other than the Series 2020AB Bond. The Reserve Requirement for
the Bonds has been amended pursuant to Article XI of the Supplemental Resolution and
as a result, the Reserve Account is overfunded. The City funded the deposits to the
Reserve Account for the Series 2010B Bond, the Series 2010C Bond, the Series 2010D
Bond, Series 2010F Bond, Series 2010G Bond, and Series 2010H Bond from proceeds of
each such series of Bonds. On the date hereof, the City will transfer $891,745,
representing amounts allocable to the Series 201 OB Bond, the Series 201 0C Bond, the
Series 2010D Bond, Series 2010F Bond, Series 2010G Bond, and Series 2010H Bond, to
the Revenue Bond Account to pay debt service on such Bonds on January 1, 2021 and, if
there are amounts left over after such payment, to pay debt service on such Bonds on July
1,2021.
Following the transfers described above, the amount remaining in the Reserve
Account equals $891,746, and assuming the full principal amount of the Series 2020B
Bond is advanced, the amount in the Reserve Account would equal $1,094,569, which is
equal to one-half the sum of the highest cumulative amount of principal and interest
payable on the Outstanding Bonds and the Series 2020B Bond in any future fiscal year.
The City will allocate amounts on deposit in the Reserve Account in proportion to
the maximum amount of principal and interest payable in the current or any future fiscal
year for the Series 201 OB Bond, the Series 201 0C Bond, the Series 201 OD Bond, the
Series 201 OF Bond, the Series 201 0G Bond, the Series 201 OH Bond, and the Series
2020B Bond; provided that such amount shall not be less than the amount of proceeds of
6
Bonds of such series (whether sale or transferred proceeds) deposited therein. Assuming
the full amount of the Series 2020B Bond is advanced, of the total amount on hand in the
Reserve Account, $13,219 is allocated to the Series 201 OB Bond, $36,537 is allocated to
the Series 201 0C Bond, $340,546 is allocated to the Series 201 OD Bond, $30,023 is
allocated to the Series 20 lOF Bond, $132,659 is allocated to the Series 20100 Bond,
$338,762 is allocated to the Series 2010H Bond, and $202,823 is allocated to the Series
2020B Bond.
Upon each advance of principal of the Series 2020B Bond, the City will deposit in
the Reserve Account from the proceeds of the Series 2020B Bond an amount sufficient to
cause the balance in the Reserve Account to equal the Reserve Requirement in respect of
the Series 201 OB Bond, the Series 201 0C Bond, the Series 201 OD Bond, the Series
2010F Bond, the Series 20100 Bond, the Series 2010H Bond, and the principal of the
Series 2020B Bond so advanced. On the date hereof, the City will fund a deposit to the
Reserve Account from proceeds of the Series 2020B Bond in the amount of $2,444,
which will cause the balance in the Reserve Account to be equal to the Reserve
Requirement for the Series 201 OB Bond, the Series 201 0C Bond, the Series 201 OD Bond,
the Series 2010F Bond, the Series 20100 Bond, the Series 2010H Bond, and the principal
amount of the Series 2020B Bond advanced on the date hereof ($66,757).
The Reserve Account, as established and implemented pursuant to the Resolution,
constitutes a "reasonably required reserve" within the meaning of Section 148(d) of the
Code to the extent the amount therein allocable to the Series 2020B Bond (the "2020B
Reserve Amount") does not exceed 2020B Reserve Limitation (as hereinafter defined).
Any portion of the 2020B Reserve Amount that is in excess of the 2020B Reserve
Limitation shall not be invested at a yield in excess of the yield of the Series 2020B Bond
(2.5000856%), except as pennitted by paragraph 6(p) hereof. As used herein, the
"2020B Reserve Limitation" is equal, as of the date of calculation, to the least of: (i) ten
percent (10%) of the principal amount of the Series 2020B Bond that is actually advanced
pursuant to the terms of the Resolution (if all proceeds are advanced, $778,600.00); (ii)
the maximum amount of principal and interest payable on the Series 2020B Bond in the
current or any future fiscal year of the City (initially, $497,813); and (iii) 125% of the
average debt service on the Series 2020B Bond payable in any fiscal year of the City
during the tenn of the Series 2020B Bond (initially, $620,658).
Assuming the full principal amount of the Series 2020B Bond is advanced, the
2020B Reserve Amount, using the method described in the first paragraph of paragraph
6(0) above, is $202,823. All of the 2020B Reserve Amount, assuming the full principal
amount of the Series 2020B Bond is advanced, is a reasonably required reserve for the
Series 2020B Bond to the extent not in excess of the 2020B Reserve Limitation.
However, because the Series 2020B Bond is subject to rebate, amounts earned on the
2020B Reserve Amount that are subject to rebate shall be rebated as provided in the
Rebate Certificate dated as of the date hereof.
(p) An aggregate amount of proceeds of the Series 2020B Bond not to exceed the
Minor Portion Amount under Section 148(e) of the Code ($100,000) (the "Minor Portion
7
Amount") may be invested without restriction as to yield throughout the term of the
Series 2020B Bond. To the extent that money, allocated to the Series 2020B Bond
pursuant to the Regulations, on deposit in (i) the Construction Account remains therein
for a period longer than that prescribed by paragraph 6(i), (ii) the Revenue Bond Account
in excess of the amount described in paragraph 6(11) hereof, or (iii) the 2020B Reserve
Amount exceeds the 2020B Reserve Limitation described in paragraph 6( o) hereof,
exceeds the Minor Portion Amount, no more than the Minor Portion Amount may be
invested at a yield which exceeds the yield of the Series 2020B Bond.
(q) No p01iion of the Series 2020B Bond is issued solely for the purpose of
investing such portion at a materially higher yield as less than a major p01iion. None of
the proceeds of the Series 2020B Bond will be used directly or indirectly to replace funds
which were used directly or indirectly to acquire obligations with a yield that is
materially higher than the yield of the Series 2020B Bond (2.5000856%).
(r) The Series 2020B Bond will not be outstanding longer than necessary, within
the meaning of Section 1.148-1( c)(4) of the Regulations. The weighted average maturity
of the Series 2020B Bond (11.017 years) does not exceed 120 percent of the average
reasonably expected economic life of the Davis Lift Station and Norton East Project.
Such average reasonably expected economic life is not less than 20 years.
(s) As determined in Section 10.4 of the Resolution No. 5183, the Series 2020B
Bond is subject to rebate requirements of Section 148(±) of the Code.
(t) On the basis of all the facts, estimates and circumstances now in existence and
set forth in the documents relating to the issuance of the Series 2020B Bond, including
without limitation this instrument, it is expected that the proceeds of the Series 2020B
Bond will be used in a manner that would not cause the Series 2020B Bond to be an
"arbitrage bond" within the meaning of Section 148 of the Code and the Regulations.
(u) To the best of our knowledge and belief, there are no other facts, estimates or
circumstances that would materially change the foregoing expectations and said
expectations are reasonable. No matters have come to our attention which make
unreasonable or incorrect the representations made in this Certificate.
7. The provisions of this paragraph 7 are intended to establish and provide for
compliance by the City with Treasury Regulations, Section 1.150-2 (the "Reimbursement
Regulations") applicable to the "reimbursement proceeds" of the Series 2020B Bond, being
those proceeds which will be used by the City to reimburse itself for any expenditure with
respect to the Davis Lift Station and Norton East Project which the City paid or will have paid
prior to the issuance of the Series 2020B Bond and as to which the City will reimburse itself
from "reimbursement proceeds" (a "Reimbursement Expenditure").
The City hereby certifies and covenants as follows:
(a) Except as hereinafter provided, on or before the date of payment of any
Reimbursement Expenditure, the City by resolution of the City Commission made a
written declaration of the City's official intent ( each a "Declaration") which complies
8
with the provisions of Section l. l 50-2(d) and (e) of the Reimbursement Regulations.
The Declaration need not cover, however, Reimbursement Expenditures: (i) to be paid or
reimbursed from sources other than the Series 2020B Bond, (ii) constituting "preliminary
expenditures" (within the meaning of Section 1.150-2(±)(2) of the Regulations) for the
Davis Lift Station and Norton East Project, including engineering or architectural
expenses and similar preparatory expenses, which in the aggregate do not exceed 20% of
the "issue price" of the Series 2020B Bond, or (iii) in a "de minimus" amount (as defined
in Section 1.150-2(±)(1) of the Regulations), i.e., $100,000.
(b) As of the date of the Declaration, no funds from sources other than the Series
2020B Bond were, or were reasonably expected to be, reserved, allocated on a long-tenn
basis, or otherwise set aside by the City to provide financing for the Reimbursement
Expenditure to be reimbursed from proceeds of the Series 2020B Bond.
(c) Each Reimbursement Expenditure to be reimbursed from proceeds of the
Series 2020B Bond, other than costs of issuing the Series 2020B Bond, is a capital
expenditure (i.e., a cost that is properly chargeable to capital account (or would be with a
proper election) under general federal income tax principles).
