Document Missoula_doc_4ef8d3b7ab

CERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE I, the undersigned, being the duly qualified and acting recording officer of the City of Missoula, Montana (the “City”), hereby certify that the attached resolution is a true copy of Resolution No. 7495 entitled: “RESOLUTION RELATING TO $1,350,012 SEWER SYSTEM REVENUE BONDS (DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM), CONSISTING OF $361,012 SUBORDINATE LIEN TAXABLE SERIES 2009A BOND, $925,000 SERIES 2009B BOND, AND $64,000 SERIES 2009C 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 Council of the City at a regular meeting on November 23, 2009, and that the meeting was duly held by the City Council 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notice of such meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed.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 Council Members voted in favor thereof: Childers, Haines, Hellegaard, Hendrickson, Jaffe, Marler, Mitchell, Rye, Strohmaier, Walzer, Wiener and Wilkins; voted against the same: None; abstained from voting thereon: None; or were absent: None. WITNESS my hand officially this 23rd day of November, 2009. Martha L. Rehbein Martha L. Rehbein City Clerk ---PAGE BREAK--- SUPPLEMENTAL RESOLUTION Relating to $1,350,012 SEWER SYSTEM REVENUE BONDS (DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM) CONSISTING OF $361,012 SUBORDINATE LIEN TAXABLE SERIES 2009A BOND, $925,000 SERIES 2009B BOND, AND $64,000 SERIES 2009C BOND CITY OF MISSOULA, MONTANA Adopted: November 23, 2009 ---PAGE BREAK--- i TABLE OF CONTENTS (For convenience only, not a part of this Supplemental Resolution) Page ARTICLE I DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES Section 1.1 Definitions 2 Section 1.2 Other Rules of Construction 7 Section 1.3 Appendices 7 ARTICLE II AUTHORIZATION, FINDINGS, REPRESENTATIONS AND COVENANTS Section 2.1 Authorization and Findings 8 Section 2.2 Representations 9 Section 2.3 Covenants 11 Section 2.4 Covenants Relating to the Tax-Exempt Status of the State Bonds 13 Section 2.5 Maintenance of System; Liens 15 Section 2.6 Maintenance of Existence; Merger, Consolidation, Etc 15 ARTICLE III USE OF PROCEEDS; THE 2009 PROJECT Section 3.1 Use of Proceeds 15 Section 3.2 The 2009 Project 16 Section 3.3 2009 Project Representations and Covenants 16 Section 3.4 2009C Loan; Lolo Street Improvements 17 Section 3.5 Completion or Cancellation or Reduction of Costs of the 2009 Project 17 ARTICLE IV THE LOAN Section 4.1 The Loan; Disbursement of Loan 18 Section 4.2 Commencement of Loan Term 20 Section 4.3 Termination of Loan Term 20 Section 4.4 Loan Closing Submissions 20 ARTICLE V REPAYMENT OF 2009 LOANS Section 5.1 Repayment of 2009 Loans 20 Section 5.2 Additional Payments 22 Section 5.3 Prepayments 23 Section 5.4 Obligations of Borrower 23 Section 5.5 Limited Liability 23 ARTICLE VI INDEMNIFICATION OF DNRC AND DEQ ARTICLE VII ASSIGNMENT ---PAGE BREAK--- ii Section 7.1 Assignment by Borrower 24 Section 7.2 Assignment by DNRC 24 Section 7.3 State Refunding Bonds 24 ARTICLE VIII THE SERIES 2009 BONDS Section 8.1 Net Revenues Available 24 Section 8.2 Issuance and Sale of the Series 2009 Bonds 24 Section 8.3 Terms 24 Section 8.4 Negotiability, Transfer and Registration 25 Section 8.5 Execution and Delivery 25 Section 8.6 Form 25 Section 8.7 2009 Acquisition and Construction Account 25 ARTICLE IX SECURITY FOR THE SERIES 2009 BONDS ARTICLE X TAX MATTERS Section 10.1 Use of 2009 26 Section 10.2 General Covenant 26 Section 10.3 Arbitrage 26 Section 10.4 Arbitrage Rebate 27 Section 10.5 Information 27 Section 10.6 “Qualified Tax-Exempt Obligations 27 ARTICLE XI CONTINUING DISCLOSURE ARTICLE XII IMPLEMENTATION Section 12.1 Clean Water Act 28 Section 12.2 Subordinate Obligations 28 Section 12.3 Rates and Charges 28 ARTICLE XIII MISCELLANEOUS Section 13.1 Notices 28 Section 13.2 Binding Effect 29 Section 13.3 Severability 29 Section 13.4 Amendments 29 Section 13.5 Applicable Law 29 Section 13.6 Captions; References to Sections 29 Section 13.7 No Liability of Individual Officers, Directors or Trustees 29 Section 13.8 Payments Due on Holidays 29 Section 13.9 Right of Others To Perform Borrower’s Covenants 29 Section 13.10 Authentication of Transcript 29 Section 13.11 Date 30 APPENDIX A – Description of the 2009 Project ---PAGE BREAK--- iii APPENDIX B-1 – Form of Series 2009A Bond B-1-1 APPENDIX B-2 – Form of Series 2009B Bond B-2-1 APPENDIX B-3 – Form of Series 2009C B-3-1 APPENDIX C – Additional Representations and Covenants APPENDIX D – ARRA Certificate and Request ---PAGE BREAK--- RESOLUTION NUMBER 7495 RESOLUTION RELATING TO $1,350,012 SEWER SYSTEM REVENUE BONDS (DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM), CONSISTING OF $361,012 SUBORDINATE LIEN TAXABLE SERIES 2009A BOND, $925,000 SERIES 2009B BOND, AND $64,000 SERIES 2009C 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 “State Revolving Fund”) be created within the state treasury and all federal, state and other funds for use in the Program be deposited into the State 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 State Revolving Fund, interest on investments made on money in the State Revolving Fund and payments of principal of and interest on loans made from the State 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 Missoula, Missoula County, Montana (the “Borrower”) has applied to the DNRC for the 2009 Loans (as hereinafter defined) from the State Revolving Fund to enable the Borrower to finance, refinance or reimburse itself for a portion of the costs of the 2009 Project (as hereinafter defined), which will carry out the purposes of the Clean Water Act and, other than the Lolo Street Improvements (as hereinafter defined), be implemented in accordance with ARRA; and WHEREAS, the total estimated costs of the 2009 Project to be financed by the City, including deposits to a reasonably required debt service reserve, deposits to the City’s Special Improvement District Revolving Fund (as hereinafter defined), costs of issuance of the bonds, capitalized interest costs and other incidental costs, are $4,430,202; WHEREAS, the DNRC has determined that $3,378,102 of the costs of the 2009 Project are eligible for financing under the Program, consisting of $1,350,012 to be financed with proceeds from the City’s 2009 Bonds (as hereinafter defined) under this Resolution, and (ii) $2,028,090 to be financed with proceeds from the City’s SID 544 Bonds (as hereinafter defined), to be issued simultaneously with the Series 2009 Bonds; and WHEREAS, costs of the 2009 Project in excess of the proceeds of the 2009 Bonds and the SID 544 Bonds are expected to be paid from a Treasure State Endowment Program grant in the amount of $500,000, an EPA grant in the amount of $482,100 and a Rural Resources Grant in the amount of $70,000; and ---PAGE BREAK--- 2 WHEREAS, the Borrower is authorized under applicable laws, ordinances and regulations to adopt this Supplemental Resolution and to issue the Series 2009 Bonds to evidence the 2009 Loans (as hereinafter defined) for the purposes set forth herein; and WHEREAS, the DNRC will fund the 2009A Loan (as hereinafter defined) and the 2009B Loan (as hereinafter defined) with funds provided by the United States Environmental Protection Agency under ARRA, and will fund the 2009C Loan with Recycled Money (as hereinafter defined). NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF MISSOULA, 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 Ordinance, 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 Series 2009 Acquisition and Construction Account created in the Sewer System Fund pursuant to Section 8.7 of this Supplemental Resolution. “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 Bonds to finance costs of the 2009 Project. “Additional Bonds” means any Additional Parity Bonds, as defined in the Ordinance and issued pursuant to Section 4.03 of the Ordinance, as amended by Section 5.03 of Resolution No. 4484, adopted by this Council. “Administrative Expense Surcharge” means, when applicable 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 2009 Loans, 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 2009A Bond and the Series 2009B Bond. “ARRA Certificate and Request” means the certificate and request attached hereto in the form of the attached Appendix D to be completed, executed and delivered by the Borrower to the DNRC pursuant to Section 5.12. “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 2009A Bond is forgiven. “ARRA 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 2009A 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. ---PAGE BREAK--- 3 “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 Outstanding Bonds, the Series 2009B Bond, the Series 2009C Bond, and any Additional Bonds; “Bonds” does not include the Series 2009A Bond. “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 Missoula, Montana and its permitted successors or assigns hereunder. “Closing” means the date of delivery of the Series 2009 Bonds to the DNRC. “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 2009 Bonds. If no Collateral Documents secure such obligations, any reference to Collateral Documents in this Supplemental Resolution shall be without effect. “Committed Amount” means the amount of the 2009 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 Contracts” means the binding contracts for construction of the 2009 Project entered into between the Borrower and the construction contractor(s) 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 experience in the preparation of financial feasibility studies or projections for facilities similar to the System or the 2009 Project, selected by the Borrower and satisfactory to the DNRC. “Council” means the City Council of the City of Missoula, Montana. “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, indebtedness of the Borrower for borrowed money or for the deferred purchase price of property or services; the obligation of the Borrower as lessee under leases which should be recorded as capital leases under generally accepted accounting principles; and 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 or 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. ---PAGE BREAK--- 4 “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 State Revolving Fund pursuant to Section 205(m) of the Clean Water Act. “Estimated Completion Date” means November 30, 2010, the date by which it is estimated by the Borrower that the 2009 Project will be substantially completed. “Fund” means the Sewer System Fund established pursuant to Section 3 of the Ordinance. “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 May 1, 1998, 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, when applicable as provided by this Supplemental Resolution, a surcharge equal to one percent (1.00%) per annum on the outstanding principal amount of the 2009 Loans, payable by the Borrower on a Payment Date. “Loan Repayments” means periodic installments of principal and interest (including any applicable Administrative Expense Surcharge and Loan Loss Reserve Surcharge as provided in this Supplemental Resolution) by Borrower in repayment of the Series 2009B Bond and Series 2009C Bond, and if the DNRC delivers an ARRA Noncompliance Statement, of the Series 2009A Bond, at the rates and times specified in Article V. “Lolo Street Improvements” means those improvements, funded with the proceeds of the D Loan, set forth as such on Appendix A. “Net Revenues” means the entire amount of the gross revenues of the System (as described in Section 3.01 of the Ordinance) remaining upon each such quarterly apportionment, after crediting to the Operating Account the amount required hereby, including sums required to maintain the Operating Reserve in the minimum amount required by the Ordinance. “Operating Account” means the account created in the Sewer System Fund pursuant to Section 3.03 of the Ordinance. “Operating Reserve” means the reserve to be maintained in the Operating Account as required by Section 3.03 of the Ordinance. “Ordinance” means Ordinance No. 1547 of the City adopted on March 19, 1973, as amended or supplemented by Resolution Nos. 4484, 5247, 5307, 6250, 6359, 6408, 6500, 6589, 6707, 6752, 6831, and 7060 adopted by the Council on February 9, 1985, January 13, 1992, June 22, 1992, May 24, 1999, August 28, 2000, March 26, 