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payment and security thereof, the conditions upon which additional bonds may be issued under the Resolution anâ made payable from such net revenues on a parity with the Outstanding Bond and the Series 2008 Bond (collectivefy, 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 2008 Bond. The Borrower may prepay the principal of the Series 2008 Bond only if it obtains the prior written consenr of the DNRC thereto, and (ii) no Loan Repayment or Administrative Expense Surcharge is then delinquent. Any prepayment permitted by the DNRC must be accompanied by palnnent of accrued interest and Administrative Expense Surcharge to the date of prepa)rynent on the amount of principal prepaid. If the Series 2008 Bond is prepaid in part, such prepalnnents 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 paynnent thereof and do not constitute a debt of the Borrower within the meaning of any constitutional or statutory limitation or provision. The Borrower may deem and tfeat the person in whose name this Series 2008 Bond is registered as the absolute owner hereof, whether this Series 2008 Bond is overdue or not, for the purpose ofreceiving payment and for all other purposes, and the Borrower shall not be affected by uny notice to the contrary' The Series 2008 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 chargeÀ 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 fimd, into irtti"tr *ltt be paid each month, from and as a first and prior lien on the Net Revenues of the System then on hand, an amount èqual to not less than the sum of one-sixth of the interest due within the next six months and one-twelfth of the priniipal due within the next twelve months with respect to all Bo¡ds na¡alle 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 ftscal year on all such Bonds; that the Revenue Bond Account wilibe used only to pay the principal of, premium, if any, and interest on the Bonds and any other additional Bonds issued pursuant tó the Resotution on a parity therewitb that the rates and charges for the system will from time to time be made and kept sufficient, to provide gfoss income and revenues adequate to pay the reasonable and current expenses of opøating and maintaining the System and to produce in ãuón ¡r.ut year Net Revenues in excess ofluch current expenses, equal to 125% of the maximum arnount of principal and interest payable from the Revenue Bond Account in any subsequent fiscal year; that additional 'Bonds and refunding eondr *uy be issued and made þayable from the Revenue Bond Account on a parity with the Bonds and other-parity Bonás, upon certain conditions set forth in the Resolution, but no obligation will be otherwise incurred and máde payablË from the Net Revenues of the System, whether or not such obligation shall also constitute a general obligation and indebtedness of the Borrower, unless the lien thereof shall be expressly made subordinats to the tien õf the Bonds and additional parity Bonds on such Net Revenues; that all provisions for the security of the holder of this Series 2008 Bond set forth in the Resolution will be punctually and faithfully performed as iherein stipulated; that all acts, conditions and things required by the Constifution and laws of the btat" 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 2008 Bond a valid and binding special obligation of the Borrower äccording 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 ZOOS Sond and the interest hereon are payable solely from the Net Revenues ofthe System pledged and appropriated to the Revenue Bond Account and do not constitute a debt of the Bonower wittrin ttte mãaning of uny constitutional or statutory limitation or provision and the issuance ofthis Series 2008 Bond does not cause either the general or the special indebtedness ofthe Borrower to exceed any constitutional or statutory limitation. IN WITNESS WHEREOF, the Ciry of Billings, Montana, by its goveming body, has caused this Bond to be executed by the signatures of the Mayor and the City Clerk, and has caused the official seal of the Borrower to be affìxed herlto, und hur caused this Bond to be dated as of the 281hday of July, 2008. B-2 ---PAGE BREAK--- City Clerk B-3 ---PAGE BREAK--- 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 the City Clerk 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 orde¡ ofthe registered holder thereof, and all such payrnents 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 Billings, Montana in the name of the registered holder appearing on the first page hereof or as last noted below: Name and Address of Date of Registration Registered Holder Signature of Citv Clerk Department of Natural Resources a¡td Conservation 1625 Eleventh Ave. 2008 Helena. MT 59620 THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND REGISTRAR UPON REGISTRATION OF EACH TRANSFER The City Clerk of the City of Billings, 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 Resistered Holder Signature of Bond Registrar B-4 ---PAGE BREAK--- recourse, to FORM OF ASSIGNMENT For value received, this Bond is hereby transferred and assigned by the undersigned holder, without on this _ day of (Authorized Signature) For: (Holder) B-5 ---PAGE BREAK--- SCHEDULE A SCHEDULE OF AMOUNTS ADVANCED Total Amount Date Advances Advanced Notation M49EJ B-6 ---PAGE BREAK--- SCHEDULE B Administrative LoanLoss Expense Reserve Total Loan Date Principal Interest Surcharge Surcharge Pa)'rnent B-7 ---PAGE BREAK--- APPENDIX C ADDITIONAL REPRESENTATIONS AND COVENANTS c-l