( d) The "reimbursement allocation" described in the Reimbursement Regulations
for each Reimbursement Expenditure to be reimbursed from proceeds of the Series
2020B Bond shall be made forthwith following (but not prior to) the issuance of the
Series 2020B Bond and in all events within the period ending on the date which is three
years after the later of: (i) the date of payment of the Reimbursement Expenditure or (ii)
the date on which the Davis Lift Station and Norton East Project is first placed in service
or abandoned.
( e) Each such reimbursement allocation will be evidenced by an entry on the
official books or records of the City maintained for and in connection with the Series
2020B Bond and will specifically identify the actual prior Reimbursement Expenditure to
be reimbursed from proceeds of the Series 2020B Bond.
(f) The City is unaware of any facts or circumstances which would cause it to
question the reasonableness or accuracy of this paragraph 7 or of the Declaration, or its
compliance with any of the covenants herein contained.
(g) None of the proceeds of the Series 2020B Bond will be used by the City to
reimburse itself for expenditures with respect to the Davis Lift Station and Norton East
Project which the City paid or will have paid prior to the issuance of the Series 2020B
Bond.
9
8. The seal impressed on this Ce1iificate and on the Series 2020AB Bonds is the true and
only official corporate seal of the City.
WITNESS our hands on behalf of the City as of this 22nd day of July, 2020.
(SEA And?#?~ C1 ger
And/£~\)~
Ci{ypinanceDirector -=
And _JY1_: ____ lte __ vtf~~--
City Clerk
Signature Page to Officers' Certificate
$8,086,000
Sewer System Revenue Bonds
(DNRC Water Pollution Control State Revolving Loan Program),
Consisting of $300,000 Subordinate Lien Taxable Series 2020A Bond,
and $7,786,000 Series 2020B Bond
City of Bozeman, Montana
REBATE CERTIFICATE
The City of Bozeman, Montana (the "City"), acting through its undersigned duly
authorized officer, hereby certifies and agrees as follows with respect to the $7,786,000 Sewer
System Revenue Bond (DNRC Water Pollution Control State Revolving Fund Program), Series
2020B, dated, as originally issued, as of July 22, 2020 (the "Series 20120B Bond") issued
pursuant to Resolution No. 4220, adopted by the City Commission of the City on November 16,
2009 (the "Original Resolution"), as amended and supplemented by Resolution Nos. 4234, 4245,
4254, 4299, and 4462, adopted by the City Commission on January 19, 2010, February 16, 2010,
May 3, 2010, November 1, 2010, and August 5, 2013, respectively, and as further amended and
supplemented by Resolution No. 5183, duly adopted by the City Commission of the City on June
15, 2020 (the Original Resolution, as so amended and supplemented, the "Resolution"):
Section 1. Undertakings.
1.01. The City, pursuant to Section 10.4 of the Resolution No. 5183, has covenanted to
comply with the requirements of Section 148(£) of the Internal Revenue Code of 1986, as
amended (the "Code") relating to the Series 2020B Bond. The City covenants that it will consult
with Bond Counsel (as hereinafter defined) and undertake to determine what is required with
respect to the rebate provisions contained in Section 148(£) of the Code from time to time and
will comply with any requirements that may be applicable to the Series 2020B Bond. The
methodology described in this Certificate will be followed, except to the extent inconsistent with
any requirements of future regulations or written advice received from Bond Counsel.
1.02. Detailed records with respect to each and every Nonpurpose Investment
attributable to Gross Proceeds of the Series 2020B Bond shall be maintained by the City,
including: (i) purchase date, (ii) purchase price, (iii) brokerage or other transaction costs of
purchase, (iv) information establishing fair market value on the date such investment became a
Nonpurpose Investment, (v) any accrued interest paid, (vi) face amount, (vii) coupon or stated
interest rate, (viii) periodicity of interest payments, (ix) disposition price, and (xii) brokerage or
other transaction costs of disposition. Such detailed recordkeeping is required for the calculation
of the Rebatable Arbitrage which, in part, will require a determination of the difference between
the actual aggregate earnings of all the Nonpurpose Investments and the amount of such earning
assuming a rate of return equal to the Yield of the Series 2020B Bond.
Section 2. Definitions. Unless the context hereof otherwise requires, capitalized terms
shall have the respective meanings given them in the Resolution or in the Officers' Certificate of
the City of even date herewith. In addition, the following capitalized terms have the following
respective meanings in this Certificate:
Available Proceeds shall mean "gross proceeds" of the Series 2020B Bond as
defined in Section 1.148-7( c )(3) of the Regulations. Generally, "Available Proceeds"
means the sale proceeds of the Series 2020B Bond and investment proceeds derived
therefrom; it does not include amounts allocable to the Series 2020B Bond in the Debt
Service Account to the extent they constitute a "bona fide debt service fund" for the
Series 2020B Bond or a "reasonably required reserve," each as described in the Officers'
Certificate executed by the City of even date herewith.
Bond Counsel shall mean nationally recognized bond counsel selected by the
City.
Bond Year shall mean each one-year period (or shorter from the Closing
Date) that ends at the close of business on each July 1, or, if earlier, the date the
last Bond is paid.
Closing Date shall mean July 22, 2020, the date of delivery of the Series
2020B Bond.
Code shall mean the Internal Revenue Code of 1986, as amended, from
time to time, and the applicable Treasury Regulations (including proposed or
temporary regulations) promulgated thereunder.
Computation Date shall mean an installment computation date (the last
day of the fifth and each succeeding fifth Bond Year) and the final computation
date (the date the last Bond is discharged). If the Series 2020B Bond are paid at
its stated maturities, the installment computation dates are expected to be July 1,
2025, July 1, 2030, July 1, 2035, and the final computation date is expected to
be July 1, 2040.
Gross Proceeds shall mean, with respect to the Series 2020B Bond, all
proceeds of the Series 2020B Bond (including original proceeds and transferred
proceeds) and any funds ( other than proceeds) that are part of a reserve or
replacement fund for the Series 2020B Bond, including amounts on deposit in
the Construction Account, if any, and in the Reserve Account, each of the
Sewer System Fund (the "Fund"), but excluding amounts on deposit in the Debt
Service Account, allocable to the Series 2020B Bond to the extent it constitutes
a "bona fide debt service fund" as described in the Officers' Certificate of even
date herewith.
Investment Property shall mean any security, obligation ( other than a
Non-AMT Obligation), annuity contract or investment-type property.
Non-AMT Obligation means any obligation the interest on which is not
includable in gross income under Section 103 of the Code and which is not a
"specified private activity bond" (within the meaning of Section 57(a)(5)(C) of
the Code).
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Nonpurpose Investment shall mean any Investment Property that is not a
purpose investment in which Gross Proceeds of the Series 2020B Bond are
invested, including investments allocated to the Series 2020B Bond in the
Construction Account in the Fund and the Reserve Amount.
Project shall mean the Davis Lift Station and Norton East Project as
described in Appendix A to the Resolution No. 5183.
Rebatable Arbitrage shall mean, as of any Computation Date, the excess
of the future value of all nonpurpose receipts with respect to the Series 2020B
Bond over the future value of all nonpurpose payments with respect to the
Series 2020B Bond.
Regulations shall mean the Treasury Regulations applicable to the Series
2020B Bond and promulgated under the Code or the Internal Revenue Code of
1954, as amended, including, without limitation, Treasury Regulations, Sections
1.103-13, 1.103.14, 1.103-15, 1.148-0 through 1.148-11, 1.148-12T, 1.148-13T,
1.149-1 and 1.150-0 through 1.150-1.
Reserve Amount shall mean the amount on deposit in the Reserve
Account in the Fund that is allocable to the Series 2020B Bond from time to
time, as provided in the Officers' Certificate of the City, of even date herewith.
Yield, with reference to any obligation, shall mean that discount rate
which, when computing the present value of all unconditionally payable
payments of principal and interest paid and to be paid on such obligation,
produces an amount equal to the present value of the issue price of the
obligation.
Yield of the Series 2020B Bond shall mean 2.5000856% per annum.
Section 3. Rebatable Arbitrage Calculation and Payment.