2001, April 15, 2002, October 21, 2002, September 15, 2003, February 23, 2004, August 16, 2004 and May 8, 2006, respectively, and this Supplemental Resolution and other supplemental resolutions. “Outstanding Bonds” means the City’s outstanding $1,177,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 1992A, $2,221,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 1992B, $1,820,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 1999A, $718,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2000B, $537,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2001A, $1,395,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2002A, $5,000,000 Sewerage System Revenue Bond (DNRC Revolving Loan ---PAGE BREAK--- 5 Program), Series 2002B, $3,800,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2003, $3,688,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2004, $1,997,000 Sewer System Revenue Bond (DNRC Revolving Loan Program), Series 2005; $419,000 Sewer System Revenue Bond (DNRC Revolving Loan Program), Series 2006. “Payment Date” means the date on which a payment of interest or principal and interest on the Bonds or the Series 2009A Bond is due. “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 2009 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 2009 Bonds. “Replacement and Depreciation Account” means the Account created in the Sewer System Fund pursuant to Section 3.05 of the Ordinance. “Recycled Money” means payments and prepayments of principal of any Loan, and any other amounts transferred to the Principal Subaccount in the Revenue Subaccount in the State Allocation Account. “Reserve” means the reserve established in the Revenue Bond Account in the Sewer System Fund pursuant to Section 3.04 of the Ordinance. “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 Ordinance, as amended and supplemented by this Supplemental Resolution and other supplemental resolutions. “Revenue Bond Account” means the account created in the Sewer System Fund pursuant to Section 3.04 of the Ordinance. “Series 2009 Bonds” means, collectively, the Series 2009A Bond, the Series 2009B Bond, and the Series 2009C Bond. “Series 2009A Bond” means the $361,012 Subordinate Lien Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Taxable Series 2009A, issued to the DNRC to evidence the 2009A Loan. “Series 2009B Bond” means the $925,000 Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2009B, issued to the DNRC to evidence the 2009B Loan. “Series 2009C Bond” means the $64,000 Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2009C, issued to the DNRC to evidence the 2009C Loan. ---PAGE BREAK--- 6 “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 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. “Sewer System Fund” means the fund created by Section 3 of the Ordinance. “SID 544 Bonds” means the City’s $2,028,090 Special Improvement District No. 544 Bonds (DNRC Revolving Loan Program), issued pursuant to the SID 544 Resolution. “SID 544 Resolution” means Resolution No. 7494, adopted by this Council on November 23, 2009. “Special Improvement District Revolving Fund” means the Special Improvement District Revolving Fund of the Borrower established pursuant to Ordinance No. 601 and Montana Code Annotated Sections 7-12-4221-29. “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. “Supplemental Resolution” means this Supplemental Resolution No. of the Borrower adopted on November 23, 2009. “Surplus Account” means the account created in the Sewer System Fund pursuant to Section 3.06 of the Ordinance. “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 portion of the Replacement and Depreciation Account that constitutes the Reserve. “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. “Trustee” means U.S. Bank National Association, in Seattle, Washington, or any successor trustee under the Indenture. “2009A Committed Amount” means the amount of the 2009A 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. “2009 ARRA Project” means that portion of the 2009 Project that does not constitute the Lolo Street Improvements. “2009A Loan” means the loan made to the Borrower by the DNRC pursuant to the Program in the maximum amount of the 2009A Committed Amount to provide funds to pay a portion of the costs of the 2009 Project payable under the Program. ---PAGE BREAK--- 7 “2009B Committed Amount” means the amount of the 2009B 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. “2009B First Advance” means the first advance of funds of the Loan from the proceeds of the 2009B Loan by the DNRC to the Borrower. “2009B Loan” means the loan made to the Borrower by the DNRC pursuant to the Program in the maximum amount of the 2009B Committed Amount to provide funds to pay a portion of the costs of the 2009 Project payable under the Program, to fund the Reserve and to pay costs of issuance. “2009C Committed Amount” means the amount of the 2009C 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. “2009C Loan” means the loan made to the Borrower by the DNRC pursuant to the Program in the maximum amount of the 2009C Committed Amount to provide funds to pay a portion of the costs of the 2009 Project payable under the Program and to fund the Reserve. “2009 Loans” or “Loan” means, collectively, the 2009A Loan, 2009B Loan, and the 2009C 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 2009 Project and to pay costs of issuance of the Series 2009 Bonds. “2009 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 2009 Loans, including the Lolo Improvements, described in Appendix A hereto. “2009 Project Readiness Date” means a date that is no later than November 1, 2009. “Undisbursed Committed Amount” means any undisbursed Committed Amount which is not required to pay costs of the 2009 Project upon completion thereof as provided in Section 3 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: All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted government accounting standards. Terms in the singular include the plural and vice versa. All references to time shall refer to Helena, Montana time, unless otherwise provided herein. All references to mail shall refer to first-class mail postage prepaid. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. “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: ---PAGE BREAK--- 8 Appendix A: a description of the 2009 Project; Appendix B-1: the form of the Series 2009A Bond; Appendix B-2: the form of the Series 2009B Bond; Appendix B-3: the form of the Series 2009C 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. Authorization. Under the provisions of the Act, the Borrower is authorized to issue and sell its revenue bonds payable during a term not exceeding forty years from their date of issue, to provide funds for the reconstruction, improvement, betterment and extension of the System or to refund its revenue bonds issued for such purpose; provided that the bonds and the interest thereon are to be payable solely out of the net income and revenues to be derived from rates, fees and charges for the services, facilities and commodities furnished by the undertaking, and are not to create any obligation for the payment of which taxes may be levied except to pay for services provided by the undertaking to the Borrower. The System. The Borrower, pursuant to the Act and other laws of the State has established and presently owns and operates the System. The 2009 Project. After investigation of the facts and as authorized by the Act, this Council has determined it to be necessary and desirable and in the best interests of the Borrower to acquire and construct the 2009 Project. Outstanding Bonds. Pursuant to the Act and the Ordinance, the Borrower has issued, and has outstanding, its Outstanding Bonds payable from Net Revenues of the System, and no other bonds or indebtedness are outstanding that are payable from or secured by revenues of the System. Additional Bonds. The City reserved the right under Section 4.03 of Ordinance No. 1547, as amended by Section 5.03 of Resolution No. 4484, to issue Additional Parity Bonds payable from the Revenue Bond Account of the Sewer System Fund on a parity as to both principal and interest on the Outstanding Bonds, if the Net Revenues of the System for the last complete fiscal year preceding the 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 calendar year during the term of the Outstanding Bonds, on all Outstanding Bonds 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 the net revenues shown by the official books and records of the City, except that if the rates and charges for sewer service 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 for the last complete fiscal year shown by the official books and records of the City plus any additional annual costs of operation and maintenance which the engineer for the City estimates will be incurred because of the improvement or extension of the sewer 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 City is then in default in any payment of principal or interest on any Outstanding Bonds payable therefrom, or if there ---PAGE BREAK--- 9 then exists any deficiency in the balances required by the Ordinance to be maintained in any of the accounts of the Sewer System Fund. Based on a certificate executed or to be executed by the Finance Director/Treasurer of the City, it is hereby determined that the Borrower is authorized to issue the Series 2009A Bond in the maximum principal amount of $361,012, the Series 2009B Bond in the maximum principal amount of $925,000 and the Series 2009C Bond in the maximum principal amount of $64,000 pursuant to Section 4.03 of Ordinance No. 1547, as amended by Section 5.03 of Resolution No. 4484, with the Series 2009B Bond and the Series 2009C Bond payable from and secured by the Net Revenues on a parity with the Outstanding Bonds. For purposes of the foregoing certificate, principal of and interest on the 2009A Loan are disregarded and interest on the Series 2009B Bonds is assumed to be 1.75%. The Borrower acknowledges and agrees that if it fails to deliver timely an acceptable ARRA 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 2009A Bond and the Series 2009B Bond as provided in Section 5.1 of this Supplemental Resolution, and the Borrower shall thereupon, to the extent required by Section 4.03 of the Ordinance, 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 this Supplemental Resolution. The total cost of the 2009 Project and costs of issuance and funding the reserve is estimated to be $4,430,202, a portion of which will be paid from proceeds of the Series 2009 Bonds. From the date of Closing, the Borrower will spend the Committed Amount on costs of the 2009 Project before applying its own funds (other than proceeds of the SID 544 Bonds and other any other funds to which the DNRC consents) to costs of the 2009 Project. Section 2.2 Representations. The Borrower represents as follows: Organization and Authority. The Borrower: is duly organized and validly existing as a municipal corporation of the State; 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 2009 Bonds and to carry out and consummate all transactions contemplated by the Supplemental Resolution, the Series 2009 Bonds and the Collateral Documents; is a Governmental Unit and a Public Entity; and has taken all proper action to authorize the execution, delivery and performance of its obligations under this Supplemental Resolution, the Series 2009 Bonds and the Collateral Documents and the incurrence of the Debt evidenced by the Series 2009 Bonds in the maximum amount of the Committed Amount. 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 2009 Bonds and the Collateral Documents, or the financial condition of the Borrower, or the transactions contemplated by the Resolution, the Series 2009 Bonds and the Collateral Documents or the validity and enforceability of the Resolution, the Series 2009 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 2009 Project, the Series 2009 Bonds or any Collateral Documents and the period for filing any such petition will have expired before issuance of the Series 2009 Bonds. ---PAGE BREAK--- 10 Borrowing Legal and Authorized. The adoption of this Supplemental Resolution, the execution and delivery of the Series 2009 Bonds and the Collateral Documents and the consummation of the transactions provided for in this Supplemental Resolution, the Series 2009 Bonds and the Collateral Documents and compliance by the Borrower with the provisions of the Resolution, the Series 2009 Bonds and the Collateral Documents: are within the powers of the Borrower and have been duly authorized by all necessary action on the part of the Borrower; and 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. No Defaults. No event has occurred and no condition exists that, upon execution and delivery of the Series 2009 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 2009 Bonds and the Collateral Documents. 