3.01. The Project will be owned and operated by the City and used for governmental
purposes. The City expects to spend all advances of the Series 2020B Bond no later than five
business days after receipt of each advance. Such amounts advanced will reimburse the City for
payments made by the City on the Project. In any event, all of the Available Proceeds qualify for
the temporary period under Section 1.148-2( e )(2) of the Regulations. Apart from the sale
proceeds of the Series 2020B Bond and investment proceeds derived therefrom and the City's
contribution of amounts to the Reserve Account from proceeds of the Series 2020B Bond, the
City does not expect that any other Gross Proceeds will arise. Thus, if the expenditure tests set
forth in Section 1.148-7( d)(l )(i) of the Regulations are met (i.e., the following percentages of
Available Proceeds are spent within the following periods beginning on the date of issuance: at
least 15% within six months (January 22, 2020); 60% within one year (July 22, 2021), and 100%
within eighteen months (January 22, 2021) (subject to a reasonable contractual retainage amount
not exceeding five percent of the net sale proceeds of the Bond as of January 22, 2021 to be
spent within 30 months after the date hereof, as defined in Section 1.148-7(h) of the
Regulations)), then the City may elect to treat the Available Proceeds as exempt from the rebate
3
requirements of Section 148(f) of the Code pursuant to the "18 month" spending exception
provided under Section 1.148-7( d) of the Regulations. For purpose of evidencing compliance
with the "18-month" spending exception, the City shall prepare and file with the City Director of
Finance the Construction Expenditure Report attached as Exhibit A at the end of each of the
three six-month increments that make up the "18-month" spending exception period.
3.02. For purposes of complying with Section 148(f) of the Code, the City will prepare
or have prepared a calculation of the Rebatable Arbitrage consistent with the rules described in
this Section 3, recognizing that even if the "18 month" spending exception is applicable, the
Reserve Amount is still subject to rebate. The City will prepare (and file in the office of the City
Director of Finance a completed copy of the calculation of the Rebatable Arbitrage within 30
days after the Computation Date.
3.03. The City shall pay to the United States Department of Treasury from surplus
money in the Sewer System Fund or other available funds (A) not later than 60 days after each
Computation Date, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of
such Computation Date; and (B) not later than 60 days after the final Computation Date, an
amount equal to 100% of the Rebatable Arbitrage.
3.04. Each payment required to be made pursuant hereto shall be filed with the Internal
Revenue Service Center, Ogden, Utah 84201 (or at such other place as the Internal Revenue
Service may designate), on or before the date such payment is due, and shall be accompanied by
a completed and executed Internal Revenue Service Form 8038-T. The City shall retain records
of the calculations required by this Section 3 until six years after the final Computation Date.
3.05. Notwithstanding anything in this certificate to the contrary, gross earnings during a
Bond Year on any bona fide debt service fund for the Series 2020B Bond and amounts earned on
such amounts, if allocated to such bona fide debt service fund, shall not be taken into account in
calculating the Rebatable Arbitrage. For purposes of this paragraph 3.05, the term "gross
earnings" means the aggregate amount earned on the Nonpurpose Investments in which the
Gross Proceeds deposited to the bona fide debt service fund are invested, including amounts
earned on such amounts if allocated to the bona fide debt service fund. It is expected that the
amounts on deposit in the Revenue Bond Account allocable to the Series 2020B Bond will
constitute a bona fide debt service fund for the Series 2020B Bond.
Section 4. Filing Requirements. The City shall file or cause to be filed such reports or
other documents with the Internal Revenue Service as required by the Code in accordance with
an opinion of Bond Counsel.
Section 5. Survival of Defeasance. Notwithstanding anything in this Certificate or any
other provisions of the Resolution to the contrary, the obligation to remit the Rebatable Arbitrage
to the United States Department of the Treasury and to comply with all other requirements
contained in this Certificate shall survive the defeasance of the Series 2020B Bond.
4
Section 6. Amendments. The City may amend or supplement the provisions of this
Ce1iificate by filing an executed copy of such amendment or supplement in the office of the
Secretary accompanied by an opinion of Bond Counsel to the effect that such amendment or
supplement is required by, or better complies with, the provisions of Section 148 and applicable
Regulations.
Dated: July 22, 2020
CITY OF BOZEMAN, MONTANA
By_/{&Zo~-~t:0c:_' ~D~~~· ~a_~-
City Finance Director
5
EXHIBIT A
CONSTRUCTION EXPENDITURE REPORT
This report is submitted pursuant to Section 3.01 of the Rebate Ce1iificate, dated July 22,
2020. As of _____ , 20_,(l) the aggregate "Available Proceeds" available for expenditure
were$ _____ (Zl The amount expended for costs of the Project as of _____ _
___ ,Ol was $ ____ ,C 4l which is _____ % of said aggregate "Available Proceeds."
Consequently, the requirements of Section 3.01 of the Rebate Certificate [have been] [have not
been] met.C 5l
Dated: ______ , 20_.
CITY OF BOZEMAN, MONTANA,
By ______________ _
Its --------------
(I) Insert most recent date from Section 3 .01, or semiannual date thereafter until all Available Proceeds are
expended.
(2) Total of (i) $ ______ (issue price of Series 2020B Bond less sale proceeds contributed to the
Reserve Account and less the sum of costs of issuance to be paid from proceeds thereof), plus (ii) aggregate
investment earnings on amounts in Construction Account in the Sewer System Fund up to the date inserted in first
blank and future investment income thereon that the City reasonably expects as of the date inserted in the first blank.
(3) Same date as first blank.
(4) Includes all disbursements for costs of the Project (excluding amounts contributed to the Reserve
Account and bond issuance costs) from proceeds of the Series 2020B Bond or investment income thereon from the
Construction Account.
(5) If percentage requirement of Section 3 .01 is not met, all Available Proceeds are subject to arbitrage
rebate.
A-1
$8,086,000
Sewer System Revenue Bonds
(DNRC Water Pollution Control State Revolving Loan Program),
Consisting of $300,000 Subordinate Lien Taxable Series 2020A Bond,
and $7,786,000 Series 2020B Bond
City of Bozeman, Montana
CERTIFICATE AND RECEIPT
OF CITY FINANCE DIRECTOR
I, the undersigned, being the duly qualified and acting City Finance Director of the City
of Bozeman, Montana (the "City"), hereby certify and acknowledge that on the date of this
instrument, I received from the Department of Natural Resources and Conservation of the State
of Montana (the "DNRC"), as purchaser thereof (the "Purchaser"), the amount of $197, as the
first advance of the principal amount of the Subordinate Lien Sewer System Revenue Bond
(DNRC Water Pollution Control State Revolving Loan Program), Taxable Series 2020A, of the
City (the "Series 2020A Bond"), dated, as originally issued, as of the date hereof, and issued in
the maximum principal amount of $300,000, and $66,757, as the first advance of principal of the
Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program),
Series 2020B, of the City (the "Series 2020B Bond"), dated, as originally issued, as of the date
hereof, and issued in the maximum principal amount of $7,786,000.
Following the total initial advance at closing, the remaining principal amounts of the
Series 2020A Bond and Series 2020B Bond will be advanced in substantially equal amounts
until all of the Series 2020A Bond has been advanced. The advance received on the date hereof
shall be used for construction costs and to fund a deposit to the Reserve Account in the amount
of $2,444 from proceeds of the Series 2020B Bond.
As Bond Registrar designated under Resolution No. 5183 adopted by the City
Commission, on June 15, 2020, authorizing the issuance of the Series 2020A Bond and the
Series 2020B Bond ( collectively, the "Bonds"), I further certify that on the date hereof the Bond
Registrar has authenticated and delivered the Bonds to the Purchaser. I further certify that the
Bonds so authenticated and delivered were registered, on the face thereof and also in the bond
register maintained by the Bond Registrar, in the name of the Purchaser.
WITNESS my hand officially as such City Finance Director as of this 22nd day of July,
2020.
City Finance Director"
$8,086,000
Sewer System Revenue Bonds
(DNRC Water Pollution Control State Revolving Loan Program),
Consisting of $300,000 Subordinate Lien Taxable Series 2020A Bond,
and $7,786,000 Series 2020B Bond
City of Bozeman, Montana
CERTIFICATE AND RECEIPT OF PURCHASER
The Department of Natural Resources and Conservation of the State of Montana, as
purchaser (the "Purchaser") of the Sewer System Revenue Bonds (DNRC Water Pollution
Control State Revolving Loan Program), consisting of $300,000 Subordinate Lien Taxable
Series 2020A Bond and $7,786,000 Series 2020B Bond (collectively, the "Series 2020AB
Bonds") of the City of Bozeman, Montana (the "City"), by its duly authorized representative,
does hereby acknowledge receipt of the Series 2020AB Bonds in the maximum authorized
principal amount of $8,086,000, each fully executed and authenticated. Sufficient funds are
available under the State of Montana's Water Pollution Control State Revolving Fund Program
(the "Program") to fund the purchase by the Purchaser of the Series 2020AB Bonds in the
aggregate principal amount of $8,086,000. The Purchaser is duly authorized to advance
principal amounts of the Series 2020AB Bonds from time to time up to $8,086,000 if the
conditions precedent thereto under the Series 2020AB Bonds, the Resolution (as defined in the
Series 2020AB Bonds) and the Program, including provisions of the Indenture of Trust, between
the Board of Examiners of the State of Montana and U.S. Bank National Association, as Trustee,
have been satisfied.
The Purchaser hereby certifies that the source of the entire purchase price of (i) the Series
2020A Bond is entirely from proceeds of the EPA Capitalization Grant, and (ii) the Series 2020B
Bond (in part, directly or indirectly, is from proceeds of the EPA Capitalization Grant and in
part, directly or indirectly, with proceeds of the State's General Obligation Bonds (Drinking
Water State Revolving Fund Program). Terms used with initial capital letters but not defined
herein shall have the meanings given them in Resolution No. 5183 of the City.
Dated: July 22, 2020.
DEPARTMENT OF NATURAL
RESOURCES AND CONSERVATION
OF THE STATE OF MONTANA
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 2020A
R-1 $300,000
FOR VALUE RECEIVED, 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 out of available Surplus Net Revenues in the Replacement and
Depreciation Account or the Surplus Account of its Sewer System Fund (the “Sewer System
Fund”), the sum of the principal 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 and one-half percent (2.50%) per annum on the unpaid balance until
paid, all subject to the effect of the immediately following paragraph. Principal and interest shall
be payable in semiannual installments payable on each January 1 and July 1 (each a “Payment
Date”) commencing with the Payment 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 2020A Loan is not forgiven and ending on July 1, 2040, all as described in the Resolution
(as hereinafter defined), subject to earlier redemption. 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 and of interest shall be as set forth in Schedule B
attached hereto. Upon each disbursement of the 2020A Loan, the DNRC shall enter (or cause to
be entered) the principal amount advanced on Schedule A under “Advances” and the total amount
advanced under the Resolution (as hereinafter defined), including such advance, 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
authorizing the Bond, and the final Schedule B will reflect repayments under Section 5.1.4 of the
Resolution. Schedule B shall be calculated and recalculated on a level debt service basis assuming
an interest rate of two and one-half percent (2.50%) per annum. Past-due payments of principal
and interest shall bear interest at the rate of ten percent (10.00%) per annum, until paid. Interest
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.
2
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 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 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 PAYMENT DATE
FIRST OCCURRING AFTER DELIVERY OF A NONCOMPLIANCE STATEMENT AND
INTEREST SHALL BE DEEMED TO ACCRUE ON THE PRINCIPAL OF THIS 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 Subordinate Lien 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 $300,000 (the “Series 2020A Bond”). The
Series 2020A 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”). The Series 2020A 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, adopted by the City Commission of the Borrower on November 16, 2009
(the “Original Resolution”), as amended and supplemented by Resolution Nos. 4234, 4245, 4254,
4299, 4462, and 5183, adopted on January 19, 2010, February 16, 2010, May 3, 2010, November
1, 2010, August 5, 2013, and June 15, 2020, respectively (the Original Resolution, as so amended
and supplemented, the “Resolution”). Terms used with initial capital letters but not defined herein
have the meanings given to them in the Resolution. The Series 2020A Bond is issuable only as a
single, fully registered bond. The Series 2020A 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 Sewer System Fund. Simultaneously herewith, the Borrower is issuing
its Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program),
Series 2020B (the “Series 2020B Bond”) and will subsequently issue its Sewer System Revenue
Bond (DNRC Water Pollution Control State Revolving Loan Program), Series C (the “Series C
Bond”), both of which are or will be payable from the Revenue Bond Account in the Fund of the
Borrower on a parity with the Borrower’s Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 2010B, its First Amended and Restated Sewer
System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series
2010C, its First Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution
3
Control State Revolving Loan Program), Series 2010D, its First Amended and Restated Sewer
System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series
2010F, its First Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Series 2010G, and its First Amended and Restated Sewer
System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series
2010H (all such Bonds, including the Series 2020B Bond, and, when issued, the Series C Bond,
collectively, the “Outstanding Bonds”).
Following the 2020B First Advance, the total amount of each advance will be split
equally between the Series 2020A Bond and the Series 2020B Bond, until the entire amount of the
Series 2020A Bond is advanced. After the Series 2020A Bond is advanced in full, all advances
will be from only the Series 2020B Bond.
Reference is made to the Resolution for a more complete statement of the terms
and conditions upon which the Series 2020A 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 2020A Bond.
The Borrower may prepay the principal of the Series 2020A 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 is then delinquent. Any prepayment permitted by the DNRC
must be accompanied by payment of accrued interest to the date of prepayment on the amount of
principal prepaid. If the Series 2020A Bond is prepaid in part, such prepayments shall be applied
to principal payments in inverse order of maturity or as otherwise determined by the DNRC.
This Series 2020A Bond, including interest and any premium, is payable solely
from the Surplus Net Revenues available for the payment hereof and does 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 2020A
Bond is registered as the absolute owner hereof, whether this Series 2020A 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 2020A Bond may be transferred as hereinafter
provided.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that
the Borrower has duly authorized and 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 Replacement and
Depreciation Account and Surplus Account in that Sewer System 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 Net 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 110% of the
4
maximum amount of principal and interest payable from the Revenue Bond Account in any
subsequent fiscal year and to maintain the balance in the Reserve Account at the Reserve
Requirement and to produce in each fiscal year adequate Net Revenues to pay the principal of and
interest on the Outstanding Bonds, as and when due; that additional Bonds issued 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 Bonds
on such Net Revenues and such obligations are payable only from Surplus Net Revenues (as is the
case with this Series 2020A Bond); that all provisions for the security of the holder of this Series
2020A 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 2020A 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 as so required; and that this Series 2020A 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 Sewer System Fund 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
2020A 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 City Manager, and the
City Clerk, and has caused the official seal of the Borrower to be affixed hereto, and has caused
this Bond to be dated as of the 22nd day of July, 2020.
______________________________________
Mayor
(Seal)
_______________________________________
City Manager
_______________________________________
City Clerk
5
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 City Finance Director 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 outstanding 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 City Finance Director
July 22, 2020 Department of Natural
Resources and Conservation
1539 Eleventh Avenue
Helena, MT 59620
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The City Finance Director 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
Registered Holder
Signature of
Bond Registrar
6
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:
(Authorized Signature)
For:
(Holder)
7
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Date Advances
Total Amount
Advanced Notation Made By
07/22/2020 $197.00 $197.00
8
SCHEDULE B
Total Loan
Date Principal Interest Payment
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 2020B
R-1 $7,786,000
FOR VALUE RECEIVED, 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 and one-half percent (2.50%) per annum on the unpaid balance until paid.
Principal and interest shall be payable in semiannual installments payable on each January 1 and
July 1 (each a “Loan Repayment Date”) commencing January 1, 2021 and concluding on July 1,
2040. The portion of each such payment consisting of principal and of interest shall be as set forth
in Schedule B hereto. Upon each disbursement of 2020B Loan amounts to the Borrower pursuant
to the Resolution (defined 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, and the final Schedule B
will reflect repayments under Section 5.1.4 of the Resolution. Schedule B shall be calculated and
recalculated on a level debt service basis assuming an interest rate of 2.50% per annum. Past-due
payments of principal and interest shall bear interest at the rate of ten percent (10.00%) per annum,
until paid. Interest 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 $7,786,000 (the “Series 2020B Bond”). The Series
2020B 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 costs of issuance of the Series 2020B Bond. The Series 2020B 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
2
of the Borrower adopted on November 16, 2009 (the “Original Resolution”), as amended and
supplemented by Resolution Nos. 4234, 4245, 4254, 4299, 4462, and 5183, adopted on January
19, 2010, February 16, 2010, May 3, 2010, November 1, 2010, August 5, 2013, and June 15, 2020,
respectively (the Original Resolution, as so amended and supplemented, the “Resolution”). Terms
used with initial capital letters but not defined herein have the meanings given to them in the
Resolution. The Series 2020B Bond is issuable only as a single, fully registered bond. The Series
2020B Bond is issued on a parity with the Borrower’s Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010B, its First Amended and Restated
Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program),
Series 2010C, its First Amended and Restated Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010D, its First Amended and Restated
Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program),
Series 2010F, its First Amended and Restated Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010G, and its First Amended and
Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan
Program), Series 2010H (collectively the “Outstanding Bonds”). Simultaneously herewith, the
Borrower is issuing its Subordinate Lien Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Taxable Series 2020A (the “Series 2020A Bond”). The
2020B First Advance is made as of the date hereof. The Borrower is also authorized, pursuant to
the Resolution, to issue the Sewer System Revenue Bond (DNRC Water Pollution Control State
Revolving Loan Program), Series C (the “Series C Bond”), which will be issued following
disbursement in full of the principal amount of the Series 2020B Bond.
Reference is made to the Resolution for a more complete statement of the terms
and conditions upon which the Series 2020B 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, the Series 2020B Bond, and the Series C Bond, 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 2020B Bond.
The Borrower may prepay the principal of the Series 2020B 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 is then delinquent. Any prepayment permitted by the DNRC
must be accompanied by payment of accrued interest to the date of prepayment on the amount of
principal prepaid. If the Series 2020B Bond is prepaid in part, such prepayments shall be applied
to principal payments in inverse order of maturity or otherwise determined by the DNRC.