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 2009 Bonds and the Collateral Documents (including any necessary sewer rate increase) or for the 2009 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 2009 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. Binding Obligation. The Resolution, the Series 2009 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. 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 provision of Article III of this Supplemental Resolution. 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 ---PAGE BREAK--- 11 2009 Bonds and the Collateral Documents and to pledge any revenues or other property pledged to the payment of the Series 2009 Bonds. Compliance With Law. The Borrower: 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 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 2009 Bonds and the Collateral Documents. Section 2.3 Covenants. Insurance. In addition to the requirements of Sections 5.03 and 5.04 of the Ordinance, 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. 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). 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. 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 2009 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 2009 Bonds and the Collateral Documents. Maintenance of Security, if Any; Recordation of Interest. 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 2009 Bonds; ---PAGE BREAK--- 12 The Borrower shall forthwith, after the execution and delivery of the Series 2009 Bonds and thereafter from time to time, cause the Resolution and any Collateral Documents granting a security interest in revenues or real or personal property and any financing statements or other notices or documents relating thereto to be filed, registered and recorded in such manner and in such places as may be required by law in order to perfect and protect fully the lien and security interest hereof and thereof and the security interest in them granted by the Resolution and, from time to time, shall perform or cause to be performed any other act required by law, including executing or causing to be executed any and all required continuation statements and shall execute or cause to be executed any further instruments that may be requested by the DNRC for such perfection and protection; and 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 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 Bonds and the Collateral Documents and the documents described in subparagraph Additional Agreements. The Borrower covenants to comply with all representations, covenants, conditions and agreements, if any, set forth in Appendix C hereto. Financial Information. This Section 2.3(f) supplements, and is not intended to limit, the requirements in Section 5.06 of the Ordinance. The Borrower agrees that for each fiscal year it shall furnish to the DNRC and the DEQ, when available: the preliminary budget for the System, with items for the 2009 Project shown separately; and when adopted, the final budget for the System, with items for the 2009 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 gross revenues derived from its operation, and the segregation and application of the gross revenues in accordance with the 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 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 statement in detail of the income and expenditures of the System for the fiscal year, identifying capital expenditures and separating them from operating expenditures; (ii) A balance sheet as of the end of the fiscal year; (iii) The number of premises connected to the System at the end of the fiscal year; ---PAGE BREAK--- 13 (iv) The amount on hand in each account of the Fund at the end of the fiscal year; 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 (vi) A determination that the report shows full compliance by the Borrower with the provisions of the Resolution during the fiscal year covered thereby, including proper segregation of the capital expenditures from operating expenses, maintenance of the required balance in the Reserve, 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 Parity Bonds (calculated assuming the DNRC has delivered an ARRA Forgiveness Statement) in any subsequent fiscal year, or, if the report should reveal that the revenues have been insufficient for compliance with the Resolution, or that the methods used in accounting for such revenues were contrary to any provision of the 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 180 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 the Resolution. 2009 Project Accounts. The Borrower shall maintain 2009 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. 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 75-6-224(1)(h) of the State Act. Compliance with Clean Water Act and ARRA. The Borrower has complied and shall comply with all conditions and requirements of the Clean Water Act pertaining to the 2009 Loans and the 2009 Project. The Borrower understands and agrees that the 2009A Loan and the 2009B Loan are being made with funds made available to the DNRC under ARRA. The Borrower has complied and shall comply with all requirements of ARRA applicable to the 2009 Loans. 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 2009 Bonds. Section 2.4 Covenants Relating to the Tax-Exempt Status of the State Bonds. The Borrower covenants and agrees that it will not use or permit to be used any of the proceeds of the Series 2009 Bonds or any other funds of the Borrower in respect of the 2009 Project or the Series 2009 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 ---PAGE BREAK--- 14 would otherwise cause the interest on the State Bonds to be included in gross income for purposes of federal income taxation. 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. 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 (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. 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 Loan, be owned by the Borrower 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 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 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. At the Closing of the 2009 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. The Borrower agrees that during the term of the 2009 Loans it will not contract with or permit any Private Person to manage the 2009 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. 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 the 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. ---PAGE BREAK--- 15 The Borrower shall not change the use or nature of the 2009 Project if 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 2009 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 2009 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 2009 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 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) is a Public Entity and (ii) assumes in writing all of the obligations of the Borrower under the Resolution, the Series 2009 Bonds and the Collateral Documents, and 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 2009 Bonds and the Collateral Documents, 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 2009 Bonds or the State Bonds from gross income for federal income tax purposes and 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 and 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 2009 PROJECT Section 3.1 Use of Proceeds. The Borrower shall apply the proceeds of the 2009 Loans from the DNRC solely as follows: The Borrower shall apply the proceeds of the 2009 Loans 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 2009 Loans will be disbursed in accordance with ARTICLE IV hereof and Article 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 2009 Loans to pay the costs of completing the 2009 Project. No portion of the proceeds of the 2009 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 June 1, 1993. 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 Supplemental Resolution, the Borrower shall have complied with Section 1.150-2 of the Regulations in respect of such costs. ---PAGE BREAK--- 16 Any Debt to be refinanced with proceeds of the Loan was incurred after June 1, 1993 for a Project the construction or acquisition of which began after June 1, 1993. No proceeds of the Loan shall be used for the purpose of refinancing an obligation the interest on which is exempt from federal income tax or excludable from gross income for purposes of federal income taxation unless the DNRC has received an Opinion of Bond Counsel, satisfactory to it, to the effect that such refinancing will not adversely affect the exclusion of interest on the State Bonds from gross income for purposes of federal income taxation. Section 3.2 The 2009 Project. Set forth in Appendix A to this Supplemental 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), and an estimated budget relating to the 2009 Project. 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 delivery to the DNRC of the following: 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 providing that the change will not delay the full execution and delivery of the Construction Contract to a date that is after the 2009 Project Readiness Date; A certificate of Independent Consultant that the change to the 2009 Project in no way adversely affects or diminishes the eligibility of the 2009 Project for ARRA funding or the various attributes of the 2009 Project as that relates to ARRA; A written consent to such change in the 2009 Project by an Authorized DNRC Officer; 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 State Act and is, and was at the time the Series 2009 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 2009 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 The Borrower acknowledges and agrees that an increase in the principal amount of the 2009 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 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 2009 Loans to pay costs of the 2009 Project 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: construction of the 2009 ARRA Project did not commence prior to February 17, 2009, and the Construction Contracts relating to the 2009 Project have been fully executed and delivered; ---PAGE BREAK--- 17 all construction of the 2009 Project has complied and will comply with all federal and state standards, including, without limitation, EPA regulations and standards and all construction of the 2009 ARRA Project has complied and will comply with all the requirements of ARRA; 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 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; all future construction of the 2009 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; the iron, steel, and manufactured goods used in the 2009 ARRA Project comply with the “buy American” requirements of Section 1605 of ARRA, as those requirements are further interpreted by applicable EPA guidance; and all laborers and mechanics employed by contractors and subcontractors on the 2009 ARRA 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; the 2009 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; the Borrower will undertake the 2009 Project after the Closing Date and will cause the 2009 Project to be completed as 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 the Estimated Completion Date; and the Borrower agrees to provide information regarding jobs created and retained as a result of the 2009 ARRA Project and such other information regarding the 2009 ARRA Project, including information 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 2009 ARRA Project that designates the 2009 ARRA Project as an ARRA funded project. Section 3.4 2009C Loan; Lolo Street Improvements. The Borrower understands and agrees that the 2009C Loan, from which the Borrower will reimburse a portion of the costs of the Lolo Street Improvements, is being made with funds that constitute Recycled Money under the Indenture and covenants with respect to the Lolo Street Improvements and the 2009C Loan that the Borrower has complied with and will comply with all requirements applicable to the 2009C Loan. Section 3.5 Completion or Cancellation or Reduction of Costs of the 2009 Project. Upon completion of the 2009 Project, the Borrower shall deliver to the DNRC a certificate stating that the 2009 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 2009 Project, a separate completion certificate shall be delivered for each. 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 Borrower will not require the full Committed Amount, the Borrower shall notify the DNRC in writing of such fact and the amount of the Undisbursed Committed Amount. ---PAGE BREAK--- 18 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 $361,012 (the “2009A Committed Amount”), (ii) $925,000 (the “2009B Committed Amount”), and (iii) $64,000 (the “2009C Committed Amount”) for the purposes of financing, refinancing or reimbursing the Borrower for a portion of the costs of the 2009 Project; 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 Section 3.2 and Section 3.4 of this Supplemental Resolution. The DNRC intends to disburse the 2009 Loans through the Trustee. In consideration of the issuance of the Series 2009 Bonds by the Borrower, the DNRC shall make, or cause the Trustee to make, a disbursement of all or a portion of the 2009 Loans upon receipt of the following documents: an Opinion of Bond Counsel as to the validity and enforceability of the Series 2009 Bonds and the security therefor and stating in effect that interest on the Series 2009B Bond and the Series 2009C 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; the Series 2009A Bond, the Series 2009B Bond, and the Series 2009C Bond, fully executed and authenticated; a certified copy of the Ordinance and this Supplemental Resolution; any other security instruments or documents required by the DNRC or DEQ as a condition to their approval of the 2009 Loans; if all or part of the 2009 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 above, that the acquisition or construction of the 2009 Project was begun no earlier than March 7, 1985 or the debt was incurred no earlier than March 7, 1985, of the Borrower’s title to the 2009 Project, of the costs of the 2009 Project and that such costs have been paid by the Borrower and on or before the date of payment of each Reimbursement Expenditure, that the Borrower (or person designated to do so on behalf of the Borrower) made or will have made a written declaration of the Borrower’s official intent (a “Declaration”) which complies with the provisions of Section 1.150-2(d) and of the Reimbursement Regulations; however, the Declaration need not cover Reimbursement Expenditures: to be paid or reimbursed from sources other than the Series 2009 Bonds, (ii) constituting “preliminary expenditures” (within the meaning of Section 1.150-2(f)(2) of the Regulations) for the 2009 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 2009 Bonds, (iii) in a “de minimis” amount (as defined in Section 1.150-2(f)(1) of the Regulations), i.e., $100,000; or (iv) Reimbursement Expenditures paid not more than 60 days before the date of the Declaration. For purposes of this subparagraph, “Reimbursement Regulations” shall mean Treasury Regulations, Section 1.150-2 and “Reimbursement Expenditures” shall mean any expenditure with respect to the 2009 Project that the Borrower paid or will have paid prior to the issuance of the Series 2009 Bonds; the items required by the Indenture for the portion of the 2009 Loans to be disbursed at Closing; and ---PAGE BREAK--- 19 such other certificates, documents and other information as the DNRC, the DEQ or the Bond Counsel giving the opinion referred to in subparagraph may require (including any necessary arbitrage rebate instructions). In order to obtain a disbursement of a portion of the 2009 Loans 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. The 2009 Loans shall be disbursed, subject to the other terms and conditions of this Supplemental Resolution, in the following order: First, the entire amount of the 2009C Loan will be disbursed at Closing. Second, after the entire amount of the 2009C Loan has been disbursed to the Borrower, the entire amount of the 2009A Loan may then be disbursed to the Borrower as and when needed. Third, after the full amount of the 2009A Loan has been disbursed to the Borrower, the Borrower may apply to the costs of the 2009 Project any other funds available to it, including grants or other funds, and including amounts under the 2009B Loan, which will be disbursed to the Borrower as and when needed; provided that, notwithstanding this Section, the Borrower may apply to the costs of the 2009 Project proceeds of the SID 544 Bonds as provided in the SID 544 Resolution, and (ii) other funds available to the Borrower with the consent of the DNRC. The Borrower shall submit the request for the 2009B First Advance in the form required by the DNRC so that it is received by the DNRC by the date that is no later than ten Business Days prior to the date desired by the Borrower for the making of the 2009B First Advance. The Borrower shall not be entitled to, and the DNRC shall have no obligation to make, the 2009B First Advance or any subsequent advance of amounts under the 2009B Loan until such time as the Borrower shall have set aside and funded the Reserve in an amount then required to satisfy the Reserve Requirement. 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 2009 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 2009 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. If all or a portion of a 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. 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 State 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 ---PAGE BREAK--- 20 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 best efforts to obtain an acceleration of such schedule if necessary. Upon making each 2009A Loan disbursement, 2009B Loan disbursement, and 2009C Loan Disbursement, the Trustee shall note such disbursement on Schedule A to the Series 2009A Bond, Series 2009B Bond, and the Series 2009C Bond, respectively. A Schedule A reflecting the amount of the 2009B First Advance and the 2009C First Advance will first be attached to the Series 2009B Bond and the Series 2009C Bond, respectively, at Closing. The Borrower agrees that it will deposit in the Revenue Bond Account, as part of the Reserve, upon receipt thereof, on the Closing date and any subsequent disbursement dates, any proceeds of the 2009B Loan and 2009C Loan borrowed for the purpose of increasing the balance in the Reserve to the Reserve Requirement. The Borrower further acknowledges and agrees that any portions of the 2009 Loans representing capitalized interest, if any, 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 2009 Bonds and interest thereon shall accrue only from the date of transfer. Compliance by the Borrower with its representations, covenants and agreements contained in the 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 2009 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 2009 Bonds shall terminate upon payment in full of all amounts due under the Series 2009 Bonds and the Resolution in respect thereof; provided, however, that the covenants and obligations provided in ARTICLE VI and 0 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 2009 LOANS Section 5.1 Repayment of 2009 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. Manner of Repayment. The Borrower shall pay all Loan Repayments 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 2009A Loan; Principal Forgiveness. ---PAGE BREAK--- 21 The Borrower is obligated to repay the principal of and interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the 2009A Loan as provided in Section 5.1.2(b), unless the DNRC forgives the Borrower’s obligation to repay the principal of the 2009A Loan as provided in this paragraph. So long as the Borrower is proceeding diligently to completion of the 2009 Project through the final advance of principal of the 2009A Loan and the Borrower has executed and delivered the ARRA Certificate and Request to the DNRC in form and substance satisfactory to the DNRC within thirty (30) days after the date that the ARRA Certificate and Request is provided to the Borrower 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 Borrower will thereafter have no obligation to repay amounts advanced under the Series 2009A Bond or interest thereon. In the event the Borrower fails to deliver timely the ARRA Certificate and Request or the Borrower 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, then the DNRC will deliver to the Borrower an ARRA Noncompliance Statement. In the event the DNRC delivers an ARRA Noncompliance Statement, then the Loan Repayments on the 2009A Loan required by this Section 5.1 shall be due on each Payment Date, as follows: interest (including the Administrative Expense Surcharge and the Loan Loss Reserve Surcharge) on the outstanding principal balance of the 2009A Loan shall be payable from and after the date of each advance of principal of the 2009A 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 an ARRA Noncompliance Statement and concluding on July 1, 2029; and the principal of the 2009A 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 July 1, 2029, 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; provided that principal of the 2009A Loan is payable only in amounts that are multiples of $1,000 In addition, in the event the DNRC delivers an ARRA Noncompliance Statement the Series 2009A Bond will continue in effect as a Subordinate Lien Obligation, and (ii) the Borrower will forthwith comply with its rate covenant pursuant to the Resolution, and, if necessary, increase the rates and charges of the System to satisfy such rate covenant as it regards the Series 2009A Bond as soon as practicable and in any event no later than three months after the date of delivery to the Borrower by the DNRC of an ARRA Noncompliance Statement. 5.1.3. Repayment of 2009B Loan. The Loan Repayments on the 2009B Loan required by this Section 5.1 shall be due on each Payment Date, as follows: interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the outstanding principal balance of the 2009B Loan shall be payable on each January 1 and July 1, beginning January 1, 2010 and concluding on that July 1, 2029 at the rate of 3.75% per annum; and the principal of the 2009B Loan shall be repayable on each Payment Date, beginning January 1, 2010, and concluding on July 1, 2029, 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 2009B Loan is payable only in amounts that are multiples of $1,000. ---PAGE BREAK--- 22 5.1.4. Repayment of 2009C Loan. The Loan Repayments on the 2009C Loan required by this Section 5.1 shall be due on each Payment Date, as follows: interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the outstanding principal balance of the 2009C Loan shall be payable on each January 1 and July 1, beginning on January 1, 2010 and concluding on July 1, 2029 at the rate of 3.75% per annum; and the principal of the 2009C Loan shall be repayable on each Payment Date, beginning on January 1, 2010 and concluding on July 1, 2029 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; provided that principal of the 2009C Loan is payable only in amounts that are multiples of $1,000. 