The Series 2020B Bond, including interest and premium, if any, is payable solely
from the Net Revenues pledged for the payment thereof and does 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 2020B
Bond is registered as the absolute owner hereof, whether this Series 2020B 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 2020B Bond may be transferred as hereinafter
provided.
3
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that
the Borrower 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 Sewer System Fund, into
which will be paid each month, from and as a first and prior lien on the Net Revenues 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 semiannually from the Revenue Bond Account; that the
Borrower has created a Reserve Account in the Sewer System Fund into which shall be paid
additional Net Revenues, after required credits to the Revenue Bond Account, sufficient to
establish and maintain a reserve therein equal to, as of the date of calculation, the Reserve
Requirement; that the Revenue Bond Account will be used only to pay the principal of, premium,
if any, and interest on the Outstanding Bonds, the Series 2020B Bond, the Series C Bond, when
issued, and any 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 equal to at
least 110% of the maximum amount of principal and interest payable from the Revenue Bond
Account in any subsequent fiscal year; that additional Bonds may be issued and made payable
from the Revenue Bond Account on a parity with the Outstanding Bonds, the Series 2020B Bond,
the Series C Bond, when issued, and other 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, the Series 2020B Bond, the Series C Bond, when issued, and additional Bonds
on such Net Revenues and such obligations are payable only from Surplus Net Revenues (as is the
case with the Series 2020A Bond); that all provisions for the security of the holder of this Series
2020B 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 2020B 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 as so required; and that this Series 2020B 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 2020B Bond does not cause either
the general or the special indebtedness of the Borrower to exceed any constitutional or statutory
limitation.
4
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 City Manager, and the
City Clerk, and has caused the official seal of the Borrower to be affixed hereto, and has caused
this Bond to be dated as of the 22nd day of July, 2020.
______________________________________
Mayor
(Seal)
_______________________________________
City Manager
_______________________________________
City Clerk
5
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 City Finance Director 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 outstanding 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 City Finance Director
July 22, 2020 Department of Natural
Resources and Conservation
1539 Eleventh Avenue
Helena, MT 59620
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The City Finance Director 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
Registered Holder
Signature of
Bond Registrar
6
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:
(Authorized Signature)
For:
(Holder)
7
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Date Advances
Total Amount
Advanced Notation Made By
07/22/2020 $66,757.00 $66,757.00
8
SCHEDULE B
Total Loan
Date Principal Interest Payment
Preliminary Schedule
STATE OF MONTANA
GENERAL OBLIGATION BONDS
WASTEWATER
(REVOLVING FUND PROGRAM) FY 2010
BORROWER:Bozeman Davis/Norton B
PROJECT NAME:Davis Lane/Norton E Ranch FINAL LOAN PAYMENT:7/1/2040
LOAN COMMITMENT:$7,786,000 # OF LOAN PAYMENTS:40
LOAN AMOUNT:7,786,000 PROJECT NUMBER:
INTEREST RATE:2.50%DATE OF FUNDING:7/22/2020
PAYMENT LOAN LOSS ADM EXPENSE INTEREST PRINCIPAL O/S LOAN TOTAL AMOUNT
DUE RESERVE SURCHARGE PAYMENT PAYMENT BALANCE OF PAYMENT
1 1/1/2021 8,597.04 8,597.04 68,776.33 151,000.00 7,635,000.00 $236,970.42 236,970.42$
2 7/1/2021 9,543.75 9,543.75 76,350.00 153,000.00 7,482,000.00 $248,437.50
3 1/1/2022 9,352.50 9,352.50 74,820.00 155,000.00 7,327,000.00 $248,525.00 496,962.50$
4 7/1/2022 9,158.75 9,158.75 73,270.00 157,000.00 7,170,000.00 $248,587.50
5 1/1/2023 8,962.50 8,962.50 71,700.00 159,000.00 7,011,000.00 $248,625.00 497,212.50$
6 7/1/2023 8,763.75 8,763.75 70,110.00 161,000.00 6,850,000.00 $248,637.50
7 1/1/2024 8,562.50 8,562.50 68,500.00 163,000.00 6,687,000.00 $248,625.00 497,262.50$
8 7/1/2024 8,358.75 8,358.75 66,870.00 165,000.00 6,522,000.00 $248,587.50
9 1/1/2025 8,152.50 8,152.50 65,220.00 167,000.00 6,355,000.00 $248,525.00 497,112.50$
10 7/1/2025 7,943.75 7,943.75 63,550.00 169,000.00 6,186,000.00 $248,437.50
11 1/1/2026 7,732.50 7,732.50 61,860.00 171,000.00 6,015,000.00 $248,325.00 496,762.50$
12 7/1/2026 7,518.75 7,518.75 60,150.00 173,000.00 5,842,000.00 $248,187.50
13 1/1/2027 7,302.50 7,302.50 58,420.00 176,000.00 5,666,000.00 $249,025.00 497,212.50$
14 7/1/2027 7,082.50 7,082.50 56,660.00 178,000.00 5,488,000.00 $248,825.00
15 1/1/2028 6,860.00 6,860.00 54,880.00 180,000.00 5,308,000.00 $248,600.00 497,425.00$
16 7/1/2028 6,635.00 6,635.00 53,080.00 182,000.00 5,126,000.00 $248,350.00
17 1/1/2029 6,407.50 6,407.50 51,260.00 184,000.00 4,942,000.00 $248,075.00 496,425.00$
18 7/1/2029 6,177.50 6,177.50 49,420.00 187,000.00 4,755,000.00 $248,775.00
19 1/1/2030 5,943.75 5,943.75 47,550.00 189,000.00 4,566,000.00 $248,437.50 497,212.50$
20 7/1/2030 5,707.50 5,707.50 45,660.00 191,000.00 4,375,000.00 $248,075.00
21 1/1/2031 5,468.75 5,468.75 43,750.00 194,000.00 4,181,000.00 $248,687.50 496,762.50$
22 7/1/2031 5,226.25 5,226.25 41,810.00 196,000.00 3,985,000.00 $248,262.50
23 1/1/2032 4,981.25 4,981.25 39,850.00 199,000.00 3,786,000.00 $248,812.50 497,075.00$
24 7/1/2032 4,732.50 4,732.50 37,860.00 201,000.00 3,585,000.00 $248,325.00
25 1/1/2033 4,481.25 4,481.25 35,850.00 204,000.00 3,381,000.00 $248,812.50 497,137.50$
26 7/1/2033 4,226.25 4,226.25 33,810.00 206,000.00 3,175,000.00 $248,262.50
27 1/1/2034 3,968.75 3,968.75 31,750.00 209,000.00 2,966,000.00 $248,687.50 496,950.00$
28 7/1/2034 3,707.50 3,707.50 29,660.00 211,000.00 2,755,000.00 $248,075.00
29 1/1/2035 3,443.75 3,443.75 27,550.00 214,000.00 2,541,000.00 $248,437.50 496,512.50$
30 7/1/2035 3,176.25 3,176.25 25,410.00 217,000.00 2,324,000.00 $248,762.50
31 1/1/2036 2,905.00 2,905.00 23,240.00 220,000.00 2,104,000.00 $249,050.00 497,812.50$
32 7/1/2036 2,630.00 2,630.00 21,040.00 222,000.00 1,882,000.00 $248,300.00
33 1/1/2037 2,352.50 2,352.50 18,820.00 225,000.00 1,657,000.00 $248,525.00 496,825.00$
34 7/1/2037 2,071.25 2,071.25 16,570.00 228,000.00 1,429,000.00 $248,712.50
35 1/1/2038 1,786.25 1,786.25 14,290.00 231,000.00 1,198,000.00 $248,862.50 497,575.00$
36 7/1/2038 1,497.50 1,497.50 11,980.00 234,000.00 964,000.00 $248,975.00
37 1/1/2039 1,205.00 1,205.00 9,640.00 236,000.00 728,000.00 $248,050.00 497,025.00$
38 7/1/2039 910.00 910.00 7,280.00 239,000.00 489,000.00 $248,100.00
39 1/1/2040 611.25 611.25 4,890.00 242,000.00 247,000.00 $248,112.50 496,212.50$
40 7/1/2040 308.75 308.75 2,470.00 247,000.00 0.00 $250,087.50 250,087.50$
214,453.29 214,453.29 1,715,626.33 7,786,000.00 9,930,532.92 9,930,532.92
DORSEY™
ahead
July 24, 2020
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Internal Revenue Service
Ogden, UT 84201
TRICIA C. ELPEL, Paralegal
elpel.tricia@dorsey.com
Re: $7,786,000 Sewer System Revenue Bond (DNRC State Revolving Fund Loan
Program, Series 2020B
City of Bozeman, Montana
Dear Sir/Madam:
Enclosed is an IRS Form 8038-G, Information Return for Tax-Exempt Governmental
Bonds, to be filed pursuant to Section 149(e) of the Internal Revenue Code with respect to the
issuance of the Issuer's bonds.