5.1.5. Details Regarding 2009 Loan Repayments. The payments of principal of and interest and the Administrative Expense Surcharge and the Loan Loss Reserve Surcharge on the 2009B Loan and the 2009C Loan and, if applicable, on the 2009A Loan, shall be due on the dates specified above and on the dates and in the amounts shown in Schedule B to each of the Series 2009B Bond and the Series 2009C Bond and, if applicable, the Series 2009A Bond, as such Schedule B shall be modified from time to time as provided below. Schedule B will first be attached to the Series 2009A Bond and the Series 2009C Bond at Closing. Schedule B will first be attached to the Series 2009B Bond following receipt by the DNRC of the information required in connection with the 2009B First Advance. The portion of each such Loan Repayment consisting of principal and the portion consisting of interest, as appropriate, and the portion of each Loan Repayment consisting the amount of Administrative Expense Surcharge and the amount of each Loan Loss Reserve Surcharge, as appropriate, shall be set forth in Schedule B to the Series 2009A Bond, the Series 2009B Bond and the Series 2009C Bond. Upon each disbursement of 2009 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 2009A Bond, the Series 2009B Bond, and the Series 2009C 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 4.1(b), interest, Administrative Expense Surcharge, and Loan Loss Reserve Surcharge in respect of the Series 2009B Bond and Series 2009C Bond, and, if required under Sections 5.1.2 and 5.1.3 hereof, in respect of the Series 2009A Bond, on such advance shall accrue from the date the advance is made and shall be payable on each Payment Date thereafter. If, after the full principal amount of the 2009 Loans has been advanced, the DNRC shall have delivered an ARRA Noncompliance Statement, then the Trustee shall revise the Schedule B to the Series 2009A Bond in accordance with this Section 5.1, and the Trustee shall send a copy of such schedule to the Borrower within one month after delivery by the DNRC of the ARRA Noncompliance Statement. Once the completion certificate for the 2009 Project has been delivered to the DNRC, the Trustee shall revise, as appropriate Schedule B to each of the Series 2009 Bonds, 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 (including, as applicable, the Administrative Expense Surcharge and Loan Loss Reserve Surcharge) shall bear interest at the rate of ten percent (10.00%) per annum, until paid. 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 Bonds, including, but not limited to: the cost of reproducing this Supplemental Resolution, the Collateral Documents and the Series 2009 Bonds; ---PAGE BREAK--- 23 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 2009 Bonds and the enforcement thereof; and all taxes and other governmental charges in connection with the execution and delivery of the Collateral Documents or the Series 2009 Bonds, whether or not the Series 2009 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 2009 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 2009B Bond or the Series 2009C Bond and, if applicable, the Series 2009A Bond, unless 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, if applicable, Administrative Expense Surcharge and Loan Loss Reserve Surcharge to the date of prepayment on the amount of principal prepaid. If the Series 2009 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 2009 Bonds and to perform its other agreements contained in the Resolution, the Series 2009 Bonds and Collateral Documents shall be absolute and unconditional, except as otherwise provided herein or in such documents. The Borrower shall not suspend or discontinue any payments provided for in the Resolution and the Series 2009 Bonds, shall perform all its other agreements in the Resolution, the Series 2009 Bonds and the Collateral Documents and shall not terminate the Resolution, the Series 2009 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 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 the Resolution. 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 Bonds shall be special, limited obligations of the Borrower payable solely out of the 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 2009 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 2009 Bonds, and 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 2009 Bonds. ARTICLE VI INDEMNIFICATION OF DNRC AND DEQ The Borrower shall 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 also indemnify and save ---PAGE BREAK--- 24 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 2009 Bonds. Section 7.2 Assignment by DNRC. The DNRC will pledge its rights under and interest in the Resolution, the Series 2009 Bonds and the Collateral Documents (except to the extent otherwise provided in the Indenture) as security for the payment of the State Bonds and may further assign such interests to the extent permitted by the Indenture, without the consent of the Borrower. Section 7.3 State Refunding Bonds. In the event the State Bonds and Additional State Bonds are refunded by bonds which are not Additional State Bonds, all references in the 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 2009 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 2005 Bond and the Series 2009 Bonds 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 Bonds are expected to be more than sufficient to pay the principal and interest when due on the Series 2005 Bond and the Series 2009 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 2009A Loan are disregarded. The Borrower acknowledges and agrees that if the DNRC delivers an ARRA Noncompliance Statement to the Borrower, then principal and interest and surcharges will become due and owing on the 2009A Loan evidenced by the Series 2009A Bond as provided in Section 5.1 and the Borrower shall thereupon, to the extent required by the 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. Section 8.2 Issuance and Sale of the Series 2009 Bonds. The Council 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 Bonds to evidence the 2009 Loans. The Series 2009 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 2009A Bond, the Series 2009B Bond, and the Series 2009C Bond shall be in the maximum principal amount equal to the original 2009A Committed Amount, 2009B Committed Amount, and 2009C 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 2009A Loan, 2009B Loan, and 2009C Loan, respectively. The principal of and interest on the Series 2009B Bond and the Series 2009C Bond, and, if ---PAGE BREAK--- 25 applicable, the principal and interest on the Series 2009A 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 2009A Bond or Series 2009B Bond or Series 2009C Bond shall be deemed made when advances of the 2009A Loan or 2009B Loan or 2009C Loan, respectively, are made under Section 4.1, and such advances shall be payable in accordance with Schedule B to the Series 2009B Bond, the Series 2009C Bond, and, if applicable, the Series 2009A 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 2009A Bond is a Subordinate Lien Obligation. The Series 2009B Bond and the Series 2009C Bond are Additional Bonds. The Borrower may prepay the Series 2009 Bonds, in whole or in part, only upon the terms and conditions under which it can prepay the 2009 Loans under Section 5.3. Section 8.4 Negotiability, Transfer and Registration. The Series 2009 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 2009 Bonds shall be payable to the DNRC at the Office of the Department of Natural Resources and Conservation, 1625 Eleventh Avenue, Helena, Montana 59620-1601 or such other place as may be designated by the DNRC in writing and delivered to the Borrower. The Series 2009 Bonds shall be negotiable, subject to the provisions for registration and transfer contained in this Section. No transfer of the Series 2009 Bonds shall be valid unless and until the holder, or his duly authorized attorney or legal representative, has executed the form of assignment appearing on the Series 2009 Bonds, and the Finance Director/Treasurer of the Borrower (or successors, the “Registrar”), as Bond Registrar, has duly noted the transfer on the Series 2009 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 2009 Bonds is registered as the absolute owner of the Series 2009 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 2009 Bonds shall be executed on behalf of the Borrower by the manual signatures of the Mayor, the Finance Director/Treasurer and the City Clerk. Any or all of such signatures may be affixed at or prior to the date of delivery of the Series 2009 Bonds. The Series 2009 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 2009 Bonds shall cease to be officers of the Borrower before the Series 2009 Bonds are issued or delivered, their signatures shall remain binding upon the Borrower. Conversely, the Series 2009 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 2009 Bonds shall be delivered to the DNRC, or its attorney or legal representative. Section 8.6 Form. The Series 2009A Bond shall be prepared in substantially the form attached as Appendix B-1, the Series 2009B Bond shall be prepared in substantially the form attached as Appendix B-2, and the Series 2009C Bond shall be prepared in substantially the form attached as Appendix B-3.. Section 8.7 2009 Acquisition and Construction Account. The 2009 Acquisition and Construction Account (the “Acquisition and Construction Account”) is hereby created as a separate account within the Sewer System Fund and shall be used only to pay as incurred and allowed, costs which under accepted accounting practice are capital costs of the 2009 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 work and materials performed and delivered under construction contracts, architectural, engineering, inspection, supervision, fiscal and legal expenses, the cost of lands 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 and the issuance of the Series 2009 Bonds. To the Acquisition and Construction ---PAGE BREAK--- 26 Account shall be credited as received the portion of the proceeds of Series 2009 Bonds for costs of the 2009 Project and for costs of issuance of the Series 2009 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 2009 BONDS The Series 2009B Bond and the Series 2009C Bond are Additional Bonds, issued in accordance with Section 4.03 of the Ordinance, as amended, and shall, with the Outstanding Bonds and any other Additional Bonds, 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, as further provided in the Resolution. Upon advancement of principal of the Series 2009B Bond and the Series 2009C Bond, the City Clerk shall transfer from proceeds of the Series 2009B Bond and the Series 2009C Bond such amount or amounts to the Reserve to cause the balance therein to equal the Reserve Requirement, treating such principal amount as outstanding. Upon the each advance of the Series 2009B Bond and the Series 2009C Bond, the deposit to the Reserve shall be sufficient to cause the balance in the Reserve to equal the Reserve Requirement in respect of all outstanding Additional Bonds and in respect of the principal of the Series 2009B Bond and the Series 2009C Bond so advanced. The Series 2009A Bond is a Subordinate Lien Obligation issued under Section 4.04 of the Ordinance, as amended. In the event the principal of and interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge becomes payable under the Series 2009A Bond, the Borrower shall cause rates and charges to be increased to produce Net Revenues at least equal to the amount required under Section 5.13 of the Ordinance, as amended. 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 outstanding Additional Bonds and the Series 2009 Bonds. ARTICLE X TAX MATTERS Section 10.1 Use of 2009 Project. The 2009 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 2009 Project or the System or security for the payment of the Series 2009B Bond and the Series 2009C Bond which might cause the Series 2009B Bond or the Series 2009C 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 10.2 General Covenant. The Borrower covenants and agrees with the owners from time to time of the Series 2009B Bond and the Series 2009C 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 2009B Bond and the Series 2009C 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 2009B Bond and the Series 2009C 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 Finance Director/Treasurer and the City Clerk, being the officers of the Borrower charged with the responsibility for issuing the Series 2009B Bond and the Series 2009C 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(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 2009B Bond and the Series 2009C Bond, it is reasonably expected that the proceeds of the Series 2009B Bond and the Series 2009C Bond will be ---PAGE BREAK--- 27 used in a manner that would not cause the Series 2009B Bond and the Series 2009C Bond to be an “arbitrage bond” within the meaning of Section 148 of the Code and the Regulations. Section 10.4 Arbitrage Rebate. The City acknowledges that the Series 2009B Bond and the Series 2009C Bond 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 Series 2009B Bond and the Series 2009C Bond from gross income for federal income tax purposes, unless the Series 2009B Bond and the Series 2009C 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 2009B Bond and the Series 2009C 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 Financial Services Manager, the Finance Director/Treasurer and the City Clerk are hereby authorized and directed to execute a Rebate Certificate, substantially in the form to be prepared by Bond Counsel, and the City hereby covenants and agrees to observe and perform the covenants and agreements contained 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 November 15, 2009, a statement concerning the Series 2009B Bond and the Series 2009C 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 2009B Bond and the Series 2009C Bond as a “qualified tax-exempt obligation” for purposes of Section 265(b)(3) of the Code. 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 141(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 2009 in an amount greater than $30,000,000. ARTICLE XI CONTINUING DISCLOSURE The Borrower understands and acknowledges that the DNRC is acquiring the Series 2009 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 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 Council 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, the City Finance Director/Treasurer and the City Clerk 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. ---PAGE BREAK--- 28 ARTICLE XII IMPLEMENTATION This Article XII describes the implementation of the provisions of the 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 Subordinate Obligations. The Series 2009A Bond is a Subordinate Obligation payable from the Surplus Net Revenues of the System in accordance with Section 4.04 of the Ordinance, as supplemented and amended. Any Revenues or 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 if necessary to meet the requirements thereof. Section 12.3 Rates and Charges. For purposes of construing the rate covenant under the Resolution, as provided in Section 5.13 of the Ordinance and as subsequently amended, the principal of and interest on the Series 2009A Bond shall initially be disregarded. However, in the event the City’s obligation to repay the principal of the Series 2009A Bond is not forgiven as described in Section 5.1.2 of this Supplemental Resolution, the City shall forthwith, and in any event not later than three 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 such rate covenant will be satisfied with respect to all outstanding Bonds, to establish and maintain the Reserve Requirement, to pay the reasonable and current operating expenses and to maintain the Operating Reserve, to pay the principal of and interest on any Subordinate Obligations (including, without limitation, all Outstanding principal of the Series 2009A Bond with interest thereon at 3.75% per annum) and to provide reserves for the repair and replacement of the System. No provision of the Resolution is amended hereby and the Resolution continues in full force and effect. ARTICLE XIII MISCELLANEOUS Section 13.1 Notices. All notices or other communications hereunder shall be sufficiently sent or given and shall be deemed sent or given when delivered or mailed by certified mail, postage prepaid, to the parties at the following addresses: DNRC: Department of Natural Resources and Conservation 1625 Eleventh Avenue P. O. Box 201601 Helena, Montana 59620-1601 Attn: Conservation and Resource Development Division Trustee: U.S. Bank National Association c/o Corporate Trust Services 1420 Fifth Avenue, 7th Floor Seattle, Washington 98101 Borrower: City of Missoula 435 Ryman Street Missoula, Montana 59802 Attn: Finance Director/Treasurer ---PAGE BREAK--- 29 Any of the above parties may, by notice in writing given to the others, designate any further or different addresses to which subsequent notices or other communications shall be sent. Section 13.2 Binding Effect. This Supplemental Resolution shall inure to the benefit of and shall be binding upon the DNRC, the Borrower and their respective successors and assigns. Section 13.3 Severability. If any provision of this Supplemental Resolution shall be determined to be unenforceable at any time, it shall not affect any other provision of the Resolution or the enforceability of that provision at any other time. Section 13.4 Amendments. This Supplemental Resolution may not be effectively amended without the written consent of the DNRC. Section 13.5 Applicable Law. This Supplemental Resolution shall be governed by and construed in accordance with the internal laws of the State. 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 2009 Bonds, shall not be Business Day, such payments may be made or act performed or right exercised on the next succeeding Business Day with the same force and effect as if done on the nominal date provided in this Supplemental Resolution or the Series 2009 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 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 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 2009 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 2009 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. ---PAGE BREAK--- 30 Section 13.11 Date. This Supplemental Resolution shall take effect immediately. ---PAGE BREAK--- 31 PASSED AND ADOPTED by the City Council of the City of Missoula, Montana, on this 23rd day of November, 2009. John Engen John Engen Mayor Attest: Martha L. Rehbein Martha L. Rehbein City Clerk (SEAL) ---PAGE BREAK--- A-1 APPENDIX A Description of the 2009 Project The project consists of providing sewer service to approximately 313 unsewered properties within the City, including installing approximately 22,000 linear feet of sewer main, as well as related costs. Description of the Lolo Street Improvements The portion of the 2009 Project that constitute the Lolo Street Improvements consists of installing sewer main and providing sewer service for 4 properties. Estimated 2009 Project Budget Administrative/ Finance Costs Source: ARRA Forgiveness 2009A Loan Source: TSEP Source: EPA STAG Source: RRGL Source: 2009B Loan Source: Lolo St. 2009C Loan Total: Debt Service Reserve 66,575.00 5,725.00 72,300.00 Bond Counsel & Related costs 10,000.00 10,000.00 Engineering/ Arch. Design: SID 544 113,635.00 113,635.00 Lolo Street 12,360.00 12,360.00 Construction Engineering: SID 544 66,019.00 204,569.00 270,588.00 Lolo Street 16,019.00 16,019.00 Construction: SID 544 181,358.00 295,431.00 482,100.00 70,000.00 828,267.02 1,857,156.02 Lolo Street 29,382.00 29,382.00 SRF Rounding/Conti ngency 336.38 514.00 850.38 Easements 19,821.60 19,821.60 TOTAL PROJECT COSTS 361,012.00 500,000.00 482,100.00 70,000.00 925,000.00 64,000.00 2,402,112.00 ---PAGE BREAK--- B-1-1 APPENDIX B-1 [Form of the Series 2009A Bond] UNITED STATES OF AMERICA STATE OF MONTANA COUNTY OF MISSOULA CITY OF MISSOULA SUBORDINATE LIEN SEWER SYSTEM REVENUE BOND (DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM) TAXABLE SERIES 2009A R-1 $361,012 FOR VALUE RECEIVED, THE CITY OF MISSOULA, 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 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 Series 2009A 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 2009A Loan is not forgiven and ending on the July 1, 2029, 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 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 attached hereto. Upon each disbursement of 2009A 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 Series 2009A Bond, a and the final Schedule B will reflect repayments under Section 5.1.4 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 Series 2009A 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. ---PAGE BREAK--- B-1-2 NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS 2009A 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 STATEMENT, THEN THEREUPON INTEREST SHALL BE DEEMED TO ACCRUE ON THE PRINCIPAL OF THIS SERIES 2009A 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 2009A BOND SHALL THEREUPON BE MARKED “CANCELLED” AND RETURNED BY THE HOLDER TO THE BORROWER, AND THIS 2009A 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 2009A BOND FROM THE DATE OF EACH ADVANCE UNTIL DELIVERY OF SUCH A STATEMENT AT THE RATE OF ZERO PERCENT (0.00%) PER ANNUM. This 2009A 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 $361,012 (the “Series 2009A Bond”). The Series 2009A 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”) and to pay costs of issuance of this Series 2009A Bond. The Series 2009A 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, Parts 44 and 45, as amended, and ordinances and resolutions duly adopted by the governing body of the Borrower, including Ordinance No. 1547 of the City adopted on March 19, 1973, as amended or supplemented by Resolution Nos. 4484, 5247, 5307, 6250, 6359, 6408, 6500, 6589, 6707, 6752, 6831, and 7060 adopted by the Council on February 9, 1985, January 13, 1992, June 22, 1992, May 24, 1999, August 28, 2000, March 26, 2001, April 15, 2002, October 21, 2002, September 15, 2003, February 23, 2004, August 16, 2004 and May 8, 2006, respectively, and as further amended and supplemented by Resolution No. adopted November 23, 2009 (the Ordinance, as so amended and supplemented, the “Resolution”). The Series 2009A Bond is issuable only as a single, fully registered bond. The Series 2009A 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. The Borrower has issued its outstanding $1,177,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 1992A, $2,221,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 1992B, $1,820,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 1999A, $718,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2000B, $537,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2001A, $1,395,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2002A, $5,000,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2002B, $3,800,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2003, $3,688,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2004, $1,997,000 Sewer System Revenue Bond (DNRC Revolving Loan Program), Series 2005; $419,000 Sewer System Revenue Bond (DNRC Revolving Loan Program), Series 2006 (collectively, the “Outstanding Bonds”), and is issuing simultaneously herewith its Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2009B (the “Series 2009B Bond”) and its Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2009C (the “Series 2009C Bond”). The Outstanding Bonds, the Series 2009B Bond, and the Series 2009C Bond are parity lien bonds payable from the Revenue Bond Account in the Fund of the Borrower. Following advancement of the full amount of principal of the Series 2009C Bond and the 2009B First ---PAGE BREAK--- B-1-3 Advance, principal amounts of this Series 2009A Bond are advanced until all of the principal of this Series 2009A Bond is advanced and then the remaining amounts of principal of the Series 2009B Bond are advanced. Terms used with initial capital letters but not defined herein have the meanings given to them in the Resolution. Reference is made to the Resolution for a more complete statement of the terms and conditions upon which the Series 2009A 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 2009A Bond. The Borrower may prepay the principal of the Series 2009A Bond only if 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 2009A Bond is prepaid in part, such prepayments shall be applied to principal payments in inverse order of maturity. This Series 2009A Bond, including interest and any premium for the redemption thereof, are payable solely from the Surplus Net Revenues available for the payment hereof and do not constitute a debt of the Borrower within the meaning of any constitutional or statutory limitation or provision. The Borrower may deem and treat the person in whose name this Series 2009A Bond is registered as the absolute owner hereof, whether this Series 2009A 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 2009A 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 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 Revenue Bond Account and the Reserve, 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 