Please file the enclosed Form 8038-G. Thank you.
Very truly yours,
~C-~/vnt
Tricia C. Elpel, Paralegal
Enclosure
Dorsey & Whitney LLP I 125 Bank Street I Suite 600 I Missoula, MT I 59802-4407 I T 406.721.6025 I F 406.543.0863 I
Form8038•G Information Return for Tax-Exempt Governmental Bonds
.,. Under Internal Revenue Code section 149(e)
(Rev. September 2018) .,. See separate instructions. 0MB No. 1545-0720
Department of the Treasury Caution: If the issue price is under $100,000, use Form 8038-GC.
Internal Revenue Service .,. Go to www.irs.gov/F8038G for instructions and the latest information.
• :F.r.•. Reporting Authority If Amended Return, check here .... D
1 Issuer's name 2 Issuer's employer identification number (EIN)
City of Bozeman, Montana 81-6001238
3a Name of person (other than issuer) with whom the IRS may communicate about this return (see instructions) 3b Telephone number of other person shown on 3a
4 Number and street (or P.O. box ii mail is not delivered to street address) I Room/suite 5 Report number (For IRS Use Only)
P.O. Box 1230 I 3 I I
6 City, town, or post office, state, and ZIP code 7 Date of issue
Bozeman, MT 59771-1230 07/22/2020
8 Name of issue 9 CUSIP number
Sewer System Revenue Bond (DNRC State Revolvinq Fund Proqram), Series 2020B None
1 Oa Name and title of officer or other employee of the issuer whom the IRS may call for more information (see 10b Telephone number of officer or other
instructions) employee shown on 1 0a
Kristin Donald, Finance Director (406) 582-2318
l:F.r.iiUI Type of Issue (enter the issue price). See the instructions and attach schedule.
11 Education. 11
12 Health and hospital 12
13 Transportation 13
14 Public safety . 14
15 Environment (including sewage bonds) 15 7,786,000 00
16 Housing 16
17 Utilities 17
18 Other. Describe.,._ 18
19a If bonds are TANs or RANs, check only box 19a .... D
b If bonds are BANs, check only box 19b .... D
20 If bonds are in the form of a lease or installment sale, check box .... D
I :F.r.i • II Description of Bonds. Complete for the entire issue for which this form is being filed.
(a) Final maturrty date (b) Issue price (c) Stated redemption (d) Weighted (e)Yield price at maturity average maturity
21 07/01/2040 $ 7,786,000 $ 7,786,000 11.017 years 2.5000856 %
l::.m.• ,,.1 Uses of Proceeds of Bond Issue (including underwriters' discount)
22 Proceeds used for accrued interest 22 0 00
23 Issue price of entire issue (enter amount from line 21, column (b)) 23 7,786,000 00
24 Proceeds used for bond issuance costs (including underwriters' discount) 24 20,000 00
25 Proceeds used for credit enhancement 25 0 00
26 Proceeds allocated to reasonably required reserve or replacement fund 26 202,823 00
27 Proceeds used to refund prior tax-exempt bonds. Complete Part V . 27 0 00
28 Proceeds used to refund prior taxable bonds. Complete Part V 28 0 00
29 Total (add lines 24 through 28) 29 222,823 00
30 Nonrefunding proceeds of the issue (subtract line 29 from line 23 and enter amount here) 30 7,563,177 00
•:r.r••'• Description of Refunded Bonds. Complete this part only for refunding bonds.
31
32
33
34
Enter the remaining weighted average maturity of the tax-exempt bonds to be refunded .
Enter the remaining weighted average maturity of the taxable bonds to be refunded
years
Enter the last date on which the refunded tax-exempt bonds will be called (MM/DD/YYYY)
Enter the date(s) the refunded bonds were issued .,.. (MM/DD/YYYY)
For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 63773S
years
Form 8038-G (Rev. 9-2018)
Form 8038-G (Rev. 9-2018) Page2
1::..:1.a·~I Miscellaneous
35 Enter the amount of the state volume cap allocated to the issue under section 141 (b)(5) 35
36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract
(GIG). See instructions 36a
b Enter the final maturity date of the GIC..,. (MM/DD/YYYY)
C Enter the name of the GIC provider..,.
37 Pooled financings: Enter the amount of the proceeds of this issue that are to be used to make loans
to other governmental units . 37
38a If this issue is a loan made from the proceeds of another tax-exempt issue, check box ..,. D and enter the following information:
b Enter the date of the master pool bond..,. (MM/DD/YYYY) ________________ _
c Enter the EIN of the issuer of the master pool bond ..,. __________________ _
d Enter the name of the issuer of the master pool bond..,. _________________ _
39 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III) (small issuer exception), check box ..,. D
40 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . ..,. D
41a If the issuer has identified a hedge, check here..,. D and enter the following information:
b Name of hedge provider..,.
c Type of hedge..,.
d Term of hedge..,. ____________________ _
42 If the issuer has superintegrated the hedge, check box ..,. D
43 If the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated
according to the requirements under the Code and Regulations (see instructions), check box . ..,. 0
44 If the issuer has established written procedures to monitor the requirements of section 148, check box . ..,. [Zj
45a If some portion of the proceeds was used to reimburse expenditures, check here..,. D and enter the amount
of reimbursement . . ..,. ---------------
b Enter the date the official intent was ado ted..,. MM/DD
Signature
and
Consent
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge
and belief, they are true, correct, and complete. I further declare that I consent to the IRS's disclosure of the issuer's return information, as necessary to
Paid
Preparer
Use Only
process this return, to the person that I horized above.
Dan Semmens
Firm's address ~
07/22/2020
Date
~ Jeff Mihelich, City Manager r Type or print name and title
Date Check D if PTIN
07 / ZPZ.0 self-employed P01069444
Firm's EIN ~ 41-0223337
Phone no. 406-721-6025
Form 8038-G (Rev. 9-2018)
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DORSEY & WHITNEY LLP
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Missoula, Montana 59802-4407
SENDER: COMPLETE THIS SECTION' -' , ,-. ,
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COMf?LETEJ'fll~ ~!{CT/ON ~'Al_'DEL!YEFfY,: \·· :· \ ~-;
• Complete items 1, 2, and 3.
• Print your name and address on the reverse
so that we can return the card to you.
• Attach this card to the back of the mailpiece,
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1. Article Addressed to:
Internal Revenue Service
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111 IIIIII IIII Ill Ill Ill 1111111111111111 II 111111
l , n , , , , ' ' , ~ ~. , '•',, o , , ~ ' I ~ /"< <1:'
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X D Agent
D Addressee
B. Received by (Printed Name) C. Date .of. Delivery
D. Is delivery address different from item 1? D Yes
If YES, enter delivery ad~: fl No
lg1/~4~c~~~v&c · 1 ~ v6o .. · -f "11, b::-
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~ '·------' ··111 D Signature Confirmation
7 0 1 7 0 5 3 0 0 0 0 0 4 8 4 2 1O77 ,ii Restricted_ Delivery Restricted Delivery
PS Form 3811, July 2015 PSN 7530-02-000-9053
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Domestic Return Receipt
~ /cc:eiertfflli!il\d;;;:-ciMMa;Jii11=F;;.;;;:]"-;--.::.__.!:2_,;:;_~__:_:___::!__l_'2:;-_.::::_::.::_~~~--_J
cQ $ :.6 , 6 ':)
,:r Ex!J;,a'Services & Fees /check box, add tee a§.f-,gpr,,priate)
ZJ Return Receipt O,ardcopy) $ e,? , tf ..::> ,
Cl O Return Receipt (electronic) $ g 0Certlfied Mall Restricted Dellve,y $ ----
Cl 0Adult Signature Required $ -----II
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~ ;osi;eLjO
Lf'J Total Postage and Fees C1$7.g
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DORSEY'"
vv y ahead
City of Bozeman, Montana
Bozeman, Montana
Depaiiment of Natural Resources and Conservation
of the State of Montana
Helena, Montana
Re: $300,000 Subordinate Lien Sewer System Revenue Bond (DNRC Water Pollution
Control State Revolving Loan Program), Taxable Series 2020A
City of Bozeman, Montana
Ladies and Gentlemen:
We have acted as Bond Counsel to the City of Bozeman, Montana (the "City"), in
connection with the sale and issuance by the City of the obligation described above, dated, as
originally issued, as of the date hereof, and issued in the maximum principal amount of $300,000
(the "Series 2020A Bond"). In that capacity, we have examined ce1iified copies of certain
proceedings taken, and certain certificates and affidavits furnished, by the City in the
authorization, sale and issuance of the Series 2020A Bond, including Resolution No. 4220,
adopted by the City Commission of the City on November 16, 2009 (the "Original Resolution"),
as amended and supplemented by Resolution Nos. 4234, 4245, 4254, 4299, 4462, and 5183,
adopted by the City Commission on January 19, 2010, February 16, 2010, May 3, 2010,
November 1, 2010, August 5, 2013, and June 15, 2020, respectively (the Original Resolution, as
so amended and supplemented, the "Resolution"), and the fonn of the Series 2020A Bond. As to
questions of fact material to our opinion, we have assumed the authenticity of and relied upon
the proceedings, certificates and affidavits furnished to us without undertaking to verify the same
by independent investigation. Terms used with initial capital letters herein without definition
shall have the meanings given them in the Resolution.