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 2009A Bond as and when due; that additional bonds issued on a parity with the Outstanding Bonds, the Series 2009B Bond, and the Series 2009C Bond (such bonds, collectively, the “Bonds”) and refunding Bonds may be issued and made payable from the Revenue Bond Account on a parity with the Outstanding Bonds, the Series 2009B Bond, and the Series 2009C 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 Outstanding Bonds, the Series 2009B Bond, the Series 2009C Bond, and additional parity Bonds on such Net Revenues (as is the case with this Series 2009A Bond); that all provisions for the security of the holder of this Series 2009A 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 2009A 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 2009A 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 ---PAGE BREAK--- B-1-4 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 2009A Bond does not cause either the general or the special indebtedness of the Borrower to exceed any constitutional or statutory limitation. ---PAGE BREAK--- B-1-5 IN WITNESS WHEREOF, the City of Missoula, Missoula County, Montana, by its City Council, has caused this Bond to be executed by the facsimile signatures of the Mayor, Finance Director/Treasurer, and the City Clerk, and by a facsimile of the official seal of the City. (Facsimile Signature) Mayor (Facsimile Signature) Finance Director/Treasurer (Facsimile Seal) (Facsimile Signature) City Clerk ---PAGE BREAK--- B-1-6 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 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 Finance Director/Treasurer 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. Date of Name and Address Signature of Registration of Registered Holder Finance Director/Treasurer , 2009 Department of Natural Resources and Conservation 1625 Eleventh Avenue Helena, MT 59620 THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND REGISTRAR UPON REGISTRATION OF EACH TRANSFER The Finance Director/Treasurer of the City of Missoula, 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 Signature of Bond Registrar ---PAGE BREAK--- B-1-7 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. ---PAGE BREAK--- B-1-8 SCHEDULE A SCHEDULE OF AMOUNTS ADVANCED Date Advances Total Amount Advanced Notation Made By ---PAGE BREAK--- B-1-9 SCHEDULE B Loan Loss Administrative Reserve Total Loan Date Principal Interest Expense Surcharge Surcharge Payment ---PAGE BREAK--- B-2-1 APPENDIX B-2 [Form of the Series 2009B Bond] UNITED STATES OF AMERICA STATE OF MONTANA COUNTY OF MISSOULA CITY OF MISSOULA SEWER SYSTEM REVENUE BOND (DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM) SERIES 2009B R-1 $925,000 FOR VALUE RECEIVED, THE CITY OF MISSOULA, 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 2009B First Advance will be made, if at all, following the advance of the full principal amount of the Series 2009C Bond and the Series 2009A Bond (as such terms are defined below or in the Resolution), and upon the making of the 2009B 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 from the date of each advance of principal at the rates of seventy-five hundredths of one percent (0.75%) and one percent (1.00%) per annum, respectively. Interest and Administrative 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, 2029, subject to earlier redemption, all as described in the Resolution. 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 2009B Loan amounts to the Borrower pursuant to the Resolution, 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 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. ---PAGE BREAK--- B-2-2 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 $925,000 (the “Series 2009B Bond”), issued to finance a portion of the costs of construction of certain improvements to the sewer system of the Borrower (the “System”) and to fund deposits to the Reserve. The Series 2009B 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 Ordinance No. 1547 of the City adopted on March 19, 1973, as amended or supplemented by Resolution Nos. 4484, 5247, 5307, 6250, 6359, 6408, 6500, 6589, 6707, 6752, 6831, and 7060 adopted by the Council on February 9, 1985, January 13, 1992, June 22, 1992, May 24, 1999, August 28, 2000, March 26, 2001, April 15, 2002, October 21, 2002, September 15, 2003, February 23, 2004, August 16, 2004 and May 8, 2006, respectively, and as further amended and supplemented by Resolution No. adopted November 23, 2009 (the Ordinance, as so amended and supplemented, the “Resolution”). The Series 2009B Bond is issuable only as a single, fully registered bond. The Series 2009B Bond is issued on a parity and is equally and ratably secured by the Net Revenues of the System with the Borrower’s outstanding $1,177,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 1992A, $2,221,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 1992B, $1,820,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 1999A, $718,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2000B, $537,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2001A, $1,395,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2002A, $5,000,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2002B, $3,800,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2003, $3,688,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2004, $1,997,000 Sewer System Revenue Bond (DNRC Revolving Loan Program), Series 2005; $419,000 Sewer System Revenue Bond (DNRC Revolving Loan Program), Series 2006 (collectively, the “Outstanding Bonds”), and its Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2009C (the “Series 2009C 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 2009A (the “Series 2009A Bond”). The 2009B First Advance has been advanced at Closing simultaneously with the full amount of principal of the Series 2009C Bond. Thereafter, remaining principal amounts of this Series 2009B Bond, if any, are advanced only after all of the principal of the Series 2009A Bond is advanced. Terms used with initial capital letters but not defined herein have the meanings given to them in the Resolution.. Reference is made to the Resolution for a more complete statement of the terms and conditions upon which the Series 2009B 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 2009B Bond, and the Series 2009C 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 2009B Bond. The Borrower may prepay the principal of the Series 2009B Bond only if 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 2009B Bond is prepaid in part, such prepayments shall be applied to principal payments in inverse order of maturity. The Series 2009B 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, statutory or charter limitation or provision. ---PAGE BREAK--- B-2-3 The Borrower may deem and treat the person in whose name this Series 2009B Bond is registered as the absolute owner hereof, whether this Series 2009B 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 2009B Bond may be transferred as hereinafter provided. 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, and has created a special Sewer System Fund into which the revenues of the System as defined in the Resolution (the “Revenues”), 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, 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 outstanding Bonds payable from that account, and a Reserve in that 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 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 Net Revenues for each fiscal year at least equal to 125% of the maximum 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 the reasonable and current expenses of operating and maintaining the System, and to provide reserves for the repair and replacement 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 Outstanding Bonds, the Series 2009B Bond, and the Series 2009C Bond 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 Outstanding Bonds, the Series 2009B Bond, and the Series 2009C Bond, and other parity Bonds on such Net Revenues and such obligations are payable only from Surplus Net Revenues (as is the case with the Series 2009A Bond); that all provisions for the security of this Series 2009B 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 2009B 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 2009B 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, statutory or charter limitation or provision and the issuance of the Series 2009B Bond does not cause either the general or the special indebtedness of the Borrower to exceed any constitutional, statutory or charter limitation. IN WITNESS WHEREOF, the City of Missoula, Missoula County, Montana, by its City Council, has caused this Bond to be executed by the facsimile signatures of the Mayor, Finance Director/Treasurer, and the City Clerk, and by a facsimile of the official seal of the City. (Facsimile Signature) Mayor (Facsimile Signature) Finance Director/Treasurer ---PAGE BREAK--- B-2-4 (Facsimile Seal) (Facsimile Signature) City Clerk ---PAGE BREAK--- 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 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 Finance Director/Treasurer 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. Date of Name and Address Signature of Registration of Registered Holder Finance Director/Treasurer , 2009 Department of Natural Resources and Conservation 1625 Eleventh Avenue Helena, MT 59620 THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND REGISTRAR UPON REGISTRATION OF EACH TRANSFER The Finance Director/Treasurer of the City of Missoula, 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 Signature of Bond Registrar ---PAGE BREAK--- B-2-6 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. ---PAGE BREAK--- B-2-7 SCHEDULE A SCHEDULE OF AMOUNTS ADVANCED Date Advances Total Amount Advanced Notation Made By ---PAGE BREAK--- B-2-8 SCHEDULE B Loan Loss Administrative Reserve Total Loan Date Principal Interest Expense Surcharge Surcharge Payment ---PAGE BREAK--- B-3-1 APPENDIX B-3 [Form of the Series 2009C Bond] UNITED STATES OF AMERICA STATE OF MONTANA COUNTY OF MISSOULA CITY OF MISSOULA WATER SYSTEM REVENUE BOND (DNRC DRINKING WATER STATE REVOLVING LOAN PROGRAM) SERIES 2009C R-1 $64,000 FOR VALUE RECEIVED, THE CITY OF MISSOULA, 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. In addition, the Borrower shall pay an Administrative Expense Surcharge and a Loan Loss Reserve Surcharge on the outstanding principal amount of this Bond from the date of each advance of principal at the rates of seventy-five hundredths of one percent (0.75%) and one percent (1.00%) per annum, respectively. Interest and Administrative 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, 2029, subject to earlier redemption, all as described in the Resolution. 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 any disbursement of 2009C Loan amounts to the Borrower pursuant to the Resolution, 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 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 $64,000 (the “Series 2009C Bond”), issued to finance a portion of the costs of construction of certain improvements to the sewer system of the Borrower (the “System”) and to fund deposits to the Reserve. The Series 2009C Bond is issued pursuant to and in full conformity with ---PAGE BREAK--- B-3-2 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 Ordinance No. 1547 of the City adopted on March 19, 1973, as amended or supplemented by Resolution Nos. 4484, 5247, 5307, 6250, 6359, 6408, 6500, 6589, 6707, 6752, 6831, and 7060 adopted by the Council on February 9, 1985, January 13, 1992, June 22, 1992, May 24, 1999, August 28, 2000, March 26, 2001, April 15, 2002, October 21, 2002, September 15, 2003, February 23, 2004, August 16, 2004 and May 8, 2006, respectively, and as further amended and supplemented by Resolution No. adopted November 23, 2009 (the Ordinance, as so amended and supplemented, the “Resolution”). The Series 2009C Bond is issuable only as a single, fully registered bond. The Series 2009C Bond is issued on a parity and is equally and ratably secured by the Net Revenues of the System with the Borrower’s outstanding $1,177,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 1992A, $2,221,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 1992B, $1,820,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 1999A, $718,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2000B, $537,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2001A, $1,395,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2002A, $5,000,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2002B, $3,800,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2003, $3,688,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2004, $1,997,000 Sewer System Revenue Bond (DNRC Revolving Loan Program), Series 2005; $419,000 Sewer System Revenue Bond (DNRC Revolving Loan Program), Series 2006 (collectively, the “Outstanding Bonds”), and its Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2009B (the “Series 2009B 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 2009A (the “Series 2009A Bond”). The 2009B First Advance has been advanced at Closing simultaneously with the full amount of principal of this Series 2009C Bond. Thereafter, remaining principal amounts of this Series 2009B Bond, if any, are advanced only after all of the principal of the Series 2009A Bond is advanced. Terms used with initial capital letters but not defined herein have the meanings given to them in the Resolution.. Reference is made to the Resolution for a more complete statement of the terms and conditions upon which the Series 2009C 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 2009B Bond, and this Series 2009C 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 this Series 2009C Bond. The Borrower may prepay the principal of this Series 2009C Bond only if it obtains the prior written consent of the DNRC thereto, and (ii) 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 this Series 2009C Bond is prepaid in part, such prepayments shall be applied to principal payments in inverse order of maturity. This Series 2009C 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, statutory or charter limitation or provision. The Borrower may deem and treat the person in whose name this Series 2009C Bond is registered as the absolute owner hereof, whether this Series 2009C 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 2009C Bond may be transferred as hereinafter provided. ---PAGE BREAK--- B-3-3 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, and has created a special Sewer System Fund into which the revenues of the System as defined in the Resolution (the “Revenues”), 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, 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 outstanding Bonds payable from that account, and a Reserve in that 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 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 Net Revenues for each fiscal year at least equal to 125% of the maximum 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 the reasonable and current expenses of operating and maintaining the System, and to provide reserves for the repair and replacement 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 Outstanding Bonds, the Series 2009B Bond, and this Series 2009C Bond 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 Outstanding Bonds, the Series 2009B Bond, and this Series 2009C Bond, and other parity Bonds on such Net Revenues and such obligations are payable only from Surplus Net Revenues (as is the case with the Series 2009A Bond); that all provisions for the security of this Series 2009C 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 2009C 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 2009C 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, statutory or charter limitation or provision and the issuance of the Series 2009C Bond does not cause either the general or the special indebtedness of the Borrower to exceed any constitutional, statutory or charter limitation.. IN WITNESS WHEREOF, the City of Missoula, Missoula County, Montana, by its City Council, has caused this Bond to be executed by the facsimile signatures of the Mayor, Finance Director/Treasurer, and the City Clerk, and by a facsimile of the official seal of the City. (Facsimile Signature) Mayor (Facsimile Signature) Finance Director/Treasurer (Facsimile Seal) (Facsimile Signature) City Clerk ---PAGE BREAK--- B-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 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 Finance Director/Treasurer 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. Date of Name and Address Signature of Registration of Registered Holder Finance Director/Treasurer , 2009 Department of Natural Resources and Conservation 1625 Eleventh Avenue Helena, MT 59620 THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND REGISTRAR UPON REGISTRATION OF EACH TRANSFER The Finance Director/Treasurer of the City of Missoula, Montana, acting as Bond Registrar, has transferred, on the books of the Borrower, on the date last noted below, ownership of the principal amount of and the accrued interest on this Bond to the new registered holder noted next to such date, except for amounts of principal and interest theretofore paid. Name of New Signature of Date of Transfer Registered Holder Bond Registrar ---PAGE BREAK--- B-3-5 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) ---PAGE BREAK--- B-3-6 SCHEDULE A SCHEDULE OF AMOUNTS ADVANCED Total Amount Notation Date Advances Advanced Made By ---PAGE BREAK--- B-3-7 SCHEDULE B Loan Loss Administrative Reserve Total Loan Date Principal Interest Expense Surcharge Surcharge Payment ---PAGE BREAK--- C-1 APPENDIX C ADDITIONAL REPRESENTATIONS AND COVENANTS None ---PAGE BREAK--- D-1 APPENDIX D $1,350,012 Sewer System Revenue Bonds (DNRC Water Pollution Control State Revolving Loan Program) Consisting Of $361,012 Subordinate Lien Taxable Series 2009A Bond $925,000 Series 2009B Bond And $64,000 Series 2009C Bond ARRA CERTIFICATE AND REQUEST We, and hereby certify that we are on the date hereof the duly qualified and acting Mayor and City Clerk, respectively, of the City of Missoula, Montana (the “Borrower”), and that: 1. Pursuant to Ordinance No. 1547 of the City adopted on March 19, 1973, as amended or supplemented by Resolution Nos. 4484, 5247, 5307, 6250, 6359, 6408, 6500, 6589, 6707, 6752, 6831, and 7060 adopted by the Council on February 9, 1985, January 13, 1992, June 22, 1992, May 24, 1999, August 28, 2000, March 26, 2001, April 15, 2002, October 21, 2002, September 15, 2003, February 23, 2004, August 16, 2004 and May 8, 2006, respectively, and as further amended and supplemented by Resolution No. adopted November 23, 2009 entitled “Resolution Relating to $1,350,012 Sewer System Revenue Bonds (DNRC Water Pollution Control State Revolving Loan Program), Consisting of $361,012 Series 2009A Bond, $925,000 Series 2009B Bond, and $64,000 Series 2009C Bond; Authorizing the Issuance and Fixing the Terms and Conditions Thereof” (the Ordinance, as so amended and supplemented, the “Resolution”), the Borrower issued its Subordinate Lien Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Taxable Series 2009A, dated, as originally issued, as of 2009, in the maximum aggregate principal amount of $361,012 (the “Series 2009A Bond”), its Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2009B, dated, as originally issued, as of 2009, in the maximum aggregate principal amount of $925,000 (the “Series 2009B Bond”), and its Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2009C, dated, as originally issued, as of 2009, in the maximum aggregate principal amount of $64,000 (the “Series 2009C Bond”). The Series 2009A Bond is also referred to herein as the “ARRA Bond.” 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 Bond evidences loan 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 2009 Project (as hereinafter defined). Capitalized terms used herein without definition shall have the meanings given them in the Resolution. 2. The ARRA Bond was issued to finance a portion of the costs of construction and installation of various improvements to the System, generally described as the “2009 ARRA Project” in the Resolution. Construction of the 2009 ARRA Project has complied with all federal and state standards, including, without limitation, EPA regulations and standards and the requirements of ARRA. The 2009 ARRA Project is expected to be completed and placed in service on or about 20__. 3. Costs of the 2009 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 2009A Committed Amount not advanced or to be advanced upon delivery hereof. The Borrower specifically confirms and agrees that any remaining amounts of the 2009 Loans to be lent to the Borrower, if any, shall be evidenced by the Series 2009B Bond. ---PAGE BREAK--- D-2 4. As of the date hereof, the Borrower has spent the following amounts in connection with the 2009 Project and costs related thereto: Preliminary Engineering $ Engineering/Arch. Design Construction Engineering Services Construction Contingency Audit Fees Loan Reserves Bond Counsel TOTAL $ Of such amounts, $361,012 were paid from advances of proceeds of the ARRA Bond, $925,000 from the Series 2009B Bond, $64,000 from the Series 2009C Bond, and were paid from funds the Borrower had on hand and available therefor. In addition, as of the date hereof. The Borrower certifies that proceeds of the ARRA Bonds, once made available to the Borrower, were applied to costs of the 2009 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 2009A Bond that reflects the amortization of all advances made or to be made on the date hereof of proceeds of the Series 2009A Bond the sum of the amounts of the Series 2009A Bond applied to pay costs of the 2009 Project or costs of issuance of the Series 2009 Bonds), 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 the Series 2009A Bond 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 issues a statement to the Borrower to the effect that the Borrower’s obligation to repay the principal amount of the Series 2009A Bond is forgiven in response to the Borrower’s request made in paragraph 10 below, the Borrower’s obligation to repay the principal of the Series 2009A Bond and interest and surcharges thereon will be forgiven. 6. Pursuant to the Resolution, the Borrower has established a Reserve in the Fund (the “Reserve”) to secure its Outstanding Bonds (as defined in the Resolution), its Series 2009B Bond, and its Series 2009C Bond (the Outstanding Bonds, the Series 2009B Bond, and Series 2009C Bond, collectively, the “Bonds”). The amount on deposit therein on the date hereof totals of which $ secures the Series 2009B Bond and Series 2009C Bond. The amount in the Reserve is equal to the lesser of: 10 percent of the original principal amount of all series of parity Bonds now outstanding or (ii) 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 2009B Bond and Series 2009C Bond in accordance with Schedules B thereto. 7. The representations of the Borrower contained in Articles II and III of the 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. 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 Certificate to the DNRC, in part, to ensure compliance with ARRA. The Borrower certifies that all iron, steel and manufactured goods (as defined by 2 CRF part 176) used or to be used in the 2009 ARRA Project have been and will be produced in the United States and the Borrower accepts the responsibility of compliance with this requirement. The Borrower further certifies that all laborers and mechanics employed by contractors and subcontractors on the 2009 ARRA ---PAGE BREAK--- D-3 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 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 2009A Bond, together with interest and surcharges thereon. The Borrower acknowledges and agrees that the forgiveness of principal of and interest and surcharges on the Series 2009A 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; (iii) if the DNRC delivers to the Borrower a statement that the obligation of the Borrower to repay the principal of the Series 2009A Bond is not forgiven, the obligation of the Borrower to repay the principal of the Series 2009A 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 2009A 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 2009A Bond and the Resolution;; and (iv) the Borrower shall, as necessary, within the 3-month period specified in the Resolution, adjust its rates and charges to produce 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 2009. CITY OF MISSOULA, MONTANA By (SEAL) Mayor By City Clerk