From our examination of such proceedings, certificates and affidavits and on the basis of
existing law, it is our opinion that:
1. The Series 2020A Bond is payable solely from Surplus Net Revenues, subject to the
prior pledge and appropriation of the Net Revenues and Surplus Net Revenues to the payment or
provision for payment of and security for Bonds outstanding from time to time, including
required credits to the Revenue Bond Account and the establishment and maintenance of the
Reserve Requirement in the Reserve Account.
2. The Series 2020A Bond is not a general obligation of the City and the general credit
and taxing powers of the City are not pledged to the payment of the principal thereof or interest
thereon. The Series 2020A Bond and interest, if any, thereon do not constitute a debt of the City
within the meaning of any constitutional or statutory limitation or provision.
3. In the event the DNRC forgives the City's obligation to repay the principal of the
Series 2020A Bond, as described in the Resolution, the City is not obligated to repay the
principal of the Series 2020A Bond or interest thereon. However, if the obligation of the City to
Dorsey & Whitney LLP I 125 Bank Street I Suite 600 I Missoula, MT I 59802-4407 I T 406.721.6025 I F 406.543.0863 I dorsey.com
City of Bozeman, Montana
Department of Natural Resources
and Conservation of the State of Montana
Page 2
DORSEY
repay the principal of the Series 2020A Bond is not forgiven by the DNRC, then principal of and
interest on the Series 2020A Bond are payable by the City, as provided in the Resolution and the
Series 2020A Bond. Interest on the Series 2020A Bond, if any, is includable in gross income for
federal income tax purposes.
The opinions expressed in paragraphs 1 and 3 above are subject, as to enforceability, to
the effect of any state or federal laws relating to bankruptcy, insolvency, reorganization,
moratorium or creditors' rights and to principles of equity, whether considered at law or in
equity.
Except as stated in this opinion, we express no opinion regarding federal, state or other
tax consequences to the holders of the Series 2020A Bond. We also express no opinion
regarding the tax treatment of the Loan Loss Reserve Surcharge or the Administrative Expense
Surcharge, if any.
We have not been engaged, and have not undertaken, to review the accuracy,
completeness or sufficiency of any offering materials relating to the Series 2020A Bond and,
accordingly, we express no opinion with respect thereto.
Dated: July 22, 2020.
Very truly yours,
1 . 11/ W tl~o L-,L f -~-~--y vi
,. I)
DORSEY™
w V ahead
City of Bozeman
Bozeman, Montana
Department of Natural Resources
and Conservation of the
State of Montana
Helena, Montana
Re: $7,786,000 Sewer System Revenue Bond (DNRC Water Pollution Control State
Revolving Loan Program), Series 2020B
City of Bozeman, Montana
Ladies and Gentlemen:
We have acted as Bond Counsel to the City of Bozeman, Montana (the "City") in
connection with the authorization, sale and issuance by the City of its Sewer System Revenue
Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2020B, in the
maximum authorized principal amount of $7,786,000 (the "Series 2020B Bond"), dated, as
originally issued, as of the date hereof. In that capacity, we have examined certified copies of
certain proceedings taken, and certain certificates and affidavits furnished, by the City in the
authorization, sale and issuance of the Series 2020B Bond, including Resolution No. 4220,
adopted by the City Commission of the City on November 16, 2009 (the "Original Resolution"),
as amended and supplemented by Resolution Nos. 4234, 4245, 4254, 4299, 4462, and 5183,
adopted by the City Commission on January 19, 2010, February 16, 2010, May 3, 2010,
November 1, 2010, August 5, 2013, and June 15, 2020, respectively (the Original Resolution, as
so amended and supplemented, the "Resolution"), and the form of the Series 2020B Bond. As to
questions of fact material to our opinion, we have assumed the authenticity of and relied upon
the proceedings, certificates and affidavits furnished to us without undertaking to verify the same
by independent investigation. Terms used with initial capital letters herein without definition
shall have the meanings given them in the Resolution.
From our examination of such proceedings, certificates and affidavits and on the basis of
existing law, it is our opinion that:
1. The Series 2020B Bond is a valid and binding special, limited obligation of the
City, enforceable in accordance with its terms and the terms of the Resolution.
2. The principal of and interest on the Series 2020B Bond are payable solely from
the Net Revenues of the System pledged and appropriated to the Revenue Bond Account in the
Fund, all in accordance with the provisions of the Resolution. The Series 2020B Bond is secured
by a first lien on the Net Revenues, equally and ratably with the City's outstanding Sewer
System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series
201 OB (the "Series 201 OB Bond"), its First Amended and Restated Sewer System Revenue Bond
(DNRC Water Pollution Control State Revolving Loan Program), Series 2010C (the "Series
2010C Bond"), its First Amended and Restated Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 201 OD (the "Series 201 OD Bond"), its
Dorsey & Whitney LLP I 125 Bank Street I Suite 600 I Missoula, MT I 59802-4407 I T 406.721.6025 I F 406.543.0863 I dorsey.com
City of Bozeman, Montana
Department of Natural Resources
and Conservation of the State of Montana
Page2
DORSEY
First Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution Control State
Revolving Loan Program), Series 201 OF (the "Series 201 OF Bond"), its First Amended and
Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan
Program), Series 20100 (the "Series 20100 Bond"), and its First Amended and Restated Sewer
System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series
2010H (the "Series 2010H Bond"), and with any additional sewer system revenue bonds of the
City that may hereafter be issued on a parity therewith under the Resolution ( collectively, the
"Bonds").
3. In and by the Resolution, the City has validly made and entered into covenants
and agreements for the benefit of the owners from time to time of the Series 2020B Bond,
including covenants that it will pay all gross revenues of the System into the Sewer System
Fund; that it will credit into the Revenue Bond Account, out of the Net Revenues of the System
then on hand, an amount sufficient to pay the Series 2010B Bond, the Series 2010C Bond, the
Series 2010D Bond, the Series 2010F Bond, the Series 20100 Bond, the Series 2010H Bond, the
Series 2020B Bond, and any additional Bonds; that it will transfer to the Reserve Account in the
Fund amounts sufficient to establish and thereafter maintain, from available Net Revenues
remaining after necessary credits to the Revenue Bond Account, a balance therein in an amount
equal to the Reserve Requirement; that the Revenue Bond Account will be used only to pay the
principal of, premium, if any, and interest on the Series 201 OB Bond, the Series 201 0C Bond, the
Series 2010D Bond, the Series 2010F Bond, the Series 20100 Bond, the Series 2010H Bond, the
Series 2020B Bond, and any additional Bonds as such principal, premium and interest become
due; that the City will fix, establish, revise and collect reasonable rates and charges for the
services and facilities afforded by the System, sufficient to provide gross revenues adequate for
the prompt payment of the reasonable and current expenses of operation and maintenance of the
System and to produce in each fiscal year Net Revenues, in excess of such current expenses,
sufficient to pay the principal of and interest on all outstanding Bonds; and that, except as
expressly authorized in the Resolution, no other obligation will be incurred and made payable
from the Net Revenues of the System, unless the lien thereof shall be made subordinate to the
lien of the Bonds on the Net Revenues.
4. The Series 2020B Bond is not a general obligation of the City and the general
credit and taxing power of the City is not pledged to the payment of the principal thereof and the
interest thereon. The Series 2020B Bond and the interest thereon do not constitute a debt of the
City within the meaning of any constitutional or statutory limitation or provision.
5. Interest on the Series 2020B Bond: (a) is excludable from gross income for
federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as
amended (the "Code"); and (b) is not an item of tax preference for purposes of the federal
alternative minimum tax imposed by Section 55 of the Code.
City of Bozeman, Montana
Depaiiment of Natural Resources
and Conservation of the State of Montana
Page 3
DORSEY
6. Interest on the Series 2020B Bond is excludable from gross income for purposes
of State of Montana individual income taxation, but is not excluded from the computation of
income for purposes of the Montana alternative corporate income tax and the Montana corporate
income tax.
The opinions expressed in paragraphs 1, 2 and 3 above are subject, as to enforceability, to
the effect of any state or federal laws relating to bankruptcy, insolvency, reorganization,
moratorium or creditors' rights and to principles of equity, whether considered at law or in
equity.
The opinions expressed in paragraph 5 above are subject to the condition of the City's
compliance with all requirements of the Code that must be satisfied subsequent to the issuance of
the Series 2020B Bond in order that interest may be, and continue to be, excluded from gross
income for federal income tax purposes. The City has covenanted to comply with these
continuing requirements. Its failure to do so could result in the inclusion of interest in gross
income for federal income tax purposes, retroactive to the date of issuance of the Series 2020B
Bond. Except as stated in this opinion, we express no opinion regarding federal, state or other
tax consequences to the owners of the Series 2020B Bond. We also express no opinion
regarding the tax treatment of the Loan Loss Reserve Surcharge or the Administrative Expense
Surcharge.
We have not been engaged, and have not undertaken, to review the accuracy,
completeness or sufficiency of any offering materials relating to the Series 2020B Bond and,
accordingly, we express no opinion with respect thereto.
Dated: July 22, 2020.
Very truly yours, 7-rvw~
DOf~Sb.Y K \\IH!ThE:.Y Ll..P
, '
I
DocuSlgn Envelope ID: 4FOD109B-47C1-4025-B1CE-E51FA65DDA6A
•·•1111_ SRF0 l
"""""" Montana State Revolving Fund ("WPCSRF") Program \rfJ
Loan Disbursement Report for (\\ry
Revenue Bonds \ \
For State use onlv Federal Funds only)
I. Borrower~ 5. Disbursement Number: I Name: Citv or Bozeman
Address: PO Box 1230, Bozeman. MT 59771-1230 6. Period covered by this Disbursement Report:
Employer ID: 81-6001238 From: Present
(~o1Day7Yrj
To: Jul~ 22 2020
•!VloIDaylYrj
2. Project Name: Davis/Norton 7. Poyment Instructions:
SRF Project Number: SRF-21486 a< Wire Instructions:_
Borrower's Project Number:
3. Committed Amount: S 15.363 000
(From the Binding Commitment Agreement)
4. Totnl Loan Amount: S 300,000 'A' (2018 Cae Gron!)
For~iven 0 Check if this is the final disbursement rcauest.
8. Use of Funds
Cinssific,ition Amount This Period Cumulative to D'1tc
A. Administrative Charges s s
B. Lnnd and RiPhts of Wav .... ,~...,/
c. Architecturnl ~~i~ii ,•'':~ /l /ft . 11 FJ• I ci ·7 ..-,
\___../ I -D. Enuinment
E. Construction Improvements \ l!. ,..~ ,.-,,
s .... v Y6_j"5 ·~,t"'' ,,
·1'-i·rs~ F. Miscellaneous lj ()" s l.l> • s . -c. Total Construction Costs s 'q 7 -s \97 ---(Add Lines A throuoh FJ
H. Administr3tive Foe -For lnili31
Disbursement Only (Multiply NIA NIA Committed Amount by .00575)
I. Originnlion Fee· For Initial
Disburscmont Only (Multiply NIA NIA Committed Amount bv .01)
J. Sub-Total (Add Amounts on Lines G , s _36:95"'" s _jj>G£"' 'l".\il"J
Handn I Cf·/ . .:iJr,17-
K. Debt service Reserve Deposit No Debt Service Reserve Req uircd on A Loan (Multiply Amount on Line J by s NIA s NIA
.038 )
Toto I Disbursement (Add Amounts [.)96:95
,.
.,/ ~ -rf\f "-L. 1 (;' "} ,.JJJi ~~97,... on Line J and Kl
M. Federal Share of Disbursement (For s \ CJ 7 --s I ~7 -Slate Use Only)
N. Percentaec of Phvsical Comaletion % ( DocuSlgned byi.
-¼
9. Certification .. Borrower(s) (Note: SiJ,1.frrvlft.kilJf~~lifying Official Dore Signed: 7/13/20
two borrower
signatures arc Typed or Prinred Name •nd Title Telephone (ArCA Code,
required J!!!ll when Kristin Don.1ltl Financ~ Director Number & Extension)
two pnrties (i.e. a 406-582-2318
I certify that to the best of my
County nnd a Sign2turc or "Aurhorized Ccrtirying Officinl'' D,110 Si~ncd: Dislrict) borrow knowledge nnd belief the billed costs or SRF funds through Typed or PrinteoJ Nnmc ond TIiie Telephone (Arc a Code, disbursements ore in accordance with an interlocal the terms of the project, that the a~rccment.1 Number & Ei::tcnsion)
disbursements represent •mounts
which hove not been previously b. Engineer or other Slgn11urc ur "Authori"ml Cerllfying Omcl:11" Onie SlgncoJ:
requested, that an inspection has been Representative
Telephone (Ar<:I Code, performed and th~t nll work is in certifying to line Typ,d or Prinlcd Nnmc ,nd TIiie
accordance with the terms of the 8.0. Number & Exccnsion)
project os described in the
J fl -Commitment Aercement
10. Approval (For Stoic Use Only) ,,Q s~vfcrif} Yn ) C) L o/;;,?l ONRC ~I r!~yf{; :kJ .UDal<,. \;~ ,,ti _. 0,,1,Q,,/;, 1'Zf; 7("
' I I
I
OoOJSign Envelope ID: 4F0O1098-47C1-4025-81CE-E51FA65DDA6A
Montana State Revolving Fund ("WPSRF") Program
Loan Disbursement Report for
Revenue Bonds/Recycled
For State use onlv (Funded from Princioal Payment Recvcled Account)
1. Borrower:
Name: City of Boremon
Address: PO Box 1230. Boz•man. MT 59771-1230
Employer ID: __,8,.,1.:,-6"',0"'0"-'12.,3,.,,Sc_ ___ _
2. Project Name: _,.D,.a,;.vi,.,s~,.,_N,,o,,r~to~n!..-_________ _
WRF Project Number: _ _,,S,.,_R,.,F..;;-.::.2:..:14::s8c,.7 ______ _
Borrower's Project Number: _______ _
3. Committed Amount: s _1,_,S,,,.3e.,6,:,3~.o~o,,_o ____ _
{From the Binding Commitment Agreement
4. Total Loa.n Amount: S 7 786 000 'B'
8. Us• of Funds
Clo,sificntion
A. Administrative Cha roes
8 . Land and Rights of Wav
C. Architecturnl & Enl!'inecrin9
D. Eouioment
E. Construction lmorovements
F. Miscellaneous
G. Total Construction Costs
H.
I.
J.
K.
L.
M.
N.
9.
(Add Lines A throul!'h Fl
Administrative Fee -For Initial
Disbunement Only (Multiply
Committed Amount by .00575)
Origination F•• -For Initial
Disbursement Only (Multiply
Committed Amount bv .Oil
Sub-Total (Add Amounts on Lines G,
Hnnd I)
Debt service Reserve Deposit
(Multiply Amount on Linc J by
.038 '
Total Disbursement (Add Amounts
on Line J and Kl
State Share of Disbursement
(For State Use Onlv)
PercentaPe of Phvsical Comnletion
Certification
I certify that to the best of my
knowledge and belief the billed costs or
disbursements arc in accordance with
the terms of the project, that the
disburscmtnts represent amounts which
have not been previously requested,
that an inspection hns been performed
and that all work is in accordance with
the terms of the project as described in
the Commitment A<'reement.
10.Approoal (For Sto<e Use Onl1•)
Amount This Period
s
64,312.76
( .. ~/ ~,.., -
s
NIA
NIA
s
.244:1:119"
, <./Vt./-'
s .. 66,:i--sG,6'1 v /,/, --i.::,
%
a. Borrower(s) [Note:
two borrower
signatures arc
required !!!ill'. when
two parties (I.e. a
County and a
District) borrow
WRF funds through
on intcrlocal
a~reement.l
b. Engineer or other
Representative
certifying to line 8.N.
5. Disbursement Number:
6. Period covered by this Disbursement Report:
From: Present To: 1122no20 (MolDay/V r) --,M""=',o,u1rr::,a?.y1"rr:r:,-)------I
7. Payment Instructions:
D Check if this is the final disbursement request
Cumulative to Date
s
NIA
NIA
Debt Service Reserve of $202,823 is required
for this lonn
Typed or Priolcd Name ::rnd Tille
Kristin Oonr.1d Fininct Director-
Si:naturc or "Authorizi:d Ce.rtirying Offici:11''
Typi:-d or Printed N:1.mt nnd Tide
Sign:uurc or "Aulhorizcd Certirying Officia.111
Typed or Printed Ni1mc .and Tille
Dal< Sl~ned:7/tJ/20
Tch::pbooc (Arc:\ Cotlc,
Number & Extcosion)
406-S8i-2318
DAie Si~ocd :
Tcilcphone. (Arcn Code,
Number & Exlco,ion)
D;iic Signed:
T1dtphonc (Arc:a Code-.
Number & Exccuion)